Document:

ex4-2.htm

Exhibit 4.2

 

	
Third Amendment to Loan Documents
	
 

 

THIS THIRD AMENDMENT TO LOAN DOCUMENTS (this “Amendment”), dated as of February 21, 2017 (“Effective Date”), by and between LSI INDUSTRIES INC., an Ohio corporation (the “Borrower”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association (the “Bank”).

 

BACKGROUND

 

A.     The Borrower has executed and delivered to the Bank one or more promissory notes, loan agreements, security agreements, mortgages, pledge agreements, collateral assignments, and other agreements, instruments, certificates and documents, some or all of which are more fully described on the attached Exhibit A, which is made a part of this Amendment (collectively as amended from time to time, the “Loan Documents”) which evidence or secure some or all of the Borrower’s obligations to the Bank for one or more loans or other extensions of credit (the “Obligations”).

 

B.     The Borrower and the Bank desire to amend the Loan Documents as provided for in this Amendment.

 

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

 

1.     Certain of the Loan Documents are amended as set forth in Exhibit A. Any and all references to any Loan Document in any other Loan Document shall be deemed to refer to such Loan Document as amended by this Amendment. This Amendment is deemed incorporated into each of the Loan Documents. Any initially capitalized terms used in this Amendment without definition shall have the meanings assigned to those terms in the Loan Documents. To the extent that any term or provision of this Amendment is or may be inconsistent with any term or provision in any Loan Document, the terms and provisions of this Amendment shall control.

 

2.     The Borrower hereby certifies that: (a) all of its representations and warranties in the Loan Documents, as amended by this Amendment, are, except as may otherwise be stated in this Amendment: (i) true and correct as of the date of this Amendment, (ii) ratified and confirmed without condition as if made anew, and (iii) incorporated into this Amendment by reference, (b) no Event of Default or event which, with the passage of time or the giving of notice or both, would constitute an Event of Default, exists under any Loan Document which will not be cured by the execution and effectiveness of this Amendment, (c) no consent, approval, order or authorization of, or registration or filing with, any third party is required in connection with the execution, delivery and carrying out of this Amendment or, if required, has been obtained, and (d) this Amendment has been duly authorized, executed and delivered so that it constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms. The Borrower confirms that the Obligations remain outstanding without defense, set off, counterclaim, discount or charge of any kind as of the date of this Amendment.

 

3.     The Borrower hereby confirms that any collateral for the Obligations, including liens, security interests, mortgages, and pledges granted by the Borrower or third parties (if applicable), shall continue unimpaired and in full force and effect, and shall cover and secure all of the Borrower’s existing and future Obligations to the Bank, as modified by this Amendment.

 

4.     As a condition precedent to the effectiveness of this Amendment, the Borrower shall comply with the terms and conditions (if any) specified in Exhibit A.

 

 

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5.     To induce the Bank to enter into this Amendment, the Borrower waives and releases and forever discharges the Bank and its officers, directors, attorneys, agents, and employees from any liability, damage, claim, loss or expense of any kind that it may have against the Bank or any of them arising out of or relating to the Obligations. The Borrower further agrees to indemnify and hold the Bank and its officers, directors, attorneys, agents and employees harmless from any loss, damage, judgment, liability or expense (including reasonable attorneys’ fees) suffered by or rendered against the Bank or any of the other indemnified parties on account of any claims arising out of or relating to the Obligations. The Borrower further states that it has carefully read the foregoing release and indemnity, knows the contents thereof, and grants the same as its own free act and deed.

 

6.     This Amendment may be signed in any number of counterpart copies and by the parties to this Amendment on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Amendment by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

 

7.     This Amendment will be binding upon and inure to the benefit of the Borrower and the Bank and their respective heirs, executors, administrators, successors and assigns.

 

8.     This Amendment has been delivered to and accepted by the Bank and will be deemed to be made in Cincinnati, Ohio. This Amendment will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State of Ohio, excluding its conflict of laws rules.

 

9.     Except as amended hereby, the terms and provisions of the Loan Documents remain unchanged, are and shall remain in full force and effect unless and until modified or amended in writing in accordance with their terms, and are hereby ratified and confirmed. Except as expressly provided herein, this Amendment shall not constitute an amendment, waiver, consent or release with respect to any provision of any Loan Document, a waiver of any default or Event of Default under any Loan Document, or a waiver or release of any of the Bank’s rights and remedies (all of which are hereby reserved). The Borrower expressly ratifies and confirms the waiver of jury trial provisions contained in the Loan Documents.

  

 

[signature page follows] 

 

 

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WITNESS the due execution of this Amendment as a document under seal as of the date first written above.

 

	
 
	
LSI INDUSTRIES INC.
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Ronald S. Stowell
	
 

	
 
	
 
	
      Ronald S. Stowell
	
 

	
 
	
 
	
      Vice President, Chief Financial Officer and Treasurer
	
 

	 	 	 	 
	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Gregory S. Buchanan	 
	 	 	      Gregory S. Buchanan	 
	 	 	      Senior Vice President	 

 

 

3

 

 

EXHIBIT A TO

THIRD AMENDMENT TO LOAN DOCUMENTS

DATED AS OF FEBRUARY 21, 2017

(LSI Industries Inc.)

 

 

	
A.
	
The “Loan Documents” that are the subject of this Amendment include the following (as any of the following have previously been amended, supplemented or otherwise modified):

 

	
 
	
1. 
	
Amended and Restated Loan Agreement dated as of June 19, 2014 (the “Loan Agreement”) between the Borrower and the Bank;

	
 
	
2.
	
$30,000,000 Second Amended and Restated Committed Line of Credit Note dated as of June 19, 2014 (the “Note”) made by the Borrower in favor of the Bank;

	
 
	
3.
	
Second Amended and Restated Guaranty Agreement dated as of June 19, 2014 (the “Guaranty”) made by the guarantors party thereto in favor of the Bank with respect to the obligations of the Borrower to the Bank; and

	
 
	
4.
	
All other documents, instruments, agreements, and certificates executed and delivered in connection with the Loan Documents listed in this Section A.

 

B.     The Loan Agreement is amended as follows:

 

	 	
1.
	
Section 1.1 of the Loan Agreement is hereby deleted and replaced with the following:

 

1.1.     Loans. The Bank has made or may make one or more loans (collectively, the “Loans”) to the Borrower subject to the terms and conditions and in reliance upon the representations and warranties of the Borrower set forth in this Agreement. The Loans shall be used by the Borrower for general corporate purposes including acquisitions permitted hereunder. As of February 21, 2017, the Loans include a revolving credit loan (the “Revolving Loan”) in the principal amount of up to $100,000,000. The Loans are or will be evidenced by a promissory note or notes of the Borrower and all renewals, extensions, amendments and restatements thereof (if one or more, collectively, the “Note”) acceptable to the Bank, which may set forth the interest rate, repayment and other provisions, the terms of which are incorporated into this Agreement by reference.

 

1.1.1. The Revolving Loan will include an investment and borrowing sweep feature on the terms and conditions of a Working Cash®, Line of Credit, Investment Sweep Rider (the “Sweep Rider”) to be executed and delivered by the Borrower to the Bank in form and substance satisfactory to the Bank, the terms of which are hereby incorporated herein by reference. The Sweep Rider will remain in effect until such time (if any) as it is terminated in accordance with its terms.

 

	 	
2.
	
The first sentence of Section 1.2 (Letters of Credit) of the Loan Agreement is hereby deleted and replaced with the following:

 

The Borrower may request that the Bank, in lieu of cash advances, issue trade or standby letters of credit (individually, a “Letter of Credit” and collectively the “Letters of Credit”) under the Revolving Loan in face amount in the aggregate at any time outstanding not to exceed $10,000,000.

 

 

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3.
	
The last sentence of Section 1.2 (Letters of Credit) of the Loan Agreement is hereby deleted and replaced with the following:

 

Notwithstanding the foregoing, after the occurrence and during the continuance of an Event of Default, the Letter of Credit Commission, as calculated above, shall be increased by two percent (2.00%) per annum.

 

	 	
4.
	
Section 1.3 of the Loan Agreement is hereby deleted and replaced with the following:

 

1.3.     Facility Fee. If, for any calendar quarter, the sum of the average daily outstanding balance of the Revolving Loan and the face amount of outstanding Letters of Credit does not equal the maximum facility amount of the Revolving Loan, then Borrower shall pay to the Bank a fee at a rate equal to the Applicable Margin per annum on the amount by which the maximum facility amount of the Revolving Loan exceeds such sum. Such fee shall be payable to the Bank in arrears on the first day of each calendar quarter with respect to the previous calendar quarter.

 

	 	
5.
	
Subsections (a), (b) and (c) of Section 1.4 (Applicable Margin) of the Loan Agreement are hereby deleted and replaced with the following:

 

(a)     The Borrower shall pay interest on the Loans in accordance with the Note. As used in this Agreement, the Note and the other Loan Documents, “Applicable Margin” means:

 

(i)     with reference to Loans, either (i) the amount specified in the table below in the column titled “LIBOR Applicable Margin” or (ii) the amount specified in the table below in the column titled “Base Rate Applicable Margin,” as applicable, that corresponds to the Leverage Ratio at the time in question; and

 

(ii)     with reference to the facility fee referred to in Section 1.3 above, the amount specified in the table below in the column titled “Facility Fee Applicable Margin” that corresponds to the Leverage Ratio at the time in question.

 

	
Pricing

Level
	
Leverage Ratio
	
LIBOR

Applicable

Margin
	
Base Rate

Applicable

Margin
	
Facility Fee

Applicable

Margin

	
I
	
< 1.00x
	
1.25%
	
0.25%
	
0.125%

	
II
	
>1.00x & < 1.50x
	
1.50%
	
0.50%
	
0.125%

	
III
	
>1.50x & < 2.00x
	
1.75%
	
0.75%
	
0.150%

	
IV
	
> 2.00x & < 2.50x
	
2.00%
	
1.00%
	
0.200%

	
V
	
> 2.50x & < 3.25x
	
2.25%
	
1.25%
	
0.250%

	
VI
	
> 3.25x
	
2.50%
	
1.50%
	
0.325%

 

(b)     The Leverage Ratio shall be calculated in the manner set forth in Section 4.11. All adjustments to the Applicable Margin based on the Leverage Ratio shall be effective prospectively on the first day of the fiscal quarter following the submission of the quarterly financial statements to the Bank for the prior fiscal quarter in accordance herewith. No downward adjustments shall occur if, at the time such downward adjustment would otherwise be made, there shall exist any Event of Default, provided that such downward adjustment shall be made on the first day of the quarter after the date on which the applicable Event of Default shall have been waived by the Bank in writing.

  

 

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Notwithstanding the foregoing, if the Leverage Ratio is less than or equal to 2.75 to 1.00 as of February 21, 2017 (after giving effect to the Acquisition of Atlas Lighting), then Pricing Level III shall be deemed to be the Applicable Margin until February 21, 2018 and the Applicable Margin shall thereafter be adjusted in accordance with the preceding paragraph.

 

(c)     If the quarterly financial statements are not timely delivered to the Bank for the end of the applicable fiscal quarter in accordance with Section 4.2, the Applicable Margin shall be conclusively presumed to equal the highest Applicable Margin specified in the pricing table set forth above until the date of delivery of such quarterly financial statements and the related compliance certificate, on which date the rate will be adjusted prospectively based upon the Leverage Ratio reflected in such quarterly financial statements. The application of the foregoing shall not be deemed a waiver of any rights the Bank may have as a result of the failure by the Borrower to deliver such financial statements or any related compliance certificate.

 

	 	
6.
	
The following Section 3.16 is hereby added to the Loan Agreement:

 

3.16.     Atlas Acquisition Agreement. The Borrower, simultaneously with the execution and delivery of the Third Amendment to Loan Documents between the Borrower and the Bank, has completed the purchase of the outstanding shares of Atlas Lighting Products, Inc. pursuant to that certain Stock Purchase Agreement dated as of February 21, 2017 (the “Atlas Acquisition Agreement”) among the Borrower, James Hewes Bennett, Rector Samuel Hunt III and Atlas Lighting Products, Inc., and the Borrower has good title to all of such shares, free and clear of all liens and encumbrances. The Borrower has delivered to the Bank a true and correct copy of the Atlas Acquisition Agreement; and the Atlas Acquisition Agreement has not been amended and none of its provisions have been waived by any of the parties thereto.

 

	 	
7.
	
Section 4.11(a) of the Loan Agreement is hereby deleted and replaced with the following:

 

(a)     Fixed Charge Coverage Ratio. The Borrower shall maintain as of the end of each fiscal quarter, on a rolling four quarters basis, a Fixed Charge Coverage Ratio of at least 1.20 to 1.00.

 

	 	
8.
	
Section 4.11(b) of the Loan Agreement is hereby deleted and replaced with the following:

 

(b)     Leverage Ratio. The Borrower shall maintain a Leverage Ratio of not more than the following for the following periods:

 

	
Period
	
Ratio

	
Four (4) fiscal quarters ending March 31, 2017
	
3.50 to 1.00

	
Four (4) fiscal quarters ending June 30, 2017
	
3.50 to 1.00

	
Four (4) fiscal quarters ending September 30, 2017
	
3.50 to 1.00

	
Four (4) fiscal quarters ending December 31, 2017
	
3.25 to 1.00

	
Four (4) fiscal quarters ending March 31, 2018
	
3.25 to 1.00

	
Four (4) fiscal quarters ending June 30, 2018
	
3.25 to 1.00

	
Four (4) fiscal quarters ending September 30, 2018
	
3.25 to 1.00

	
Four (4) fiscal quarters ending December 31, 2018
	
3.00 to 1.00

	
Four (4) fiscal quarters ending each quarter thereafter
	
3.00 to 1.00

  

 

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9.
	
The definition of “Consolidated EBITDA” set forth in Section 4.11 of the Loan Agreement is hereby deleted and replaced with the following:

 

“Consolidated EBITDA” means, for the relevant period, the sum of the Borrower’s (i) Consolidated net income, (ii) Consolidated income tax expense, (iii) Consolidated interest expense, (iv) Consolidated depreciation and amortization expenses and (v) other Consolidated non-cash expenses for the Borrower, all determined in accordance with GAAP; provided that there shall be excluded from Consolidated net income any extraordinary items of gain or loss (including, without limitation, those items created by mandated changes in GAAP). The historical EBITDA of Atlas Lighting shall be included as part of the Borrower’s Consolidated EBITDA.

 

	 	
10.
	
The following definitions are hereby added to Section 4.11 of the Loan Agreement in appropriate alphabetical order:

 

“Acquisition” means any transaction, or any series of related transactions, by which the Borrower or any of its Subsidiaries (a) acquires any going-concern business or all or substantially all of the assets of any Person, or division thereof, whether through purchase of assets, merger or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation having ordinary voting power for the election of directors or a majority (by percentage or voting power) of the outstanding ownership interests of a limited liability company, partnership or other Person.

 

“Atlas Lighting” means Atlas Lighting Products, Inc., a North Carolina corporation.

 

“Availability” means, at any time, an amount equal to the amount of the Revolving Loan minus (a) the aggregate outstanding amount of advances under the Revolving Loan and minus (b) the face amount of all outstanding Letters of Credit, in each case as reasonably determined by the Bank.

 

“Current Maturities” means the scheduled payments of principal on all Consolidated indebtedness for borrowed money having an original term of more than one year (including but not limited to amortization of capitalized lease obligations), as shown on the Borrower’s financial statements as of one year prior to the date of determination.

 

“Fixed Charge Coverage Ratio” means (i) Consolidated EBITDA divided by the sum of (ii) Consolidated capital expenditures, (iii) Consolidated cash taxes paid, (iv) Consolidated cash interest expense, (v) dividends and (vi) Current Maturities.

 

“Funded Debt” means all Consolidated indebtedness for borrowed money having an original term of more than one year, including but not limited to capitalized lease obligations, reimbursement obligations in respect of letters of credit, and guarantees of any such indebtedness.

 

“Permitted Acquisition” means the Acquisition of Atlas Lighting and any other Acquisition made by the Borrower or any of its Subsidiaries, provided that, (a) as of the date of the consummation of such Acquisition, no Default or Event of Default shall have occurred and be continuing or would result after giving effect to such Acquisition, (b) such Acquisition is consummated on a non-hostile basis, and no material challenge to such Acquisition shall be pending or threatened in writing by any shareholder or director of the seller or Person to be acquired, (c) the business to be acquired in such Acquisition is in the same line of business as the Borrower’s or a line of business incidental thereto, and (d) the total consideration paid in connection with such Acquisition does not exceed $20,000,000 unless, after giving effect to the completion of such Acquisition, (1) the pro forma Leverage Ratio is less than 2.0 to 1.0 and the Borrower shall have furnished to the Bank a certificate to that effect in reasonable detail and (2) Availability is not less than $20,000,000 on a pro forma basis (which includes all consideration given in connection with such Acquisition as having been paid in cash at the time of making such Acquisition) and the Borrower shall have furnished to the Bank a certificate to that effect in reasonable detail.

 

 

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11.
	
The following Section 4.13 is hereby added to the Loan Agreement:

 

4.13.     Acquisition Agreement. Amend, release, waive or fail to enforce any material provision of the Atlas Acquisition Agreement.

 

	 	
12.
	
Section 5.4 of the Loan Agreement is hereby deleted and replaced with the following:

 

5.4.     Mergers, Consolidations, Acquisitions, Etc. (a) Dissolve, liquidate or wind up their respective affairs, or become a party to any merger or consolidation; provided, however, any Subsidiary may merge into or consolidate with any other Subsidiary and any Subsidiary may merge into or consolidate with the Borrower, with the Borrower being the surviving Person; and provided, further, the Borrower may dissolve LSI MidWest Lighting Inc.; and provided, further, the Borrower or any Subsidiary may merge or consolidate with or into any other Person which is not a Subsidiary so long as (i) the Borrower or such Subsidiary, as the case may be, is the surviving Person, (ii) at the time of such merger or consolidation, no Default or Event of Default has occurred and is continuing and (iii) such merger or consolidation shall not itself cause there to be a Default or Event of Default; or (b) make any Acquisition other than a Permitted Acquisition.

 

	 	
13.
	
Schedule 3.15 to the Loan Agreement is hereby deleted and replaced with the following:

 

	
Schedule 3.15 - Equity Interests; Subsidiaries & Partnerships.

	
 

	
LSI MidWest Lighting Inc.

	
LSI Adapt Inc.

	
Grady McCauley Inc.

	
LSI Integrated Graphics LLC – 100% owned by LSI Lightron Inc.

	
LSI Kentucky, LLC

	
LSI Lightron Inc.

	
LSI Retail Graphics LLC – 100% owned by LSI Lightron Inc.

	
LSI ADL Technology LLC

	
LSI Controls Inc.

	
Atlas Lighting Products, Inc.

 

 

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C.
	
Conditions to Effectiveness of Amendment: The Bank’s willingness to agree to the amendments set forth in this Amendment is subject to the prior satisfaction of the following conditions:

 

	 	
1.
	
Amendment and Related Documents. The Bank shall have received from the Borrower and each Guarantor (each, a “Loan Party”) a duly executed counterpart of this Amendment, the Note, the Security Documents, and such other certificates, documents, instruments and agreements listed on the Closing Memorandum prepared in connection with this Amendment or as the Bank shall otherwise reasonably request.

 

	 	
2.
	
Closing Fee. The Borrower shall have paid to the Bank a one-time closing fee in the amount of $150,000. Such closing fee is fully earned on the date hereof and is nonrefundable.

 

	 	
3.
	
Financial Statements and Projections. The Bank shall have received (i) unaudited interim consolidated financial statements of the Loan Parties (except in the case of Atlas Lighting which financial statements are not consolidated with the other Loan Parties) for the fiscal quarter and year-to-date period ended September 30, 2016, and such financial statements shall not, in the reasonable judgment of the Bank, reflect any material adverse change in the financial condition of the Loan Parties since the most recent annual audited financial statements delivered to the Bank and (ii) satisfactory projections for the fiscal years 2016 through 2020.

 

	 	
4.
	
Closing Certificates; Certified Organizational Documents; Good Standing Certificates. The Bank shall have received (i) a certificate of each Loan Party, dated the Effective Date, which shall (A) certify the resolutions of its board of directors, members or other governing body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear the specimen signatures of the officers or other agents of such Loan Party authorized to sign the Loan Documents to which it is a party, and (C) include the articles of incorporation, articles of organization or other charter documents of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its regulations, operating agreement or similar agreement, and (ii) a good standing certificate for each Loan Party from its jurisdiction of organization.

 

	 	
5.
	
No Default Certificate. The Bank shall have received a certificate, signed by the chief financial officer of the Borrower as of the Effective Date (i) stating that no Event of Default has occurred and is continuing, (ii) stating that the representations and warranties contained in the Loan Agreement and other Loan Documents are true and correct as of such date, and (iii) certifying any other factual matters as may be reasonably requested by the Bank.

 

	 	
6.
	
Lien Searches. The Bank shall have received the results of a recent lien search in each of the jurisdictions where the Loan Parties are located, and such search shall reveal no liens on any assets of the Loan Parties except for liens permitted by the Loan Documents or discharged on or prior to the Effective Date pursuant to a pay-off letter or other documentation satisfactory to the Bank.

 

	 	
7.
	
Effective Date Availability. After giving effect to all advances under the Revolving Loan to be made on the Effective Date and the issuance of any Letters of Credit on the Effective Date and payment of all fees and expenses due hereunder, and with all indebtedness, liabilities, and obligations of the Borrower and the Guarantors current, the Borrower’s Availability plus encumbered cash on hand shall be not less than $20,000,000.

  

 

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8.
	
Atlas Acquisition Documents. The Bank shall have received the following with respect to the Acquisition of Atlas Lighting:

 

	 	
a.
	
Acquisition Agreement. A true and complete copy of the Atlas Acquisition Agreement, including all Exhibits and Schedules thereto.

 

	 	
b.
	
Payment of Indebtedness; Release of Liens. Satisfactory pay-off letters for all existing indebtedness of Atlas Lighting to be repaid in connection with the Acquisition of Atlas Lighting, confirming that all security interests and liens upon any of the assets of Atlas Lighting will be terminated concurrently with such payment (other than liens or security interests on items of equipment of an immaterial nature), and that all letters of credit issued or guaranteed as part of such indebtedness shall have been cash collateralized or supported by a Letter of Credit.

 

	 	
9.
	
Insurance. The Bank shall have received evidence of insurance coverage in form, scope and substance reasonably satisfactory to the Bank and otherwise in compliance with the terms of the Loan Agreement and the Security Documents.

 

	 	
10.
	
Legal Fees. The Borrower shall have paid, or reimbursed the Bank for, the sum of $18,000 in respect of the fees and expenses of the Bank’s counsel in connection with the preparation, negotiation, execution and delivery of this Amendment and the related documents.

 

	 	
11.
	
Costs and Expenses. The Borrower shall have paid, or reimbursed the Bank for, all other costs and expenses incurred by the Bank in connection with the structuring of the transactions contemplated by this Amendment and the negotiation, execution and delivery of this Amendment and the related documents, including but not limited to lien searches, filing fees and audit fees.

 

	 	
12.
	
No Material Adverse Change. (i) There shall not have occurred a material adverse effect on (a) the business, property, liabilities (actual and contingent), operations or condition (financial or otherwise), results of operations, or prospects of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower or any Guarantor to perform its obligations under the Loan Documents to which it is a party, or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Bank under the Loan Documents, or (ii) a material adverse change in the facts and information regarding the Borrower and its Subsidiaries as represented by such entities to date.

  

 

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CONSENT OF GUARANTOR

 

Each of the undersigned guarantors (individually and collectively, the “Guarantor”) consents to the provisions of the foregoing Amendment and all prior amendments (if any) and confirms and agrees that: (a) the Guarantor’s obligations under its Second Amended and Restated Guaranty Agreement dated as of June 19, 2014 (the “Guaranty”) relating to the Obligations mentioned in the Amendment shall be unimpaired by the Amendment; (b) the Guarantor has no defenses, set offs, counterclaims, discounts or charges of any kind against the Bank, its officers, directors, employees, agents or attorneys with respect to the Guaranty; and (c) all of the terms, conditions and covenants in the Guaranty remain unaltered and in full force and effect and are hereby ratified and confirmed and apply to the Obligations, as modified by the Amendment. The Guarantor certifies that all representations and warranties made in the Guaranty are true and correct.

 

The Guarantor hereby confirms that any collateral for the Obligations, including liens, security interests, mortgages, and pledges granted by the Guarantor or third parties (if applicable), shall continue unimpaired and in full force and effect, shall cover and secure all of the Guarantor’s existing and future Obligations to the Bank, as modified by the Amendment.

 

By signing below, each Guarantor who is an individual provides written authorization to the Bank or its designee (and any assignee or potential assignee hereof) to obtain the Guarantor's personal credit profile from one or more national credit bureaus. Such authorization shall extend to obtaining a credit profile for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account. A photocopy or facsimile copy of this authorization shall be valid as the original. By signature below, each such Guarantor affirms his/her identity as the respective individual(s) identified in the Guaranty.

 

The Guarantor ratifies and confirms the indemnification and waiver of jury trial provisions contained in the Guaranty.

 

WITNESS the due execution of this Consent as a document under seal as of the date of the Amendment, intending to be legally bound hereby.

 

	
 
	
LSI MIDWEST LIGHTING INC.
	
 

	 	LSI ADAPT INC.	 
	 	GRADY McCAULEY INC.	 
	 	LSI INTEGRATED GRAPHICS LLC	 
	 	LSI KENTUCKY, LLC	 
	 	LSI LIGHTRON INC.	 
	 	LSI RETAIL GRAPHICS LLC	 
	 	LSI ADL TECHNOLOGY LLC	 
	 	LSI CONTROLS INC.	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Ronald S. Stowell 
	
 

	
 
	
 
	
     Ronald S. Stowell
	
 

	
 
	
 
	
     Secretary and TreasurerEX-4.2

 Exhibit 4.2 

SNAP-ON INCORPORATED 

OFFICERS’ CERTIFICATE PURSUANT TO SECTION 3.01 OF THE INDENTURE 

February 21, 2017 

Pursuant to Section 3.01 of the Indenture dated as of January 8, 2007 (the “Indenture”), between Snap-on Incorporated (the “Company”) and U.S. Bank National Association, as trustee, the undersigned on behalf of the Company and in our respective capacities indicated below, hereby certify that we
have examined resolutions duly adopted at a meeting of the Board of Directors of the Company on November 3, 2016. Acting pursuant thereto, the undersigned hereby establish a series of Debt Securities (the “Notes”) by
means of this Officers’ Certificate, in accordance with the provisions of Section 3.01 of the Indenture: 
  

	 	1.	The title of the new series of Debt Securities shall be 3.250% Notes due 2027. U.S. Bank National Association shall be the trustee with respect to the Notes. 

 

	 	2.	The aggregate principal amount of the Notes that may be authenticated and delivered under the Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Notes pursuant to Article 3, the second paragraph of Section 4.03, or Section 11.04, of the Indenture) is initially $300,000,000; provided, however, that the Company shall have the right to “reopen” this
series of Debt Securities and to issue additional 3.250% Notes due 2027, which shall be part of the same series as the Notes initially issued; provided, further, however, that a separate CUSIP and ISIN will be issued for any
additional Notes unless the additional Notes and the Notes initially issued are fungible for U.S. federal income tax purposes. 

  

	 	3.	Principal on the Notes shall be payable on March 1, 2027. 

  

	 	4.	The Notes shall bear interest at a rate of 3.250% per annum, which interest shall accrue from February 21, 2017 and shall be payable semi-annually in arrears on March 1 and September 1 and on the maturity
date, beginning on September 1, 2017, to the persons in whose names the Notes are registered at the close of business on the preceding February 15 and August 15, respectively; provided, however, that interest payable on
the maturity date will be paid to the person to whom principal shall be payable. 

  

	 	5.	The principal of and premium, if any, and interest on the Notes shall initially be payable at the offices of U.S. Bank National Association, as paying agent. Payments of interest on the Notes will be made by wire
transfer of immediately available funds. Principal of and premium, if any, and interest on the Notes payable at Stated Maturity or other maturity date in respect of the Notes will be paid in immediately available funds upon surrender of the Notes at
the office of the Company’s paying agent. 

  

	 	6.	The Notes will be redeemable prior to maturity at any time at the Company’s option as described in the form of Note attached hereto as Exhibit A, notwithstanding anything to the contrary set forth in the
Indenture. The Company may, subject to compliance with applicable law, at any time, purchase any Notes in the open market or otherwise. 

	 	7.	The Company shall have no obligation to redeem or purchase the Notes pursuant to any sinking fund or analogous provision. 

  

	 	8.	The denominations in which the Notes shall be issuable shall be U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof. 

  

	 	9.	Payments of principal of and premium, if any, and interest on the Notes shall be payable in United States dollars. 

  

	 	10.	The Notes shall be issued in the form of fully registered Global Debt Securities in the form attached hereto as Exhibit A, which will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York (the “Depository”) and registered in book-entry form in the name of the Depository’s nominee, Cede & Co. Principal of and premium, if any, and interest payments on the Notes will be made to
the Depository or its nominee. 

  

	 	11.	Notwithstanding the provisions of Section 4.02 of the Indenture or any other provisions of the Indenture to the contrary, notice of any redemption to the Holders of the Notes may, in the Company’s discretion,
be subject to one or more conditions precedent, including completion of a corporate transaction. In such event, the related notice of redemption will describe each such condition and, if applicable, will state that, in the Company’s discretion,
the date of redemption may be delayed until such time as any or all such conditions shall be satisfied or waived, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been
satisfied or waived by the date of redemption, or by the date of redemption as so delayed. 

  

	 	12.	The covenants in the Indenture, as they relate to the Notes, are hereby amended as follows: 

(a)    In addition to the eleven exceptions enumerated under Section 5.05(a) of the Indenture, a twelfth exception is
added thereto for any Security Interest on assets and/or equity interests of a Subsidiary that is not organized under the laws of the United States of America, any state thereof or the District of Columbia that only secures obligations of one or
more of such Subsidiaries. 
 (b)    Notwithstanding Section 5.05(b) of the Indenture, in addition to the exceptions
enumerated under Section 5.05(a) of the Indenture, as modified hereby, the Company or a Restricted Subsidiary may issue, assume or guarantee other Secured Debt without securing the Notes if the total amount of Secured Debt outstanding
(excluding Secured Debt secured by the types of Security Interests set forth in Section 5.05(a) of the Indenture, as modified hereby) and the value of Sale and Leaseback Transactions (other than Sale and Leaseback Transactions in connection
with which indebtedness 

  
 2 

 
has been, or will be, retired in accordance with Section 5.06 of the Indenture) calculated in accordance with the Indenture at the time does not exceed 10% of the Company’s consolidated
total assets, determined as of a date not more than 90 days prior thereto. 
 (c)    Section 6.03 of the
Indenture is hereby amended and restated in its entirety as follows: 
 The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act of 1939, as amended, at the times and in the manner provided pursuant to such Act; provided
that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, shall be filed with the Trustee within 15 days after the same
are filed with the Commission. The Company shall be deemed to have so filed and transmitted such information, documentation, reports and summaries upon the filing thereof via the Commission’s Electronic Data Gathering, Analysis and Retrieval
System (or any successor system). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt thereof shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the Company’s compliance with any of our covenants applicable to the Notes (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates). 

(d)    The definitions of the following terms set forth in Section 1.01 of the Indenture are hereby amended and
restated in their entirety as follows: 
 “Secured Debt” means indebtedness for money borrowed secured by a Security
Interest in (a) any Principal Property or (b) any shares of capital stock or indebtedness of any Restricted Subsidiary that owns a Principal Property. 

“Security Interest” means any mortgage, pledge, lien, encumbrance, conditional sale agreement, title retention agreement or
other security interest which secures payment or performance of an obligation, excluding the interest of a lessor under an operating lease (with the determination of whether a lease constitutes an operating lease to be based upon generally accepted
accounting principles in effect as of the issue date of the Notes, without giving effect to any subsequent phase-in of the effectiveness of any amendments to generally accepted accounting principles that have
been adopted as of the issue date of the Notes). 
 “Unrestricted Subsidiary” means (a) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors (provided, however, that any Subsidiary of the Company having, as of the end of the Company’s most recently completed fiscal year,

  
 3 

 
(i) assets (after elimination of intercompany assets) with a value in excess of 5% of the total value of the assets of the Company and the Company’s Subsidiaries taken as a whole, or
(ii) gross revenue (after elimination of intercompany revenues) in excess of 5% of the Company’s total (gross) revenue and of the Company’s Subsidiaries taken as a whole, may not be designated as an Unrestricted Subsidiary under the
Indenture); and (b) any Subsidiary of an Unrestricted Subsidiary. 
 (e)    Section 13.01 of the Indenture is
hereby amended and restated in its entirety as follows: 
 Satisfaction and Discharge. The Notes, and the Indenture as it relates to
the Notes, will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Notes and certain rights of the Trustee, as expressly provided for in the Indenture), when: 

(1)    either (a) all of the Notes theretofore authenticated and delivered under the Indenture (except lost, stolen
or destroyed Notes that have been replaced or paid and Notes for the payment of which money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation, or (b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable, will become due and payable at their Stated Maturity within one year, or are to be
called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be
deposited with the Trustee funds, in an amount sufficient to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of and premium, if any, and interest on the Notes to the
date of deposit (in the case of Notes that have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with instructions from the Company irrevocably directing the Trustee to apply such funds to the
payment thereof at such Stated Maturity or Redemption Date, as the case may be; 
 (2)    the Company has paid all other
sums then due and payable with respect to the Notes under the Indenture by the Company; and 
 (3)    the Company has
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, which, taken together, state that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture as it relates to the Notes
have been complied with. 
 The Trustee, at the expense of the Company, shall, upon Company Request, execute proper instruments
acknowledging any discharge in accordance with the foregoing. 

  
 4 

 (f)    Section 13.02 of the Indenture is hereby amended and restated in
its entirety as follows: 
 Legal Defeasance and Covenant Defeasance. 

(a)    The Company may, at the Company’s option and at any time, elect to have all of the Company’s obligations
released, terminated and discharged with respect to the Notes (“Legal Defeasance”), except for: 

(1)    the rights of Holders of Outstanding Notes to receive payments in respect of the principal of, or interest or
premium, if any, on, the Notes when such payments are due from the trust referred to below; 
 (2)    the Company’s
obligations with respect to the Notes concerning temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, the maintenance of an office or agency for payment and money for security payments held in trust; 

(3)    the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s obligations in connection
therewith; and 
 (4)    the Legal Defeasance and Covenant Defeasance (as defined below) provisions. 

(b)    The Company may, at the Company’s option and at any time, elect to have the Company’s obligations
released, terminated and discharged with respect to Sections 5.05 to 5.09 of the Indenture, inclusive, Section 6.03 of the Indenture, Section 12.01 of the Indenture, the provisions of the Notes relating to Change of Control Repurchase
Events (as defined in the Notes), Section 7.01(d) of the Indenture as it relates to each of the foregoing provisions of the Indenture and the Notes and Sections 7.01(e) to 7.01(h) of the Indenture, inclusive (“Covenant
Defeasance”), and thereafter any failure to comply with such obligations or provisions will not constitute an Event of Default. In the event Covenant Defeasance occurs, any defeasible Event of Default will no longer constitute an Event of
Default. 
 (c)    To exercise either Legal Defeasance or Covenant Defeasance: 

(1)    the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash
in Dollars, Government Obligations, or a combination of Dollars and Government Obligations, in amounts as will be sufficient, in the opinion of a nationally-recognized investment bank, appraisal firm or firm of independent public accountants, to pay
the principal of, and interest and premium, if 

  
 5 

 
any, on, the Outstanding Notes on the Stated Maturity thereof or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to the
Stated Maturity thereof or to a particular Redemption Date; 
 (2)    in the case of Legal Defeasance, the Company must
deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the issue date of the
Notes, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the beneficial owners of the Outstanding Notes will not recognize income,
gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such Legal Defeasance
had not occurred; 
 (3)    in the case of Covenant Defeasance, the Company must deliver to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee confirming that the beneficial owners of the Outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; 

(4)    no Event of Default or event which with notice or lapse of time would become an Event of Default shall have
occurred and be continuing on the date of such deposit (other than an Event of Default resulting from the borrowing of funds to be applied to such deposit and/or the grant of any Security Interest to secure such borrowing); 

(5)    the deposit must not result in a breach or violation of, or constitute a default under, any other material
instrument to which the Company is a party or by which the Company is bound; 
 (6)    such Legal Defeasance or Covenant
Defeasance must not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which the Company is, or any Subsidiary of the Company is, a party or by which the Company is,
or any Subsidiary of the Company is, bound; 
 (7)    the Company must deliver to the Trustee an Officers’
Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the Company’s other creditors with the intent of defeating, hindering, delaying or defrauding the Company’s creditors
or the creditors of others; 

  
 6 

 (8)    the Company must deliver to the Trustee an Officers’ Certificate
stating that all conditions precedent set forth in clauses (c)(1) through (c)(6) above have been complied with; and 

(9)    the Company must deliver to the Trustee an Opinion of Counsel (which Opinion of Counsel may be subject to customary
assumptions, qualifications, and exclusions) stating that all conditions precedent set forth in clauses (c)(2), (c)(3) and (c)(6) above have been complied with. 

Section 13.02 of the Indenture, as modified by this Officers’ Certificate, shall apply to the Notes. 

 

	 	13.	For purposes of the Notes, in Section 7.01(e) of the Indenture, the reference to “$50,000,000” is hereby replaced with “$100,000,000”. 

Except as expressly modified in this Officers’ Certificate, capitalized terms used herein which are defined in the Indenture are used
herein as so defined. 
 [Signature Page Follows] 

  
 7 

 IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of the date
first set forth above. 
  

			
	SNAP-ON INCORPORATED
		
	By:	 	 /s/ Aldo J. Pagliari

	Name:	 	Aldo J. Pagliari
	Title:	 	Senior Vice President – Finance and Chief Financial Officer
		
	By:	 	 /s/ Irwin M. Shur

	Name:	 	Irwin M. Shur
	Title:	 	Vice President, General Counsel and Secretary

 [SIGNATURE PAGE TO OFFICERS’ CERTIFICATE 

PURSUANT TO SECTION 3.01 OF THE INDENTURE] 

 EXHIBIT A 

FORM OF NOTES 
 [See
attached] 

 Unless this certificate is presented by an authorized representative of the Depository to the
Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of the nominee of the Depository or in such other name as is requested by an authorized representative of the Depository
(and any payment is made to the nominee of the Depository or to such other entity as is requested by an authorized representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, the nominee of the Depository, has an interest herein. 
  

			
	REGISTERED	  	REGISTERED

 SNAP-ON INCORPORATED 

3.250% NOTE DUE 2027 
 CUSIP 833034
AK7 
  

			
	No. R-6	  	US$300,000,000

 SNAP-ON INCORPORATED, a corporation duly organized and existing under
the laws of the State 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 assignees, the
principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) on March 1, 2027 (the “Stated Maturity Date”), and to pay interest thereon from February 21, 2017, or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 of each year and at maturity (each, an “Interest Payment Date”), commencing on September 1, 2017 (in each case
excluding the Interest Payment Date), at the rate of 3.250% per annum, until the principal hereof becomes due and payable, and at such rate on any overdue principal and (to the extent that the payment of such interest shall be legally enforceable)
on any overdue installment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this 3.250% Note Due 2027 (this
“Note,” and all of the Notes collectively referred to herein as the “Notes”) (or one or more Predecessor Debt Securities) is registered at the close of business on the Regular Record Date for such interest, which
shall be the February 15 or August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date; provided, however, that interest payable on the Interest Payment Date occurring at maturity
will be paid to the person to whom principal shall be payable. Any such interest not punctually paid or duly provided for on any Interest Payment Date shall forthwith cease to be payable to the registered Holder on such Regular Record Date by virtue
of his having been such Holder, and may either be paid to the Person in whose name this Note (or one or more Predecessor Debt Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. If any Interest Payment Date, any Redemption Date (as defined below) or the Stated Maturity Date or other
maturity date in respect of the Notes falls on a day that is not a Business Day, then the payment to be made on such date will be made on the next Business Day without additional interest and with the same effect as if it were made on the originally
scheduled date. 
 Payments of interest will be made by wire transfer of immediately available funds. Principal and premium, if any, and
interest payable at Stated Maturity or other maturity date in respect of the Notes will be paid in immediately available funds upon surrender of the Notes at the office of a paying agent in The City of New York, New York or at such other office or
agency as the Company may designate. 

 Unless the certificate of authentication herein has been duly executed by the Trustee referred to
herein by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

This Note is one of a duly authorized issue of securities of the Company (the “Debt Securities”), issued or to be issued in
one or more series under an indenture, dated as of January 8, 2007 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee,” which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders
of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Note is one of the series of 3.250% Notes due 2027 initially limited in aggregate principal amount to $300,000,000, except
that the Company may, without the consent of the Holders, “reopen” the series and issue additional notes that have the same ranking, interest rate, Stated Maturity Date and other terms as this Note (except for the issue date and, in some
cases, the public offering price and the first interest payment date); provided, however, that a separate CUSIP and ISIN will be issued for any additional notes unless the additional notes and the Notes are fungible for U.S. federal
income tax purposes. 
 Prior to December 1, 2026, the Company may, at the Company’s option, redeem the Notes, in whole or from
time to time in part. The price payable for any Notes to be redeemed (the “Redemption Price”) on the date of redemption (each, a “Redemption Date”) prior to December 1, 2026 will be equal to the greater of
(i) 100% of the principal amount of the Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed (not including any portion of such payments of
interest accrued to the Redemption Date), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined below) plus 15 basis points, plus in either of case (i) or (ii) above, accrued and unpaid interest on the Notes being redeemed to, but not including, the Redemption Date. In addition, at any time on or after
December 1, 2026, the Company may, at the Company’s option, redeem the Notes, in whole or from time to time in part, at a Redemption Price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest
on the Notes being redeemed to, but not including, the Redemption Date. The principal amount of the Notes called for redemption shall become due on the Redemption Date. 

The Company will give written notice of any redemption at least 30 days but not more than 60 days prior to the Redemption Date to each Holder
at each such Holder’s address shown in the Debt Security Register for the Notes (or, as to Notes that are represented by a Global Debt Security, electronically in accordance with the Depository’s procedures). Notwithstanding anything to
the contrary herein, notice of any redemption to the Holders of the Notes may, in the Company’s discretion, be subject to one or more conditions precedent, including completion of a corporate transaction. In such event, the related notice of
redemption will describe each such condition and, if applicable, will state that, in the Company’s discretion, the Redemption Date may be delayed until such time as any or all such conditions shall be satisfied or waived, or such redemption may
not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied or waived by the Redemption Date, or by the Redemption Date as so delayed. If fewer than all of the Notes that are not represented
by a Global Debt Security are (or if less than all of the principal amount of Notes represented by a Global Debt Security is) to be redeemed, the Trustee will select, not more than 60 days prior to the Redemption Date, the particular Notes or
portions thereof for redemption from the outstanding Notes not previously called by such method as the Trustee deems fair and appropriate. 

  
 2 

 Notwithstanding the foregoing, installments of interest payable on the principal amount of Notes
being redeemed that are due and payable on an Interest Payment Date falling on a Redemption Date shall be payable on the Interest Payment Date to the registered Holders as of the close of business on the relevant Regular Record Date according to
this Note and the Indenture. 
 For purposes of determining the Redemption Price, the following definitions are applicable: 

“Comparable Treasury Issue” means the U.S. Treasury security selected by the Independent Investment Banker as
having a maturity comparable to the remaining term of the Notes to be redeemed that 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, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, (B) if the Independent Investment Banker obtains fewer
than three (3) such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations, or (C) if only one Reference Treasury Dealer Quotation is received, such Reference Treasury Dealer Quotation. 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company. 

“Reference Treasury Dealer” means (A) each of Citigroup Global Markets Inc. and J.P. Morgan Securities
LLC (or their respective affiliates that are Primary Treasury Dealers (as defined below)) and their respective successors, and two (2) other Primary Treasury Dealers selected by the Company; provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer. 

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any Redemption
Date, the average, as determined by the Independent Investment Banker, 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 Independent Investment
Banker by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual
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. The Treasury Rate
will be calculated on the third Business Day preceding the Redemption Date. 
 If a Change of Control Repurchase Event (as defined below)
occurs, unless the Company has exercised the right to redeem all of the Notes as described above by giving irrevocable notice of redemption on or prior to the 30th day after the date on which such Change of Control Repurchase Event occurs, each
Holder of the Notes will have the right to require the Company to purchase all or a portion of such Holder’s Notes pursuant to the Company’s offer described below, at a repurchase price equal to 101% of the aggregate principal amount of
Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but not including, the date of repurchase, subject to the rights of Holders of the Notes on the relevant record date to receive interest due and owing on the
relevant Interest Payment Date. 

  
 3 

 Within 30 days following any Change of Control Repurchase Event or, at the Company’s option,
prior to any Change of Control (as defined below), but after the public announcement of the transaction that constitutes or may constitute the Change of Control, the Company will give written notice to each Holder at each such Holder’s address
shown in the Debt Security Register for the Notes (or, as to Notes that are represented by a Global Debt Security, electronically in accordance with the Depository’s procedures), with a copy to the Trustee, describing the transaction or
transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase the Notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the
date on which such notice is given or, if the notice is given prior to the Change of Control, at least 30 days, but no more than 60 days, from the date on which the Change of Control Repurchase Event occurs, other than as may be required by law. The
notice, if given prior to the date of consummation of the Change of Control, shall state that the offer to repurchase the Notes is conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date specified in the
notice. 
 The Company must comply with the requirements of Rule 14e-1 under the Exchange Act (as
defined below) and any other securities laws and regulations under the Exchange Act 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 Repurchase Event. To the
extent that the provisions of any securities laws or regulations conflict with these Change of Control Repurchase Event provisions, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached
the Company’s obligations under these Change of Control Repurchase Event provisions by virtue of such compliance. 
 On the Change of
Control Repurchase Event payment date, the Company will, to the extent lawful: (1) accept or cause a third party to accept for payment all Notes or portions of Notes properly tendered pursuant to the Company’s offer; (2) deposit or
cause a third party to deposit with the paying agent an amount equal to the aggregate purchase price in respect of all Notes or portions of Notes properly tendered; and (3) deliver or cause to be delivered to the Trustee the Notes properly
accepted, together with an Officers’ Certificate stating the aggregate principal amount of Notes being repurchased. 
 The Company will
not be required to make an offer to repurchase the Notes upon a Change of Control Repurchase 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 such third party repurchases all Notes properly tendered and not withdrawn under such third party’s offer. 
 For purposes of this
Note, the following definitions are applicable: 
 “Below Investment Grade Rating Event” means the Notes
cease to be rated Investment Grade (as defined below) by at least two of the three Rating Agencies (as defined below) on any date within the 60-day period after the earlier of (i) the occurrence of a
Change of Control and (ii) the first public announcement by the Company (including, without limitation, any filing or report made in accordance with the requirements of the Securities and Exchange Commission or any press release or public
announcement made by the Company, the “Public Notice”) of the Company’s intention to effect a Change of Control (which 60-day period shall be extended for so long as any of the Rating
Agencies has publicly announced that it is considering a possible downgrade of the rating of the Notes); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed
to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event) if the Rating Agencies making the reduction in
rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at the Company’s request that the reduction was the result, in whole or in part, of any event or circumstance comprised
of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event). 

  
 4 

 “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 or as a pledge for security purposes only), in one or a series of related transactions, of all or
substantially all of the properties and assets of the Company and its Subsidiaries, taken as a whole, to any person, other than the Company and/or one or more of the Company’s Subsidiaries, other than any such transaction or series of related
transactions where holders of the Company’s Voting Stock outstanding immediately prior thereto hold Voting Stock of the transferee person representing a majority of the voting power of the transferee person’s Voting Stock immediately after
giving effect thereto; (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), directly or indirectly, of more than 50% of the Company’s then outstanding Voting Stock (as defined below) or other Voting
Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; or (3) the approval by the holders of the Company’s common stock of any plan or
proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control if (1) the Company becomes a direct or indirect wholly-owned subsidiary of a holding
company and (2)(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 satisfying the requirements of this sentence) is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), 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. 
 “Change of Control Repurchase Event” means the occurrence of
both a Change of Control and a Below Investment Grade Rating Event. Notwithstanding anything to the contrary, no Change of Control Repurchase Event will be deemed to have occurred in connection with any particular Change of Control unless and until
such Change of Control has actually been consummated. 
 “Exchange Act” means the U.S. Securities Exchange
Act of 1934, as amended. 
 “Fitch” means Fitch Ratings Inc. and its successors. 

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor
rating category of Moody’s); a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P); a rating of BBB- or better by
Fitch (or its equivalent under any successor rating category of Fitch); 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., a subsidiary of Moody’s Corporation, and its
successors. 
 “Rating Agency” means (1) each of Moody’s, S&P and Fitch; and (2) if any
of Moody’s, S&P or Fitch (or, in each case, any replacement thereof appointed pursuant to this definition) ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control,
a “nationally recognized statistical rating organization” as defined under Section 3(a)(62) of the Exchange Act, selected by the Company as a replacement agency for Moody’s, S&P and/or Fitch, as the case may be; provided that the
Company shall give notice of any such replacement to the Trustee. 

  
 5 

 “S&P” means S&P Global Ratings, a division of S&P
Global 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) 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. 

The Company shall have no obligation to redeem or purchase the Notes pursuant to any sinking fund or analogous provision. 

If an Event of Default with respect to the Notes shall have occurred and be continuing, the principal of all the Notes may be declared, or
shall become, due and payable in the manner and with the effect provided in the Indenture. 
 With the consent of the Holders of greater
than 50% in aggregate principal amount of the Outstanding Notes, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental to the Indenture for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture or of any indentures supplemental thereto or of modifying in any manner the rights of the Holders of the Notes; provided, however, that no such
supplemental indenture shall (a) without the consent of each Holder of each Outstanding Note affected thereby, extend the fixed maturity of the Notes, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal
amount thereof or any premium thereon, or make the principal thereof or interest or premium thereon payable in any coin or currency other than that provided herein, or (b) without the consent of the Holders of all of the Outstanding Notes
affected, reduce the percentage of Notes, the Holders of which are required to consent (i) to any such supplemental indenture, (ii) to rescind and annul a declaration that the Notes are due and payable as a result of the occurrence of an
Event of Default, (iii) to waive any past default under the Indenture and its consequences and (iv) to waive compliance with certain other provisions contained in the Indenture. 

The Company and the Trustee may also enter into an indenture or indentures supplemental to the Indenture without the consent of the Holders
for limited purposes specified in the Indenture. 
 The Holders of a majority in aggregate principal amount of the Outstanding Notes may on
behalf of the Holders of all the Notes waive any past default or Event of Default under the Indenture and its consequences except a default in the payment of principal of or premium, if any, or interest on the Notes. 

Holders of Notes may not enforce their rights pursuant to the Indenture or the Notes except as provided in the Indenture. No reference herein
to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place
and rate, and in the coin or currency, herein prescribed. 
 The Notes are issuable in registered form without coupons in denominations of
U.S.$2,000 and any integral multiple of U.S.$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes that are of other
authorized denominations. 
 Notes to be exchanged shall be surrendered at any office or agency maintained by the Company for such purpose,
and the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor the Notes which the Holder making the exchange shall be entitled to receive. Upon due presentment for registration of transfer of any Note at any such
office or agency, the Company shall execute and register and the Trustee shall 

  
 6 

 
authenticate and deliver in the name of the transferee or transferees a new Note for an equal aggregate principal amount. Registration or registration of transfer of any Note by the Debt Security
Registrar (initially, U.S. Bank National Association) in the registry books maintained by such Debt Security Registrar in The City of New York, New York, and delivery of such Note, duly authenticated, shall be deemed to complete the registration or
registration of transfer of such Note. 
 No service charge shall be made for any exchange or registration of transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or
the Trustee may treat the person in whose name a Note is registered as the owner for all purposes whether or not such Note be overdue and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 

Certain of the Company’s obligations under the Indenture with respect to the Notes may be terminated if the Company irrevocably deposits
with the Trustee money or eligible instruments sufficient to pay and discharge the entire indebtedness on all of the Notes, as described in the Indenture. 

This Note is in the form of a Global Debt Security as provided in the Indenture. If at any time the Depository notifies the Company that it is
unwilling or unable to continue as Depository for this Note or if at any time the Depository for the Notes shall no longer be eligible or in good standing under the Exchange Act, or other applicable statute or regulation, the Company shall appoint a
successor Depository with respect to this Note. If a successor Depository for this Note is not appointed by the Company within 90 days after the Company receives notice or becomes aware of such ineligibility, the Company will issue Notes in
definitive form in exchange for the Global Debt Security representing Notes in an aggregate principal amount equal to the principal amount of this Note in exchange for this Note. 

No recourse under or upon any obligation, covenant or agreement of the Indenture, any supplemental indenture, or of any Note, or for any claim
based thereon or hereon, or otherwise in respect thereof or hereof, as the case may be, shall be had against any incorporator, organizer, member, owner, manager, employee, stockholder, officer or director, as such, past, present or future, of the
Company or any Subsidiary or of any predecessor or successor Person, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such
liabilities being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 
 The
Notes are subject to defeasance, at the option of the Company, as provided in the Indenture. 
 All terms used in this Note which are not
defined herein, but which are defined in the Indenture shall have the meanings assigned to them in the Indenture, as modified by that certain Officers’ Certificate dated contemporaneously herewith pursuant to which this Note was established.

 [Remainder of Page Intentionally Left Blank] 

  
 7 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 

 

							
	Dated: February 21, 2017	 		 	SNAP-ON INCORPORATED
				
		 		 	By:	 	  

		 		 	Name:	 	Aldo J. Pagliari
		 		 	Its:	 	 Senior Vice President – Finance and

Chief Financial Officer

				
		 		 	By:	 	  

		 		 	Name:	 	Irwin M. Shur
		 		 	Its:	 	Vice President, General Counsel and Secretary

 [SIGNATURE PAGE TO NOTE] 

 CERTIFICATE OF AUTHENTICATION 

This is one of the Debt Securities of the series designated herein issued under the within-mentioned Indenture. 

U.S. BANK NATIONAL ASSOCIATION, a national banking association, 

  as Trustee 
  

			
	By:	 	  

		 	Authorized Officer

 [SIGNATURE PAGE TO NOTE] 

 ABBREVIATIONS 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations: 
 TEN COM — as tenants in common 

TEN ENT — as tenants by the entireties 

JT TEN — as joint tenants with right of survivorship and not as tenants in common 

UNIF GIFT MIN ACT — Uniform Gifts to Minors Act 

CUST — Custodian 
 Additional abbreviations
may also be used though not in the above list. 

 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE 
  

 
  

 
 PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE 
 the within Security and all rights thereunder, hereby irrevocably constituting and appointing
                     attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. 

 

					
	Dated:                                     
	  	  
	  	
		  	Signature	  	

 NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

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