Exhibit 10.2
Execution Copy
WAIVER AND THIRD AMENDMENT TO
NOTE PURCHASE AGREEMENT
(2006)
This Waiver and Third Amendment
dated as of September 15, 2009 (this “ Third
Amendment ”) to the Note Purchase Agreement dated as of
December 7, 2006 as amended by the First Amendment
thereto dated February 1, 2008 and the Second Amendment
thereto dated as of February 17, 2009 (the “ Note
Purchase Agreement ”) is between Modine Manufacturing
Company, a Wisconsin corporation (the “ Company
”), and each of the institutions which is a signatory to this
Third Amendment (collectively, the “ Noteholders
”).
RECITALS:
A. The Company and the Noteholders
are parties to the Note Purchase Agreement pursuant to which the
Notes (as defined therein) are outstanding.
B. The Company has advised the
Noteholders that an Event of Default has occurred under the Note
Purchase Agreement (the “ Existing Modine China Event of
Default ”) due to a breach of
Section 10.15(a)(ii)(x) of the Note Purchase Agreement as a
result of the Company committing, on or about March 31, 2009,
to increase the equity capital of Modine Thermal Systems
(Changzhou) Co. Ld. (“ Modine China ”) in the
aggregate amount of $1,500,000, which commitment was funded in the
amount of approximately $400,000 in April of 2009, and in the
amount of approximately $1,100,000 in June of 2009 (such increases,
collectively, the “ Modine China Investments ”).
The proceeds of such increased capital are intended to be used by
Modine China primarily to pay an intercompany receivable owing to
the Company, subject to the receipt of required regulatory
approvals.
C. The Company has further advised
the Noteholders that an Event of Default has occurred under the
Note Purchase Agreement (the “ Existing Intercreditor
Event of Default ” and, together with the Existing Modine
China Event of Default, the “ Existing Events of
Default ”) as a result of the Company making, on
July 8, 2009, an optional principal payment of Advances (as
defined in the Intercreditor Agreement, as used herein, the “
Advances ”) that reduced the aggregate outstanding
principal amount of the Advances to $87,000,000, and making a
further optional principal payment of the Advances that reduced the
aggregate outstanding principal amount of the Advances to
$82,000,000 in violation of Section 4.1(b) of the
Intercreditor Agreement which requires that such principal payments
be paid into the Collateral Agent Intercreditor Collateral Account
(as defined in the Intercreditor Agreement), to the extent that
such principal payments caused the outstanding principal amount of
the Advances to be less than $94,000,000.
D. The Company has requested that
the holders of the Notes waive the Existing Events of Default. The
Company has further requested that the Noteholders agree to certain
amendments to the Note Purchase Agreement as set forth
below.
E. Subject to the terms and
conditions set forth herein, the Noteholders are willing to waive
the Existing Events of Default and amend the Note Purchase
Agreement in the respects, but only in the respects, set forth in
this Third Amendment.
F. Capitalized terms used herein
shall have the respective meanings ascribed thereto in the Note
Purchase Agreement, as amended hereby, unless herein defined or the
context shall otherwise require.
G. All requirements of law have been
fully complied with and all other acts and things necessary to make
this Third Amendment a valid, legal and binding instrument
according to its terms for the purposes herein expressed have been
done or performed.
NOW, THEREFORE
, in consideration of good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Noteholders do hereby
agree as follows:
SECTION 1.
AMENDMENTS.
Effective as of the Effective Date
(as defined in Section 4 hereof), the Company and the
Noteholders agree that the Note Purchase Agreement and the Notes
are amended as follows:
1.1 The last sentence of
Section 9.9(c) is amended and restated in its entirety as
follows:
“The Company shall execute and
deliver, and cause each Subsidiary Guarantor to execute and
deliver, promptly upon the reasonable request of the Required
Holders, such agreements and instruments evidencing any
intercompany loans or other advances among the Company and its
Subsidiaries, or any of them, and all such intercompany loans or
other advances owing by the Company or any of the Subsidiary
Guarantors shall be, and are hereby made, subordinate and junior to
the Secured Obligations and no payments may be made on such
intercompany loans or other advances upon and during the
continuance of a Default or Event of Default unless otherwise
agreed to by the Required Holders.”
1.2 The first paragraph of
Section 9.12 is amended by replacing the reference to
“4.2(b)” therein with “4.1(b)” and the
second paragraph of Section 9.12 is amended and restated in
its entirety as follows:
“As used herein, “Asset
Sale Net Proceeds” means 100% of all of the Net Cash Proceeds
from any sale, Event of Loss, license, lease or other disposition
or transfer of any assets (including without limitation any Sale
and Leaseback Transaction and any sale permitted under
Section 10.5(b) , but excluding the Excluded Sales
described below) in excess of $25,000,000 in aggregate amount after
the Second Amendment Effective Date, each payable and effective
upon receipt of such Net Cash Proceeds. As used herein,
“Excluded Sales” means (i) the sale of inventory
in the ordinary course of business, (ii) the sale of obsolete
or worn-out property in the ordinary course of business not to
exceed $1,000,000 in the aggregate after the Second Amendment
Effective Date, (iii) sales of notes receivable or accounts
receivable to the extent permitted under Section 10.23
; (iv) revenues
- 2 -
from licenses in existence on the
Second Amendment Effective Date, including all renewals, extensions
and modifications thereof and substitutions therefor, (v) the
sale or other transfer of any assets solely among the Company and
the Subsidiaries which is permitted by the terms of this Agreement,
or (vi) if the Company shall deliver to the holders a
certificate of a Responsible Officer to the effect that the Company
or its applicable Subsidiary receiving the Net Cash Proceeds from
an Event of Loss intends to apply the Net Cash Proceeds from such
event (or a portion thereof specified in such certificate), within
180 days after receipt of such Net Cash Proceeds, to acquire
(or replace or rebuild) real property or equipment to be used in
the business of the Company or its Subsidiaries, and certifying
that no Default or Event of Default has occurred and is continuing,
then such Net Cash Proceeds specified in such certificate shall be
excluded from the determination required under the first sentence
of this Section 9.12 , provided that to the
extent of any such Net Cash Proceeds therefrom that have not been
so applied by the end of such 180 day period, such Net Cash
Proceeds will not be so excluded, and will be included in the
calculation contained in the first sentence of this
Section 9.12 .”
1.3 Section 10.2 of the Note
Purchase Agreement is amended by adding the following to the end
thereof:
“Notwithstanding anything
herein to the contrary, Dutch Holdco shall not incur any Debt
(other than owing to the Company and constituting loans permitted
under Section 10.14), conduct any material business other than
acting as a holding company or grant any Lien on any of its assets
(other than in favor of the Company to secure its permitted Debt to
the Company and Liens described in clauses (a)-(d) and
(h) of Section 10.4) at any time.
1.4 Section 10.5 of the Note
Purchase Agreement is amended and restated in its entirety as
follows:
“Section 10.5 Sale of
Assets. The Company will
not, and will not permit any Subsidiary to, sell, lease, transfer,
abandon or otherwise dispose of assets including, without
limitation, pursuant to any Sale and Leaseback Transaction;
provided that the foregoing restrictions do not apply
to:
(a) the sale, lease, transfer or
other disposition of assets of a Subsidiary to the Company or a
Wholly-owned Subsidiary; or
(b) the following sale, lease or
other dispositions of assets:
(i) sales of inventory in the
ordinary course of business;
(ii) sale or other disposition of
Modine Korea, whether by sale of Equity Interests or assets, and
other assets owned by Foreign Subsidiaries related to the
Korean-based vehicular HVAC business;
(iii) if no Default or Event of
Default shall have occurred and be continuing or would be caused
thereby, the sale of the Equity Interests of UK Dollar owned by the
Company to Dutch Holdco for a purchase price equal to the fair
value of
- 3 -
UK Dollar, to be determined based on
a valuation by Ernst & Young (or another global valuation
company of comparable reputation selected by the Company) or
otherwise determined in a manner acceptable to the Required
Holders, on cash and deferred payment terms to be determined,
provided that: (x) if such sale of UK Dollar is consummated
contemporaneously with the sale of Modine Korea to any Person that
is not an Affiliate of the Company, the cash portion of the
purchase price of UK Dollar will be not less than the Net Cash
Proceeds payable to Dutch Holdco from such sale of Modine Korea;
(y) if such sale of Modine Korea is consummated subsequent to
such sale of UK Dollar, Dutch Holdco shall be obligated to prepay
the deferred payment portion of the purchase price of UK Dollar in
an amount equal to the Net Cash Proceeds payable to Dutch Holdco
from such sale of Modine Korea; and (z) all other terms and
conditions of the deferred payment portion of the purchase price of
UK Dollar shall be reasonably satisfactory to the Required Holders.
For the avoidance of doubt, the Net Cash Proceeds payable to Dutch
Holdco for the sale of Modine Korea will not include any payment of
the intercompany loans owed by Modine Korea to the Company and
permitted under Section 10.14(c). When computing the Net Cash
Proceeds from the sale of Modine Korea that are to be applied in
accordance with Section 9.12 there shall not be subtracted
from the gross proceeds of such sale any portion of such proceeds
applied to the prepayment of the deferred payment portion of the
purchase price of UK Dollar;
(iv) if no Default or Event of
Default shall have occurred and be continuing or would be caused
thereby, the sale of Modine Austria to Modine Holding GmbH,
provided that Modine Holding GmbH is a Wholly-Owned Subsidiary at
the time of such sale, for a purchase price based on the fair value
of Modine Austria to be determined based on a valuation by
Ernst & Young or otherwise determined in a manner
acceptable to the Required Holders, provided that such price shall
not be less than €11,000,000 (as adjusted based on any changes
to the balance sheet of Modine Austria between March 31, 2009
and closing of the sale), and such purchase price is payable as
follows: (x) at least €1,500,000 payable in cash at the
closing of the sale, (y) the assignment to the Company by
Modine Holding GmbH of an existing loan in the amount of
€3,500,000 owing by UK Dollar to Modine Holding GmbH, which
assignment shall be on terms and conditions satisfactory to the
Required Holders, and (z) the balance of the purchase price
will be paid with a promissory note with a maturity of not more
than three years, interest payable at the rate of one year EURIBOR
+ 300 bps, payable quarterly and reset annually on each
December 1 and otherwise on terms and conditions satisfactory
to the Required Holders and without any restrictions on the payment
or prepayment thereof (whether in connection with any agreement
governing any Debt of Modine Holding GmbH or any of its
Subsidiaries or otherwise);
(v) leases, sales or other
dispositions of property that, together with all other property of
the Company and its Subsidiaries previously leased, sold or
disposed of as permitted by this clause (v) during the
twelve-month period ending with the month in which any such lease,
sale or other disposition occurs, do not constitute a Substantial
Portion of the
- 4 -
property of the Company and its
Subsidiaries, provided that, after giving effect to any such lease,
sale or other disposition, no Default or Event of Default shall
have occurred and be continuing; and
(vi) any transfer of an interest in
accounts or notes receivable and related assets permitted under
Section 10.23 ; and
(vii) any transfer of assets
pursuant to an Investment permitted under
Section 10.15.
provided that, in the case of any
lease, sale or other disposition under clauses (ii), (v),
(vi) or (vii) of this Section 10.5(b) , the
proceeds of such any such lease, sale or other disposition are
applied in accordance with Section 9.12
.”
1.5 Section 10.6 of the Note
Purchase Agreement is amended by replacing the reference therein to
“Section 10.5(c)” to “Section
10.5(b)”.
1.6 Section 10.7 of the Note
Purchase Agreement is amended and restated in its entirety as
follows:
“Section 10.7. Transactions
with Affiliates. The
Company will not and will not permit any Subsidiary to enter into
directly or indirectly any transaction or group of related
transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any
service) with any Affiliate (other than the Company or another
Subsidiary), except (a) in the ordinary course and pursuant to
the reasonable requirements of the Company’s or such
Subsidiary’s business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm’s-length transaction with a
Person not an Affiliate; (b) transactions between the Company
or any Subsidiary, on the one hand, and any Subsidiary or other
special purpose entity created to engage solely in a Qualified
Receivables Transaction; (c) transactions between the Company
and Dutch Holdco permitted under Section 10.5(b)(iii),
10.14(g) or 10.15(a)(vi) and(vii), and (d) transactions
between the Company and Modine Holding GmbH permitted under
Section 10.5(b)(iv), 10.14(h) or 10.15(a)(viii)
hereof.
1.7 Sections 10.14 and 10.15 of the
Note Purchase Agreement are amended and restated as
follows:
“Section 10.14. Loans or
Advances. Neither the
Company nor any of its Subsidiaries shall make loans or advances to
any Person except:
(a) [Intentionally
Omitted];
(b) deposits required by government
agencies or public utilities;
- 5 -
(c) existing loans or advances
between the Company and its Subsidiaries and between Subsidiaries
described on Schedule 10.14 hereto, but no increase in the
amount thereof (except to the extent increased amounts are
permitted under another clause of this Section 10.14 );
provided that: (i) this covenant shall not restrict the
assignment of any such loans or advances by the holder thereof to
the Company or a Subsidiary Guarantor, and (ii) in the event
of the sale of Modine Korea as permitted by
Section 10.5(b)(ii) to a Person that is not an Affiliate of
the Company, the amount of loans owed by Modine Korea to the
Company on the date of such sale may continue to be outstanding
after such date, to be repaid on such terms as the Company and such
Person may agree;
(d) loans or advances from any
Foreign Subsidiaries to the Company or any Subsidiary Guarantor,
provided that such loans and advances are evidenced by documents
satisfactory to the Required Holders and are subordinated to all
Secured Obligations on terms and by agreements satisfactory to the
Required Holders;
(e) loans and advances between the
Company and the Subsidiary Guarantors, provided that such loans and
advances are evidenced by documents satisfactory to the Required
Holders and are subordinated to all Secured Obligations on terms
and by agreements satisfactory to the Required Holders;
and
(f) loans and advances between
Foreign Subsidiaries, provided that such loans and advances are
(i) evidenced by documents satisfactory to the Required
Holders and (ii) if such loans and advances are owing by a
Foreign Subsidiary that is a borrower under the Credit Agreement or
any Foreign Subsidiary guaranteeing the Secured Obligations of such
Foreign Subsidiary that is a borrower under the Credit Agreement,
subordinated to all Secured Obligations owing by such Foreign
Subsidiary that is a borrower under the Credit Agreement on terms
and by agreements satisfactory to the Required Holders;
(g) a loan by the Company to Dutch
Holdco consisting solely of the deferred payment portion of the
sale of UK Dollar to Dutch Holdco permitted under
Section 10.5(b)(iii);
(h) a loan by the Company to Modine
Holding GmbH consisting solely of the deferred payment portion of
the sale of Modine Austria GmbH to Modine Holding GmbH permitted
under Section 10.5(b)(iv), provided that the Company will take
or cause its Subsidiaries to take all action to ensure that all
obligations under such loan do and will rank at least pari passu in
right of payment with all of the present and future unsubordinated
Debt of Modine Holding GmbH, except to the extent:
(i) otherwise required under German law, or (ii) such
Debt is secured by Liens permitted under Section 10.4;
and
(i) other loans and advances made in
the ordinary course of business not exceeding $10,000,000 in the
aggregate at any time outstanding; minus
(ii) (A) $1,500,000, which is the aggregate amount of the
increase in the registered capital of
- 6 -
