<PAGE>
Exhibit 10.34
FIFTH AMENDMENT TO, AND CONSENT AND WAIVER UNDER,
CREDIT AGREEMENT AND JOINDER TO LOAN DOCUMENTS
THIS
FIFTH AMENDMENT TO, AND CONSENT AND WAIVER UNDER, CREDIT AGREEMENT
AND
JOINDER TO LOAN DOCUMENTS (this "Fifth Amendment") is made and
entered into as
of April 5, 2007, by and among Altra Industrial Motion, Inc., a
Delaware
corporation, as Administrative Borrower ("Administrative Borrower")
for the
Borrowers (as defined below), each of the New Loan Parties (as
defined below)
listed on the signatory pages hereof, the lenders listed on the
signatory pages
hereof (the "Lenders"), and Wells Fargo Foothill, Inc., a
California
corporation, in its capacity as the arranger and administrative
agent for the
Lenders ("Agent").
WITNESSETH:
WHEREAS, each of Administrative Borrower, Warner Electric LLC, a
Delaware
limited liability company, Kilian Manufacturing Corporation, a
Delaware
corporation, Warner Electric Technology LLC, a Delaware limited
liability
company, Formsprag LLC, a Delaware limited liability company,
Boston Gear LLC, a
Delaware limited liability company, Nuttall Gear L L C, a Delaware
limited
liability company, and Ameridrives International L.P., a Delaware
limited
partnership (each, a "Borrower" and, collectively, the
"Borrowers"), have
entered into a Credit Agreement dated as of November 30, 2004 (as
amended as of
December 30, 2004, January 14, 2005, January 31, 2005, and February
16, 2007,
and as may be further amended, restated, supplemented or otherwise
modified from
time to time, the "Credit Agreement"), with the Lenders and
Agent;
WHEREAS, on February 17, 2007, Holdings, and its wholly owned
subsidiary
Forest Acquisition Corporation ("FAC"), entered into an Agreement
and Plan of
Merger (the "Merger Agreement") with TB Wood's Corporation ("TB
Wood's"),
pursuant to which FAC agreed to purchase shares of common stock of
TB Wood's for
$24.80 per share;
WHEREAS, in the Merger Agreement, FAC agreed to make a cash tender
offer of
$24.80 per share for all outstanding shares of TB Wood's common
stock;
WHEREAS, FAC commenced the tender offer (the "Tender Offer") on
March 5,
2007;
WHEREAS, FAC acquired greater than 90% of the outstanding shares of
TB
Wood's common stock in the Tender Offer, and FAC and TB Wood's
will
substantially simultaneously herewith effect a statutory
"short-form" merger
pursuant to which FAC will be merged with and into TB Wood's (the
"Merger") and
TB Wood's will become a wholly-owned subsidiary of Administrative
Borrower;
WHEREAS, upon consummation of the Merger and TB Wood's becoming
a
wholly-owned subsidiary of Administrative Borrower (the "Joinder
Effective
Time"), TB Wood's and each of its domestic subsidiaries
(collectively, the "New
Loan Parties") will become Guarantors under the Loan Documents;
<PAGE>
WHEREAS, Administrative Borrower intends to issue $105,000,000
aggregate
principal amount of 9% Senior Secured Notes due 2011 (the
"Additional Notes")
under a supplement (the "Indenture Supplement") to the Indenture,
pursuant to
which Administrative Borrower has previously issued $165,000,000
aggregate
principal amount of senior secured notes;
WHEREAS, the Notes (including the Additional Notes) will be
guaranteed by
the New Loan Parties and secured by the assets of the New Loan
Parties, subject
to the Intercreditor Agreement;
WHEREAS, Holdings and Administrative Borrower intend to fund the
purchase
price of the acquisition of the common stock of TB Wood's through
the net
proceeds of the issuance of the Additional Notes, together with
cash on hand and
borrowings under the Credit Agreement;
WHEREAS, absent a consent and waiver from the Lenders and Agent,
the
issuance of the Additional Notes would violate Section 6.1 of the
Credit
Agreement and the consummation of the acquisition of TB Wood's
contemplated by
the Merger Agreement would violate Section 6.3 and Section 6.12 of
the Credit
Agreement;
WHEREAS, Borrowers have requested that the Lenders and Agent
consent to the
issuance of the Additional Notes and the consummation of the
acquisition of TB
Wood's contemplated by the Merger Agreement; and
WHEREAS, Borrowers, the Lenders and Agent wish to amend the
Credit
Agreement, as provided herein;
NOW,
THEREFORE, in consideration of the agreements and provisions
herein
contained, the parties hereto do hereby agree as follows:
SECTION 1. DEFINITIONS. Any capitalized terms used but not
otherwise defined
herein shall have the meanings ascribed to such terms in the Credit
Agreement.
SECTION 2. CONSENTS AND WAIVERS. Subject to the satisfaction of the
conditions
set forth in Section 6 herein, the Lenders and Agent hereby (a)
consent to, and
waive the application of Section 6.1 of the Credit Agreement solely
with respect
to, the issuance of the Additional Notes in an aggregate principal
amount not to
exceed $105,000,000, (b) consent to, and waive the application of
Section 6.3
and Section 6.12 of the Credit Agreement solely with respect to,
the
consummation of the acquisition of TB Wood's contemplated by the
Merger
Agreement, (c) consent to, and waive the application of Section
6.14 of the
Credit Agreement solely with respect to, the use of proceeds of
Borrowings under
the Credit Agreement to partially finance the Merger, (d) subject
to compliance
with Section 7.03 hereof, waive the application of Section 5.15 of
the Credit
Agreement solely with respect to the Securities Accounts and
Deposit Accounts of
the New Loan Parties, and (e) waive the application of Section 5.16
of the
Credit Agreement solely with respect to the pledge by TB Wood's
Incorporated of
the Stock of TB Wood's (India) Private Ltd..
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SECTION 3. AMENDMENTS TO CREDIT AGREEMENT. Subject to the
satisfaction of the
conditions set forth in Section 6 herein, the Credit Agreement is
hereby
amended, effective as of the Effective Date (as defined below), as
follows:
3.01 AMENDMENT TO
SECTION 2.6(B). Section 2.6(b) of the Credit Agreement is
hereby amended by deleting the words "2.00% per annum" therein and
inserting
"1.50% per annum" in lieu thereof.
3.02
AMENDMENT TO SECTION 3.3. Section 3.3 of the Credit Agreement
is
hereby amended by deleting the words "the fifth anniversary of the
date hereof"
therein and inserting "the sixth anniversary of the date hereof" in
lieu
thereof.
3.03
AMENDMENTS TO SECTION 6.1. Section 6.1 of the Credit Agreement
is
hereby amended as follows:
(a) Section 6.1(g) of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting the following in lieu
thereof:
"(g) Indebtedness represented by any notes issued pursuant to
the
Indenture, including any Senior Notes (or any other evidence of
indebtedness for borrowed money under the Senior Notes or the
Indenture) in an aggregate principal amount not to exceed
$275,000,000
at any one time outstanding and any Refinancing Indebtedness in
respect thereof (whether in whole or in part);"
(b) The word "and" at the end of clause (p) is hereby deleted.
(c) Clause (q) is hereby re-titled clause (t).
(d) The following new clauses (q), (r) and (s) are hereby added
as
follows:
"(q) Indebtedness under the TB Wood's Refinanced Standalone
Facility
and any Refinancing Indebtedness in respect thereof (whether in
whole
or in part);
(r) Indebtedness represented by any notes issued pursuant to
the
Unsecured Indenture, including any Unsecured Notes (or any
other
evidence of indebtedness for borrowed money under the Unsecured
Notes
or the Unsecured Indenture) in an aggregate principal amount not
to
exceed L21,450,000 at any one time outstanding and any
Refinancing
Indebtedness in respect thereof (whether in whole or in part);
(s) Indebtedness represented by the IRB Bonds in an aggregate
principal amount not to exceed $5,300,000 and any Refinancing
Indebtedness in respect thereof (whether in whole or in part);
and"
3.04
AMENDMENTS TO SECTION 6.7. Section 6.7(a) of the Credit Agreement
is
hereby amended by (a) re-titling clause (iv) as clause (v) and (b)
adding the
following new clause (iv): "(iv) Borrowers and their Restricted
Subsidiaries may
pay and prepay the Indebtedness under the
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TB Wood's Refinanced Standalone Facility in accordance with the
terms of the TB
Wood's Refinanced Standalone Facility,".
3.05
AMENDMENT TO SECTION 6.16. Section 6.16 of the Credit Agreement
is
hereby amended by deleting it in its entirety and inserting the
following in
lieu thereof:
"6.16 FINANCIAL COVENANTS.
(A) FIXED CHARGE COVERAGE RATIO. Fail to maintain or achieve a
Fixed
Charge Coverage Ratio, measured on a fiscal quarter-end basis, of
at least the
required amount set forth in the following table for the
"Applicable Period" set
forth opposite thereto; provided, however, that, with respect to
any "Applicable
Period", if daily average Excess Availability was at least
$12,500,000 during
the 30 day period immediately preceding the applicable date of
determination and
on the applicable date of determination, then the foregoing
covenant shall not
apply for such applicable period:
<TABLE>
<CAPTION>
Applicable Ratio
Applicable Period
----------------
-----------------
<S>
<C>
1.20:1.00
For the 4 quarter period
ending March 31, 2007
1.20:1.00
For the 4 quarter period
ending each fiscal quarter thereafter
</TABLE>
(B) CAPITAL EXPENDITURES. Make Capital Expenditures in any fiscal
year
in excess of the amount set forth in the following table for the
applicable
period:
<TABLE>
<CAPTION>
Applicable Amount
Applicable Period
-----------------
-----------------
<S>
<C>
$25,750,000
fiscal year 2007
$20,000,000
fiscal year 2008
$21,250,000
fiscal year 2009
$22,500,000
fiscal
year 2010 and each fiscal year thereafter
</TABLE>
provided, however, that up to 75% of the difference between the
amount of
Capital Expenditure that may be made in any fiscal year and the
amount of
Capital Expenditures actually made in such fiscal year, may be made
in the
immediately succeeding fiscal year; provided further, however, that
with
respect to any Permitted Acquisitions, the "Applicable Amount" for
the
"Applicable Period" in which such Permitted Acquisition is
consummated
shall be increased by an amount equal to the product of (a) 1.25
times (b)
the
average amount per year of Capital Expenditures made by such
acquired
Person during the immediately preceding three (3) year period."
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3.06
AMENDMENT TO SECTION 11. Section 11 of the Credit Agreement is
hereby
amended by replacing the words "Morrison & Foerster LLP, 1290
Avenue of the
Americas, 40th Floor, New York, NY 10104-0050, Attn: Mark B.
Joachim, Esq., Fax
No.: (212) 468-7900" with the following: "Moses & Singer, The
Chrysler Building,
405 Lexington Avenue, New York, NY 10174-1299, Attn.: Howard L.
Siegel, Esq.,
Fax No.: (212) 554-7700."
3.07
AMENDMENTS TO SCHEDULE 1.1. Schedule 1.1 of the Credit Agreement
is
hereby amended as follows:
(a) The words "1.25 percentage points" in the definition of "Base
Rate
Margin" contained therein are hereby deleted and the words "0.25
percentage
points" are hereby inserted in lieu thereof.
(b) The definition of "Borrowing Base" is hereby amended by
deleting
the words "Eligible Real Property and Equipment Book Value" and
inserting
"Eligible Equipment Book Value" in lieu thereof.
(c) The definition of "Eligible Real Property" is hereby deleted
in
its entirety.
(d) The
definition of "Eligible Real Property and Equipment Book
Value" is hereby deleted in its entirety and the following
definition shall be
inserted in lieu thereof:
"Eligible Equipment Book Value" means the net book value of the
Eligible
Equipment, such value to be as determined from time to time
by a qualified appraisal company selected by Agent, net of all
related
costs and expenses.
(e) The words "2.50 percentage points" in the definition of
"LIBOR
Rate Margin" contained therein are hereby deleted and the words
"1.75 percentage
points" are hereby inserted in lieu thereof.
(f) The definition of "Permitted Liens" is hereby amended by
(i)
deleting "and" at the end of clause (r) thereof, (ii) re-titling
clause (s) as
clause (t) and replacing the words "under clause (a) through (r) of
this
definition" in such re-titled clause (t) with the words "under
clause (a)
through (s) of this definition", and (iii) inserting the following
new clause
(s): "(s) Liens securing the TB Wood's Refinanced Standalone Credit
Facility."
(g) The following new definitions are hereby added in proper
alphabetical order:
"IRB Bonds" means those certain variable rate demand revenue
bonds
issued by TB Wood's
Incorporated under the authority of the industrial
development corporations of the City of San Marcos, Texas and the
City
of Chattanooga, Tennessee in an aggregate principal amount of
$5,300,000, as the same may be amended, restated, supplemented
or
modified from time to time.
"TB Wood's Refinanced Standalone Credit Facility" means that
certain
Credit Agreement dated as of April 5, 2007 among TB Wood's
Corporation, the subsidiaries of TB Wood's Corporation party
thereto,
Wells Fargo Foothill, Inc., as agent thereunder and the lenders
party
thereto, as the same may be amended,
5
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restated, supplemented or modified from time to time, together
with
the related "Loan Documents" (as defined thereunder).
"Unsecured Indenture" means the Indenture dated as of February
8,
2006, by and among Parent, the domestic subsidiaries of Parent
party
thereto and The Bank of New York, as trustee, pursuant to which
Parent
has issued the Unsecured Notes.
"Unsecured Notes" means the 11-1/4% Senior Notes due 2013 issued
by
Parent under the Unsecured Indenture.
SECTION 4. JOINDERS. Subject to the satisfaction of the conditions
set forth in
Section 6 herein, the parties agree that, as of the Joinder
Effective Time, each
New Loan Party shall become a party to the following documents (the
"Joined Loan
Documents") as follows:
4.01
SECURITY AGREEMENT
A.
By execution of this Fifth Amendment and a Supplement to the
Security
Agreement in the form of Annex 1 thereto, each New Loan Party will,
as of the
Joinder Effective Time immediately and without any further action,
become a
party to the Security Agreement (as amended by this Fifth
Amendment), and each
New Loan Party will be deemed to be a "Grantor" for all purposes
under the
Security Agreement as of the Joinder Effective Time.
B.
As of the Joinder Effective Time, each New Loan Party shall assume
all
the rights and obligations of a Grantor under and as defined in the
Security
Agreement in the same manner as if such New Loan Party were an
original
signatory to the Security Agreement.
C.
As a Grantor, as of the Joinder Effective Time, each New Loan
Party
shall be bound by the provisions of the Security Agreement and
shall perform in
accordance with its terms all the obligations which by the terms of
the Security
Agreement are required to be performed by it as a Grantor to the
same extent as
if originally a party thereto.
4.02
GUARANTY
A.
By execution of this Fifth Amendment, each New Loan Party will, as
of
the Joinder Effective Time immediately and without any further
action, become a
party to the Guaranty as a "Guarantor" for all purposes
thereunder.
B.
As of the Joinder Effective Time, each New Loan Party shall assume
all
the rights and obligations of a Guarantor under the Guaranty in the
same manner
as if such New Loan Party were an original signatory to the
Guaranty.
C.
As a party to the Guaranty, as of the Joinder
