Modine Manufacturing Co 10-Q for FY2023 Q3
Modine Manufacturing Co (MOD)
10-Q
2023-02-02
For: 2022-12-31
View Original
Added on
April 11, 2026
About this 10-Q
Modine Manufacturing Co filed this 10-Q on February 2, 2023, covering the quarter ended December 31, 2022 (FY2023 Q3).
Headline figures
Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $560M
- up 11.5% from $502.2M a year earlier
- Net income
- $24.5M
- down 66.9% from net income of $74.1M a year earlier
- Diluted EPS
- $0.46
- down 67.4% from $1.41 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended December 31, 2022
or
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
Commission file number 1-1373
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code (262 ) 636-1200
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer ☐
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Non-accelerated Filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☑
The number of shares outstanding of the registrant’s common stock, $0.625 par value, was 52,120,189 at January 27, 2023.
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PART I. FINANCIAL INFORMATION
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1
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23
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34
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34
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PART II. OTHER INFORMATION
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35
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35
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36
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37
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PART I. FINANCIAL INFORMATION
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended December 31, 2022 and 2021
(In millions, except per share amounts)
(Unaudited)
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Three months ended
December 31,
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Nine months
ended
December 31,
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2022
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2021
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2022
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2021
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Net sales
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$
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$
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$ | $ | ||||||||||
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Cost of sales
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Gross profit
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Selling, general and administrative expenses
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Restructuring expenses
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Impairment charges (reversals) – net
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(
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)
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( |
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Loss on sale of assets
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Operating income
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Interest expense
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(
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)
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(
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( |
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Other expense – net
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(
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(
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( |
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Earnings before income taxes
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Provision for income taxes
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(
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(
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( |
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Net earnings
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Net earnings attributable to noncontrolling interest
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(
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)
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(
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( |
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Net earnings attributable to Modine
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$
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$
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$ | $ | ||||||||||
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Net earnings per share attributable to Modine shareholders:
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Basic
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$
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$
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$ | $ | ||||||||||
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Diluted
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$
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$
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$ | $ | ||||||||||
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Weighted-average shares outstanding:
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Basic
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Diluted
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
For the three and nine months ended December 31, 2022 and 2021
(In millions)
(Unaudited)
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Three months ended
December 31,
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Nine months
ended
December 31,
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2022
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2021
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2022
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2021
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Net earnings
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$
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$
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$ | $ | ||||||||||
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Other comprehensive income (loss), net of income taxes:
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Foreign currency translation
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(
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)
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( |
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Defined
benefit plans
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Cash
flow hedges
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( |
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Total other comprehensive income (loss)
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(
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)
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( |
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Comprehensive income (loss)
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Comprehensive (income) loss attributable to noncontrolling interest
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(
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)
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(
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( |
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Comprehensive income (loss) attributable to Modine
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$
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$
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$ | $ | ||||||||||
The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED
BALANCE SHEETS
December 31, 2022 and March 31, 2022
(In millions, except per share amounts)
(Unaudited)
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December 31, 2022
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March 31, 2022
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ASSETS
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Cash and cash equivalents
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$
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$
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Trade accounts receivable – net
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Inventories
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Other current assets
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Total current assets
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Property, plant and equipment – net
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Intangible assets – net
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Goodwill
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Deferred income taxes
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Other noncurrent assets
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Total assets
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$
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$
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Short-term debt
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$
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$
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Long-term debt – current portion
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Accounts payable
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Accrued compensation and employee benefits
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Other current liabilities
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Total current liabilities
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Long-term debt
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Deferred income taxes
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Pensions
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Other noncurrent liabilities
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Total liabilities
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Commitments and contingencies (see Note 17)
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Shareholders’ equity:
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Preferred stock, $
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Common stock, $
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Additional paid-in capital
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Retained earnings
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Accumulated other comprehensive loss
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(
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(
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Treasury stock, at cost,
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(
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(
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Total Modine shareholders’ equity
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Noncontrolling interest
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Total equity
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Total liabilities and equity
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$
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the nine months ended December 31, 2022 and 2021
(In millions)
(Unaudited)
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Nine months ended December 31,
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2022
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2021
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Cash flows from operating activities:
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Net earnings
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$
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$
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Adjustments to reconcile net earnings to net cash provided by operating activities:
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Depreciation and amortization
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Impairment charges (reversals) – net
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(
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Loss on sale of assets
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Stock-based compensation expense
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Deferred income taxes
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(
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(
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Other – net
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Changes in operating assets and liabilities:
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Trade accounts receivable
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Inventories
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(
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(
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Accounts payable
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(
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Other assets and liabilities
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(
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(
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Net cash provided by operating activities
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Cash flows from investing activities:
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Expenditures for property, plant and equipment
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(
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(
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Proceeds from (payments for) disposition of assets
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(
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Disbursements for loan origination (see Note 1)
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( |
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Other – net
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(
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Net cash used for investing activities
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(
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(
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Cash flows from financing activities:
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Borrowings of debt
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Repayments of debt
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(
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(
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Borrowings (repayments) on bank overdraft facilities – net
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(
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| Financing fees paid |
( |
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Purchases of treasury stock under share repurchase program
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(
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Dividend paid to noncontrolling interest
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(
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(
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Other – net
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(
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)
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Net cash provided by financing activities
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Effect of exchange rate changes on cash
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(
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)
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(
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)
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Net increase in cash, cash equivalents, and restricted cash
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Cash, cash equivalents, and restricted cash – beginning of period
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Cash, cash equivalents, and restricted cash – end of period
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$
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the three and nine months ended December 31,
2022 and 2021
(In millions)
(Unaudited)
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Common stock
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Additional
paid-in
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Retained
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Accumulated
other
comprehensive
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Treasury stock, at
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Non-
controlling
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|||||||||||||||||||||||||||
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Shares
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Amount
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capital
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earnings
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loss
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cost
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interest
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Total
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|||||||||||||||||||||||||
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Balance, March 31, 2022
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|
$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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$
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Net earnings
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-
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Other comprehensive loss
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-
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(
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)
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(
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(
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)
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Stock options and awards
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Purchase of treasury stock
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-
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(
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)
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(
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Stock-based compensation expense
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-
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Dividend paid to noncontrolling interest
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Balance, June 30, 2022
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|
$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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$
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Net earnings (loss)
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-
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( |
) | |||||||||||||||||||||||||||||
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Other comprehensive loss
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-
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( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
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Stock options and awards
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||||||||||||||||||||||||||||||||
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Purchase of treasury stock
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock-based compensation expense
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-
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|||||||||||||||||||||||||||||||
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Balance, September 30, 2022
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$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
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Net earnings
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-
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|||||||||||||||||||||||||||||||
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Other comprehensive income
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-
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Stock options and awards
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Purchase of treasury stock
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock-based compensation expense
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-
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Balance, December 31, 2022
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$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
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Common stock
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Additional
paid-in
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Retained
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Accumulated
other
comprehensive
|
Treasury stock, at
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Non-
controlling
|
|||||||||||||||||||||||||||
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Shares
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Amount
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capital
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earnings
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loss
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cost
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interest
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Total
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|||||||||||||||||||||||||
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Balance, March 31, 2021
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$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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$
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Net earnings
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-
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Other comprehensive income
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-
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Stock options and awards
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Purchase of treasury stock
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-
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(
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)
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(
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)
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||||||||||||||||||||||
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Stock-based compensation expense
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-
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Dividend paid to noncontrolling interest
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
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Balance, June 30, 2021
|
|
$
|
|
$
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|
$
|
|
$
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(
|
)
|
$
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(
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)
|
$
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$
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|
|||||||||||||||
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Net earnings
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-
|
|||||||||||||||||||||||||||||||
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Other comprehensive loss
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-
|
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
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Stock options and awards
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||||||||||||||||||||||||||||||||
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Stock-based compensation expense
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-
|
|||||||||||||||||||||||||||||||
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Balance, September 30, 2021
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
|
Net earnings
|
-
|
|||||||||||||||||||||||||||||||
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Other comprehensive income (loss)
|
-
|
( |
) | ( |
) | |||||||||||||||||||||||||||
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Stock options and awards
|
||||||||||||||||||||||||||||||||
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Purchase of treasury stock
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
|
Stock-based compensation expense
|
-
|
|||||||||||||||||||||||||||||||
|
Balance, December 31, 2021
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||
The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 1: General
The accompanying unaudited condensed consolidated financial statements of Modine Manufacturing Company
(“Modine” or the “Company”) were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flows required by GAAP for complete financial statements. The financial statements include all normal recurring
adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Results for the first nine months of fiscal 2023 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and
related notes in Modine’s Annual Report on Form 10-K for the year ended March 31, 2022.
Disposition of Austrian Air-cooled Automotive Business in Fiscal 2022
On April 30, 2021, the Company sold
its air-cooled automotive business in Austria to Schmid Metall GmbH. As a result of this transaction, the Company recorded a loss of $6.6
million during the first quarter of fiscal 2022, which included the write-off of $1.7 million of net
actuarial losses related to its pension plan. The Company reported this loss within the loss on sale of assets line on the consolidated statement of operations. Upon transaction closing, $5.9 million of cash within the business transferred to the buyer. During the third quarter of fiscal 2022, a
purchase price adjustment for net working capital and certain other items was finalized and the Company paid the buyer $2.4 million.
In connection with the sale of this business, the Company provided the buyer with a 5 -year, €4.0 million loan facility. The buyer began borrowing
under this facility during the second quarter of fiscal 2022. At both December 31, 2022 and March 31, 2022, the Company recorded a €4.0 4.6 percent.
Liquid-Cooled
Automotive Business Held for Sale in Fiscal 2022
The Company previously
agreed to sell its liquid-cooled automotive business. During the first quarter of fiscal 2022, the Company and the prospective buyer modified the transaction perimeter to remove certain manufacturing operations. U.S. GAAP requires companies
to measure asset groups that revert back to held and used classification at the lower of their (i) carrying value, as if held for sale classification had not been met; or (ii) fair value at the date of the decision not to sell. As a result,
the Company evaluated the long-lived assets of these businesses that no longer met the requirements to be classified as held for sale and reversed $7.4
million of previously-recorded impairment charges during the first quarter of fiscal 2022 to adjust the long-lived assets to their estimated fair value.
During the third
quarter of fiscal 2022, the Company and the prospective buyer terminated the sale agreement and the liquid-cooled automotive business reverted back to held and used classification. As a result, the Company remeasured the long-lived assets
within the liquid-cooled automotive business and reversed $57.2 million of previously-recorded held for sale impairment charges
during the third quarter of fiscal 2022.
On a year-to-date
basis, the $64.6 million of impairment reversals described above were partially offset by $8.6 million of impairment charges related to the automotive assets while they were classified as held for sale during fiscal 2022, resulting in a net impairment reversal of
$56.0 million. The Company reported all impairment charges and reversals during fiscal 2022 within the impairment charges
(reversals) line on the consolidated statements of operations.
6
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Disposition of Previously-Closed Facility in Fiscal 2022
During the first quarter of fiscal 2022, the Company signed a definitive agreement to sell a previously-closed manufacturing facility in the U.S.
As a result, the Company recorded an impairment charge of $0.3 million within the Climate Solutions segment to write down the property
to fair value less costs to sell. During July 2021, the sale was completed and the Company received net cash proceeds of $0.7 million.
New Accounting Guidance: Supplier Finance Programs
In September 2022, the Financial Accounting Standards Board (“FASB”) issued new guidance that will require companies that use supplier finance
programs to disclose information about the programs, including key terms, outstanding obligations under such programs and where outstanding amounts are presented within their financial statements. In addition, a roll forward of obligations
under supplier finance programs will be required annually. The new guidance is effective for the Company’s fiscal 2024 financial statements, with the exception of the roll forward disclosure requirement, which will become effective one year
later. The Company is currently evaluating the new disclosures, but does not expect the guidance will have a material impact on its consolidated financial statements.
Note 2: Revenue Recognition
Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported Building HVAC Systems (“BHVAC”) and the Commercial
and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the previously-reported Heavy Duty Equipment (“HDE”) and Automotive segments and the CIS Coatings business. See Note 19
for additional segment financial information.
The Company’s operating segments and their principal revenue-generating activities are as follows:
Climate Solutions
The Climate Solutions segment provides energy-efficient, climate-controlled components and solutions for a wide array of
applications. The Climate Solutions segment principally generates revenue from selling heat transfer products, heating, ventilating, air conditioning, and refrigeration (“HVAC & refrigeration”) products, and data center cooling solutions.
Heat transfer products include heat transfer coils used in commercial and residential HVAC and refrigeration applications. HVAC and refrigeration products include commercial and residential unit heaters, vertical and horizontal unit ventilators,
air conditioning chillers, low global warming potential unit coolers, air-cooled condensers, and dry coolers. Data center cooling solutions, which are integrated with system controls, include air- and liquid-cooled chillers, computer room air
conditioner and air handler units, and fan walls.
Performance Technologies
The Performance Technologies segment provides products and solutions that enhance the performance of customer applications.
The Performance Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial applications. Air-cooled products include radiators, charge air coolers, condensers, and engine cooling
modules. Liquid-cooled products include engine oil coolers, charge air coolers, condensers, and exhaust gas recirculation coolers. In addition, the Performance Technologies segment provides advanced solutions, which are designed to improve
battery range and vehicle life, to zero-emission and hybrid commercial vehicle and automotive customers. These solutions include battery thermal management systems, electronics cooling packages, and battery chillers. The advanced solutions
provided by the segment also include coating products and application services that extend the life of equipment and components by protecting against corrosion.
7
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Disaggregation of Revenue
The tables below present revenue for each of the Company’s operating segments. Each segment’s revenue is disaggregated by product group, by geographic location and based upon the timing of revenue recognition. The disaggregated revenue
information presented in the tables below for fiscal 2022 has been recast to be comparable with the fiscal 2023 presentation.
|
Three months ended December 31, 2022
|
Three months ended December 31, 2021
|
|||||||||||||||||||||||
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
|||||||||||||||||||
|
Product groups:
|
||||||||||||||||||||||||
|
Heat transfer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
HVAC & refrigeration
|
||||||||||||||||||||||||
|
Data center cooling
|
|
|
|
|
|
|
||||||||||||||||||
|
Air-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Liquid-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Advanced solutions
|
|
|
|
|
|
|
||||||||||||||||||
|
Inter-segment sales
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Geographic location:
|
||||||||||||||||||||||||
|
Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Europe
|
|
|
|
|
|
|
||||||||||||||||||
|
Asia
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Timing of revenue recognition:
|
||||||||||||||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Nine months ended December 31, 2022
|
Nine
months ended December 31, 2021
|
|||||||||||||||||||||||
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
Climate
Solutions
|
Performance
Technologies
|
Segment
Total
|
|||||||||||||||||||
|
Product groups:
|
||||||||||||||||||||||||
|
Heat transfer
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
HVAC & refrigeration
|
|
|
|
|
|
|
||||||||||||||||||
|
Data center cooling
|
|
|
|
|
|
|
||||||||||||||||||
|
Air-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Liquid-cooled
|
|
|
|
|
|
|
||||||||||||||||||
|
Advanced solutions
|
|
|
|
|
|
|
||||||||||||||||||
|
Inter-segment sales
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Geographic location:
|
||||||||||||||||||||||||
|
Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Europe
|
|
|
|
|
|
|
||||||||||||||||||
|
Asia
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Timing of revenue recognition:
|
||||||||||||||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
8
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Contract Balances
Contract assets and contract liabilities from contracts with customers were as follows:
| |
December 31, 2022
|
March 31, 2022
|
||||||
|
Contract assets
|
$
|
|
$
|
|
||||
|
Contract liabilities
|
|
|
||||||
Contract
assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue
recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed. The $3.0 million
decrease in contract assets during the first nine months of fiscal 2023 primarily resulted from a decrease in contract assets for revenue recognized over time.
Contract
liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for customer-owned tooling. The
$0.1 million increase in contract liabilities during the first nine months of fiscal 2023 primarily resulted from payments received in
advance of the Company’s satisfaction of performance obligations.
Note 3: Fair Value Measurements
Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants. Fair value measurements are classified under the following hierarchy:
| • |
Level 1 – Quoted prices for identical instruments in active markets.
|
| • |
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in
which all significant inputs are observable in active markets.
|
| • |
Level 3 – Model-derived valuations in which one or more significant inputs are not observable.
|
When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1. In some cases, where market prices are not
available, the Company uses observable market-based inputs to calculate fair value, in which case the measurements are classified as Level 2. If quoted or observable market prices are not available, the Company determines fair value based upon
valuation models that use, where possible, market-based data such as interest rates, yield curves or currency rates. These measurements are classified as Level 3.
The carrying values of cash, cash equivalents, restricted cash, short-term investments, trade accounts receivable, accounts payable, and short-term debt approximate fair
value due to the short-term nature of these instruments. The fair value of the Company’s long-term debt is disclosed in Note 16.
9
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 4: Pensions
Pension cost included the following components:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Service cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest cost
|
|
|
|
|
||||||||||||
|
Expected return on plan assets
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Amortization of unrecognized net loss
|
|
|
|
|
||||||||||||
|
Net periodic benefit cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The Company’s funding policy is to contribute annually, at a minimum, the amount
necessary on an actuarial basis to provide for benefits in accordance with applicable laws and regulations. In connection with funding relief provisions within the American Rescue Plan Act of 2021, the Company does not expect to make cash
contributions to its U.S. pension plans during fiscal 2023.
Note 5: Stock-Based Compensation
The Company’s stock-based incentive programs consist of the following: (1) a long-term incentive plan (“LTIP”) for officers and other executives that
consists of stock awards, stock options, and performance-based awards granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards for non-employee directors.
The Company calculates compensation expense based upon the fair value of the awards at the time of grant and subsequently recognizes expense ratably over
the respective vesting periods of the stock-based awards. The Company recognized stock-based compensation expense of $1.5 million and $1.1 million for the three months ended December 31, 2022 and 2021, respectively. The Company recognized stock-based compensation expense of $5.0 million and $4.7 million for the nine months ended December 31, 2022 and 2021, respectively.
The weighted-average fair value of stock-based compensation awards granted during the nine months
ended December 31, 2022 and 2021 were as follows:
| Nine months ended December 31, |
||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Fair Value | Fair Value | |||||||||||||||
|
Shares
|
Per Award
|
Shares |
Per Award
|
|||||||||||||
|
Stock options
|
|
$
|
|
$ | ||||||||||||
|
Restricted stock awards
|
|
$
|
|
$ | ||||||||||||
| Unrestricted stock awards |
$ |
|||||||||||||||
In lieu of performance-based stock awards, the Company granted performance cash
awards to the LTIP participants during the first nine months of fiscal 2023. The performance metrics for the cash awards are based upon a target three-year average cash flow return on invested capital and a target three-year average growth in consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”) at the end of the performance period ending March 31, 2025.
10
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
The Company used the following assumptions in
determining fair value for stock options:
| Nine months ended December 31, |
||||||||
| 2022 |
2021 | |||||||
|
Expected life of awards in years
|
|
|||||||
|
Risk-free interest rate
|
|
%
|
% | |||||
|
Expected volatility of the Company’s stock
|
|
%
|
% | |||||
|
Expected dividend yield on the Company’s stock
|
|
%
|
% | |||||
As of December 31, 2022, unrecognized compensation expense related to non-vested
stock-based compensation awards, which will be recognized as expense over the remaining service periods, was as follows:
| |
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
|
Stock options
|
$
|
|
|
|||||
|
Restricted stock awards
|
|
|
||||||
|
Total
|
$
|
|
|
|||||
Note 6: Restructuring Activities
During
the first nine months of fiscal 2023, restructuring and repositioning expenses primarily consisted of severance expenses related to targeted headcount reductions in Europe within the Performance Technologies segment. In addition, the Company
incurred equipment transfer costs and closure costs related to a previously-leased facility in the Performance Technologies and Climate Solutions segments, respectively.
During the first nine months of fiscal 2022, restructuring and repositioning expenses primarily consisted
of severance-related expenses within the Climate Solutions and Performance Technologies segments and equipment transfer costs within the Performance Technologies segment.
Restructuring and repositioning expenses were as follows:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Employee severance and related benefits
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Other restructuring and repositioning expenses
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other restructuring and repositioning expenses primarily consist of equipment transfer and plant consolidation costs.
11
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as
follows:
|
Three months ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Additions
|
|
|
||||||
|
Payments
|
(
|
)
|
(
|
)
|
||||
| Reclassified from held for sale | ||||||||
|
Effect of exchange rate changes
|
|
(
|
)
|
|||||
|
Ending balance
|
$
|
|
$
|
|
||||
| Nine months ended December 31, | ||||||||
| 2022 |
2021 |
|||||||
| Beginning balance | $ | $ | ||||||
| Additions | ||||||||
| Payments | ( |
) | ( |
) | ||||
| Reclassified from held for sale | ||||||||
| Effect of exchange rate changes | ( |
) | ( |
) | ||||
| Ending balance | $ | $ | ||||||
Note 7: Other Income and Expense
Other income and expense consisted of the following:
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Foreign currency transactions (a)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Net periodic benefit cost (b)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Total other expense – net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
|
(a) |
|
|
|
(b) |
|
12
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 8: Income Taxes
The Company’s effective tax rate for the three months ended December 31, 2022 and 2021 was 25.6 percent and 0.1 percent, respectively. The
Company’s effective tax rate for the nine months ended December 31, 2022 and 2021 was 23.8 percent and 8.7 percent, respectively.
The
effective tax rates for the fiscal 2022 periods were significantly impacted by the Company’s accounting for the liquid-cooled automotive business, which had been previously classified as held for sale. During the nine months ended December 31,
2021, the Company recorded net impairment reversals totaling $56.0 million related to this business, primarily driven by the
remeasurement of its property, plant and equipment assets upon reverting back to held and used classification during the third quarter of fiscal 2022. In addition, the effective tax rates for the third quarter and the first nine months of fiscal
2022 were favorably impacted by $8.2 million and $11.4 million, respectively, from income tax benefits related to valuation allowances on deferred tax assets in foreign jurisdictions, as further described below. See Note 1 for additional
information regarding the net impairment reversals related to the liquid-cooled automotive business.
The Company records valuation allowances
against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized in the future. Each quarter, the Company evaluates the probability that its deferred tax assets will be realized and
determines whether valuation allowances or adjustments thereto are needed. This determination involves judgement and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies. In
addition, the Company considers the duration of statutory carryforward periods and historical financial results.
Based upon its quarterly analyses in fiscal 2022, the Company determined it was more likely than not that the deferred tax assets in certain foreign jurisdictions will be
realized. As a result, the need for the valuation allowances recorded thereon was eliminated and the Company recorded income tax benefits of $4.8
million and $8.2 million during the first and third quarters of fiscal 2022, respectively. The Company’s analyses in these quarters
included consideration of the transaction perimeter modification during the first quarter and the termination of the sale agreement during the third quarter for the liquid-cooled automotive business and the related impairment reversals. In
addition, based upon the Company’s analysis as of September 30, 2021, the Company determined it was more likely than not that the deferred tax assets in a foreign jurisdiction will not be realized. As a result, the Company recorded an income tax
charge of $1.6 million in the second quarter of fiscal 2022, which partially offset the $13.0 million of income tax benefits recorded during the first and third quarters. Combined, these fiscal 2022 valuation allowance adjustments resulted in a net income tax
benefit of $11.4 million during the first nine months of fiscal 2022.
At December 31, 2022, valuation allowances against deferred tax assets in the U.S. and in certain foreign
jurisdictions totaled $84.9 million and $28.1 million, respectively. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more
likely than not the deferred tax assets will be realized, thereby eliminating the need for a valuation allowance. Future events or circumstances, such as lower taxable income or unfavorable changes in the financial outlook of the Company’s
operations in certain foreign jurisdictions, could necessitate the establishment of further valuation allowances. At present, the Company has recorded a full valuation allowance on its U.S. deferred tax assets. Based upon current and anticipated future
earnings in the U.S., the Company believes it is reasonably possible that in the fourth quarter of fiscal 2023 or in fiscal 2024, sufficient positive evidence may be available to conclude that a significant portion of the U.S. valuation allowance
is not needed. The Company estimates such valuation allowance release would result in a decrease to income tax expense of up to $65.0
million in the period recorded. However, the ultimate timing of such a release, if any, and the resulting decrease to income tax expense, could differ from the Company’s current estimates.
Accounting policies for interim reporting require the Company to adjust its effective tax rate each
quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The
Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. The Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate
methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions. The Company does not anticipate a significant change in unrecognized tax
benefits during the remainder of fiscal 2023.
13
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 9: Earnings Per Share
The components of basic and diluted earnings per share were as follows:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Net earnings attributable to Modine
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Weighted-average shares outstanding – basic
|
|
|
|
|
||||||||||||
|
Effect of dilutive securities
|
|
|
|
|
||||||||||||
|
Weighted-average shares outstanding – diluted
|
|
|
|
|
||||||||||||
|
Earnings per share:
|
||||||||||||||||
|
Net earnings per share – basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Net earnings per share – diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
For the three and nine months ended
December 31, 2022, the calculation of diluted earnings per share excluded 0.1 million and 0.6 million stock options, respectively, because they were anti-dilutive. In addition, the calculation for the three and nine months ended December 31, 2022 excluded less
than 0.1 million and 0.2
million restricted stock awards, respectively, because they were anti-dilutive.
For both the three and nine months ended December 31, 2021, the calculation of diluted earnings per share
excluded 0.6 0.2
Note 10: Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following:
|
December 31, 2022
|
March 31, 2022
|
|||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Restricted cash
|
|
|
||||||
|
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
||||
Restricted cash, which is reported within other current assets and other noncurrent assets in the consolidated balance sheets, consists primarily of deposits for
contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.
14
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 11: Inventories
Inventories consisted of the following:
| |
December 31, 2022
|
March 31, 2022
|
||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work in process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
Total inventories
|
$
|
|
$
|
|
||||
Note 12: Property, Plant and Equipment
Property, plant and equipment, including depreciable lives, consisted of the following:
|
December 31, 2022
|
March 31, 2022
|
|||||||
|
Land
|
$
|
|
$
|
|
||||
|
Buildings and improvements (
|
|
|
||||||
|
Machinery and equipment (
|
|
|
||||||
|
Office equipment (
|
|
|
||||||
|
Construction in progress
|
|
|
||||||
|
|
|
|||||||
|
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
Net property, plant and equipment
|
$
|
|
$
|
|
||||
Note 13: Goodwill and Intangible Assets
The following table presents a roll forward of the carrying value of goodwill from March 31, 2022 to December 31, 2022. The Company has recast the March 31, 2022 goodwill balances to
be comparable with the current segment structure. There was no impact to the underlying reporting units as a result of the segment realignment during fiscal 2023.
|
Climate
Solutions
|
Performance
Technologies
|
Total
|
||||||||||
|
Goodwill, March 31,
2022
|
$
|
|
$
|
|
$
|
|
||||||
|
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Goodwill, December 31,
2022
|
$
|
|
$
|
|
$
|
|
||||||
15
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Intangible assets consisted of the following:
|
December 31, 2022
|
March 31, 2022
|
|||||||||||||||||||||||
| Gross | Net | Gross | Net | |||||||||||||||||||||
| Carrying | Accumulated |
Intangible |
Carrying |
Accumulated |
Intangible |
|||||||||||||||||||
|
Value
|
Amortization
|
Assets
|
Value
|
Amortization
|
Assets
|
|||||||||||||||||||
|
Customer relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
|
Trade names
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
|
Acquired technology
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
|
Total intangible assets
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
The Company recorded amortization expense of $2.0 million and $2.1 million for the three months ended December 31, 2022 and 2021, respectively. The Company recorded amortization expense of $6.0 million and $6.3 million for the nine months ended December 31, 2022
and 2021, respectively. The Company estimates that it will record approximately $2.0 million of amortization expense
during the remainder of fiscal 2023 and approximately $8.0
Note 14: Product Warranties
Changes in accrued warranty costs were as follows:
|
Three months ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Warranties recorded at time of sale
|
|
|
||||||
|
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
|
Settlements
|
(
|
)
|
(
|
)
|
||||
| Reclassified from held for sale |
||||||||
|
Effect of exchange rate changes
|
|
|
||||||
|
Ending balance
|
$
|
|
$
|
|
||||
|
Nine months
ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Warranties recorded at time of sale
|
|
|
||||||
|
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
|
Settlements
|
(
|
)
|
(
|
)
|
||||
| Reclassified from held for sale |
||||||||
|
Effect of exchange rate changes
|
(
|
)
|
|
|||||
|
Ending balance
|
$
|
|
$
|
|
||||
16
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 15: Leases
Lease Assets and Liabilities
The following table provides a summary of leases recorded on
the consolidated balance sheets.
|
Balance Sheet Location
|
December 31, 2022
|
March 31, 2022
|
||||||||
|
Lease Assets
|
||||||||||
|
Operating lease ROU assets
|
|
$
|
|
$
|
|
|||||
|
Finance lease ROU assets (a)
|
|
|
|
|||||||
|
Lease Liabilities
|
||||||||||
|
Operating lease liabilities
|
|
$
|
|
$
|
|
|||||
|
Operating lease liabilities
|
|
|
|
|||||||
|
Finance lease liabilities
|
|
|
|
|||||||
|
Finance lease liabilities
|
|
|
|
|||||||
| (a) |
|
Components of Lease Expense
The components of lease expense were as follows:
|
Three months ended
December 31,
|
Nine months ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Operating lease
expense (a)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Finance lease
expense:
|
||||||||||||||||
|
Depreciation of
ROU assets
|
|
|
|
|
||||||||||||
|
Interest on
lease liabilities
|
|
|
||||||||||||||
|
Total lease
expense
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
(a)
|
|
17
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 16: Indebtedness
In October 2022, the Company executed an
amended and restated credit agreement with a syndicate of banks that provides for a multi-currency $275.0 million revolving credit
facility and U.S. dollar- and euro-denominated term loan facilities maturing in October 2027. In addition, the credit agreement provides for shorter-duration swingline loans. This credit agreement modified the Company’s then existing $250.0 million revolver and term loan facilities, which would have matured in June 2024.
In connection with the credit agreement
modification, the Company incurred $2.2 million of debt issuance costs. Of these costs, the Company deferred $1.5 million, which will be amortized as interest expense over the term of the debt, and recorded $0.7 million as interest expense on the consolidated statement of operations during the third quarter of fiscal 2023. The Company paid $0.6 million of the debt issuance costs during the third quarter of fiscal 2023 and the remaining issuance costs were added to the new term loan principal at the time of the modification.
Long-term debt consisted of the following:
| |
Fiscal year of
maturity
|
December 31, 2022
|
March 31, 2022
|
||||||
|
Term loans
|
|
$
|
|
$
|
|
||||
|
Revolving credit facility
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
Other (a)
|
|
|
|||||||
|
|
|
||||||||
|
Less: current portion
|
(
|
)
|
(
|
)
|
|||||
|
Less: unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
|||||
|
Total long-term debt
|
$
|
|
$
|
|
|||||
|
|
(a) |
|
Long-term debt, including the current portion of long-term debt, matures as
follows:
|
Fiscal Year
|
||||
|
Remainder of 2023
|
$
|
|
||
|
2024
|
|
|||
|
2025
|
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028 & beyond
|
|
|||
|
Total
|
$
|
|
||
Borrowings under the revolving credit,
swingline and term loan facilities bear interest at a variable rate based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below. At December 31, 2022, the
weighted-average interest rates for revolving credit facility borrowings and the term loans were 4.1 and 5.6 percent, respectively. Based upon the terms of the credit agreement, the Company classifies borrowings under its revolving credit and swingline
facilities as long-term and short-term debt, respectively, on its consolidated balance sheets.
18
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
At December 31, 2022, the Company’s borrowings under its revolving credit and swingline facilities totaled $27.5
million and $6.0 million, respectively, and domestic letters of credit totaled $5.3 million. As a result, available borrowing capacity under the Company’s revolving credit facility was $236.2 million as of December 31, 2022. At March 31, 2022, the Company’s borrowings under its revolving credit and
swingline facilities totaled $64.9 million and $7.0 million, respectively.
The Company also maintains credit agreements for its foreign subsidiaries. The
outstanding short-term borrowings related to these foreign credit agreements totaled $5.3 million and $0.7 million at December 31, 2022 and March 31, 2022, respectively.
Provisions in the Company’s credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various
covenants and include certain cross-default clauses. Under its primary debt agreements in the U.S., the Company has provided liens on substantially all domestic assets. Also, as specified in the credit agreement, the term loans may require
prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, the Company is required to represent to the lenders that there has been no material adverse effect, as
defined in the credit agreement, on its business, property, or results of operations.
The leverage ratio covenant requires the Company to limit its consolidated indebtedness, less a portion of its cash balances, both as defined by the credit agreements, to
no more than times consolidated net earnings before interest, taxes, depreciation, amortization, and certain other
adjustments (“Adjusted EBITDA”). The Company is also subject to an interest expense coverage ratio covenant, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense. The Company was in compliance with its debt covenants as of December 31, 2022.
The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable
maturities. As of December 31, 2022 and March 31, 2022, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of $123.7 million and $138.9 million, respectively. The fair value of
the Company’s long-term debt is categorized as Level 2 within the fair value hierarchy. Refer to Note 3 for the definition of a Level 2 fair value measurement.
Note 17: Risks, Uncertainties, Contingencies and Litigation
Supply Chain Disruptions and Inflationary Market
Conditions
Market and economic dynamics, including the impacts of the COVID-19 pandemic and the military conflict between Russia and the Ukraine, have contributed to global supply chain challenges and
inflationary market conditions. The Company is focused on mitigating the negative impacts of labor shortages, supply chain challenges and inflationary market conditions, including changes in raw material, energy, logistic, and interest costs, as
well as delays and shortages in certain purchased commodities and components.
The Company cannot reasonably estimate the full impact that the ongoing
supply chain challenges and other related economic and market dynamics will have on
the Company’s business, results of operations and cash flows in the future.
Environmental
The Company has recorded environmental investigation and remediation accruals related to manufacturing facilities in the U.S., one of which the Company currently owns and operates, and a former
manufacturing facility in the Netherlands. These accruals primarily relate to soil and groundwater contamination at facilities where past operations followed practices and procedures that were considered acceptable under then-existing
regulations, or where the Company is a successor to the obligations of prior owners, and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance. In instances where a range of loss
can be reasonably estimated for a probable environmental liability, but no amount within the range is a better estimate than any other amount, the Company accrues the minimum of the range. The Company’s accruals for environmental matters totaled
$18.6 million and $18.2
million as of December 31, 2022 and March 31, 2022, respectively. During the first quarter of fiscal 2023 and 2022, the Company increased its remediation accrual related to a former manufacturing facility in the U.S. by $1.0 million and $3.4 million, respectively. As additional information becomes
available regarding the environmental matters, the Company will re-assess the liabilities and revise the estimated accruals, if necessary. While it is possible that the ultimate environmental remediation costs may be in excess of amounts accrued,
the Company believes, based upon currently available information, that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on its financial position. However, these matters are subject
to inherent uncertainties, and unfavorable outcomes could occur, including significant monetary damages.
Other Litigation
In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits and enforcement proceedings by private parties, governmental
agencies and/or others in which claims are asserted against Modine. The Company believes that any additional loss in excess of amounts already accrued would not have a material effect on the Company’s consolidated balance sheet, results of
operations, and cash flows. In addition, management expects that the liabilities which may ultimately result from such lawsuits or proceedings, if any, would not have a material adverse effect on the Company’s financial position.
19
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 18: Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss were as follows:
|
Three months ended December 31, 2022
|
Nine months
ended December 31, 2022
|
|||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||||||||||||||
|
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||
|
Other comprehensive income (loss) before reclassifications
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||||
|
Reclassifications:
|
||||||||||||||||||||||||||||||||
|
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
- | - | ||||||||||||||||||||||||||
|
Realized losses – net (b)
|
-
|
-
|
|
|
- | - | ||||||||||||||||||||||||||
|
Income taxes
|
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | |||||||||||||||||||||||
|
Total other comprehensive income (loss)
|
|
|
|
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
|
Three months ended December 31, 2021
|
Nine months
ended December 31, 2021
|
|||||||||||||||||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||||||||||||||
|
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
|
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ||||||||||||||||||||||
|
Reclassifications:
|
||||||||||||||||||||||||||||||||
|
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
- | - | ||||||||||||||||||||||||||
|
Realized gains – net (b)
|
- | - | ( |
) | ( |
) | - | - | ( |
) | ( |
) | ||||||||||||||||||||
|
Unrecognized net pension loss in disposed business (c)
|
- | - | - | - | ||||||||||||||||||||||||||||
|
Income taxes
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||||
|
Total other comprehensive income (loss)
|
(
|
)
|
|
|
(
|
)
|
( |
) | ( |
) | ||||||||||||||||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||
| (a) |
|
| (b) |
|
| (c) |
|
20
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 19: Segment Information
Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported BHVAC and CIS
segments, with the exception of CIS Coatings. The Performance Technologies segment includes the previously-reported HDE and Automotive segments and the CIS Coatings business. See Note 2 for information regarding the primary operating activities of
each segment. The Company’s new segment structure aligns businesses serving similar or complimentary end markets, products and technologies under common segment management.
The Company
believes this simplified segment structure allows it to better focus resources on targeted growth opportunities and better enables for an efficient application of 80/20 principles across all product lines to optimize profit margins and cash flow.
The segment realignment had no impact on the Company’s consolidated financial position, results of operations, and cash flows. Segment financial information for the prior periods has been recast to conform to the current presentation.
The following is a summary of net sales, gross profit and operating income by segment:
|
Three months ended December 31,
|
||||||||||||||||||||||||
|
2022
|
2021
|
|||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
|
Net sales:
|
||||||||||||||||||||||||
| Climate Solutions |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Performance Technologies |
||||||||||||||||||||||||
|
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
|
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
|
Net sales
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
||||||||||||
|
Nine months
ended December 31,
|
||||||||||||||||||||||||
|
2022
|
2021
|
|||||||||||||||||||||||
|
External
Sales
|
Inter-segment
Sales
|
Total
|
External
Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
|
Net sales:
|
||||||||||||||||||||||||
|
Climate Solutions
|
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
|
Performance Technologies
|
||||||||||||||||||||||||
|
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
|
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
|
Net sales
|
$
|
|
$
|
-
|
$
|
|
$
|
|
$
|
-
|
$
|
|
||||||||||||
21
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
|
Three months ended December 31,
|
Nine months
ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
| $’s |
% of sales | $’s |
% of sales | $’s |
% of sales | $’s |
% of sales | |||||||||||||||||||||||||
|
Gross profit:
|
||||||||||||||||||||||||||||||||
| Climate Solutions | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Performance Technologies | % | % | % | % | ||||||||||||||||||||||||||||
|
Segment total
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
|
Corporate and eliminations
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||
|
Gross profit
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||||||
|
Three months ended
December 31,
|
Nine months
ended
December 31,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
Operating income:
|
||||||||||||||||
| Climate Solutions | $ |
$ | $ |
$ |
||||||||||||
| Performance Technologies | ||||||||||||||||
|
Segment total
|
|
|
|
|
||||||||||||
|
Corporate and eliminations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Operating income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The following is a summary of segment assets, comprised entirely of trade
accounts receivable and inventories, and other assets:
|
December 31, 2022
|
March 31, 2022
|
|||||||
|
Assets:
|
||||||||
| Climate Solutions | $ |
$ |
||||||
| Performance Technologies | ||||||||
| Other (a) |
||||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
(a)
|
|
| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
When we use the terms “Modine,” “we,” “us,” the “Company,” or “our” in this report, we are referring to Modine Manufacturing Company. Our fiscal year ends on March 31 and, accordingly, all references to quarters refer to our fiscal quarters. The
quarter ended December 31, 2022 was the third quarter of fiscal 2023.
Supply Chain Disruptions and Inflationary Market Conditions
Market and economic dynamics, including the impacts of the COVID-19 pandemic and the military conflict between Russia and Ukraine, have contributed to global supply chain challenges and inflationary market conditions. We are focused on mitigating
the negative impacts of labor shortages, supply chain challenges and inflationary market conditions, including changes in raw material, energy, logistic, and interest costs, as well as delays and shortages in certain purchased commodities and
components. We have implemented selling price increases for many of our products in response to raw material and other cost increases and are engaged with suppliers to ensure availability of key raw materials.
We cannot reasonably estimate the full impact that the ongoing supply chain challenges and other related economic and market dynamics will have on our business, results of operations, or cash flows in the future.
Third Quarter Highlights
Net sales in the third quarter of fiscal 2023 increased $57.8 million, or 12 percent, from the third quarter of fiscal 2022, primarily due to higher sales in our Performance Technologies and Climate Solutions segments. Cost of sales increased
$34.8 million, or 8 percent, primarily due to higher sales volume. Gross profit increased $23.0 million and gross margin improved 250 basis points to 17.4 percent. Selling, general and administrative (“SG&A”) expenses increased $7.7 million,
primarily due to higher compensation-related expenses. Operating income of $39.5 million during the third quarter of fiscal 2023 decreased $39.9 million from the prior year, primarily due to the absence of a $57.2 million impairment reversal
recorded in the prior year related to the liquid-cooled automotive business, which reverted back to held and used classification upon the termination of a sale agreement with the prospective buyer during the third quarter of fiscal 2022. See Note 1
of the Notes to Condensed Consolidated Financial Statements for further information regarding the liquid-cooled automotive business, which was classified as held for sale during the first seven months of fiscal 2022.
Year-to-date Highlights
Net sales in the first nine months of fiscal 2023 increased $204.1 million, or 14 percent, from the same period last year, primarily due to higher sales in each of our operating segments. Cost of sales increased $141.0 million, or 11 percent,
from the same period last year, primarily due to higher sales volume and higher raw material costs, including underlying metal prices and related premiums, fabrication, freight, and packaging costs. Gross profit increased $63.1 million and gross
margin improved 200 basis points to 16.5 percent. SG&A expenses increased $11.5 million, primarily due to higher compensation-related expenses. Operating income of $101.9 million during the first nine months of fiscal 2023 increased $3.3
million from the prior year, primarily due to higher gross profit, partially offset by the absence of a $55.7 million net impairment reversal recorded in the prior year that primarily related to the liquid-cooled automotive business.
CONSOLIDATED RESULTS OF OPERATIONS
The following table presents our consolidated financial results on a comparative basis for the three and nine months ended December 31, 2022 and 2021:
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
|
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
|
Net sales
|
$
|
560.0
|
100.0
|
%
|
$
|
502.2
|
100.0
|
%
|
$
|
1,679.8
|
100.0
|
%
|
$
|
1,475.7
|
100.0
|
%
|
||||||||||||||||
|
Cost of sales
|
462.4
|
82.6
|
%
|
427.6
|
85.1
|
%
|
1,402.6
|
83.5
|
%
|
1,261.6
|
85.5
|
%
|
||||||||||||||||||||
|
Gross profit
|
97.6
|
17.4
|
%
|
74.6
|
14.9
|
%
|
277.2
|
16.5
|
%
|
214.1
|
14.5
|
%
|
||||||||||||||||||||
|
Selling, general and administrative expenses
|
58.0
|
10.3
|
%
|
50.3
|
10.0
|
%
|
173.1
|
10.3
|
%
|
161.6
|
11.0
|
%
|
||||||||||||||||||||
|
Restructuring expenses
|
0.1
|
-
|
2.1
|
0.4
|
%
|
2.2
|
0.1
|
%
|
3.0
|
0.2
|
%
|
|||||||||||||||||||||
|
Impairment charges (reversals) – net
|
-
|
-
|
(57.2
|
)
|
-11.4
|
%
|
-
|
-
|
(55.7
|
)
|
-3.8
|
%
|
||||||||||||||||||||
|
Loss on sale of assets
|
-
|
-
|
-
|
-
|
-
|
-
|
6.6
|
0.4
|
%
|
|||||||||||||||||||||||
|
Operating income
|
39.5
|
7.1
|
%
|
79.4
|
15.8
|
%
|
101.9
|
6.1
|
%
|
98.6
|
6.7
|
%
|
||||||||||||||||||||
|
Interest expense
|
(5.9
|
)
|
-1.1
|
%
|
(3.8
|
)
|
-0.8
|
%
|
(14.7
|
)
|
-0.9
|
%
|
(11.8
|
)
|
-0.8
|
%
|
||||||||||||||||
|
Other expense – net
|
(0.4
|
)
|
-0.1
|
%
|
(1.1
|
)
|
-0.2
|
%
|
(4.1
|
)
|
-0.2
|
%
|
(1.6
|
)
|
-0.1
|
%
|
||||||||||||||||
|
Earnings before income taxes
|
33.2
|
5.9
|
%
|
74.5
|
14.8
|
%
|
83.1
|
4.9
|
%
|
85.2
|
5.8
|
%
|
||||||||||||||||||||
|
Provision for income taxes
|
(8.5
|
)
|
-1.5
|
%
|
(0.1
|
)
|
-
|
(19.8
|
)
|
-1.2
|
%
|
(7.4
|
)
|
-0.5
|
%
|
|||||||||||||||||
|
Net earnings
|
$
|
24.7
|
4.4
|
%
|
$
|
74.4
|
14.8
|
%
|
$
|
63.3
|
3.8
|
%
|
$
|
77.8
|
5.3
|
%
|
||||||||||||||||
Comparison of Three Months ended December 31, 2022 and 2021
Third quarter net sales of $560.0 million were $57.8 million, or 12 percent, higher than the third quarter of the prior year, primarily due to higher sales volume in each of our segments and favorable commercial pricing. These increases were
partially offset by a $30.2 million unfavorable impact of foreign currency exchange rates. Sales in the Performance Technologies and Climate Solutions segments increased $35.8 million and $21.3 million, respectively.
Third quarter cost of sales increased $34.8 million, or 8 percent, primarily due to higher sales volume, partially offset by a $25.5 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased
250 basis points to 82.6 percent, primarily due to the favorable impacts of higher sales volume and commercial pricing, partially offset by higher labor and inflationary costs.
As a result of higher sales and lower cost of sales as a percentage of sales, third quarter gross profit increased $23.0 million and gross margin improved 250 basis points to 17.4 percent.
Third quarter SG&A expenses increased $7.7 million, primarily driven by higher compensation-related expenses, which increased approximately $5.0 million, and, to a lesser extent, increases in other general and administrative expenses that have
been impacted by inflationary market conditions. The compensation-related expenses included higher incentive compensation expenses driven by improved financial results, as compared with the prior year. These increases were partially offset by a
$2.3 million favorable impact of foreign currency exchange rates and lower strategic reorganization costs recorded at Corporate, which decreased $0.9 million.
Restructuring expenses of $0.1 million in the third quarter of fiscal 2023 decreased $2.0 million compared with the third quarter of fiscal 2022, primarily due to lower severance and equipment transfer costs in the Climate Solutions and
Performance Technologies segments, respectively.
During the third quarter of fiscal 2022, in connection with the termination of the agreement to sell the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment charges within the Performance Technologies
segment. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.
Operating income of $39.5 million in the third quarter of fiscal 2023 decreased $39.9 million compared with the third quarter of fiscal 2022, primarily due to the absence of the significant impairment reversal recorded in the prior year, partially
offset by higher gross profit.
Interest expense during the third quarter of fiscal 2023 increased $2.1 million compared with the third quarter of fiscal 2022, primarily due to unfavorable changes in interest rates. In addition, we amended and extended our U.S. credit agreement
that provides for a multi-currency revolving credit facility and U.S. dollar- and euro- denominated term loans maturing in October 2027, along with shorter-duration swingline loans. In connection with this credit agreement modification, we recorded
$0.7 million of costs as interest expense during the third quarter of fiscal 2023.
The provision for income taxes was $8.5 million and $0.1 million in the third quarter of fiscal 2023 and 2022, respectively. The $8.4 million increase was primarily due the absence of an $8.2 million income tax benefit recorded during the third
quarter of fiscal 2022 resulting from the reversal of valuation allowances in foreign jurisdictions.
Comparison of Nine Months ended December 31, 2022 and 2021
Fiscal 2023 year-to-date net sales of $1,679.8 million were $204.1 million, or 14 percent, higher than the same period last year, primarily due to higher sales volume in both of our segments and favorable commercial pricing, including adjustments
in response to raw material price increases. These increases were partially offset by a $93.1 million unfavorable impact of foreign currency exchange rates. Sales in the Performance Technologies and Climate Solutions segments increased $102.2
million and $97.9 million, respectively.
Fiscal 2023 year-to-date cost of sales of $1,402.6 million increased $141.0 million, or 11 percent, primarily due to higher sales volume and higher raw material prices, which increased approximately $42.0 million. These increases were partially
offset by an $80.2 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 200 basis points to 83.5 percent, primarily due to the favorable impact of higher sales volume and favorable commercial
pricing, partially offset by higher material, labor and other inflationary costs.
As a result of higher sales and lower cost of sales as a percentage of sales, gross profit increased $63.1 million and gross margin improved 200 basis points to 16.5 percent.
Fiscal 2023 year-to-date SG&A expenses increased $11.5 million, primarily driven by higher compensation-related expenses, which increased approximately $14.0 million and included higher incentive compensation and commission-related expenses,
and, to a lesser extent, increases in other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $7.1 million favorable impact of foreign currency exchange rates.
In addition, strategic reorganization costs, costs associated with our review of strategic alternatives for our automotive businesses, and environmental charges related to a previously-closed manufacturing facility in the U.S., which are each
recorded at Corporate, decreased $3.1 million, $2.3 million, and $1.8 million, respectively, during the first nine months of fiscal 2023 compared with the same period in the prior year.
Restructuring expenses of $2.2 million in the first nine months of fiscal 2023 decreased $0.8 million compared with the same period last year, primarily due to lower severance expenses in the Climate Solutions segment, partially offset by higher
restructuring expenses in the Performance Technologies segment.
The net impairment reversal of $55.7 million during the first nine months of fiscal 2022 primarily related to the liquid-cooled automotive business within the Performance Technologies segment. See Note 1 of the Notes to Condensed Consolidated
Financial Statements for further information.
We sold our Austrian air-cooled automotive business on April 30, 2021. As a result of the sale, we recorded a $6.6 million loss on sale at Corporate during the first quarter of fiscal 2022.
Operating income of $101.9 million during the first nine months of fiscal 2023 increased $3.3 million compared with the same period last year, primarily due to the $63.1 million increase in gross profit and the absence of the $6.6 million loss on
the sale of the Austrian air-cooled automotive business in the prior year. These drivers, which increased operating income in the first nine months of fiscal 2023, were partially offset by the absence of the $55.7 million net impairment reversal
recorded in the prior year and higher SG&A expenses.
Interest expense during the first nine months of fiscal 2023 increased $2.9 million compared with the same period in the prior year, primarily due to unfavorable changes in interest rates and $0.7 million of costs recorded in connection with the
credit agreement modification during the third quarter of fiscal 2023.
The provision for income taxes was $19.8 million and $7.4 million during the first nine months of fiscal 2023 and 2022, respectively. The $12.4 million increase was primarily due to the absence of a net $11.4 million income tax benefit related to
valuation allowances on deferred tax assets in foreign jurisdictions recorded in the prior year.
SEGMENT RESULTS OF OPERATIONS
Effective April 1, 2022, we began managing the company under two operating segments, Climate Solutions and Performance Technologies. Our new segment structure aligns businesses serving similar or complimentary end markets, products and
technologies under common segment management. This simplified segment structure allows us to better focus resources on targeted growth opportunities and better enables an efficient application of 80/20 principles across all product lines to optimize
profit margins and cash flow.
The Climate Solutions segment provides energy-efficient, climate-controlled solutions and components for a wide array of applications. The Climate Solutions segment sells heat transfer products, heating, ventilating, air conditioning and
refrigeration (“HVAC and refrigeration”) products, and data center cooling solutions. The Performance Technologies segment provides products and solutions that enhance the performance of customer applications and develops solutions that increase
fuel economy and lower emissions in light of increasingly stringent government regulations. The Performance Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial
applications. In addition, the Performance Technologies segment provides advanced thermal solutions to zero-emission and hybrid commercial vehicle and automotive customers and coating products and application services.
The Climate Solutions segment includes the previously-reported Building HVAC Systems and Commercial and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the
previously-reported Heavy Duty Equipment and Automotive segments and the CIS Coatings business. The segment realignment had no impact on our consolidated financial position, results of operations, and cash flows. Segment financial information for
fiscal 2022 has been recast to conform to the current presentation.
The following is a discussion of our segment results of operations for the three months and nine months ended December 31, 2022 and 2021:
Climate Solutions
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
|
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
|
Net sales
|
$
|
248.6
|
100.0
|
%
|
$
|
227.3
|
100.0
|
%
|
$
|
748.9
|
100.0
|
%
|
$
|
651.0
|
100.0
|
%
|
||||||||||||||||
|
Cost of sales
|
193.8
|
78.0
|
%
|
185.4
|
81.6
|
%
|
586.4
|
78.3
|
%
|
540.6
|
83.0
|
%
|
||||||||||||||||||||
|
Gross profit
|
54.8
|
22.0
|
%
|
41.9
|
18.4
|
%
|
162.5
|
21.7
|
%
|
110.4
|
17.0
|
%
|
||||||||||||||||||||
|
Selling, general and administrative expenses
|
24.6
|
9.9
|
%
|
23.6
|
10.4
|
%
|
72.3
|
9.7
|
%
|
67.0
|
10.3
|
%
|
||||||||||||||||||||
|
Restructuring expenses
|
-
|
-
|
1.5
|
0.6
|
%
|
0.3
|
-
|
1.7
|
0.3
|
%
|
||||||||||||||||||||||
|
Impairment charge
|
-
|
-
|
-
|
-
|
-
|
-
|
0.3
|
-
|
||||||||||||||||||||||||
|
Operating income
|
$
|
30.2
|
12.2
|
%
|
$
|
16.8
|
7.4
|
%
|
$
|
89.9
|
12.0
|
%
|
$
|
41.4
|
6.4
|
%
|
||||||||||||||||
Comparison of Three Months ended December 31, 2022 and 2021
Climate Solutions net sales increased $21.3 million, or 9 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume and favorable commercial pricing. This increase was partially
offset by a $13.7 million unfavorable impact of foreign currency exchange rates. Compared with the third quarter of the prior year, sales of data center cooling, heat transfer, and HVAC & refrigeration products increased $16.3 million, $2.8
million, and $2.2 million, respectively.
Climate Solutions cost of sales increased $8.4 million, or 5 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume, partially offset by an $11.6 million favorable impact of foreign
currency exchange rates. As a percentage of sales, cost of sales decreased 360 basis points to 78.0 percent, primarily due to the favorable impact of higher sales volume, and improved operating efficiencies, partially offset by higher labor and
inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $12.9 million and gross margin improved 360 basis points to 22.0 percent.
SG&A expenses increased $1.0 million, yet decreased 50 basis points as a percentage of sales. The increase in SG&A expenses was primarily due to increases in general and administrative expenses that have been impacted by inflationary
market conditions and, to a lesser extent, higher compensation-related expenses. These increases were partially offset by a $1.1 million favorable impact of foreign currency exchange rate changes.
Restructuring expenses decreased $1.5 million compared with the third quarter of fiscal 2022. The fiscal 2022 restructuring expenses primarily consisted of severance expenses related to targeted headcount reductions in Europe and China.
Operating income of $30.2 million increased $13.4 million from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher gross profit.
Comparison of Nine Months ended December 31, 2022 and 2021
Climate Solutions year-to-date net sales increased $97.9 million, or 15 percent, from the same period last year, primarily due to higher sales volume and favorable commercial pricing, including adjustments in response to raw material price
increases. These increases were partially offset by a $43.6 million unfavorable impact of foreign currency exchange rates. Compared with the same period in the prior year, sales of heat transfer, data center cooling, and HVAC & refrigeration
products increased $41.3 million, $37.6 million, and $18.9 million, respectively.
Climate Solutions year-to-date cost of sales increased $45.8 million, or 8 percent, from the same period last year, primarily due to higher sales volume and, to a lesser extent, higher raw material prices, which increased by approximately $10.0
million. These increases were partially offset by a $37.0 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 470 basis points to 78.3 percent, primarily due to the favorable impact of
higher sales volume, favorable commercial pricing, and improved operating efficiencies, partially offset by higher labor and inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $52.1 million and gross margin improved 470 basis points to 21.7 percent.
Climate Solutions year-to-date SG&A expenses increased $5.3 million, yet decreased 60 basis points as a percentage of sales. The increase in SG&A expenses was primarily due to higher compensation-related expenses, including higher
commission expenses, and increases in other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $3.5 million favorable impact
of foreign currency exchange rate changes.
Restructuring expenses of $0.3 million during the first nine months of fiscal 2023 decreased $1.4 million compared with the same period last year, primarily due to lower severance expenses. The severance expenses during the first nine months of
fiscal 2022 primarily related to targeted headcount reductions in Europe and China. The $0.3 million of restructuring expenses during the first nine months of fiscal 2023 primarily consisted of closure costs related to a previously-leased facility.
During the first quarter of fiscal 2022, we recorded an impairment charge of $0.3 million to write-down a previously-closed manufacturing facility in the U.S. to fair value less costs to sell. We sold the facility and received net cash proceeds
of $0.7 million during July 2021.
Operating income of $89.9 million increased $48.5 million from the same period last year, primarily due to higher gross profit and lower restructuring expenses, partially offset by higher SG&A expenses.
Performance Technologies
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||||||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||||||||||||||||||
|
(in millions)
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||||||||||||||
|
Net sales
|
$
|
317.8
|
100.0
|
%
|
$
|
282.0
|
100.0
|
%
|
$
|
952.1
|
100.0
|
%
|
$
|
849.9
|
100.0
|
%
|
||||||||||||||||
|
Cost of sales
|
274.8
|
86.5
|
%
|
249.1
|
88.3
|
%
|
836.9
|
87.9
|
%
|
747.3
|
87.9
|
%
|
||||||||||||||||||||
|
Gross profit
|
43.0
|
13.5
|
%
|
32.9
|
11.7
|
%
|
115.2
|
12.1
|
%
|
102.6
|
12.1
|
%
|
||||||||||||||||||||
|
Selling, general and administrative expenses
|
25.5
|
8.0
|
%
|
23.4
|
8.3
|
%
|
72.2
|
7.6
|
%
|
73.4
|
8.6
|
%
|
||||||||||||||||||||
|
Restructuring expenses
|
0.1
|
-
|
0.6
|
0.2
|
%
|
1.9
|
0.2
|
%
|
1.3
|
0.2
|
%
|
|||||||||||||||||||||
|
Impairment reversals - net
|
-
|
-
|
(57.2
|
)
|
-20.3
|
%
|
-
|
-
|
(56.0
|
)
|
-6.6
|
%
|
||||||||||||||||||||
|
Operating income
|
$
|
17.4
|
5.5
|
%
|
$
|
66.1
|
23.5
|
%
|
$
|
41.1
|
4.3
|
%
|
$
|
83.9
|
9.9
|
%
|
||||||||||||||||
Comparison of Three Months ended December 31, 2022 and 2021
Performance Technologies net sales increased $35.8 million, or 13 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume and favorable commercial pricing. These increases were
partially offset by a $16.5 million unfavorable impact of foreign currency exchange rates. Compared with the third quarter of the prior year, sales of air-cooled, liquid-cooled, and advanced solutions products increased $20.8 million, $10.5 million,
and $5.2 million respectively.
Performance Technologies cost of sales increased $25.7 million, or 10 percent, from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to higher sales volume and, to a lesser extent, higher labor costs. These
increases were partially offset by a $14.0 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 180 basis points to 86.5 percent, primarily due to the favorable impact of higher sales volume
and commercial pricing, partially offset by higher labor and inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $10.1 million and gross margin improved 180 basis points to 13.5 percent.
SG&A expenses increased $2.1 million compared with the third quarter of the prior year. As a percentage of sales, SG&A expenses decreased by 30 basis points. The increase in SG&A expenses was primarily due to higher product
development costs and other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $1.2 million favorable impact of foreign currency exchange rate changes.
Restructuring expenses of $0.1 million during the third quarter of fiscal 2023 decreased $0.5 million compared with the third quarter of fiscal 2022, primarily due to lower equipment transfer costs.
During the third quarter of fiscal 2022 and in connection with the termination of the agreement to sell the liquid-cooled automotive business, we reversed $57.2 million of previously-recorded impairment charges to adjust the long-lived assets of
the liquid-cooled automotive business to the lower of their carrying or fair value. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.
Operating income of $17.4 million decreased $48.7 million from the third quarter of fiscal 2022 to the third quarter of fiscal 2023, primarily due to the absence of the significant impairment reversal recorded in the prior year, partially offset
by higher gross profit.
Comparison of Nine Months ended December 31, 2022 and 2021
Performance Technologies year-to-date net sales increased $102.2 million, or 12 percent, from the same period last year, primarily due to higher sales volume and favorable commercial pricing, including adjustments in response to raw material price
increases. These increases were partially offset by a $49.6 million unfavorable impact of foreign currency exchange rates and, to a lesser extent, the absence of sales from the Austrian air-cooled automotive business, which we sold on April 30,
2021. Compared with the same period in the prior year, sales of air-cooled, liquid-cooled, and advanced solutions products increased $65.4 million, $24.6 million, and $16.3 million respectively.
Performance Technologies year-to-date cost of sales increased $89.6 million, or 12 percent, from the same period last year, primarily due to higher sales volume and higher raw material prices, which increased by approximately $32.0 million. In
addition, to a lesser extent, higher labor costs and higher depreciation expenses negatively impacted cost of sales. During fiscal 2022, we did not depreciate the held for sale property, plant and equipment assets within the liquid-cooled automotive
business until they reverted back to held and used classification during the third quarter of fiscal 2022. These increases were partially offset by a $43.4 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost
of sales was consistent with the same period in the prior year, as the higher material, labor and other inflationary costs were offset by the favorable impact of higher sales.
As a result of the higher sales and a consistent gross margin at 12.1 percent, gross profit increased $12.6 million.
Performance Technologies year-to-date SG&A expenses decreased $1.2 million compared with the same period last year. As a percentage of sales, year-to-date SG&A expenses decreased by 100 basis points. The decrease in SG&A expenses was
primarily due to a $3.8 million favorable impact of foreign currency exchange rate changes and, to a lesser extent, lower compensation-related expenses, partially offset by higher product development costs and other general and administrative
expenses that have been impacted by inflationary market conditions.
Restructuring expenses during the first nine months of fiscal 2023 increased $0.6 million compared with the same period last year, primarily due to higher severance expenses, partially offset by lower equipment transfer costs. The severance
expenses during the first nine months of fiscal 2023 primarily related to targeted headcount reductions in Europe. Restructuring expenses during the first nine months of fiscal 2022 primarily consisted of equipment transfer costs.
The year-to-date net impairment reversal of $56.0 million in fiscal 2022 primarily related to assets in our liquid-cooled automotive business. The $57.2 million impairment reversal during the third quarter of fiscal 2022 was partially offset by
$1.2 million of net impairment charges recorded during the first six months of fiscal 2022. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.
Operating income of $41.1 million during the first nine months of fiscal 2023 decreased $42.8 million from the same period last year, primarily due to the absence of the significant net impairment reversal recorded in the prior year, partially
offset by higher gross profit.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flow from operating activities, our cash and cash equivalents as of December 31, 2022 of $82.2 million, and available borrowing capacity of $236.2 million under our revolving credit facility. Given our
extensive international operations, approximately $78.0 million of our cash and cash equivalents is held by our non-U.S. subsidiaries. Amounts held by non-U.S. subsidiaries are available for general corporate use; however, these funds may be subject
to foreign withholding taxes if repatriated. We believe our sources of liquidity will provide sufficient cash flow to adequately cover our funding needs on both a short-term and long-term basis.
Net Cash Provided by Operating Activities
Net cash provided by operating activities for the nine months ended December 31, 2022 was $67.9 million, which represents a $60.5 million increase compared with the same period in the prior year. This increase in operating cash flow was primarily
due to the favorable impact of higher earnings and favorable net changes in working capital, as compared with the same period in the prior year. While inventories have increased $32.4 million from March 31, 2022 to December 31, 2022, the increase
has been less significant than the increase during the same period last year. In fiscal 2023, the Company has increased its inventory levels to support higher production levels. In fiscal 2022, the higher
inventory levels largely resulted from increased raw material prices and impacts from global supply constraints and challenges, which continue to impact our businesses in fiscal 2023. In addition, the favorable changes in working capital include
lower payments for incentive compensation and lower pension plan contributions in fiscal 2023, as compared with the same period in the prior year.
Capital Expenditures
Capital expenditures of $35.2 million during the first nine months of fiscal 2023 increased $4.5 million compared with the same period in the prior year. The fiscal 2023 capital expenditures include investments supporting our strategic growth
initiatives, including expanding our data center business.
Debt
In October 2022, we executed an amended and restated credit agreement with a syndicate of banks that provides for a multi-currency $275.0 million revolving credit facility and term loan facilities maturing in October 2027. This credit agreement
modified our then existing $250.0 million revolver and term loan facilities, which would have matured in June 2024.
Our credit agreements require us to maintain compliance with various covenants, including a leverage ratio covenant and an interest expense coverage ratio covenant discussed further below. The permitted leverage and interest expense coverage
ratios were not modified by the recent credit agreement amendment. Also, as specified in the credit agreement, the term loans may require prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under
the revolving credit facility, we must represent to the lenders that there has been no material adverse effect, as defined in the credit agreement, on our business, property, or results of operations.
The leverage ratio covenant requires us to limit our consolidated indebtedness, less a portion of our cash balance, both as defined by the credit agreements, to no more than three and one-quarter times consolidated net earnings before interest,
taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”). We are also subject to an interest expense coverage ratio covenant, which requires us to maintain Adjusted EBITDA of at least three times consolidated interest
expense. As of December 31, 2022, our leverage ratio and interest coverage ratio were 1.6 and 12.4, respectively. We expect to remain in compliance with our debt covenants during the remainder of fiscal 2023 and beyond.
Share Repurchase Program
During the first nine months of fiscal 2023, we repurchased $4.7 million of our common stock. As of December 31, 2022, we had $47.9 million of authorized share repurchases remaining under the current repurchase program, which expires in
November 2024. Our decision whether and to what extent to repurchase additional shares will depend on a number of factors, including business conditions, other cash priorities, and stock price.
Forward-Looking Statements
This report, including, but not limited to, the discussion under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements, including information about future financial performance,
accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine’s actual results,
performance or achievements may differ materially from those expressed or implied in these statements, because of certain risks and uncertainties, including, but not limited to, those described under “Risk Factors” in Item 1A. in Part I. of the
Company’s Annual Report on Form 10-K for the year ended March 31, 2022. Other risks and uncertainties include, but are not limited to, the following:
Market Risks:
| • |
The impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to inflation, including rising energy costs, along with supply chain challenges, tariffs, sanctions and
other trade issues or cross-border trade restrictions (and any potential resulting trade war), and including impacts associated with the military conflict between Russia and Ukraine;
|
| • |
The impact of other economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and compete, including foreign currency
exchange rate fluctuations; increases in interest rates; recession and recovery therefrom; and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade that have been or may be
implemented in the U.S. or abroad;
|
| • |
The impact of potential further price increases associated with raw materials, including aluminum, copper, steel and stainless steel (nickel), and other purchased component inventory including, but not limited to, increases in the
underlying material cost based upon the London Metal Exchange and related premiums or fabrication costs. These prices may be impacted by a variety of factors, including changes in trade laws and tariffs, the behavior of our suppliers and
significant fluctuations in demand. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, including through our quotation process or through contract
provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions;
|
| • |
Our ability to mitigate increased labor costs and labor shortages;
|
| • |
The impact of the COVID-19 pandemic on the national and global economy, our business, suppliers (and the supply chain), customers, and employees; and
|
| • |
The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to supply alternative new technologies to meet environmental
and/or energy standards and objectives.
|
Operational Risks:
| • |
The impact of problems, including logistic and transportation challenges, associated with suppliers meeting our quantity, quality, price and timing demands, and the overall health of our suppliers, including their ability and willingness
to supply our volume demands if their production capacity becomes constrained;
|
| • |
The overall health of and price-reduction pressure from our vehicular customers in light of economic and market-specific factors, and the potential impact on us from any deterioration in the stability or performance of any of our major
customers;
|
| • |
Our ability to maintain current customer relationships and compete effectively for new business, including our ability to achieve profit margins acceptable to us by offsetting or otherwise addressing any cost increases associated with
supply chain challenges and inflationary market conditions;
|
| • |
The impact of product or manufacturing difficulties or operating inefficiencies, including program launch and product transfer challenges and warranty claims;
|
| • |
The impact of delays or modifications initiated by major customers with respect to program launches, product applications or requirements;
|
| • |
Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor, while also positioning ourselves geographically, so that we can continue to support
our customers with the technical expertise and market-leading products they demand and expect from Modine;
|
| • |
Our ability to effectively and efficiently manage our cost structure in response to sales volume increases or decreases;
|
| • |
Costs and other effects of the investigation and remediation of environmental contamination; including when related to the actions or inactions of others and/or facilities over which we have no control;
|
| • |
Our ability to recruit and maintain talent, including personnel in managerial, leadership, operational and administrative functions, in light of tight global labor markets;
|
| • |
Our ability to protect our proprietary information and intellectual property from theft or attack by internal or external sources;
|
| • |
The impact of a substantial disruption or material breach of our information technology systems, and any related delays, problems or costs;
|
| • |
Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we operate, and the costs associated with compliance therewith;
|
| • |
Work stoppages or interference at our facilities or those of our major customers and/or suppliers;
|
| • |
The constant and increasing pressures associated with healthcare and associated insurance costs; and
|
| • |
Costs and other effects of litigation, claims, or other obligations.
|
Strategic Risks:
| • |
Our ability to successfully realize anticipated benefits from strategic initiatives and our continued application of 80/20 principles across our business, through which we are focused on reducing complexity and growing businesses with
strong market drivers;
|
| • |
Our ability to successfully execute and realize anticipated benefits from strategies, including restructuring activities, to reduce costs and improve operating margins; and
|
| • |
The potential impacts from actions by activist shareholders, including disruption of our business and related costs.
|
Financial Risks:
| • |
Our ability to fund our global liquidity requirements efficiently for our current operations and meet our long-term commitments in the event of disruption in or tightening of the credit markets or extended recessionary conditions in the
global economy;
|
| • |
The impact of increases in interest rates in relation to our variable-rate debt obligations;
|
| • |
The impact of changes in federal, state or local taxes that could have the effect of increasing our income tax expense;
|
| • |
Our ability to comply with the financial covenants in our credit agreements, including our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) and our interest coverage ratio (Adjusted EBITDA divided
by interest expense, as defined in our credit agreements);
|
| • |
The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and
|
| • |
Our ability to effectively realize the benefits of deferred tax assets in various jurisdictions in which we operate.
|
Forward-looking statements are as of the date of this report; we do not assume any obligation to update any forward-looking statements.
The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A. of the Company’s Annual Report on Form 10-K for the year ended March 31, 2022. The Company’s market risks have not
materially changed since the fiscal 2022 Form 10-K was filed.
Evaluation Regarding Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report on Form 10-Q, management of the Company, under the supervision, and with the participation, of the Company’s President and Chief Executive Officer and
Executive Vice President, Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures, at a reasonable assurance level, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon
that evaluation, the President and Chief Executive Officer and Executive Vice President, Chief Financial Officer have concluded that the design and operation of the Company’s disclosure controls and procedures were effective, at a reasonable
assurance level, as of December 31, 2022.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting during the third quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
ISSUER PURCHASES OF EQUITY SECURITIES
The following describes the Company’s purchases of common stock during the third quarter of fiscal 2023:
|
Period
|
Total Number of
Shares Purchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Maximum Number (or
Approximate Dollar
Value) of Shares
that May Yet Be Purchased
Under the Plans or Programs (a)
|
|
October 1 – October 31, 2022
|
34,225 (b)
|
$13.06
|
_______
|
$47,359,156
|
|
November 1 – November 30, 2022
|
20,000 (c)
|
$20.80
|
20,000
|
$49,583,934
|
|
December 1 – December 31, 2022
|
90,866 (b)(c)
|
$20.87
|
80,000
|
$47,909,372
|
|
Total
|
145,091
|
$19.02
|
100,000
|
| (a) |
Effective November 5, 2022, the Company’s Board of Directors authorized officers to repurchase up to $50.0 million of Modine common stock at such times and prices they deem appropriate. This authorization, which expires in November 2024,
replaced the previous repurchase program, which expired in early November 2022.
|
| (b) |
Includes shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants the
opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of restrictions. These shares are held as treasury shares.
|
| (c) |
Includes shares acquired pursuant to the repurchase program described in (a) above.
|
On January 19, 2023, the Board of Directors of the Company approved and adopted amended and restated bylaws (the “Amended and Restated Bylaws”), which became effective the same day. Among other things, the amendments
effected by the Amended and Restated Bylaws: (1) address the universal proxy rules adopted by the U.S. Securities and Exchange Commission, by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s
nominees unless such person has complied with Rule 14a-19 under the Securities Exchange Act of 1934, as amended, including applicable notice and solicitation requirements; (2) require that a shareholder directly or indirectly soliciting proxies from
other shareholders use a proxy card color other than white, which shall be reserved for exclusive use by the Board; (3) enhance procedural mechanics and disclosure requirements in connection with shareholder nominations of directors and submissions
of proposals regarding other business at shareholder meetings, including requiring additional background information and disclosures regarding proposing shareholders, proposed nominees and business, and other persons related to a shareholder’s
solicitation of proxies, such as additional information about the ownership of securities of the Company.
The preceding summary of the amendments to the Amended and Restated Bylaws is qualified in its entirety by reference to, and should be read in connection with, the complete copy of the Amended and Restated Bylaws filed
herewith as Exhibits 3.1 (clean) and 3.2 (marked).
(a) Exhibits:
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
|
Bylaws of Modine Manufacturing Company, as amended, effective January 19, 2023.
|
Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated January 19, 2023
|
||
|
Bylaws of Modine Manufacturing Company as amended, effective January 19, 2023 (marked version).
|
X
|
||
|
Fourth Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement dated as of November 21, 2022.
|
X
|
||
|
Rule 13a-14(a)/15d-14(a) Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
||
|
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
||
|
Section 1350 Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
||
|
Section 1350 Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
||
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
X
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema.
|
X
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
X
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
X
|
|
|
10.1.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
X
|
|
|
10.1.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
X
|
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
X
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MODINE MANUFACTURING COMPANY
(Registrant)
By: /s/ Michael B. Lucareli
Michael B. Lucareli, Executive Vice President, Chief Financial Officer*
Date: February 2, 2023
* Executing as both the principal financial officer and a duly authorized officer of the Company
37
Exhibit 3.2
OF
MODINE MANUFACTURING COMPANY
|
CONTENTS
|
|||
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Page
|
|||
|
Article 1. OFFICES; RECORDS
|
1
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||
|
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1.01
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Principal and Business Offices
|
1
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1.02
|
Registered Office and Registered Agent
|
1
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|
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1.03
|
Corporate Records
|
1
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Article 2. STOCKHOLDERS
|
1
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||
|
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2.01
|
Annual Meeting
|
1
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2.02
|
Special Meetings
|
1
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2.03
|
Place of Meeting
|
5
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2.04
|
Notices to Stockholders
|
5
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2.05
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Fixing of Record Date
|
6
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2.06
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Stockholder List
|
7
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2.07
|
Quorum and Voting Requirements
|
7
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2.08
|
Conduct of Meetings
|
7
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2.09
|
Proxies
|
|
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2.10
|
Voting of Shares
|
8
|
|
|
2.11
|
Notice of Business to be Brought Before a Meeting
|
8
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|
|
2.12
|
Notice of Nominations for Election to the Board of Directors
|
11
|
|
|
2.13
|
Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to Be Seated as Directors
|
|
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|
2.14
|
Control Share Voting Restrictions Inapplicable
|
|
|
|
Delivery to the Corporation
|
15
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|
|
Article 3. BOARD OF DIRECTORS
|
|||
|
|
3.01
|
General Powers; Number and Classification
|
|
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|
3.02
|
Election, Tenure and Qualifications
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|
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3.03
|
Resignation and Removal for Cause
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|
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3.04
|
Regular Meetings
|
|
|
|
3.05
|
Special Meetings
|
|
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|
3.06
|
Meetings By Telephone or Other Communication Technology
|
|
|
|
3.07
|
Notice of Meetings
|
|
|
|
3.08
|
Quorum
|
|
|
|
3.09
|
Manner of Acting
|
|
|
|
3.10
|
Conduct of Meetings
|
|
|
|
3.11
|
Vacancies
|
|
|
|
3.12
|
Compensation
|
|
|
|
3.13
|
Presumption of Assent
|
|
|
|
3.14
|
Committees
|
|
|
|
3.15
|
Retirement
|
|
|
Article 4. OFFICERS
|
|||
|
|
4.01
|
Appointment
|
|
|
|
4.02
|
Resignation and Removal
|
|
|
|
4.03
|
Vacancies
|
|
|
|
4.04
|
Chairperson of the Board or Lead Director
|
|
|
|
4.05
|
Chief Executive Officer
|
|
|
|
4.06
|
President
|
|
|
|
4.07
|
Chief Financial Officer
|
|
|
|
4.08
|
Vice Presidents
|
|
|
|
4.09
|
Secretary
|
|
|
|
4.10
|
Treasurer
|
|
i
|
Article 5. SHARES AND THEIR TRANSFER
|
|||
|
5.01
|
Certificates for Shares
|
||
|
5.02
|
Signature by Former Officers
|
||
|
5.03
|
Transfer of Shares
|
||
|
5.04
|
Restrictions on Transfer
|
||
|
5.05
|
Lost, Destroyed or Stolen Certificates
|
||
|
5.06
|
Consideration for Shares
|
||
|
5.07
|
Stock Regulations
|
||
|
Article 6. WAIVER OF NOTICE
|
|||
|
6.01
|
Stockholder Written Waiver
|
||
|
6.02
|
Stockholder Waiver by Attendance
|
||
|
6.03
|
Director Written Waiver
|
||
|
6.04
|
Director Waiver by Attendance
|
||
|
Article 7. ACTION WITHOUT MEETINGS
|
|||
|
7.01
|
Stockholder Action Without Meeting
|
||
|
7.02
|
Director Action Without Meeting
|
||
|
Article 8. INDEMNIFICATION
|
|||
|
8.01
|
Indemnification for Successful Defense
|
||
|
8.02
|
Other Indemnification
|
||
|
8.03
|
Written Request
|
||
|
8.04
|
Nonduplication
|
||
|
8.05
|
Determination of Right to Indemnification
|
||
|
8.06
|
Advance of Expenses
|
||
|
8.07
|
Nonexclusivity
|
||
|
8.08
|
Court-Ordered Indemnification
|
||
|
8.09
|
Indemnification and Allowance of Expenses of Employees and Agents
|
||
|
8.10
|
Insurance
|
||
|
8.11
|
Securities Law Claims
|
||
|
8.12
|
Liberal Construction
|
||
|
Amendment or Repeal; Interpretation
|
26
|
||
|
Definitions Applicable to this Article
|
|||
|
Article 9. MISCELLANEOUS
|
|||
|
9.01
|
Corporate Seal
|
||
|
9.02
|
Fiscal Year
|
||
|
9.03
|
Contracts
|
||
|
9.04
|
Loans
|
||
|
9.05
|
Checks, Drafts, Etc
|
||
|
9.06
|
Deposits
|
||
|
Article 10. AMENDMENTS
|
|||
|
10.01
|
Amendments
|
||
|
10.02
|
Implied Amendments and Other Amendment Provisions
|
||
|
Article 11. EMERGENCY BYLAWS
|
|||
|
11.01
|
Emergency Bylaws
|
||
|
11.02
|
Notice of Board Meetings
|
||
|
11.03
|
Temporary Directors and Quorum
|
||
|
11.04
|
Actions Permitted To Be Taken
|
||
|
29
|
|||
|
Exclusive Forum
|
29
|
||
ii
1.01 Principal and Business Offices. The corporation may have such
principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time.
1.02 Registered Office and Registered Agent. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin. The address of the registered office may be
changed from time to time by any officer or by the registered agent. The office of the registered agent of the corporation shall be identical to such registered office.
1.03 Corporate Records. The following documents and records shall be kept
at the corporation’s principal office or at such other reasonable location as may be specified by the corporation:
(a) Minutes of stockholders’ and Board of Directors’ meetings and any written notices thereof.
(b) Records of actions taken by the stockholders or directors without a meeting.
(c) Records of actions taken by committees of the Board of Directors.
(d) Accounting records.
(e) Records of its stockholders.
(f) Current Bylaws.
(g) Written waivers of notice by stockholders or directors (if any).
(h) Written consents by stockholders or directors for actions without a meeting (if any).
(i) Voting trust agreements (if any).
(j) Stock transfer agreements to which the corporation is a party or of which it has notice (if
any).
(k) Consents by stockholders and directors to receive notice via electronic transmission (if any).
2.01 Annual Meeting. The annual meeting of the stockholders shall be held on the third Wednesday of July in each year at 9:30 a.m. (Central Standard Time), or at such otherat such time and date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may properly come before the meeting. If the day fixed for the annual meeting is a legal holiday in the State of
Wisconsin, such meeting shall be held on the next succeeding business day. If the election of directors is not held on the day designated herein, or fixed as herein provided, for any in accordance with Section 2.11 of these Bylaws. The Board of Directors may postpone, reschedule or cancel any previously scheduled annual meeting of
the stockholders, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a meeting of the stockholders as soon thereafter as may be convenient.
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(a) Special meetings of the stockholders for any purpose or purposes (i) may be called only (A) by
the Chairperson of the Board or Lead Director, as applicable, or (B) by the Board of Directors, pursuant to a resolution approved by a majority of the entire Board of Directors, or (ii) shall be called by the President of the corporation,
following his or her receipt of one or more written demands to call a special meeting of the stockholders in accordance with, and subject to, this Section 2.02 from stockholders of record as of the record date fixed in accordance with Section
2.02(d) who hold, in the aggregate, at least 10 percent of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting (the “Requisite Percentage”). The notice of a special meeting shall state the purpose
or purposes of the special meeting, and the business to be conducted at the special meeting shall be limited to the purpose or purposes stated in the notice. Except in accordance with this Section 2.02, stockholders shall not be permitted to
propose business to be brought before a special meeting of the stockholders. Stockholders who nominate persons for election to the board of
directorsBoard of Directors at a special meeting must also comply
with the requirements set forth in Section 2.12 and Section 2.13.
(b) No stockholder may demand that the President call a special meeting of the stockholders
pursuant to Section 2.02(a) unless a stockholder of record has first submitted a request in writing that the Board of Directors fix a record date (a “Demand Record Date”) for the purpose of determining the stockholders entitled to demand that
the President of the corporation call such special meeting, which request shall be in proper form and delivered to, or mailed and received by, the Secretary of the corporation at the principal executive offices of the corporation.
(c) To be in proper form for purposes of this Section 2.02, a request by a stockholder for the
Board of Directors to fix a Demand Record Date shall set forth:
(i) As to each Requesting Person (as defined below), the Stockholder Information (as defined in
Section 2.11(c)(i), except that for purposes of this Section 2.02 the term “Requesting Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.11(c)(i));
(ii) As to each Requesting Person, any Disclosable Interests (as defined in Section 2.11(c)(ii),
except that for purposes of this Section 2.02 the term “Requesting Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.11(c)(ii) and the disclosure with respect to the business to be brought
before the meeting in Section 2.11(c)(ii) shall be made with respect to the business proposed to be conducted at the special meeting or the proposed election of directors at the special meeting, as the case may be);
(iii) As to the purpose or purposes of the special meeting, (A) a reasonably brief description of
the purpose or purposes of the special meeting and the business proposed to be conducted at the special meeting, the reasons for conducting such business at the special meeting and any material interest in such business of each Requesting
Person, and (B) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Requesting Persons or (y) between or among any Requesting Person and any other person or entity (including
their names) in connection with the request for the special meeting or the business proposed to be conducted at the special meeting; and
(iv) If directors are proposed to be elected at the special meeting, the Nominee Information for
each person whom a Requesting Person expects to nominate for election as a director at the special meeting and the
grounds for showing good cause for removal of any director as provided in Section 3.03 of these Bylaws.
For purposes of this Section 2.02(c), the term “Requesting Person” shall mean (i) the stockholder making the request to fix a Demand Record Date for the purpose of
determining the stockholders entitled to demand that the President call a special meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf such request is made, and (iii) any affiliate of such stockholder or
beneficial owner.
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(d) Within ten (10) days after receipt of a request to fix a Demand Record Date in proper form and
otherwise in compliance with this Section 2.02 from any stockholder of record, the Board of Directors may adopt a resolution fixing a Demand Record Date for the purpose of determining the stockholders entitled to demand that the President of
the corporation call a special meeting, which date shall not precede the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors. If no resolution fixing a Demand Record Date has been adopted by the
Board of Directors within the ten (10) day period after the date on which such a request to fix a Demand Record Date was received, the Demand Record Date in respect thereof shall be deemed to be the twentieth (20th) day after the date on
which such a request is received.
(e) Without qualification, a special meeting of the stockholders shall not be called pursuant to
Section 2.02(a) unless stockholders of record as of the Demand Record Date who hold, in the aggregate, the Requisite Percentage timely provide to the Secretary of the corporation at the principal executive offices of the corporation, in
writing and in proper form, one or more demands to call such special meeting. Only stockholders of record on the Demand Record Date shall be entitled to demand that the President call a special meeting of the stockholders pursuant to Section
2.02(a)(ii). To be timely, a stockholder’s demand to call a special meeting must be delivered to, or mailed and received at, the principal executive offices of the corporation not later than the seventieth (70th) day following the Demand
Record Date. To be in proper form for purposes of this Section 2.02, a demand to call a special meeting shall set forth (i) the business proposed to be conducted at the special meeting or the proposed election of directors at the special
meeting, as the case may be, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration), if applicable, and (iii) with respect to any stockholder or stockholders submitting a demand to call a
special meeting (except for any stockholder that has provided such demand in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”) by way of a solicitation statement filed on Schedule 14A) (a “Solicited Stockholder”) the information required to be provided pursuant to this Section
2.02 of a Requesting Person. A stockholder may revoke a demand to call a special meeting by written revocation delivered to the Secretary at any time prior to the special meeting. If any such revocation(s) are received by the Secretary
after the Secretary’s receipt of written demands from the holders of the Requisite Percentage of stockholders, and as a result of such revocation(s), there no longer are unrevoked demands from the Requisite Percentage of stockholders to call
a special meeting, the Board of Directors shall have the discretion to determine whether or not to proceed with the special meeting.
(f) The corporation shall not be required to call a Special Meeting upon stockholder demand
unless, in addition to the information required by Section 2.02(c), the Secretary receives a written agreement signed by each Soliciting Stockholder (as defined below) pursuant to which each Soliciting Stockholder, jointly and severally,
agrees to pay the corporation’s costs of holding the Special Meeting, including the costs of preparing and mailing proxy materials for the corporation’s own Solicitation, provided that if each of the resolutions introduced by any Soliciting
Stockholder at such meeting is adopted, and each of the individuals nominated by or on behalf of any Soliciting Stockholder for election as a director at such meeting is elected, then the Soliciting Stockholders shall not be required to pay
such costs. For purposes of these Bylaws, the following terms shall have the respective meanings set forth below:
(i) “Affiliate” of any Person (as defined herein) shall mean any Person controlling, controlled by
or under common control with such first Person.
(ii) “Participant” shall have the meaning assigned to such term in Rule 14a-12 promulgated under
the Exchange Act.
(iii) “Person” shall mean any individual, firm, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
(iv) “Proxy” shall have the meaning assigned to such term in Rule 14a-1 promulgated under the
Exchange Act.
(v) “Solicitation” shall have the meaning assigned to such term in Rule 14a-1 promulgated under
the Exchange Act.
(vi) “Soliciting Stockholder” shall mean, with respect to any Special Meeting demanded by a
stockholder or stockholders, each of the following Persons:
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(A) if the number of stockholders signing the demand or demands of meeting delivered to
the corporation pursuant to Section 2.02(c) is ten or fewer, each Person signing any such demand; or
(B) if the number of stockholders signing the demand or demands of meeting delivered to the
corporation pursuant to Section 2.02(c) is more than ten, each Person who either (I) was a Participant in any Solicitation of such demand or demands or (II) at the time of the delivery to the corporation of the documents described in Section
2.02(c) had engaged or intends to engage in any Solicitation of Proxies for use at such Special Meeting (other than a Solicitation of Proxies on behalf of the corporation).
A “Soliciting Stockholder” shall also mean each Affiliate of a Soliciting Stockholder described in clause (A) or (B) above who is a member of such Soliciting Stockholder’s “group” for purposes
of Rule 13d-5(b) under the Exchange Act, and any other Affiliate of such a Soliciting Stockholder, if a majority of the directors then in office determines, reasonably and in good faith, that such Affiliate should be required to sign the
written notice described in Section 2.02(c) and/or the written agreement described in this Section 2.02(d) to prevent the purposes of this Section 2.02 from being evaded.
(g) Except as provided in the following sentence, any Special Meeting shall be held at such hour
and day as may be designated by whichever of the Chairperson of the Board or Lead Director, as applicable, the President or the Board of Directors shall have called such meeting. In the case of any Special Meeting called by the President
upon the demand of stockholders (a “Demand Special Meeting”), such meeting shall be held for the purpose or purposes and to conduct the business specified in the demands received by the corporation at such hour and day as may be designated by
the Board of Directors; provided, however, that the date of any Demand Special Meeting shall be not more than 70 days after the Meeting Record Date (as defined in Section 2.05); and provided further that in the event that the directors then
in office fail to designate an hour and date for a Demand Special Meeting within ten days after the date that valid written demands for such meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of
all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting, calculated as if the Demand Record Date were the record date for the Special Meeting, are delivered to the corporation (the “Delivery Date”),
then such meeting shall be held at 2:00 p.m. local time on the 100th day after the Delivery Date or, if such 100th day is not a Business Day, on the first preceding Business Day. In fixing a meeting date for any Special Meeting, the
Chairperson of the Board or Lead Director, as applicable, the President or the Board of Directors may consider such factors as he, she or it deems relevant within the good faith exercise of his, her or its business judgment, including,
without limitation, the nature of the action proposed to be taken, the facts and circumstances surrounding any demand for such meeting, and any plan of the Board of Directors to call an Annual Meeting or a Special Meetingannual meeting or a
special meeting for the conduct of related business. Notwithstanding anything in these Bylaws to the contrary, the Board of Directors may submit its own proposal or proposals for consideration at a
special meeting called in accordance with Section 2.02(a)(ii).
(h) In connection with a special meeting called in accordance with Section 2.02(a)(ii), the
stockholder or stockholders (except for any Solicited Stockholder) who requested that the Board of Directors fix a record date for notice and voting for the special meeting in accordance with Section 2.02(a)(ii) or who delivered a demand to
call a special meeting to the Secretary shall further update and supplement the information previously provided to the corporation in connection with such request or demand, if necessary, so that the information provided or required to be
provided in such request or demand pursuant to this Section 2.02 shall be true and correct as of the record date for stockholders entitled to vote at the special meeting and as of the date that is ten (10) business days prior to the special
meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the corporation not later than five (5) business days
after the record date for stockholders entitled to vote at the special meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the special
meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the special meeting has been adjourned or postponed) (in the case of the update and
supplement required to be made as of ten (10) business days prior to the special meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any
other Section of these Bylaws shall not limit the corporation’s rights with respect to any deficiencies in any request or demand provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a
stockholder who has previously submitted a request or demand hereunder to amend or update any such request or demand, including by changing or adding nominees, matters, business or resolutions proposed to be brought before a meeting of the
stockholders.
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(i) Notwithstanding anything in these Bylaws to the contrary, the President shall not be required
to call a special meeting pursuant to Section 2.02(a)(ii) except in accordance with this Section 2.02. If the Board of Directors shall determine that any request to fix a record date for notice and voting for the special meeting or demand to
call and hold a special meeting was not properly made in accordance with this Section 2.02, or shall determine that the stockholder or stockholders requesting that the Board of Directors fix such record date or submitting a demand to call the
special meeting have not otherwise complied with this Section 2.02, then the Board of Directors shall not be required to fix such record date or to call and hold the special meeting. In addition to the requirements of this Section 2.02, each
Requesting Person shall comply with all requirements of applicable law, including all requirements of the Exchange Act, with respect to any request to fix a record date for notice and voting for the special meeting or demand to call a special
meeting.
(j) The corporation may engage regionally or nationally recognized independent inspectors of
elections to act as an agent of the corporation for the purpose of promptly performing a ministerial review of the validity of any purported written demand or demands for a Special Meeting received by the Secretary. For the purpose of
permitting the inspectors to perform such review, no purported demand shall be deemed to have been delivered to the corporation until the earlier of (i) five Business Days following receipt by the Secretary of such purported demand and (ii)
such date as the independent inspectors certify to the corporation that the valid demands received by the Secretary represent at least 10% of all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting
calculated as if the Demand Record Date were the record date for the Special Meeting. Nothing contained in this Section 2.02(f) shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be
entitled to contest the validity of any demand, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect
thereto).
(k) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Wisconsin are authorized or obligated by law or executive order to close.
2.03 Place of Meeting. The Board of Directors may designate any place,
either within or without the State of Wisconsin, as the place of meeting for any annual meeting or any special meeting. The
Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication. If no designation or determination is made, the place of meeting shall be the principal office of the corporation but any meeting may
be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat.
(a) Required Notice. Written notice stating the day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days before the date of the meeting (unless a different time is provided by the Wisconsin
Business Corporation Law or the Articles of Incorporation), by or at the direction of the Chairperson of the Board or Lead Director, as applicable, the Chief Executive Officer or the Secretary, to each stockholder entitled to vote at such
meeting or, for the fundamental transactions described in subsections (e)(1) to (4) below (for which the Wisconsin Business Corporation Law requires that notice be given to stockholders not entitled to vote), to all stockholders. The
corporation may give notice in person, by mail or other method of delivery, by telephone, including voice mail, answering machine or answering service or by any other electronic means and, if these forms of personal notice are impracticable,
notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television or other form of public broadcast communication. For purposes of this Section 2.04, notice by “electronic transmission” (as
defined in the Wisconsin Business Corporation Law) is written notice. Written notice is effective: (1) when mailed, if mailed postpaid and addressed to the stockholder’s address shown in the corporation’s current record of stockholders; or
(2) when electronically transmitted to the stockholder in a manner authorized by the stockholder. Oral notice shall be deemed to be effective when communicated. Notice by newspaper, radio, television or other form of public broadcast
communication shall be deemed to be effective the date of publication or broadcast
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At least twenty (20) days’ notice shall be provided if the purpose, or one of the purposes, of the meeting is to consider a plan of merger or share exchange for which stockholder approval is
required by law, or the sale, lease, exchange or other disposition of all or substantially all of the corporation’s property, with or without goodwill, otherwise than in the usual and regular course of business.
(b) Adjourned Meeting. An annual or special meeting of stockholders may be adjourned at any time,
including after action on one or more matters, by a majority of shares represented, even if less than a quorum. An annual or special meeting may also be adjourned at any time, including after action on one or more matters, by the Chairperson
of the Board or Lead Director, as applicable, by the presiding officer of such meeting or by any duly authorized officer of the corporation. The meeting may be adjourned for any purpose, including, but not limited to, allowing additional time
to solicit votes on one or more matters, to disseminate additional information to stockholders or to count votes. Upon being reconvened, the adjourned meeting shall be deemed to be a continuation of the initial meeting. Except as provided in
the next sentence, if any stockholder meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, and place, if the new date, time, and place is announced at the meeting before adjournment. If a
new record date for the adjourned meeting is or must be fixed, then notice must be given pursuant to the requirements of paragraph (a) of this Section 2.04, to those persons who are stockholders as of the new record date.
(c) Waiver of Notice. A stockholder may waive notice in accordance with Article VI of these
Bylaws.
(d) Contents of Notice. The notice of each special stockholder meeting shall include a
description of the purpose or purposes for which the meeting is called, and only business within the purpose described in the meeting notice may be conducted at a special stockholders’ meeting. Except as otherwise provided in subsection (e)
of this Section 2.04, in the Articles of Incorporation, or in the Wisconsin Business Corporation Law, the notice of an annual stockholders’ meeting need not include a description of the purpose or purposes for which the meeting is called.
(e) Fundamental Transactions. If a purpose of any stockholder meeting is to consider either: (1i) a proposed amendment to the Articles of Incorporation (including any restated articles); (2ii) a plan of merger or share exchange for which stockholder approval is required by
law; (3iii) the sale, lease, exchange or other disposition of all or substantially all of the corporation’s property, with or without goodwill, otherwise than in the usual and regular course of business; (4iv) the dissolution of the corporation; or (5v) the removal of a director, the notice must so state and in cases (1i), (2ii) and (3iii) above must be accompanied by, respectively, a copy or summary of the: (1) proposed articles of amendment or a copy of the restated articles that identifies any amendment or other change; (2) proposed plan of merger
or share exchange; or (3) proposed transaction for the sale, lease, exchange or other disposition of all or substantially all of the corporation’s property. If the proposed corporate action creates dissenters’ rights, the notice must state
that stockholders and beneficial stockholders are or may be entitled to assert dissenters’ rights, and must be accompanied by a copy of Sections 180.1301 to 180.1331 of the Wisconsin Business Corporation Law.
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2.05 Fixing of Record Date. The Board of Directors may fix in advance a date, which date shall be not
less than 10 days and not more than 70 days prior to the date of any Annual Meeting or Special Meetingannual meeting or special meeting, as the record date for the determination of stockholders entitled to notice of, or to vote at, such meeting (the
“Meeting Record Date”). In the case of any Demand Special Meeting, (i) the Meeting Record Date shall be not later than the 30th day after the Delivery Date and (ii) if the Board of Directors fails to fix the Meeting Record Date within 30 days
after the Delivery Date, then the close of business on such 30th day shall be the Meeting Record Date. The stockholders of record on the Meeting Record Date shall be the stockholders entitled to notice of and to vote at the meeting. Except as
provided by the Wisconsin Business Corporation Law for a court-ordered adjournment, a determination of stockholders entitled to notice of and to vote at any Annual
Meeting or Special Meeting isannual meeting or special meeting is effective for any adjournment
of such meeting unless the Board of Directors fixes a new Meeting Record Date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. The Board of Directors may also fix in
advance a date as the record date for the purpose of determining stockholders entitled to take any other action or determining stockholders for any other purpose. Such record date shall be not more than 70 days prior to the date on which the
particular action, requiring such determination of stockholders, is to be taken. The record date for determining stockholders entitled to a distribution (other than a distribution involving a purchase, redemption or other acquisition of the
corporation’s shares) or a share dividend is the date on which the Board of Directors authorizes the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date.
2.06 Stockholder List. The officer or agent having charge of the stock
transfer books for shares of the corporation shall, before each meeting of stockholders, make a complete record of the stockholders entitled to notice of such meeting, arranged by class or series of shares and showing the address of and the
number of shares held by each stockholder. The stockholder list shall be available at the meeting and may be inspected by any stockholder or his or her agent or attorney at any time during the meeting or any adjournment. Any stockholder or
his or her agent or attorney may inspect the stockholder list beginning two (2) business days after the notice of the meeting is given and continuing to the date of the meeting, at the corporation’s principal office or at a place identified in
the meeting notice in the city where the meeting will be held and, subject to Section 180.1602(2)(b) 3 to 5 of the Wisconsin Business Corporation Law, may copy the list, during regular business hours and at his or her expense, during the period
that it is available for inspection hereunder. The original stock transfer books and nominee certificates on file with the corporation (if any) shall be prima facie evidence as to who are the stockholders entitled to inspect the stockholder
list or to vote at any meeting of stockholders. Failure to comply with the requirements of this sectionSection shall not affect the validity of any action taken at such meeting.
2.07 Quorum and Voting Requirements. Except as otherwise provided in the
Articles of Incorporation or in the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast by shares entitled to vote as a separate voting group on a matter, represented in person or by proxy, shall constitute a quorum
of that voting group for action on that matter at a meeting of stockholders. If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the
action exceed the votes cast opposing the action unless a greater number of affirmative votes is required by the Wisconsin Business Corporation Law, these Bylaws or the Articles of Incorporation. If the Articles of Incorporation or the
Wisconsin Business Corporation Law provide for voting by two (2) or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one (1) voting
group on a matter even though no action is taken by another voting group entitled to vote on the matter. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting
business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that meeting.
2.08 Conduct of Meetings. The Chairperson of the Board or Lead Director, as
applicable, or if there is none, or in his or her absence, the Chief Executive Officer, and in the Chief Executive Officer’s absence, the President, and in the President’s absence, a Vice President, and in their absence, any person chosen by
the stockholders present shall call the meeting of the stockholders to order and shall act as chairperson of the meeting, and the Secretary shall act as secretary of all meetings of the stockholders, but, in the absence of the Secretary, the
presiding officer may appoint any other person to act as secretary of the meeting. The order and conduct of business and matters of procedures at any
meeting of stockholders shall be determined by the Chairperson of the BoardExcept to the extent inconsistent
with such rules and regulations as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to
prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board of Directors or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii)
rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iii) limitations on attendance at or
participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on entry to the
meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other
determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting,
whether adopted by the Board of Directors or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and
if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent
determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
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2.09 Proxies. At all meetings of stockholders, a stockholder entitled to vote may vote in person or by
proxy appointed as provided in the Wisconsin Business Corporation Law. The means by which a stockholder or the stockholder’s authorized officer, director, employee, agent or attorney-in-fact may authorize another person to act for the
stockholder by appointing the person as proxy include:
(a) Appointment of a proxy in writing by signing or causing the stockholder’s signature to be
affixed to an appointment form by any reasonable means, including, but not limited to, by facsimile signature.
(b) Appointment of a proxy by transmitting or authorizing the transmission of an electronic
transmission of the appointment to the person who will be appointed as proxy or to a proxy solicitation firm, proxy support service organization or like agent authorized to receive the transmission by the person who will be appointed as
proxy. Every electronic transmission shall contain, or be accompanied by, information that can be used to reasonably determine that the stockholder transmitted or authorized the transmission of the electronic transmission. Any person
charged with determining whether a stockholder transmitted or authorized the transmission of the electronic transmission shall specify the information upon which the determination is made.
(c) Any other means permitted by the Wisconsin Business Corporation Law.
An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the
corporation authorized to tabulate votes. An appointment is valid for 11 months unless a different period is expressly provided in the appointment. An appointment of a proxy is revocable unless the appointment form or electronic transmission
states that it is irrevocable and the appointment is coupled with an interest. The presence of a stockholder who has made an effective proxy appointment shall not of itself constitute a revocation. The Board of Directors shall have the power
and authority to make rules that are not inconsistent with the Wisconsin Business Corporation Law as to the validity and sufficiency of proxy appointments.
Any stockholder directly or indirectly soliciting proxies from other stockholders must use
a proxy card color other than white, which shall be reserved for the exclusive use by the Board of Directors.
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2.10 Voting of Shares. Each outstanding share shall be entitled to one (1) vote on each matter submitted
to a vote at a meeting of stockholders, except to the extent that the voting rights of the shares are enlarged, limited or denied by the Articles of Incorporation or the Wisconsin Business Corporation Law. Shares owned directly or indirectly
by another corporation are not entitled to vote if this corporation owns, directly or indirectly, sufficient shares to elect a majority of the directors of such other corporation. However, the prior sentence shall not limit the power of the
corporation to vote any shares, including its own shares, held by it in a fiduciary capacity. Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares.
(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in a notice of meeting given by or at the direction of the Board of Directors, (ii) if not specified in a notice of
meeting, otherwise brought before the meeting by the Board of Directors or the Chairperson of the Board or Lead Director, as applicable, or (iii) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was
a beneficial owner of shares of the corporation both at the time of giving the notice provided for in this Section 2.11 and at the time of the meeting, (2) is entitled to vote at the meeting, and (3) has complied with this Section 2.11 in all
applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Exchange Act. The foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting
of the stockholders. For purposes of this Section 2.11, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the corporation, or a qualified representative of such proposing
stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such
stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of
the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to the Board of Directors must comply with Section 2.12 and Section 2.13 and this Section 2.11 shall not be
applicable to such nominations except as expressly provided in Section 2.12 and Section 2.13.
(b) Without qualification, for business to be properly brought before an annual meeting by a
stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the corporation and (ii) provide any updates or supplements to such notice at the times and in the forms
required by this Section 2.11. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the corporation not less than ninety (90) days nor more than one hundred twenty (120)
days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by
the stockholder to be timely must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of
such annual meeting was first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of
Timely Notice as described above.
(c) To be in proper form for purposes of this Section 2.11, a stockholder’s notice to the
Secretary shall set forth:
(i) As to each Proposing Person (as defined below), (A) the name and address of such Proposing
Person (including, if applicable, the name and address that appear on the corporation’s books and records); and (B) the class or series and number of shares of the corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing
Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the
future; and (C) the date or dates such shares were acquired; (D) the investment intent of such acquisition and (E) any
pledge by such Proposing Person with respect to any of such shares (the disclosures to be made pursuant to the foregoing clauses (A) and (BE) are referred
to as “Stockholder Information”);
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(ii) As to each Proposing Person, (A) the full notional amount of any securities that, directly or
indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic
Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the corporation; provided that, for the purposes of the definition of “Synthetic
Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or
privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be
convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of
Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any
securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person's
business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the
corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the corporation or any of its officers or directors, or any affiliate of the corporation, (D)
any other material relationship between such Proposing Person, on the one hand, and the corporation, any affiliate of the corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of
such Proposing Person with the corporation or any affiliate of the corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) any proportionate interest in shares of the corporation or a Synthetic Equity Position held, directly or indirectly, by a general or limited partnership, limited
liability company or similar entity in which any such Proposing Person (1) is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership or (2) is the manager,
managing member or, directly or indirectly, beneficially owns an interest in the manager or managing member of such limited liability company or similar entity; (G) a representation that such
Proposing Person intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the proposal or
otherwise solicit proxies from stockholders in support of such proposal and (GH) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or
other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the
disclosures to be made pursuant to the foregoing clauses (A) through (GH) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect
to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by
these Bylaws on behalf of a beneficial owner; and
(iii) As to each item of business that the stockholder proposes to bring before the annual meeting,
(A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the
proposal or business (including the text of any resolutions proposed for consideration), and (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y)
between or among any Proposing Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder;, and (D) any other information relating to such
item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to
Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this paragraph (iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a
Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner.
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For purposes of this Section 2.11, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual
meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of
Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.
(d) The Board of Directors may request that any Proposing Person furnish such additional information as may be reasonably required by the Board of Directors. Such
Proposing Person shall provide such additional information within ten (10) days after it has been requested by the Board of Directors.
(e) (d) A Proposing Person shall update and supplement its notice to the corporation of its intent to propose business at an annual meeting, if
necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.11 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is
ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the corporation not
later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior
to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update
and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other
Section of these Bylaws shall not limit the corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has
previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.
(f) (e) Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought
before the meeting in accordance with this Section 2.11. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.11, and if
he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
(g) (f) This Section 2.11 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than
any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the corporation’s proxy statement. In addition to the requirements of this Section 2.11 with respect to any business proposed to be brought before an
annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.11 shall be deemed to affect the rights of stockholders to request inclusion
of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
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(h) (g) For purposes of these Bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
(a) Nominations of any person for election to the Board of Directors at an annual meeting or at a
special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the direction of the
Board of Directors, including by any committee or persons authorized to do so by the Board of Directors or these bylaws, or (ii) by a stockholder present in person (A) who was a beneficial owner of shares of the corporation both at the time
of giving the notice provided for in this Section 2.12 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.12 and Section 2.13 as to such notice and nomination. For purposes of
this Section 2.12, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the corporation, or a qualified representative of such stockholder, appear at such meeting. A “qualified
representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such
stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of
stockholders. The foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board of Directors at an annual meeting or special meeting.
(b) (i) Without qualification, for a stockholder to make any nomination of a person or
persons for election to the Board of Directors at an annual meeting, the stockholder must (1) provide Timely Notice (as defined in Section 2.11) thereof in writing and in proper form to the Secretary of the corporation, (2) provide the
information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 2.12 and Section 2.13 and (3) provide any updates or supplements to such notice at the
times and in the forms required by this Section 2.12 and Section 2.13.
(ii) Without qualification, if the election of directors is a matter specified in the notice of
meeting given by or at the direction of the person calling a special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board of Directors at a special meeting, the stockholder must (i) provide
timely notice thereof in writing and in proper form to the Secretary of the corporation at the principal executive offices of the corporation, (ii) provide the information with respect to such stockholder and its candidate for nomination as
required by this Section 2.12 and Section 2.13 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.12. To be timely, a stockholder’s notice for nominations to be made at a
special meeting must be delivered to, or mailed and received at, the principal executive offices of the corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the ninetieth (90th)
day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 2.11) of the date of such special meeting was first made.
(iii) In no event shall any adjournment or postponement of an annual meeting or special meeting or
the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(iv) In no event may a Nominating Person provide Timely Notice with respect to a greater number of
director candidates than are subject to election by shareholders at the applicable meeting. If the corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting, such notice as to any
additional nominees shall be due on the later of (i) the conclusion of the time period for Timely Notice, (ii) the date set forth Section 2.12(b)(ii) or (iii) the tenth day following the date of public disclosure (as defined in Section 2.11)
of such increase.
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(c) To be in proper form for purposes of this Section 2.12, a stockholder’s notice to the
Secretary shall set forth:
(i) As to each Nominating Person (as defined below), the Stockholder Information (as defined in
Section 2.11(c)(i), except that for purposes of this Section 2.12 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.11(c)(i));
(ii) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.11(c)(ii),
except that for purposes of this Section 2.12 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.11(c)(ii) and the disclosure with respect to the business to be brought
before the meeting in Section 2.11(c)(ii) shall be made with respect to the election of directors at the meeting); and
(iii) As to each candidate whom a Nominating Person proposes to nominate for election as a
director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.12 and Section 2.13 if such candidate for nomination were a Nominating
Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement and accompanying proxy card relating to the corporation’s next meeting of stockholders at which directors are to be elected or other filings required to be made in connection with
solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a
director for a full term if elected), (C) a description of any direct or
indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on
the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for
nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), and (D) a completed and signed questionnaire,
representation and agreement as provided in Section 2.13(i).
For purposes of this Section 2.12, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii)
the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, and (iii) any other
participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such
stockholder in such solicitation.
(d) The Board of Directors may request that any Nominating Person furnish such additional information as may be reasonably required by the Board of Directors. Such
Nominating Person shall provide such additional information within ten (10) days after it has been requested by the Board of Directors.
(e) (d) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if
necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.12 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is
ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the corporation not
later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior
to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update
and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other
Section of these Bylaws shall not limit the corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has
previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.
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(f) (e) In addition to the requirements of this Section 2.12 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with
respect to any such nominations. Notwithstanding the foregoing provisions of this Section 2.12, unless otherwise
required by law, (i) no Nominating Person shall solicit proxies in support of director nominees other than the corporation’s nominees unless such Nominating Person has complied with Rule 14a-19 promulgated under the Exchange Act in
connection with the solicitation of such proxies, including the provision to the corporation of notices required thereunder in a timely manner and (ii) if any Nominating Person (1) provides notice pursuant to Rule 14a-19(b) promulgated
under the Exchange Act and (2) subsequently fails to comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act, including the provision to the Corporation of notices required thereunder in a
timely manner, then the Corporation shall disregard any proxies or votes solicited for the Nominating Person’s candidates. If any Nominating Person provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such
Nominating Person shall deliver to the corporation, no later than five (5) business days prior to the applicable meeting, reasonable evidence that it has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.
2.13 Additional Requirements for Valid Nomination of Candidates to Serve as Director
and, if Elected, to Be Seated as Directors.
(a) To be eligible to be a candidate for election as a director of the corporation at an annual or
special meeting, a candidate must be nominated in the manner prescribed in Section 2.12 and the candidate for nomination, whether nominated by the Board of Directors or by a stockholder of record, must have previously delivered (in accordance
with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board of Directors), to the Secretary at the principal executive offices of the corporation, (i) a completed written questionnaire (in a
form provided by the corporation upon written request of any stockholder of record thereof) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (ii) a written representation and agreement (in form provided by the corporation upon written request of any stockholder of record thereof) that such candidate for
nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any
person or entity as to how such proposed nominee, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could limit or interfere with such proposed
nominee’s ability to comply, if elected as a director of the corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any
person or entity other than the corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed therein, (C) if elected as a director of the corporation, will comply with
all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the corporation applicable to directors and in effect during such person’s term in office as a
director (and, if requested by any candidate for nomination, the Secretary of the corporation shall provide to such candidate for nomination all such policies and guidelines then in effect), and (D) if elected as director of the corporation,
intends to serve the entire term until the next meeting at which such candidate would face re-election.
(b) The Board of Directors may also require any proposed candidate for nomination as a Director to
furnish such other information as may reasonably be requested by the Board of Directors in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board of Directors to determine
the eligibility of such candidate for nomination to be an independent director of the corporation in accordance with the corporation’s Guidelines on Corporate Governance. In addition, the Board of Directors may require any proposed candidate for nomination as a director to submit to interviews with the Board of Directors or any committee thereof, and such
candidate shall make himself or herself available for any such interviews within no less than ten (10) business days following the date of such request.
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(c) A candidate for nomination as a director shall further update and supplement the materials
delivered pursuant to this Section 2.13, if necessary, so that the information provided or required to be provided pursuant to this Section 2.13 shall be true and correct as of the record date for stockholders entitled to vote at the meeting
and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive
offices of the corporation (or any other office specified by the corporation in any public announcement) not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update
and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first
practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement
thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these Bylaws shall not limit the corporation’s rights with respect to any deficiencies in any notice
provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by
changing or adding nominees, matters, business or resolutions proposed to be brought before a meeting of the stockholders.
(d) No candidate shall be eligible for nomination as a director of the corporation unless such
candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with Section 2.12 and this Section 2.13, as applicable. The presiding officer at the meeting shall, if the facts warrant,
determine that a nomination was not properly made in accordance with Section 2.12 and this Section 2.13, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be
disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots case for the nominee in question) shall be void and of no force or effect.
(e) Notwithstanding anything in these Bylaws to the contrary, no candidate for nomination shall be
eligible to be seated as a director of the corporation unless nominated and elected in accordance with Section 2.12 and this Section 2.13.
2.14 Control Share Voting Restrictions Inapplicable. Notwithstanding any
other provision of the Articles of Incorporation or these Bylaws, Section 180.1150 of the Wisconsin Business Corporation Law (or any successor statute) regarding control share voting restrictions shall not apply to any shares of stock of the
corporation. (Section 2.14 was added by an amendment adopted by the Board of Directors on July 19, 2006 pursuant to Section 180.1150(2) of the Wisconsin Business Corporation Law, as amended by 2005 Wisconsin Act 476.)
2.15 Delivery to the Corporation. Whenever this Article 2 requires one or more persons (including a record or
beneficial owner of stock) to deliver a document or information to the corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such
document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return
receipt requested, and the corporation shall not be required to accept delivery of any document not in such written form or so delivered.
3.01 General Powers; Number and Classification. All corporate powers shall
be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, its Board of Directors. The Articles of Incorporation provide that the Board of Directors shall consist of such
number of members as these Bylaws may provide, but not less than seven, nor more than twelve. The total number of directors constituting the Board shall be set between seven (7) directors to twelve (12) directors as determined from time to time by
resolution of the Board. No decrease in the number of directors shall have the effect of shortening the term of an incumbent director.
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As provided in the Articles of Incorporation, the Board of Directors shall be divided into three classes as nearly equal in number as possible, as determined by the Board of Directors. The
term of office of a director shall be three years. The classes of directors shall be staggered so that each expires in succeeding years. At each annual meeting of stockholders, the number of directors equal to the number of the class whose
terms expire at the time of such meeting shall be elected to hold office until the third succeeding annual meeting and until their successors shall have been elected.
3.02 Election, Tenure and Qualifications. Unless action is taken without a
meeting under Section 7.01 of these Bylaws, in a noncontested election, directors shall be elected by a majority of the votes cast by holders of shares of the corporation’s common stock entitled to vote in the election at a stockholders meeting
at which a quorum is present. In a contested election, directors shall be elected by a plurality of the votes cast by holders of shares of the corporation’s common stock entitled to vote in the election at a meeting at which a quorum is
present. An election shall be considered contested if, as of the record date for the meeting at which the election is held, there are more nominees for election than positions on the Board of Directors to be filled by election at the meeting.
Each director shall hold office until the end of such director’s term and until there is a decrease in the number of directors, or until his or her prior death, resignation or removal. Directors need not be residents of the State of Wisconsin
or stockholders of the corporation.
In the event that an incumbent director fails to receive the affirmative vote of a majority of votes cast in an uncontested election, such director shall promptly tender his or her resignation
to the Board of Directors. The Nominating Committee shall recommend to the Board of Directors as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board of Directors shall act on the
recommendation of the Nominating Committee and publicly disclose its decision, and the rationale behind its decision, within 90 days from the date of the certification of the results of the election. The director who has tendered his or her
resignation pursuant to this provision shall not participate in the Nominating Committee’s or the Board of Directors’ deliberations or decision with respect to the tendered resignation. In the event that such director does not promptly tender
his or her resignation in accordance herewith, the Board of Directors may determine to take such actions as may be necessary to reduce the size of the Board of Directors to eliminate such director’s position.
3.03 Resignation and Removal for Cause. Any director, member of a committee
or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairperson of the Board or Lead Director,
as applicable, or Secretary. The acceptance of a resignation shall not be necessary to make it effective.
Notwithstanding the foregoing, however, in the event of the tender of a resignation by a director pursuant to the requirements of Section 3.02, such director and the Board of Directors shall
proceed in accordance with the provisions of Section 3.02 with respect to such resignation.
A director may be removed from office during his or her term of such office but only upon a showing of good cause, such removal to be by affirmative vote of a majority of the outstanding shares
entitled to vote for the election of such director and which removal may only be taken at a special meeting of stockholders called for that purpose.
A special meeting of the stockholders as herein referred to may only be held after a hearing on the matter of cause claimed to exist has been held by the full Board of Directors of the
corporation at which hearing the director or directors proposed for removal shall be given an adequate opportunity for preparation and attendance in person (together with representation by counsel); provided, however, that such hearing shall be
held only after written notice has been given to said director or directors proposed for removal specifying the matters of cause claimed to exist. The conclusions of said hearing shall be reported by the Board of Directors in writing
accompanying the notice of the special stockholders’ meeting sent to each stockholder eligible to vote at said special meeting.
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3.04 Regular Meetings. A regular meeting of the Board of Directors shall be held, without other notice
than this Bylaw, immediately after the annual meeting of stockholders, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of stockholders which precedes it, or such other
suitable place as may be announced at such meeting of stockholders. The Board of Directors and any committee may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular
meetings without other notice than such resolution.
3.05 Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the Chairperson of the Board or Lead Director, as applicable, if there is one, the President or by the Secretary at the request in writing of a majority of the Board of Directors. Special meetings of any
committee may be called by or at the request of the foregoing persons or the chairperson of the committee. The persons calling any special meeting of the Board of Directors or committee may fix any place, either within or without the State of
Wisconsin, as the place for holding any special meeting called by them, and if no other place is fixed the place of meeting shall be the principal office of the corporation in the State of Wisconsin.
(a) Any or all directors may participate in a regular or special meeting or in a committee meeting
of the Board of Directors by, or conduct the meeting through the use of, telephone or any other means of communication by which either: (i) all participating directors may simultaneously hear each other during the meeting or (ii) all
communication during the meeting is immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors.
(b) If a meeting will be conducted through the use of any means described in paragraph (a), all
participating directors shall be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by any means described in paragraph (a) is deemed to be present in person at the
meeting.
3.07 Notice of Meetings. Except as otherwise provided in the Articles of
Incorporation or the Wisconsin Business Corporation Law, notice of the date, time and place of any special meeting of the Board of Directors and of any special meeting of a committee of the Board of Directors shall be given orally or in writing to each director or committee member at least 48 hours prior to the meeting, except that notice by
mail shall be given at least 72 hours prior to the meeting. For purposes of this Section 3.07, notice by electronic transmission is written notice. The notice need not describe the purpose of the meeting. Notice may be communicated in
person; by mail or other method of delivery (meaning any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery and “electronic transmission,” as defined in the Wisconsin Business
Corporation Law); by telephone, including voice mail, answering machine or answering service; or by any other electronic means. Oral notice is effective when communicated. Written notice is effective as follows: If delivered in person or by
commercial delivery, when received; if given by mail, when deposited, postage prepaid, in the United States mail addressed to the director at his or her business or home address (or such other address as the director may have designated in
writing filed with the Secretary); if given by facsimile, at the time transmitted to a facsimile number at any address designated above; if given by telegraph, when delivered to the telegraph company; and if given by electronic transmission,
when electronically transmitted to the director in a manner authorized by the director.
3.08 Quorum. Except as otherwise provided by the Wisconsin Business
Corporation Law, a majority of the number of directors as provided in Section 3.01 shall constitute a quorum of the Board of Directors. Except as otherwise provided by the Wisconsin Business Corporation Law, a majority of the number of
directors appointed to serve on a committee shall constitute a quorum of the committee.
3.09 Manner of Acting. Except as otherwise provided by the Wisconsin
Business Corporation Law, these Bylaws, or the Articles of Incorporation, the affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors or any committee thereof.
3.10 Conduct of Meetings. The Chairperson of the Board or Lead Director, as
applicable, or if there is none, or in his or her absence, the Chief Executive Officer, and in the Chief Executive Officer’s absence, the President, and in the President’s absence, a Vice President, and in their absence, any director chosen by
the directors present, shall call meetings of the Board of Directors to order and shall chair the meeting. The Secretary of the corporation shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary,
the presiding officer may appoint any assistant secretary or any director or other person present to act as secretary of the meeting.
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3.11 Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an
increase in the number of directors, may be filled by the stockholders or the Board of Directors. If the directors remaining in office constitute fewer than a quorum of the Board of Directors, the directors may fill a vacancy by the affirmative vote of a majority of all directors remaining in office. If the vacant office was held by a director elected
by a voting group of stockholders (other than a group constituting all the shareholders), only the holders of shares of that voting group may vote to fill the vacancy if it is filled by the stockholders, and only the remaining directors elected
by that voting group may vote to fill the vacancy if it is filled by the directors. A vacancy that will occur at a specific later date (because of a resignation effective at a later date or otherwise) may be filled before the vacancy occurs,
but the new director may not take office until the vacancy occurs.
3.12 Compensation. The Board of Directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or
otherwise, or to delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death
benefits, employee stock options, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees
to the corporation.
3.13 Presumption of Assent. A director who is present and is announced as
present at a meeting of the Board of Directors or a committee thereof at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless (i) the director objects at the beginning of the meeting or
promptly upon his or her arrival to holding the meeting or transacting business at the meeting, or (ii) the director’s dissent or abstention from the action taken is entered in the minutes of the meeting, or (iii) the director delivers his or
her written dissent or abstention to the presiding officer of the meeting before the adjournment thereof or to the corporation immediately after the adjournment of the meeting, or (iv) the director dissents or abstains from the action taken,
minutes of the meeting are prepared and fail to show the director’s dissent or abstention from the action taken, and the director delivers to the corporation a written notice of that omission from the minutes promptly after receiving a copy of
the minutes. Such right to dissent or abstain shall not apply to a director who voted in favor of such action.
3.14 Committees. Unless the Articles of Incorporation otherwise provide,
the Board of Directors, by resolution adopted by the affirmative vote of a majority of all the directors then in office, may create one (1) or more committees, each committee to consist of two (2) or more directors as members, which to the
extent provided in the resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, may exercise the authority of the Board of Directors, except that no committee may: (a) authorize
distributions; (b) approve or propose to stockholders action that the Wisconsin Business Corporation Law requires be approved by stockholders; (c) fill vacancies on the Board of Directors or any of its committees, except that the Board of
Directors may provide by resolution that any vacancies on a committee shall be filled by the affirmative vote of a majority of the remaining committee members; (d) amend the Articles of Incorporation; (e) adopt, amend or repeal Bylaws; (f)
approve a plan of merger not requiring stockholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors or (h) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except within limits prescribed by the Board of Directors. The Board of Directors may elect one or more
of its members as alternate members of any committee who may take the place of any absent member or members at any meeting of such committee. Each such committee shall fix its own rules (consistent with the Wisconsin Business Corporation Law,
the Articles of Incorporation and these Bylaws) governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. Unless otherwise provided by the Board of
Directors in creating a committee, a committee may employ counsel, accountants and other consultants to assist it in the exercise of authority. The creation of a committee, delegation of authority to a committee or action by a committee does
not relieve the Board of Directors or any of its members of any responsibility imposed on the Board of Directors or its members by law.
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3.15 Retirement. Each director shall be retired at the close of the term in which he or she attains the
age of seventy-two (72) years except that this provision shall not apply to any director who has been exempted from this provision by a resolution passed by a two-thirds vote of the Board of Directors.
4.01 Appointment. The officers of the corporation shall include a Chief
Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors shall appoint the Chief Executive Officer, the President, the Chief Financial Officer and the other
officers designated by the Board of Directors as “executive officers” for purposes of the Exchange Act. Either the Board of Directors or the Chief Executive Officer may appoint such other officers and assistant officers as may be deemed
necessary or appropriate. Subject to such limitations as the Board of Directors may from time to time prescribe, the officers of the corporation shall each have such powers and duties as described below, as well as such powers and duties as
from time to time may be conferred by the Chief Executive Officer or the Board of Directors. Any two or more offices may be held by the same person.
4.02 Resignation and Removal. An officer shall hold office until he or she
resigns, dies, is removed hereunder, or a different person is appointed to the office. An officer may resign at any time by delivering an appropriate written notice to the corporation. The resignation is effective when the notice is
delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. Any officer may be removed by the Board of Directors, and, unless restricted by the Board of Directors, any officer or
assistant officer appointed by the Chief Executive Officer may be removed by the Chief Executive Officer, at any time, with or without cause and notwithstanding the contract rights, if any, of the person removed. Except as provided in the
preceding sentence, the resignation or removal is subject to any remedies provided by any contract between the officer and the corporation or otherwise provided by law. Appointment shall not of itself create contract rights.
4.03 Vacancies. A vacancy in any office because of death, resignation,
removal or otherwise, may be filled by the Board of Directors or the Chief Executive Officer, as appropriate. If a resignation is effective at a later date, the Board of Directors or the Chief Executive Officer, as appropriate, may fill the
vacancy before the effective date if the Board of Directors or the Chief Executive Officer, as appropriate, provides that the successor may not take office until the effective date.
4.04 Chairperson of the Board or Lead Director. The Board of Directors may
at its discretion appoint a Chairperson of the Board or Lead Director, as applicable. The Chairperson of the Board or Lead Director, if there is one, shall preside at all meetings of the stockholders and Board of Directors, and shall carry out
such other duties as directed by the Board of Directors.
4.05 Chief Executive Officer. The Chief Executive Officer shall, subject to
the direction of the Board of Directors, in general supervise and control all of the business and affairs of the corporation. He or she shall, in the absence of the Chairperson of the Board or Lead Director, as applicable, (if one is
appointed), preside at all meetings of the stockholders and of the Board of Directors. The Chief Executive Officer shall have authority to appoint officers and assistant officers of the corporation, subject to any limitations that the Board of
Directors may from time to time prescribe; it being understood that the Board of Directors continues to reserve its right to also appoint officers and assistant officers and exclusive right to appoint officers designated as “executive officers”
for purposes of the Exchange Act, as provided in Section 4.01. The Chief Executive Officer shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as
he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the Chief Executive Officer. The Chief Executive Officer
shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the
course of the corporation’s regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or directed by the Board of Directors, the Chief Executive Officer may authorize the
President, any Vice President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his or her place and stead. In general he or she shall perform all duties incident to the office of
Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time.
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4.06 President. The President shall: (a) be the Chief Operating Officer of the corporation, unless
otherwise designated by the Board of Directors; (b) subject to the direction of the Chief Executive Officer, direct certain operating functions; and (c) perform the duties incident to the office of President and any other duties as may be
prescribed by the Chief Executive Officer or the Board of Directors. In the absence of the Chief Executive Officer or in the event of the Chief Executive Officer’s death, inability to act, resignation or removal from office, or in the event
for any reason it shall be impracticable for the Chief Executive Officer to act personally, the powers and duties of the Chief Executive Officer shall for the time being devolve upon and be exercised by the President, unless otherwise ordered
by the Board of Directors.
4.07 Chief Financial Officer. The Chief Financial Officer shall: (a)
subject to the direction of the Board of Directors and the Chief Executive Officer, in general, manage, supervise, and control all of the financial affairs of the corporation; (b) have responsibility over the office of the Treasurer and the
Controller; (c) designate agents and employees of the corporation to (i) have charge and custody and be responsible for all funds and securities of the corporation, (ii) receive, disburse and invest funds of the corporation, (iii) negotiate and
borrow short-term unsecured funds and to issue and sell commercial paper and other types of short-term unsecured indebtedness and (iv) establish depository and checking accounts at banks or other financial institutions for various corporate
purposes and act as signatories for such accounts; and (d) in general perform all other duties incident to the office of the Chief Financial Officer and have such other duties and exercise such other authority as from time to time may be
delegated or assigned by the Chief Executive Officer, the President or the Board of Directors.
4.08 Vice Presidents (which may include Executive Vice Presidents, Senior
Vice Presidents, Group Vice Presidents or other designations). In the absence of the President, or in the event of the President’s death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President
to act personally, a Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their appointment)
shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for
shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, the President, or the Board of Directors. The execution of
any instrument of the corporation by any Vice President shall be conclusive evidence, as to third parties, of the Vice President’s authority to act in the stead of the President.
4.09 Secretary. The Secretary shall: (a) keep (or cause to be kept)
regular minutes of all meetings of the stockholders, the Board of Directors and any committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions
of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation, if any, and see that the seal of the corporation, if any, is affixed to all documents which are authorized to be executed on
behalf of the corporation under its seal; (d) keep or arrange for the keeping of a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (e) sign with the Chief Executive Officer,
the President, or a Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation;
and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, the President or by
the Board of Directors.
4.10 Treasurer. The Treasurer shall, subject to the direction of the Chief
Executive Officer: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected by the corporation; and (c) in general perform all of the duties incident to the office of Treasurer and have such other duties and
exercise such other authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, the President, the Chief Financial Officer or by the Board of Directors.
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ARTICLE 5. SHARES AND THEIR TRANSFER
5.01 Certificates for Shares. Shares of the corporation’s stock may be
certificated or uncertificated, as provided under the Wisconsin Business Corporation Law.
(a) Certificates representing shares of the corporation shall be in such form, consistent with
law, as shall be determined by the Board of Directors. At a minimum, a share certificate shall state on its face the name of the corporation and that it is organized under the laws of the State of Wisconsin, the name of the person to whom
issued, and the number and class of shares and the designation of the series, if any, that the certificate represents. If the corporation is authorized to issue different classes of shares or different series within a class, the front or
back of the certificate must contain either (i) a summary of the designations, relative rights, preferences and limitations applicable to each class, and the variations in the rights, preferences and limitations determined for each series and
the authority of the Board of Directors to determine variations for future series, or (ii) a conspicuous statement that the corporation will furnish the stockholder the information described in clause (i) on request, in writing and without
charge. Such certificates shall be signed, either manually or in facsimile, by the Chief Executive Officer, the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in
Section 5.05.
(b) The Board of Directors of the corporation may authorize the issuance of any shares of any of
its classes or series without certificates. The authorization does not affect shares already represented by certificates until the certificates are surrendered to the corporation. Within a reasonable time after the issuance or transfer of
shares without certificates, the corporation shall send the stockholder a written statement of the information required on share certificates by paragraph (a) of this Section 5.01 and, if applicable, Section 5.04. Unless the Wisconsin
Business Corporation Law or Chapter 408 of the Wisconsin Statutes expressly provides otherwise, the rights and obligations of stockholders are identical whether or not their shares are represented by certificates.
5.02 Signature by Former Officers. If an officer or assistant officer, who
has signed or whose facsimile signature has been placed upon any certificate for shares, has ceased to be such officer or assistant officer before such certificate is issued, the certificate may be issued by the corporation with the same effect
as if that person were still an officer or assistant officer at the date of its issue.
5.03 Transfer of Shares. Transfer of shares shall be made on the books of
the corporation only by the record holder of such shares, or by attorney lawfully constituted in writing, and, in the case of shares represented by a certificate, upon surrender of the certificate. Prior to due presentment of a certificate for
shares for registration of transfer, and unless the corporation has established a procedure by which a beneficial owner of shares held by a nominee is to be recognized by the corporation as the stockholder, the corporation may treat the
registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. The corporation may require reasonable assurance that all transfer
endorsements are genuine and effective and in compliance with all regulations prescribed by or under the authority of the Board of Directors.
5.04 Restrictions on Transfer. The face or reverse side of each certificate
representing shares, and the written statement of the information required by Section 5.01(b) with respect to shares without certificates, shall bear a conspicuous notation of any restriction upon the transfer of such shares imposed by the
corporation or imposed by any agreement of which the corporation has written notice.
5.05 Lost, Destroyed or Stolen Certificates. Where the owner claims that
his or her certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide
purchaser, and (b) if required by the corporation, files with the corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors.
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5.06 Consideration for Shares. The shares of the corporation may be issued for such consideration as
shall be fixed from time to time and determined to be adequate by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration may consist of any
tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation. When the corporation receives the
consideration for which the Board of Directors authorized the issuance of shares, such shares shall be deemed to be fully paid and nonassessable by the corporation.
5.07 Stock Regulations. The Board of Directors shall have the power and
authority to make all such rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the corporation,
including the appointment or designation of one or more stock transfer agents and one or more registrars.
6.01 Stockholder Written Waiver. A stockholder may waive any notice required
by the Wisconsin Business Corporation Law, the Articles of Incorporation or these Bylaws before or after the date and time stated in the notice. The waiver shall be in writing and signed by the stockholder entitled to the notice, shall contain
the same information that would have been required in the notice under the Wisconsin Business Corporation Law except that the time and place of meeting need not be stated, and shall be delivered to the corporation for inclusion in the corporate
records.
6.02 Stockholder Waiver by Attendance. A stockholder’s attendance at a
meeting, in person or by proxy, waives objection to both of the following:
(a) Lack of notice or defective notice of the meeting, unless the stockholder at the beginning of
the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting.
(b) Consideration of a particular matter at the meeting that is not within the purpose described
in the meeting notice, unless the stockholder objects to considering the matter when it is presented.
6.03 Director Written Waiver. A director may waive any notice required by
the Wisconsin Business Corporation Law, the Articles of Incorporation or the Bylaws before or after the date and time stated in the notice. The waiver shall be in writing, signed by the director entitled to the notice and retained by the
corporation.
6.04 Director Waiver by Attendance. A director’s attendance at or
participation in a meeting of the Board of Directors or any committee thereof waives any required notice to him or her of the meeting unless the director at the beginning of the meeting or promptly upon his or her arrival objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.
7.01 Stockholder Action Without Meeting. Action required or permitted by
the Wisconsin Business Corporation Law to be taken at a stockholders’ meeting may be taken without a meeting (a) by all stockholders entitled to vote on the action, or (b) if the Articles of Incorporation so provide (and except with respect to an election of directors for which stockholders may vote cumulatively) by stockholders who would be entitled to vote at a meeting shares with
voting power sufficient to cast not less than the minimum number (or, in the case of voting by voting groups, the minimum numbers) of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to
vote were present and voted. The action must be evidenced by one or more written consents describing the action taken, signed by the stockholders consenting thereto and delivered to the corporation for inclusion in its corporate records. A
consent hereunder has the effect of a meeting vote and may be described as such in any document. The Wisconsin Business Corporation Law requires that notice of the action be given to certain stockholders and specifies the effective date
thereof and the record date in respect thereto.
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7.02 Director Action Without Meeting. Unless the Articles of Incorporation provide otherwise, action
required or permitted by the Wisconsin Business Corporation Law to be taken at a Board of Directors meeting or committee meeting may be taken without a meeting if the action is taken by all members of the Board or committee. The action shall
be evidenced by one or more written consents describing the action taken, signed by each director and retained by the corporation. Action taken hereunder is effective when the last director signs the consent, unless the consent specifies a
different effective date. A consent signed hereunder has the effect of a unanimous vote taken at a meeting at which all directors or committee members were present, and may be described as such in any document.
8.01 Indemnification for Successful Defense. Within twenty (20) days after
receipt of a written request pursuant to Section 8.03, the corporation shall indemnify a director or officer, to the extent he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the corporation.
(a) In cases not included under Section 8.01, the corporation shall indemnify a director or
officer against all liabilities and expenses incurred by the director or officer in a proceeding to which the director or officer was a party because he or she is a director or officer of the corporation, unless liability was incurred because
the director or officer breached or failed to perform a duty he or she owes to the corporation and the breach or failure to perform constitutes any of the following:
(i) A willful failure to deal fairly with the corporation or its stockholders in connection with a
matter in which the director or officer has a material conflict of interest.
(ii) A violation of criminal law, unless the director or officer had reasonable cause to believe
that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful.
(iii) A transaction from which the director or officer derived an improper personal profit.
(iv) Willful misconduct.
(b) Determination of whether indemnification is required under this Section shall be made pursuant
to Section 8.05.
(c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea
of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the director or officer is not required under this Section.
8.03 Written Request. A director or officer who seeks indemnification under
Sections 8.01 or 8.02 shall make a written request to the corporation.
8.04 Nonduplication. The corporation shall not indemnify a director or
officer under Sections 8.01 or 8.02 to the extent the director or officer has previously received indemnification or allowance of expenses from any person, including the corporation, in connection with the same proceeding. However, the
director or officer has no duty to look to any other person for indemnification.
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(a) Unless otherwise provided by the Articles of Incorporation or by written agreement between the
director or officer and the corporation, the director or officer seeking indemnification under Section 8.02 shall select one of the following means for determining his or her right to indemnification:
(i) By a majority vote of a quorum of the Board of Directors consisting of directors not at the
time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the Board of Directors and consisting solely of two (2) or more directors who are
not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee.
(ii) By independent legal counsel selected by a quorum of the Board of Directors or its committee
in the manner prescribed in subsection (a)(i) of this Section 8.05 or, if unable to obtain such a quorum or committee, by a majority vote of the full Board of Directors, including directors who are parties to the same or related proceedings.
(iii) By a panel of three (3) arbitrators consisting of one arbitrator selected by those directors
entitled under subsection (a)(ii) of this Section 8.05 to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the two (2) arbitrators previously selected.
(iv) By an affirmative vote of shares represented at a meeting of stockholders at which a quorum of
the voting group entitled to vote thereon is present. Shares owned by, or voted under the control of, persons who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may
not be voted in making the determination.
(v) By a court under Section 8.08.
(vi) By any other method provided for in any additional right to indemnification permitted under
Section 8.07.
(b) In any determination under (a), the burden of proof is on the corporation to prove by clear
and convincing evidence that indemnification under Section 8.02 should not be allowed.
(c) A written determination as to a director’s or officer’s indemnification under Section 8.02
shall be submitted to both the corporation and the director or officer within 60 days of the selection made under (a).
(d) If it is determined that indemnification is required under Section 8.02, the corporation shall
pay all liabilities and expenses not prohibited by Section 8.04 within ten (10) days after receipt of the written determination under (c). The corporation shall also pay all expenses incurred by the director or officer in the determination
process under (a).
8.06 Advance of Expenses. Within ten (10) days after receipt of a written
request by a director or officer who is a party to a proceeding, the corporation shall pay or reimburse his or her reasonable expenses as incurred if the director or officer provides the corporation with all of the following:
(i) A written affirmation of his or her good faith belief that he or she has not breached or
failed to perform his or her duties to the corporation.
(ii) A written undertaking, executed personally or on his or her behalf, to repay the allowance to
the extent that it is ultimately determined under Section 8.05 that indemnification under Section 8.02 is not required and that indemnification is not ordered by a court under Section 8.08(b)(2). The undertaking under this subsection shall
be an unlimited general obligation of the director or officer and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured.
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8.07 Nonexclusivity.
(a) Except as provided in (b), Sections 8.01, 8.02 and 8.06 do not preclude any additional right
to indemnification or allowance of expenses that a director or officer may have under any of the following:
(i) The Articles of Incorporation.
(ii) A written agreement between the director or officer and the corporation.
(iii) A resolution of the Board of Directors.
(iv) A resolution, after notice, adopted by a majority vote of all of the corporation’s voting
shares then issued and outstanding.
(b) Regardless of the existence of an additional right under (a), the corporation shall not
indemnify a director or officer, or permit a director or officer to retain any allowance of expenses unless it is determined by or on behalf of the corporation that the director or officer did not breach or fail to perform a duty he or she
owes to the corporation which constitutes conduct under Section 8.02(a)(1), (2), (3) or (4). A director or officer who is a party to the same or related proceeding for which indemnification or an allowance of expenses is sought may not
participate in a determination under this subsection.
(c) Sections 8.01 to 8.138.14 do not affect the corporation’s power to
pay or reimburse expenses incurred by a director or officer in any of the following circumstances.
(i) As a witness in a proceeding to which he or she is not a party.
(ii) As a plaintiff or petitioner in a proceeding because he or she is or was an employee, agent,
director or officer of the corporation.
(a) Except as provided otherwise by written agreement between the director or officer and the
corporation, a director or officer who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. Application shall be made for an initial determination by
the court under Section 8.05(a)(5) or for review by the court of an adverse determination under Section 8.05(a) (1), (2), (3), (4) or (6). After receipt of an application, the court shall give any notice it considers necessary.
(b) The court shall order indemnification if it determines any of the following:
(i) That the director or officer is entitled to indemnification under Sections 8.01 or 8.02.
(ii) That the director or officer is fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, regardless of whether indemnification is required under Section 8.02.
(c) If the court determines under (b) that the director or officer is entitled to indemnification,
the corporation shall pay the director’s or officer’s expenses incurred to obtain the court-ordered indemnification.
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8.09 Indemnification and Allowance of Expenses of Employees and Agents. The corporation shall indemnify
an employee of the corporation who is not a director or officer of the corporation, to the extent that he or she has been successful on the merits or otherwise in defense of a proceeding, for all reasonable expenses incurred in the proceeding
if the employee was a party because he or she was an employee of the corporation. In addition, the corporation may indemnify and allow reasonable expenses of an employee or agent who is not a director or officer of the corporation to the
extent provided by the Articles of Incorporation or these Bylaws, by general or specific action of the Board of Directors or by contract.
8.10 Insurance. The corporation may purchase and maintain insurance on
behalf of an individual who is an employee, agent, director or officer of the corporation against liability asserted against or incurred by the individual in his or her capacity as an employee, agent, director or officer, regardless of whether
the corporation is required or authorized to indemnify or allow expenses to the individual against the same liability under Sections 8.01, 8.02, 8.06, 8.07 and 8.09.
(a) Pursuant to the public policy of the State of Wisconsin, the corporation shall provide
indemnification and allowance of expenses and may insure for any liability incurred in connection with a proceeding involving securities regulation described under (b) to the extent required or permitted under Sections 8.01 to 8.10.
(b) Sections 8.01 to 8.10 apply, to the extent applicable to any other proceeding, to any
proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities, securities brokers or dealers, or investment companies or investment advisers.
8.12 Liberal Construction. In order for the corporation to obtain and
retain qualified directors, officers and employees, the foregoing provisions shall be liberally administered in order to afford maximum indemnification of directors, officers and, where Section 8.09 of these Bylaws applies, employees. The
indemnification above provided for shall be granted in all applicable cases unless to do so would clearly contravene law, controlling precedent or public policy.
8.13 Amendment or Repeal; Interpretation. The provisions of this Article 8 shall constitute a contract between
the corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the corporation (whether before or after the adoption of these bylaws), in consideration of such person’s
performance of such services, and pursuant to this Article 8 the corporation intends to be legally bound to each such current or former director or officer of the corporation. With respect to current and former directors and officers of the
corporation, the rights conferred under this Article 8 are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of these bylaws. With respect to any directors or
officers of the corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully,
immediately upon such director or officer commencing service as a director or officer of the corporation. Any repeal or modification of the foregoing provisions of this Article 8 shall not adversely affect any right or protection (i)
hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the
corporation in effect prior to the time of such repeal or modification.
(a) “Corporation” means this corporation and any domestic or foreign predecessor of this
corporation where the predecessor corporation’s existence ceased upon the consummation of a merger or other transaction.
(b) “Director or officer” means any of the following:
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(i) An individual who is or was a director or officer of this corporation.
(ii) An individual who, while a director or officer of this corporation, is or was serving at the
corporation’s request as a director, officer, partner, trustee, member of any governing or decision-making committee, employee or agent of another corporation or foreign corporation, partnership, joint venture, trust or other enterprise.
(iii) An individual who, while a director or officer of this corporation, is or was serving an
employee benefit plan because his or her duties to the corporation also impose duties on, or otherwise involve services by, the person to the plan or to participants in or beneficiaries of the plan.
(iv) Unless the context requires otherwise, the estate or personal representative of a director or
officer.
For purposes of this Article, it shall be conclusively presumed that any director or officer serving as a director, officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of an affiliate shall be so serving at the request of the corporation.
(c) “Expenses” include fees, costs, charges, disbursements, attorney fees and other expenses
incurred in connection with a proceeding.
(d) “Liability” includes the obligation to pay a judgment, settlement, forfeiture or fine,
including an excise tax assessed with respect to an employee benefit plan, plus applicable court costs, fees and surcharges and reasonable expenses.
(e) “Party” includes an individual who was or is, or who is threatened to be made, a named
defendant or respondent in a proceeding.
(f) “Proceeding” means any threatened, pending or completed civil, criminal, administrative or
investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the corporation or by any other person.
9.01 Corporate Seal. The corporate seal shall be a round metallic disc, with
the words “MODINE MANUFACTURING COMPANY, Wisconsin” around the circumference, and the words “CORPORATE SEAL” in the center. If a facsimile or printed seal is used on stock certificates, it shall be similar in content and design to the above.
9.02 Fiscal Year. The fiscal year of the corporation shall begin on the
first day of April in each year, and end on the thirty-first day of March in the following year.
9.03 Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or exercise or deliver any instrument in the name of and on behalf of the corporation, and such authorization may be general or confined to specific instances.
9.04 Loans. No loans shall be contracted on behalf of the corporation and
no evidences of indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances.
9.05 Checks, Drafts, Etc. All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
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9.06 Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time
to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of the Board of Directors.
10.01 Amendments. These Bylaws may be amended, repealed or altered in whole
or in part by the affirmative vote of not less than two third (2/3) of the shares of the corporation entitled to vote thereon, or by the affirmative vote of not less than two-thirds (2/3) of the full Board of Directors of the corporation, at
any regular meeting of the stockholders or of the Board of Directors, or any special meeting of the stockholders or Board of Directors, provided that such action has been specified in the notice of any such meeting.
10.02 Implied Amendments and Other Amendment Provisions. Any action taken or
authorized by the stockholders or by the Board of Directors, which would be inconsistent with the Bylaws then in effect but is taken or authorized by a vote that would be sufficient to amend the Bylaws so that the Bylaws would be consistent
with such action, shall be given the same effect as though the Bylaws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.
If authorized by the Articles of Incorporation, the stockholders may adopt or amend a Bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for stockholders or
voting groups of stockholders than otherwise is provided in the Wisconsin Business Corporation Law. The adoption or amendment of a Bylaw that adds, changes or deletes a greater or lower quorum requirement or a greater voting requirement for
stockholders must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect.
A Bylaw adopted by the stockholders shall not be amended, repealed or readopted by the Board of Directors if the Bylaw so adopted so provides. A Bylaw adopted or amended by the stockholders
that fixes a greater or lower quorum requirement or a greater voting requirement for the Board of Directors than otherwise is provided in the Wisconsin Business Corporation Law may not be amended or repealed by the Board of Directors unless the
Bylaw expressly provides that it may be amended or repealed by a specified vote of the Board of Directors. Action by the Board of Directors to adopt or amend a Bylaw that changes the quorum or voting requirement for the Board of Directors must
meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect, unless a different voting requirement is specified as provided in the preceding sentence. A Bylaw
that fixes a greater or lower quorum requirement or a greater voting requirement for stockholders or voting groups of stockholders than otherwise is provided in the Wisconsin Business Corporation Law may not be adopted, amended or repealed by
the Board of Directors.
11.01 Emergency Bylaws. Unless the Articles of Incorporation provide
otherwise, the following provisions of this Article 11 shall be effective during an “Emergency,” which is defined as a catastrophic event that prevents a quorum of the corporation’s directors from being readily assembled.
11.02 Notice of Board Meetings. During an Emergency, any one member of the
Board of Directors or any one of the following officers: Chief Executive Officer, President, any Vice President, Secretary or Treasurer, may call a meeting of the Board of Directors. Notice of such meeting need be given only to those directors
whom it is practicable to reach, and may be given in any practical manner, including by publication or radio. Such notice shall be given at least six hours prior to commencement of the meeting.
11.03 Temporary Directors and Quorum. One or more officers of the corporation
present at the Emergency meeting of the Board of Directors, as is necessary to achieve a quorum, shall be considered to be directors for the meeting, and shall so serve in order of rank, and within the same rank, in order of seniority. In the
event that less than a quorum of the directors are present (including any officers who are to serve as directors for the meeting), those directors present (including the officers serving as directors) shall constitute a quorum.
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11.04 Actions Permitted To Be Taken. The Board of Directors as constituted in Section 11.03, and after
notice as set forth in Section 11.02 may:
(a) Officers’ Powers. Prescribe emergency powers to any officers of the corporation;
(b) Delegation of Any Power. Delegate to any officer or director, any of the powers of the Board
of Directors;
(c) Lines of Succession. Designate lines of succession of officers and agents, in the event that
any of them are unable to discharge their duties;
(d) Relocate Principal Place of Business. Relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
(e) All Other Action. Take any and all other action, convenient, helpful, or necessary to carry
on the business of the corporation.
Corporate action taken in good faith in accordance with the Emergency Bylaws binds the corporation and may not be used to impose liability on any of the corporation’s directors, officers,
employees or agents.
(a) Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding
brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or agent of the corporation to the corporation or the corporation’s stockholders, (iii)
any action asserting a claim arising pursuant to any provision of the Wisconsin Business Corporation Law or the corporation’s Articles of Incorporation or these Bylaws (as either may be amended from time to time), or (iv) any action
asserting a claim governed by the internal affairs doctrine shall be the Circuit Court for Racine County, Wisconsin or U.S. District Court for the Eastern District of Wisconsin – Milwaukee Division (the “Wisconsin Courts”). If any action
the subject matter of which is within the scope of the immediately preceding sentence is filed in a court other than the Wisconsin Courts (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have notice
of and consented to (x) the personal jurisdiction of the state and federal courts in the State of Wisconsin in connection with any action brought in any such court to enforce the provisions of the immediately preceding sentence and (y)
having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
(b) Unless the corporation consents in writing to the selection of an alternative forum and subject to Section 12.01(a), the sole and exclusive forum for the
resolution of any complaint asserting a cause or causes of action arising under the Securities Act of 1933, as amended, including all causes of action asserted against any defendant to such complaint, shall be the federal district courts of
the United States of America.
(c) Any person or entity purchasing or otherwise acquiring any interest in any security of the corporation shall be deemed to have notice of and consented to this
Article 12. This Article 12 is intended to benefit and may be enforced by the corporation, its officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional or entity whose profession
gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering. Notwithstanding the foregoing, the provisions of this Article 12 shall not apply to suits
brought to enforce any liability or duty created by the Exchange Act, as amended, or any other claim for which the federal courts of the United States have exclusive jurisdiction.
(d) If any provision or provisions of this Article 12 shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever,
(i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article 12 (including, without limitation, each portion of any paragraph of this Article 12 containing any
such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) the application of such provision to other persons or
entities and circumstances shall not in any way be affected or impaired thereby.
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EXECUTION VERSION
Exhibit 4.1
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED
NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
This Fourth Amendment dated as of November 21, 2022 (this “Fourth Amendment”) to the Second Amended and Restated Note Purchase and Private Shelf Agreement
dated as of August 6, 2019, as amended by the First Amendment dated as of January 31, 2020, Second Amendment dated as of May 19, 2020 and Third Amendment dated as of May 18, 2021 (as amended, the “Note Agreement”)
is between Modine Manufacturing Company, a Wisconsin corporation (the “Company”), PGIM, Inc. (“Prudential”) and each holder of the Series A Notes, the Series B Notes and
the Series C Notes (collectively, the “Noteholders”).
RECITALS:
A. The Company, Prudential and the Noteholders are parties to the Note Agreement pursuant to which the Notes (as defined therein) are outstanding.
B. The Company has requested, among other things, that Prudential and the Noteholders agree to certain amendments to the Note Agreement, as set forth below.
C. Subject to the terms and conditions set forth herein, the Noteholders are willing to amend the Note Agreement in the respects, but only in the respects, set forth in this Fourth Amendment.
D. Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Agreement, as amended hereby, unless herein defined or the context shall otherwise require.
E. All requirements of law have been fully complied with and all other acts and things necessary to make this Fourth 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 3 hereof), the Company and the Noteholders agree that the Note Agreement is amended as follows:
1.1 Section 9.12(a) of the Note Agreement is hereby amended and restated in its entirety to read as follows:
(a) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Company or any of its Subsidiaries in respect of any Prepayment Event, the
Company will, and will cause each of its Subsidiaries to, within five Business Days after such Net Proceeds are received, prepay the Term Loans (as defined in the Credit Agreement) pursuant to Section 2.11(f) of the Credit Agreement in an aggregate
amount equal to 100% of such Net Proceeds provided that, in the case of any event described in clause (a) or (b) of the definition of the term “Prepayment Event”, if the Company or its relevant Subsidiaries intend to apply the Net Proceeds
from such event (or a portion thereof specified in such certificate), within 365 days after receipt of such Net Proceeds, to acquire, replace, rebuild, maintain, develop, construct, improve, upgrade or repair real property, equipment or other
tangible assets (excluding inventory) to be used in the business of the Company and/or its Subsidiaries, to make Permitted Acquisitions and/or other permitted Investments (excluding cash and Cash Equivalent Investments and Investments in the Company
and its Subsidiaries), to reimburse the cost of any of the foregoing and/or, in the case of any Net Proceeds received by a Foreign Subsidiary, to make a repayment under any local credit facility constituting Debt for borrowed money, and no Default or
Event of Default has occurred and is continuing, then no prepayment of such Term Loans shall be required in respect of the Net Proceeds; provided further that to the extent of any such Net Proceeds therefrom that have not been so applied by
the end of such 365-day period (or within a period of 180 days thereafter if by the end of such initial 365 day period the Company or one or more Subsidiaries shall have entered into an agreement with an unaffiliated third party to acquire such
assets with such Net Proceeds), at which time the Company shall prepay the Term Loans in an amount equal to the Net Proceeds that have not been so applied; provided further that, no such prepayment shall be required as to a Prepayment Event
unless the sum of the Net Proceeds received in respect of such Prepayment Event, plus the sum of Net Proceeds received in respect of other Prepayment Events during the same Fiscal Year, in each case excluding Net Proceeds not subject to prepayment as
a result of the foregoing re-investment exception, exceeds $7,500,000. Notwithstanding the foregoing, no such prepayment of the Term Loans shall be required to the extent waived in accordance with the Credit Agreement.
1.2 Section 10.2 of the Note Agreement is hereby amended as follows:
(a) Clause (c) of Section 10.2 is hereby amended and restated in its entirety to read as follows:
(c) the Obligations (as defined in the Credit Agreement as in effect on the Fourth Amendment Effective Date); provided that the aggregate principal amount of the Debt thereunder
in respect of Loans and Letters of Credit (in each case as defined in the Credit Agreement) shall not at any time exceed (i) the sum of $450,000,000 and €40,000,000 plus (ii) additional Debt in respect of Loans and Letters of Credit under the Credit
Agreement, whether pursuant to an increase in the commitments under Section 2.20 of the Credit Agreement or otherwise; provided that with respect to any increase under this clause (ii) (1) the aggregate principal amount of such additional Debt
shall not at any time exceed $275,000,000 and (2) the holders of the Notes shall have received copies of the material documents evidencing such increase;
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(b) Clause (e) of Section 10.2 is hereby amended and restated in its entirety to read as follows:
(e) Receivables/Factoring/SCF Indebtedness not to exceed the greater of (i) $125,000,000 and (ii) 8.75% of the consolidated total assets of the Company and its Subsidiaries
(determined as of the last day of the most recent fiscal quarter for which financial statements shall have been delivered pursuant to Section 7.1(a) or Section 7.1(b))
at the time of incurrence thereof in aggregate principal amount outstanding, if no Default or Event of Default exists at the time of, or would be caused by, the incurrence of any such Debt;
(c) Clause (h) of Section 10.2 is hereby amended and restated in its entirety to read as follows:
(h) Debt of Foreign Subsidiaries, provided that (i) the aggregate outstanding amount of all Debt of all Foreign Subsidiaries (excluding any Debt permitted under any other
subsection of this Section 10.2, Debt under Swap Contracts, and Banking Services Obligations (as such term is defined in the Credit Agreement as in effect on the Fourth Amendment Effective Date)) shall not
exceed, at the time of incurrence thereof, the greater of (1) $125,000,000 and (2) 8.75% of the consolidated total assets of the Company and its Subsidiaries (determined as of the last day of the most recent fiscal quarter for which financial
statements shall have been delivered pursuant to Section 7.1(a) or Section 7.1(b)), and (ii) no Default or Event of Default exists at the time of, or would be caused
by, the incurrence of any such Debt;
(d) Clause (j) of Section 10.2 is hereby amended and restated in its entirety to read as follows:
(j) Debt consisting of Guaranties of the Company with respect to Debt of its Subsidiaries permitted under this Section 10.2, provided
that the aggregate maximum amount of such Guaranties with respect to Debt of its Subsidiaries (other than (x) Guaranties with respect to Subsidiary Guarantors that are Domestic Subsidiaries and (y) Guaranties with respect to the Modine Europe
Comfort Letter) permitted under this Section 10.2(j) (based on the maximum amount of such Guaranties, net of any cash collateral or letter of credit provided with respect to such Guaranties or the
related Debt) shall not exceed, at the time of incurrence thereof, the greater of (i) $150,000,000 and (ii) 10.0% of the consolidated total assets of the Company and its Subsidiaries (determined as of the last day of the most recent fiscal quarter
for which financial statements shall have been delivered pursuant to Section 7.1(a) or Section 7.1(b));
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(e) Clause (k) of Section 10.2 is hereby amended and restated in its entirety to read as follows:
(k) Debt under the following Sale and Leaseback Transactions: (i) Sale and Leaseback Transactions existing as of the Fourth Amendment Effective Date, (ii) the Sale and
Leaseback Transaction with respect to the Company’s facility located in Kottingbrunn, Austria and (iii) other Sale and Leaseback Transactions entered into after the Fourth Amendment Effective Date where the liability, at the time of incurrence
thereof, in the aggregate, is less than the greater of (1) $100,000,000 and (2) 7.0% of the consolidated total assets of the Company and its Subsidiaries (determined as of the last day of the most recent fiscal quarter for which financial statements
shall have been delivered pursuant to Section 7.1(a) or Section 7.1(b)), in each case, to the extent the incurrence of such Debt pursuant to this clause (k) (with the
amount thereof determined by aggregating the present value, applying an appropriate discount rate, as reasonably determined by the Company, from the date on which each fixed lease payment is due under such lease to such date of determination) would
be permitted by the last paragraph of this Section 10.2;
(f) Clause (l) of Section 10.2 is hereby amended and restated in its entirety to read as follows:
(l) Debt (including obligations relating to build-to-suit leases) existing or committed or anticipated in the future to be outstanding on the Fourth Amendment Effective Date
(provided, that any Debt incurred pursuant to this clause (l) in respect of any Debt with an aggregate principal amount outstanding and/or committed thereunder that exceeds $5,000,000 or any Debt that is anticipated on the Fourth Amendment Effective
Date to be outstanding in the future shall, in each such case, be set forth on Schedule 10.2); provided, that any Debt outstanding pursuant to this clause (l) which is owed by the Company or a Subsidiary
Guarantor to any Subsidiary that is neither a Bank Borrower nor a Subsidiary Guarantor shall be subordinated in right of payment to the Notes on customary terms;
(g) The final proviso of Section 10.2 is hereby amended and restated in its entirety to read as follows:
Notwithstanding anything herein to the contrary, the Company will not permit the aggregate principal amount of the Debt permitted pursuant to clauses (k), (q), (y) and (cc) of this Section 10.2 (and, in each case,extensions, refinancings, renewals, substitutions or replacements thereof pursuant to clauses (ee) and (ff) of this Section 10.2)
immediately after giving effect to the incurrence, creation or assumption of such Debt and the use of proceeds thereof, together with the aggregate principal amount of any other Debt outstanding pursuant to such clauses, to exceed, at the time of the
incurrence thereof, the greater of (i) $185,000,000 or (ii) 15% of Consolidated Tangible Assets (determined as of the last day of the most recent fiscal quarter for which financial statements shall have been delivered pursuant to Section 7.1(a) or Section 7.1(b)) when incurred, created or assumed.
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1.3 Section 10.4 of the Note Agreement is hereby amended as follows:
(a) Clause (i) of Section 10.4 is hereby amended and restated in its entirety to read as follows:
(i) any Lien existing on any property or asset prior to the acquisition thereof by the Company or any Subsidiary or existing on any property or asset of any Person that becomes a
Subsidiary after the Fourth Amendment Effective Date prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as
the case may be, (ii) such Lien shall (A) apply only to the property so acquired, products and proceeds thereof and, in the case of property acquired in connection with an acquisition, after-acquired property that is affixed or incorporated into such
property and/or that otherwise constitutes after-acquired property that would be required to be subjected to such Lien pursuant to the collateral grant clause and/or other terms of the related secured obligations as in effect immediately prior to the
acquisition and (B) not apply to any other property or assets of the Company or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as
the case may be, and amendments, modifications, extensions, refinancings, renewals and replacements thereof to the extent they do not increase the outstanding principal amount thereof;
(b) Clause (k) of Section 10.4 is hereby amended and restated in its entirety to read as follows:
(k) any Lien on any property or asset of the Company or any Subsidiary (including Liens relating to build-to-suit leases) existing, or applicable to committed obligations, or anticipated to
exist in the future, on the Fourth Amendment Effective Date and set forth in Schedule 10.4, provided that (i) such Lien shall not apply to any other property or asset of the Company or any Subsidiary (other
than (A) after-acquired property that is affixed or incorporated into the property or asset covered by such Lien and/or that otherwise constitutes after-acquired property that would be required to be subjected to such Lien pursuant to the
collateral grant clause and/or other terms of the related secured obligations as in effect on the Fourth Amendment Effective Date and (B) proceeds and products thereof), and (ii) such Lien shall secure only those obligations which it secures (or
is intended to secure) on the Fourth Amendment Effective Date and extensions, renewals and replacements thereof to the extent that they do not increase the outstanding principal amount thereof;
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1.4 Section 10.6 of the Note Agreement is hereby amended as follows:
(a) Section 10.6(i) is hereby amended and restated in its entirety to read as follows:
(i) 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 (i) during any Fiscal Year do not constitute a Substantial Portion of the property of the Company and its Subsidiaries, provided that, upon giving effect to any such lease, sale or other disposition, no Default or Event of
Default shall have occurred and be continuing;
(b) Section 10.6(aa) is hereby amended to include “and” immediately following the semicolon.
(c) Section 10.6(bb) is hereby amended to delete both the “;” and “and” at the end of the clause and to substitute a “.” immediately following “business”.
(d) Section 10.6(cc) is hereby deleted in its entirety.
1.5 Section 10.7 of the Note Agreement is hereby amended by (i) deleting the “and” immediately following the semicolon at the end of clause (k), (ii) deleting the “.” at the end of clause (l)
and in substitution inserting “; and” and (iii) inserting a new clause (m) to read as follows:
(m) any other transactions with Affiliates not to exceed an outstanding aggregate amount of $10,000,000.
1.6 Section 10.11(f) of the Note Agreement is hereby amended and restated in its entirety to read as follows:
(f) other loans and advances made in the ordinary course of business or otherwise to facilitate transactions permitted under this Agreement; provided that (i) such loans and
advances (other than any loans or advances pursuant to the Modine Europe Comfort Letter) shall not exceed, at the time made, the greater of $150,000,000 and 10.0% of the consolidated total assets of the Company and its Subsidiaries (determined as of
the last day of the most recent fiscal quarter for which financial statements shall have been delivered pursuant to Section 7.1(a) or Section 7.1(b)) in the aggregate;
(ii) not more than $125,000,000 of such $150,000,000/10% basket set forth in this clause (f) may be owing by Foreign Subsidiaries that do not have 65% or more of their Equity Interests pledged under Section 9.9(a)(i),
and (iii) upon giving effect to the making of any such loans or advances no Default or Event of Default shall have occurred and be continuing. For purposes hereof, Foreign Subsidiaries organized under the laws of India or China shall be deemed to be
Foreign Subsidiaries that do not have 65% or more of their Equity Interests pledged under Section 9.9(a)(i);
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1.7 Section 10.12 of the Note Agreement is hereby amended as follows:
(a) Clause (l) of Section 10.12 is hereby amended and restated in its entirety to read as follows:
(l) Investments that are existing or committed, or anticipated to exist in the future, as of the Fourth Amendment Effective Date (provided, that any
such Investments in any Person that, in the aggregate as to such Person, exceed $5,000,000 and/or any such Investments in any Person that are anticipated as of the Fourth Amendment Effective Date to exist in the future, shall, in each such case, be
set forth on Schedule 10.12 or otherwise disclosed in writing to Prudential prior to the Fourth Amendment Effective Date), and any extensions, renewals, replacements or reinvestments of Investments permitted
by this clause (l), so long as the aggregate amount of all Investments pursuant to this clause (l) is not increased at any time above the amount of such Investment existing or committed as of the Fourth Amendment Effective Date (other than pursuant
to an increase as required by the terms of any such Investment as in existence as of the Fourth Amendment Effective Date, or as otherwise permitted by this Section 10.12);
(b) Clause (y) of Section 10.12 is hereby amended by amending and restating the final clause of the paragraph as follows:
provided that the foregoing dollar limitation shall not apply if the pro forma Leverage Ratio upon giving effect (including pro forma effect) to such Investment or Acquisition is less than or equal
to a ratio equal to 3.00 to 1.00.
1.8 Section 10.14 of the Note Agreement is hereby amended to replace each reference to “after” with “upon”.
1.9 Section 10.15(c) of the Note Agreement is hereby amended and restated in its entirety to read as follows:
(c) imposed under the Credit Agreement (or the Loan Documents as defined in the Credit
Agreement) as in effect on the Fourth Amendment Effective Date or that constitutes a customary term (as determined in good faith by the Company) of unsecured Debt permitted to be incurred hereunder;
1.10 Section 11 of the Note Agreement is hereby amended as follows:
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(a) Clause (d) of Section 11 is hereby amended and restated in its entirety to read as follows:
(d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 11(a),
(b) and (c)) or any Transaction Document and such default is not remedied within 30 days after the Company receives written notice of such default from any holder of a
Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 11(d)); or
(b) Clause (i) of Section 11 is hereby amended and restated in its entirety to read as follows:
(i) a final judgment or judgments for the payment of money aggregating in excess of $40,000,000 (to the extent not covered by indemnification or independent third-party
insurance as to which the insurer does not dispute coverage) are rendered against one or more of the Company and its Subsidiaries and which judgments are not, within 45 days after entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 45 days after the expiration of such stay; or
(c) Clause (l) of Section 11 is hereby amended and restated in its entirety to read as follows:
(l) any Collateral Document shall for any reason (except to the extent any loss of perfection or priority results solely from (i) the Collateral Agent no longer having possession of certificates actually delivered to it representing
equity interests pledged under any Transaction Document or (ii) a UCC filing having lapsed because a UCC continuation statement was not filed in a timely manner) fail to create a valid and perfected Lien, subject to the Intercreditor Agreement, in
any Collateral purported to be covered thereby, except as permitted by the terms of this Agreement or any Collateral Document.
1.11 Section 12.2 of the Note Agreement is hereby amended and restated in its entirety to read as follows:
Section 12.2 Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may
proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein, in any Note or in any other Transaction Document
or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
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In addition to any other rights and remedies granted to the Collateral Agent and any holder of the Notes in the Transaction Documents, the Collateral Agent on behalf of the holders
of the Notes may, in accordance with and subject to the terms and conditions of the Intercreditor Agreement, exercise all rights and remedies of a secured party under the UCC or any other applicable law. Without limiting the generality of the
foregoing, the Collateral Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below and any notice or demand expressly required or provided for
in this Agreement or any other Transaction Document) to or upon the Company or its Subsidiaries or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived by the Company on behalf of itself and its
Subsidiaries), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, or consent to the use by the Company or its Subsidiaries of any cash collateral arising in respect of the
Collateral on such terms as the Required Noteholders (as defined in the Intercreditor Agreement) and Collateral Agent deem reasonable, and/or may forthwith sell, lease, assign give an option or options to purchase or otherwise dispose of and deliver,
or acquire by credit bid on behalf of the Secured Parties, the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the
Collateral Agent or any of the holders of the Notes or elsewhere, upon such terms and conditions as the Required Noteholders may deem advisable and at such prices as the Required Noteholders may deem best, for cash or on credit or for future
delivery, all without assumption of any credit risk. The Collateral Agent or any holder of the Notes shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of redemption in the Company or its Subsidiaries, which right or equity is hereby waived and released by the Company on behalf of itself and its Subsidiaries. The Company
further agrees on behalf of itself and its Subsidiaries, at the Required Noteholders’ or Collateral Agent’s request, to assemble the Collateral and make it available to the Required Noteholders and Collateral Agent at places which the Required
Noteholders and Collateral Agent shall reasonably select, whether at the premises of the Company or its Subsidiaries or elsewhere. The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 12.2, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any other way relating to the Collateral or the
rights of the Collateral Agent and the holders of the Notes hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, in such order as the Required Noteholders and Collateral
Agent may elect, and only after such application and after the payment by the holders of the Notes or the Collateral Agent of any other amount required by any provision of law, including Section 9-615(a)(3) of the New York Uniform Commercial Code,
need the holders of the Notes or the Collateral Agent account for the surplus, if any, to the Company or its Subsidiaries. To the extent permitted by applicable law, the Company on behalf of itself and its Subsidiaries waives all Liabilities it may
acquire against the Collateral Agent or any holder of the Notes arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other disposition.
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1.12 Section 22.3(i) of the Note Agreement is hereby amended and restated in its entirety as follows:
(i) Accounting Terms. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the holders of Notes that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the
date hereof in GAAP or in the application thereof on the operation of such provision (or if the holders of Notes notify the Company that Prudential or the Required Holders request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the application thereof, then (A) such provision shall be interpreted on the basis of GAAP as in effect and applied without giving effect to such change and (B) the Company
shall provide to the holders of Notes financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after
giving effect to such change in GAAP, until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (i) all terms of an accounting or financial nature used herein
shall be construed, and all computations of amounts and ratios referred to herein (including computations in respect of compliance with Sections 10.1 and 10.3) shall be made (a) without giving effect to any election under Financial Accounting
Standards Board Accounting Standards Codification 825 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Debt or other liabilities of the Company or any Subsidiary at “fair
value”, as defined therein and (b) without giving effect to any treatment of Debt under Accounting Standards Codification 470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or
effect) to value any such Debt in a reduced or bifurcated manner as described therein, and such Debt shall at all times be valued at the full stated principal amount thereof, provided, that, in the event the Company makes any such election or clause
(b) would be applicable to the financing statements of the Company and its Subsidiaries in accordance with GAAP, the Company shall provide to the holders of the Notes financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between calculations of such covenants made before and after giving effect to such election or application and (ii) other than for purposes of the preparation and delivery of financial
statements as contemplated by this Agreement, any obligations relating to a lease that was accounted for by such Person as an Operating Lease as of the Fourth Amendment Effective Date and any similar lease entered into after the Fourth Amendment
Effective Date by such Person (or any subsidiary or Affiliate of such Person) shall be accounted for as obligations relating to an Operating Lease and not as Capitalized Lease Obligations.
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1.13 Schedule B to the Note Agreement is hereby amended by deleting the following definition:
“Dakota Assets”
“Dakota Disposition”
“Modine Austria Comfort Letters”
“Second Amendment Effective Date”
“Third Amendment Effective Date”
1.14 Schedule B to the Note Agreement is hereby amended by adding, or amending and restating, as applicable, the following definitions:
“Capital Lease” of a Person means any lease of property by such Person as lessee which would be, in accordance with GAAP subject to Section 22.3(i), recorded as a finance lease on a balance sheet of such Person (excluding, for the avoidance of doubt, Operating Leases, whether or not capitalized on the balance sheet).
“Consolidated EBITDA” means, with reference to any period, Consolidated
Net Income of the Company (plus, to the extent not included in Consolidated Net Income, all cash dividends and cash distributions received by the Company or any Subsidiary from any Person in which the Company or any Subsidiary has made an
Investment), adjusted to exclude the following items (a) through and including (n) (without duplication) to the extent taken into account in determining Consolidated Net Income and adjusted (without duplication) on a pro forma basis as contemplated
by the following item (m), all calculated for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP:
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(a) Consolidated Interest Expense and Receivables Transaction Financing Costs,
(b) expense for federal, state, local and foreign income and franchise taxes paid or accrued,
(c) depreciation and amortization,
(d) non-cash stock based compensation expense,
(e) non-recurring and/or unusual gains or expenses, costs, losses and charges; provided that the aggregate cash amount added back pursuant to this clause (e) shall not,
when aggregated with the Non-S-X Adjustment Amount defined in clause (m) below, exceed the greater of $25,000,000 and fifteen percent (15%) of Consolidated EBITDA for such period prior to giving effect to such cash amount and the Non-S-X Adjustment
Amount for such period,
(f) any other non-cash charges, losses, costs, expenses, income, gains or other non-cash items (excluding the accrual of revenue in the ordinary course and any non-cash
gains or other items increasing Consolidated EBITDA which represent the reversal of any accrual of, or reserve for, anticipated cash charges in any prior period that reduced Consolidated EBITDA in an earlier period and any items for which cash was
received in any prior period), it being understood that any non-cash charges, losses, costs, expenses or other items deducted in the calculation of Consolidated Net Income and added back in the determination of Consolidated EBITDA for a prior period
shall be deducted in the calculation of Consolidated EBITDA during any subsequent period to the extent such items become cash charges during such subsequent period,
(g) any net after-tax loss from disposed, abandoned, transferred, closed or discontinued operations,
(h) costs, expenses, charges and losses with respect to liability or casualty and condemnation events, takings under power of eminent domain and similar events or business
interruption, in each case to the extent covered by insurance and actually reimbursed or with respect to which the Company has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer, and
only to the extent that such amount is (i) not denied by the applicable carrier in writing within 180 days (with a deduction for any amount so added back and then denied within such 180-day period) and (ii) in fact reimbursed within 365 days of the
date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days),
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(i) the Transaction Costs and any other out of pocket fees, costs and expenses incurred during such period in connection with (A) any issuance of Debt permitted hereunder,
the amendment, amendment and restatement, refinancing, retirement or repayment of any Debt or any issuance of equity, (B) any Permitted Acquisitions, (C) any divestiture permitted hereunder and (D) any Investment permitted hereunder,
(j) Restructuring Charges in an amount not to exceed
(i) $25,000,000 in any Fiscal Year or (ii) $75,000,000 for all times after the Fourth Amendment Effective Date,
(k) Make-Whole Amounts under this Agreement,
(l) fees costs and expenses relating to, and awards and settlement payments in respect of, litigation, arbitration and/or other resolutions of legal disputes (provided that
the aggregate amount permitted to be added back for any such loss pursuant to this clause (l) shall not exceed $10,000,000 during such period),
(m) with respect to each Permitted Acquisition, demonstrable cost savings and cost synergies (in each case, net of continued associated expenses) that, as of the date of
calculation with respect to such period, are anticipated by the Company in good faith to be realized within 12 months following such Permitted Acquisition, net of the amount of any such cost savings and cost synergies otherwise included, or added
back, pursuant to this definition, provided that (1) the amount of such cost savings and synergies under this clause (m) relating to any Permitted Acquisition may not exceed the greater of $25 million and fifteen percent (15%) of the EBITDA
(determined with respect to the target of such Permitted Acquisition, determined on a basis consistent with Consolidated EBITDA as defined herein) for such period (as calculated without giving effect to this clause (m)) unless approved by the
Required Holders, (2) the amount of such cost savings and cost synergies that do not comply with Article 11 of Regulation S-X (the “Non-S-X Adjustment Amount”), for any four quarter period added back under
this clause (l) may not, when aggregated with the amount of any increase to Consolidated Net Income pursuant to clause (e) above, exceed the greater of $25,000,000 and fifteen percent (15%) of Consolidated EBITDA for such period (as calculated
without giving effect to any increase pursuant to clause (e) above and the Non-S-X Adjustment Amount), (3) such cost savings and cost synergies have been reasonably detailed by the Company in the applicable compliance certificate required by Section 7.2(b), and (4) if any cost savings or cost synergies included in any pro forma calculations based on the anticipation that such cost synergies or cost savings will be achieved within such 12- month period
shall at any time cease to be reasonably anticipated by the Company to be so achieved, then on and after such time any pro forma calculations required to be made under this Agreement shall not reflect such cost synergies or cost savings, all
determined in accordance with GAAP for such period; and
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(n) Restructuring Charges solely in connection with, and directly related to, the exit of the automotive business segment, the details of which Restructuring Charges were
disclosed by the Company to Prudential and the holders of Notes prior to the Fourth Amendment Effective Date, in an amount not to exceed (i) $25,000,000 in any Fiscal Year or (ii) $55,000,000 for all times after the Fourth Amendment Effective Date.
For purposes hereof, “Consolidated EBITDA” shall be adjusted to give effect to each Acquisition, and any related Debt and related interest expense, and each
disposition of any Subsidiary or of all or substantially all of the assets of any Subsidiary or of greater than 50% of the Equity Interests of any Subsidiary (including any Debt repaid in connection therewith and related interest expense), in each
case that occurred during the applicable period as if such Acquisition or disposition had occurred at the inception of such period.
“Credit Agreement” means the Fifth Amended and Restated Credit Agreement,
dated as of October 12, 2022, among the Company, the Foreign Subsidiaries named therein, the Bank Agent and the Banks, and as further amended, restated, supplemented, otherwise modified, refinanced or replaced from time to time.
“Debt” of any Person means, without duplication, such Person’s (i) obligations for borrowed money and all mandatory obligations under any Disqualified Stock, (ii) obligations representing the deferred
purchase price of property or services (other than accounts payable and accrued expenses, in each case, arising in the ordinary course of such Person’s business), (iii) obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other similar instruments (other than with respect to accounts payable arising in the ordinary
course of such Person’s business), (v) obligations of such Person to purchase securities or other property arising out of or in connection with the sale of the same or substantially similar securities or property, (vi) Capitalized Lease
Obligations, (vii) obligations in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money),
(viii) Guaranties in respect of Debt of any other Person, (ix) Off-Balance Sheet Liabilities, (x) Receivables Transaction Attributed Indebtedness, (xi) Supply Chain Finance Outstanding Obligations and (xii) obligations under Swap Contracts. In
the event any of the foregoing Debt is limited to recourse against a particular asset or assets of such Person, the amount of the corresponding Debt shall be equal to the lesser of the amount of such Debt and the fair market value of such asset or
assets at the date of determination of the amount of such Debt. Notwithstanding the foregoing, the term “Debt” shall exclude (1) purchase price adjustments, earnouts, holdbacks or deferred payments of a similar nature (including deferred
compensation representing consideration or other contingent obligations incurred in connection with an Acquisition), except in each case to the extent that such amount payable is, or becomes, reasonably determinable and contingencies have been
resolved, (2) Debt that has been defeased, discharged and/or redeemed in accordance with its terms, provided that funds in an amount equal to all such Debt (including interest and any other amounts required to be paid to the holders thereof in
order to give effect to such defeasance, discharge and/or redemption) have been irrevocably deposited with a trustee for the benefit of the relevant holders of such Debt, (3) accrued pension cost, employee benefits and postretirement health care
obligations arising in the ordinary course of business, (4) obligations in respect of customer advances received and held in the ordinary course of business or (5) interest, fees, make-whole amounts, premium, charges or expenses, if any, relating
to the principal amount of Debt.
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“Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (a) matures or is mandatorily redeemable (other than solely for Equity Interests that are not Disqualified Stock), pursuant to a sinking fund obligation or otherwise (except as a result
of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Notes and all other obligations under the
Transaction Documents that are accrued and payable), or (b) is redeemable at the option of the holder thereof, in whole or in part, in each case, prior to a date one year after the latest Maturity Date (as defined in the Credit Agreement) at the time
such Equity Interest is issued; provided that if such Equity Interest is issued pursuant to a plan for the benefit of employees of the Company or any Subsidiary or by any such plan to such employees, such Equity Interest shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Equity Interests” means (a) in the case of any corporation, all capital stock and any securities exchangeable for or convertible into
capital stock and any warrants, rights or other options to purchase or otherwise acquire capital stock or such securities or any other form of equity securities, (b) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (d) any other interest or
participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding, in each of the foregoing cases, (i) any agreement for the purchase of the equity
interests of a Subsidiary prior to the consummation of such purchase and (ii) any convertible Debt until such convertible Debt has been converted pursuant to the terms thereof.
“Fourth Amendment Effective Date” means November 21, 2022.
“Leverage Ratio” means, as of any date of calculation, the ratio of:
(i) the Company’s Consolidated Total Debt outstanding on such date, minus:
(a) the amount of any Cash Collateral (as defined in the Credit Agreement as in effect on the Fourth Amendment Effective Date) provided for any of the Secured
Obligations, and
(b) the amount by which the sum of 100% of the unrestricted cash of the Company and its Domestic Subsidiaries at such time that is not subject to any Lien other
than in favor of the Collateral Agent or Permitted Encumbrances plus 100% of the unrestricted cash of the Foreign Subsidiaries at such time that is not subject to any Lien other than in favor of the Collateral Agent or Permitted Encumbrances and that
is freely transferrable without restriction (which restriction has not been waived or terminated) to the United States (it being understood and agreed that “freely transferable” shall not be deemed to refer to (i) any procedures or limitations which
are solely within the control of the Company or applicable Foreign Subsidiary and which do not require the approval or consent of any other third party or Governmental Authority or (ii) in the case of cash maintained in the People's Republic of
China, the requirement to obtain approval from the State Administration of Foreign Exchange (“SAFE”) if, as of any date of determination, SAFE has not denied the then most recent approval request by the
Company or any of its Subsidiaries to repatriate such cash out of the People's Republic of China), exceeds $5,000,000, and
(c) any Off-Balance Sheet Liabilities arising from Permitted Sale and Leaseback Transactions, and
(d) up to $7,500,000, in the aggregate, of (i) Supply Chain Finance Outstanding Obligations, (ii) Off-Balance Sheet Liabilities relating to Permitted Factoring
transactions and/or (iii) Receivables Transaction Attributed Indebtedness relating to the factoring of accounts receivable and related rights and property to any Person other than the Company or any Subsidiary in the ordinary course of business, and
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(e) up to $5,000,000, in the aggregate, of outstanding undrawn contingent Letters of Credit and/or instruments serving a similar function issued or accepted by
banks and/or other financial institutions, and
(f) all Rate Management Obligations (as defined in the Credit Agreement), to
(ii) the Company’s Consolidated EBITDA for the then most recently ended four Fiscal Quarters;
provided that, at any time after the definitive agreement for any Material Acquisition shall
have been executed (or, in the case of a Material Acquisition in the form of a tender offer or similar transaction, after the offer shall have been launched) and prior to the consummation of such Material Acquisition (or termination of the
definitive documentation in respect thereof (or such later date as such debt ceases to constitute Acquisition Indebtedness as set forth in the definition of “Acquisition Indebtedness”)), any Acquisition Indebtedness (and the proceeds of such Debt)
shall be excluded from the determination of the Leverage Ratio.
“Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“Material Adverse Effect” means a material adverse effect on (a) the
business, results of operations, financial condition, assets, or properties of the Company and its Subsidiaries taken as a whole, excluding changes or effects in connection with specific events (and not general economic or industry conditions)
applicable to the Company and/or its Subsidiaries as disclosed in any Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K filed with or furnished to the SEC, in each case prior to the Fourth Amendment Effective
Date), or (b) the ability of the Company or any Subsidiary Guarantor to perform its obligations under this Agreement, the Notes or any other Transaction Document to which it is a party, or (c) the validity or enforceability of this Agreement, the
Notes, the Subsidiary Guaranty or any other Transaction Document against the Company or any Subsidiary Guarantor or the rights and remedies against the Company or any Subsidiary Guarantor thereunder.
“Material Indebtedness” means (a) Debt under the Credit Agreement and (b)
any other Debt (other than the Notes and intercompany indebtedness owing by and among the Company and/or its Subsidiaries) of the Company or any of its Subsidiaries in respect of any credit or loan facility or publicly issued or privately placed
debt issuance if the aggregate principal amount outstanding and/or committed in respect of such credit or loan facility or debt issuance exceeds $40,000,000.
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“Modine Europe Comfort Letter” means that certain Comfort Letter dated as
of November 30, 2021 made by the Company in favor of Modine Holding GmbH.
“Net Proceeds” means, with respect to any event, (a) the cash proceeds
received in respect of such event (other than from the Company or any of its Subsidiaries), including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant
to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a Sale and Leaseback Transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made as a result of such event to repay Debt (other than
Notes), including penalties and breakage, secured by such asset or otherwise subject to mandatory prepayment as a result of such event, (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves
established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next two succeeding years and that are directly attributable to such event (as determined reasonably and in
good faith by a Responsible Officer), (iv) any repatriation costs associated with the receipt by the applicable taxpayer of such proceeds, (v) any costs associated with unwinding any related Swap Contract in connection with such event and (vi) any
customer deposits required to be returned as a result of such transaction; provided, however, that the amount determined pursuant to the foregoing shall be reduced, in the case of any Net Proceeds received
by a joint venture Subsidiary, by the amount attributable to (and not available for distribution to, or for the account of, the Company or a Wholly-owned Subsidiary) noncontrolling interests in such joint venture Subsidiary owned by any Person
other than the Company or any of its Subsidiaries.
“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for
administering and enforcing. A list of OFAC Sanctions Programs may be found at https://home.treasury.gov/policy-issues/financial-sanctions/sanctions- programs-and-country-information.
“Operating Leases” of a Person means any lease of property which would
be, in accordance with GAAP subject to Section 22.3(i), recorded as an operating lease on a balance sheet of such Person.
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“Qualified Receivables Transaction” means any transaction or series of related transactions that may be entered into by the Company or any
Subsidiary pursuant to which the Company or any Subsidiary may sell, convey or otherwise transfer to a newly-formed Subsidiary or other special-purpose entity, or any other Person, any accounts, notes receivable or other financial assets and, in each
case, rights related thereto on a limited recourse basis, provided that such sale, conveyance or transfer qualifies as a sale under GAAP.
“Significant Obligations” means Debt (other than the Notes and
intercompany Debt owing by and among the Company and/or its Subsidiaries) of any one or more of the Company and its Subsidiaries in an aggregate outstanding principal amount exceeding $40,000,000. For purposes of determining Significant
Obligations, the “principal amount” of the Swap Contracts at any time shall be determined based on the Net Mark-to-Market Exposure of the Company or any Subsidiary.
“Substantial Portion” means, with respect to the property of the Company
and its Subsidiaries, property (excluding intercompany items) which represents more than 10% of the consolidated total assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its
Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made (or if financial statements have not been delivered hereunder for that month which begins the twelve-month period, then the
financial statements delivered hereunder for the quarter ending immediately prior to that month).
“UCC” means the Uniform Commercial Code as in effect from time to time in
the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.
1.15 Schedules 10.2, 10.4 and 10.12 to the Note Agreement are hereby amended and restated in their entirety to read as set forth in Exhibit A attached hereto.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
2.1 To induce Prudential and the Noteholders to execute and deliver this Fourth Amendment (which representations shall survive the execution and delivery of this Fourth Amendment), the
Company and each Subsidiary Guarantor represents and warrants to the Noteholders that:
(a) this Fourth Amendment has been duly authorized, executed and delivered by it and this Fourth Amendment constitutes the legal, valid and binding obligation, contract and
agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws and equitable principles relating to or limiting creditors’
rights generally;
- 18-
(b) the Note Agreement, as amended by this Fourth Amendment, constitutes the legal, valid and binding obligations, contracts and agreements of the Company enforceable against
it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws and equitable principles relating to or limiting creditors’ rights generally;
(c) the execution, delivery and performance by the Company of this Fourth Amendment (i) has been duly authorized by all requisite corporate action and, if required,
shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation applicable to the Company or its certificate of
incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, or any
other Material agreement or instrument to which it is a party or by which its properties or assets are or may be bound or affected, including without limitation the Credit Agreement, or (B) result in a breach or constitute (alone or with due notice
or lapse of time or both) a default under, or require any consent or approval under, any indenture, deed of trust, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 2.1(c);
(d) upon giving effect to the amendments to the Note Agreement contained in this Fourth Amendment, all the representations and warranties contained in Section 5 of the Note Agreement and in the other Transaction Documents are true and correct in all material respects with the same force and
effect as if made by the Company and the Subsidiary Guarantors on and as of the date hereof; provided that, notwithstanding any provision of
this Fourth Amendment or the Note Agreement to the contrary, in lieu of making the representation and warranty set forth in the last sentence of Section 5.3 of the Note Agreement as a condition to the occurrence of the Fourth Amendment Effective
Date, the Company and each Subsidiary Guarantor represents and warrants to the Noteholders that, since March 31, 2022, there has been no change in the financial condition, operations, business or properties of the Company and its Subsidiaries,
taken as a whole, that individually or in the aggregate has had a Material Adverse Effect; and
(e) upon giving effect to the amendments to the Note Agreement contained in this Fourth Amendment, no Default or Event of Default shall be in existence.
SECTION 3. CONDITIONS TO EFFECTIVENESS.
This Fourth Amendment shall not become effective until, and shall become effective on the date (the “Effective Date”) when, each and every one of the following
conditions shall have been satisfied:
- 19-
(a) Executed counterparts of this Fourth Amendment, duly executed by the Company, the Subsidiary Guarantors, Prudential and the Noteholders, shall have been delivered to Prudential and the
Noteholders;
(b) The Noteholders shall have received a fully-executed copy of the Credit Agreement;
(c) Each Subsidiary required under the Note Agreement to be a party to the Subsidiary Guaranty as of the Effective Date shall have executed and delivered the
Subsidiary Guaranty, or a joinder thereto, in form and substance reasonably satisfactory to the Required Holders, and the Subsidiary Guaranty shall be in full force and effect with respect to such Subsidiary, and such Subsidiary shall have complied
with all other applicable provisions of Section 9.8 of the Note Agreement;
(d) The representations and warranties of the Company and each Subsidiary Guarantor in this Fourth Amendment and in each of the other Transaction Documents to which
it is a party shall be correct when made and on the Effective Date (subject to the proviso to Section 2.1(d) of this Fourth Amendment); and
(e) All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in substance and form to the Noteholders, and the Noteholders shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request.
SECTION 4. EXPENSES.
The Company hereby confirms its obligations under the Note Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request by any Noteholder, all
reasonable and documented out-of-pocket costs and expenses, including reasonable, documented and invoiced attorneys’ fees and expenses of one special counsel for each of the Noteholders, incurred by any Noteholder in connection with this Fourth
Amendment or the transactions contemplated hereby, in enforcing any rights under this Fourth Amendment, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Fourth Amendment or the
transactions contemplated hereby. The obligations of the Company under this Section 4 shall survive transfer by any Noteholder of any Note and payment of any Note.
SECTION 5. REAFFIRMATION.
Each Subsidiary Guarantor hereby consents to the terms and conditions of this Fourth Amendment, including without limitation all covenants, representations and warranties, releases, indemnifications,
and all other terms and provisions hereof, and the consummation of the transactions contemplated hereby, and acknowledges that its Guaranty under the Subsidiary Guaranty and its obligations under all other Transaction Documents to which it is a party
remain in full force and effect and are hereby ratified and confirmed in all respects.
- 20-
SECTION 6. MISCELLANEOUS.
6.1 This Fourth Amendment shall be construed in connection with and as part of the Note Agreement, and except as modified and expressly amended by this Fourth Amendment, all terms, conditions
and covenants contained in the Note Agreement and the Notes are hereby ratified and shall be and remain in full force and effect. The Company and the Subsidiary Guarantors acknowledge and agree that no holder is under any duty or obligation of any
kind or nature whatsoever to grant the Company any additional amendments or waivers of any type, whether or not under similar circumstances, and no course of dealing or course of performance shall be deemed to have occurred as a result of the
amendments herein.
6.2 Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Fourth Amendment may refer to the Note Agreement without
making specific reference to this Fourth Amendment but nevertheless all such references shall include this Fourth Amendment unless the context otherwise requires.
6.3 The descriptive headings of the various Sections or parts of this Fourth Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions
hereof.
6.4 This Fourth Amendment shall be governed by and construed in accordance with New York law.
6.5 The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Fourth Amendment may be executed in any number of
counterparts and by electronic means, each executed counterpart constituting an original, but all together only one agreement.
* * * * *
- 21-
|
MODINE MANUFACTURING COMPANY
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||
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By:
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/s/ Michael B. Lucareli
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Name:
|
Michael B. Lucareli
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|
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Title:
|
Executive Vice President and Chief Financial Officer
|
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MODINE CIS HOLDING INC.
|
||
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By:
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/s/ Scott C. Reaume
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Name:
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Scott C. Reaume
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Title:
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Treasurer
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MODINE GRENADA LLC
|
||
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By:
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/s/ Scott C. Reaume
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Name:
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Scott C. Reaume
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Title:
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Treasurer
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MDA US LLC
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||
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By:
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/s/ Michael B. Lucareli
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|
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Name:
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Michael B. Lucareli
|
|
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Title:
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President
|
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[Fourth Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement]
- 22-
|
ACCEPTED AND AGREED TO:
|
||
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PGIM, INC.
|
||
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By:
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/s/ Thomas Molzahn | |
| |
Vice President
|
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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
|
||
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PRUDENTIAL ARIZONA REINSURANCE TERM COMPANY
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||
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PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
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||
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PRUCO LIFE INSURANCE COMPANY
|
||
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PRUDENTIAL LEGACY INSURANCE COMPANY OF NEW JERSEY
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||
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PRUDENTIAL TERM REINSURANCE COMPANY
|
||
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By:
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PGIM, Inc., as investment manager | |
|
By:
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/s/ Thomas Molzahn | |
| |
Vice President
|
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PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
|
||
| |
||
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By:
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Pruco Life Insurance Company (as Grantor) | |
|
By:
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PGIM, Inc. (as Investment Manager) | |
|
By:
|
/s/ Thomas Molzahn | |
|
Vice President
|
||
[Fourth Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement]
|
PAR U HARTFORD LIFE & ANNUITY COMFORT TRUST
|
||
|
By:
|
Prudential Arizona Reinsurance Universal Company, as Grantor | |
| |
||
|
By:
|
PGIM, Inc., as investment manager | |
|
By:
|
/s/ Thomas Molzahn | |
|
Vice President
|
|
|
|
THE GIBRALTAR LIFE INSURANCE CO., LTD.
|
||
|
THE PRUDENTIAL LIFE INSURANCE COMPANY, LTD.
|
||
|
By:
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PGIM Japan Co., Ltd., as Investment Manager | |
|
By:
|
PGIM, Inc., as Sub-Adviser | |
|
By:
|
/s/ Thomas Molzahn | |
|
Vice President
|
|
|
[Fourth Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement]
Exhibit 31.1
Certification
I, Neil D. Brinker, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended December 31, 2022;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
| d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
| a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
| b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: February 2, 2023
|
|
|
/s/ Neil D. Brinker
|
|
|
Neil D. Brinker
|
|
|
President and Chief Executive Officer
|
Exhibit 31.2
Certification
I, Michael B. Lucareli, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended December 31, 2022;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
| d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
| a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
| b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: February 2, 2023
|
|
|
/s/ Michael B. Lucareli
|
|
|
Michael B. Lucareli
|
|
|
Executive Vice President, Chief Financial Officer
|
Exhibit 32.1
Certification
Pursuant to 18 United States Code § 1350
In connection with the quarterly report of Modine Manufacturing Company (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2022 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Neil D. Brinker, President and Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. § 1350, that, to the best of my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date: February 2, 2023
|
|
|
/s/ Neil D. Brinker
|
|
|
Neil D. Brinker
|
|
|
President and Chief Executive Officer
|
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
Certification
Pursuant to 18 United States Code § 1350
In connection with the quarterly report of Modine Manufacturing Company (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2022 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Michael B. Lucareli, Executive Vice President, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. § 1350, that, to the best of my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date: February 2, 2023
|
|
|
/s/ Michael B. Lucareli
|
|
|
Michael B. Lucareli
|
|
|
Executive Vice President, Chief Financial Officer
|
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.