Exhibit 10.1
AMENDMENT NO. 1 TO CREDIT AGREEMENT AND WAIVER AND CONSENT
     This AMENDMENT NO. 1 TO CREDIT AGREEMENT AND WAIVER AND CONSENT dated as of
February 24, 2011 (this “Amendment”), is by and among ALTRA HOLDINGS, INC.
(“Holdings”), ALTRA INDUSTRIAL MOTION, INC. (“Company”), the other borrowers
party to the Credit Agreement referenced below (collectively with Company, the
“Borrowers” and collectively with Holdings, the “Loan Parties”), JPMORGAN CHASE
BANK, N.A., as sole lender under the Credit Agreement referenced below (in such
capacity, the “Sole Lender”), and JPMORGAN CHASE BANK, N.A., as administrative
agent (in such capacity, the “Agent”).
     WHEREAS, the Loan Parties, the Sole Lender and the Agent are parties to
that certain Credit Agreement dated as of November 25, 2009 (as amended or
supplemented from time to time, the “Credit Agreement”);
     WHEREAS, capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Credit Agreement;
     WHEREAS, Holdings has advised the Agent that Holdings in engaged in
discussions with Danfoss A/S, an entity with a place of business in Nordborg,
Denmark (“Danfoss”), concerning the proposed acquisition (the “Danfoss
Acquisition”) by one or more Foreign Subsidiaries of the gear motor business
operated by Danfoss Bauer GmbH, a German affiliate of Danfoss;
     WHEREAS, Holdings has also advised the Agent that Holdings desires to issue
up to $115,000,000 of senior unsecured convertible notes (the “Convertible
Notes”), a portion of the proceeds of which Convertible Notes will be used by
Holdings and the other Loan Parties to make cash investments in Equity Interests
of, and loans or advances to, Altra Industrial Motion (Netherlands) C.V., a
newly formed Foreign Subsidiary (“Altra Netherlands”) and certain of its
subsidiaries (such cash investments, loans and advances collectively, the
“Proposed Investments”);
     WHEREAS, Holdings has also advised the Agent that depending upon the timing
of the closing of the issuance of the Convertible Notes, the Borrowers may
borrow Revolving Loans under the Credit Agreement and use the proceeds of such
Revolving Loans, together with available cash of the Loan Parties, to fund the
Proposed Investments;
     WHEREAS, Section 6.01 of the Credit Agreement does not permit Holdings to
issue the Convertible Notes;
     WHEREAS, Section 6.04(c) and Section 6.04(d) of the Credit Agreement permit
the Loan Parties to make investments in Equity Interests in, and loans or
advances to, Foreign Subsidiaries so long as Available Liquidity during the
period of two consecutive fiscal quarters most recently ended prior to the
making of such investments, determined as if such investments had been made on
the first day of such period, shall equal or exceed $35,000,000;
     WHEREAS, depending upon the timing of the closing of the issuance of the
Convertible Notes, at the time the Loan Parties intend to make the Proposed
Investments Available Liquidity during the period of two consecutive fiscal
quarters most recently then ended, determined as if such Proposed Investments
had been made on the first day of such period, may not equal or exceed
$35,000,000; and

 

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     WHEREAS, the Loan Parties have requested, and the Agent and the Sole Lender
have agreed, on the terms and subject to the conditions set forth herein (i) to
amend certain provisions of the Credit Agreement to permit Holdings to issue the
Convertible Notes, (ii) to consent to the use by the Loan Parties of proceeds of
Revolving Loans to fund a portion of the Proposed Investments, and (iii) to
waive the Available Liquidity requirements of Section 6.04(c) and
Section 6.04(d), to the extent necessary, to permit the Loan Parties to make the
Proposed Investments, all on the terms and subject to the conditions set forth
herein;
     NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained in this Amendment, the Loan Parties, the Sole Lender and the Agent
hereby agree as follows:
     1. Amendment to Credit Agreement. Subject to the terms and conditions set
forth herein and in reliance on the representations and warranties set forth in
Section 3 below, the Loan Parties, the Sole Lender and the Agent hereby agree
that the Credit Agreement shall be amended as follows:
     (a) Section 1.01 Section 1.01 of the Credit Agreement is hereby amended by
adding the following new defined term in the appropriate alphabetical order:
     “Convertible Notes” means senior convertible unsecured notes to be issued
by Holdings on or before September 30, 2011 in an aggregate principal amount not
in excess of $115,000,000.
     (b) Section 5.02 Section 5.02 of the Credit Agreement is hereby amended by
deleting the word “and” at the end of clause (j), by deleting clause (k) and by
adding the following new clauses (k) and (l):
     “(k) on the date of the occurrence thereof, notice that (i) any or all of
the obligations in respect of the Convertible Notes have been accelerated or
(ii) that the trustee or required holders of the Convertible Notes have given
notice that they intend to accelerate any or all of the obligations in respect
of the Convertible Notes; and
     (l) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.”
     (c) Section 6.01 Section 6.01 of the Credit Agreement is hereby amended by
deleting clause (f) and replacing it with the following new clause (f):
     “(f) Indebtedness which represents an extension, refinancing, or renewal of
any of the Indebtedness described in clauses (b), (e), (j), (k) and (m) hereof;
provided that, (i) the principal amount of such Indebtedness is not increased,
(ii) the interest rate of such refinancing, renewal or extension Indebtedness is
not greater than the rate generally available in the market at the time of such
extension, refinancing or renewal for similar instruments of Indebtedness having
a similar tenor, (iii) any Liens securing such Indebtedness are not extended to
any additional property of any Loan Party (other than additional immaterial
property), (iv) no Loan Party that is not originally obligated with respect to
repayment of such Indebtedness is required to become obligated with respect
thereto, (v) such extension, refinancing or renewal does not result in a
shortening of the average weighted maturity of the Indebtedness so extended,
refinanced or renewed, (vi) the terms of any such extension, refinancing, or
renewal are not less favorable in any material respect to the obligor thereunder
than the original terms of such Indebtedness, (vii) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Secured Obligations, then the terms and conditions of the

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refinancing, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable in all material respects, taken as
a whole, to the Administrative Agent and the Lenders as those that were
applicable to the refinanced, renewed, or extended Indebtedness and (viii) in
the case of any refinancing, renewal, or extension of Indebtedness permitted
under Section 6.01(k), such refinancing, renewal, or extension Indebtedness
shall be subject to the terms of the Intercreditor Agreement;”
     (d) Section 6.01 Section 6.01 of the Credit Agreement is hereby amended by
deleting the word “and” at the end of clause (1), by deleting clause (m) and by
adding the following new clauses (m) and (n):
     “(m) unsecured Indebtedness in respect of the Convertible Notes; and
     (n) other unsecured Indebtedness in an aggregate principal amount not
exceeding $15,000,000 at any time outstanding.”
     (e) Section 6.04 Section 6.04 of the Credit Agreement is hereby amended by
deleting clause (n) and replacing it with the following new clause (n):
     “(n) Investments consisting of purchases, redemptions, repurchases and
exchanges of the Senior Secured Notes or the Convertible Notes, in each case to
the extent permitted under Section 6.08(b);”
     (f) Section 6.08(a) Section 6.08(a) of the Credit Agreement is hereby
amended by deleting clause (viii) and replacing it with the following new clause
(viii):
     “(viii) the Company and its Subsidiaries may make Restricted Payments to
Holdings to permit Holdings to make payments or other distributions permitted by
Section 6.08(b) in respect of (A) the Senior Secured Notes (and permitted
refinancings thereof) and (B) the Convertible Notes (and permitted refinancings
thereof);”
     (g) Section 6.08(b) Section 6.08(b) of the Credit Agreement is hereby
amended by deleting clause (ii) and replacing it with the following new clause
(ii):
     “(ii) payment of (A) regularly scheduled interest and principal payments as
and when due in respect of the Senior Secured Notes, (B) interest as and when
due in respect of the Convertible Notes, and (C) regularly scheduled interest
and principal payments as and when due in respect of any other Indebtedness,
other than payments in respect of the Subordinated Indebtedness prohibited by
the subordinated provisions thereof;”
     (h) Section 6.08(b) Section 6.08(b) of the Credit Agreement is hereby
amended by deleting clause (v) and replacing it with the following new clauses
(v) and (vi):
     “(v) payments or other distributions constituting purchases, repurchases
and redemptions of the Senior Secured Notes, the Variable Rate Demand Revenue
Bonds or the Convertible Notes (including repurchases of the Convertible Notes
upon the conversion thereof), in each case, so long as (A) no Default or Event
of Default has occurred and is continuing or would result therefrom,
(B) Holdings has delivered to the Administrative Agent pro forma financial
statements which demonstrate, on a pro forma basis, Available Liquidity during
the period of two consecutive fiscal quarters most recently ended prior to the
funding of such purchase, repurchase or redemption,

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determined as if the funding of such purchase, repurchase or redemption had
occurred on the first day of such period, of not less than $35,000,000, and
(C) Holdings has delivered to the Administrative Agent a certificate of a
Financial Officer certifying that (x) such pro forma financial statements
present fairly in all material respects the financial condition of Holdings and
its Subsidiaries on a consolidated basis as of the date thereof after giving
effect thereto and setting forth reasonably detailed calculations demonstrating
compliance with the minimum Available Liquidity requirement set forth in clause
(B) above and (y) such purchase, repurchase or redemption of the Senior Secured
Notes, the Variable Demand Rate Revenue Bonds or the Convertible Notes is
permitted under the terms of the Senior Secured Notes Indenture; and
     (vi) the issuance by Holdings of shares of common stock, and the payment by
Holdings or the Company of cash in lieu of the issuance by Holdings of
fractional shares of common stock, in each case, in connection with the
conversion of any Convertible Notes.”
     (i) Section 6.08(c) Section 6.08(c) of the Credit Agreement is hereby
amended by deleting Section 6.08(c) and replacing it with the following new
Section 6.08(c):
     “(c) Notwithstanding any provision to the contrary set forth in this
Section 6.08, no Restricted Payment or purchase, repurchase, redemption or
payment in respect of Indebtedness shall be permitted to made pursuant to this
Section 6.08 if such Restricted Payment or purchase, repurchase, redemption or
payment in respect of Indebtedness is not permitted to be made in accordance
with the Senior Secured Notes Indenture or the indenture pursuant to which the
Convertible Notes are issued.”
     (j) Section 6.11 Section 6.11 of the Credit Agreement is hereby amended by
adding the following sentence to the end of Section 6.11:
“No Loan Party will amend, modify or waive any of its rights under the documents
governing the Convertible Notes to the extent any such amendment, modification
or waiver would be materially adverse to the Lenders.”
     (k) Section 7.01 Section 7.01 of the Credit Agreement is hereby amended by
deleting the word “or” at the end of clause (p), by deleting clause (q) and by
adding the following new clauses (q) and (r):
     “(q) the occurrence of any event which obligates Holdings or the Company to
repurchase or redeem any Convertible Notes for cash, provided that an Event of
Default shall not be deemed to have occurred under this clause (q) with respect
to (i) the obligation of Holdings or the Company, in connection with the
conversion of any Convertible Notes into common stock, to make cash payments in
lieu of the issuance by Holdings of fractional shares of common stock or
(ii) any repurchase or redemption of Convertible Notes (including repurchase of
the Convertible Notes upon conversion thereof) by Holdings or the Company made
in compliance with the provisions of Section 6.08(b)(v); or
     (r) loss, theft, damage or destruction occurs with respect to any
Collateral having an aggregate value in excess of $10,000,000 and such loss,
theft, damage or destruction is not covered by insurance.”
     2. Waiver and Consent. Subject to the terms and conditions set forth herein
and in reliance on the representations and warranties set forth in Section 3
below, the Sole Lender and the Agent hereby

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(i) consent to the borrowing of Revolving Loans by the Borrowers and to the use
by the Loan Parties of the proceeds of such Revolving Loans to fund a portion of
the Proposed Investments, and (ii) waive the Available Liquidity requirements of
Section 6.04(c) and Section 6.04(d) to permit the Loan Parties to make the
Proposed Investments; provided, that (A) the aggregate amount of the Proposed
Investments shall not exceed €45,000,000, or the U.S. dollar equivalent thereof,
with such U.S. dollar equivalent, in each case, translated on the date of the
respective Proposed Investments, (B) the aggregate proceeds of Revolving Loans
used to fund a portion of the Proposed Investments shall not exceed $40,000,000,
(C) all Proposed Investments shall be made by the Loan Parties on or before
September 30, 2011, (D) Holdings shall deliver to the Agent a copy of the
purchase and sale agreement with respect to the Danfoss Acquisition promptly
following the execution thereof by Holdings or any of its Subsidiaries, and
(E) the foregoing waivers and consents shall apply solely to the Proposed
Investments to be made by the Loan Parties to fund a portion of the purchase
price for the Danfoss Acquisition and except as otherwise expressly set forth in
Section 1 of this Amendment, nothing herein shall be deemed to modify, amend or
waive any of the provisions of the Credit Agreement, including, without
limitation, Section 6.04, with respect to any additional investments by the Loan
Parties in Altra Netherlands or any of its subsidiaries, or any other
investments by the Loan Parties in any Foreign Subsidiaries or in any other
Subsidiaries that are not Loan Parties, it being expressly acknowledged and
agreed by the Loan Parties that the Available Liquidity requirement of
Section 6.04(c) and Section 6.04(d) shall apply to any and all such additional
or other investments.
     3. No Default; Representations and Warranties, Etc. The Loan Parties hereby
represent, warrant, confirm and covenant that: (a) the representations and
warranties of the Loan Parties contained in Article 3 of the Credit Agreement,
as amended hereby, are true and correct on and as of the date hereof as if made
on such date (except to the extent that such representations and warranties
expressly relate to an earlier date, in which case, such representations were
true and correct as of such date); (b) the Loan Parties are in compliance with
all of the terms and provisions set forth in the Credit Agreement and the other
Loan Documents to be observed or performed thereunder and no Default or Event of
Default has occurred and is continuing; and (c) the execution, delivery and
performance by the Loan Parties of this Amendment and all other documents,
instruments and agreements executed and delivered in connection herewith or
therewith and the consummation by the Loan Parties of the transactions
contemplated hereby and thereby (i) have been duly authorized by all necessary
action on the part of the Loan Parties, (ii) have not violated, conflicted with
or resulted in a default under and will not violate or conflict with or result
in a default under any applicable law or regulation, any term or provision of
the organizational documents of the Loan Parties or any term or provision of the
Senior Secured Notes Indenture or any other material indenture, agreement or
other instrument binding on the Loan Parties or any of their assets and (iii) do
not require any consent, waiver or approval of or by any Person which has not
been obtained.
     4. Ratification and Confirmation. The Loan Parties hereby ratify and
confirm all of the terms and provisions of the Credit Agreement and the other
Loan Documents and agree that all of such terms and provisions, as amended
hereby, remain in full force and effect. Without limiting the generality of the
foregoing, the Loan Parties hereby acknowledge and confirm that all obligations,
liabilities and Indebtedness of the Loan Parties under the Credit Agreement
constitute “Obligations” under and as defined in the Credit Agreement and are
secured by and entitled to the benefits of the Credit Agreement and the other
Loan Documents and the Loan Parties hereby ratify and confirm the grant of the
liens and security interests in the Collateral in favor of the Agent, for the
benefit of itself and the Lenders, pursuant to the Security Agreement and the
other Loan Documents, as security for the Obligations.
     5. Conditions to this Amendment. The effectiveness of this Amendment shall
be subject to the satisfaction of the following conditions precedent:

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     (a) Counterparts of Amendment. The Agent shall have received from each
party hereto either (a) a counterpart of this Amendment signed on behalf of such
party or (b) written evidence satisfactory to the Agent (which may include
telecopy transmission of a signed signature page of this Amendment) that such
party has signed a counterpart of this Amendment.
     (b) Consent Fee. The Loan Parties shall have paid to the Agent and Sole
Lender, in consideration of the amendments, waivers and consents provided by the
Agent and Sole Lender in this Amendment, a consent fee in the aggregate amount
of $7,500 (the “Consent Fee”).
     (c) Pledge of Stock of Altra Netherlands. The Loan Parties shall have taken
such steps as necessary to cause 65% of the Equity Interests of Altra
Netherlands to be pledged to the Agent.
     (d) Other Documents. The Agent shall have received such other documents as
the Agent shall have reasonably requested and the same shall be satisfactory to
the Agent.
     6. Miscellaneous.
     (a) Except as otherwise expressly set forth herein, nothing herein shall be
deemed to constitute an amendment, modification or waiver of any of the
provisions of the Credit Agreement or the other Loan Documents, all of which
remain in full force and effect as of the date hereof and are hereby ratified
and confirmed. The Loan Parties hereby acknowledge and agree that nothing
contained herein shall be deemed to entitle the Loan Parties to a consent to, or
a waiver, amendment or modification of, any of the terms, conditions,
obligations, covenants or agreements contained in the Loan Documents in similar
or different circumstances.
     (b) This Amendment may be executed in any number of counterparts, each of
which, when executed and delivered, shall be an original, but all counterparts
shall together constitute one instrument.
     (c) This Amendment shall be governed by the laws of the State of New York
and shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
     (d) The Loan Parties agree to pay all reasonable expenses, including legal
fees and disbursements incurred by the Agent in connection with this Amendment
and the transactions contemplated hereby.
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     IN WITNESS WHEREOF, the parties hereto have executed this Amendment which
shall be deemed to be a sealed instrument as of the date first above written.

            HOLDINGS AND BORROWERS

ALTRA HOLDINGS, INC.
ALTRA INDUSTRIAL MOTION, INC.
AMERICAN ENTERPRISES MPT CORP.
AMERICAN ENTERPRISES MPT HOLDINGS, LLC
AMERIDRIVES INTERNATIONAL, LLC
BOSTON GEAR LLC
FORMSPRAG LLC
INERTIA DYNAMICS, LLC
KILIAN MANUFACTURING CORPORATION
NUTTALL GEAR LLC
TB WOOD’S CORPORATION
TB WOOD’S ENTERPRISES, INC.
TB WOOD’S INCORPORATED
WARNER ELECTRIC INTERNATIONAL HOLDING, INC.
WARNER ELECTRIC LLC
WARNER ELECTRIC TECHNOLOGY LLC
      By:   /s/ TODD PATRIACCA         Name:   TODD PATRIACCA        Title:   VP
FINANCE, CORP. CONTROLLER & TREASURER        AGENT AND SOLE LENDER

JPMORGAN CHASE BANK, N.A.,
as Agent and Sole Lender
      By:   /s/ Robert A. Kaulius       Name:   Robert A. Kaulius       Title:  
Vice President  

[Signature Page to Amendment No. 1 to Credit Agreement and Waiver and Consent]