Document:

EX-10.38

 

Exhibit 10.38

EXECUTIVE SEVERANCE AGREEMENT

     Executive Severance Agreement, dated as of                     , 2008 (this “Agreement”), between Town
Sports International, LLC (the “Company”) and                                                              (the “Executive”).

     WHEREAS, the Compensation Committee of the Board of Directors of Town Sports International
Holdings, Inc., the parent of the Company (the “Holdings”) has authorized this offer of Severance
Payments in the event of a Qualifying Termination of employment due to a Change in Control of
Holdings or the Company;

     WHEREAS, the Severance Payments in this Agreement are offered in exchange for the commitments
of the Executive as set forth herein.

     WHEREAS, by signing and returning this Agreement, the Executive acknowledges and agrees to
comply with the provisions of this Agreement and acknowledges that the execution of a Separation
and Release Agreement is a requirement for receiving the Severance Payments under this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the parties hereby agree as follows:

1. Definitions. As used herein, the terms identified below shall have the meanings
indicated:

     (a) “Cause” means the Company’s termination of the Executive’s employment with the Company as
a result of: (i) Executive’s willful failure to perform any material portion of his duties; (ii)
the commission of any fraud, misappropriation or misconduct by Executive that causes demonstrable
injury, monetarily or otherwise, to the Company or an affiliate; (iii) the conviction of, or
pleading guilty or no contest to, a felony involving moral turpitude; (iv) an act resulting or
intended to result, directly or indirectly, in material gain or personal enrichment to the
Executive at the expense of the Company or an affiliate; (v) any material breach of Executive’s
fiduciary duties to the Company or an affiliate as an employee or officer; (vi) a material
violation of the Town Sports International Code of Ethics and Business Conduct, as amended from
time to time, and such material policies and procedures of the Company; (vii) any material breach
of the terms of any agreement between Executive and the Company or any affiliate, including any of
the restrictive covenants imposed pursuant to the Holdings’ stock option and similar incentive
plans and the related stock option agreement issued thereunder, if such breach is reasonably likely
to result in a material injury to the Company or an affiliate.

     (b) “Change in Control” means:

          (i) The acquisition by any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than BRS, the
BRS Investors and their respective Permitted Transferees (each as defined in the Credit Agreement),
of beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange
Act) of 35% or more of either (A) the then

 

 

outstanding shares of common stock of Holdings (the “Outstanding Holdings Common Stock”), or
(B) the combined voting power of the then outstanding voting securities of Holdings entitled to
vote generally in the election of directors (the “Outstanding Holdings Voting Securities”);

          (ii) Individuals who, as of the date of this Agreement, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose election, or nomination
for election by Holdings’ stockholders, was approved or recommended by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board;

          (iii) Consummation of a reorganization, merger or consolidation involving Holdings (a
“Business Combination”), in each case, unless, following such Business Combination, all or
substantially all of the Persons who were the beneficial owners, respectively, of the Outstanding
Holdings Common Stock and Outstanding Holdings Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 65% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the
Person resulting from such Business Combination (including, without limitation, a Person which as a
result of such transaction owns Holdings or all or substantially all of Holdings’ assets either
directly or through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding Holdings Common Stock
and Outstanding Holdings Voting Securities, as the case may be;

          (iv) Sale or other disposition of all or substantially all the assets of Holdings or the
Company; or

          (v) Approval by the stockholders of Holdings or approval by the member(s) of the Company of a
complete liquidation, winding up or dissolution of Holdings or the Company, as the case may be.

     (b) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and other
guidance promulgated by the Treasury Department and the Internal Revenue Service thereunder.

     (c) “Constructive Termination” means the Executive’s voluntary termination of employment with
the Company as a result of (i) a material diminution in the Executive’s authority, duties, or
responsibilities, or a change in the Executive’s supervisory reporting relationship within the
Company, except as part of, and consistent with, an organizational change; (ii) a change, caused by
the Company, in geographic location of greater than 50 miles of

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the location at which the Executive primarily performs services for the Company; or (iii) a
material reduction in the Executive’s base pay or incentive cash compensation.

     (d) “Credit Agreement” means the Credit Agreement among Holdings, the Company, the Various
Lenders party thereto, and Deutsche Bank Trust Company Americas, dated February 27, 2007, as in
effect as of the date of this Agreement.

     (e) “Disability” means any medically determinable physical or mental impairment resulting in
the Executive’s inability to perform the duties of his or her position or any substantially similar
position, where such impairment is expected to result in death or is expected to last for a
continuous period of not less than six (6) months.

     (f) “Person” means any individual, firm, corporation, partnership, limited liability company,
trust, joint venture, governmental entity or other entity.

     (g) “Severance Payments” means the aggregate gross amount of severance payments determined in
accordance with Sections 2 and 3 of this Agreement to be paid to the Executive who is entitled to
receive such severance benefits under this Agreement.

     (h) “Termination Date” means the date on which the Executive has a termination of employment
from the Company.

2. Eligibility. The Executive shall be eligible for Severance Payments under this
Agreement following a Qualifying Termination as follows:

     (a) Qualifying Termination. The Company will pay Severance Payments under Section 3
of this Agreement on account of either of these events occurring within a period of six (6) months
following the date of a Change in Control:

          (i) involuntary termination of the Executive’s employment by the Company that is not for
Cause, or

          (ii) voluntary separation of the Executive as a result of a Constructive Termination.

     (b) Non-Qualifying Termination. Notwithstanding Section 2(a) of this Agreement,
nothing in this Agreement shall be construed to require the Company to pay severance benefits to
the Executive if the Executive terminates Employment with the Company as the result of:

          (i) voluntary separation (a separation, including retirement, initiated by the Executive),
other than a voluntary separation pursuant to Section 2(a)(ii);

          (ii) retirement, whether early retirement, retirement at normal retirement age or retirement
following normal retirement age;

          (iii) the Company having terminated such Executive’s employment for Cause;

          (iv) death;

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          (v) Disability; or

          (vi) a separation or termination for any reason more than six (6) months following the date of
a Change in Control.

     (c) Separation Release Agreement. The eligibility for receipt of benefits under this
Agreement as described in Section 3 herein is expressly conditioned upon the following: (i) the
Executive’s signing of a release in which the Executive releases and/or waives any and all claims
the Executive may have against the Company and (ii) the release becoming effective.

3. Amount and Payment of Severance. Unless otherwise provided herein, the Executive shall
receive the following severance payments:

          (i) An amount equal to the sum of one (1) times the Executive’s annual base salary as of the
Executive’s Termination Date payable in a twelve (12) equal monthly installments (such twelve-month
period, the “Severance Period”), less all applicable withholding taxes, beginning thirty (30) days
following the Termination Date or as soon as administratively practicable thereafter; provided
however, that the Severance Period shall immediately terminate, and no further amounts shall be due
pursuant to this Section 3(i) in the event Executive has materially breached any of the terms and
conditions of this Agreement, including Section 4 hereunder.

          (ii) An amount equivalent to Executive’s pro-rata annual bonus (based on the number of days in
fiscal year through the Termination Date) with respect to the fiscal year in which the Termination
Date occurred that Executive would otherwise have been entitled to receive had Executive remained
in the employ of the Company through the payment date of such bonus. The bonus amount will be
based upon the bonus plan and targets approved by the Board of Directors of Holdings (or a
committee thereof) and assuming the approved bonus target had been met, which amount shall be
payable at such time as bonuses are paid to the Company’s employees generally. This bonus payment
shall be subject to all other terms of Holdings’ bonus plan and shall be and subject to deduction
for all required income and payroll taxes.

          (iii) The Company shall continue Executive’s health and dental coverage (or provide comparable
substitute coverage), and continue to pay that portion of the premium that it pays for active
employees at such times as the Company makes such payments for its active employees on a monthly
basis until the earlier of (i) the last day of the Severance Period and (ii) the date on which
Executive is eligible for coverage under another group health and dental insurance plan; provided
however, that the Severance Period shall immediately terminate, and no further amounts shall be due
pursuant to this Section 3(iii) in the event Executive has materially breached any of the terms and
conditions of this Agreement, including Section 4 hereunder. Executive agrees to promptly notify
the Company in writing in the event that Executive is eligible for coverage under another such
plan. If not otherwise covered by a group health or dental plan as the end of the Severance
Period, Executive shall be eligible for COBRA continuation coverage on such date on the same terms
and conditions as offered to other eligible plan participants, and, if you elect such coverage, you
shall be fully responsible for the associated premiums.

4

 

          (iv) During the Severance Period, Executive and his immediate family will continue to have
Passport Memberships (or its equivalent) at no cost to such Executive (provided however that such
memberships shall cease in the event Executive has materially breached the terms and conditions of
this Agreement, including Section 4 hereunder). The aforementioned memberships are subject to all
of the Company’s membership rules, regulations and policies currently in effect and as may be
amended from time to time.

4. Non-Compete and Non-solicitation.

     (a) As an inducement to the Company to enter into this Agreement, the Executive agrees that
(i) during the Executive’s period of employment with the Company or any of its Affiliates, and (ii)
during the twelve (12)-month period following the Termination Date (the “Non-compete Period”), the
Executive shall not, directly or indirectly, own, manage, control, participate in, consult with,
render services for, or in any manner engage in, any business competing directly or indirectly with
the business as conducted by the Company or any of its Affiliates during the Executive’s period of
employment with the Company or any of its Affiliates or at the time of the Termination Date or with
any other business that is the logical extension of the Company’s and its Affiliates’ business
during the Executive’s period of employment with the Company or any of its Affiliates or at the
time of the Executive’s Termination of Employment, within any metropolitan area in which the
Company or any of its Affiliates engages or has definitive plans to engage in such business;
provided, however, that the Executive shall not be precluded from purchasing or holding publicly
traded securities of any entity so long as the Executive shall hold less than 2% of the outstanding
units of any such class of securities and has no active participation in the business of such
entity. The Executive agrees that the following entities are examples of competitive businesses
and are not exclusive: Crunch, 24 Hour, Equinox, NY Health and Racquet Club, LA Fitness, Sports &
Health, Lifetime and Bally’s.

     (b) As an inducement to the Company to enter into this Agreement the Executive agrees that
during the Non-compete Period, the Executive shall not directly or indirectly (i) induce or attempt
to induce any employee of the Company or any of its Affiliates to leave the employ of the Company
or any of its Affiliates, or in any way interfere with the relationship between the Company or any
of its Affiliates and any employee thereof, (ii) hire any person who was an employee of the Company
or any of its Affiliates at any time during the Executive’s employment period except for such
employees who have been terminated for at least six months, or (iii) induce or attempt to induce
any customer, supplier, licensee, franchisor or other business relation of the Company or any of
its Affiliates to cease doing business with such member, or in any way interfere with the
relationship between any such customer, supplier, licensee, franchisor or business relation, on the
one hand, and the Company or any of its Affiliates, on the other hand.

     (c) The provisions of this Section 4 shall survive any expiration or termination of this
Agreement.

     (d) If it is determined by a court of competent jurisdiction that any of the provisions of
this Section 4 is excessive in duration or scope or otherwise is unenforceable, then such provision
may be modified or supplemented by the court to render it enforceable to the maximum extent
permitted by law.

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5. Confidential Information. The Executive expressly recognizes and acknowledges that
during the Executive’s employment with the Company, the Executive became entrusted with, had access
to, or gained possession of confidential and proprietary information, data, documents, records,
materials, and other trade secrets and/or other proprietary business information of the Company
that is not readily available to competitors, outside third parties and/or the public, including
without limitation, information about (i) current or prospective customers and/or suppliers, (ii)
employees, research, goodwill, production, and prices, (iii) business methods, processes, practices
or procedures; (iv) computer software and technology development, and (v) business strategy,
including acquisition, merger and/or divestiture strategies, (collectively or with respect to any
of the foregoing, the “Confidential Information”). The Executive agrees, by acceptance of the
right to receive Severance Payments under this Agreement, that: (i) unless pursuant to prior
written consent by the Company, the Executive shall not disclose any Confidential Information for
any purpose whatsoever unless compelled by court order of subpoena; (ii) the Executive shall treat
as confidential all Confidential Information and shall take reasonable precautions to prevent
unauthorized access to the Confidential Information; (iii) the Executive shall not use the
Confidential Information in any way detrimental to the Company or any of its affiliates; and (iv)
the Executive agrees that the Confidential Information obtained during the Executive’s employment
with the Company shall remain the exclusive property of the Company and its affiliates, and the
Executive shall promptly return to the Company all material which incorporates, or is derived from,
all such Confidential Information upon termination of the Executive’s employment with the Company
or any of its affiliates. It is hereby agreed that Confidential Information does not include
information generally available and known to the public other than through the disclosure thereof
by or through the Executive or obtained from a source not bound by a confidentiality agreement with
the Company or any of its affiliates.

6. Notices. Any notice or communication given hereunder (each a “Notice”) shall be in
writing and shall be sent by personal delivery, by courier or by United States mail (registered or
certified mail, postage prepaid and return receipt requested), to the appropriate party at the
address set forth below, or such other address or to the attention of such other person as a party
shall have specified by prior Notice to the other party. Each Notice will be deemed given and
effective upon actual receipt (or refusal of receipt).

If to the Company, to:

Town Sports International, LLC

5 Penn Plaza (4th Floor)

New York, New York 10001

Attention: President

With a copy to: General Counsel

If to the Executive, to:

The address for the Executive on file with the Company.

7. No Obligation to Continue Employment. This Agreement is not an agreement of continued
employment. This Agreement does not guarantee that the Company or its Affiliates

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will employ, retain or continue to, employ or retain the Executive, nor does it modify in any
respect any right of the Company or of any Affiliate of the Company to terminate or modify the
Executive’s employment or compensation.

8. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY
PARTY HERETO.

9. Governing Law. All questions concerning the construction, validity and interpretation
of this Agreement will be governed by, and construed in accordance with, the domestic laws of the
State of New York, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.

10. Consent to Jurisdiction. In the event of any dispute, controversy or claim between the
Company or any Affiliate and the Executive in any way concerning, arising out of or relating to
this Agreement (a “Dispute”), including without limitation any Dispute concerning, arising out of
or relating to the interpretation, application or enforcement of this Agreement, the parties hereby
(a) agree and consent to the personal jurisdiction of the courts of the State of New York located
in New York County and/or the Federal courts of the United States of America located in the
Southern District of New York (collectively, the “Agreed Venue”) for resolution of any such
Dispute, (b) agree that those courts in the Agreed Venue, and only those courts, shall have
exclusive jurisdiction to determine any Dispute, including any appeal, and (c) agree that any cause
of action arising out of this Agreement shall be deemed to have arisen from a transaction of
business in the State of New York. The parties also hereby irrevocably (i) submit to the
jurisdiction of any competent court in the Agreed Venue (and of the appropriate appellate courts
therefrom), (ii) to the fullest extent permitted by law, waive any and all defenses the parties may
have on the grounds of lack of jurisdiction of any such court and any other objection that such
parties may now or hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court (including without limitation any defense that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum), and (iii) consent
to service of process in any such suit, action or proceeding, anywhere in the world, whether within
or without the jurisdiction of any such court, in any manner provided by applicable law. Without
limiting the foregoing, each party agrees that service of process on such party pursuant to a
Notice shall be deemed effective service of process on such party. Any action for enforcement or
recognition of any judgment obtained in connection with a Dispute may enforced in any competent
court in the Agreed Venue or in any other court of competent jurisdiction.

11. Counterparts. This Agreement may be executed (including by facsimile transmission)
with counterpart signature pages or in separate counterparts each of which shall be an original and
all of which taken together shall constitute one and the same agreement.

12. Waiver. The failure of the Company to enforce at any time any of the provisions of
this Agreement, or to require at any time performance of any of the provisions of this Agreement,

7

 

shall in no way be construed to be a waiver of these provisions, nor in any way to affect the
validity of this Agreement or any part thereof, or the right of the Company thereafter to enforce
every provision.

13. Severability and Interpretation. Whenever possible, each provision of this Agreement
and any portion hereof shall be interpreted in such a manner as to be effective and valid under
applicable law, rules and regulations. If any covenant or other provision of this Agreement (or
portion thereof) shall be held to be invalid, illegal, or incapable of being enforced, by reason of
any rule of law, rule, regulation, administrative order, judicial decision or public policy, all
other conditions and provisions of this Agreement shall, nevertheless, remain in full force and
effect, and no covenant or provision shall be deemed dependent upon any other covenant or provision
(or portion) unless so expressed herein. The parties hereto desire and consent that the court or
other body making such determination shall, to the extent necessary to avoid any unenforceability,
so reform such covenant or other provision or portions of this Agreement to the minimum extent
necessary so as to render the same enforceable in accordance with the intent herein expressed.

14. No Mitigation Required. The Executive shall not be required to mitigate the amount
provided for in Section 3 hereof by seeking other employment or otherwise, nor shall the amount of
any payment provided for in Section 3 hereof be reduced by any compensation earned by the Executive
as the result of employment by another employer after the date of termination, or otherwise.

15. 409A Savings Clause. This Agreement is intended to comply with the provisions of 409A
of the Internal Revenue Code of 1986, as amended, and the regulations and other guidance
promulgated by the Treasury Department and the Internal Revenue Service thereunder (the “Code”).
If the Severance Payments provided by this Agreement may result in the application of Section 409A
of the Code, the Company shall, in consultation with the Executive, modify the Agreement as
reasonably required to comply with such section, including delaying any such payments that would
have been required to be paid pursuant to this Agreement during the first six months following the
Termination Date, in order to exclude such compensation from the definition of “deferred
compensation” within the meaning of such Section 409A of the Code or in order to comply with the
provisions of Section 409A of the Code, other applicable provision(s) of the Code and/or any rules,
regulations or other regulatory guidance issued under such statutory provisions and without any
diminution in the value of the payments to the Executive. Notwithstanding any of the preceding,
the Company makes no representations regarding the tax treatment of any payments hereunder, and the
Executive shall be responsible for any and all applicable taxes, other than the Company’s share of
employment taxes on the severance payments provided by the Agreement.

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     IN WITNESS WHEREOF, the parties have executed this agreement, effective as of the date and
year first above written.

	 	 	 	 	 
	 	TOWN SPORTS INTERNATIONAL, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Executive:

 	 
	 	  	 	 
	 	 	 	 
	 	 	 	 
	 

9EX-4.1

 

Exhibit 4.1

First Supplemental Indenture

between

UST INC.,
as Issuer

and

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

Dated as of February 29, 2008

5.75% Senior Notes due 2018

 

 

 

    TABLE OF
    CONTENTS

 

	 	 	 	 
	

    ARTICLE ONE
    Definitions and Other Provisions of General Application
    

	
 
	
 
	
    1

	
 
	
 
	
 
	
 

	

    Section 1.1. General

	
 
	
 
	
    1

	

    Section 1.2. Definitions

	
 
	
 
	
    1

	
 
	
 
	
 
	
 

	

    ARTICLE TWO General
    Terms and Conditions of the Securities
    

	
 
	
 
	
    4

	
 
	
 
	
 
	
 

	

    Section 2.1. Designation, Principal Amount and Authorized
    Denomination

	
 
	
 
	
    4

	

    Section 2.2. Maturity

	
 
	
 
	
    5

	

    Section 2.3. Rate of Interest and Accrual; Payment of
    Principal and Interest

	
 
	
 
	
    5

	

    Section 2.4. Form of the Notes

	
 
	
 
	
    6

	

    Section 2.5. Global Securities

	
 
	
 
	
    6

	
 
	
 
	
 
	
 

	

    ARTICLE THREE Events
    of Default; Modification and Waiver
    

	
 
	
 
	
    7

	
 
	
 
	
 
	
 

	

    Section 3.1. Events of Default

	
 
	
 
	
    7

	

    Section 3.2. Modification and Waiver

	
 
	
 
	
    7

	

    Section 3.3. Restrictions on Liens

	
 
	
 
	
    7

	
 
	
 
	
 
	
 

	

    ARTICLE FOUR
    Repurchase upon Change of Control
    

	
 
	
 
	
    8

	
 
	
 
	
 
	
 

	

    Section 4.1. Repurchase of Notes at Option of the Holder
    Upon a Change of Control

	
 
	
 
	
    8

	

    Section 4.2. Repurchase Notice

	
 
	
 
	
    8

	

    Section 4.3. Terms of Repurchase

	
 
	
 
	
    9

	
 
	
 
	
 
	
 

	

    ARTICLE FIVE
    Optional Redemption
    

	
 
	
 
	
    10

	
 
	
 
	
 
	
 

	

    Section 5.1. Redemption of Notes at the Option of the
    Company

	
 
	
 
	
    10

	

    Section 5.2. Notice of Redemption

	
 
	
 
	
    10

	
 
	
 
	
 
	
 

	

    ARTICLE SIX
    Miscellaneous
    

	
 
	
 
	
    10

	
 
	
 
	
 
	
 

	

    Section 6.1. Trustee Disclaimer

	
 
	
 
	
    10

	

    Section 6.2. Effectiveness of Amendments

	
 
	
 
	
    10

	

    Section 6.3. Continuing Effect and Ratification of Indenture

	
 
	
 
	
    10

	

    Section 6.4. Trust Indenture Act Controls

	
 
	
 
	
    10

	

    Section 6.5. Counterpart Originals

	
 
	
 
	
    11

	

    Section 6.6. Effect of Headings

	
 
	
 
	
    11

	

    Section 6.7. Governing Law

	
 
	
 
	
    11

	

    Section 6.8. Severability

	
 
	
 
	
    11

 

    Annex A      Form of 5.75%
    Senior Note due 2018

 

     FIRST SUPPLEMENTAL INDENTURE, dated as of February 29, 2008 (this
“Supplemental Indenture”), between UST Inc., a Delaware corporation (the
“Company”), and U.S. Bank National Association, as successor to State Street
Bank and Trust Company, as trustee (the “Trustee”), under the Indenture, dated
as of May 27, 1999 (the “Base Indenture”), between the Company and the Trustee.

     WHEREAS, the Company has executed and delivered the Base Indenture to the
Trustee to provide for the issuance from time to time of the Company’s debt
securities in one or more series as may be authorized under the Base Indenture;

     WHEREAS, the Base Indenture provides that the Company and the Trustee may
enter into an indenture supplemental to the Base Indenture to establish the
form and terms of any series of Securities (as defined in the Base Indenture)
as provided by Sections 201 and 301 of the Base Indenture;

     WHEREAS, the Board of Directors of the Company has duly adopted
resolutions authorizing the Company to issue the Securities provided for in
this Supplemental Indenture;

     WHEREAS, the Company desires to enter into this Supplemental Indenture to
provide for the establishment of a series of Securities to be known as the
5.75% Senior Notes due 2018 (as set forth in Section 2.1(a) hereof), the form,
substance, terms, provisions and conditions of which shall be set forth in the
Base Indenture and this Supplemental Indenture; and

     WHEREAS, the Company has requested that the Trustee execute and deliver
this Supplemental Indenture and satisfy all requirements necessary to make (i)
this Supplemental Indenture a valid instrument in accordance with its terms and
(ii) the Securities provided for hereby, when executed and delivered by the
Company and authenticated by the Trustee, the valid obligations of the Company.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein, and for the purpose of setting forth, as provided in the Base
Indenture, the form and terms of the Notes, the Company covenants and agrees
with the Trustee as follows:

ARTICLE ONE

Definitions and Other Provisions of General Application

     Section 1.1. General.

     To the extent that any provision of this Supplemental Indenture conflicts
with the express provisions of the Base Indenture, the provisions of this
Supplemental Indenture shall govern and be controlling.

     Section 1.2. Definitions.

     Unless the context otherwise requires:

		
	(a)	Capitalized terms used herein but not defined herein have the
meanings ascribed thereto in the Base Indenture;

1

 

		
	(b)	A term defined in the Base Indenture has the same meaning
when used in this Supplemental Indenture unless otherwise specified
herein;
	 	 
	(c)	a term defined anywhere in this Supplemental Indenture has
the same meaning throughout;
	 	 
	(d)	the singular includes the plural and vice versa; and

	 	 
	(e)	the following terms have the meanings given to them in this
Section 1.2(e):

     “Change of Control” means the occurrence of any of the following: (1) the
direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or more series of
related transactions, of all or substantially all of the assets of the Company
and the assets of the Subsidiaries of the Company, taken as a whole, to any
person, other than the Company or one of the Subsidiaries of the Company; (2)
the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any person becomes the Beneficial
Owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act or any
successor rules thereto) (other than the Company or one of its Subsidiaries),
directly or indirectly, of more than 50% of the outstanding Voting Stock of the
Company or other Voting Stock into which the Voting Stock of the Company is
reclassified, consolidated, exchanged or changed, measured by voting power
rather than number of shares; (3) the Company consolidates with, or merges with
or into, any person, or any person consolidates with, or merges with or into,
the Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company or the Voting Stock of such other
person is converted into or exchanged for cash, securities or other property,
other than any such transaction where the shares of the Voting Stock of the
Company outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, a majority of the Voting Stock of the
surviving person or any direct or indirect parent company of the surviving
person immediately after giving effect to such transaction; (4) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors; or (5) the adoption of a plan relating to the
liquidation or dissolution of the Company (other than the Company’s liquidation
into a newly formed holding company). Notwithstanding the foregoing, a
transaction will not be deemed to involve a change of control if (i) the
Company becomes a direct or indirect wholly-owned subsidiary of a holding
company and (ii) (A) the direct or indirect holders of the Voting Stock of such
holding company immediately following that transaction are substantially the
same as the holders of the Company’s Voting Stock immediately prior to that
transaction or (B) immediately following that transaction no person (other than
a holding company) is the beneficial owner, directly or indirectly, of more
than 50% of the Voting Stock of such holding company. The term “person,” as
used in this definition, has the meaning given thereto in Section 13(d)(3) of
the Exchange Act or any successor provision thereto.

     “Change of Control Offer” has the meaning set forth in Section 4.1.

     “Change of Control Payment” has the meaning set forth in Section 4.1.

     “Change of Control Payment Date” has the meaning set forth in Section
4.2(a).

2

 

     “Change of Control Triggering Event” means the occurrence of both a Change
of Control and a Rating Event.

     “Comparable Treasury Issue” means the United States Treasury security or
securities selected by the Reference Treasury Dealer as having an actual or
interpolated maturity comparable to the remaining term of the Notes to be
redeemed which would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Notes.

     “Comparable Treasury Price” means, with respect to any Redemption Date,
(1) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

     “Continuing Directors” means, as of any date of determination, any member
of the Board of Directors of the Company who (1) was a member of such Board of
Directors on the date the Notes were issued or (2) was nominated for election,
elected or appointed to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board of Directors at the
time of such nomination, election or appointment (either by a specific vote or
by approval of the proxy statement of the Company in which such member was
named as a nominee for election as a director, without objection to such
nomination).

     “Investment grade rating” means a rating equal to or higher than Baa3 (or
the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, and the
equivalent investment grade credit rating from any replacement rating agency or
rating agencies selected by the Company.

     “Moody’s” means Moody’s Investors Service, Inc., and its successors.

     “Notes” has the meaning set forth in Section 2.1(a).

     “Rating Agencies” means (1) each of Moody’s and S&P; and (2) if either of
Moody’s or S&P ceases to rate the Notes or fails to make a rating of the Notes
publicly available for reasons outside of the control of the Company, a
“nationally recognized statistical rating organization” within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act (or any successor rule thereto)
selected by the Company (as certified by a resolution of the Board of Directors
of the Company) as a replacement agency for Moody’s or S&P, or both of them, as
the case may be.

     “Rating Event” means the rating on the Notes is lowered by each of the
Rating Agencies and the Notes are rated below an investment grade rating by
each of the Rating Agencies within the 60-day period (which 60-day period will
be extended so long as the rating of the Notes is under publicly announced
consideration for a possible downgrade by either of the rating agencies) after
the earlier of (1) the occurrence of a Change of Control and (2) public notice
of the occurrence of a Change of Control or the Company’s intention to effect a
Change of Control.

     “Reference Treasury Dealer” means (1) Lehman Brothers Inc. and Morgan
Stanley & Co. Incorporated (or their respective affiliates that are Primary
Treasury Dealers) and their respective successors; provided, however, that if
any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (2) any
other Primary Treasury Dealer(s) selected by the Company.

3

 

     “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee at 5:00 p.m., New York City time, on the third Business
Day preceding such Redemption Date.

     “Repurchase Date” has the meaning set forth in Section 4.1.

     “S&P” means Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc., and its successors.

     “Treasury Rate” means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price
for such Redemption Date.

     “Voting Stock” means, with respect to any specified “person” (as that term
is used in Section 13(d)(3) of the Exchange Act or any successor provision
thereto) as of any date, the capital stock of such person that is at the time
entitled to vote generally in the election of the board of directors of such
person.

ARTICLE TWO

General Terms and Conditions of the Securities

     Section 2.1. Designation, Principal Amount and Authorized Denomination.

(a) Designation

     Pursuant to Section 301 of the Base Indenture, there is hereby established
a series of Securities of the Company designated as the “5.75% Senior Notes due
2018” (the “Notes”), the principal amount of which to be issued shall be in
accordance with Section 2.1 hereof and as set forth in any Company Order for
the authentication and delivery of Notes pursuant to the Base Indenture, and
the form and terms of which shall be as set forth hereinafter.

(b)  Principal Amount; Additional Notes

     Notes in an initial aggregate principal amount of $300,000,000 shall, upon
execution of this Supplemental Indenture, be executed by the Company and
delivered to the Trustee or an Authenticating Agent for authentication, and the
Trustee or an Authenticating Agent shall thereupon authenticate and deliver
said Notes in accordance with a Company Order. At any time and from time to
time after the execution and delivery of this Supplemental Indenture, without
notice to or the consent of any Holders, the Company may execute and deliver
additional Notes to the Trustee or an Authenticating Agent for authentication,
together with a Company Order for the authentication and delivery of such
additional Notes. Any additional Notes so issued shall be governed by this
Supplemental Indenture and shall rank equally and ratably in right of payment

4

 

with the Notes issued on the date of this Supplemental Indenture and,
together with the Notes issued as of the date of this Supplemental Indenture,
shall be treated as a single series of Notes for all purposes.

(c) Authorized Denomination

     The Notes shall be issued in denominations of $1,000 and integral
multiples in excess thereof.

     Section 2.2. Maturity.

     The Stated Maturity of the Notes will be March 1, 2018.

     Section 2.3. Rate of Interest and Accrual; Payment of Principal and Interest.

(a) Rate of Interest and Accrual

     The Notes will bear interest from February 29, 2008 at an annual rate of
5.75% until the principal thereof becomes due and payable or the date of
redemption or repurchase (if any) of the Notes, such interest to be payable
semiannually on March 1 and September 1 of each year (each an “Interest Payment
Date”), to the Holders of record of the Notes as of the close of business on
the February 15 and August 15 preceding such Interest Payment Dates, commencing
on September 1, 2008 in the case of the Notes issued on the date of this
Supplemental Indenture.

(b) Payment of Principal and Interest

     All payments of principal and interest on the Notes shall be made in
accordance with the Base Indenture, as supplemented hereby. Payments on the
Notes will be made in U.S. Dollars in immediately available funds, at the
office of the Paying Agent, to the persons in whose names the Notes are
registered at the close of business on February 15 and August 15, as the case
may be (in each case, whether or not a Business Day), immediately preceding the
related Interest Payment Date; provided, however, that interest payable on the
date of Stated Maturity shall be payable to the person to whom the principal of
such notes shall be payable. Interest on the Notes will be computed on the
basis of a 360-day year composed of twelve 30-day months.

     In the event that any interest becomes payable on the Notes, a Holder
shall be entitled to receive such interest on the corresponding Interest
Payment Date. Interest payable on any Interest Payment Date or the date of
Stated Maturity shall be the amount of interest accrued from, and including,
the next preceding Interest Payment Date in respect of which interest has been
paid or duly provided for (or from and including the original issue date, if no
interest has been paid or duly provided for with respect to the Notes) to, but
excluding, such Interest Payment Date or date of Stated Maturity, as the case
may be; provided, however, that if the Company redeems the Notes under Section
5.1 of this Supplemental Indenture, or the Company is required to repurchase
the Notes after a Change of Control Triggering Event as set forth under Section
4.1 of this Supplemental Indenture, on a Redemption Date or Repurchase Date (as
defined below), as the case may be, that is after such Interest Payment Date
and on or prior to the corresponding Interest Payment Date, the Company will
pay accrued and unpaid interest on the

5

 

Note being redeemed or repurchased to, but excluding, the Redemption Date
or Repurchase Date, as the case may be, to the same person to whom the
principal amount of such Note is paid.

     If any Interest Payment Date is not a Business Day, the interest payment
will be made on the next succeeding day that is a Business Day, but the Company
will not be liable for any additional interest as a result of the delay in
payment. If the date of Stated Maturity of the Notes falls on a day that is
not a Business Day, the related payment of principal and interest will be made
on the next succeeding Business Day, as if it were made on the date such
payment was due, and no interest will accrue on the amounts so payable for the
period from and after such date to the next succeeding Business Day.

     Payments of principal and interest will be made through the Trustee to the
Depositary.

     Section 2.4. Form of the Notes.

     The Notes shall be issued in the form of one or more Securities in
substantially the form set forth in Annex A and with the terms further provided
therein. The initial Depositary with respect to the Notes shall be The
Depository Trust Company (“DTC”).

     Section 2.5. Global Securities.

     The Notes shall initially be issued in the form of one or more Global
Securities registered in the name of a nominee of the Depositary. Except under
the limited circumstances described below, Notes represented by such Global
Security or Global Securities shall not be exchangeable for, and shall not
otherwise be issuable as, Notes in definitive form. The Global Securities
described above may not be transferred except as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or to a successor Depositary or its
nominee or by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary, unless and until the Global Securities
are exchanged in whole or in part for Notes in definitive form.

     Subject to the procedures of the Depositary, a Global Security shall be
exchangeable for Notes registered in the names of persons other than the
Depositary or its nominee only if (i) the Depositary notifies the Trustee and
the Issuer that it is no longer willing or able to properly discharge its
responsibilities as a Depositary for such Global Security and no qualified
successor Depositary shall have been appointed by the Issuer within ninety (90)
days of receipt by the Issuer of such notification, or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act at
a time when the Depositary is required to be so registered to act as such
Depositary and no qualified successor Depositary shall have been appointed by
the Issuer within ninety (90) days after it becomes aware of such cessation,
(ii) the Issuer executes and delivers to the Trustee an Issuer Order stating
that the Issuer elects to terminate the book-entry system through the
Depositary, or (iii) there shall have occurred and be continuing an Event of
Default with respect to the Global Security. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Notes
as provided in the Base Indenture.

6

 

ARTICLE THREE

Events of Default; Modification and Waiver

     Section 3.1. Events of Default.

     Solely for purposes of, and with respect to, the Notes and any other
series of Securities issued after the date of this Supplemental Indenture,
Section 501(5) of the Base Indenture shall be amended as follows:

     "(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (including a default with
respect to Securities of any series other than that series) having an aggregate
principal amount outstanding of at least $50,000,000, or under any mortgage,
indenture or instrument (including this Indenture) under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company having an aggregate principal amount outstanding of at
least $50,000,000, whether such indebtedness now exists or shall hereafter be
created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, without such acceleration having been rescinded or
annulled, within a period of 10 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 10% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
and requiring the Company to cause such indebtedness to be discharged or cause
such acceleration to be rescinded or annulled, as the case may be, and stating
that such notice is a “Notice of Default” hereunder; provided, however, that,
subject to the provisions of Sections 601 and 602 of the Base Indenture, the
Trustee shall not be deemed to have knowledge of such default unless either (A)
a Responsible Officer of the Trustee shall have actual knowledge of such
default or (B) the Trustee shall have received written notice thereof from the
Company, from any Holder, from the holder of any such indebtedness or from the
trustee under any such mortgage, indenture or other instrument;”

     Section 3.2. Modification and Waiver.

     Solely for purposes of, and with respect to, the Notes and any other
series of Securities issued after the date of this Supplemental Indenture,
Section 902 of the Base Indenture shall be amended by replacing the percentage
“66 2/3%” in the first sentence with the words “a majority,” and Section 1010 of
the Base Indenture shall be amended by replacing the percentage “66 2/3%” in
such Section with the words “a majority”.

     Section 3.3. Restrictions on Liens.

     Solely for purposes of, and with respect to, the Notes and any other
series of Securities issued after the date of this Supplemental Indenture,
Section 1008 of the Base Indenture shall be amended by replacing the percentage
“10%” in such Section with the percentage “15%”.

7

 

ARTICLE FOUR

Repurchase upon Change of Control

     Section 4.1. Repurchase of Notes at Option of the Holder Upon a Change of
Control.

     Solely for purposes of, and with respect to, the Notes, upon the
occurrence of a Change of Control Triggering Event, unless all Notes have been
called for redemption pursuant to Section 5.1 hereof, each Holder of Notes
shall have the right to require the Company to offer (the “Change of Control
Offer”) to repurchase all or any part (equal to $100,000 or an integral
multiple of $1,000 in excess thereof) of such Holder’s Notes at a repurchase
price in cash equal to 101% of the aggregate principal amount of the Notes
repurchased, plus any accrued and unpaid interest to, but not including, the
date of repurchase (the “Change of Control Payment”).

     Section 4.2. Repurchase Notice.

		
	 	     (a) Within 30 days following any Change of Control Triggering
Event or, at the option of the Company, prior to any Change of
Control, but in either case, after public announcement of the
transaction that constitutes or may constitute the Change of
Control, the Company will mail, or cause to be mailed, a notice to
each Holder of the Notes describing the transaction that constitutes
or may constitute the Change of Control Triggering Event and
offering to repurchase such Notes on the date specified in the
notice, which date shall be no earlier than 30 days and no later
than 60 days from the date such notice is mailed (a “Change of
Control Payment Date”).

		
	 	     (b) The Company may make a Change of Control Offer in advance of,
but conditioned on, the occurrence of a Change of Control Triggering
Event but otherwise in accordance with the provisions of this
Section 4.2. The notice will, if mailed prior to the date of
consummation of the Change of Control, state that the Change of
Control Offer is conditioned on the Change of Control Triggering
Event occurring on or prior to the Change of Control Payment Date.

		
	 	     (c) The notice issued to Holders pursuant to Section 4.2(a) shall
specify:

		
	 	     (i) that the Change of Control Offer is being
made pursuant to this Section 4.1 and that all Notes
properly tendered will be accepted for payment;

		
	 	     (ii) the Change of Control Payment and the Change
of Control Payment Date;
	 	     
	 	    (iii) the CUSIP numbers for the Notes;

		
	 	    (iv) that any Note not tendered will continue to
accrue interest;

		
	 	     (v) that, unless the Company defaults in the
making of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer will
cease to accrue interest after the Change of Control Payment
Date;

8

 

		
	 	(vi) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be
required to surrender such Notes to the Paying Agent at the
address specified in the notice prior to the close of
business on the third Business Day preceding the Change of
Control Payment Date;

		
	 	     (vii) that Holders will be entitled to withdraw
their election referred to in clause (vi) if the Paying
Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment
Date, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased.

     Section 4.3. Terms of Repurchase

		
	 	     (a) On the Change of Control Payment Date, the Company shall, to
the extent lawful:

		
	 	     (i) accept for payment all Notes or portions of
Notes properly tendered pursuant to the Change of Control
Offer;

		
	 	     (ii) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or
portions of Notes properly tendered; and

		
	 	     (iii) deliver or cause to be delivered to the
Trustee the Notes properly tendered with an Officers’
Certificate stating the aggregate principal amount of Notes
or portions of Notes being repurchased.

		
	 	     (b) The Company shall not be required to make a Change of Control
Offer upon the occurrence of a Change of Control Triggering Event if
a third party makes such an offer in the manner, at the times and
otherwise in compliance with the requirements for an offer made by
the Company, and the third party repurchases all Notes properly
tendered and not withdrawn under its offer.

		
	 	     (c) The Company shall not repurchase any Notes if there has
occurred and is continuing on the Change of Control Payment Date an
Event of Default, other than a default in the payment of the Change
of Control Payment upon a Change of Control Triggering Event.

		
	 	     (d) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act (or any successor rule thereto) and any other
securities laws and regulations thereunder to the extent those laws
and regulations are applicable in connection with the repurchase of
the Notes as a result of a Change of Control Triggering Event. To
the extent that the provisions of any securities laws or regulations
conflict with the provisions of Article Four herein, the Company
shall comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under Article
Four by virtue of such conflict.

9

 

ARTICLE FIVE

Optional Redemption

     Section 5.1. Redemption of Notes at the Option of the Company

		
	 	     (a) The Notes shall be redeemable, in whole or in part from time
to time, at the option of the Company, at any time, at a Redemption
Price equal to the greater of (i) 100% of the principal amount of
the Notes to be redeemed, and (ii) the sum of the present values of
the remaining scheduled payments of principal and interest that
would be due on the Notes to be redeemed after the related
Redemption Date but for such redemption (exclusive of interest
accrued up to such Redemption Date) discounted to such Redemption
Date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) using a discount rate equal to the Treasury
Rate plus 30 basis points, plus, in either case, accrued and unpaid
interest on the principal amount being redeemed up to, but not
including, such Redemption Date.

		
	 	     (b) All determinations made by the Trustee with respect to
determining the Redemption Price will be final and binding on all
parties, absent manifest error.

     Section 5.2. Notice of Redemption

     The Notes shall be redeemed in accordance with Section 1104 of the Base
Indenture.

ARTICLE SIX

Miscellaneous

     Section 6.1. Trustee Disclaimer.

     The recitals in this Supplemental Indenture are made by the Company only
and not by the Trustee, and all of the provisions contained in the Base
Indenture in respect of the rights, privileges, immunities, powers and duties
of the Trustee shall be applicable in respect of the Notes and of this
Supplemental Indenture as fully and with like effect as if set forth herein in
full.

     Section 6.2. Effectiveness of Amendments.

     This Supplemental Indenture shall be effective as of February 29, 2008.

     Section 6.3. Continuing Effect and Ratification of Indenture.

     The Base Indenture, as supplemented by this Supplemental Indenture, is in
all respects ratified and confirmed, and this Supplemental Indenture shall be
deemed part of the Base Indenture in the manner and to the extent herein and
therein provided.

     Section 6.4. Trust Indenture Act Controls.

     If any provision of this Supplemental Indenture limits, qualifies or
conflicts with another provision of this Supplemental Indenture or the Base
Indenture that is required to be included by the Trust Indenture Act of 1939 as in force at the date as of which this
Supplemental Indenture is executed, the provision required by said Act shall
control.

10

 

     Section 6.5. Counterpart Originals.

     This Supplemental Indenture may be simultaneously executed in several
counterparts, each of which shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.

     Section 6.6. Effect of Headings.

     The Article and Section headings herein have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.

     Section 6.7. Governing Law.

     This Supplemental Indenture and the Notes shall be governed by and
construed in accordance with the laws of the State of New York.

     Section 6.8. Severability.

     In case any provision in this Supplemental Indenture or the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

11

 

    IN WITNESS WHEREOF, the parties hereto have caused this
    Supplemental Indenture to be duly executed as of the date first
    above written.

 

    UST INC., as Issuer

 

			
	 	    By:  
	
    /s/  Raymond
    P. Silcock

    Name: Raymond P. Silcock

			
	 	    Title:  
	
    Senior Vice President and
 Chief Financial Officer

 

    U.S. BANK NATIONAL ASSOCIATION, 

    as Trustee

 

			
	 	    By:  
	
    /s/  Todd
    R. DiNezza

    Name: Todd R. DiNezza

			
	 	    Title:  
	
    Assistant Vice President

 

[Signature Page -
Supplemental Indenture]

12

 

Annex A

[Form of Security]

[Face]

     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

 

UST INC.

5.75% SENIOR NOTES DUE 2018

No. 1

Principal Amount: $300,000,000

CUSIP No. 902911AN6

     UST INC., a corporation duly organized and existing under the laws of
Delaware (the “Company”, which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of THREE HUNDRED
MILLION DOLLARS ($300,000,000) on March 1, 2018, and to pay interest thereon
from February 29, 2008, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, at an annual rate of 5.75% until
the principal thereof becomes due and payable or the date of redemption or
repurchase (if any) of the Securities, such interest to be payable semiannually
on March 1 and September 1 of each year, commencing on September 1, 2008.
Payments on the Securities will be made in U.S. Dollars in immediately
available funds, at the office of the Paying Agent, to the persons in whose
names the Securities are registered at the close of business on February 15 and
August 15, as the case may be (in each case, whether or not a Business Day),
immediately preceding the related Interest Payment Date; provided, however,
that interest payable on the date of Stated Maturity shall be payable to the
person to whom the principal of such Securities shall be payable. Interest on
the Securities will be computed on the basis of a 360-day year composed of
twelve 30-day months.

     In the event that any interest becomes payable on the Securities, a Holder
shall be entitled to receive such interest on the corresponding Interest
Payment Date. Interest payable on any Interest Payment Date or the date of
Stated Maturity shall be the amount of interest accrued from, and including the
next preceding Interest Payment Date in respect of which interest has been paid
or duly provided for (or from and including the original issue date, if no
interest has been paid or duly provided for with respect to the Securities) to,
but excluding, such Interest Payment Date or date of Stated Maturity, as the
case may be; provided, however, that if the Company redeems the Securities, or
the Company is required to repurchase the Securities after a Change of Control
Triggering Event, on a Redemption Date or Repurchase Date, as the case may be,
that is after such Interest Payment Date and on or prior to the corresponding
Interest Payment Date, the Company will pay accrued and unpaid Interest on the
Securities being redeemed or repurchased to, but excluding, the Redemption Date
or Repurchase Date, as the case may be, to the same person to whom the
principal amount of such Securities is paid.

     If any Interest Payment Date is not a Business Day, the interest payment
will be made on the next succeeding day that is a Business Day, but the Company
will not be liable for any additional interest as a result of such delay in
payment. If the date of Stated Maturity of the Securities falls on a day that
is not a Business Day, the related payment of principal and interest will be
made on the next succeeding Business Day, as if it were made on the date such payment was due, and no interest will accrue on the
amounts so payable for the period from and after such date to the next
succeeding Business Day. Any interest not punctually paid or duly provided for
shall be payable as provided in the Indenture.

2

 

     Payments of principal and interest will be made through the Trustee to the
Depositary.

     Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

3

 

    IN WITNESS WHEREOF, the parties hereto have caused this
    Supplemental Indenture to be duly executed as of the date first
    above written.

    Dated: February 29, 2008

 

    UST Inc.

 

			
	 	    By:  
	
     

    Name:  

			
	 	    Title:   
	
     

 

    Attest:

 

			
	 	    By:  
	
     

    Name:  

			
	 	    Title:  
	
     

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

This is one of the Securities of the
series designated therein referred to in the with-in mentioned
Indenture.

    U.S. Bank National Association,
As Trustee

 

			
	 	    By:  
	
     

    Authorized Signature

 

[REVERSE OF SECURITY]

     This Security is one of a duly authorized issue of securities of the
Company (herein called the “Securities”), issued and to be issued in one or
more series under an Indenture, dated as of May 27, 1999, as amended and
supplemented by that First Supplemental Indenture, dated February 29, 2008 (as
so amended and supplemented herein called the “Indenture”, which term shall
have the meaning assigned to it in such instrument), between the Company and
U.S. Bank National Association, as successor to State Street Bank and Trust
Company, as trustee (herein called the “Trustee”, which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, initially limited in aggregate principal amount to
$300,000,000; provided that the Company may from time to time, without notice
to or the consent of the Holders of the Securities of this series, create and
issue further Securities of this series (the “Additional Securities”). Any
Additional Securities will be consolidated and form a single series with the
Securities and shall have the same terms as to status, redemption and otherwise
as the Securities. Any Additional Securities may be issued pursuant to
authorization provided by a resolution of the Board of Directors of the
Company, under a supplement to the Indenture or an Officers’ Certificate
pursuant to the Indenture. The Indenture does not limit the aggregate principal
amount of the Securities that may be issued thereunder.

Sinking Fund

     No sinking fund is provided for this Security.

Optional Redemption

     The Securities shall be redeemable in whole or in part from time to time,
at the option of the Company, at any time, at a Redemption Price equal to the
greater of (i) 100% of the principal amount of the Securities to be redeemed,
and (ii) the sum of the present values of the remaining scheduled payments of
principal and interest that would be due on the Securities to be redeemed after
the related Redemption Date but for such redemption (exclusive of interest
accrued up to such Redemption Date) discounted to such Redemption Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
using a discount rate equal to the Treasury Rate plus 30 basis points, plus, in
either case, accrued and unpaid interest on the principal amount being redeemed
up to, but not including, such Redemption Date. All determinations made by the
Trustee with respect to determining the Redemption Price will be final and
binding on all parties, absent manifest error.

     “Treasury Rate” means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue,

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assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date.

     “Comparable Treasury Issue” means the United States Treasury security or
securities selected by the Reference Treasury Dealer as having an actual or
interpolated maturity comparable to the remaining term of the Securities to be
redeemed which would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Securities.

     “Comparable Treasury Price” means, with respect to any Redemption Date,
(1) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

     “Reference Treasury Dealer” means (1) Lehman Brothers Inc. and Morgan
Stanley & Co. Incorporated (or their respective affiliates that are Primary
Treasury Dealers) and their respective successors; provided, however, that if
any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a “Primary Treasury Dealer”), the Company will
substitute therefor another Primary Treasury Dealer; and (2) any other Primary
Treasury Dealer(s) selected by the Company.

     “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee at 5:00 p.m., New York City time, on the third Business
Day preceding such Redemption Date.

Repurchase Upon a Change of Control

     Upon the occurrence of a Change of Control Triggering Event, unless all
Securities have been called for redemption pursuant to the Optional Redemption
provision set forth above, each Holder of Securities shall have the right to
require the Company to offer (the “Change of Control Offer”) to repurchase all
or any part (equal to $100,000 or an integral multiple of $1,000 in excess
thereof) of such Holder’s Securities at a repurchase price in cash equal to
101% of the aggregate principal amount of the Securities repurchased, plus any
accrued and unpaid interest to, but not including, the date of repurchase (the
“Change of Control Payment”).

     “Change of Control” means the occurrence of any of the following: (1) the
direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or more series of
related transactions, of all or substantially all of the assets of the Company
and the assets of the Subsidiaries of the Company, taken as a whole, to any
person, other than the Company or one of the Subsidiaries of the Company; (2)
the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any person

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becomes the Beneficial Owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act or any successor rules thereto) (other than the Company or one
of its Subsidiaries), directly or indirectly, of more than 50% of the
outstanding Voting Stock of the Company or other Voting Stock into which the
Voting Stock of the Company is reclassified, consolidated, exchanged or
changed, measured by voting power rather than number of shares; (3) the Company
consolidates with, or merges with or into, any person, or any person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company or the Voting Stock of such other person is converted into or exchanged
for cash, securities or other property, other than any such transaction where
the shares of the Voting Stock of the Company outstanding immediately prior to
such transaction constitute, or are converted into or exchanged for, a majority
of the Voting Stock of the surviving person or any direct or indirect parent
company of the surviving person immediately after giving effect to such
transaction; (4) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors; or (5) the adoption
of a plan relating to the liquidation or dissolution of the Company (other than
the Company’s liquidation into a newly formed holding company).
Notwithstanding the foregoing, a transaction will not be deemed to involve a
change of control if (i) the Company becomes a direct or indirect wholly-owned
subsidiary of a holding company and (ii) (A) the direct or indirect holders of
the Voting Stock of such holding company immediately following that transaction
are substantially the same as the holders of the Company’s Voting Stock
immediately prior to that transaction or (B) immediately following that
transaction no person (other than a holding company) is the beneficial owner,
directly or indirectly, of more than 50% of the Voting Stock of such holding
company. The term “person”, as used in this definition, has the meaning given
thereto in Section 13(d)(3) of the Exchange Act or any successor provision
thereto.

     “Change of Control Triggering Event” means the occurrence of both a Change
of Control and a Rating Event.

     “Continuing Directors” means, as of any date of determination, any member
of the Board of Directors of the Company who (1) was a member of such Board of
Directors on the date the Securities were issued or (2) was nominated for
election, elected or appointed to such Board of Directors with the approval of
a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination, election or appointment (either by a
specific vote or by approval of the proxy statement of the Company in which
such member was named as a nominee for election as a director, without
objection to such nomination).

     “Investment grade rating” means a rating equal to or higher than Baa3 (or
the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, and the
equivalent investment grade credit rating from any replacement rating agency or
rating agencies selected by the Company.

     “Moody’s” means Moody’s Investors Service, Inc., and its successors.

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     “Rating Agencies” means (1) each of Moody’s and S&P; and (2) if either of
Moody’s or S&P ceases to rate the Securities or fails to make a rating of the
Securities publicly available for reasons outside of the control of the
Company, a “nationally recognized statistical rating organization” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act (or any successor
rule thereto) selected by the Company (as certified by a resolution of the
Board of Directors of the Company) as a replacement agency for Moody’s or S&P,
or both of them, as the case may be.

     “Rating Event” means the rating on the Securities is lowered by each of
the Rating Agencies and the Securities are rated below an investment grade
rating by each of the Rating Agencies within the 60-day period (which 60-day
period will be extended so long as the rating of the Securities is under
publicly announced consideration for a possible downgrade by either of the
rating agencies) after the earlier of (1) the occurrence of a Change of Control
and (2) public notice of the occurrence of a Change of Control or the Company’s
intention to effect a Change of Control.

     “S&P” means Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc., and its successors.

     “Voting Stock” means, with respect to any specified “person” (as that term
is used in Section 13(d)(3) of the Exchange Act or any successor provision
thereto) as of any date, the capital stock of such person that is at the time
entitled to vote generally in the election of the board of directors of such
person.

     Within 30 days following any Change of Control Triggering Event or, at the
option of the Company, prior to any Change of Control, but in either case,
after public announcement of the transaction that constitutes or may constitute
the Change of Control, the Company will mail, or cause to be mailed, a notice
(as described in the Indenture) to each Holder of the Securities describing the
transaction that constitutes or may constitute the Change of Control Triggering
Event and offering to repurchase such Securities on the date specified in the
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (a “Change of Control Payment Date”). The
Company may make a Change of Control Offer in advance of, but conditioned on,
the occurrence of a Change of Control Triggering Event; provided, however, that
in such a case the notice will state that the Change of Control Offer is
conditioned on the Change of Control Triggering Event occurring on or prior to
the Change of Control Payment Date.

     The Company will not be required to make a Change of Control Offer upon
the occurrence of a Change of Control Triggering Event if a third party makes
such an offer in the manner, at the times and otherwise in compliance with the
requirements for an offer made by the Company, and the third party repurchases
all Securities properly tendered and not withdrawn under its offer. The
Company will not repurchase any Securities if there has occurred and is
continuing on the Change of Control Payment Date an Event of Default, other
than a default in the payment of the Change of Control Payment upon a Change of
Control Triggering Event.

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     The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act (or any successor rule thereto) and any other securities laws and
regulations thereunder to the extent those laws and regulations are applicable
in connection with the repurchase of the Securities as a result of a Change of
Control Trigger Event. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of the Securities provided
herein, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under such
provisions of the Securities by virtue of such conflict.

Miscellaneous

     The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.

     If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and modification of the rights and obligations of the Company
and the rights of the Holders of the Securities of this series to be affected
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of a majority in principal amount of the Securities of this
series at the time Outstanding. The Indenture also contains provisions (i)
permitting the Holders of not less than a majority in principal amount of the
Securities of this series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture with respect to such series and (ii) permitting the
Holders of not less than a majority in principal amount of the Securities of
this series at the time Outstanding, on behalf of the Holders of all Securities
of this series, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time

R-5

 

Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.

     Notwithstanding any other provision of this Security or the Indenture to
the contrary, no recourse shall be had, whether by levy or execution or
otherwise, for the payment of any sums due under this Security, including,
without limitation, the principal of, premium, if any, or interest payable
under this Security, or for the payment or performance of any obligation,
covenant or agreement under, or for any claim based on, this Security or the
Indenture or otherwise in respect of this Security or the Indenture, against
any Subsidiary of the Company, or any successor of any such Subsidiary, or any
such Subsidiary’s assets or against any shareholder, officer, director, trustee
or employee of any such Subsidiary, under any rule of law, statute or
constitution, or by the enforcement of any assessment or penalty or by any
legal or equitable proceeding or otherwise, nor shall any of such parties be
personally liable for any such amounts, obligations or claims, or liable for
any deficiency judgment based thereon or with respect thereto, it being
expressly understood that the sole remedies hereunder or under any other
document with respect to the Securities against such parties with respect to
such amounts, obligations or claims shall be against the Company and that all
such liability of such parties is and is to be, by the acceptance hereof,
expressly waived and released by the acceptance of the Securities by the
Holders and as part of the consideration for the issue of the Securities.

     As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

     The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principle
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

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     No service charge shall be made to a Holder for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.

     THIS SECURITY AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

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