Document:

sbsaa-ex101_481.htm

 

Exhibit 10.1

 

Execution Version

FORBEARANCE AGREEMENT

 

This FORBEARANCE AGREEMENT, dated as of May 8, 2017 (this “Agreement”), is by and among Spanish Broadcasting System, Inc., a corporation organized under the laws of Delaware (the “Company”), the Guarantors (together with the Company, the “Obligors”) and the undersigned beneficial holders or investment managers or advisors for such beneficial holders (together with any party that executes a Forbearance Joinder Agreement (as defined below) after the date hereof, the “Supporting Holders”) of the Company’s 12.5% Senior Secured Notes due 2017 (the “Notes”).

 

WHEREAS, the Company, the Guarantors1 and Wilmington Trust, National Association, as Trustee (the “Trustee”) and Collateral Agent (the “Collateral Agent”), are parties to (1) the Indenture, dated as of February 7, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”) under which the Notes were issued and (2) the Security Agreement, dated as of February 7, 2012 and any related documents and instruments that serves to grant and provide collateral to the Collateral Agent (as amended, restated, supplemented or otherwise modified from time to time, and collectively, the “Security Documents”). The Guarantors have issued their Guarantee under a Guarantee Agreement (the Notes, the Indenture, the Security Documents, the Guarantee Agreement and the Guarantees, collectively, the “Notes Documents”).

 

WHEREAS, the current principal amount outstanding of such Notes is $275,000,000;

 

WHEREAS, the final maturity date of the Notes occurred on April 15, 2017 (the “Maturity Date”) and the Company is exploring a potential repayment of the Notes or other potential restructuring or recapitalization transaction, and any related asset sales, in each case involving the Company (the “Potential Transaction”);

 

WHEREAS the Company (a) has not paid the principal amount of the Notes that was due and payable on the Maturity Date and an Event of Default exists under the Indenture and (b) moved certain funds maintained in bank accounts subject to one or more deposit account control agreements in favor of the Collateral Agent (the “Control Accounts”), which constitutes a Default under the Notes Documents ((a) and (b) collectively, the “Specified Defaults”);

 

WHEREAS, as a result of the Specified Defaults, the Holders, the Trustee and the Collateral Agent have the immediate right to exercise any and all remedies under the Notes Documents, including, without limitation, (a) charging default rate interest, (b) the initiation or continuation of any legal action against the Company or any Guarantor, (c) instructing the Collateral Agent or the Trustee to take any action permitted under the Notes Documents or applicable law, (d) the preparation for or initiation of any legal process for payment or otherwise permitted under the Notes Documents or applicable law (including but not limited to, any enforcement action), and (e) aiding or assisting another creditor or any preferred stockholder of the Company or the Guarantors intentionally or knowingly in furtherance of any of the foregoing (collectively, all such rights and remedies the “Rights and Remedies”); and

 

WHEREAS, to facilitate discussions in respect of a Potential Transaction, the Obligors have requested that each of the Supporting Holders agree temporarily to forbear in the exercise of their Rights and Remedies solely to the extent arising from the occurrence and continuation of the Specified Defaults, subject to the terms and conditions of this Agreement.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

SECTION I. ACKNOWLEDGMENTS

 

1.01 Each of the Obligors hereby acknowledges and agrees, upon execution and delivery of this Agreement, but subject to the terms of this Agreement, that:

 

(a) The recital of facts set forth in this Agreement is true and correct in all material respects;

 

(b) The principal amount under the Notes of $275,000,000 is due and validly owing as of the Maturity Date by the Obligors and is not subject to any right of offset, deduction, claim, or counterclaim in favor of any Obligor;

	
	 

	
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 Capitalized terms not otherwise defined in this Agreement shall have the meanings assigned thereto in the Indenture

 

 

 

(c) The Specified Defaults (i) have occurred and are continuing, (ii) constitute a Default or an Event of Default under the Indenture without the need for any notice to the Obligors, and (iii) have not been cured by the Obligors, and as a consequence thereof, and subject to and but for the terms of this Agreement, the Holders, the Trustee and the Collateral Agent are free to exercise the Rights and Remedies without the need for any notice to the Obligors;

 

(d) Obligors hereby ratify and affirm the Notes Documents and acknowledge that the Notes Documents are and shall remain unchanged and in full force and effect. Obligors agree that the Notes Documents constitute valid and binding obligations and agreements of Obligors enforceable by the Trustee and the Holders, the Trustee and the Collateral Agent against Obligors in accordance with their respective terms;

 

(e) Subject to the terms of this Agreement, the Supporting Holders have not waived, released or compromised, do not hereby waive, release or compromise, and may never waive, release or compromise any events, occurrences, acts, or omissions that may constitute or give rise to any Defaults or Events of Default, including without limitation the Specified Defaults, that existed or may have existed, exist or may presently exist, or may arise in the future, nor does the any Supporting Holder waive any Rights and Remedies, including without limitation, the right to direct the Trustee to commence to exercise the remedy of foreclosure as to any property pledged as collateral in connection with the Notes Documents;

 

(f) The execution and delivery of this Agreement shall not: (i) constitute an extension, modification, or waiver of any aspect of the Indenture; (ii) extend the terms of the Notes or the due date of any of the Notes; (iii) give rise to any obligation on the part of the Supporting Holders to extend, modify or waive any term or condition of the Notes; (iv) establish any course of dealing with respect to the Notes; or (v) give rise to any defenses or counterclaims to the right of the Supporting Holders to compel payment of the Notes or otherwise enforce their rights and remedies set forth in the Notes Documents;

 

(g) Except as expressly provided herein, the Supporting Holders’ agreement to forbear in the exercise of their Rights and Remedies and to perform as provided herein shall not invalidate, impair, negate or otherwise affect the Trustee’s or Supporting Holders’ ability to exercise their Rights and Remedies under the Notes Documents, and otherwise.

 

SECTION II. FORBEARANCE

 

2.01 Forbearance. In consideration of the Obligors’ agreement of timely and strict compliance with the terms of this Agreement, and in reliance upon the representations, warranties, agreements and covenants of Obligors set forth herein, subject to the satisfaction of each of the conditions precedent to the effectiveness of this Agreement, from the Agreement Effective Date (as defined below) until the Termination Date (as defined below), each Supporting Holder (severally and not jointly) hereby agrees to forbear (the “Forbearance”) from exercising any of the Rights and Remedies under the Notes Documents or applicable law solely with respect to the Specified Defaults. For the avoidance of doubt, during the Forbearance Period, each Supporting Holder agrees that it (individually or collectively) will not deliver any notice or instruction to the Trustee or Collateral Agent relating to the Control Accounts, and to the extent that, during the Forbearance Period, the Trustee or Collateral Agent delivers any notice or instruction relating to the Control Accounts, the Supporting Holders will promptly deliver written notice to the Trustee and/or Collateral Agent (with a copy to the Company and the recipient bank of such notice) instructing the Trustee or Collateral Agent, as the case may be, to rescind any and all notices relating to the Control Accounts.

 

2.02 Forbearance Period. The Forbearance shall commence on the Agreement Effective Date (as defined below) and continue until the earlier of (a) May 31, 2017 at 12:01 a.m. New York City time and (b) the date on which any Event of Termination (as defined below) shall have occurred (the earlier of (a) and (b), the “Termination Date” and the period commencing on the Agreement Effective Date and ending on the Termination Date, the “Forbearance Period”). From and after the Termination Date, the Forbearance shall immediately and automatically terminate and have no further force or effect, and each of the Supporting Holders shall be released from any and all obligations and agreements under this Agreement and shall be entitled to exercise any of the Rights and Remedies as if this Agreement had never existed, and all of the Rights and Remedies under the Indenture, the Security Documents and in law and in equity shall be available without restriction or modification, as if this Forbearance had not occurred.

 

SECTION III. EVENTS OF TERMINATION.

 

3.01 Events of Termination. The Forbearance Period shall automatically terminate if any of the following events shall occur (each, an “Event of Termination”):

 

(a) the failure of any Obligor to comply with any term, condition or covenant set forth in this Agreement;

 

(b) other than the Specified Default relating to the non-payment of principal due under the Notes, there occurs 

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either any (i) Event of Default or (ii) Default under the Indenture that is not cured within five (5) business days after the Company’s receipt of written notice from any of the Supporting Holders;

 

(c) any Obligor commences a case under title 11 of the United States Code or any equivalent;

 

(d) the Company notifies any Supporting Holder or its representatives that it is terminating discussions with the Supporting Holder regarding a Potential Transaction; or

 

(e) Any holder of the Company’s issued and outstanding 10.75% Series B cumulative exchangeable redeemable preferred stock (the “Series B Preferred Stock”) institutes any legal action against any of the Supporting Holder Indemnified Parties (as defined below), the Trustee or Collateral Agent, which action is not dismissed or stayed within ten (10) business days from the date on which service of process of such action is served on the Supporting Holder Indemnified Parties, the Trustee or Collateral Agent.

 

SECTION IV. OTHER AGREEMENTS

 

4.01 Accrued Interest.

 

(a) The Company has paid pursuant to the terms of the Notes and the Indenture, on April 17, 2017, accrued and unpaid interest due and payable on the Notes as of April 15, 2017 in the amount of $17,187,500.

 

(b) The Company and Obligors agree that during the Forbearance Period, interest on all outstanding Obligations, including the unpaid principal amount of the Notes, shall continue to accrue at a rate of 12.5% per annum pursuant to the terms of the Indenture. The Company shall pay on May 15, 2017, such interest that will accrue from April 15, 2017 through and including May 15, 2017 (which, for the avoidance of doubt, is equal to $2,864,583.33), and shall pay on June 15, 2017, such interest that will accrue from May 16, 2017 through and including June 15, 2017 (which, for the avoidance of doubt, is equal to $2,864,583.33).

 

4.02 Consent Fee. Within three (3) business days of the Agreement Effective Date (as defined below), the Company shall pay, pursuant to wire instructions that will be provided to the Company within one business day following the Agreement Effective Date, to each of the Supporting Holders a consent fee in cash equal to .35% of the principal amount of Notes held by such Supporting Holder (the “Consent Fee”). For the avoidance of doubt, the Obligors acknowledge and agree that the Consent Fee shall be fully earned on the Agreement Effective Date.

 

4.03 Negative Covenants. The Obligors covenant that during the Forbearance Period, each of Obligors shall not:

 

(a) Make any payment, distribution or transfer or provide any other consideration to any holder of, or on account of, any of the Notes other than the payments specified in Sections 4.01 and 4.02 above or in respect of asset sales in accordance with Section 4.03(c) below.

 

(b) Make any payment, dividend, distribution or transfer or provide any other consideration to any holder of, or on account of, the Series B Preferred Stock or, other than payments unrelated to the Series B Preferred Stock and made in the ordinary course of any Obligor, to any holder of any other equity interest in the Company.

 

(c) Except as expressly provided herein or with respect to certain non-core asset sales, use, sell or lease, other than in the ordinary course of business, any property or assets of any of the Obligors; provided, that within three (3) business days of the closing of any sale described in this Section 4.03(c), all proceeds of such sales shall be used to repay the Notes.

 

(d) Purchase, redeem, defease, exchange, or otherwise acquire for value any Equity Interests of the Company, including any of the Series B Preferred Stock, or amend, modify, supplement, or waive any of the governing documents for the Series B Preferred Stock.

 

(e) (i) Incur (as defined in section 4.04 of the Indenture), directly or indirectly, any Indebtedness or (ii) create, Incur (as defined in section 4.04 of the Indenture) or suffer to exist any Lien upon any of its property or assets or income or profits therefrom, or collaterally assign or convey as collateral any right to receive income therefrom, in each case that is not used immediately to irrevocably repay the Notes.

 

4.04 Retention of Professionals; Expenses.

 

(a) The Company hereby acknowledges and agrees that the Supporting Holders have hired Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul, Weiss”) in connection with the execution of this Agreement and the Potential Transaction. 

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The Company shall pay the reasonable and documented fees and expenses of Paul, Weiss in accordance with the engagement letter executed with Paul, Weiss, provided that any such fees and expenses shall only be payable if the Supporting Holders continue to hold in excess of 75% of the outstanding principal amount of the Notes.

 

(b) The Company understands that Paul, Weiss, on behalf of the Supporting Holders have hired Moelis & Co. (“Moelis” and, together with Paul, Weiss, the “Advisors”). The Company shall pay a flat, one-time fee of $250,000 to Moelis in connection with Moelis’ services to the Supporting Holders during the Forbearance Period (the “Moelis Due Diligence Fee”). The Obligors agree that (i) the indemnity attached hereto as Exhibit B is included in, and made part of, this Agreement, but only with regard to Actions (as defined in Exhibit B) that arise from, are in connection with or relate to services performed or activities occurring prior to the end of the Forbearance Period, and (ii) that Moelis is an express third party beneficiary of this Section 4.04(b) and Exhibit B.

 

4.05 Information. The Obligors shall provide to the Advisors:

 

(a) no later than the date set forth in Section 4.11 of the Indenture, the quarterly reports described therein;

 

(b) promptly and in any event within one business day of the occurrence thereof, written notice regarding the occurrence of (i) any Event of Termination or (ii) any other event which could reasonably be expected to have a material adverse effect on the Obligors or their businesses or assets;

 

(c) twice weekly reports regarding the status of or any developments in connection with the Potential Transaction, provided that, any such reports may be replaced with a conference call between representatives of the Company and the Supporting Holders to discuss the topics referred to above;

 

(d) upon written request of the Advisors, any information that is reasonably necessary to evaluate the Company and its Affiliates, the Potential Transaction (including copies of any term sheets, letters of intent, or other similar agreements received by or delivered to the Company), any underlying financial information necessary to evaluate any Potential Transaction, and to verify the Obligors’ compliance with the terms of this Agreement and the Indenture (other than with respect to the Specified Default), such information shall be provided to the Advisors as promptly as practicable following the Advisors’ written request for such information, provided that the Obligors shall not be required to provide any historical or past financial information related to their television business; and

 

(e) Within one (1) business day after distribution thereof, copies of any diligence materials given to any other holders of the Notes, any holders of the Series B Preferred Stock (or the advisors for such holders) or (to the extent not included in a data room to which Moelis has access) potential financing sources.

 

4.06 Release. Each Obligor (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge each of the Supporting Holders, together with each of their respective Affiliates, and each of the directors, officers, members, employees, agents, attorneys and consultants of each of the foregoing (collectively, the “Released Parties”), from any and all debts, claims, allegations, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case, on or prior to the date hereof directly arising out of, connected with or related to this Agreement, the Indenture or any other Notes Document, or any act, event or transaction related or attendant thereto, or the agreements of any Supporting Holder contained therein, or the possession, use, operation or control of any of the assets of any Obligor. Each Obligor represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby.

 

4.07 Confidentiality.

 

(a) Subject to entry into a confidentiality agreement in form and substance acceptable to the Company and each Supporting Holder, each Supporting Holder agrees that all information relating to the Company, the Guarantors or any other Subsidiary or Affiliate of the Company, the Notes Documents or the matters contemplated that is received by such Supporting Holder in connection with the performance by any party of this Agreement will be maintained in confidence and will not be disclosed to third parties, except to the extent permitted under such confidentiality agreement.

 

(b) The Obligors agree that all information provided by the Supporting Holders hereunder, including the identity of and amount of Notes held by each Supporting Holder, will be maintained in confidence and will not be disclosed publicly or 

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to third parties other than the Company’s advisors and agents, except as may be required by a court or other governmental agency. If the Company publicly files a copy of this Agreement with the SEC or otherwise it shall redact each of the Supporting Holder’s signature pages in any such filing so as to not disclose such Supporting Holder’s identity or holdings information.

 

4.08 Notices. The Company hereby agrees to notify the Supporting Holders promptly in writing of (a) any failure by any of the Obligors to comply with their obligations set forth in this Agreement or (b) the receipt by any of the Obligors of any material complaint or demand by any person against the any of the Obligors.

 

SECTION V. REPRESENTATIONS AND WARRANTIES

 

In consideration of the foregoing agreements, the Company and each Guarantor jointly and severally hereby represent and warrant to each Supporting Holder, and each Supporting Holder severally but not jointly hereby represents and warrants to the Company and the Guarantors, as follows:

 

5.01 Such party is duly organized, is validly existing and is not in violation in any respect of any term of its charter, bylaws or other constitutive documents; the execution, delivery and performance of this Agreement are within such party’s power and have been duly authorized by all necessary action; and such party is voluntarily entering into this Agreement.

 

5.02 This Agreement constitutes a valid and legally binding agreement, enforceable against such party in accordance with its terms.

 

5.03 No consent or authorization of, filing with, notice to or other act by or in respect of, any governmental or regulatory authority or any other person is required in connection with such party’s entry into, and performance of, this Agreement, except for consents, authorizations, filings and notices which have been obtained or made and are in full force and effect or which are immaterial in nature; and the entry into and performance of this Agreement by such party does and will not conflict with, or result in the default under, any material agreement or document of such party, its constituent documents or any applicable law, regulation or court order, consent or ruling.

 

5.04 Each Supporting Holder represents and warrants that, as of the date hereof, it beneficially holds, or advises or manages for a beneficial holder, the principal amount of Notes set forth on the signature page attached hereto; and to that extent it advises or manages the Notes for any beneficial holder, it has the authority to enter into this Agreement on behalf of any such beneficial holder and that this Agreement is a valid and legally binding agreement, enforceable against that holder and such party.

 

5.05 The Company represents, as of the date of this Agreement that there are no Events of Default that have occurred and are continuing under the Notes other than the Specified Defaults.

 

5.06 The parties to this Agreement acknowledge that nothing in this Agreement, including the presentation of drafts from one party to another, constitutes the making of an offer to sell or the solicitation of an offer to buy securities or loans of any kind or the solicitation of a consent or waiver of any rights under any of the Notes Documents and the entry into this Agreement shall not constitute, directly or indirectly, an incurrence, a refinancing, an extension or a modification in any way of any debt or a recapitalization or restructuring in any way of the obligations of the Obligors.

 

5.07 The Supporting Holders have not made any assurances concerning (a) the manner in which or whether any Specified Default may be resolved or (b) any additional forbearance, waiver, restructuring or other accommodations.

 

SECTION VI. RATIFICATION OF EXISTING AGREEMENTS

 

6.01 During the Forbearance Period, no Supporting Holder may transfer its rights under the Notes or the Indenture to another party unless (a) the party acquiring such rights (i) is a Supporting Holder or (ii) agrees in writing to be bound by this Agreement and enters into the Forbearance Joinder Agreement and (b) such Supporting Holder promptly notifies the Company and the other Supporting Holders party hereto of such transfer.

 

6.02 This Agreement shall in no way be construed to preclude any Supporting Holder from acquiring additional Notes, provided, however, that any such additional Notes automatically shall be counted as part of the Notes subject to the terms of this Agreement.

 

6.03 The Obligors and the Supporting Holders hereby acknowledge and agree that, (a) the relationships between the Obligors and the Supporting Holders are governed by the Notes Documents and this Agreement, (b) no fiduciary duty or special relationship is or will be created by any discussions regarding any possible amendment, waiver or forbearance, (c) the rights and obligations of the Supporting Holders under this Agreement are several and not joint and no Supporting Holder shall be liable or 

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responsible for obligations of any other Supporting Holder, (d) no Supporting Holder has made to any Obligor, and no Obligor has made to any Supporting Holder, any promise, commitment or representation of any kind or character with respect to any forbearance or other matter as of the date of this Agreement other than as set forth in this Agreement, (e) no Person has any obligation to engage in discussions with any other Person after the date hereof regarding any further forbearance and (f) no Supporting Holder and no Obligor has any obligation under any circumstances to amend, waive, supplement or otherwise modify the terms of the Notes Documents, offer any discounted payoff of the Notes, refinance or exchange the Notes, vote or refrain from voting or otherwise acting with respect to its Notes, extend the forbearance period, grant any other forbearance, agree to any amendment, supplement, waiver or other modification or any Potential Transaction, enter into any definitive documentation in connection with a Potential Transaction, or extend any other accommodation, financial or otherwise, to any Obligor or any of its Affiliates.

 

SECTION VII. MISCELLANEOUS

 

7.01 Condition Precedent to Effectiveness of this Agreement. This Agreement and the Forbearance shall become effective only upon satisfaction in full of the following conditions precedent, unless waived in writing by each of the Supporting Holders (the date on which such conditions are satisfied or waived, the “Agreement Effective Date”):

 

(a) The parties to this Agreement shall have received counterparts of this Agreement duly executed by the Company, the Guarantors and beneficial holders, or investment managers or advisors for such beneficial holders, of more than 75% of the outstanding principal amount of the Notes;

 

(b)The Company shall have paid the Moelis Due Diligence Fee;

 

(c) The Company shall have transferred balance of funds into the Control Accounts that were removed by the Company and deposited into accounts that are not Control Accounts; and

 

(d) The Company shall have made the payments required to be made pursuant to

Section 4.01 above.

 

Notwithstanding anything herein to the contrary, if the Agreement Effective Date does not occur on or before May 10, 2017, then this Agreement shall automatically terminate without further notice or action by any party.

 

7.02 Assistance with Asset Sales. With regard to any asset sale that has been agreed to by the Supporting Noteholders, the Supporting Noteholders shall use commercially reasonable efforts to ensure that the Trustee and/or Collateral Agent provide any release or liens or mortgages necessary to close on any such asset sale.

 

7.03 More Favorable Agreements. If the Company has entered into or at any time on or after the date hereof enters into a forbearance or similar agreement with any other holder of Notes that contains terms more favorable to such holder than those contained in this Agreement (each such agreement, a “More Favorable Agreement”), such terms shall automatically be incorporated herein at the option of the Supporting Holders. The Company shall (a) promptly notify the Supporting Holders of its entry into a More Favorable Agreement, including the identity of the other party to such More Favorable Agreement, and (b) promptly provide a copy of such More Favorable Agreement to the Supporting Holders.

 

7.04 Counterparts. This Agreement may be executed and delivered in any number of counterparts with the same effect as if the signatures on each counterpart were upon the same instrument. Any counterpart delivered by facsimile or by other electronic method of transmission shall be deemed an original signature thereto.

 

7.05 Interpretive Matters.

 

(a) Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, and the term “including” is not limiting. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, subsection and clause references herein are to this Agreement unless otherwise specified.

 

(b) The term “person” as used in this Agreement shall be broadly interpreted to include, without limitation, any individual, corporation, company, partnership or other entity.

 

7.06 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Each party hereto hereby irrevocably and unconditionally consents to submit to the non-exclusive jurisdiction of the federal and state courts in the Borough of Manhattan, City of New York for any action, suit, or proceeding arising out of or relating to this Agreement and the transactions contemplated by this Agreement. Each party hereto hereby irrevocably and unconditionally waives 

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any objection to the laying of venue of any action, suit, or proceeding arising out of this Agreement in any such court and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.

 

7.07 Taxes. The parties agree that payments hereunder shall be made free and clear of, and without deduction or withholding for or on account of, any taxes; provided that if the Company or any other applicable withholding agent shall be required by any applicable requirement of law to deduct or withhold any taxes from any such payment, then the amount payable by the Company shall be increased as necessary so that after all required deductions and withholdings have been made (including deductions or withholdings applicable to additional sums payable under this sentence) the applicable Supporting Holder receives an amount equal to the sum it would have received had no such deductions or withholdings been made. The Company’s obligations under this Section 7.06 shall survive any termination of this Agreement.

 

7.08 Successors and Assigns. This Agreement shall be binding upon each of the Company, the Guarantors, the Supporting Holders and their respective successors and assigns, and shall inure to the benefit of each such person and their permitted successors and assigns.

 

7.09 Additional Parties. Without in any way limiting the provisions hereof, additional holders or beneficial owners of Notes may elect to become parties to this Agreement by executing and delivering to the Company a joinder agreement substantially in the form of Exhibit A hereto. Such additional holder or beneficial owner of Notes shall become a Supporting Holder under this Agreement in accordance with the terms of this Agreement.

 

7.10 Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

 

7.11 Integration. This Agreement contains the entire understanding of the parties hereto with regard to the subject matter contained herein. This Agreement supersedes all prior or contemporaneous negotiations, promises, covenants, agreements and representations of every nature whatsoever with respect to the matters referred to in this Agreement, all of which have become merged and finally integrated into this Agreement. Each of the parties hereto understands that in the event of any subsequent litigation, controversy or dispute concerning any of the terms, conditions or provisions of this Agreement, no party shall be entitled to offer or introduce into evidence any oral promises or oral agreements between the parties relating to the subject matter of this Agreement not included or referred to herein and not reflected by a writing included or referred to herein.

 

7.12 Jury Trial Waiver. The Company, the Guarantors and the Supporting Holders, by acceptance of this Agreement, mutually hereby knowingly, voluntarily and intentionally waive the right to a trial by jury in respect of any litigation based herein, arising out of, under or in connection with this Agreement and the Notes Documents or any other documents contemplated to be executed in connection herewith, or any course of conduct, course of dealings, statements (whether verbal or written) or actions of any party, including, without limitation, any course of conduct, course of dealings, statements or actions of any Supporting Holder relating to the administration of the Notes or enforcement of the Notes Documents arising out of tort, strict liability, contract or any other law, and agree that no party will seek to consolidate any such action with any other action in which a jury trial cannot be or has not been waived.

 

7.13 Amendment. This Agreement may only be amended or modified in writing by the Company, the Guarantors and each Supporting Holder.

 

7.14 Indemnity. In the event that one or more holders of the Series B Preferred Stock shall have instituted legal action against any of the Supporting Holders or any of their affiliates, subsidiaries, managed accounts, or any of their respective officers, directors, employees, members, representative agents, consultants, attorneys or advisors (the “Supporting Holder Indemnified Parties”), the Obligors, jointly and severally, shall indemnify and hold harmless such Supporting Holder Indemnified Parties from any losses, claims, damages, or liabilities resulting therefrom or related thereto, including all fees and expenses (including legal fees) incurred in connection with defending against any such legal action.

 

 

 

 

 

[Remainder of page intentionally left blank; signature pages follow] 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
 
	
SPANISH BROADCASTING SYSTEM, INC.

	
 
	
 
	
 

	
 
	
By:
	
/s/ Joseph A. Garcia 

	
 
	
 
	
Name: Joseph A. Garcia

	
 
	
 
	
Title: SVP & CFO

	
 
	
 
	
 

	
 
	
EACH OF THE GUARANTORS

	
 
	
 
	
 

	
 
	
By:
	
/s/Joseph A. Garcia

	
 
	
 
	
Name: Joseph A. Garcia

	
 
	
 
	
Title: SVP & CFO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Forbearance Agreement]

 

 

 

Exhibit A

 

[FORM OF FORBEARANCE JOINDER AGREEMENT]

 

[●], 2017

 

Spanish Broadcasting System, Inc.

7007 NW 77th Avenue

Miami, Florida 33166

Attention: Richard Lara, General Counsel and Secretary

 

RE: Forbearance Agreement

 

Ladies and Gentlemen:

 

Reference is made to the Forbearance Agreement dated as of April [●], 2017 entered into between the Company, the Guarantors; and the Supporting Holders party thereto (such Forbearance Agreement, as in effect on the date hereof and as it may hereafter be amended, supplemented or otherwise modified from time to time, together with this Forbearance Joinder Agreement, being the “Forbearance Agreement”). Any capitalized terms not defined in this Forbearance Joinder Agreement have the meanings given to them in the Forbearance Agreement.

 

SECTION I. Joining Obligations Under the Forbearance Agreement. The undersigned hereby agrees, as of the date first above written, to join and to be bound as a Supporting Holder by all of the terms and conditions of the Forbearance Agreement to the same extent as each of the other Supporting Holders thereunder. The undersigned further agrees, as of the date first above written, that each reference in the Forbearance Agreement to a “Supporting Holder” shall also mean and be a reference to the undersigned, including the making of each representation and warranty set forth in Section 5 of the Forbearance Agreement.

 

SECTION II. Execution and Delivery. Delivery of an executed counterpart of a signature page to this Forbearance Joinder Agreement by telecopier or in .PDF or similar format by electronic mail shall be effective as delivery of an original executed counterpart of this Forbearance Joinder Agreement.

 

SECTION III. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. The parties hereto hereby agree that Sections 7.05 and 7.11 of the Forbearance Agreement shall apply mutatis mutandis to this Forbearance Joinder Agreement.

 

 

 

 

[Signature Page Follows]

 

 

 

 

	
 
	
Very truly yours,

	
 
	
 
	
 

	
 
	
[●]
	
 

	
 
	
 
	
 

	
 
	
By
	
 

	
 
	
 
	
Name:

	
 
	
 
	
Title:

	
 
	
 
	
Noteholder’s principal amount of Notes:

$    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Forbearance Joinder Agreement]

 

 

 

Exhibit B

 

In the event that Moelis & Company LLC or any of its affiliates or any of its or its affiliates’ respective current or former directors, officers, partners, managers, agents, representatives or employees (including any person controlling us or any of our affiliates) (collectively, “Indemnified Persons”) becomes involved in any capacity in any actual or threatened action, claim, suit, investigation or proceeding (an “Action”) arising out of, related to or in connection with the Forbearance Agreement dated May [●], 2017 (the “Forbearance Agreement”) between the Obligors and the Supporting Holders (each as defined in the Forbearance Agreement), any matter referred to therein or the performance of services by Moelis as requested by any Supporting Holder or its counsel, the Obligors will reimburse such Indemnified Person for the reasonable out-of-pocket costs and expenses (including counsel fees) of investigating, preparing for and responding to such Action or enforcing this agreement, as they are incurred. The Obligors will also indemnify and hold harmless any Indemnified Person from and against, and the Obligors agree that no Indemnified Person shall have any liability to the Obligors or its affiliates, the Supporting Holders (or any affiliates of any member thereof) or Advisors, or their respective owners, directors, officers, employees, security holders or creditors for, any losses, claims, damages or liabilities (collectively, “Losses”) (A) related to or arising out of oral or written statements or omissions made or information provided by any Obligor or its agents (including information provided by or on behalf of the Obligors to any counterparty to any transaction contemplated by the engagement) or (B) otherwise arising out of, related to or in connection with the Forbearance Agreement, any matter referred to therein or Moelis’ performance of services as requested by any Supporting Holder or its counsel, except that this clause (B) shall not apply to Losses that are finally judicially determined to have resulted primarily from the bad faith or gross negligence of such Indemnified Person.

 

If such indemnification or limitation on liability for any reason is not available or is insufficient to hold an Indemnified Person harmless, the Obligors agree to contribute to the Losses in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by the Obligors and Supporting Holders, on the one hand, and by Moelis, on the other hand, with respect to the Forbearance Agreement or, if such allocation is judicially determined to be unavailable, in such proportion as is appropriate to reflect the relative benefits and relative fault of any Obligor, Supporting Holders, on the one hand, and of Moelis, on the other hand, and any other equitable considerations; provided, however, that, to the extent permitted by applicable law, in no event shall the Indemnified Persons be responsible for amounts that exceed the fees actually received by Moelis from any Obligor in connection with the Forbearance Agreement. Relative benefits to the Obligors and Supporting Holders, on the one hand, and Moelis, on the other hand, with respect to the Forbearance Agreement shall be deemed to be in the same proportion as (i) the total value paid or proposed to be paid or received or proposed to be received by the Obligors or its security holders, as the case may be, pursuant to the Potential Transaction, whether or not consummated, contemplated by the Forbearance Agreement bears to (ii) the fees actually received by Moelis in connection with the Forbearance Agreement.

 

The Obligors will not without the prior written consent of Moelis (not to be unreasonably withheld), settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate (a “Settlement”) any Action (or facilitate the Settlement of any Action) in respect of which indemnification is or may be sought hereunder or in connection with the Potential Transaction contemplated by the Forbearance Agreement to which this Exhibit B is attached (whether or not an Indemnified Person is a party to such Action) unless such Settlement includes a release of each Indemnified Person from any Losses arising out of such Action. The Obligors will not permit any such Settlement to include a statement as to, or an admission of, fault or culpability by or on behalf of an Indemnified Person without such Indemnified Person’s prior written consent. No Indemnified Person seeking indemnification, reimbursement or contribution under this Forbearance Agreement will, without the Obligors’ prior written consent (not to be unreasonably withheld), agree to the Settlement of any Action.Exhibit 4.1

 

 

W.W. GRAINGER, INC.

 

AND

 

U.S. BANK NATIONAL ASSOCIATION, TRUSTEE

 

 

4.20% Senior Notes due 2047

 

 

THIRD SUPPLEMENTAL INDENTURE

 

 

Dated as of May 22, 2017

 

to

 

Indenture Dated as of June 11, 2015

 

Debt Securities

 

 

 

THIRD SUPPLEMENTAL INDENTURE, dated as of May 22, 2017, (this “Supplemental Indenture”), between W.W. Grainger, Inc., an Illinois corporation (the “Company”) and U.S. Bank National Association, a national banking association (the “Trustee”).

 

Recitals of The Company

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture (the “Base Indenture”), dated as of June 11, 2015 (as supplemented by this Supplemental Indenture, the “Indenture”), providing for the issuance from time to time of one or more series of Securities;

 

WHEREAS, Section 9.1(e) of the Base Indenture provides that the Company and the Trustee may, without the consent of any Holders of Securities, enter into an indenture supplemental to the Base Indenture to establish the form or terms of Securities of any series as permitted by Sections 2.1 and 3.1 of the Base Indenture;

 

WHEREAS, the Company has duly authorized the execution and delivery of this Supplemental Indenture to provide for the issuance of $400,000,000 principal amount of its 4.20% Senior Notes due 2047 (the “Notes”); and

 

WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture; all the conditions and requirements necessary to make this Supplemental Indenture, when duly executed and delivered, a valid and binding agreement in accordance with its terms and for the purposes herein expressed, have been performed and fulfilled; and the execution and delivery of this Supplemental Indenture have been duly authorized in all respects.

 

NOW THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:  For and in consideration of the premises and the issuance of the series of Securities provided for herein, the Company and the Trustee mutually covenant and agree as follows:

 

 

ARTICLE 1

 

RELATION TO THE BASE INDENTURE; DEFINITIONS; RULES OF CONSTRUCTION

 

Section 1.1                                    Relation to the Base Indenture.  This Supplemental Indenture constitutes an integral part of the Base Indenture.

 

Section 1.2                                    Definitions.  For all purposes of this Supplemental Indenture, the following terms shall have the respective meanings set forth in this Section 1.2.

 

“Adjusted 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.

 

“Base Indenture” has the meaning set forth in the recitals hereto.

 

“Business Day” means any day other than a Saturday or Sunday and other than a day on which banking institutions in New York, New York, are authorized or obligated by law or executive order to close.

 

“Certificated Security” means a Security registered in the name of the Holder thereof and issued in accordance with Section 2.4 hereof, substantially in the form of the Security attached hereto as Exhibit A and that does not bear the Global Security Legend.

 

“Change of Control” means the occurrence of any of the following: (1) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than the Company or one of its Subsidiaries 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 Voting Stock 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; (2) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s assets and the assets of its subsidiaries, taken as a whole, to one or more Persons, other than the Company or one of its Subsidiaries; or (3) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors.  Notwithstanding the foregoing, a transaction shall not be deemed to be 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” (as that term is

 

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used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.

 

“Change of Control Offer” has the meaning set forth in Section 2.5(a).

 

“Change of Control Payment” has the meaning set forth in Section 2.5(a).

 

“Change of Control Payment Date” has the meaning set forth in Section 2.5(a).

 

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

 

“Company” has the meaning set forth in the introductory paragraph hereof.

 

“Comparable Treasury Issue” means the U.S. Treasury security selected by the Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Notes 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 the Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company is provided fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

 

“Continuing Director” means, as of any date of determination, any member of the Company’s Board of Directors 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 Company’s proxy statement in which such member was named as a nominee for election as a director).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Global Security” has the meaning set forth in Section 2.4(a).

 

“Global Security Legend” means the legend set forth in Section 2.4(c), which is to be placed on all Global Securities issued under the Indenture.

 

“Indenture” has the meaning set forth in the recitals hereto.

 

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

 

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“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.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Notes” has the meaning set forth in the recitals hereto, and means any Notes authenticated and delivered pursuant to the Indenture.

 

“Participant” means a member of, or a participant in, the Depositary.

 

“Paying Agent” means any Person (including the Company) authorized by the Company to pay the principal of, premium, if any, or interest on, any Securities on behalf of the Company.

 

“Primary Treasury Dealer” has the meaning set forth in the definition of “Reference Treasury Dealer.”

 

“Rating Agencies” means (1) each of Moody’s and S&P, and (2) if either 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 Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company (as certified by a Board Resolution) 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 on any day 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 any of the Rating Agencies) after the earlier of (1) the occurrence of a Change of Control and (2) public notice of the Company’s intention to effect a Change of Control; provided, however, that a 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 Rating Event for purposes of the definition of Change of Control Triggering 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 has occurred at the time of the Rating Event).

 

“Reference Treasury Dealer” means each of Morgan Stanley & Co. LLC, J.P. Morgan Securities, LLC and a Primary Treasury Dealer selected by U.S. Bancorp Investments, Inc. and their respective successors and, at the Company’s option, additional Primary Treasury Dealers; provided, however, that if any of the foregoing ceases to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute another Primary Treasury Dealer.

 

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

 

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

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Supplemental Indenture” has the meaning set forth in the introductory paragraph hereof.

 

“Trustee” has the meaning set forth in the introductory paragraph hereof until a successor replaces it in accordance with the applicable provisions of the Indenture and thereafter means the successor serving thereunder.

 

“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.

 

Section 1.3                                    Rules of Construction.  For all purposes of this Supplemental Indenture, except as expressly provided or unless the context otherwise requires:

 

(a)                                 capitalized terms used herein without definition shall have the meanings specified in the Base Indenture;

 

(b)                                 all references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture;

 

(c)                                  the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision; and

 

(d)                                 in the event of a conflict with the definition of terms in the Base Indenture, the definitions in this Supplemental Indenture shall control.

 

ARTICLE 2

 

THE NOTES

 

Section 2.1                                    Title of the Notes.  There are hereby established by this Supplemental Indenture a separate series of Securities under the Indenture, designated as the “4.20% Senior Notes due 2047.”

 

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Section 2.2                                    Limitation on Aggregate Principal Amount.

 

(a)                                 The Notes are initially limited in aggregate principal amount to $400,000,000, except for such Notes authorized and delivered upon registration of transfer of, or in exchange for, or in lieu of other notes, pursuant to Sections 3.4, 3.5, 3.6, 9.6 or 11.7 of the Base Indenture.  The Company may, from time to time, without the consent of Holders of the Securities of any series, issue Securities under the Indenture in addition, and with identical terms, to the $400,000,000 aggregate principal amount of Notes (other than issue date, issue price and the amount of the first payment of interest).  Any such additional Securities and the Notes will be treated as a single series for purposes of the Indenture; provided that if the additional Securities are not fungible with the Notes for United States federal income tax purposes, the additional Securities will have a separate CUSIP number.  Any such increase in the authorized aggregate principal amount of the Notes shall be evidenced by an Officers’ Certificate delivered to the Trustee, without further action by the Company.

 

Section 2.3                                    Terms of the Notes.

 

(a)                                 The Depository Trust Company is hereby designated as the Depositary for the Notes, which shall be issued in the form of Global Securities as further provided in Section 2.4.

 

(b)                                 The principal of the Notes is payable on May 15, 2047.

 

(c)                                  The Notes shall bear interest at an annual rate of 4.20%, from May 22, 2017, or from the most recent date on which interest has been paid or provided for, payable semi-annually in arrears on May 15 and November 15 of each year commencing November 15, 2017, until the principal of such Notes is paid or made available for payment.  The interest so payable will be paid to the person in whose name the Notes are registered at the close of business on the preceding May 1 or November 1, respectively.  If the date on which interest is payable is not a Business Day, the interest will be paid on the next following Business Day and no interest shall accrue for the intervening period.

 

(d)                                 Payment of the principal of (and premium, if any, on) and any such interest on the Notes will be made at the office or agency of the Company maintained for that purpose in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register.  U.S. Bank National Association is appointed as the Trustee and Paying Agent for the Notes to perform the functions set forth in the Indenture to be performed by such offices.

 

(e)                                  At any time prior to November 15, 2046 (the date that is six months prior to their maturity date)  the Notes are redeemable at the option of the Company, in whole or in part at any time and from time to time, at a Redemption Price equal to the greater of:

 

·                  100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon to the Redemption Date; and

 

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·                  the sum of the remaining scheduled payments of principal of and interest on the Notes to be redeemed (not including any portion of the payment of interest accrued as of the Redemption Date), discounted to their present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 20 basis points, plus accrued and unpaid interest on the principal amount to be redeemed to the Redemption Date.

 

On or after November 15, 2046 (the date that is six months prior to their maturity date), the Notes are redeemable at the option of the Company, in whole or in part at any time and from time to time, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon to the Redemption Date.

 

(f)                                   The Notes are not entitled to any mandatory redemption or sinking fund payments.

 

(g)                                  The Notes shall be issued in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000.

 

(h)                                 The entire principal amount of the Notes shall be payable upon the acceleration of the Maturity thereof pursuant to Section 5.2 of the Indenture.

 

(i)                                     Additional Amounts will not be payable to the Holders of the Notes.

 

(j)                                    The Notes shall have such other terms and provisions as are provided in the form thereof set forth in Exhibit A hereto, which terms and provisions are hereby expressly made a part of the Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Supplemental Indenture expressly agree to such terms and provisions and to be bound thereby.  Except as otherwise expressly permitted by the Indenture, all Notes shall be identical in all respects.  Notwithstanding any differences among them, all Notes issued under the Indenture, including any Notes issued after the date hereof pursuant to and in accordance with the terms hereof, shall vote and consent together on all matters as one class.

 

(k)                                 The Company shall be required to offer to purchase the Notes, in accordance with Section 2.5 hereof, upon the occurrence of a Change of Control Triggering Event.

 

Section 2.4                                    Book Entry Provisions; Transfer and Exchange.

 

(a)                                 The Notes shall be issued initially in the form of one or more permanent global notes (“Global Securities”).  Each Global Security initially shall (i) be registered in the name of the Depositary for such Global Security or the nominee of such Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the Trustee as custodian for such Depositary, (iii) bear the Global Security Legend and (iv) be dated the date of its authentication.  Except as provided in Section 2.4(b), owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Notes.

 

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Participants shall have no rights under the Indenture with respect to any Global Security held on their behalf by the Depositary, or the Trustee as its custodian, or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

 

 

(b)                                 Notwithstanding any other provision in the Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary (A) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (B) has ceased to be a clearing agency registered as such under the Exchange Act, and in either case of (A) or (B) the Company fails to appoint a successor Depositary within 90 calendar days, (ii) the Company, at its option, executes and delivers to the Trustee a Company Order stating that it elects to cause the issuance of the Securities in certificated form and that all Global Securities shall be exchanged in whole for Securities that are not Global Securities (in which case, such exchange shall be effected by the Trustee) or (iii) there shall have occurred and be continuing an Event of Default with respect to the Notes.  In all cases, Certificated Securities delivered in exchange for any Global Security or beneficial interests in Global Securities will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures).  Global Securities also may be exchanged or replaced, in whole or in part, as provided in Sections 3.4 and 3.6 of the Base Indenture.  Every Security authenticated and delivered in exchange for, or in lieu of, a Global Security or any portion thereof, pursuant to this Section 2.4 or Sections 3.4 and 3.6 of the Base Indenture, shall be authenticated and delivered in the form of, and shall be, a Global Security.  A Global Security may not be exchanged for another Note other than as provided in this Section 2.4(b).

 

(c)                                  Legend.  The following legend shall appear on the face of all Global Securities.

 

“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 OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY

 

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SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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.”

 

Section 2.5                                    Change of Control.

 

(a)                                 If a Change of Control Triggering Event occurs with respect to the Notes, unless the Company has exercised its option to redeem the Notes (as described in Section 2.3(e)), the Company shall be required to make an offer (the “Change of Control Offer”) to each Holder of the Notes to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of such Holder’s Notes on the terms set forth below.  In the Change of Control Offer, the Company shall be required to offer payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to the date of repurchase (the “Change of Control Payment”).  Within 30 days following any Change of Control Triggering Event or, at the option of the Company, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control, the Company shall deliver a notice to Holders of the Notes, with a copy to the Trustee, describing the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase the 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 delivered (the “Change of Control Payment Date”).  The notice shall, if delivered prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date.

 

(b)                                 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 accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being repurchased.

 

(c)                                  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

 

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by the Company and the third party repurchases all Notes properly tendered and not withdrawn under its offer.

 

(d)                                 The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act, 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 such securities laws or regulations conflict with the provisions of this Section 2.5, the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under this Section 2.5 by virtue of any such conflict.

 

Section 2.6                                    Events of Default.  In addition to the Events of Default specified in Section 5.1 of the Base Indenture, the following shall constitute an “Event of Default” with respect to the Notes:  any default in the payment of any Change of Control Payment in respect of the Notes as when the same becomes due and payable in accordance with Section 2.5 hereof.  Such additional Event of Default is expressly included in this Supplemental Indenture for the benefit of, and shall be solely applicable to, the series of Securities established as the Notes by this Supplemental Indenture.

 

ARTICLE 3

 

MISCELLANEOUS PROVISIONS

 

Section 3.1                                    Ratification.  The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed.

 

Section 3.2                                    Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Signatures of the parties hereto transmitted by Facsimile or PDF may be used in lieu of the originals shall be deemed to be their original signatures for all purposes.

 

Section 3.3                                    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 WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF.

 

Section 3.4                                    Trustee.  The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this Supplemental Indenture or the Notes. The recitals herein are deemed to be those of the Company and not of the Trustee. The Trustee shall not be accountable for the use or application by the Company of the Notes or the proceeds thereof. Neither the Trustee nor any Paying Agent shall be responsible for monitoring the Company’s ratings or determining whether a Rating Event has occurred.

 

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

 

	
 
    	
W.W.   GRAINGER, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ronald L. Jadin 
    
	
 
    	
Name:   
    	
Ronald   L. Jadin
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Linda E. Garcia
    
	
 
    	
Name:   
    	
Linda   E. Garcia
    
	
 
    	
Title:
    	
Vice   President
    
				

 

[Signature page to Third Supplemental Indenture]

 

 

 

EXHIBIT A

 

Form of Notes

 

A-1

 

W.W. GRAINGER, INC.

 

4.20% SENIOR NOTE DUE 2047

 

[Insert the Global Security Legend, if applicable, pursuant to the provisions of the Third Supplemental Indenture]

 

	
No.
    	
$                                  
    

 

CUSIP                              

 

ISIN                              

 

W.W. Grainger, Inc., an Illinois corporation (herein called the “Company,” which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to               , the principal sum of                         Dollars ($            ) on May 15, 2047, and to pay interest thereon from May 22, 2017 or from the most recent Interest Payment Date to which interest has been paid or duly provided for semi-annually in arrears on May 15 and November 15 in each year commencing November 15, 2017, at the rate of 4.20% per annum until the principal hereof is paid or made available for payment.

 

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture referred to on the reverse hereof, be paid to the Person in whose name this Security is registered at the close of business on the May 1 or the November 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date; provided, however, that, if such Interest Payment Date would fall on a day that is not a Business Day, such Interest Payment Date shall be the following day that is a Business Day and no interest shall accrue for the intervening period.

 

Payment of the principal of (and premium, if any, on) and any such interest on this Security will be made at the office or agency of the Company maintained for that purpose in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register.

 

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 manually executed by or on behalf of the Trustee under the Indenture referred to on the reverse hereof, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

* * * * *

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by the manual or facsimile signature of one of its authorized officers.

 

	
 
    	
W.W.   Grainger, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

Trustee’s Certificate of Authentication

 

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

 

	
 
    	
U.S.   Bank National Association, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    	
 
    
				

 

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W.W. GRAINGER, INC.

 

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 June 11, 2015, between the Company and U.S. Bank National Association as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), as supplemented by a third supplemental indenture dated as of May 22, 2017, between the Company and the Trustee (collectively, the “Indenture”), to which Indenture 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 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 $400,000,000.

 

At any time prior to November 15, 2046 (the date that is six months prior to their maturity date), the Securities are redeemable at the option of the Company, in whole or in part at any time and from time to time, at a Redemption Price equal to the greater of:

 

·                                          100% of the principal amount of the Securities to be redeemed plus accrued and unpaid interest thereon to the Redemption Date; and

 

·                                          the sum of the remaining scheduled payments of principal of and interest on the Securities to be redeemed (not including any portion of the payment of interest accrued as of the Redemption Date), discounted to their present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 20 basis points, plus accrued and unpaid interest on the principal amount to be redeemed to the Redemption Date.

 

On or after November 15, 2046 (the date that is six months prior to their maturity date), the Securities are redeemable at the option of the Company, in whole or in part at any time and from time to time, at a Redemption Price equal to 100% of the principal amount of the Securities to be redeemed plus accrued and unpaid interest thereon to the Redemption Date.

 

“Adjusted 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.

 

“Business Day” means any day other than a Saturday or Sunday and other than a day on which banking institutions in New York, New York, are authorized or obligated by law or executive order to close.

 

“Comparable Treasury Issue” means the U.S. Treasury security selected by the Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Securities 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 the Securities.

 

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“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company is provided fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

 

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

 

“Reference Treasury Dealer” means each of Morgan Stanley & Co. LLC, J.P. Morgan Securities, LLC and a Primary Treasury Dealer selected by U.S. Bancorp Investments, Inc. and their respective successors and, at the Company’s option, additional Primary Treasury Dealers; provided, however, that if any of the foregoing ceases to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute another Primary Treasury Dealer

 

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

 

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 the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series under the Indenture to be affected at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of all the Holders of all Securities of such 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.

 

The Indenture does not limit the incurrence of additional debt by the Company or any of its Subsidiaries; however, it does limit the creation of certain Liens and the entry into certain sale and leaseback transactions by the Company or any of its Restricted Subsidiaries. The limitations are subject to a number of qualifications and exceptions.

 

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

 

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the principal of (and premium, if any, on) and interest on this Security at the times, place and rate, and in the coin or currency, as prescribed herein and in the Indenture.

 

“Global Security” and “Global Securities” means a Security or Securities evidencing all or part of a series of Securities, issued to the Depositary (as hereinafter defined) for such series or its nominee, registered in the name of such Depositary or its nominee, bearing the Global Securities Legend and dated the date of its authentication.  “Depositary” means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the person designated as the Depositary by the Company.

 

No holder of any beneficial interest in this Security held on its behalf by a Depositary or a nominee of such Depositary shall have any rights under the Indenture with respect to such Global Security, and such Depositary or nominee may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary as Holder of any Security.

 

This Security is exchangeable, in whole but not in part, for Securities registered in the names of Persons other than the Depositary or its nominee or in the name of a successor to the Depositary or a nominee of such successor depositary only if (i) the Depositary (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Securities and the Company fails to appoint a successor depositary within 90 calendar days or (b) has ceased to be a clearing agency registered under the Exchange Act and the Company fails to appoint a successor depositary within 90 calendar days, (ii) at any time the Company in its sole discretion determines to issue Certificated Securities or (iii) there shall have occurred and be continuing an Event of Default with respect to the Securities. If this Security is exchangeable pursuant to the preceding sentence, it shall be exchangeable for Securities issuable in minimum denominations of $2000 and in integral multiples of $1000 in excess thereof and registered in such names as the Depositary holding this Security shall direct.  Subject to the foregoing, this Security is not exchangeable, except for a Security or Securities of the same aggregate denominations to be registered in the name of such Depositary or its nominee or in the name of a successor to the Depositary or a nominee of such successor depositary.

 

No recourse shall be had for the payment of the principal of (and premium, if any, on) or interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

 

All capitalized terms used in this Security and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

 

This Security, including without limitation the obligation of the Company contained herein to pay the principal of (and premium, if any, on) and interest on this Security in

 

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accordance with the terms hereof and of the Indenture, shall be construed in accordance with and governed by the laws of the State of New York.

 

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ASSIGNMENT FORM

 

To assign this Security, fill in the form below:
 (I) or (we) assign and transfer this Security to

 

	
 
    
	
(Insert assignee’s social security or tax I.D. no.)
    
	
 
    
	
 
    
	
 
    

(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint                                              agent to transfer this Security on the books of the Company.  The agent may substitute another to act for him.

 

	
Your   Signature:
    	
 
    	
 
    
	
 
    	
(Sign   exactly as your name appears on the other side of  this Security)
    
	
 
    	
 
    
	
Date:
    	
 
    	
 
    
	
 
    
	
Medallion   Signature Guarantee:
    	
 
    	
 
    
							

 

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