EX-10.3



 




Exhibit 10.3



UST INC.

2005 LONG-TERM INCENTIVE PLAN

NOTICE OF GRANT OF RESTRICTED STOCK




     This Notice is to certify that the Participant named below has been granted the number of
shares of Restricted Stock set forth below under the UST Inc. 2005 Long-Term Incentive Plan (the
“Plan”) and the terms and conditions set forth in this Notice and attached Restricted Stock
Agreement (the “Agreement”) . This Notice is subject to and incorporates by reference the
terms and conditions of the Agreement. Please refer to the Agreement and the Plan document for an
explanation of the terms and conditions of this grant and a full description of your rights and
obligations. If this Notice of Grant is not signed and returned to the Company, on or before the
date on which the Restricted Stock vests, the Restricted Stock granted hereunder shall be
forfeited. Please sign and date the Notice and return it promptly in the enclosed envelope.



	 	 	 
	Name of Participant:

	 	[                    ]
	 
	 	 
	Number of Shares of Restricted Stock:
that will vest if EPS targets for each of
2006, 2007 and 2008 are achieved
(“Target Award”)

	 	[               ]
	 
	 	 
	Grant Date:

	 	[               ]
	 
	 	 
	Vesting Conditions:

	 	The number of shares that will
vest on January 31, 2009 (the
“Vesting Date”) will depend on
the attainment of pre-established
EPS targets for each of 2006,
2007 and 2008. The percentages
of the Target Award that will
vest on January 31, 2009 will be
determined at the beginning of
2007, 2008 and 2009 respectively
based on achievement of
pre-established EPS targets for
each of 2006, 2007 and 2008
according to the following
schedule:






	 	 	 	 	 	 	 	 	 	 	 
	 	 	% of Target	 	 	 	% of Target	 	 	 	% of Target
	 	 	Award Earned	 	 	 	Award Earned	 	 	 	Award Earned
	% of 2006	 	with respect to	 	% of 2007	 	with respect to	 	% of 2008	 	with respect to
	EPS Target	 	2006	 	EPS Target	 	2007	 	EPS Target	 	2008
	below 75%
	 	0.00%	 	below 75%	 	0.00%	 	below 75%	 	0.00%
	75.0%
	 	22.20%	 	75.0%	 	22.20%	 	75.0%	 	22.26%
	77.5%
	 	23.31%	 	77.5%	 	23.31%	 	77.5%	 	23.38%
	85.0%
	 	26.64%	 	85.0%	 	26.64%	 	85.0%	 	26.72%
	92.5%
	 	29.97%	 	92.5%	 	29.97%	 	92.5%	 	30.06%
	100.0%
	 	33.30%	 	100.0%	 	33.30%	 	100.0%	 	33.40%
	107.5%
	 	36.63%	 	107.5%	 	36.63%	 	107.5%	 	36.74%
	115.0%
	 	39.96%	 	115.0%	 	39.96%	 	115.0%	 	40.08%






 









 





	 	 	 
	 

	 	The percentage earned with respect to each
year shall be interpolated based on results in
accordance with the above vesting schedule. To
the extent that the number of shares earned
pursuant to the above vesting schedule exceed the
Target Award as of the vesting date, an award of
the number of unrestricted shares of Common Stock
equal to such excess shall be made to you on the
vesting date.
	 
	 	 
	Additional Terms:

	 	See the Restricted Stock Agreement.







 










 






UST INC.

2005 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT




          RESTRICTED STOCK AGREEMENT, made as of the date set forth on the Notice of Grant of Restricted
Stock, by and between UST Inc., a Delaware corporation (the “Company”), pursuant to the 2005
Long-Term Incentive Plan (the “Plan”) and the employee of the Company or a Subsidiary named on the
Notice of Grant of Restricted Stock (the “Employee”);




          WHEREAS, the Company desires, by affording the Employee the opportunity to acquire or enlarge
the Employee’s ownership of shares of the Company’s common stock, $.50 par value (“Common Stock”),
and providing the Employee with a direct proprietary interest in the Company’s success, to carry
out the purpose of the Plan; and




          WHEREAS, the Committee administering the Plan has granted (as of the effective date of grant
specified in the Notice of Grant of Restricted Stock) to the Employee the shares of Restricted
Stock as set forth in the Notice of Grant of Restricted Stock.




          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto have agreed and do hereby agree as follows:





	1.	 	Grant of Award. Pursuant to Section 7 of the Plan, the Company grants to the
Employee, subject to the terms and conditions of the Plan and subject further to the terms and
conditions set forth herein and in the Notice of Grant of
Restricted Stock, the number of shares of Restricted Stock as shown on the Notice of Grant of Restricted Stock. The
Participant’s grant and record of Restricted Stock share ownership shall be kept on the books
of the Company until the restrictions on transfer have lapsed. At the Employee’s request,
vested shares may be evidenced by stock certificates.
	 
	2.	 	Vesting. The shares of Restricted Stock granted to the Employee shall vest in
accordance with the performance criteria and vesting schedule set forth in the Notice of Grant
of Restricted Stock. Such vesting schedule indicates the performance criteria used to
determine the number of shares which shall vest and the date upon which the Employee shall be
entitled to receive shares of freely transferable Common Stock equal to the number of vested
shares of Restricted Stock as determined pursuant to the Notice of Grant of Restricted Stock,
provided that, as of the vesting date, the Employee has not incurred a termination of
service with the Company and all Subsidiaries (collectively, the Company and its Subsidiaries
shall be referred to herein as the “Company”). There shall be no proportionate or partial
vesting in the periods between the vesting date(s), if any, specified in the Notice of Grant
of Restricted Stock and all vesting shall occur only on such vesting date(s), except as set
forth in Sections 7 and 8 below.




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     Other than as set forth in Sections 7 and 8 below and as provided in the Plan, no vesting
shall occur after the termination of a Employee’s employment or service with the Company for any
reason.




	3.	 	Rights as a Stockholder. The Employee shall have all of the rights of a stockholder
with respect to the number of shares of Restricted Stock designated as the Target Award in the
Notice of Grant of Restricted Stock, including the right to vote on all matters with respect
to which the stockholders of the Company have the right to vote and the right to receive
dividends thereon.
	 
	4.	 	Restrictions on Transfer. Shares of Restricted Stock may not be transferred or
otherwise disposed of by the Employee, including by way of sale, assignment, transfer, pledge,
hypothecation or otherwise, except as permitted by the Committee, or by will or the laws of
descent and distribution.
	 
	5.	 	Approvals. The delivery of any shares of Common Stock hereunder is subject to
approval of any government agency which may, in the opinion of counsel, be required in
connection with the authorization, issuance or sale of Common Stock. No Common Stock shall be
issued upon the lapse of restrictions relating to the shares of Restricted Stock prior to
compliance with such requirements and with the Company’s listing agreement with the New York
Stock Exchange (or other national exchange upon which the Company’s shares may then be
listed).
	 
	6.	 	Invalid Transfers. No purported sale, assignment, mortgage, hypothecation, transfer,
pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or
creation of a security interest in or lien on, any of the shares of Restricted Stock by any
holder thereof in violation of the provisions of this Restricted Stock Agreement shall be
valid, and the Company will not transfer any of said shares of Restricted Stock on its books
nor will any of said shares of Restricted Stock be entitled to vote, nor will any dividends be
paid thereon, unless and until there has been full compliance with said provisions to the
satisfaction of the Company. The foregoing restrictions are in addition to and not in lieu of
any other remedies, legal or equitable, available to enforce said provisions.
	 
	7.	 	Change in Control. Subject to the provisions of the next sentence of this Section 7,
upon the occurrence of a Change in Control, the shares of Restricted Stock shall no longer be
subject to the performance criteria described in the Notice of Grant of Restricted Stock for
years with respect to which performance has not yet been determined, and the number of shares
of Restricted Stock corresponding to such performance period shall be deemed to have been
earned at target as of the vesting date set forth in the Notice of Grant of Restricted Stock,
provided, however, that if the Employee’s employment is terminated by the
Company without Cause or by the Employee for “Good Reason” (as such term is defined in the
employment agreement, severance agreement or Change in Control
agreement entered into between the Company and the Employee)
following the Change in Control, the restrictions that apply to any shares of Restricted Stock
which have not yet vested, or with respect to which the restrictions have not lapsed, shall
immediately lapse as of the date of such




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termination. Notwithstanding the foregoing, upon a Change in Control in which the Company
is not the surviving corporation (or survives only as a subsidiary of another corporation)
or other Change in Control described in clause (iii) of the definition of a “Change in
Control” set forth in the Plan, the shares of Restricted Stock shall be immediately vested
in full, regardless of whether the performance criteria set forth in the Notice of Grant of
Restricted Stock have been attained, and shall be treated in accordance with the provisions
of Section 11(c) of the Plan. For all purposes of this Section 7, the number of shares of
Restricted Stock that shall either remain outstanding until the vesting date set forth in
the Notice of Grant of Restricted Stock or immediately vest in accordance with this Section
7 shall equal the sum of (a) the number of shares corresponding to any performance period
with respect to which performance has been determined prior to the date of the Change in
Control, calculated based on actual performance and (b) the number of shares corresponding
to any performance period with respect to which performance has not yet been determined as
of the date of the Change in Control, calculated based on deemed performance at target.




	8.	 	Effect of Termination of Employment. 






	 	(a)	 	If the employment of the Employee is terminated by reason of his/her death or
Disability, or for any other reason if the Committee so determines, the number of
shares equal to the sum of (i) and (ii) below shall become fully vested as of the date
of such termination of employment, where (i) equals the number of shares of Restricted
Stock corresponding to any performance period with respect to which performance has
been determined prior to the date of termination, calculated based on actual
performance and (ii) equals the number of shares of Restricted Stock corresponding to
any performance period with respect to which performance has not yet been determined
as of the date of termination, calculated based on deemed performance at target.
	 
	 	(b)	 	If the employment of the Employee is terminated due to his Retirement, the
Employee shall become vested as of the vesting date specified in the Notice of Grant
of Restricted Stock with respect to a number of shares of Restricted Stock determined
in accordance with the performance criteria specified in such Notice;
provided, however, that if the date of the Employee’s Retirement
occurs on or before the first anniversary of the Grant Date specified in the Notice of
Grant of Restricted Stock, then the Employee shall become vested solely with respect
to a pro rata portion of the shares of Restricted Stock earned based upon the
performance criteria specified in the Notice of Grant of Restricted Stock as set forth
below. For purposes of the foregoing, the pro rata portion of the shares of
Restricted Stock that may become vested as of the vesting date shall be the number of
shares earned pursuant to the Notice of Grant of Restricted Stock multiplied by a
fraction, the numerator of which is the number of full months that have elapsed from
the Grant Date specified in the Notice of Grant of Restricted Stock until the date of
Retirement, and the denominator of which is the number of full months in the
applicable vesting period.




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	 	(c)	 	Subject to the provisions of Section 7, if the employment of the Employee is
terminated for any reason other than by reason of his death, Disability or Retirement
and the Employee is not eligible for Retirement, and if the Committee does not
determine otherwise, the number of shares of Restricted Stock that have not
theretofore become vested shall be forfeited.
	 
	 	(d)	 	For purposes of this Agreement, the term “Disability” shall mean a
“disability,” as defined in the Company’s Long-Term Disability Plan or, if such plan
is not applicable to the Employee, as defined by the State or federal disability
program which applies to the Employee.






	9.	 	Non-Competition.






	 	(a)	 	     In consideration of the grant of Restricted Stock made pursuant to this
Agreement, during the term of the Employee’s employment with the Company and for a
period of one (1) year after that employment is terminated, by
the Company or the Employee, for any reason other than
the cessation of business by the Company pursuant to a filing for bankruptcy
protection or liquidation initiated by the Company,
the Employee will not, without the Company’s prior written approval, directly or
indirectly:






	 	(i)	 	     recruit, solicit or knowingly induce, or attempt to induce,
any employee or consultant of the Company to terminate his/her employment or
consulting relationship with, or otherwise cease his/her relationship with,
the Company; or
	 
	 	(ii)	 	     solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of any of the clients, customers or accounts,
or prospective clients, customers or accounts, of the Company. For purposes of
this Agreement, a prospective client, customer or account is any individual or
entity whose business is solicited by the Company, proposed to be solicited by
the Company, or who approaches the Company with respect to possibly becoming a
client, customer, or account during the period of Employee’s employment with
the Company; or
	 
	 	(iii)	 	     Engage (whether for compensation or without compensation),
directly or indirectly, as an individual proprietor, partner, officer,
employee, director, independent contractor, consultant or in any other
capacity whatsoever, in any business currently involved in, or actually
contemplating involvement in, the manufacture or distribution of smokeless
tobacco or tobacco seed, wines or distilled spirits, whether or not the same
is pursued for gain, profit or other pecuniary advantage. The foregoing shall
not, however, be construed as preventing Employee from making investments in
any other business, provided, however, that such




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	 	 	 	investments do not require his/her services in the operation of the
affairs of the businesses in which such investments are made.






	 	(b)	 	If any restriction set forth in this Section 9 is found by any court of
competent jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic areas to which it may be enforceable.
	 
	 	(c)	 	The restrictions contained in this Section 9 are necessary for the protection
of the business and goodwill of the Company and are considered by the Employee to be
reasonable for this purpose. The Employee agrees that any breach of this Section 9
will cause the Company substantial and irrevocable damage and, therefore, in the event
of any such breach, in addition to such other remedies which may be available, the
Company will have the right to seek specific performance and injunctive relief,
attorney’s fees, costs and disbursements to enforce its rights hereunder.






	10.	 	Finding of Cause; Violation of Non-Competition Covenant. If (a) the employment of
the Employee is terminated for Cause or (b) after the Employee’s termination of employment
with the Company other than for Cause, the Company discovers the occurrence of an act or
failure to act by the Employee, while in the employ of the Company, that would have enabled
the Company to terminate the Employee’s employment for Cause had the Company known of such act
or failure to act at the time of its occurrence, or (c) subsequent to his termination of
employment, the Employee violates the restrictions set forth in Section 9 of this Agreement,
and, in each case, such act is discovered by the Company within three (3) years of its
occurrence, then, unless otherwise determined by the Committee,






	 	(i)	 	any shares of Restricted Stock granted pursuant to the Notice
of Grant of Restricted Stock which have not yet become vested shall thereupon
be forfeited and shall be returned to the Company; and
	 
	 	(ii)	 	the Employee (or, in the event of the Employee’s death
following the commission of such act, his beneficiaries or estate) shall (A)
return to the Company all shares of Restricted Stock that became vested during
the 180 day period prior to and including the date of the termination of the
Employee’s employment (the “Acquired Shares”) and (B) to the extent such
Acquired Shares granted pursuant to the Notice of Grant of Restricted Stock
have previously been sold or otherwise disposed of by the Employee, other than
by reason of death (or if applicable, by his beneficiaries or estate), repay
to the Company the Fair Market Value of such shares on the date of such sale
or other disposition.




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	 	(iii)	 	for purpose of clause (ii)(B) above, (A) the amount of
repayment described therein shall not be affected by whether the Employee (or,
if applicable, his/her beneficiaries or estate) actually received such Fair
Market Value with respect to such sale or other disposition, and (B)
repayment may, without limitation, be affected, at the discretion of the
Company, by means of offset against any amount owed by the Company to the
Employee (or, if applicable, his/her beneficiaries or estate).







	11.	 	Taxes. The Employee shall pay to the Company promptly upon request, at the time the
Employee recognizes taxable income in respect to the shares of Restricted Stock, an amount
equal to the federal, state and/or local taxes the Company determines it is required to
withhold under applicable tax laws with respect to the shares of Restricted Stock. In lieu of
collecting payment from the Employee, the Company may, in its discretion, distribute vested
shares of Common Stock net of the number of whole shares of Common Stock the fair market value
of which is equal to the minimum amount of federal, state and local taxes required to be
withheld under applicable tax laws. The Employee shall be precluded from making any election
pursuant to Section 83(b) of the Internal Revenue Code. The Employee understands that he/she
(and not the Company) shall be responsible for any tax liability that may arise as a result of
the transactions contemplated by this Restricted Stock Agreement.




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	12.	 	Compliance with Law and Regulations; Legend. The award and any obligation of the
Company hereunder shall be subject to all applicable federal, state and local laws, rules and
regulations and to such approvals by any government or regulatory agency as may be required.
The Company may require, as a condition of the issuance and delivery of certificates
evidencing Restricted Stock pursuant to the terms hereof, that the certificates bear such
legends as set forth immediately below, in addition to any other legends required under
federal and state securities laws or as otherwise determined by the Committee.
	 
	 	 	The transferability of this certificate and the shares of stock represented hereby are
subject to the restrictions, terms and conditions (including forfeiture provisions and
restrictions against transfer) contained in the UST Inc. 2005 Long-Term Incentive Plan and
an Agreement entered into between the registered owner of such shares and the Company. A
copy of the Plan and Agreement is on file in the office of the Secretary of the Company,
100 West Putnam Avenue, Greenwich, Connecticut 06830.
	 
	 	 	Such legend shall not be removed until such shares vest pursuant to the terms hereof.
	 
	13.	 	Incorporation of Plan. This Agreement is made under the provisions of the Plan
(which is incorporated herein by reference) and shall be interpreted in a manner consistent
with it. To the extent that this Agreement is silent with respect to, or in any way
inconsistent with, the terms of the Plan, the provisions of the Plan,
as determined by the Committee, shall govern and this
Restricted Stock Agreement shall be deemed to be modified accordingly. Unless otherwise
defined herein or otherwise required by the context, all terms used herein shall have the
meaning ascribed to them in the Plan.
	 
	14.	 	Notices. Any notices required or permitted hereunder shall be addressed to the
Company, at 100 West Putnam Avenue, Greenwich, Connecticut 06830, or to the Employee at the
address then on record with the Company, as the case may be, and deposited, postage prepaid,
in the United States mail. Either party may, by notice to the other given in the manner
aforesaid, change his/her or its address for future notices.
	 
	15.	 	Successor. This Agreement shall bind and inure to the benefit of the Company, its
successors and assigns, and the Employee and his or her personal representatives and
beneficiaries.
	 
	16.	 	Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware. The Committee shall have final authority to interpret and
construe the Plan and this Agreement and to make any and all determinations under them, and
its decision shall be binding and conclusive upon the Employee and his/her legal
representative in respect of any questions arising under the Plan or this Agreement.
	 
	17.	 	Amendment. This Agreement may be amended or modified by the Company at any time;
provided that notice is provided to the Employee in accordance with




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	 	 	Section 15; and provided further that no amendment or modification that is adverse to the
rights of the Employee as provided by this Agreement shall be effective unless set forth in
a writing signed by the parties hereto.
	 
	18.	 	Binding Agreement. This Agreement shall be binding upon the Employee and his or her
personal representatives and beneficiaries without any need for additional action by the
Employee, and any attempt by the Employee and his or her personal representatives and
beneficiaries to exercise any rights under this Agreement shall be conclusive evidence of such
person’s acceptance thereof.




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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officer
thereunder duly authorized and the Employee has hereunto set his hand, all as of the day and year
set forth above.




	 	 	 
	UST INC.

	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 


	 	 
	Name: Richard A. Kohlberger
	 	 
	Title: Sr Vice President
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 


	 	 
	Employee
	 	 
	 
	 	 
	Date:
	 	 







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