SECOND AMENDMENT TO SECOND AMENDED AND RESTATED NOTE PURCHASE AGREEMENT AND SHELF AGREEMENT
EXHIBIT
10.2
SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED
NOTE PURCHASE
AGREEMENT AND SHELF AGREEMENT
THIS
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED NOTE PURCHASE AGREEMENT AND
SHELF AGREEMENT (this “Amendment”),
is made and entered into as of March 5, 2010, by and among NN, INC., a Delaware
corporation (the “Company”),
certain of its subsidiaries named below (the “Guarantors”),
The Prudential Insurance Company of America (together with its successors and
assigns, “Prudential”)
and the other holders of the Notes from time to time party to the Note Agreement
(as defined below) (collectively, and together with their successors and
assigns, the “Noteholders”).
W I
T
N
E
S
S
E
T
H:
WHEREAS, the
Company, the Guarantors and the Noteholders are parties to a certain Second
Amended and Restated Note Purchase Agreement and Shelf Agreement, dated as of
March 13, 2009, as amended by that First Amendment to Second Amended and
Restated Note Purchase Agreement and Shelf Agreement, dated as of July 31, 2009
(as further amended, restated, supplemented or otherwise modified from time to
time, the “Note
Agreement”); capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Note
Agreement;
WHEREAS, the
Company has requested certain amendments to the Note Agreement, and subject to
the terms and conditions hereof, the Noteholders are willing to agree to such
amendments;
NOW, THEREFORE, for
good and valuable consideration, the sufficiency and receipt of all of which are
acknowledged, the Company and the Noteholders agree as follows:
1. Amendments
to Note Agreement. The Note Agreement is amended as
follows:
(a) Section
8.8. Section 8.8 of the Note Agreement is amended
by replacing the references to Sections 8.3(c) and 8.3(e) appearing in Section
8.8(b) with references to Sections 8.8(c) and 8.8(e).
(b) Section
10.2. Section 10.2 of the Note Agreement is amended by
replacing such Section in its entirety with the following:
|
Four
fiscal quarter period ending date:
|
Maximum Leverage Ratio:
|
|
September 30, 2010
|
6.50:1.00
|
|
December 31, 2010
|
5.57:1.00
|
|
March 31, 2011
|
3.94:1.00
|
|
June 30, 2011
|
2.77:1.00
|
|
September 30, 2011 and thereafter
|
2.75:1.00
|
This covenant shall
be suspended and shall not apply for the fiscal quarters ending March 31, 2010
and June 30, 2010.
(c) Section
10.3. Section 10.3 of the Note Agreement is amended by
replacing such Section in its entirety with the following:
Section
10.3 Capitalization
Ratio. The Obligors will not permit Consolidated Funded Debt at any time
to exceed (a) 60% of Consolidated Total Capitalization on the Restatement
Closing Date through June 29, 2010, (b) 61% of Consolidated Total Capitalization
on June 30, 2010 through September 29, 2010, (c) 62% of Consolidated Total
Capitalization on September 30, 2010 through ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) 61% of
Consolidated Total Capitalization on March 30, 2011 through June 29, 2011, and
(e) 60% of Consolidated Total Capitalization thereafter.
(d) Section
10.5. Section 10.5 of the Note Agreement is amended by replacing such
Section in its entirety with the following:
Section
10.5 Interest Coverage Ratio.
The Obligors will not suffer or permit the ratio of (a) EBITDAR to (b)
Consolidated Interest Expense, in each case for the four-fiscal quarter period
ending on the dates set forth below, to be less than:
|
Four fiscal quarter
period ending date:
|
Minimum Interest Coverage:
|
|
March 31,
2010
|
0.42:1.00
|
|
June 30,
2010
|
0.95:1.00
|
|
September 30,
2010
|
1.57:1.00
|
|
December 31,
2010
|
1.71:1.00
|
|
March 31,
2011
|
2.23:1.00
|
|
June 30, 2011
and thereafter
|
2.76:1.00
|
2
(e)
Section
10.6. Section 10.6 of the Note Agreement is amended by
replacing such Section in its entirety with the following:
Section 10.6 Minimum EBITDA.
For each period of four fiscal quarters ending on the last day of each quarterly
fiscal period of the Company, commencing on March 31, 2010, the Obligors will
not permit EBITDA to be less than:
|
Four fiscal quarter
period ending date:
|
Minimum EBITDA:
|
|
March 31,
2010
|
$603,000
|
|
June 30,
2010
|
$7,245,000
|
|
September 30,
2010
|
$15,106,000
|
|
December 31,
2010
|
$17,623,000
|
|
March 31,
2011
|
$24,904,000
|
|
June 30, 2011
and thereafter
|
$32,077,000
|
(f)
Section 10.7. Section
10.7 of the Note Agreement is amended by replacing such Section in its entirety
with the following:
3
(g)
Section 10.9. Section
10.9 of the Note Agreement is amended by replacing Subsection (b) of such
Section in its entirety with the following:
(b) any loans granted to or Capital Lease Obligations
entered into by the Company or any Subsidiary for the purchase or lease of fixed
assets (and refinancings of such loans or Capital Lease Obligations), which
loans and Capital Lease Obligations shall only be secured by the fixed assets
being purchased or leased, so long as the aggregate principal amount of all such
loans and Capital Lease Obligations for the Company and its Subsidiaries shall
not exceed Six Million Dollars ($6,000,000) in the
aggregate at any time outstanding;
(h)
Section
10.19.
Section 10.19 of the Note Agreement is amended by replacing such Section
in its entirety with the following:
Section 10.19
Credit
Documents. The Company
shall not, without the prior written consent of the Required Holders, amend,
restate, supplement or otherwise modify the Credit Documents to (a) increase the
committed principal amount of the Revolving Credit Facility unless such increase
shall be permitted pursuant to Section
10.9(l), (b) change the date of any scheduled principal payment to a date
prior to September 21, 2011 or (c) otherwise modify any provision such that a
Default or Event of Default will exist. The Obligors shall not, without
the prior written consent of the Required Holders, permit to exist, on the
occurrence of any condition or otherwise, any Lien or other security in favor of
the trustee for or the Bank Lenders or any agent therefor other than any Lien
granted to Collateral Agent for the benefit of both the Bank Lenders and the
holders of the Notes and Liens on assets of Foreign Subsidiaries to the extent
subject to the Intercreditor Agreement. The Company will not reduce the
commitments to its Revolving Credit Facility to less than the Minimum Revolver
Amount, except to the extent that the Company has offered to the holders of the
Notes a proportionate prepayment of the Notes pursuant to Section 8.1(b) in
connection with each such reduction of the Revolving Credit Facility below the
Minimum Revolver Amount, and to the extent such offer is accepted, has made such
prepayment. The Company will not make any Restricted Payment under the
Credit Agreement other than Restricted Payments under Section 10.14. For
purposes of this Section 10.19, the Minimum Revolver Amount at any time shall
mean $85,000,000, reducing to $84,000,000 on December 31, 2010, reducing to
$83,000,000 on March 31, 2011 and reducing to and remaining $82,000,000 on June
30, 2011 and thereafter.
(i) Section
10. Section 10 of the Note Agreement is
amended by adding the following as new Sections 10.25 and 10.26 at the end of
Section
10:
4
Section 10.25 Restructure
of Foreign Subsidiaries. Except as listed on Schedule 10.25, the Obligors
agree that the Obligors will not commence a material restructuring (including
any insolvency action with respect thereto) of any Foreign Borrower (as such
term is defined in the Credit Agreement) or any Subsidiary which was formerly a
Foreign Borrower under the Credit Agreement (notwithstanding its release as a
Foreign Borrower under the Credit Agreement pursuant to the Second Amendment to
Credit Agreement or otherwise as contemplated thereby), so long as any
Obligations (as such term is defined in the Credit Agreement) of such Foreign
Subsidiary under the Credit Agreement are outstanding and for a period of twelve
(12) months following repayment of any such obligations, unless such action is
required under order of any Governmental Authority after the Obligors have taken
all steps reasonably available to prevent, object to or stay such
action.
Section 10.26
Minimum Asset
Coverage Ratio: The Company
shall
not suffer or permit at as of the last day of any fiscal quarter the Minimum
Asset Coverage Ratio of the Company to be less than to be less than 1.05 to
1.00.
(j) Schedule
B. Schedule B to the Note Agreement is amended by (1) adding
thereto the following definitions of “Alternate Currency”, “Attributable
Indebtedness”, “Minimum Asset Coverage Ratio”, “Second Amendment Date” and
“Second Amendment to Credit Agreement” in appropriate alphabetical order and (2)
replacing the definition of “EBITDA” and “Subsidiary” in their entirety with the
following definitions of “EBITDA” and “Subsidiary”:
“Alternate
Currency” shall mean Euros or any other currency, other than Dollars,
agreed to by the holders of the Notes that shall be freely transferable and
convertible into Dollars.
“Attributable
Indebtedness” shall mean, on any date, in respect of any operating lease
of a Person, the capitalized amount of the remaining lease payments under such
lease that would appear on a balance sheet of such Person prepared as of such
date in accordance with GAAP if the obligations under such lease were accounted
for as Capital Lease Obligations.
“EBITDA”
shall mean, for the Company and its Subsidiaries on a consolidated basis for any
period, after giving Acquisition Pro Forma Effect to any Acquisition made during
such period,
the sum of (a) Section 10.10 Consolidated Net Income, plus (b) Section
10.10 Interest Expense, plus (c) any provision for taxes based on income or
profits that was deducted in computing Section 10.10 Consolidated Net Income,
plus (d) depreciation, plus (e) amortization of intangible assets and other
non-recurring non-cash charges, plus (f) non-recurring non-cash restructuring
charges, minus without duplication, the aggregate amounts included in
determining such Section 10.10 Consolidated Net Income in respect of: (i)
extraordinary or unusual non-cash gains not incurred in the ordinary course of
business and (ii) foreign exchange gains as reported in Other Income according
to GAAP and the positive impact to EBITDA resulting from converting Alternate
Currency-based income to Dollar-based income at an exchange rate exceeding $1.46
per €1.00, to the extent such amounts together exceed $5,000,000 for such
period; provided that for purposes of calculating the Leverage Ratio and the
applicable financial covenants set forth in Section 10.2, Section 10.5 and
Section 10.6 hereof, EBITDA shall be deemed to be (A) negative ($3,513,000) for
the fiscal quarter ended June 30, 2009, (B) negative ($3,382,000) for the fiscal
quarter ended September 30, 2009 and (C) $3,680,000 for the fiscal quarter ended
December 31, 2009.
5
"Minimum
Asset Coverage Ratio” means, as of any date of determination, determined
on a Consolidated basis, the ratio of: (a) the sum of Consolidated Accounts
Receivable (as defined by GAAP) of the Company as of such date, plus
Consolidated Inventory (as defined by GAAP) of the Company as of such date to
(b) the outstanding “Revolving Credit Exposure” (as defined in the Credit
Agreement as in effect as of the Second Amendment Date) at such time.
“Second
Amendment Date” shall mean March 5, 2010.
“Second
Amendment to Credit Agreement” shall mean that certain Amendment No.2 to
Amended and Restated Credit Agreement, dated as of March 5, 2010, by and among
the Obligors, certain of their other subsidiaries, the lenders parties thereto
and KeyBank National Association, as Administrative Agent.
“Subsidiary” shall mean,
as to any Person, any corporation, association or other business entity in which
such Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries owns sufficient equity or voting interests to enable it or them
(as a group) ordinarily, in the absence of contingencies, to elect a majority of
the directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary
of the Company; provided,
however that Kugelfertigung Eltmann GmbH shall not be considered a
Subsidiary for purposes of this Agreement except with respect to the following
definitions and Sections: (i) Section 7.1(a); (ii) Section 7.1(b); (iii) Section
10.10(m); (iv) Section 10.22; and (v) the definitions of the following terms set
forth in Schedule B: “Consolidated”; “Consolidated Fixed Charges”;
“Consolidated Funded Debt”; “Consolidated Net Income”; “Consolidated Net Worth”;
“Consolidated Section 10.10 Debt”; “Consolidated Total Assets”; “EBITDA”;
“Foreign Subsidiary”; “Funded Debt”; “Interest Charges”; “Leverage Ratio”;
“Pledged Securities”; “Section 10.10 Consolidated Net Income”; “Section 10.10
Interest Expense”; and “Section 10.10 Rent Expense”.
6
2. Waiver
of Mandatory Prepayment. The Noteholders waive the
requirement under Section 10.19 of the Agreement that the Company offer to
prepay a portion of the Notes pursuant to Section 8.1(b) in connection with the
reduction of the Revolving Credit Facility to $85,000,000 pursuant to the Second
Amendment to Credit Agreement (as defined below).
3. Conditions
to Effectiveness of this Amendment. Notwithstanding any other
provision of this Amendment and without affecting in any manner the rights of
the Noteholders hereunder, it is understood and agreed that this Amendment shall
not become effective, and the Company shall have no rights under this Amendment,
until the Noteholders shall have received (i) payment of an amendment fee to the
Noteholders in the amount of 0.25% of the aggregate outstanding principal amount
of the Notes, (ii) payment of a structuring fee to the Noteholders in the amount
of $16,806, (iii) reimbursement or payment of their costs and expenses incurred
in connection with this Amendment or the Note Agreement (including reasonable
fees, charges and disbursements of King & Spalding LLP, counsel to the
Noteholders) and (iv) each of the following:
(a)
executed counterparts to this Amendment
from the Company, each of the Guarantors and the Noteholders;
(b)
a certified copy of the fully effective
amendment to the Credit Documents, in form and substance satisfactory to the
Noteholders, incorporating in substance the amendments set forth in Section
1 hereof, authorizing KeyBank National Association, as Administrative
Agent, to enter into the amendment to the Intercreditor Agreement contemplated
in clause (c) below and consenting to the execution, delivery and performance of
this Amendment by the Company and the Guarantors (the “Second
Amendment to Credit Agreement”); and
(c) a fully effective amendment
to the Intercreditor Agreement, in form and substance satisfactory to the
Noteholders.
4. Representations
and Warranties. To induce the Noteholders to enter into this
Amendment, each Obligor hereby represents and warrants to the Noteholders that:
(a) The execution, delivery and
performance by such Obligor of this Amendment (i) are within such Obligor’s
power and authority; (ii) have been duly authorized by all necessary
corporate and shareholder action; (iii) are not in contravention of any
provision of such Obligor’s certificate of incorporation or bylaws or other
organizational documents; (iv) do not violate any law or regulation, or any
order or decree of any Governmental Authority; (v) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
any performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Obligor or any of its Subsidiaries
is a party or by which such Obligor or any such Subsidiary or any of their
respective property is bound; (vi) do not result in the creation or imposition
of any Lien upon any of the property of such Obligor or any of its Subsidiaries;
and (vii) do not require the consent or approval of any Governmental
Authority or any other person;
7
(b) This Amendment has been
duly executed and delivered for the benefit of or on behalf of each Obligor and
constitutes a legal, valid and binding obligation of each Obligor, enforceable
against such Obligor in accordance with its terms; and
(c) After giving effect to this
Amendment, the representations and warranties contained in the Note Agreement
and the other Financing Agreements are true and correct in all material
respects, and no Default or Event of Default has occurred and is continuing, or
would result herefrom, as of the date hereof, except for representations and
warranties that were given as of a specific earlier date (which remain true and
correct as of such earlier date) or representations and warranties which became
inaccurate solely as a result of changes permitted under the Note
Agreement.
5.
Reaffirmations
and Acknowledgments.
(a) Reaffirmation
of Guaranty. Each Guarantor consents to the execution and delivery
by the Company of this Amendment and jointly and severally ratify and confirm
the terms of its Guaranty of the Obligations of the Company arising under
Section 23 of the Note Agreement. Each Guarantor acknowledges that,
notwithstanding anything to the contrary contained herein or in any other
document evidencing any indebtedness of the Company to the Noteholders or any
other obligation of the Company, or any actions now or hereafter taken by the
Noteholders with respect to any obligation of the Company, Section 23 of the
Note Agreement (i) is and shall continue to be a primary obligation of the
Guarantors, (ii) is and shall continue to be an absolute, unconditional, joint
and several, continuing and irrevocable guaranty of payment, and (iii) is and
shall continue to be in full force and effect in accordance with its
terms. Nothing contained herein to the contrary shall release, discharge,
modify, change or affect the original liability of the Guarantors under Section
23 of the Note Agreement.
(b) Acknowledgment
of Perfection of Security Interest. Each Obligor hereby acknowledges
that, as of the date hereof, the security interests and liens granted to the
Collateral Agent and the Noteholders under the Note Agreement, the Pledge
Agreements and the other Financing Agreements are in full force and effect, are
properly perfected and are enforceable in accordance with the terms of the Note
Agreement and the other Financing Agreements.
6.
Effect
of Amendment. Except as set forth expressly herein, all
terms of the Note Agreement, as amended hereby, and the other Financing
Agreements shall be and remain in full force and effect and shall constitute the
legal, valid, binding and enforceable obligations of the Obligors to the
Noteholders. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Noteholders under the Note Agreement, nor
constitute a waiver of any provision of the Note Agreement. This Amendment
shall constitute a Financing Agreement for all purposes of the Note
Agreement.
8
7.
Governing
Law. This Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of New York and all
applicable federal laws of the United States of
America.
8.
No
Novation. This Amendment is not intended by the parties to
be, and shall not be construed to be, a novation of the Note Agreement or an
accord and satisfaction in regard thereto.
9.
Costs
and Expenses; Agreement With Respect to the Credit
Documents. The Company agrees to pay on demand all
reasonable costs and expenses of the Noteholders in connection with the
preparation, execution and delivery of this Amendment, including, without
limitation, the reasonable fees and out-of-pocket expenses of outside counsel
for the Noteholders with respect thereto. To the extent any Bank Lender is
compensated for executing and delivering the Second Amendment to Credit
Agreement, whether by fee, increased yield or otherwise, the Company shall
provide the Noteholders with at least the equivalent economic consideration,
including without limitation the fees set forth in subparagraphs (i) and (ii) of
Section 3 of this Amendment (it being understood that the foregoing sentence
shall in no way be deemed to constitute a consent on the part of the Noteholders
for any such additional compensation to such
Persons).
11.
Binding
Nature. This Amendment shall be binding upon and inure to
the benefit of the parties hereto, their respective successors,
successors-in-titles, and assigns.
12.
Entire
Understanding. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations or agreements, whether written or
oral, with respect thereto.
[Remainder of page
intentionally blank.]
9
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.
|
Company:
NN,
Inc.
|
|||
|
|
By:
|
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: Vice President and CFO | |||
GUARANTORS
| Industrial Molding Corporation, as successor by merger to Industrial Molding Group, L.P. | |||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: Treasurer | |||
|
|
|||
| The Delta Rubber Company, a Connecticut corporation | |||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: Treasurer | |||
| Whirlaway Corporation, an Ohio corporation | |||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: Treasurer | |||
| Triumph LLC, an Arizona limited liability company | |||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: Treasurer | |||
NOTEHOLDERS:
| The Prudential Insurance Company of America | |||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Senior Vice President | |||
|
Prudential
Retirement Insurance and Annuity Company
By:
Prudential Investment Management, Inc., as investment
manager
|
|||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Senior Vice President | |||
|
American
Bankers Life Assurance Company of Florida, Inc.
By:
Prudential Private Placement Investors, L.P., as Investment
Advisor
By:
Prudential Private Placement Investors, Inc., as its General
Partner
|
|||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Senior Vice President | |||
|
Farmers
New World Life Insurance Company
By:
Prudential Private Placement Investors, L.P., as Investment
Advisor
By:
Prudential Private Placement Investors, Inc., as its General
Partner
|
|||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Senior Vice President | |||
|
Union
Security Insurance Company, as successor to Time Insurance
Company
By:
Prudential Private Placement Investors, L.P., as Investment
Advisor
By:
Prudential Private Placement Investors, Inc., as its General
Partner
|
|||
|
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Senior Vice President | |||
Schedule 10.25
to
Second Amended and
Restated Note Purchase Agreement and Shelf Agreement
1. NN Netherlands employee
reduction action (up to 52 employees)
2. NN Italy employee reduction
action (up to 34 employees)