Document:

ex10-6.htm

    Exhibit
10.6

    

    

    [DATE]

    

    Mr.
Richard A. Kohlberger

    
      
        	
                Senior
      Vice President, General
Counsel

              

      

    

    
      	
               
      

            	
              and
      Secretary

            

    

    
      
        	
                UST
      Inc.

              

      

    

    
      
        	
                6
      High Ridge Park, Building A

              

      

    

    
      
        	
                Stamford,
      CT  06905

              

      

    

    

    Dear
Mr. Kohlberger:

     

    UST
Inc. (the “Company”) considers it essential to the best interests of its
stockholders to foster the continuous employment of key management
personnel.  In this connection, the Board of Directors of the Company
(the “Board”) recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders.

     

    The
Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a change in control of the Company, although no such change is now
contemplated.

     

    In
order to induce you to remain in the employ of the Company, the Company agrees
that you shall receive the severance benefits set forth in this letter agreement
(the “Agreement”) in the event your employment with the Company is terminated
under the circumstances described below subsequent to a “change in control of
the Company” (as defined in Section 2).

     

    You
have an existing agreement with the Company (“Existing Agreement”), dated
October 27, 1986 (the “Original Effective Date”), regarding the payment of
severance benefits upon a change in control of the Company. This Agreement
amends and restates your Existing Agreement, effective December 16, 2008, in order to
evidence formal compliance with section 409A of the Internal Revenue Code of
1986, as amended, and the guidance thereunder (the “Code”).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
2

    

     

     

    1.          
 Term of
Agreement.  This Agreement shall commence on the Original
Effective Date and shall continue in effect through July 31, 2009; provided,
however, that commencing on August 1, 2009, and each August 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, prior to such August 1, the Company shall have given notice that it does
not wish to extend this Agreement; and provided, further, that if a change in
control of the Company, as defined in Section 2, shall have occurred during the
original or extended term of this Agreement, this Agreement shall continue in
effect for a period of not less than twenty-four (24) months beyond the month in
which such change in control occurred. In no event, however, shall the term of
this Agreement extend beyond the earlier of (i) the end of the calendar month in
which your 65th birthday occurs or (ii) the date on which you cease to be an
officer of the Company or a subsidiary thereof, whether or not you continue to
be an employee of the Company or a subsidiary thereof.

     

    2.          
 Change in
Control.  For purposes of this Agreement, a “change in control
of the Company” shall be deemed to have occurred if (i) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), other than the Company, any “person” who on
the date hereof is a director or officer of the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company’s then
outstanding securities; (ii) during any period of two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i) or (iii) of
this Section) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved (such individuals and director being hereinafter referred to as
“Continuing Directors”), cease for any reason to constitute at least a majority
thereof; or (iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s
assets.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
3

       

       

    

    3.           Termination Following Change
in Control.  (i) General.  If
any of the events described in Section 2 constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Section 4(iii) upon the subsequent termination of your employment during the
term of this Agreement unless such termination is (a) because of your death,
General Disability or 409A Disability, (b) by the Company for Cause, or (c) by
you other than for Good Reason.  In the event your employment with the
Company is terminated for any reason and subsequently a change in control of the
Company shall have occurred, you shall not be entitled to any benefits
hereunder.

     

    (ii)           Disability.  The Company will terminate your
employment at the conclusion of a twelve (12) month period during which you
continuously have a General Disability (as defined below), a 409A Disability (as
defined below) or both. In determining whether a disability is continuous for
this purpose, a temporary return to work shall be disregarded (I) in the case of
a General Disability, if it would be disregarded under the long-term disability
plan for salaried employees maintained by the Company, and (II) in the case of a
409A Disability, if it would be disregarded under the long-term disability plan
for salaried employees maintained by the Company and it may be disregarded under
Treasury Regulation § 1.409A-3(i)(4).

    

        (a)    You will be deemed to
have a “General Disability” if, as a result of your incapacity due to physical
or mental illness, you shall have been absent from the full-time performance of
your duties with the Company for six (6) consecutive months, and within thirty
(30) days after written notice of termination is given you shall not have
returned to the full time performance of your duties.

    

        (b)    You will be deemed to
have a “409A Disability” if (A) you are unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months; (B) you are, by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering Company
employees; or (C) you are determined to be totally disabled by the Social
Security Administration.

    

    (iii)           Cause.  Termination
by the Company of your employment for “Cause” shall mean termination upon an act
or acts of dishonesty constituting a felony under the laws of the United States
or any State thereof and resulting or intended to result directly or indirectly
in gain or personal enrichment at the expense of the
Company.  Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to you a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board called and 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
4

       

    

     

    held
for such purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
this Subsection and specifying the particulars thereof in detail.

     

    (iv)           Good
Reason.  You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without
your express written consent, the occurrence after a change in control of the
Company of any of the following circumstances unless, in the case of paragraphs
(a), (e), (f), (g) or (h), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination, as defined in
Sections 3(vii) and 3(vi), respectively, given in respect thereof:

     

       
(a)           the
assignment to you of any duties inconsistent with the position in the Company
that you held immediately prior to the change in control of the Company, or a
significant adverse alteration in the nature or status of your responsibilities
from those in effect immediately prior to such change;

     

       
(b)           a reduction
by the Company in your annual base salary as in effect on the date hereof or as
the same may be increased from time to time;

     

       
(c)           the
relocation of the Company’s principal executive offices to a location outside
the Stamford Metropolitan Area (or, if different, the metropolitan area in which
such offices are located immediately prior to the change in control of the
Company) or the Company’s requiring you to be based anywhere other than the
Company’s principal executive offices except for required travel on the
Company’s business to an extent substantially consistent with your present
business travel obligations;

     

       
(d)           the failure
by the Company to pay to you any portion of your current compensation except
pursuant to an across-the-board compensation deferral similarly affecting all
officers of the Company and all officers of any person whose actions resulted in
a change in control of the Company or any person affiliated with the Company or
such person, or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;

     

       
(e)           the failure
by the Company to continue in effect any compensation plan in which you
participate immediately prior to the change in control of the Company which is
material to your total compensation, including but not limited to the Company’s
Retirement Income Plan for Salaried Employees, Employees’ Savings Plan,
Officers’ Supplemental Retirement Plan, Incentive Compensation Plan, and 1982
Stock Option Plan, or any substitute plans adopted prior to the change in
control, unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by the
Company to continue your participation therein (or in such substitute or
alternative plan) on a 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
5

       

       

    

    basis
not materially less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, as existed
at the time of the change in control;

     

       
(f)           the failure
by the Company to continue to provide you with benefits substantially similar to
those enjoyed by you under any of the Company’s life insurance, medical, health
and accident, or disability plans in which you were participating at the time of
the change in control of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of such benefits or
deprive you of any material fringe benefit enjoyed by you at the time of the
change in control of the Company, or the failure by the Company to provide you
with the number of paid vacation days to which you are entitled on the basis of
years of service with the Company in accordance with the Company’s normal
vacation policy in effect at the time of the change in control of the
Company;

     

       
(g)           the failure
of the Company to obtain a satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section 5 hereof;
or

     

       
(h)           any
purported termination of your employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Subsection (vi) hereof
(and, if applicable, the requirements of Subsection (iii) hereof); for purposes
of this Agreement, no such purported termination shall be
effective.

     

    Your
right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness.  Your
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder.

     

    (v)
           Employment by
Affiliates. For purposes of this Agreement, in no event shall a
termination of your employment with the Company be deemed to occur as a result
of your transfer to, or employment by, any of the Company’s affiliates during
the term of this Agreement.

    

    (vi)           Notice of
Termination.  Any purported termination of your employment by
the Company or by you shall be communicated by written “Notice of Termination”
to the other party hereto in accordance with Section 6.  “Notice of
Termination” shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.

     

    (vii)          Date of Termination;
Severance Start Date.

    

      (a)           "Date of Termination" shall mean (A) if
your employment is terminated for General Disability or 409A Disability, thirty
(30) days after Notice of 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
6

       

       

    

    Termination is given but not before the
end of the twelve (12) month period specified in Subsection (ii) above, and not
if you have returned to the full-time performance of your duties for a period
that breaks the period of continuous disability in accordance with Subsection
(ii) above, and (B) if your employment is terminated pursuant to Subsection
(iii) or (iv) hereof or for any other reason (other than General Disability or
409A Disability), the date specified in the Notice of Termination (which, in the
case of a termination pursuant to Subsection (iii) hereof shall not be less than
thirty (30) days, and in the case of a termination pursuant to Subsection (iv)
hereof shall not be less than fifteen (15) nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given); provided,
however, that if you reasonably believe in good faith the Company is not
providing you with a benefit or payment to which you are entitled under the
terms of this Agreement, you may notify the Company, within forty-five (45) days
after the Date of Termination or, if any such payment or benefit is due after
such 45-day period, within 45 days following such payment date, that a dispute
exists concerning the termination and/or the amount of such payment or benefit.
In this event, the Company shall act within fifteen (15) days to restore fully
the disputed benefits and payments (so that all benefits and payments are
provided as of such date as would have been provided had there been no delay in
providing such benefits and payments) and to continue to provide such benefits
and payments as contemplated by this Agreement thereafter (provided,
however, that in all events any payment or benefit shall not be paid or provided
to you before the payment date set forth in this Agreement or any applicable
document), but subject to
termination and recapture from you of these disputed benefits and payments in
accordance with the terms of a mutual written agreement of the parties, a
binding arbitration award, or a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been
perfected).

    

      (b)        “Severance Start Date” shall mean the
date on which you incur a “separation from service” under section
409A(a)(2)(A)(i) of the Code.

    

    4.           
Compensation Upon
Termination or During Disability.  Following a change in
control of the Company, you shall be entitled to the following benefits during a
period of disability, or upon termination of your employment, as the case may
be, provided that such period or termination occurs during the term of this
Agreement:

     

    (i)           
During any period that you fail to perform your full-time duties with the
Company as a result of:

    

        (a)    a period of 409A
Disability, you shall continue to receive your base salary in accordance with
the standard payroll practices of the Company at the rate in effect at the
commencement of any such period, together with any compensation payable to you
under the 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
7

       

    

     

    short-term and long-term disability
plans for salaried employees maintained by the Company during such period and
any benefit coverages customarily provided to disabled salaried employees, until
your employment is terminated pursuant to Section 3(ii)
hereof.

    

        (b)    a period of General
Disability, you shall receive any compensation payable to you under the
short-term and long-term disability plans for salaried employees maintained by
the Company during such period, as well as any benefit coverages customarily
provided to disabled salaried employees, until your employment is terminated
pursuant to Section 3(ii) hereof.

    

    Thereafter
your benefits shall be determined under the Company’s retirement, insurance and
other compensation programs then in effect in accordance with the terms of such
programs.

    

    (ii)           If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason, the Company shall pay you your full base salary in
accordance with the Company’s standard payroll practices through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
plus all other amounts to which you are entitled under any compensation plan of
the Company at the time such payments are due, and the Company shall have no
further obligations to you under this Agreement.

     

    (iii)           If
your employment by the Company shall be terminated by you for Good Reason or by
the Company other than for Cause, General Disability or 409A Disability, then,
subject to the provisions of Subsection (iv) hereof, you shall be entitled to
the benefits provided below:

     

     
(a)           the Company
shall pay to you your full base salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given, no later than the
fifth day following the Date of Termination; plus all other amounts to which you
are entitled under any compensation plan of the Company, at the time such
payments are due;

     

     
(b)           in lieu of
any further salary payments to you for periods subsequent to the Date of
Termination, the Company shall pay as severance pay to you a lump sum severance
payment equal to the product of (1) the sum of (A) your annual salary rate in
effect as of the Date of Termination or, if greater, such rate in effect
immediately prior to the change in control of the Company, and (B) the highest
annual amount payable to you under the Company's Incentive Compensation Plan
with respect to any of the three (3) calendar years immediately preceding the
Date of Termination; provided, however, that the amount taken into account under
this clause (B) shall in no event exceed seventy-five percent (75%) of the
amount taken into account under clause (A) hereof, and (2) the number three (3);
except as provided below with respect to status as a 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
8

       

    

     

    specified
employee such amount will be paid no later than the fifth day following your
Severance Start Date; however, in the event you are a “specified employee” on
your Severance Start Date as determined by the Company in accordance with rules
established by the Company in writing in advance of the “specified employee
identification date” that relates to your Severance Start Date or, if later, by
December 31, 2008, such payments shall be delayed until the date that is six (6)
months after your Severance Start Date  (if you die after your
Severance Start Date but before such payment is made, it will be paid to your
estate without regard to any six-month delay that otherwise applies to specified
employees); for purposes of this Agreement, “specified employee” shall be
defined as provided in section 409A(a)(2)(B)(i) of the Code and “specified
employee identification date” shall be defined as provided in Treasury
Regulation §1.409A-1(i);

     

     
(c)           the Company
also shall promptly pay to you all legal fees and expenses incurred by you as a
result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to obtain
or enforce any right or benefit provided by this Agreement. To the extent that
any such payment does not qualify for exclusion from Federal income taxation,
the Company will make the payment only if (A) the corresponding expense is
incurred by you during your lifetime (or by your estate on your behalf after
your death and within ten years of such termination), and (B) the request for
payment is submitted no later than two months prior to the last day of the
calendar year following the calendar year in which the expense was incurred so
that the Company can make the payment on or before the last day of the calendar
year following the calendar year in which the expense was
incurred.  The amount of expenses eligible for such payment during a
calendar year will not affect the amount of expenses eligible for such payment
in another calendar year, and the right to such payment is not subject to
liquidation or exchange for another benefit from the Company. The Company shall
also promptly pay to you all legal fees and expenses incurred by you in
connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment or benefits provided
hereunder); each such payment shall be paid no later than the end of the
calendar year next following the calendar year in which you or the Company remit
to the Internal Revenue Service the taxes that are the subject of the audit or
proceeding or, where as a result of the audit or proceeding no taxes are due or
are remitted but other reimbursable expenses have been incurred, the end of the
calendar year following the calendar year in which the audit is completed or
there is a final and nonappealable settlement or other resolution of the
proceeding.  For purposes of the foregoing, in the event you are a
“specified employee” on your Severance Start Date (as determined by the Company
in accordance with rules established by the Company in writing in advance of the
“specified employee identification date” that relates to your 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
9

       

       

    

    Severance
Start Date or, if later, by December 31, 2008), and to the extent that any
portion of the payments described above in this Subsection (c) relate to
expenses that were triggered by your “separation from service” within the
meaning of section 409A(a)(2)(A)(i) of the Code and such payments constitute a
“deferral of compensation” within the meaning of section 409A of the Code, such
payments shall be paid no earlier than the date that is six (6) months after
your Severance Start Date (if you die after your Severance Start Date but before
such payments have been made, such payments will be paid to your estate in a
lump sum without regard to any six-month delay that otherwise applies to
specified employees);

     

     
(d)           for a
thirty-six (36) month period after such termination, the Company shall arrange
to provide you with life, disability, and accident insurance benefits
substantially similar to those which you were receiving immediately prior to the
Notice of Termination.  Benefits otherwise receivable by you pursuant
to this paragraph (d) shall be reduced to the extent comparable benefits are
actually received by you during the thirty-six (36) month period following your
termination, and any such benefits actually received by you shall be reported to
the Company; and

     

     
(e)           for a thirty-six (36) month period after
such termination, the Company shall arrange to provide you with group health
coverage substantially similar to that which you were receiving immediately
prior to the Notice of Termination.

     

         
(1)          If such coverage is provided under a
self-insured medical reimbursement plan maintained by the Company (within the
meaning of section 105(h) of the Code): 

    

                       
(A)           there will be no charge to you for such
coverage for any month that falls within the first six months following your
Severance Start Date; 

    

                       
(B)           the charge to you for each remaining
month of coverage will equal the Company’s monthly COBRA charge for such
coverage, and you will be required to pay such monthly charge in accordance with
the Company’s standard COBRA premium payment requirements;
and

    

                       
(C)           on the date that is six months following
your Severance Start Date, the Company will pay you a lump sum in cash equal to
the product of (I) the Company’s monthly COBRA charge on the payment date for
family coverage under the group health plan maintained by the Company, and (II)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
10

       

    

    the difference between (a) the number thirty-six (36), and
(b) the number of months of coverage
provided under clause  (A) above, with the amount of such payment
grossed up for taxes at the maximum individual Federal tax rate and maximum
individual applicable state tax rate in effect on the payment
date.  

    

                     (2)             If such coverage is provided under a
fully-insured medical reimbursement plan (within the meaning of section 105(h)
of the Code), there will be no charge to you for such
coverage.

     

    (iv)           Notwithstanding
the provisions of Subsection (iii) hereof, if

     

     
(a)           any
payments or benefits received or to be received by you, whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change in control of the Company
or any person affiliated with the Company or such person, constitute “parachute
payments” (such payments or benefits being hereinafter referred to as the
“Parachute Payments”) within the meaning of section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the “Code”), and

     

     
(b)           the
aggregate present value of the Parachute Payments reduced by any excise tax
imposed under section 4999 of the Code (or any similar tax that may hereafter be
imposed) (the “Excise Tax”) would be less than 3 times your “base amount,” as
defined in section 280G(b)(3) of the Code,

     

    then
the Company will reduce the portion of the Parachute Payments to which you would
otherwise be entitled under Subsection (iii) hereof by an amount (if any) such
that the aggregate present value of the Parachute Payments is equal to 2.99
times your base amount (the “Reduced Amount”).  Any such reduction
shall be applied under Subsection (iii) as follows:

     

           (1)           first, for purposes of Subsection
(iii)(e)(1)(A), there will be a charge to you for each month of coverage,
applied on a month-to-month basis as necessary to cause the aggregate present
value of the Parachute Payments to
equal the Reduced Amount, in an amount equal to the Company's monthly
COBRA charge for such coverage, and you will be required to pay such monthly
charge in accordance with the Company's standard COBRA premium payment
requirements;

     

          
(2)           second,
for purposes of Subsection
(iii)(d), there will be a charge to you for each month of coverage,
applied on a dollar-for-dollar basis as necessary to cause the aggregate present
value of the Parachute Payments to
equal the Reduced Amount, in an amount equal to the premium paid by the
Company for such coverage, and you will be required to pay such monthly charge
to the Company at the same time as the Company is required to make payment of
such premium to the insurance carrier; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
11

       

    

          
(3)           third, the
lump sums payable under Subsection (iii)(b) and Subsection (iii)(e)(1)(C) shall
each be reduced, on a pro rata basis (based on the dollar amounts payable under
Subsection (iii)(b) and Subsection (iii)(e)(1)(C)), as necessary to cause the
aggregate present value of the
Parachute Payments to equal the Reduced Amount.

     

    For purposes of the preceding
paragraph, your base amount, the present value of the Parachute Payments, the
amount of the Excise Tax and all other appropriate matters shall be determined
by the Company’s independent auditors in accordance with the principles of
section 280G of the Code and based upon the advice of tax counsel selected by
such auditors.

     

    [In the event that application of the
above ordering rules results in the imposition upon you of an excise tax or
penalty interest under section 409A of the Code, the Company will pay you an
additional payment (the “Gross-Up Payment”) in an amount equal to such excise
tax and penalty interest plus all income and employment taxes on such excise tax
and penalty interest.  For this purpose, all income taxes will be
assumed to apply to you at the highest marginal rate in effect on the date the
Gross-Up Payment is made.  The Gross-Up Payment shall be paid no later
than the end of the calendar year next following the calendar year in which you
remit the corresponding excise tax and penalty interest to the Internal Revenue
Service.]

     

    (v)           Except
as provided in Subsection (iii)(d) hereof, you shall not be required to mitigate
the amount of any payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Section 4 be reduced by any compensation earned by you as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by you to the Company, or otherwise.

     

    5.           
Successors; Binding
Agreement.  (i) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.  Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms to which you would be entitled hereunder if
you terminate your employment for Good Reason following a change in control of
the Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.  As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

     

    (ii)           This
Agreement shall inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
12

       

       

    

    devisees
and legatees.  If you should die while any amount would still be
payable to you hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.

     

    6.           
Notice.  For
the purpose of this Agreement, notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notice to the
Company shall be directed to the attention of the Board with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

     

    7.           
Miscellaneous.  No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by you and
such officer as may be specifically designated by the Board.  No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.  No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.  The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware without regard to its conflicts
of law principles.  All references to sections of the Exchange Act or
the Code shall be deemed also to refer to any successor provisions to such
sections.  Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law.  The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.

     

    8.           
Validity.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

     

    9.           
Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.

     

    10.          Arbitration.  Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three
arbitrators in New York, New York, in accordance with the rules of the American
Arbitration Association then in effect.  Judgment may be entered on
the arbitrator’s award in any court having jurisdiction; provided, however, that
you shall be entitled to seek specific performance of 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr.
Richard A. Kohlberger

      December
__, 2008

      Page
13

       

       

    

    your
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this
Agreement.

     

    11.          Code Section
409A.  It is intended, and this Agreement will be so construed,
that any amounts payable under this Agreement and the Company’s and your
exercise of authority or discretion hereunder shall comply with the provisions
of section 409A of the Code and the treasury regulations relating thereto so as
not to subject you to the payment of interest and tax penalty which may be
imposed under section 409A of the Code.  In furtherance of this
intent, to the extent that any regulations or other guidance issued under
section 409A of the Code would result in you being subject to the payment of
such interest or tax penalty, the Company and you agree to amend this Agreement
prior to January 1, 2009 in order to bring this Agreement into compliance with
section 409A of the Code in a manner which has the least adverse effect on
you.

     

    12.          Entire
Agreement.  This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto, including, without
limitation, the Existing Agreement and any addendums, amendments or
modifications thereof; and any prior agreement of the parties hereto in respect
of the subject matter contained herein is hereby terminated and
cancelled.

     

    If
this letter sets forth our agreement on the subject matter hereof, kindly sign
and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.

     

     

    
      
        
          
            
              
                
                  
                    	 	Sincerely,	 
	 	 	 	 
	 
      	UST
      Inc.	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	
                            /s/  Gary B.
Glass

                          	 
      
	 
      	
                             

                          	
                            Vice
      President

                          	 
      

                  

                

              

            

          

        

      

    

     

    
      

      Agreed
to this 15 day

      of
December, 2008

       

       

      
        
          
            	
                             
      /s/ Richard
      A Kohlberger

                  	 
      
	
                    
                      Richard
      A Kohlbergerex10-7.htm

    Exhibit 10.7

     

    

     

    AMENDMENTS TO NONQUALIFIED RETIREMENT
PLANS

     

    The provisions set forth in the attached
two-page "Amendment Document" are intended to become applicable with respect to
the UST Inc. Benefit Restoration Plan, the UST Inc. Officers' Supplement
Retirement Plan, and the
UST Inc. Excess Retirement Benefit Plan. These provisions shall become actual
amendments to these plans as provided in the Amendment Document. Each of these
plans is governed by two
plan documents: one that is generally referred to as the "Pre-409A Document," and one that
is termed the "409A Document." Changes included in the Amendment Document apply
to benefits governed by both the Pre-409A Document and the 409A Document for
each plan. Accordingly, once the provisions of the Amendment Document become actual amendments to
these plans, the Amendment Document will be appended to each plan's Pre-409A
Document and 409A Document.

     

     

    
      
        
          
            	 
      	
                    UST INC.  
       

                     

                     

                  	 
      
	 
      	By: 	
                    /s/
      Murray S. Kessler

                  	 
      
	 
      	 	
                    Murray S.
      Kessler

                  	 
      
	 
      	 	
                    Chief Executive
      Officer

                  	 
      
	 	 	 	 
	 
      	Date:	
                    December
      15, 2008

                  	 
      

          

        

      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

     

    AMENDMENT
DOCUMENT

     

    AMENDMENTS
TO THE NONQUALIFIED RETIREMENT PLANS

     

    In
connection with the execution of the definitive agreement ("Agreement")
contemplating a merger between UST Inc. (the "Company") and Altria Merger Sub,
Inc. ("Merger") that, if consummated, will result in a change in control (within
the meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(the "Code")) of the Company ("Change in Control"), the Company has formed the
intention to amend, in certain
respects, the UST Inc. Benefit Restoration Plan, the UST Inc. Officers'
Supplemental Retirement Plan (the "SOP"), and the UST inc. Excess Retirement
Benefit Plan (collectively, the "Nonqualified Retirement Plans" and each a
"Nonqualified Retirement Plan"). Unless cancelled by the Company in advance of
their becoming actual amendments. these intended amendments shall become actual
amendments to the Nonqualified Retirement Plans as of the earlier of - (i) the
effective time of the actual consummation of the Merger, determined under the
Agreement, as amended (the "Effective Time"), or (ii) December 31, 2008.
However, the amendments set forth in paragraphs I through 6 of this Amendment
Document shall not apply to anyone who did not sign a September 2008 letter
agreement with the Company regarding the payment of benefits from one or more of
the Nonqualified Retirement Plans in connection with a Change in Control (a
"September 2008 Agreement"). Any such person's rights under the Nonqualified
Retirement Plans shall be determined without regard to paragraphs I through 6 of
this Amendment Document.

     

    1.     Effective
as of the end of the day on December 31, 2008, the compensation and service of
an individual that can be taken into account for purposes of determining
benefits under the Nonqualified Retirement Plans shall be fixed and frozen.
Subject to the next sentence, such
other benefit determining factors under the Nonqualified Retirement
Plans, which are necessary to permit the determination of a final and definitive
lump sum settlement of each participant's benefit as of December 31, 2008,
including (without limitation) the participant's age, shall also be fixed and
frozen as of such date (based on the applicable information as of such date). An
individual (who, under the terms of the SOP as in effect on the date of
the Agreement, qualifies as an "Eligible Employee" as of the earlier of (i)
December 31, 2008, or (ii) immediately before the Effective Time) shall be
deemed to be a SOP "Participant" not later than December 31. 2008 (provided that
such individual shall not become a SOP "Participant" if a Change in Control does
not occur by December 31, 2010). Moreover, if a Change in Control does not occur
by December 31, 2010, then the fixing and freezing of benefit determining
factors provided for in this Paragraph I shall not apply, and the operation of
the Nonqualified Retirement Plans shall be governed by their regular terms,
without regard to this Paragraph 1.

     

    2.     If
a Change in Control occurs during 2008, and under the terms of the Nonqualified
Retirement Plans as in effect immediately before their amendment for Code
Section 409A during September 2008 (the "Prior Plan Terms") an individual would
be entitled to be paid a Nonqualified Retirement Plan benefit during 2008 in
connection with such Change in Control, then such benefit shall be paid during
2008 in accordance with the Prior Plan Terms and with the amount of such benefit
that is payable during 2008 determined under the Prior Plan Terms (but subject
to Paragraphs 1 and 4 of this Amendment Document). For this purpose,
the

    

     

    
      Page
1

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Prior
Plan terms shall be deemed to include the six-month delay in the payment of
benefits that Section 409A applies when benefits are paid to a specified
employee in connection with his or her separation from service.

     

    3.     If
a Change in Control occurs during or after 2008, and Paragraph 2 above does not
provide for the complete distribution in 2008 of a participant's benefits under
the Nonqualified Retirement Plans, then the following shall apply.

     

                    (a)    If
an amount was payable to a participant in the Nonqualified Retirement Plans
during 2008 pursuant to Paragraph 2 above, but less than the full lump sum value
of the participant's benefits (determined under Paragraph 4 below) was actually
paid to the participant during 2008, then the excess of such full lump sum value
over the amount actually paid during 2008 shall be paid to the participant on
January 1, 2009.

     

                    (b)     This
subparagraph (b) shall apply if no amount was payable in accordance with
Paragraph 2. above to a participant in the Nonqualified Retirement Plans. In the
case of such a participant, any such participant who has a Separation from
Service (with "Separation from Service" defined as provided in Treasury
Regulation Section 1.409A-l (h) or any successor provision) that occurs within
the two-year period that begins on the date of the Change in Control (an
"Eligible Separation from Service"), shall be paid the full value of his or her
benefits under the Nonqualified Retirement Plans in a single lump sum on the
date of the participant's Eligible Separation from Service (but not before
January I, 2009 and not without giving effect to any applicable six-month delay
in the payment of benefits that Section 409A requires when benefits are paid to
a specified employee in connection with his or her separation from service).
However, if a participant in the Nonqualified Retirement Plans has not had his
or her benefits paid in accordance with the prior sentence by December 31, 2010,
then such participant shall be paid the full lump sum value of his or her
benefits under the Nonqualified Retirement Plans in a single lump sum on the
later of December 31, 2010 or the date of a Change in Control. The full lump sum
value of the benefits of a participant in any of the Nonqualified Retirement
Plans shall be determined in accordance with Paragraph 4 below. In the event of
a participant's death, any benefits that have become payable to the participant
hereunder (but that remain unpaid) shall be paid on the participant's behalf to
a party determined under the terms of the applicable Nonqualified Retirement
Plan.

     

    4.     Notwithstanding
any other provision of either (i) this Amendment Document or (ii) the
Nonqualified Retirement Plans. the full lump sum value of a participant's
benefits that are paid pursuant to this Amendment Document shall be (a) the
applicable lump sum value stated in such participant's final September 2008
Agreement, plus (b) any Interest on such applicable lump sum value, as
"Interest" is defined in and authorized by the September 2008 Agreement .
Accordingly, a participant who is entitled to the payment of the full lump sum
value of his or her benefits under the Nonqualified Retirement Plans pursuant to
this Amendment Document shall be paid no more and no less than the aggregate
amount specified in the preceding sentence.

     

    5.     Nothing
contained in this Amendment Document, including without limitation the
provisions regarding payment of benefits, shall affect Section 9 of the SOP
(relating to retired officer medical benefits), except that the time of payment
of any such medical benefits shall

     

    

    Page 2

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    comply with Section 409A's time of
payment requirements for medical benefits to the extent such medical benefits
are not exempt from Section 409A.

     

    6.    In the event the terms of this Amendment
Document become an actual amendment to the Nonqualified Retirement Plans, then
appropriate conforming changes shall apply to the Pre-409A Documents to reflect
the fact that a material modification (within the meaning of Section 409A) has occurred and that all
benefits that had been subject to the terms of such Pre-409A Document are thereafter
subject to the terms of the applicable 409A Document in the case of participants who have sided
a September 2008 Agreement.

     

    7.    Effective as of the date that these
intended amendments become actual amendments. no person who did not sign a
September 2008 Agreement shall become or continue as a participant in SOP or shall accrue
any benefits under SOP from and after such date.

     

     

     

    Page 3

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