UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒

Filed by a party other than the Registrant  ☐

Check the appropriate box:

 

☒	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☐	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material Under Rule 14a-12

ALTRA INDUSTRIAL MOTION CORP.

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

 

☐	No fee required

 

☐	Fee paid previously with preliminary materials

 

☒	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

PRELIMINARY PROXY MATERIAL SUBJECT TO COMPLETION, DATED NOVEMBER 23, 2022

 

 

 

LETTER FROM OUR CHIEF EXECUTIVE OFFICER

[                ], 2022

Dear Altra Stockholder:

You are cordially invited to attend a special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of stockholders of Altra Industrial Motion Corp., a Delaware corporation (“Altra”, the “Company”, “we”, “us” and “our”) to be held virtually via live webcast on [                ], beginning at [                ] Eastern Time (unless the Special Meeting is adjourned or postponed). Altra stockholders will be able to virtually attend and vote at the Special Meeting by visiting [                ] (the “Special Meeting website”). To attend the Special Meeting, you must pre-register at [                ] by [                ] Eastern Time on [                ]. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” shall mean virtually present at the Special Meeting.

At the Special Meeting, you will be asked to consider and vote on (a) a proposal to adopt the Agreement and Plan of Merger, dated as of October 26, 2022 (as it may be amended from time to time, “Merger Agreement”), by and among Regal Rexnord Corporation, a Wisconsin corporation (“Parent” or “Regal Rexnord”), Aspen Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Altra (“Merger Agreement Proposal”), (b) a proposal to approve, on an advisory (nonbinding) basis, the compensation that may be paid or become payable to Altra’s named executive officers that is based on or otherwise related to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”) and (c) a proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”). Pursuant to the terms of the Merger Agreement, subject to the terms and conditions set forth therein, Merger Sub will merge with and into Altra (the “Merger”), with Altra continuing as the surviving corporation in the Merger and as a wholly owned subsidiary of Parent.

The Merger Agreement provides that, subject to certain exceptions, each share of common stock, par value $0.001 per share, of Altra (“Altra common stock”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will at the Effective Time automatically be converted into the right to receive $62.00 in cash, without interest (the “Merger Consideration”) and subject to any required withholding of tax.

If the Merger is completed, you will be entitled to receive the Merger Consideration, less any applicable withholding taxes, for each share of Altra common stock that you own immediately prior to the Effective Time (unless you have properly and validly exercised and do not withdraw your appraisal rights under Section 262 of the General Corporation Law of the State of Delaware).

The Board of Directors of Altra, after considering the factors more fully described in the enclosed proxy statement, has unanimously: (a) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the consummation by the Company of the Merger and the other transactions contemplated thereby; (b) declared that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, Altra and its stockholders; (c) directed that the adoption of the Merger Agreement be submitted for consideration by Altra stockholders at the Special Meeting; and (d) resolved to recommend that Altra stockholders adopt the Merger Agreement. The Board of Directors unanimously recommends that you vote: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement.

The proxy statement also describes the actions and determinations of the Board of Directors in connection with its evaluation of the Merger Agreement and the Merger. You should carefully read and consider the entire enclosed proxy statement and its annexes, including the Merger Agreement, as they contain important information about, among other things, the Merger and how it affects you.

Whether or not you plan to attend the virtual Special Meeting, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in the section of the proxy statement entitled “The Special Meeting—Voting at the Special Meeting”). If you attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted.

If you hold your shares in “street name”, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the Merger Agreement Proposal, without your instructions.

Your vote is very important, regardless of the number of shares that you own. We cannot complete the Merger unless the Merger Agreement Proposal is approved by the affirmative vote of the holders of at least a majority of the outstanding shares of Altra common stock entitled to vote thereon at the Special Meeting. If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free: 1 (877) 456-3513

Banks and Brokers may call collect: 1 (212) 750-5833

On behalf of the Board of Directors, I thank you for your support and appreciate your consideration of these matters.

 

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [                ], 2022, and, together with the enclosed form of proxy card, is first being mailed to Altra stockholders on or about [                ], 2022.

PRELIMINARY PROXY MATERIAL SUBJECT TO COMPLETION, DATED NOVEMBER 23, 2022

 

 

 

ALTRA INDUSTRIAL MOTION CORP.

300 Granite Street, Suite 201

Braintree, MA 02184

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [                ]

Notice is hereby given that a special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of stockholders of Altra Industrial Motion Corp., a Delaware corporation (“Altra”, the “Company”, “we”, “us” or “our”), will be held virtually via live webcast on [                ], beginning at [                ] Eastern Time (unless the Special Meeting is adjourned or postponed). Altra stockholders will be able to virtually attend and vote at the Special Meeting by visiting [                ] (the “Special Meeting website”). To attend the Special Meeting, you must pre-register at [                ] by [                ] Eastern Time on [                ]. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” shall mean virtually present at the Special Meeting. The Special Meeting is being held for the following purposes:

 

1.

To consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of October 26, 2022 (as it may be amended from time to time, the “Merger Agreement”), by and among Regal Rexnord Corporation, a Wisconsin corporation (“Parent” or “Regal Rexnord”), Aspen Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Altra (the “Merger Agreement Proposal”). Pursuant to the terms of the Merger Agreement, subject to the terms and conditions set forth therein, Merger Sub will merge with and into Altra (the “Merger”), with Altra continuing as the surviving corporation in the Merger and as a wholly owned subsidiary of Parent;

 

2.

To consider and vote on the proposal to approve, on an advisory (nonbinding) basis, the compensation that may be paid or become payable to Altra’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”); and

 

3.

To consider and vote on any proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

Only Altra stockholders of record as of the close of business on [                ], 2022, are entitled to notice of the Special Meeting and to vote at the Special Meeting or any adjournment, postponement or other delay thereof.

The Board of Directors unanimously recommends that you vote: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

Whether or not you plan to attend the virtual Special Meeting, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in the section of the proxy statement entitled “The Special Meeting—Voting at the Special Meeting”). If you attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted. If you hold your shares in “street name”, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank,

broker or other nominee cannot vote on any of the proposals, including the Merger Agreement Proposal, without your instructions.

If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote “FOR” the Merger Agreement Proposal, “FOR” the Compensation Proposal and “FOR” the Adjournment Proposal.

 

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE: (1) BY TELEPHONE; (2) OVER THE INTERNET; OR (3) BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote before the Special Meeting in the manner described in the enclosed proxy statement.

If you fail to (1) return your proxy card, (2) grant your proxy electronically over the Internet or by telephone or (3) vote at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal or the Adjournment Proposal.

You should carefully read and consider the entire accompanying proxy statement and its annexes, including the Merger Agreement, along with all of the documents incorporated by reference into the accompanying proxy statement, as they contain important information about, among other things, the Merger and how it affects you. If you have any questions concerning the Merger Agreement, the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of Altra common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free: 1 (877) 456-3513

Banks and Brokers may call collect: 1 (212) 750-5833

TABLE OF CONTENTS

 

		Page
SUMMARY TERM SHEET			1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING OF STOCKHOLDERS AND THE MERGER			13
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			23
THE SPECIAL MEETING			25
Date, Time and Place			25
Purpose of the Special Meeting			25
Pre-Registering for the Special Meeting			25
Record Date; Shares Entitled to Vote; Quorum			25
Vote Required; Abstentions and Broker Non-Votes			26
Stock Ownership and Interests of Certain Persons			27
Voting at the Special Meeting			27
Revocability of Proxies			28
Board’s Recommendation			28
Solicitation of Proxies			28
Anticipated Date of Completion of the Merger			29
Appraisal Rights			29
Delisting and Deregistration of Altra Common Stock			30
Other Matters			30
Householding of Special Meeting Materials			30
Questions and Additional Information			30
PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT			31
Parties Involved in the Merger			31
Effect of the Merger			31
Effect on Altra If the Merger Is Not Completed			32
Merger Consideration			32
Background of the Merger			33
Recommendation of the Board and Reasons for the Merger			40
Opinion of Goldman Sachs			45
Certain Financial Forecasts			51
Interests of Altra’s Directors and Executive Officers in the Merger			54
Financing of the Merger			61
Closing and Effective Time			62
Accounting Treatment			62
Appraisal Rights			62
Material U.S. Federal Income Tax Consequences of the Merger			66
Regulatory Approvals Required for the Merger			70
THE MERGER AGREEMENT			72
Explanatory Note Regarding the Merger Agreement			72
Effects of the Merger			72
Closing and Effective Time of the Merger			73
Consideration To Be Received in the Merger			73
Excluded Shares			73
Treatment of Company Equity-Based Awards			74

Exchange and Payment Procedures			75
Representations and Warranties			76
Covenants Regarding Conduct of Business by the Company Pending the Effective Time			79
Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation			82
Efforts to Obtain the Company Stockholder Approval			87
Efforts to Consummate the Merger			87
Company Indebtedness			89
Financing			90
Indemnification and Insurance			91
Employee Benefits Matters			91
Additional Agreements			93
Conditions to the Closing of the Merger			93
Termination of the Merger Agreement			94
Termination Fees			95
Fees and Expenses			96
Withholding Taxes			97
Amendment			97
Extension; Waiver			97
Governing Law			97
Specific Enforcement			97
PROPOSAL 2: THE COMPENSATION PROPOSAL			98
PROPOSAL 3: THE ADJOURNMENT PROPOSAL			99
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			100
FUTURE STOCKHOLDER PROPOSALS			102
WHERE YOU CAN FIND MORE INFORMATION			103
MISCELLANEOUS			104
Annex A Agreement and Plan of Merger, dated as of October 26, 2022			A-1
Annex B Opinion of Goldman Sachs & Co. LLC			B-1

ALTRA INDUSTRIAL MOTION CORP.

300 Granite Street, Suite 201

Braintree, MA 02184

 

 

SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [                ]

 

PROXY STATEMENT

This proxy statement contains information relating to a special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of stockholders of Altra Industrial Motion Corp., a Delaware corporation (the “Company”, “Altra”, “we”, “us” or “our”), which will be held via live webcast on [                ], beginning at [                ] Eastern Time (unless the Special Meeting is adjourned or postponed). Altra stockholders will be able to virtually attend and vote at the Special Meeting by visiting [                ]. We are furnishing this proxy statement to holders of the Company’s issued and outstanding common stock, par value $0.001 per share (“Altra common stock”), as part of the solicitation of proxies by the Board of Directors of Altra (the “Board”) for use at the Special Meeting and at any adjournments or postponements thereof. This proxy statement is dated [                ], 2022 and is first being mailed to holders of Altra common stock on or about [                ], 2022. Throughout this proxy statement, we refer to Regal Rexnord Corporation, a Wisconsin corporation, as “Parent” or “Regal Rexnord”, Aspen Sub, Inc., a Delaware corporation, as “Merger Sub” and Altra, Parent and Merger Sub each as a “party” and together as the “parties”. In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated as of October 26, 2022 (as it may be amended from time to time), by and among Parent, Merger Sub and Altra as the “Merger Agreement”, and the holders of Altra common stock as “Altra stockholders”. Unless indicated otherwise, any other capitalized term used herein but not otherwise defined herein has the meaning assigned to such term in the Merger Agreement.

SUMMARY TERM SHEET

This summary term sheet highlights selected information from this proxy statement related to the Merger and may not contain all of the information that is important to you. To understand the Merger more fully and for a more complete description of the legal terms of the Merger, you should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including the Merger Agreement, along with all of the documents to which we refer in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement entitled “Where You Can Find More Information”. The Merger Agreement is attached as Annex A to this proxy statement. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger.

Parties Involved in the Merger

(page 31)

Altra Industrial Motion Corp.

Altra is a premier industrial global manufacturer and supplier of highly engineered motion control, automation, and power transmission systems and components. Altra’s portfolio consists of 26 well-respected brands including Bauer Gear Motor, Boston Gear, Kollmorgen, Portescap, Stromag, Svendborg Brakes, TB

 

1

Wood’s, Thomson and Warner Electric. Altra was incorporated in 2004 and its principal executive offices are located at 300 Granite Street, Suite 201, Braintree, MA 02184 and its telephone number is (781) 917-0600. Altra common stock is listed on The NASDAQ Global Select Market (the “Nasdaq”) under the symbol “AIMC”.

Regal Rexnord Corporation

Regal Rexnord is a global leader in the engineering and manufacturing of industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems, serving customers around the world. Through longstanding technology leadership and an intentional focus on producing more energy-efficient products and systems, Regal Rexnord helps create a better tomorrow—for its customers and for the planet. Regal Rexnord was incorporated under the laws of the State of Wisconsin in 1994. Regal Rexnord’s principal executive offices are located at 200 State Street, Beloit, WI 53511, and its telephone number is (608) 364-8800.

Aspen Sub, Inc.

Merger Sub is a Delaware corporation and a wholly owned subsidiary of Regal Rexnord and was formed on October 21, 2022, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon the completion of the Merger, Merger Sub will cease to exist and Altra will continue as the surviving corporation and a wholly owned subsidiary of Regal Rexnord (the “Surviving Corporation”). The principal executive offices of Merger Sub are located at 200 State Street, Beloit, WI 53511, and its telephone number is (608) 364-8800.

The Merger

(page 31)

On the terms and subject to the conditions of the Merger Agreement, and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), Merger Sub will merge with and into Altra (the “Merger”), the separate corporate existence of Merger Sub will cease and Altra will continue its corporate existence under the DGCL as the Surviving Corporation. As a result of the Merger, Altra common stock will no longer be publicly traded and will be delisted from the Nasdaq. In addition, Altra common stock will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Altra will no longer file periodic reports with the United States Securities and Exchange Commission (the “SEC”). If the Merger is completed, you will not own any shares of capital stock of the Surviving Corporation. The Merger will become effective at such time as the certificate of merger with respect to the Merger has been duly filed with the Secretary of State of the State of Delaware or, to the extent permitted by applicable law, at such later time as may be agreed by Altra and Regal Rexnord prior to filing the certificate of merger and specified in the certificate of merger (the “Effective Time”).

Background of the Merger

(page 33)

A description of the process we undertook that led to the Merger, including our discussions with Regal Rexnord, is included in this proxy statement under the section entitled “Proposal 1: Adoption of the Merger Agreement—Background of the Merger”.

Merger Consideration

(page 32)

Altra Common Stock

At the Effective Time, by virtue of the Merger and without any action on the part of Altra, Parent, Merger Sub or the holders of any securities of Altra or Merger Sub, each share of Altra common stock issued and

 

2

outstanding immediately prior to the Effective Time (other than (a) shares of Altra common stock owned by the Company, any wholly owned subsidiary of the Company, Parent, Merger Sub or any other wholly owned subsidiary of Parent, (b) shares of Altra common stock owned by stockholders of the Company who have validly exercised (and not withdrawn) their statutory rights of appraisal under Section 262 of the DGCL and (c) Company Restricted Shares (collectively, “Excluded Altra Shares”)) will be converted automatically into the right to receive $62.00 in cash, without interest (the “Merger Consideration”) and subject to any required tax withholding.

At or prior to the Effective Time, Parent will deposit (or cause to be deposited) with the Paying Agent (as defined in the section of this proxy statement entitled “The Merger Agreement—Exchange and Payment Procedures”) a cash amount that is sufficient to pay the aggregate Merger Consideration in exchange for all shares of Altra common stock outstanding immediately prior to the Effective Time (other than Excluded Altra Shares). For more information, please see the section of this proxy statement entitled “The Merger Agreement—Exchange and Payment Procedures”.

After the Merger is completed, you will have the right to receive the Merger Consideration in respect of each share of Altra common stock that you own (other than Excluded Altra Shares) immediately prior to the Effective Time (subject to any required tax withholding), but you will no longer have any rights as an Altra stockholder (except that Altra stockholders who properly and validly exercise and do not withdraw their appraisal rights will not be entitled to receive the Merger Consideration and instead shall have a right to receive payment of the “fair value” of their shares as determined pursuant to an appraisal proceeding, as contemplated by the DGCL). For more information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Appraisal Rights”.

Treatment of Company Equity-Based Awards

(page 32)

At the Effective Time, subject to all required withholding taxes, outstanding equity awards will be treated as follows:

 

•

each outstanding option to purchase shares of Altra common stock (a “Company Option”) that is vested and exercisable as of immediately prior to the Effective Time or portion thereof, will be canceled in exchange for the right to receive an amount in cash, without interest, equal to (i) the number of shares of Altra common stock subject to such Company Option immediately prior to the Effective Time multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option; provided that any such Company Option with an exercise price per share that is equal to or greater than the Merger Consideration will be canceled for no consideration;

 

•

each outstanding Company Option that is unvested, as of immediately prior to the Effective Time or portion thereof, will be converted into an award of stock options to purchase a number of Parent common shares (rounded down to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company Option immediately prior to the Effective Time multiplied by (ii) a conversion ratio described below, at an exercise price per share (rounded up to the nearest whole cent) equal to (x) the exercise price per share of such Company Option immediately prior to the Effective Time divided by (y) the conversion ratio. The conversion ratio is the quotient of (1) the Merger Consideration divided by (2) the average of the volume-weighted averages of the trading prices of shares of Parent common stock on the New York Stock Exchange (as reported by Bloomberg L.P.) on each of the five consecutive trading days ending on (and including) the trading day that is three trading days prior to the date of the closing of the Merger (the “Equity Award Conversion Ratio”). Each converted Company Option will be subject to substantially similar terms and conditions with respect to vesting and exercisability as were applicable to the related Company Option immediately prior to the Effective Time;

 

3

•

each outstanding restricted stock unit of the Company subject only to time-based vesting requirements (a “Company RSU”) that is unvested immediately prior to the Effective Time will be converted into a restricted stock unit denominated in Parent common shares (rounded to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company RSU immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company RSU will be subject to substantially similar terms and conditions with respect to vesting as were applicable to the related Company RSU immediately prior to the Effective Time;

 

•

each outstanding Company RSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) (x) the Merger Consideration multiplied by (y) the number of shares of Altra common stock subject to such Company RSU immediately prior to the Effective Time plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents;

 

•

each outstanding Company RSU that is subject to performance-based vesting requirements (a “Company PSU”) that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) the product of (x) the number of shares of Altra common stock subject to such vested Company PSU (assuming all applicable performance measures for vested Company PSUs are satisfied at the actual level of performance (measured as of the Effective Time), as determined by the Board in consultation with Parent) and (y) the Merger Consideration plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents;

 

•

each outstanding Company PSU that is unvested prior to the Effective Time will be canceled and converted into an award of time-based restricted stock denominated in Parent common shares equal to the product (rounded to the nearest whole number) of (i) the sum of (x) the number of shares of Altra common stock subject to such unvested Company PSU immediately prior to the Effective Time and (y) (1) the amount of any accrued unpaid dividend equivalents divided by (2) the Merger Consideration (assuming all applicable performance measures are satisfied at (i) the actual level of performance (measured as of the Effective Time) with respect to any performance period that expires on or prior to the Effective Time and (ii) the greater of (x) the target level of performance and (y) the actual level of performance (measured as of the Effective Time) with respect to any performance period that is scheduled to expire after the Effective Time, in each case, as determined by the Board in consultation with Parent) multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company PSU will be subject to substantially similar terms and conditions with respect to vesting terms as were applicable to the applicable Company PSU immediately prior to the Effective Time, except that the award will only be subject to time-based vesting conditions; and

 

•

each outstanding share of Altra common stock that is subject to forfeiture conditions, including those received as dividend equivalents (a “Company Restricted Share”) will be converted into an award of restricted cash (a “Restricted Cash Award”) equal to the product of (i) the number of shares of Altra common stock subject to such Company Restricted Share immediately prior to the Effective Time and (ii) the Merger Consideration. Each Restricted Cash Award will be subject to substantially similar terms and conditions with respect to vesting and forfeiture as were applicable to the applicable Company Restricted Share immediately prior to the Effective Time, except that the form of payment upon vesting and settlement will be in cash.

For more information, please see the section of this proxy statement entitled “The Merger Agreement—Treatment of Company Equity-Based Awards”.

Material U.S. Federal Income Tax Consequences of the Merger

(page 66)

The exchange of Altra common stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, for such purposes, a U.S. Holder (as defined in the section of this

 

4

proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger”) who exchanges shares of Altra common stock for cash in the Merger generally will recognize gain or loss in an amount equal to the difference, if any, between the amount of cash that such U.S. Holder receives pursuant to the Merger and such U.S. Holder’s adjusted tax basis in the shares of Altra common stock surrendered by such U.S. Holder pursuant to the Merger.

With respect to a non-U.S. Holder (as defined in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger”), the exchange of Altra common stock for cash in the Merger generally will not result in tax to that non-U.S. Holder under U.S. federal income tax laws unless that non-U.S. Holder has certain connections with the United States, but may be subject to backup withholding tax unless the non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding tax.

This proxy statement contains a general discussion of certain U.S. federal income tax consequences of the Merger. This description does not address any non-U.S. tax consequences, nor does it address state, local or other tax consequences or the consequences to holders who are subject to special treatment under U.S. federal income tax law. Consequently, you should consult your tax advisor to determine the particular U.S. federal, state, local and non-U.S. tax consequences to you of the Merger.

Appraisal Rights

(page 62)

If the Merger is consummated, persons who do not wish to accept the Merger Consideration are entitled to seek appraisal of their shares of Altra common stock under Section 262 of the DGCL (“Section 262”) and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their shares of Altra common stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery (the “Delaware Court”), together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of your shares of Altra common stock as determined by the Delaware Court may be more or less than, or the same as, the Merger Consideration that you are otherwise entitled to receive under the Merger Agreement. These rights are known as “appraisal rights”. This proxy statement serves as a notice of such appraisal rights pursuant to Section 262.

Persons who exercise appraisal rights under Section 262 will not receive the Merger Consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their shares of Altra common stock following petition to, and an appraisal by, the Delaware Court. Persons considering seeking appraisal should recognize that the fair value of their shares of Altra common stock determined under Section 262 could be more than, the same as or less than the Merger Consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 is required. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A holder of record or a beneficial owner of shares of Altra common stock who (i) continuously holds such shares through the Effective Time, (ii) has not consented to or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (iii) strictly complies with the procedures under Section 262, (iv) does not thereafter withdraw his, her or its demand for appraisal of such shares and (v) in the case of a beneficial owner, a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it

 

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purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by the Company and to be set forth on the Chancery List (as defined in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Appraisal Rights”), will be entitled to receive the fair value of his, her or its shares of Altra common stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court, together with interest, if any, to be paid upon the amount determined to be the fair value.

A copy of Section 262 may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. The foregoing summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. For more information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Appraisal Rights”.

Regulatory Approvals Required for the Merger

(page 70)

U.S. Regulatory Clearances

Under the Merger Agreement, the Merger cannot be completed until the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), has expired or been terminated. Altra and Parent made the filings required under the HSR Act on November 9, 2022, and the initial 30-day waiting period is scheduled to expire at 11:59 p.m. Eastern Time on December 9, 2022, unless otherwise extended.

Non-U.S. Regulatory Approvals

The Merger is also subject to receipt of the Other Regulatory Approvals (as defined under the heading “Proposal 1: Adoption of the Merger Agreement—Regulatory Approvals Required for the Merger—Other Regulatory Approvals”). In each case, the Merger cannot be completed until the parties obtain clearance or approval to consummate the Merger or the applicable waiting periods have expired or been terminated.

For more information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Regulatory Approvals Required for the Merger”.

Parent is required to pay Altra a termination fee (the “Parent Termination Fee”) equal to $200 million in connection with the termination of the Merger Agreement under specified antitrust related circumstances. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Termination Fees”.

Closing Conditions

(page 93)

The obligations of the parties to consummate the Merger are subject to the satisfaction or waiver of customary conditions, including (among other conditions) the following:

 

•

the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Altra common stock entitled to vote thereon (the “Company Stockholder Approval”);

 

•

the absence of any judgment enacted, promulgated, issued, entered, amended or enforced by any governmental authority of competent jurisdiction or any applicable law in effect (collectively, “Restraints”) enjoining or otherwise prohibiting the consummation of the Merger;

 

6

•

(i) the expiration or termination of the waiting period (and any extension thereof whether by agreement or operation of law) applicable to the consummation of the Merger under the HSR Act; and (ii) the Other Regulatory Approvals shall have been obtained and be in full force and effect;

 

•

the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain materiality qualifiers);

 

•

the performance and compliance in all material respects by the parties of their respective obligations required by the Merger Agreement to be performed or complied with by such party prior to the Effective Time; and

 

•

in the case of Parent and Merger Sub, the absence of any law or judgment (whether temporary, preliminary or permanent) enacted, issued, promulgated, enforced or entered by any governmental authority of competent jurisdiction, in each case pursuant to or arising under any antitrust law or investment screening law that is in effect that, individually or in the aggregate, results in the imposition of or requirement of any Burdensome Condition (as defined under the section of this proxy statement entitled “The Merger Agreement—Efforts to Consummate the Merger”).

For more information, please see the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger”.

Financing of the Merger

(page 61)

There is no financing condition to the Merger. Regal Rexnord plans to fund the Merger Consideration with cash on hand and committed debt financing, as described below.

In connection with the Merger, on October 26, 2022, Regal Rexnord entered into a commitment letter (the “Commitment Letter”) with JPMorgan Chase Bank, N.A. (“JPMorgan”) pursuant to which JPMorgan (i) committed to provide Regal Rexnord with, among other things, a 364-day senior unsecured bridge term loan facility in an aggregate principal amount of $5.5 billion (the “Bridge Facility”) for the purpose of funding, in part, the Merger Consideration, paying certain fees and expenses related to the Merger and related transactions and for general corporate purposes and (ii) agreed to use commercially reasonable efforts to arrange financing (through the issuance of notes and/or the incurrence of term loans) in an aggregate principal amount of up to $5.5 billion for the purpose of replacing the Bridge Facility.

On March 28, 2022, Regal Rexnord entered into the Second Amended and Restated Credit Agreement providing for term loan credit facilities (the “Term Loan Credit Facilities”) and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Credit Facilities, the “Parent Existing Credit Facility”). In connection with the Merger, on November 17, 2022, Regal Rexnord entered into an amendment (the “First Amendment”) to the Parent Existing Credit Facility pursuant to which, among other things, the lenders party thereto agreed to provide $600 million of additional commitments under the Term Loan Credit Facilities and $500 million of additional commitments under the Revolving Credit Facility, the Merger was permitted, the incurrence of debt in connection with the Merger was permitted and certain covenants were modified. Subject to the terms and conditions thereof, the increased commitments under the Term Loan Credit Facilities will be available to fund, in part, the Merger Consideration, pay certain fees and expenses related to the Merger and related transactions and for general corporate purposes.

The aggregate principal amount of the increased commitments under the Term Loan Credit Facilities have reduced on a dollar for dollar basis a corresponding amount of the commitments in respect of the Bridge Facility in accordance with the terms of the Commitment Letter. As a result, there are now $4.9 billion in Bridge Facility commitments remaining.

 

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Required Stockholder Approval

(page 26)

The affirmative vote of the holders of a majority of the outstanding shares of Altra common stock entitled to vote thereon is required to adopt the Merger Agreement (the “Merger Agreement Proposal”). As of [        ], 2022 (the “Record Date”), [        ] votes constitute a majority of the outstanding shares of Altra common stock entitled to vote thereon. Approval of the proposal to approve, on an advisory (nonbinding) basis, the compensation that may be paid or become payable to Altra’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated thereby (the “Compensation Proposal”) requires the affirmative vote of a majority of the shares of Altra common stock properly cast for and against the Compensation Proposal. Approval of the proposal to adjourn the Special Meeting (the “Adjournment Proposal”) (a) when a quorum is present, requires the affirmative vote of a majority of the shares of Altra common stock properly cast for and against the Adjournment Proposal, and (b) when a quorum is not present, requires the affirmative vote of the holders of shares of Altra common stock representing a majority of the voting power present at the Special Meeting. The approval of the Compensation Proposal is advisory (nonbinding) and is not a condition to the completion of the Merger.

As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [        ] shares of Altra common stock, representing approximately [    ]% of the shares of Altra common stock outstanding as of the Record Date.

We currently expect that each of our directors and executive officers will vote all of their respective shares of Altra common stock: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

The Special Meeting

(page 25)

Date, Time and Location

The Special Meeting to consider and vote on the proposal to adopt the Merger Agreement will be held virtually via live webcast on [        ], beginning at [        ] Eastern Time (unless the Special Meeting is adjourned or postponed). Altra stockholders will be able to virtually attend and vote at the Special Meeting by visiting [                ] (the “Special Meeting website”). To attend the Special Meeting, you must pre-register at [        ] by [        ] Eastern Time on [        ]. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

Record Date; Shares Entitled to Vote

You are entitled to vote at the Special Meeting if you owned shares of Altra common stock at the close of business on the Record Date. Each Altra stockholder shall be entitled to one vote for each such share owned at the close of business on the Record Date.

Quorum

As of the Record Date, there were [        ] shares of Altra common stock outstanding and entitled to vote at the Special Meeting. The presence, in person or represented by proxy, of the holders of a majority of the shares of Altra common stock entitled to vote on the Record Date, will constitute a quorum at the Special Meeting.

Recommendation of the Altra Board of Directors

(page 40)

The Board has unanimously: (a) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the consummation by the Company of the Merger and the other

 

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transactions contemplated by the Merger Agreement; (b) declared that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, Altra and its stockholders; (c) directed that the adoption of the Merger Agreement be submitted for consideration by Altra stockholders at the Special Meeting; and (d) resolved to recommend that Altra stockholders adopt the Merger Agreement.

The Board unanimously recommends that you vote: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

Prior to the adoption of the Merger Agreement by Altra stockholders, under certain circumstances, the Board may make an Adverse Recommendation Change (as defined in the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”) in response to an Intervening Event (as defined in the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”) or in connection with a Superior Proposal (as defined in the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”).

However, the Board cannot make an Adverse Recommendation Change unless it complies with certain procedures in the Merger Agreement, including negotiating with Parent in good faith over a three-business day period to amend or modify the Merger Agreement to obviate the need for such Adverse Recommendation Change, after which the Board shall have determined, after consultation with outside counsel and its financial advisor, that the failure of the Board to make an Adverse Recommendation Change would be reasonably likely to be inconsistent with the directors’ exercise of their duties to the Company or its stockholders under applicable law. The termination of the Merger Agreement (a) by Parent in the event of (1) an Adverse Recommendation Change, (2) the Company’s failure to recommend rejection of a tender offer or exchange offer that constitutes a Takeover Proposal (as defined in the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”) within 10 business days after the commencement thereof, or (3) the Company’s failure to publicly reaffirm its recommendation that Altra stockholders adopt the Merger Agreement (the “Board Recommendation”) within 10 business days following receipt of a written request by Parent to provide such reaffirmation following the public announcement or disclosure of a Takeover Proposal or (b) by Altra to enter into a definitive agreement to consummate a Superior Proposal, in each case of clauses (a) and (b), will result in the payment by Altra of a termination fee (the “Company Termination Fee”) of $100 million. Altra will also be required to pay the Company Termination Fee in additional circumstances that involve a Takeover Proposal being made prior to certain terminations of the Merger Agreement and Altra subsequently consummating a Takeover Proposal. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”.

Opinion of Goldman Sachs & Co. LLC

(page 45 and Annex B)

Goldman Sachs & Co. LLC (“Goldman Sachs”) rendered its oral opinion to the Board, which was subsequently confirmed by delivery of a written opinion that, as of October 26, 2022, and based upon and subject to the factors and assumptions set forth therein, the $62.00 in cash per share of Altra common stock (each, a “Share”) to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated October 26, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information

 

9

and assistance of the Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of Shares should vote with respect to the Merger or any other matter. Pursuant to an engagement letter between the Company and Goldman Sachs, the Company has agreed to pay Goldman Sachs a transaction fee of $45 million, $5 million of which became payable at announcement of the Merger, and the remainder of which is contingent upon consummation of the Merger.

For additional information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Opinion of Goldman Sachs” and the full text of the written opinion of Goldman Sachs attached as Annex B to this proxy statement.

Interests of Altra’s Directors and Executive Officers in the Merger

(page 54)

Altra’s directors and executive officers have financial interests in the Merger that may be different from, or in addition to, the interests of Altra stockholders generally. The members of the Board were aware of and considered these interests in reaching the determination to approve the Merger Agreement and recommend that Altra stockholders vote their Altra common shares to adopt the Merger Agreement. These interests may include the following:

 

•

(i) each outstanding Company Option, Company RSU and Company PSU that is vested prior to the Effective Time will be canceled in exchange for a cash payment, without interest, upon the Effective Time, (ii) each outstanding Company Option, Company RSU and Company PSU that is unvested immediately prior to the Effective Time will be converted at the Effective Time into an unvested award representing a number of shares of Parent common stock and (iii) each outstanding Company Restricted Share that is unvested immediately prior to the completion of Merger will be converted at the Effective Time into an unvested award of restricted cash (as described in the section of this proxy statement entitled “The Merger Agreement—Treatment of Company Equity-Based Awards”);

 

•

each of Messrs. Christenson, Deegan, Patriacca and Schuele is eligible to receive a retention award in the event that, despite mitigation efforts, the applicable executive officer will receive “excess parachute payments” (as defined in Section 280G of the Internal Revenue Code) (as of the date of this proxy statement, no determinations have been made as to whether any such individual will receive a retention payment or the amounts of any such potential payments to any particular individual);

 

•

each of the Company’s named executive officers entered into a change in control agreement with the Company that provides for severance and other benefits in the case of a “qualifying termination” prior to, on or following a change in control, which will include the completion of the Merger (as described in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Company’s Directors and Executive Officers in the Merger—Severance Entitlements”); and

 

•

the Company’s directors and executive officers are entitled to continued indemnification and insurance coverage under the Merger Agreement.

Please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Company’s Directors and Executive Officers in the Merger” for additional information about these financial interests.

Restrictions on Solicitation of Takeover Proposals

(page 82)

Under the Merger Agreement, Altra may not, directly or indirectly: (a) initiate, solicit or knowingly encourage, knowingly induce or knowingly facilitate (including by way of furnishing non-public information) the making, submission or announcement of any Takeover Proposal or any proposal, inquiry or offer that would

 

10

reasonably be expected to lead to a Takeover Proposal, (b) make available any information regarding the Company or any of its subsidiaries to any person (other than Parent and Parent’s or the Company’s representatives acting in their capacity as such) in connection with or in response to a Takeover Proposal or any proposal, inquiry or offer that would reasonably be expected to lead to a Takeover Proposal, (c) engage in, continue or otherwise participate in any discussions or negotiations regarding any Takeover Proposal or any proposal, inquiry or offer that would reasonably be expected to lead to a Takeover Proposal or (d) enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar contract providing for, relating to or in connection with any Takeover Proposal (other than an Acceptable Confidentiality Agreement (as defined in the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”)).

Notwithstanding the foregoing restrictions, if, prior to the adoption of the Merger Agreement by Altra stockholders Altra receives a Takeover Proposal that did not result from a breach of the foregoing restrictions, Altra may furnish information pursuant to an Acceptable Confidentiality Agreement (provided that within 24 hours Altra provides Parent any non-public information not previously provided to it), and engage in discussions or negotiations with, a person in respect of a Takeover Proposal if in each case, subject to complying with certain procedures, the Board determines in good faith (after consultation with outside counsel and its financial advisor) that such Takeover Proposal constitutes or could reasonably be expected to result in a Superior Proposal. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”.

Prior to the adoption of the Merger Agreement by Altra stockholders, Altra is entitled to terminate the Merger Agreement for the purpose of entering into a definitive agreement to effect a Superior Proposal if it pays the Company Termination Fee described below and complies with certain procedures in the Merger Agreement, including (a) giving Parent at least three business days’ prior written notice of its intention to take such action, (b) during such three-business day period, negotiating with Parent in good faith to enable Parent to propose in writing a binding offer to effect revisions to the terms of the Merger Agreement and the Debt Commitment Letter such that it would cause such Superior Proposal to no longer constitute a Superior Proposal and (c) following the end of such three-business day period, the Board again determines in good faith (after consultation with outside counsel and its financial advisor) that the Superior Proposal would continue to constitute a Superior Proposal if the proposed revisions in such binding offer were to be given effect.

The termination of the Merger Agreement by Altra in connection with the Board’s authorization for Altra to enter into a definitive agreement to effect a Superior Proposal will result in the payment by Altra of a termination fee of $100 million. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Restrictions on Solicitation of Takeover Proposals; The Board’s Recommendation; Change of Recommendation”.

Termination of the Merger Agreement

(page 94)

In addition to the circumstances described above, Parent and Altra have certain rights to terminate the Merger Agreement under customary circumstances, including (a) by mutual agreement; (b) the imposition of a final and non-appealable Restraint; (c) certain uncured breaches of the Merger Agreement by the other party; (d) if the Effective Time shall not have occurred on or prior to October 26, 2023 (the “Outside Date”, except that (i) if the Marketing Period (as described under “Proposal 1: Adoption of the Merger Agreement—Financing of the Merger”) has commenced but not been completed as of the Outside Date, the Outside Date shall automatically be extended to the date that is three business days following the then-scheduled end date of the Marketing Period and (ii) if on the Outside Date any of the conditions set forth under the second (to the extent relating to any antitrust law or investment screening law), third or sixth bullet under “Closing Conditions” above are not satisfied but all other closing conditions have been satisfied or waived, then the Outside Date will

 

11

automatically be extended to April 26, 2024); or (e) if Altra stockholders fail to adopt the Merger Agreement at the Special Meeting (or any adjournment or postponement thereof). For more information, please see the section of this proxy statement entitled “The Merger Agreement—Termination of the Merger Agreement”.

Under certain circumstances, Altra will be required to pay Parent a termination fee equal to $100 million and, under certain other circumstances, Parent will be required to pay Altra a termination fee equal to $200 million. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Termination Fees”.

Effect on Altra If the Merger Is Not Completed

(page 32)

If the Merger Agreement is not adopted by Altra stockholders, or if the Merger is not completed for any other reason:

 

•

the Altra stockholders will not be entitled to, nor will they receive, any payment for their respective shares of Altra common stock pursuant to the Merger Agreement;

 

•

(a) Altra will remain an independent public company; (b) Altra common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act; and (c) Altra will continue to file periodic reports with the SEC; and

 

•

under certain specified circumstances described in the section of this proxy statement entitled “The Merger Agreement—Termination Fees”, Altra will be required to pay Parent a termination fee of $100 million and, under certain other specified circumstances described in such section of this proxy statement, Parent will be required to pay Altra a termination fee of $200 million.

For more information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Effect on Altra If the Merger Is Not Completed”.

Current Price of Shares

(page 31)

The closing sale price of Altra common stock on the Nasdaq on [ ], 2022 was $[ ]. You are encouraged to obtain current market quotations for Altra common stock in connection with voting your shares of Altra common stock.

Additional Information

(page 103)

You can find more information about the Company in the periodic reports and other information we file with the SEC. The information is available at the SEC’s public reference facilities and at the website maintained by the SEC at www.sec.gov. Please see the section of this proxy statement entitled “Where You Can Find More Information”.

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING OF STOCKHOLDERS AND THE MERGER

The following questions and answers address some commonly asked questions regarding the Merger, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that are important to you. You should carefully read and consider the more detailed information contained elsewhere in this proxy statement and the annexes to this proxy statement, including the Merger Agreement, along with all of the documents we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement entitled “Where You Can Find More Information”.

Q: Why am I receiving these materials?

A: The Board is furnishing this proxy statement and form of proxy card to the Altra stockholders in connection with the solicitation of proxies to be voted at the Special Meeting.

Q: When and where is the Special Meeting?

A: The Special Meeting is scheduled to be held virtually via live webcast on [                ], at [        ] Eastern Time (unless the Special Meeting is adjourned or postponed). There will not be a physical meeting location. In light of continuing public health and travel concerns arising from the COVID-19 pandemic, Altra believes hosting a virtual meeting helps ensure the health and safety of its stockholders, the Board and Altra management. Additionally, the virtual nature of the Special Meeting is generally designed to enable participation of and access by more Altra stockholders while decreasing the cost of conducting the Special Meeting. Altra stockholders will be able to virtually attend and vote at the Special Meeting by visiting [                ]. To attend the Special Meeting, you must pre-register at [        ] by [        ] Eastern Time on [                ].

Q: What am I being asked to vote on at the Special Meeting?

A: You are being asked to vote on the following proposals:

 

•

to adopt the Merger Agreement Proposal;

 

•

to approve, on an advisory (nonbinding) basis, the Compensation Proposal; and

 

•

to approve the Adjournment Proposal.

Q:    Who is entitled to vote at the Special Meeting?

A: Altra stockholders as of the Record Date are entitled to notice of the Special Meeting and to vote at the Special Meeting. Each holder of shares of Altra common stock shall be entitled to cast one vote on each matter properly brought before the Special Meeting for each such share owned at the close of business on the Record Date. Virtual attendance at the Special Meeting via the Special Meeting website is not required to vote.

Q: May I attend and vote at the Special Meeting?

A: All Altra stockholders as of the Record Date may attend and vote at the Special Meeting. To vote your shares at the Special Meeting, you must pre-register for the Special Meeting at [        ] by [        ] Eastern Time on [                ]. For additional information on how to pre-register for the Special Meeting, please see the section entitled “The Special Meeting—Pre-Registering for the Special Meeting”.

Shares held directly in your name as an Altra stockholder of record may be voted at the Special Meeting via the Special Meeting website, provided you have pre-registered for the Special Meeting. Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website only if you obtain a legal proxy from your bank, broker or other nominee and provided you have pre-registered for the Special Meeting.

 

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Even if you plan to attend the virtual Special Meeting, we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in the section of this proxy statement entitled “The Special Meeting—Voting at the Special Meeting”) so that your vote will be counted if you later decide not to or become unable to virtually attend the Special Meeting. If you attend the Special Meeting and vote thereat, your vote will revoke any proxy previously submitted.

Q: What will I receive if the Merger is completed?

A: Upon completion of the Merger, you will be entitled to receive the Merger Consideration of $62.00 in cash, without interest and subject to any required tax withholding, for each share of Altra common stock that you own (other than Excluded Altra Shares) immediately prior to the Effective Time. For example, if you own 100 shares of Altra common stock (other than Excluded Altra Shares), you will receive $6,200 in cash in exchange for your shares of Altra common stock, without interest and less any applicable withholding taxes.

Q: What are the material U.S. federal income tax consequences of the Merger?

A:    The exchange of Altra common stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, for such purposes, a U.S. Holder (as defined in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger”) who exchanges shares of Altra common stock for cash in the Merger generally will recognize gain or loss in an amount equal to the difference, if any, between the amount of cash that such U.S. Holder receives pursuant to the Merger and such U.S. Holder’s adjusted tax basis in the shares of Altra common stock surrendered by such U.S. Holder pursuant to the Merger.

With respect to a non-U.S. Holder (as defined in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger”), the exchange of Altra common stock for cash in the Merger generally will not result in tax to that non-U.S. Holder under U.S. federal income tax laws unless that non-U.S. Holder has certain connections with the United States, but may be subject to backup withholding tax unless the non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding tax.

This proxy statement contains a general discussion of certain U.S. federal income tax consequences of the Merger. This description does not address any non-U.S. tax consequences, nor does it address state, local or other tax consequences or the consequences to holders who are subject to special treatment under U.S. federal income tax law. Consequently, you should consult your tax advisor to determine the particular U.S. federal, state, local and non-U.S. tax consequences to you of the Merger.

Q: What will happen to outstanding Altra equity compensation awards in the Merger?

A: At the Effective Time, subject to all required withholding taxes, outstanding equity awards will be treated as follows:

 

•

each outstanding Company Option that is vested and exercisable as of immediately prior to the Effective Time or portion thereof, will be canceled in exchange for the right to receive an amount in cash, without interest, equal to (i) the number of shares of Altra common stock subject to such Company Option immediately prior to the Effective Time multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option; provided that any such Company Option with an exercise price per share that is equal to or greater than the Merger Consideration will be canceled for no consideration;

 

•

each outstanding Company Option that is unvested, as of immediately prior to the Effective Time or portion thereof, will be converted into an award of stock options to purchase a number of Parent

 

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common shares (rounded down to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company Option immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (x) the exercise price per share of such Company Option immediately prior to the Effective Time divided by (y) the Equity Award Conversion Ratio. Each converted Company Option will be subject to substantially similar terms and conditions with respect to vesting and exercisability as were applicable to the related Company Option immediately prior to the Effective Time;

 

•

each outstanding Company RSU that is unvested immediately prior to the Effective Time will be converted into a restricted stock unit denominated in Parent common shares (rounded to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company RSU immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company RSU will be subject to substantially similar terms and conditions with respect to vesting as were applicable to the related Company RSU immediately prior to the Effective Time;

 

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each outstanding Company RSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) (x) the Merger Consideration multiplied by (y) the number of shares of Altra common stock subject to such Company RSU immediately prior to the Effective Time plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents;

 

•

each outstanding Company PSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) the product of (x) the number of shares of Altra common stock subject to such vested Company PSU (assuming all applicable performance measures for vested Company PSUs are satisfied at the actual level of performance (measured as of the Effective Time), as determined by the Board in consultation with Parent) and (y) the Merger Consideration plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents);

 

•

each outstanding Company PSU that is unvested prior to the Effective Time will be canceled and converted into an award of time-based restricted stock denominated in Parent common shares equal to the product (rounded to the nearest whole number) of (i) the sum of (x) the number of shares of Altra common stock subject to such unvested Company PSU immediately prior to the Effective Time and (y)(1) the amount of any accrued unpaid dividend equivalents divided by (2) the Merger Consideration (assuming all applicable performance measures are satisfied at (i) the actual level of performance (measured as of the Effective Time) with respect to any performance period that expires on or prior to the Effective Time and (ii) the greater of (x) the target level of performance and (y) the actual level of performance (measured as of the Effective Time) with respect to any performance period that is scheduled to expire after the Effective Time, in each case, as determined by the Board in consultation with Parent) multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company PSU will be subject to substantially similar terms and conditions with respect to vesting terms as were applicable to the applicable Company PSU immediately prior to the Effective Time, except that the award will only be subject to time-based vesting conditions; and

 

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each outstanding Company Restricted Share will be converted into a Restricted Cash Award equal to the product of (i) the number of shares of Altra common stock subject to such Company Restricted Share immediately prior to the Effective Time and (ii) the Merger Consideration. Each Restricted Cash Award will be subject to substantially similar terms and conditions with respect to vesting and forfeiture as were applicable to the applicable Company Restricted Share immediately prior to the Effective Time, except that the form of payment upon vesting and settlement will be in cash.

For more information, please see the section of this proxy statement entitled “The Merger Agreement—Treatment of Company Equity-Based Awards”.

 

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Q: How do Altra’s directors and executive officers intend to vote?

A: As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [        ] shares of Altra common stock, representing approximately [    ]% of the shares of Altra common stock outstanding as of the Record Date. Although none of the directors or executive officers is obligated to vote to approve the Merger Agreement and the transactions contemplated thereby, we currently expect that each of our directors and executive officers will vote all of their respective shares of Altra common stock: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

Q: Do any of the Company’s directors or executive officers have any interests in the Merger that are different from, or in addition to, my interests as an Altra stockholder?

A: In considering the proposals to be voted on at the Special Meeting, you should be aware that Altra’s directors and executive officers have financial interests in the Merger that may be different from, or in addition to, the interests of Altra stockholders generally. The members of the Board were aware of and considered these interests in reaching the determination to approve the Merger Agreement and recommend that Altra stockholders vote their Altra common shares to adopt the Merger Agreement. These interests may include the following:

 

•

(i) each outstanding Company Option, Company RSU and Company PSU that is vested prior to the Effective Time will be canceled in exchange for a cash payment, without interest, upon the Effective Time, (ii) each outstanding Company Option, Company RSU and Company PSU that is unvested immediately prior to the Effective Time will be converted at the Effective Time into an unvested award representing a number of shares of Parent common stock and (iii) each outstanding Company Restricted Share that is unvested immediately prior to the completion of Merger will be converted at the Effective Time into an unvested award of restricted cash (as described in the section of this proxy statement entitled “The Merger Agreement—Treatment of Company Equity-Based Awards”);

 

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each of Messrs. Christenson, Deegan, Patriacca and Schuele is eligible to receive a retention award in the event that, despite mitigation efforts, the applicable executive officer will receive “excess parachute payments” (as defined in Section 280G of the Internal Revenue Code) (as of the date of this proxy statement, no determinations have been made as to whether any such individual will receive a retention payment or the amounts of any such potential payments to any particular individual);

 

•

each of the Company’s named executive officers entered into a change in control agreement with the Company that provides for severance and other benefits in the case of a “qualifying termination” prior to, on or following a change in control, which will include the completion of the Merger (as described in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Company’s Directors and Executive Officers in the Merger—Severance Entitlements”); and

 

•

the Company’s directors and executive officers are entitled to continued indemnification and insurance coverage under the Merger Agreement.

Please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Interests of the Company’s Directors and Executive Officers in the Merger” for additional information about these financial interests.

Q: What vote is required to approve the Merger Agreement Proposal, the Compensation Proposal and the Adjournment Proposal?

A: The affirmative vote of the holders of a majority of the outstanding shares of Altra common stock entitled to vote thereon is required to adopt the Merger Agreement. The affirmative vote of the holders of a majority of the shares of Altra common stock properly cast for and against the Compensation Proposal is

 

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required to approve the Compensation Proposal. The affirmative vote of either (a) a majority of the shares of Altra common stock properly cast for and against the Adjournment Proposal, when a quorum is present, or (b) the affirmative vote of the holders of the shares of Altra common stock representing a majority of the voting power present at the Special Meeting, when a quorum is not present, is required, as applicable, for approval of the Adjournment Proposal.

If a quorum is present at the Special Meeting, the failure of any Altra stockholder of record to: (a) submit a signed proxy card; (b) grant a proxy over the Internet or by telephone (in accordance with the instructions detailed in the section of this proxy statement entitled “The Special Meeting-Voting at the Special Meeting”); or (c) vote virtually at the Special Meeting will have the same effect as a vote “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal or the Adjournment Proposal. If you hold your shares in “street name” and a quorum is present at the Special Meeting, the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal or the Adjournment Proposal. If a quorum is present at the Special Meeting, abstentions will have the same effect as a vote “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal and the Adjournment Proposal. Each “broker non-vote” will also count as a vote “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal or the Adjournment Proposal. If a quorum is not present, abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal. If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

The Company does not intend to call a vote on the Adjournment Proposal if the Merger Agreement Proposal is approved at the Special Meeting.

Q: What happens if the Merger is not completed?

A: If the Merger Agreement is not adopted by Altra stockholders or if the Merger is not completed for any other reason, Altra stockholders will not receive any payment for their shares of Altra common stock. Instead, Altra will remain an independent public company, Altra common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act, and Altra will continue to file periodic reports with the SEC.

Under certain circumstances, Altra will be required to pay Parent a termination fee equal to $100 million and, under certain other circumstances, Parent will be required to pay Altra a termination fee equal to $200 million. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Termination Fees”.

Q: Why are Altra stockholders being asked to cast an advisory (nonbinding) vote to approve the Compensation Proposal?

A: The Exchange Act and applicable SEC rules thereunder require Altra to seek an advisory (nonbinding) vote with respect to certain payments that could become payable to its named executive officers in connection with the Merger.

Q: What will happen if Altra stockholders do not approve the Compensation Proposal at the Special Meeting?

A: Approval of the Compensation Proposal is not a condition to the completion of the Merger. The vote with respect to the Compensation Proposal is an advisory vote and will not be binding on Altra. Therefore, if the approval of the Merger Agreement Proposal is obtained and the Merger is completed, the amounts payable under the Compensation Proposal will be payable to Altra’s named executive officers in accordance with the terms and conditions of the applicable agreements, regardless of whether the Compensation Proposal is approved.

 

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Q: What do I need to do now?

A: You should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including the Merger Agreement, along with all of the documents that we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. Then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in the section of this proxy statement entitled “The Special Meeting—Voting at the Special Meeting”), so that your shares can be voted at the Special Meeting. If you hold your shares in “street name”, please refer to the voting instruction form provided by your bank, broker or other nominee to vote your shares.

Q: Should I surrender my book-entry shares now?

A: No. After the Merger is completed, the Paying Agent will mail a check, or make a wire transfer, to each holder of book-entry shares in an amount of U.S. dollars equal to the aggregate amount of Merger Consideration, without interest, to which such holder is entitled, as described in the section of this proxy statement entitled “The Merger Agreement—Exchange and Payment Procedures”.

Q: If I hold my Altra common stock in certificated form, should I send in my stock certificates now?

A: No. After the Merger is completed, the Paying Agent will mail to each holder of certificated shares whose shares were converted into the Merger Consideration a letter of transmittal and instructions for use in effecting the surrender of certificates in exchange for the Merger Consideration. Each such holder of Altra common stock will be entitled to receive the Merger Consideration upon the surrender of such certificates, together with the associated letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required by the Paying Agent. You should not forward your stock certificates to the Paying Agent without a letter of transmittal, and you should not return your stock certificates with the enclosed proxy card. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Exchange and Payment Procedures”.

Q: What happens if I sell or otherwise transfer my shares of Altra common stock after the Record Date but before the Special Meeting?

A: The Record Date for the Special Meeting is earlier than the date of the Special Meeting and the date the Merger is expected to be completed. If you sell or transfer your shares of Altra common stock after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies Altra in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the Special Meeting. Even if you sell or otherwise transfer your shares of Altra common stock after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in the section of this proxy statement entitled “The Special Meeting—Voting at the Special Meeting”).

Q: What is the difference between holding shares as an Altra stockholder of record and holding shares in “street name” as a beneficial owner?

A: If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered to be the “stockholder of record” with respect to those shares. In this case, this proxy statement and your proxy card have been sent directly to you by Altra.

 

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If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of Altra common stock held in “street name”. In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the Altra stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the virtual Special Meeting.

Q: How may I vote?

A: If you are an Altra stockholder of record (that is, if your shares of Altra common stock are registered in your name with American Stock Transfer & Trust Company, our transfer agent), there are four ways to vote:

 

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Internet: Vote at [        ] in advance of the Special Meeting. The Internet voting system is available 24 hours a day until 11:59 p.m. Eastern Time on [        ]. Once you enter the Internet voting system, you can record and confirm (or change) your voting instructions.

 

•

Telephone: Use the telephone number shown on your proxy card. The telephone voting system is available 24 hours a day in the United States until 11:59 p.m. Eastern Time on [        ]. Once you enter the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions.

 

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Mail: Mark your voting instructions on the card and sign, date and return it in the postage-paid envelope provided. For your mailed proxy card to be counted, we must receive it before [        ] on [        ].

 

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At the Special Meeting: To vote your shares at the Special Meeting, you must pre-register at [        ] by [        ] Eastern Time on [        ]. Shares held directly in your name as an Altra stockholder of record may be voted at the Special Meeting via the Special Meeting website, provided you have pre-registered for the Special Meeting. Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website only if you obtain a legal proxy from your bank, broker or other nominee, and provided you have pre-registered for the Special Meeting.

If your shares of Altra common stock are held “in street name” by a bank, broker or other nominee, the holder of your shares will provide you with a copy of this proxy statement, a voting instruction form and directions on how to provide voting instructions. These directions may allow you to vote over the Internet or by telephone.

Whether or not you plan to attend the virtual Special Meeting, we urge you to vote in advance by proxy to ensure your vote is counted. We encourage you to submit your proxy over the Internet or by telephone, both of which are convenient, cost-effective and reliable alternatives to returning a proxy card by mail. You may still attend the Special Meeting and vote thereat if you have already voted by proxy.

Please be aware that, although there is no charge for voting your shares, if you vote electronically over the Internet by visiting the address on your proxy card or by telephone by calling the phone number on your proxy card, in each case, you may incur costs such as Internet access and telephone charges for which you will be responsible.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the Internet or by telephone.

Q: What is a proxy?

A: A proxy is an Altra stockholder’s legal designation of another person to vote shares owned by such Altra stockholder on their behalf. If you are an Altra stockholder of record, you can vote by proxy over the Internet, by

 

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telephone or by mail by following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name”, you should follow the voting instructions provided by your bank, broker or other nominee.

Q: If an Altra stockholder gives a proxy, how are the shares voted?

A: Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

Q: If my broker holds my shares in “street name”, will my broker vote my shares for me?

A: No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the Special Meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares. Without instructions, your shares will not be voted on such proposals, which will have the same effect as if you voted against the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal or the Adjournment Proposal.

Q: May I change my vote after I have mailed my signed and dated proxy card?

A: Yes. You can change or revoke your proxy before the Special Meeting in the manner described in this proxy statement. If you are the record holder of your shares, you may change or revoke your proxy by any of the following actions:

 

•

You may vote again over the Internet or by telephone as instructed on your proxy card before the closing of the voting facilities at 11:59 p.m. Eastern Time on [        ].

 

•

You may submit another properly signed proxy card with a later date, provided such proxy card is received no later than the close of business on [        ].

 

•

You may send a signed written notice that you are revoking your proxy to Altra’s Secretary at 300 Granite Street, Suite 201, Braintree, MA 02184, provided such written notice is received no later than the close of business on [        ].

 

•

You may attend the Special Meeting and vote thereat. Simply attending the virtual Special Meeting will not, by itself, revoke your proxy.

If you hold your shares of Altra common stock in “street name”, you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the Special Meeting via the Special Meeting website, provided you have pre-registered for the Special Meeting.

If you have any questions about how to vote or change your vote, you should contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free: 1 (877) 456-3513

Banks and Brokers may call collect: 1 (212) 750-5833

 

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Q: What should I do if I receive more than one set of voting materials?

A: This means you own shares of Altra common stock that are registered under different names or are in more than one account. For example, you may own some shares directly as an Altra stockholder of record and other shares through a broker, or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope. If you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.

Q: How many copies of this proxy statement and related voting materials should I receive if I share an address with another Altra stockholder?

A: The SEC’s proxy rules permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy statements with respect to two or more Altra stockholders sharing the same address by delivering a single proxy statement to those Altra stockholders. This process, which is commonly referred to as “householding”, potentially provides extra convenience for Altra stockholders and cost savings for companies.

Altra and some brokers may be householding our proxy materials by delivering a single set of proxy materials to multiple Altra stockholders who request a copy and share an address, unless contrary instructions have been received from the affected Altra stockholders. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker if your shares are held in a brokerage account or Altra if you are an Altra stockholder of record by making a request to our Secretary at 300 Granite Street, Suite 201, Braintree, MA 02184 or by calling (781) 917-0600. In addition, Altra will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the proxy statement.

Q: Where can I find the voting results of the Special Meeting?

A: The preliminary voting results for the Special Meeting are expected to be announced at the Special Meeting. In addition, within four business days following certification of the final voting results, Altra will file the final voting results of the Special Meeting (or, if the final voting results have not yet been certified, the preliminary results) with the SEC on a Current Report on Form 8-K.

Q: Who will solicit and pay the cost of soliciting proxies?

A: Altra has engaged Innisfree M&A Incorporated to assist in the solicitation of proxies for the Special Meeting. Altra expects to pay Innisfree M&A Incorporated a fee of $45,000, plus certain costs associated with additional services, as necessary, and Innisfree M&A Incorporated will be reimbursed for certain out-of-pocket fees and expenses. Altra has agreed to indemnify Innisfree M&A Incorporated against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).

Altra also may reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Altra common stock. Altra directors, officers and employees also may solicit proxies by telephone, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies.

Q: When do you expect the Merger to be completed?

A: We currently expect to complete the Merger in the first half of 2023. However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to the closing conditions specified in

 

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the Merger Agreement and summarized in this proxy statement, many of which are outside of our control. For more information, please see the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger”.

Q: How can I obtain additional information about Altra?

A: Altra will provide copies of this proxy statement, documents incorporated by reference and its 2022 Annual Report to Stockholders, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, without charge to any Altra stockholder who makes a request in writing or by telephone to Altra’s Investor Relations Department at 300 Granite Street, Suite 201, Braintree, MA 02184 or (781) 917-0600. In order for you to receive timely delivery of documents in advance of the Special Meeting, you must make such request by no later than [        ]. Altra’s Annual Report and other SEC filings may also be accessed at https://sec.gov or on Altra’s investor website at https://ir.altramotion.com. Altra’s website address is provided as an inactive textual reference only. The information provided on or accessible through our website is not part of this proxy statement and is not incorporated in this proxy statement by this or any other reference to our website provided in this proxy statement.

Q: Who can help answer my questions?

A: If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of Altra common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free: 1 (877) 456-3513

Banks and Brokers may call collect: 1 (212) 750-5833

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this proxy statement, together with other statements and information publicly disseminated by Altra, contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Altra intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions, which reflect Altra’s current estimates, expectations and projections about Altra’s future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning Altra’s possible future results of operations including revenue, costs of goods sold, gross margin, future profitability, future economic improvement, business and growth strategies, financing plans, expected leverage levels, Altra’s competitive position and the effects of competition, the projected growth of the industries in which we operate, Altra’s ability to consummate the Merger and other strategic transactions on the expected timeline or at all and Altra’s expectations regarding the Special Meeting. Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”, “intend”, “plan”, “may”, “project”, “should”, “will”, “would”, and similar expressions or variations. These forward-looking statements are based upon information currently available to Altra and are subject to a number of risks, uncertainties, and other factors that could cause Altra’s actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

 

•

the Merger may not be completed in a timely manner or at all, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect Altra or the expected benefits of the Merger or that the approval of Altra stockholders is not obtained;

 

•

the ability of Regal Rexnord to obtain debt financing in connection with the Merger;

 

•

the possibility that any or all of the various conditions to the consummation of the Merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals);

 

•

the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger, including in circumstances which would require Altra to pay the Company Termination Fee;

 

•

the effect of the announcement or pendency of the Merger on Altra’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers, distributors and others with whom it does business, or its operating results and business generally;

 

•

risks related to the Merger and related transactions diverting management’s attention from Altra’s ongoing business operations;

 

•

the risk that shareholder litigation in connection with the Merger may result in significant costs of defense, indemnification and liability; and

 

•

other factors discussed in the “Risk Factors” and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Altra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 28, 2022, and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022, filed with the SEC on November 3, 2022 and risks that may be described in Altra’s other Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings by Altra with the SEC.

In addition to the risks described above, other unknown or unpredictable factors also could affect Altra’s results. As a result of these factors, we cannot assure you that the forward-looking statements in this proxy statement will

 

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prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this proxy statement represent our views as of the date of this proxy statement. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this proxy statement. You should read this proxy statement and the documents that we reference in this proxy statement completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements in this proxy statement by these cautionary statements.

 

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THE SPECIAL MEETING

The enclosed proxy is solicited on behalf of the Board for use at the Special Meeting.

Date, Time and Place

The Special Meeting will held virtually via live webcast on [        ], beginning at [        ] Eastern Time (unless the Special Meeting is adjourned or postponed). Altra stockholders will be able to virtually attend and vote at the Special Meeting by visiting [                ]. To attend the Special Meeting, you must pre-register at [        ] by [        ] Eastern Time on [        ].

Purpose of the Special Meeting

At the Special Meeting, we will ask Altra stockholders to vote on proposals to: (a) adopt the Merger Agreement Proposal; (b) approve, on an advisory (nonbinding) basis, the Compensation Proposal; and (c) approve the Adjournment Proposal.

Pre-Registering for the Special Meeting

In order to attend the Special Meeting, you must pre-register at [        ] by [        ] Eastern Time on [        ]. To pre-register for the meeting, please follow the instructions below:

Altra Stockholders of Record

Altra stockholders of record as of the Record Date may register to participate in the Special Meeting remotely by visiting [        ]. Please have your proxy card, or notice, containing your control number available and follow the instructions to complete your registration request. After registering, Altra stockholders will receive a confirmation email with a link and instructions for accessing the virtual Special Meeting. Requests to register to participate in the Special Meeting remotely must be received no later than [        ] Eastern Time on [        ].

Beneficial (Street Name) Stockholders

Altra stockholders whose shares are held through a bank, broker or other nominee as of the Record Date may register to participate in the Special Meeting remotely by visiting [        ]. Please have your voting instruction form, notice, or other communication containing your control number available and follow the instructions to complete your registration request. After registering, Altra stockholders will receive a confirmation email with a link and instructions for accessing the virtual Special Meeting. Requests to register to participate in the Special Meeting remotely must be received no later than [        ] Eastern Time on [        ].

Questions on How to Pre-Register

If you have any questions or require any assistance with pre-registering, please contact Innisfree M&A Incorporated, Altra’s proxy solicitor for the Special Meeting, at 1 (877) 456-3513.

Record Date; Shares Entitled to Vote; Quorum

Only Altra stockholders as of the Record Date are entitled to notice of the Special Meeting and to vote at the Special Meeting. A list of Altra stockholders entitled to vote at the Special Meeting will be available at our principal executive offices located at 300 Granite Street, Suite 201, Braintree, MA 02184, during regular business hours for a period of no less than 10 days before the Special Meeting, as well as on the Special Meeting website. If Altra’s headquarters are closed during such period for health and safety reasons related to the COVID-19

 

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pandemic, the list of Altra stockholders will be made available for inspection upon request to our Secretary at 300 Granite Street, Suite 201, Braintree, MA 02184, subject to the satisfactory verification of Altra stockholder status. The list will also be available electronically during the Special Meeting on the Special Meeting website. As of the Record Date, there were [        ] shares of Altra common stock outstanding and entitled to vote at the Special Meeting.

The presence, in person or represented by proxy, of the holders of a majority of the shares of Altra common stock entitled to vote on the Record Date will constitute a quorum at the Special Meeting. In the event that a quorum is not present at the Special Meeting, it is expected that the Special Meeting will be adjourned to solicit additional proxies.

Vote Required; Abstentions and Broker Non-Votes

Each Altra stockholder shall be entitled to one vote for each share of Altra common stock owned at the close of business on the Record Date.

The affirmative vote of the holders of a majority of the outstanding shares of Altra common stock entitled to vote thereon is required to approve the Merger Agreement Proposal. As of the Record Date, [        ] votes constitute a majority of the outstanding shares of Altra common stock. Adoption of the Merger Agreement by Altra stockholders is a condition to the consummation of the Merger.

The affirmative vote of the holders of a majority of the shares of Altra common stock properly cast and against for the Compensation Proposal is required to approve, on an advisory (nonbinding) basis, the Compensation Proposal.

The affirmative vote of either (a) a majority of the shares of Altra common stock properly cast for and against the Adjournment Proposal, when a quorum is present, or (b) the affirmative vote of the holders of the shares of Altra common stock representing a majority of the voting power present at the Special Meeting, when a quorum is not present, is required, as applicable, for approval of the Adjournment Proposal.

If a quorum is present at the Special Meeting, for Altra stockholders who attend the Special Meeting or are represented by proxy and abstain from voting, the abstention will have the same effect as if the Altra stockholder voted “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal and the Adjournment Proposal. If a quorum is not present, abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal.

Each “broker non-vote” will also count as a vote “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will have no effect on the Compensation Proposal or the Adjournment Proposal. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such shares. Altra does not expect any broker non-votes at the Special Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered “routine”, whereas each of the proposals to be presented at the Special Meeting is considered “non-routine”. As a result, no broker will be permitted to vote your shares of Altra common stock at the Special Meeting without receiving instructions. Failure to instruct your broker on how to vote your shares will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

The Company does not intend to call a vote on the Adjournment Proposal if the Merger Agreement Proposal is approved at the Special Meeting.

 

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Stock Ownership and Interests of Certain Persons

Shares Held by Altra’s Directors and Executive Officers

As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [        ] shares of Altra common stock, representing approximately [    ]% of the shares of Altra common stock outstanding on the Record Date.

We currently expect that each of our directors and executive officers will vote all of their respective shares of Altra common stock (1) “FOR” the Merger Agreement Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

Voting at the Special Meeting

You can vote at the virtual Special Meeting, which will be held on [        ], at [        ] Eastern Time at [        ] (unless the Special Meeting is adjourned or postponed).

You may also authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card in advance by mail, over the Internet or by telephone. Although Altra offers four different voting methods, Altra encourages you to vote over the Internet or by phone as Altra believes they are the most cost-effective methods. We also recommend that you vote as soon as possible, even if you are planning to attend the Special Meeting, so that the vote count will not be delayed. Both the Internet and the telephone provide convenient, cost-effective and reliable alternatives to returning your proxy card by mail. If you choose to vote your shares over the Internet or by telephone, there is no need for you to submit your proxy card by mail.

To Vote Over the Internet:

Vote at [        ] in advance of the Special Meeting. The Internet voting system is available 24 hours per day until 11:59 p.m. Eastern Time on [        ]. Once you enter the Internet voting system, you can record and confirm (or change) your voting instructions.

To Vote by Telephone:

Use the telephone number shown on your proxy card. The telephone voting system is available 24 hours per day in the United States until 11:59 p.m. Eastern Time on [        ]. Once you enter the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions.

To Vote by Proxy Card:

If you received a proxy card, mark your voting instructions on the card and sign, date and return it in the postage-paid envelope provided. For your mailed proxy card to be counted, we must receive it before [        ] Eastern Time on [        ].

All shares represented by properly signed and dated proxies received by the deadline indicated above will be voted at the Special Meeting in accordance with the instructions of the Altra stockholder. Properly signed and dated proxies that do not contain voting instructions will be voted: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal. If you indicate on your proxy card that you wish to vote in favor of the Merger Agreement Proposal but do not indicate a choice on the Adjournment Proposal or the Compensation Proposal on a nonbinding advisory basis, your shares of Altra common stock will be voted “FOR” each such proposal. Proxy cards that are returned without a signature will not be counted as present at the Special Meeting and cannot be voted.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or

 

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other nominee or attending the Special Meeting and voting using your control number, or, if you did not obtain a control number, contacting your bank, broker or other nominee to obtain a control number so that you may vote. If such a service is provided, you may vote over the Internet or telephone through your bank, broker or other nominee by following the instructions on the voting form provided by your bank, broker or other nominee. If you do not return your bank’s, broker’s or other nominee’s voting form, do not vote via the Internet or telephone through your bank, broker or other nominee, if possible, or do not attend the Special Meeting and vote thereat, it will have the same effect as if you voted “AGAINST” the Merger Agreement Proposal but, assuming a quorum is present, will not have any effect on the Compensation Proposal or the Adjournment Proposal.

Revocability of Proxies

Any proxy given by an Altra stockholder may be revoked before the Special Meeting by doing any of the following:

 

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if a proxy was submitted by telephone or over the Internet, by submitting another proxy by telephone or over the Internet, in accordance with the instructions detailed in the section of this proxy statement entitled “The Special Meeting—Voting at the Special Meeting” at any time before the closing of the voting facilities at 11:59 p.m. Eastern Time on [        ];

 

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by submitting a properly signed and dated proxy card with a date later than the date of the previously submitted proxy relating to the same shares of Altra common stock, provided such proxy card is received no later than the close of business on [        ];

 

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by delivering a signed written notice of revocation bearing a date later than the date of the proxy to Altra’s Secretary at 300 Granite Street, Suite 201, Braintree, MA 02184, stating that the proxy is revoked, provided such written notice is received no later than the close of business on [        ]; or

 

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by attending the virtual Special Meeting and voting thereat (your attendance at the virtual Special Meeting will not, by itself, revoke your proxy).

If you hold your shares of Altra common stock in “street name”, you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the virtual Special Meeting with your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number.

Any adjournment, postponement or other delay of the Special Meeting, including for the purpose of soliciting additional proxies, will allow Altra stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned, postponed or delayed.

Board’s Recommendation

The Board has unanimously: (a) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the consummation by the Company of the Merger and the other transactions contemplated thereby, including the execution, delivery and performance of the Merger Agreement; (b) declared that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, Altra and its stockholders; (c) directed that the adoption of the Merger Agreement be submitted for consideration by Altra stockholders at the Special Meeting; and (d) resolved to recommend that Altra stockholders adopt the Merger Agreement.

The Board unanimously recommends that you vote: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

Solicitation of Proxies

The Board is soliciting your proxy, and Altra will bear the cost of soliciting proxies. Innisfree M&A Incorporated has been retained to assist with the solicitation of proxies. Altra expects to pay Innisfree M&A

 

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Incorporated a fee of $45,000, plus certain costs associated with additional services, as necessary, and Innisfree M&A Incorporated will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the Special Meeting. Forms of proxies and proxy materials may also be distributed through brokers, custodians and other like parties to the beneficial owners of shares of Altra common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses in accordance with SEC and Nasdaq regulations. Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by Innisfree M&A Incorporated or, without additional compensation, by Altra or Altra’s directors, officers and employees.

Anticipated Date of Completion of the Merger

Assuming timely satisfaction of necessary closing conditions, including the approval by Altra stockholders of the Merger Agreement Proposal, we currently anticipate that the Merger will be consummated in the first half of 2023. However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to the closing conditions specified in the Merger Agreement and summarized in this proxy statement, many of which are outside of our control.

Appraisal Rights

If the Merger is consummated, persons who do not wish to accept the Merger Consideration are entitled to seek appraisal of their shares of Altra common stock under Section 262 and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their shares of Altra common stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of your shares of Altra common stock as determined by the Delaware Court may be more or less than, or the same as, the Merger Consideration that you are otherwise entitled to receive under the Merger Agreement. These rights are known as “appraisal rights”. This proxy statement serves as a notice of such appraisal rights pursuant to Section 262.

Persons who exercise appraisal rights under Section 262 will not receive the Merger Consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their shares of Altra common stock following petition to, and an appraisal by, the Delaware Court. Persons considering seeking appraisal should recognize that the fair value of their shares of Altra common stock determined under Section 262 could be more than, the same as or less than the Merger Consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 is required. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A holder of record or beneficial owner of shares of Altra common stock and a beneficial owner who (i) continuously holds such shares through the Effective Time, (ii) has not consented to or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (iii) strictly complies with the procedures under Section 262, (iv) does not thereafter withdraw his, her or its demand for appraisal of such shares and (v) in the case of a beneficial owner, a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by the Company and to be set forth on the Chancery List (as defined in the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Appraisal Rights”), will be entitled to receive the fair value of his, her or its shares of Altra common stock exclusive of any element of value arising

 

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from the accomplishment or expectation of the Merger, as determined by the Delaware Court, together with interest, if any, to be paid upon the amount determined to be the fair value.

A copy of Section 262 may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. The foregoing summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. For more information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Appraisal Rights”.

Delisting and Deregistration of Altra Common Stock

If the Merger is completed, the shares of Altra common stock will be delisted from the Nasdaq and deregistered under the Exchange Act, and shares of Altra common stock will no longer be publicly traded.

Other Matters

Pursuant to the DGCL and Altra’s bylaws, only the matters set forth in the Notice of Special Meeting may be brought before the Special Meeting.

Householding of Special Meeting Materials

Unless we have received contrary instructions, we may send a single copy of this proxy statement to any household at which two or more Altra stockholders reside if we believe the stockholders are members of the same family. Each Altra stockholder in the household will continue to receive a separate proxy card. This process, known as “householding”, reduces the volume of duplicate information received at your household and helps to reduce our expenses.

If you would like to receive your own set of our disclosure documents, please contact us using the instructions set forth below. Similarly, if you share an address with another Altra stockholder and together both of you would like to receive only a single set of our disclosure documents, please contact us using the instructions set forth below.

If you are an Altra stockholder of record, you may contact us by writing to our Secretary at 300 Granite Street, Suite 201, Braintree, MA 02184 or by calling (781) 917-0600. Eligible stockholders of record receiving multiple copies of this proxy statement can request householding by contacting us in the same manner. If a bank, broker or other nominee holds your shares, please contact your bank, broker or other nominee directly.

Questions and Additional Information

If you have any questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of Altra common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free: 1 (877) 456-3513

Banks and Brokers may call collect: 1 (212) 750-5833

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger, because it contains important information about the Merger and how it affects you.

Parties Involved in the Merger

Altra Industrial Motion Corp.

300 Granite Street, Suite 201

Braintree, MA 02184

Altra is a premier industrial global manufacturer and supplier of highly engineered motion control, automation, and power transmission systems and components. Altra’s portfolio consists of 26 well-respected brands including Bauer Gear Motor, Boston Gear, Kollmorgen, Portescap, Stromag, Svendborg Brakes, TB Wood’s, Thomson and Warner Electric. Altra was incorporated in 2004 and is headquartered in Braintree, Massachusetts. Altra common stock is listed on the Nasdaq under the symbol “AIMC”.

Regal Rexnord Corporation

200 State Street

Beloit, WI 53511

Regal Rexnord is a global leader in the engineering and manufacturing of industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems, serving customers around the world. Through longstanding technology leadership and an intentional focus on producing more energy-efficient products and systems, Regal Rexnord helps create a better tomorrow – for its customers and for the planet. Regal Rexnord was incorporated under the laws of the State of Wisconsin in 1994 and is headquartered in Beloit, Wisconsin.

Aspen Sub, Inc.

200 State Street

Beloit, WI 53511

Merger Sub is a Delaware corporation and a wholly owned subsidiary of Regal Rexnord and was formed on October 21, 2022, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon the completion of the Merger, Merger Sub will cease to exist and Altra will continue as the Surviving Corporation and a wholly owned subsidiary of Regal Rexnord.

Effects of the Merger

On the terms and subject to the conditions of the Merger Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub will merge with and into Altra, the separate corporate existence of Merger Sub will cease and Altra will continue its corporate existence under the DGCL as the Surviving Corporation. As a result of the Merger, Altra will become a wholly owned subsidiary of Parent, and Altra common stock will no longer be publicly traded and will be delisted from the Nasdaq. In addition, Altra common stock will be deregistered under the Exchange Act, and Altra will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation.

The Effective Time will occur at such time as the certificate of merger with respect to the Merger has been duly filed with the Secretary of State of the State of Delaware or, to the extent permitted by applicable law, at

 

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such later time as may be agreed by Altra and Regal Rexnord prior to filing the certificate of merger and specified in the certificate of merger.

Effect on Altra If the Merger Is Not Completed

If the Merger Agreement is not adopted by Altra stockholders, or if the Merger is not completed for any other reason:

 

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Altra stockholders will not be entitled to, nor will they receive, any payment for their respective shares of Altra common stock pursuant to the Merger Agreement;

 

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(a) Altra will remain an independent public company; (b) Altra common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act; and (c) Altra will continue to file periodic reports with the SEC; and

 

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under certain specified circumstances described in the section of this proxy statement entitled “The Merger Agreement—Termination Fees”, Altra will be required to pay Parent a termination fee of $100 million and, under certain other specified circumstances described in such section of this proxy statement, Parent will be required to pay Altra a termination fee of $200 million.

Merger Consideration

Altra Common Stock

At the Effective Time, by virtue of the Merger and without any action on the part of Altra, Parent, Merger Sub or the holders of any securities of Altra or Merger Sub, each share of Altra common stock (other than Excluded Altra Shares) issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive the Merger Consideration of $62.00 in cash, without interest and subject to any required tax withholding.

After the Merger is completed, you will have the right to receive the Merger Consideration in respect of each share of Altra common stock that you own (other than Excluded Altra Shares) immediately prior to the Effective Time (subject to any required tax withholding), but you will no longer have any rights as an Altra stockholder. For more information, please see the section of this proxy statement entitled “—Appraisal Rights”.

Treatment of Company Equity-Based Awards

At the Effective Time, subject to all required withholding taxes, outstanding equity awards will be treated as follows:

 

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each outstanding Company Option that is vested will be canceled in exchange for the right to receive an amount in cash, without interest, equal to (i) the number of shares of Altra common stock subject to such Company Option immediately prior to the Effective Time multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option; provided that any such Company Option with an exercise price per share that is equal to or greater than the Merger Consideration will be canceled for no consideration;

 

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each outstanding Company Option that is unvested will be converted into an award of stock options to purchase a number of Parent common shares (rounded down to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company Option immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (x) the exercise price of such Company Option immediately prior to the Effective Time divided by (y) the Equity Award Conversion Ratio. Each converted Company Option will be subject to substantially similar terms and conditions with respect to vesting and exercisability as were applicable to the related Company Option immediately prior to the Effective Time;

 

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•

each outstanding Company RSU that is unvested will be converted into a restricted stock unit denominated in Parent common shares (rounded to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company RSU immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company RSU will be subject to substantially similar terms and conditions with respect to vesting as were applicable to the applicable Company RSU immediately prior to the Effective Time;

 

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each outstanding Company RSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) (x) the Merger Consideration multiplied by (y) the number of shares of Altra common stock subject to such Company RSU immediately prior to the Effective Time plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents;

 

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each outstanding Company PSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) the product of (x) the number of shares of Altra common stock subject to such vested Company PSU (assuming all applicable performance measures for vested Company PSUs are satisfied at the actual level of performance (measured as of the Effective Time), as determined by the Board in consultation with Parent) and (y) the Merger Consideration plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents);

 

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each outstanding Company PSU that is unvested prior to the Effective Time will be canceled and converted into an award of time-based restricted stock denominated in Parent common shares equal to the product (rounded to the nearest whole number) of (i) the sum of (x) the number of shares of Altra common stock subject to such unvested Company PSU immediately prior to the Effective Time and (y)(1) the amount of any accrued unpaid dividend equivalents divided by (2) the Merger Consideration (assuming all applicable performance measures are satisfied at (i) the actual level of performance (measured as of the Effective Time) with respect to any performance period that expires on or prior to the Effective Time and (ii) the greater of (x) the target level of performance and (y) the actual level of performance (measured as of the Effective Time) with respect to any performance period that is scheduled to expire after the Effective Time, in each case, as determined by the Board in consultation with Parent) multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company PSU will be subject to substantially similar terms and conditions with respect to vesting terms as were applicable to the applicable Company PSU immediately prior to the Effective Time, except that the award will only be subject to time-based vesting conditions; and

 

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each outstanding Company Restricted Share will be converted into a Restricted Cash Award equal to the product of (i) the number of shares of Altra common stock subject to such Company Restricted Share immediately prior to the Effective Time and (ii) the Merger Consideration. Each Restricted Cash Award will be subject to substantially similar terms and conditions with respect to vesting and forfeiture as were applicable to the applicable Company Restricted Share immediately prior to the Effective Time, except that the form of payment upon vesting and settlement will be in cash.

For more information, please see the section of this proxy statement entitled “The Merger Agreement—Treatment of Company Equity-Based Awards”.

Background of the Merger

The Company’s management and the Board regularly review the Company’s performance and prospects in light of its business and developments in the electromechanical power transmission motion control industry. These reviews have included consideration, from time to time, of potential partnerships, collaborations and other strategic transactions and opportunities to enhance stockholder value, including potential sale transactions. Such reviews have been accompanied by periodic conversations between senior executives of the Company and their counterparts at other companies in such industry regarding such potential transactions and opportunities.

 

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On March 11, 2022, during a Manufacturers Alliance CEO Council conference in Pentagon City, Virginia, Louis V. Pinkham, Chief Executive Officer of Regal Rexnord, and Carl R. Christenson, Chairman and Chief Executive Officer of the Company, met and discussed the possibility of having dinner to discuss their respective businesses.

On April 4, 2022, in light of the significant industry consolidation that had occurred during 2021, the Company’s strong position in the industry, and the upcoming dinner with Regal Rexnord, Mr. Christenson contacted representatives from Goldman Sachs and asked that they attend the Company’s next regularly scheduled Board meeting on April 25, 2022 and provide the Board with an overview of the market and key considerations if the Company became the target of activism or an unsolicited offer.

On April 13, 2022, Mr. Pinkham and Mr. Christenson met for dinner, at the end of which Mr. Pinkham raised the possibility of a business combination between the Company and Regal Rexnord. Mr. Pinkham and Mr. Christenson did not discuss a possible price or other terms. Mr. Christensen indicated that he would take the matter back to the Board for review. Following the dinner, Mr. Christenson informed Lyle G. Ganske, the Company’s lead independent director, of Regal Rexnord’s potential interest.

On April 25, 2022, the Board, along with members of the Company’s management and representatives of Goldman Sachs, met in person in Blacksburg, VA. The representatives of Goldman Sachs provided an overview of the market, strategic alternatives and key considerations in the context of activism or an unsolicited offer. In an executive session attended by only the Board, Mr. Christenson informed the Board of Regal Rexnord’s potential interest in a business combination with the Company and described his conversations with Mr. Pinkham to date. Following discussion, the Board determined that a sale of the Company at that time was not in the best interest of the Company and its stockholders due to the fact that the Company’s stock price was undervalued at that time relative to recent average trading prices as a result of the broad downturn in U.S. equity markets.

During the month of May, Mr. Christenson and Mr. Pinkham had three telephonic conversations during which Mr. Christenson and Mr. Pinkham discussed the possibility of a proposal and the Board’s decision that a sale of the Company at that time was not in the best interest of the Company and its stockholders.

On August 23, 2022, Mr. Pinkham emailed Mr. Christenson with a request for a call.

On August 26, 2022, Mr. Pinkham and Mr. Christenson spoke telephonically during which Mr. Pinkham asked to meet with Mr. Christenson and indicated that he planned to provide Mr. Christenson with a written proposal to combine Regal Rexnord and the Company. Mr. Christenson promptly informed Mr. Ganske and representatives of Goldman Sachs of these discussions and a meeting date was agreed.

On August 29, 2022, Mr. Pinkham met with Mr. Christenson and provided him with a Letter of Intent (the “Offer Letter”) containing a preliminary non-binding proposal to acquire 100% of the issued and outstanding Company common stock at a price of $60.70 per share in cash (the “August 29 Proposal”), representing a 56.9% premium to the closing price for shares of Altra common stock of $38.69 on August 29, 2022, the last trading day prior to the August 29 Proposal, and a 60.2% premium to the Company’s 90-day-volume-weighted average share price of $37.90 as of the same day. The Offer Letter also stated that Regal Rexnord’s proposal had the support of its Board of Directors and management team, that Regal Rexnord had retained legal and financial advisors, and that the acquisition would be funded by a combination of cash on hand and new debt financing, to be arranged by J.P. Morgan Securities LLC on the terms set forth in a highly confident letter attached to the Offer Letter. Mr. Christenson told Mr. Pinkham that he would discuss the August 29 Proposal with the Board but that the Company was currently not for sale, and any potential transaction would need to be at a higher price, without the Company bearing meaningful consummation risk.

On September 1, 2022, the Board, along with members of the Company’s management, representatives of Goldman Sachs and Cravath, Swaine & Moore LLP (“Cravath”), outside counsel to the Company, met virtually

 

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to discuss the August 29 Proposal. Mr. Christenson provided the Board with an update regarding the August 29 Proposal, including a summary of the interactions between Mr. Christenson and Mr. Pinkham to date and a review of views as to why Regal Rexnord was likely to be willing and able to pay a higher price than any other potentially interested party, and discussed with the Board potential next steps to be taken by the Company in response to the August 29 Proposal. A representative of Cravath reviewed with the Board their fiduciary duties under Delaware law, including in the context of the August 29 Proposal, and representatives of Goldman Sachs provided the Board with a preliminary overview of the August 29 Proposal. The Board scheduled a subsequent meeting for September 8, 2022 and requested that the Company’s management work with Goldman Sachs to perform a preliminary financial analysis of the August 29 Proposal prior to such meeting.

On September 8, 2022, the Board, along with members of the Company’s management and representatives of Goldman Sachs and Cravath, met virtually. During this meeting, representatives of Goldman Sachs presented its preliminary financial analysis of the August 29 Proposal based on pre-existing financial projections provided by the Company’s management. Representatives of Goldman Sachs then discussed certain strategic considerations, including the possibility of and considerations regarding conducting a “market check” to gauge third-party interest in an acquisition of the Company. Following discussion with representatives of Goldman Sachs, Cravath and the Company’s management, the Board determined that contacting alternative bidders for the Company would not be in the best interest of Altra stockholders in light of the risks that a “market check” would entail, including concerns that market leaks or rumors regarding a potential transaction could disrupt the Company’s business relationships, increase employee turnover, increase turnover in the Company’s stockholder base and result in potential stock price volatility. The Board also considered the fact that there were a limited number of potential counterparties that might have an interest in, and be financially capable of, engaging in a strategic transaction with the Company at a value higher than Regal Rexnord’s offer, that the recent deterioration of the credit and equity markets threatened the prospects of any transaction, including one with Regal Rexnord, and that guiding Regal Rexnord to make a “preemptive offer” (i.e., an offer on terms that were sufficiently attractive that the Board would conclude that engaging in discussions on a bilateral basis with Regal Rexnord was in the best interest of Altra stockholders) presented the best opportunity to maximize value for Altra stockholders. As a result, the Board determined that it was in the best interest of the Company and its stockholders to engage with Regal Rexnord regarding a potential transaction, but that any definitive agreement must provide for a high degree of closing certainty, contain a termination fee that would not deter competing bids and a “no-shop” provision that would permit the Company to engage in negotiations with third parties regarding potentially superior proposals while under a binding contract with Regal Rexnord. The Board then authorized the Company’s management to inform Regal Rexnord that the August 29 Proposal was insufficient and that improved terms would be a condition to further discussions regarding a potential transaction but that, upon execution of a confidentiality agreement, the Company would provide Regal Rexnord with limited high-level information to enable Regal Rexnord to improve its offer price.

Later on September 8, 2022, Mr. Christenson and Mr. Ganske informed Mr. Pinkham that the Board had determined that the August 29 Proposal was insufficient from a financial perspective, but that, following the execution by Regal Rexnord of a customary confidentiality agreement, Mr. Christenson and a limited number of other members of senior management of the Company would make themselves available for a meeting to help Regal Rexnord learn about the Company in order to facilitate an increase in Regal Rexnord’s offer price. Mr. Christenson and Mr. Ganske also informed Mr. Pinkham that the Board was not prepared to accept any meaningful consummation risk.

On September 9, 2022, at the direction of the Board, representatives of Cravath provided a draft confidentiality agreement to representatives of Sidley Austin LLP, Regal Rexnord’s outside legal counsel (“Sidley”), which was negotiated over the next several days among representatives of the Company, Regal Rexnord, Cravath and Sidley, with particular focus on the duration and other terms of the standstill provision.

On September 10, 2022, at the direction of Regal Rexnord, representatives of Regal Rexnord’s financial advisors sent representatives of Goldman Sachs an initial due diligence request list.

 

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On September 18, 2022, Mr. Christenson informed Mr. Pinkham that the Company was willing to agree to a six-month standstill in the confidentiality agreement but reemphasized that the Company expected that, following further due diligence, Regal Rexnord would improve its offer price and that any merger agreement would contain terms consistent with the Company’s position that it would not take any meaningful consummation risk. Mr. Pinkham indicated he understood the Company’s position, and the confidentiality agreement was executed later that day.

On September 19, 2022, members of the Company’s management team, representatives of Goldman Sachs, members of Regal Rexnord’s management team, and representatives of Regal Rexnord’s financial advisors met in person in Boston, and the Company’s management delivered a presentation on, among other things, operational and management highlights, growth strategies, overviews of its financial performance and projections, and preliminary views on potential synergies.

On September 20, 2022, at the direction of Regal Rexnord, representatives of Regal Rexnord’s financial advisors sent a supplemental due diligence request list to representatives of Goldman Sachs. Over the course of the next several weeks, Regal Rexnord and its representatives conducted due diligence on Altra, including by way of diligence calls and documentary review.

On September 21, 2022, representatives of the Company met virtually with representatives of Cravath to discuss Regal Rexnord’s supplemental due diligence request list and the scope of non-public information that the Company was willing to provide prior to receipt of a revised offer. Later that day, at the direction of the Company, representatives of Goldman Sachs provided Regal Rexnord and its representatives with access to the Company’s virtual data room in order to enable Regal Rexnord to improve its offer price. From time to time, representatives of the Company uploaded additional documents to the Company’s virtual data room and representatives of Regal Rexnord reviewed these documents in the course of their due diligence.

On September 22, 2022, the Board, along with members of the Company’s management, representatives of Goldman Sachs and representatives of Cravath, met virtually to discuss, among other topics, the in-person management meeting that had occurred on September 19 and updated financial projections refined by the Company’s management, reflecting certain updates since the prior Board meeting on September 8. A letter from Goldman Sachs regarding Goldman Sachs’ relationships with the Company and Regal Rexnord was then reviewed with the Board. A general update and discussion regarding next steps followed. Following discussion, the Board determined that the Company would permit Regal Rexnord to conduct further due diligence in order to enable it to improve its offer price and that Cravath would send a draft merger agreement to Sidley to be negotiated concurrently.

On September 23, 2022, representatives of Cravath sent a draft merger agreement to representatives of Sidley, which included, among other terms, a “hell or high water” regulatory standard. The draft also included a right for Altra to terminate the Merger Agreement if it received an unsolicited competing proposal financially superior to the Merger and Regal Rexnord declined to match such superior proposal after being offered an opportunity to do so, subject to Altra paying a termination fee (a “company termination fee”) for an undetermined amount. The draft provided limited cooperation obligations for Altra in connection with Regal Rexnord’s financing, but no marketing period for Regal Rexnord to obtain such financing.

On September 26, 2022, the Company held a financial diligence call with Regal Rexnord during which the updated 2022 financial projections were shared.

On October 4, 2022, Mr. Pinkham spoke telephonically with Mr. Christenson to reaffirm Regal Rexnord’s previous non-binding proposal to acquire 100% of the outstanding equity of the Company at a price of $60.70 per share in cash (the “October 4 Proposal”), representing a 73.8% premium to the closing price for shares of Altra common stock of $34.93 on October 3, 2022, the last trading day prior to the October 4 Proposal. Later that day, the October 4 Proposal was delivered to the Company in a letter, which requested that, in order to finalize a transaction efficiently and maintain strict confidentiality, the Company enter into an exclusivity agreement

 

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providing for exclusivity until 11:59 p.m. Central Time on October 24, 2022, with an automatic one-week extension if negotiations continued in good faith. Later that day, representatives of Sidley sent a revised draft merger agreement to representatives of Cravath that included, among other things, a marketing period, a proposed company termination fee of 3.5% of transaction equity value and a revised position on regulatory commitments, such that Regal Rexnord’s obligation to take or agree to take actions in order to obtain regulatory approvals required to consummate the transaction would exclude actions that relate to assets or businesses (of Regal Rexnord or the Company) that contributed to the generation of $100 million or more of revenue from third-party sales in calendar year 2021.

On October 5, 2022, the Board, along with members of the Company’s management and representatives of Goldman Sachs and Cravath, met virtually to discuss the October 4 Proposal, the revised draft merger agreement and next steps. Management of the Company and representatives of Goldman Sachs reviewed with the Board the Company’s interactions with Regal Rexnord since the prior Board meeting on September 22, 2022. Representatives of Goldman Sachs then provided an overview of the October 4 Proposal and macroeconomic developments, including in the credit markets. Next, representatives of Cravath presented an overview of the key legal terms of the draft merger agreement proposed by Regal Rexnord. Following discussion, the Board determined that the October 4 Proposal remained insufficient from a financial perspective and that certain of the proposed terms of the revised merger agreement were unacceptable, including with respect to closing certainty, the restrictions on the ability of Altra to engage in discussions with parties that submitted an unsolicited proposal after signing and the company termination fee. The Board then directed Mr. Christenson, representatives of Goldman Sachs and Cravath to inform Regal Rexnord and its representatives that the Company was willing to accept a revised offer of $63.00 per share if Regal Rexnord agreed to bear all regulatory risk associated with the transaction and to improve certain other terms of its offer.

Later that day, Mr. Christenson spoke telephonically with Mr. Pinkham to communicate that the Company was willing to accept a revised offer of $63.00 per share if Regal Rexnord agreed to bear all regulatory risk associated with the transaction and improved certain other terms of its offer, including the company termination fee and the terms of the “no shop” provision (the “October 5 Counterproposal”). Representatives of Goldman Sachs and Cravath subsequently discussed the October 5 Counterproposal with representatives of Regal Rexnord’s financial advisors and Sidley, respectively, during which discussion Cravath proposed a company termination fee of 1.75% of transaction equity value.

On October 6, 2022, Mr. Pinkham spoke telephonically with Mr. Christenson to deliver a revised non-binding proposal, which consisted of an offer to acquire 100% of the outstanding equity of the Company at a price of $61.50 per share in cash, a company termination fee of 2.8% of transaction equity value and a revised position on regulatory commitments, such that Regal Rexnord’s obligation to take or agree to take actions in order to obtain regulatory approvals required to consummate the transaction would exclude actions that, individually or in the aggregate, would or would reasonably be expected to have a material adverse effect on the Company’s Power Transmission Technologies segment (the “October 6 Proposal”). The October 6 Proposal represented a 65.9% premium to the closing price for shares of Altra common stock of $37.07 on October 5, 2022, the last trading day prior to the October 6 Proposal.

On October 7, 2022, the Company delivered a verbal counteroffer proposing an offer price of $62.25 per share, a company termination fee of 2.0% of transaction equity value, a reverse termination fee, which would be payable by Regal Rexnord if certain specified regulatory-related closing conditions were not met (a “reverse termination fee”), of 7.5% of transaction equity value and a revised position on regulatory commitments, such that Regal Rexnord’s obligation to take or agree to take actions in order to obtain regulatory approvals required to consummate the transaction would exclude those actions that, individually or in the aggregate, would or would reasonably be expected to have a material adverse effect on Regal Rexnord and its subsidiaries, taken as a whole, after giving effect to the transaction.

Also, on October 7, 2022, representatives of Goldman Sachs informed representatives of Regal Rexnord’s financial advisors that Altra was concerned that Regal Rexnord’s regulatory standard in the October 6 Proposal

 

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could allocate meaningful regulatory risk to Altra. In response, following discussions with and at the direction of Regal Rexnord, representatives of Regal Rexnord’s financial advisors spoke telephonically with representatives of Goldman Sachs to deliver a revised proposal on regulatory commitments, such that Regal Rexnord’s obligation to take or agree to take actions in order to obtain regulatory approvals required to consummate the transaction would exclude actions that relate to assets or businesses (of Regal Rexnord or the Company) that contributed to the generation of $200 million or more of revenue from third-party sales in calendar year 2021, and otherwise reaffirm the October 6 Proposal, including a company termination fee of 2.8% of transaction equity value. Representatives of Goldman Sachs promptly relayed information regarding the discussion to Mr. Christenson.

On October 8, 2022, Mr. Christenson, Mr. Ganske and representatives of Cravath discussed next steps in light of Regal Rexnord’s revised proposal, including a range of potential counterproposals by the Company. Following such discussion, Mr. Christenson spoke with representatives of Goldman Sachs and Cravath and instructed Cravath to convey the Company’s counterproposal to Sidley, as well as to discuss other key outstanding issues in the draft merger agreement.

Later that day, representatives of Cravath and representatives of Sidley telephonically discussed certain unresolved business and legal issues. Cravath conveyed that, if Regal Rexnord increased its offer to $62.25 per share and accepted a company termination fee of 2.0% of transaction equity value and a reverse termination fee of 6.5% of transaction equity value, the Company would be willing to revise its position on regulatory commitments, such that Regal Rexnord’s obligation to take or agree to take actions in order to obtain regulatory approvals required to consummate the transaction would exclude those actions that, individually or in the aggregate, would or would reasonably be expected to have a material adverse effect on Regal Rexnord and its subsidiaries, taken as a whole, after giving effect to the transaction (with Regal Rexnord deemed to be the same size as the Company and its subsidiaries, taken as a whole).

On October 9, 2022, at the direction of Regal Rexnord, representatives of Regal Rexnord’s financial advisors spoke telephonically with representatives of Goldman Sachs to deliver a revised proposal consisting of an offer price of $61.50 per share, a company termination fee of 2.8% of transaction equity value, a reverse termination fee of 4.5% of transaction equity value and the regulatory commitments position proposed by Cravath the prior day (the “October 9 Proposal”). The October 9 Proposal represented a 75.9% premium to the closing price for shares of Altra common stock of $34.96 on October 7, 2022, the last trading day prior to the October 9 Proposal. Representatives of Goldman Sachs promptly relayed information regarding the discussion to Mr. Christenson.

Later that day, Mr. Christenson spoke telephonically with Mr. Pinkham to deliver a counterproposal (the “October 9 Counterproposal”) consisting of an offer price of $62.00 per share, the Company Termination Fee of 2.5% of transaction equity value and the Parent Termination Fee of 5.0% of transaction equity value, which Mr. Pinkham verbally accepted, on the condition that the Company grant Regal Rexnord exclusivity. The October 9 Counterproposal represented a 77.3% premium to the closing price for shares of Altra common stock of $34.96 on October 7, 2022, the last trading day prior to the October 9 Counterproposal.

On October 11, 2022, representatives of Cravath sent a revised draft merger agreement to representatives of Sidley, reflecting the terms of the October 9 Counterproposal.

On October 12, 2022, the Board, along with members of the Company’s management and representatives of Goldman Sachs and Cravath, met virtually to discuss, among other things, the Company’s interactions with Regal Rexnord since the prior Board meeting on October 5, 2022, the terms of the October 9 Counterproposal, the other significant open issues with the key legal terms in the draft merger agreement and next steps. Following discussion, the Board authorized the Company’s management to enter into an exclusivity agreement with Regal Rexnord, with an exclusivity period ending no later than 11:59 Central Time on October 24, 2022, and directed the Company’s management, with the assistance of Cravath, to negotiate the outstanding points in the merger agreement.

 

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On October 17, 2022, the Company entered into an exclusivity agreement with Regal Rexnord providing for exclusive negotiations until 11:59 p.m. Central Time on October 24, 2022. Additionally, representatives of Sidley sent a revised draft merger agreement to representatives of Cravath, which contained terms consistent with the October 9 Counterproposal but required further negotiation in certain areas.

On October 20, 2022, representatives of Cravath sent representatives of Sidley a draft proposal regarding certain employee retention, compensation and benefits-related matters.

Between October 20, 2022 and October 26, 2022, Altra, Regal Rexnord, Cravath and Sidley worked to finalize the merger agreement, including the specific language of Regal Rexnord’s regulatory efforts obligations, the circumstances under which the Board would be permitted to change its recommendation to Altra stockholders and terminate the merger agreement, the circumstances under which the Company Termination Fee and the Parent Termination Fee would be payable, the initiation and duration of the marketing period, the treatment of unvested equity awards in connection with the transaction and certain other employee retention, compensation and benefits-related matters, with several drafts exchanged over this period.

On October 25, 2022, the Board, along with members of the Company’s management and representatives of Goldman Sachs and Cravath, met virtually. A letter from Goldman Sachs regarding Goldman Sachs’ relationships with the Company and Regal Rexnord was reviewed with the Board, and the Board approved the formal engagement terms for Goldman Sachs as the Company’s financial advisor in connection with its review of a potential transaction. Next, representatives of Goldman Sachs presented its preliminary financial analysis of the Merger Consideration based on updated financial projections refined by the Company’s management (as described below in the section of this proxy statement entitled “Certain Financial Forecasts”). Discussion followed, including regarding the lack of potential counterparties that might have an interest in, and be financially capable of, engaging in a strategic transaction with the Company at a value higher than Regal Rexnord’s offer and the Board’s belief that the proposed transaction with Regal Rexnord continued to present the best opportunity to maximize value for Altra stockholders. Representatives of Cravath reviewed the Board’s fiduciary duties in connection with its consideration of the proposed transaction. Representatives of Cravath then provided an overview of the terms of the proposed merger agreement, with a particular focus on the definition of Material Adverse Effect, Regal Rexnord’s obligations regarding regulatory commitments, the circumstances under which the Company Termination Fee would be payable, the “no-shop” provision, the initiation and duration of the marketing period and the parties’ respective proposals regarding certain employee retention, compensation and benefits-related matters, including the treatment of unvested equity awards. Following discussion, the Board directed the Company’s management, with the assistance of Cravath, to finalize the merger agreement with Regal Rexnord and its representatives.

On October 26, 2022, representatives of Cravath and Sidley finalized the merger agreement.

Later that day, the Board reconvened to review the proposed transaction with Regal Rexnord. A representative of Goldman Sachs rendered Goldman Sachs’ opinion to the Board that, as of October 26, 2022, and based upon and subject to the factors and assumptions set forth therein, the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement was fair from a financial point of view to such holders. For additional information regarding Goldman Sachs’ opinion, please see the section of this proxy statement below entitled “—Opinion of Goldman Sachs”. The written opinion delivered by Goldman Sachs is attached to this proxy statement as Annex B. Representatives of Cravath reviewed with the Board the proposed merger agreement, including the mutually agreed terms regarding certain employee retention, compensation and benefits-related matters. Following additional discussion and consideration of the proposed merger agreement, the Board recessed and the Compensation Committee of the Board convened and unanimously approved certain employment compensation and other employee benefit arrangements with respect to the employees of the Company in connection with the proposed merger agreement, including the treatment of Company equity awards. Following such approval by the Compensation Committee of the Board, the Board reconvened and unanimously (i) authorized and approved the execution, delivery and

 

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performance by the Company of the Merger Agreement and the consummation by the Company of the Merger and the other transactions contemplated by the Merger Agreement, (ii) declared that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, Altra and its stockholders, (iii) directed that the adoption of the Merger Agreement be submitted for consideration by Altra stockholders at the Special Meeting and (iv) recommended that Altra stockholders adopt the Merger Agreement.

Following the conclusion of the Board meeting, the parties executed and delivered the Merger Agreement on October 26, 2022.

On October 27, 2022, at 6:30 a.m., Eastern Time, prior to the opening of trading on the Nasdaq and the New York Stock Exchange, the parties issued separate press releases announcing the transaction.

Recommendation of the Board and Reasons for the Merger

Recommendation of the Board

The Board has unanimously: (a) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement and the consummation by the Company of the Merger and the other transactions contemplated by the Merger Agreement; (b) declared that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, Altra and its stockholders; (c) directed that the adoption of the Merger Agreement be submitted for consideration by Altra stockholders at the Special Meeting; and (d) resolved to recommend that Altra stockholders adopt the Merger Agreement.

The Board unanimously recommends that you vote: (1) “FOR” the adoption of the Merger Agreement; (2) “FOR” the Compensation Proposal; and (3) “FOR” the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

Reasons for the Merger

As described above in the section entitled “—Background of the Merger”, prior to and in reaching its unanimous determination to authorize and approve the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, declare the Merger advisable and in the best interests of the Company and stockholders of the Company and recommend that the Company’s stockholders adopt the Merger Agreement, the Board consulted with and received the advice of its financial advisor and outside counsel, discussed certain issues with the Company’s management and considered a variety of factors weighing positively in favor of the Merger, the Merger Agreement and the transactions contemplated thereby, including, among other things, the following non-exhaustive list of material factors (not necessarily in order of relative importance):

 

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Merger Consideration; Premium to the Trading Price of Altra Common Stock. The Board considered the current and historical market prices of Altra common stock, including the market performance of Altra common stock relative to those of other participants in the Company’s industry and general market indices, and the fact that the Merger Consideration of $62.00 per share of Altra common stock represented a:

 

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57% premium to the trading price at which Altra common stock closed on October 25, 2022, the last trading day prior to the Board’s approval of the Merger;

 

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73% premium to the volume weighted average price for Altra common stock over the 30-trading day period ended October 25, 2022, the last trading day that closed prior to the Board’s approval of the Merger; and

 

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0.4% premium to the highest closing price in the 52-week period ended October 25, 2022, the last trading day that closed prior to the Board’s approval of the Merger.

 

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•

Cash Consideration; Certainty of Value. The Board considered the fact that the Merger Consideration is all cash, which will provide Altra stockholders immediate certainty of value and liquidity for their shares of Altra common stock, enables Altra stockholders to realize value that has been created by Altra and does not expose them to any future risks related to the business or macroeconomic conditions, as compared to Altra remaining independent.

 

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No Financing Condition and Committed Debt Financing. The Board considered the fact that the Merger is not subject to a financing condition, that Regal Rexnord obtained committed debt financing for the Merger from a reputable financing source and that Regal Rexnord and Merger Sub have represented in the Merger Agreement that proceeds from such financing will, in the aggregate and together with any cash or other funds available to Regal Rexnord or Merger Sub, be sufficient to pay the amounts required to be paid in connection with, or as a result of, the consummation of the Merger and the other transactions contemplated by the Merger Agreement.

 

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Lack of Potential Counterparties. The Board considered the fact that there were a limited number of potential counterparties that might have an interest in, and be financially capable of, engaging in a strategic transaction with Altra at a value higher than Regal Rexnord’s offer and the potential regulatory, commercial and financing issues that might arise in connection with pursuing such a transaction. For a detailed discussion of the Board’s assessment of potential counterparties, please see above under the heading entitled “—Background of the Merger”.

 

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Risk Associated with a “Market Check”. The Board considered the fact that contacting other potential counterparties prior to signing a definitive agreement with Regal Rexnord would result in significant risks to the Company and its business, including concerns that market leaks and rumors regarding a potential transaction would disrupt the Company’s business relationships and risk employee turnover, as well as lead to turnover in the Company’s stockholder base and potential stock price volatility, and concerns that Regal Rexnord could withdraw from consideration of a potential transaction if Altra were to pursue other potential counterparties, including as a result of a downturn in the credit markets. For a detailed discussion of the Board’s consideration of a “market check”, please see above under the heading entitled “—Background of the Merger”.

 

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The Company’s Operating and Financial Condition and Prospects. The Board considered the Company’s operating and financial performance and its prospects, including certain prospective forecasts for the Company prepared by the Company’s senior management, which reflect an application of various assumptions of senior management. The Board considered the inherent uncertainty of achieving senior management’s prospective forecasts, as set forth under the heading entitled “—Certain Financial Forecasts”, and that as a result the Company’s actual financial results in future periods could differ materially from senior management’s forecasts.

 

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Best Alternative for Maximizing Stockholder Value. After a review of a range of alternatives and discussions with management and the Company’s financial and legal advisors, the Board determined that the Merger Consideration is more favorable to the stockholders of the Company than the potential value that might result from other options available, including, but not limited to, remaining a standalone public company. As part of these evaluations, the Board considered an assessment of the Company’s business, assets, prospects, competitive position, historical and projected financial performance, short- and long-term capital needs and the nature of the industries in which the Company competes as well as the significant risks and uncertainties associated with remaining a standalone public company.

 

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Goldman Sachs’ Fairness Opinion and Related Financial Analyses. Goldman Sachs rendered its opinion to the Board that, as of October 26, 2022, and based upon and subject to the factors and assumptions set forth therein, the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement was fair from a financial point of view to such holders. For a detailed discussion of Goldman Sachs’ opinion, please see below in the section of this proxy statement entitled “—Opinion of Goldman Sachs”. The written opinion delivered by Goldman Sachs is attached to this proxy statement as Annex B.

 

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Negotiation Process. The Board considered its belief that, after extensive negotiations, the Company obtained the highest price that Regal Rexnord is willing to pay for the Company, as evidenced by the Company’s ability to increase the Merger Consideration relative to Regal Rexnord’s initial offer of $60.70 per share of Altra common stock. The Board considered the fact that the terms of the Merger were the result of robust arm’s-length negotiations conducted by the Company, with the knowledge of and at the direction of the Board, with the assistance of experienced financial and legal advisors. For a detailed discussion of the negotiation process, please see above under the heading entitled “—Background of the Merger”.

 

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Timing of Completion. The Board considered the anticipated timing of the consummation of the Merger and concluded that, despite the number of regulatory approvals required in connection with the Merger, the Merger could be completed in a reasonable timeframe. For more information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Regulatory Approvals Required for the Merger”. The Board also considered that the potential for closing the Merger in a reasonable timeframe could reduce the period during which Altra’s business would be subject to the potential uncertainty of closing and related disruption.

 

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Business Reputation of Regal Rexnord. The Board considered the business reputation and capabilities of Regal Rexnord and its management and the financial resources of Regal Rexnord, which the Board believed supported the conclusion that a transaction with Regal Rexnord could be completed relatively quickly and in an orderly manner.

 

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No Vote of Regal Rexnord Stockholders. The Board considered the fact that the Merger is not subject to the conditionality and execution risk of any required approval by Regal Rexnord’s shareholders.

 

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Regulatory Matters. The Board considered the fact that under the terms of the Merger Agreement Regal Rexnord would be required to take all actions to secure the expiration or termination of the waiting period under the HSR Act, as well as to obtain the Other Regulatory Approvals, except that Regal Rexnord would not be required to take, proffer to, agree to, commit to, accept, or consent to, any Remedial Action if such Remedial Action, individually or together with other Remedial Actions, would or would reasonably be expected to have a material adverse effect on the business, results of operations or financial condition of Regal Rexnord and its subsidiaries (including the Company and its subsidiaries), taken as a whole, after giving effect to the Merger but without giving effect to any Remedial Actions (with Regal Rexnord and its subsidiaries (including the Company and its subsidiaries), taken as a whole, measured for this purpose as being the same size and having the same financial position and results of operations as the Company and its subsidiaries, taken as a whole, prior to giving effect to the Merger and prior to giving effect to any Remedial Actions). For a detailed discussion of regulatory matters, please see below under the section entitled “The Merger Agreement—Efforts to Consummate the Merger”.

 

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Terms of the Merger Agreement. The Board considered the terms and conditions of the Merger Agreement, including:

 

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that the Company may, subject to certain conditions, furnish, pursuant to entry into an acceptable confidentiality agreement, confidential information with respect to the Company to third parties making an unsolicited proposal and participate in discussions or negotiations with such third parties regarding unsolicited proposals that are made prior to obtaining stockholder approval of the Merger;

 

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the provision allowing the Board to change its recommendation that the Company’s stockholders adopt the Merger Agreement prior to obtaining stockholder approval of the Merger in specified circumstances relating to a Superior Proposal or Intervening Event, subject to Regal Rexnord’s right to terminate the Merger Agreement and receive payment of the Company Termination Fee of $100 million;

 

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•

the provision allowing the Board to terminate the Merger Agreement to enter into a Superior Proposal, subject to certain conditions (including payment of the Company Termination Fee and certain rights of Regal Rexnord to match the Superior Proposal);

 

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the Board’s belief, after discussion with Altra’s advisors, that the Company Termination Fee, which constitutes approximately 2.5% of Altra’s equity value in the Merger, would not preclude a Superior Proposal from being made; and

 

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the Parent Termination Fee of $200 million that may be owed by Regal Rexnord to the Company in connection with the termination of the Merger Agreement under specified regulatory related circumstances.

For a detailed discussion of the Merger Agreement, please see below under the section entitled “The Merger Agreement”.

 

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Appraisal Rights. The Board considered the availability of appraisal rights under the DGCL to Altra stockholders who comply with all of the required procedures for perfecting appraisal rights under the DGCL in connection with the Merger, including the fact that such stockholders will have the right to demand appraisal and payment of the fair value of their shares as determined by the Delaware Court of Chancery. For a detailed discussion of appraisal rights, please see below under the section entitled “—Appraisal Rights”.

 

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Specific Performance. Altra’s ability, under circumstances specified in the Merger Agreement, to seek specific performance of Regal Rexnord’s and Merger Sub’s obligation to cause the Merger to occur and to prevent other breaches of the Merger Agreement.

 

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Opportunity for Altra Stockholders to Vote. The Board considered the fact that the Merger would be subject to the approval of Altra stockholders, and Altra stockholders would be free to evaluate the Merger and vote for or against the adoption of the Merger Agreement at the Special Meeting.

In the course of its deliberations, the Board also considered a variety of risks and other countervailing factors related to the Merger Agreement and the Merger, including the following material factors:

 

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No Participation in Altra’s Future Growth or Earnings. The Board considered that if the Merger is consummated, stockholders of the Company will receive the Merger Consideration in cash and will no longer have the opportunity to participate in any future earnings or growth of the Company or the combined company or benefit from any potential future appreciation in the value of Altra common stock, including any value that could be achieved if the Company engages in future strategic or other transactions.

 

•

Closing Conditions. The Board considered the fact that there can be no assurance that all conditions to the parties’ obligations to consummate the Merger will be satisfied even if the Merger Agreement is adopted by Altra stockholders.

 

•

Disruption of the Company’s Business. The Board considered the effect of a public announcement of the Merger on the Company’s operations, stock price and employees and its ability to attract and retain management, sales and other personnel while the Merger is pending and the potential adverse effects on the financial and other results of the Company as a result of that disruption.

 

•

Non-Solicitation Covenant. The Board considered that the Merger Agreement imposes restrictions on the Company’s solicitation of acquisition proposals from third parties and requires the Company to provide Regal Rexnord with an opportunity to propose in writing a binding offer to effect revisions to the terms of the Merger Agreement prior to the Company being able to terminate the Merger Agreement and accept a Superior Proposal, although the Board believes this would not preclude another potential acquiror from submitting a proposal to acquire the Company.

 

•

Company Termination Fee. The Board considered the fact that the Company must pay Regal Rexnord the Company Termination Fee of $100 million if the Merger Agreement is terminated under certain

 

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circumstances, including to accept a Superior Proposal, and that the amount of the Company Termination Fee is lower than termination fees in transactions of a similar size, is reasonable, would not likely deter competing bids and would not likely be required to be paid unless the Company entered into a more favorable transaction. The Board also recognized that the provisions in the Merger Agreement relating to the Company Termination Fee were insisted upon by Regal Rexnord as a condition to entering into the Merger Agreement.

 

•

Interim Operating Covenants. The Board considered that the Merger Agreement imposes restrictions on the conduct of the Company’s business prior to the consummation of the Merger, requiring the Company to use commercially reasonable efforts to conduct its and its subsidiaries’ business in all material respects in the ordinary course of business, which may delay or prevent the Company from undertaking business opportunities that may arise pending completion of the Merger (as more fully described under the section entitled “The Merger Agreement—Conduct of Business Pending the Merger”).

 

•

Risk Associated with Failure to Consummate the Merger. The Board considered the possibility that the Merger might not be consummated, and the fact that if the Merger is not consummated:

 

•

Altra’s directors, senior management and other employees will have expended extensive time and effort and will have experienced significant distraction from their work during the pendency of the Merger;

 

•

Altra will have incurred significant costs, expenses and fees for professional services and other costs in connection with the Merger, many of which will be payable even if the Merger is not completed;

 

•

Altra’s continuing business relationships with personnel, customers, distributors, suppliers and other business parties may be adversely affected;

 

•

the trading price of shares of Altra common stock will change to the extent that the current price reflects assumptions regarding the completion of the Merger;

 

•

the market’s perceptions of Altra’s prospects could be adversely affected, which may lead to subsequent offers to acquire the Company at a lower price or otherwise on less favorable terms to Altra and its stockholders than contemplated by the Merger; and

 

•

Altra could lose senior management or other personnel during the pendency of the Merger.

 

•

Regulatory Matters. The Board considered the regulatory approvals that would be required to consummate the Merger, the prospects for receiving such approvals and the possibility that the Merger might not be consummated in a timely manner or at all due to a failure to obtain such approvals.

 

•

Potential Future Share Price. The possibility that, although the Merger provides the Company’s stockholders the opportunity to realize a premium to the price at which Altra common stock traded prior to the Board’s approval of the Merger, the price of Altra common stock might have increased in the future to a price greater than the Merger Consideration.

 

•

Timing Risks. The Board considered the amount of time it could take to complete the Merger, including that completion of the Merger depends on factors outside of Altra’s or Regal Rexnord’s control (including the approval of the Merger by Altra stockholders and certain governmental authorities) and the risk that the pendency of the Merger for an extended period of time following the announcement of the execution of the Merger Agreement could divert Altra management’s attention and have an adverse impact on Altra, including its customer, distributor, supplier and other business relationships.

 

•

Litigation Risk. The Board considered the risk of litigation in connection with the execution of the Merger Agreement and the consummation of the Merger.

 

44

•

Tax Treatment. The Board considered that the receipt of the Merger Consideration payable in the Merger will generally be taxable to stockholders of the Company for United States federal income tax purposes. The Board believed that this was mitigated by the fact that the entire consideration payable in the Merger would be cash, providing adequate cash for the payment of any taxes due.

 

•

Other Risks. The Board considered various other risks associated with the Merger and the business of the Company, as more fully described below in the section entitled “Cautionary Note Regarding Forward-Looking Statements”.

The Board concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were outweighed by the potential benefits of the Merger.

In addition to considering the factors described above, the Board also considered that some of Altra’s directors and executive officers have interests that may be different from, or in addition to, the interests of Altra stockholders generally. The Board was aware of these interests and considered them at the time it approved the Merger Agreement and made its recommendation to Altra stockholders. For more information, please see the section of this proxy statement entitled “—Interests of Altra’s Directors and Executive Officers in the Merger”. The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but includes the material positive and negative factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board did not undertake to make any specific determination as to whether, or to what extent, any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board based its unanimous recommendation on the totality of the information presented, including the factors described above. This explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section of this proxy statement entitled “Cautionary Note Regarding Forward-Looking Statements”.

Opinion of Goldman Sachs

Goldman Sachs rendered its oral opinion to the Board, which was subsequently confirmed by delivery of a written opinion that, as of October 26, 2022, and based upon and subject to the factors and assumptions set forth therein, the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated October 26, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of Shares should vote with respect to the Merger, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

•

the Merger Agreement;

 

•

annual reports to stockholders and Annual Reports on Form 10-K of the Company for the five years ended December 31, 2021;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company;

 

•

certain other communications from the Company to its stockholders;

 

45

•

certain publicly available research analyst reports for the Company;

 

•

certain internal financial analyses and forecasts for the Company prepared by its management, as approved for Goldman Sachs’ use by the Company, which, together with the Amortization Forecasts (as defined below), are referred to as the Management Forecasts (as defined below in the section of this proxy statement entitled “Certain Financial Forecasts”); and

 

•

certain projected tax savings from amortization expense for the Company prepared by its management, as approved for Goldman Sachs’ use by the Company, which are included in the Management Forecasts (the “Amortization Forecasts”).

Goldman Sachs also held discussions with members of the senior management of the Company regarding their assessment of the past and current business operations, financial condition, and future prospects of the Company; reviewed the reported price and trading activity for the Shares; compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the motion control industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the Company’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the Company’s consent that the Management Forecasts and the Amortization Forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or any of its subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of the Company to engage in the Merger or the relative merits of the Merger as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, the Company or any other alternative transaction. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Altra, or class of such persons in connection with the Merger, whether relative to the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement or otherwise. Goldman Sachs’ opinion was necessarily based on economic, monetary market and other conditions, as in effect on, and the information made available to it as of the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs did not express any opinion as to the potential effects of volatility in the credit, financial and stock markets on the Company, Regal Rexnord or the Merger, or as to the

 

46

impact of the Merger on the solvency or viability of the Company or Regal Rexnord or the ability of the Company or Regal Rexnord to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before October 25, 2022, the second to last trading day before the public announcement of the Merger, and is not necessarily indicative of current market conditions.

Historical Stock Trading Analysis. Goldman Sachs calculated and compared certain implied premia described below based on the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of Shares pursuant to the Merger Agreement.

Goldman Sachs calculated the implied premia represented by $62.00 in cash per Share relative to:

 

•

$39.48, the closing price for the Shares on October 25, 2022, the second to last trading day before the public announcement of the Merger (the “Undisturbed Share Price”);

 

•

$61.76, the highest closing trading price of the Shares over the 52-week period ended October 25, 2022 (the “52-Week High”);

 

•

$50.34, the median of the Wall Street research analyst price targets for the Shares as of October 25, 2022 (the “Median Analyst Price Target”);

 

•

$35.78, the volume weighted average price (“VWAP”) of the Shares over the 30-trading-day period ended October 25, 2022 (the “30-Day VWAP”);

 

•

$38.05, the VWAP of the Shares over the 60-trading-day period ended October 25, 2022 (the “60-Day VWAP”); and

 

•

$37.14, the VWAP of the Shares over the 90-trading-day period ended October 25, 2022 (the “90-Day VWAP”).

The results of these calculations and comparisons were as follows:

 

Share Reference Price		Implied Premium Represented by $62.00 in Cash Per Share
Undisturbed Share Price of $39.48		57.0%
52-Week High of $61.76		0.4%
Median Analyst Price Target of $50.34		23.2%
30-Day VWAP of $35.78		73.3%
60-Day VWAP of $38.05		63.0%
90-Day VWAP of $37.14		66.9%

Illustrative Discounted Cash Flow Analysis. Using the Management Forecasts and the Amortization Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on the Company. Using discount rates ranging from 10.0% to 11.0%, reflecting estimates of the Company’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2022 (i) estimates of unlevered free cash flow for the Company for Q4 2022 and the years 2023 through 2026 as reflected in the Management Forecasts (ii) a range of illustrative terminal values for the Company, which were calculated by applying perpetuity growth

 

47

rates ranging from 2.5% to 3.5%, to a terminal year estimate of the unlevered free cash flow to be generated by the Company, as reflected in the Management Forecasts (which analysis implied exit terminal year EBITDA multiples ranging from 8.0x to 10.5x), and (iii) expected tax savings from future amortization expense for the years 2027 through 2045 as reflected in the Amortization Forecasts. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model (“CAPM”), which requires certain company-specific inputs, including the company’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal tax rate and a beta for the company, as well as certain financial metrics for the United States financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Management Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation.

Goldman Sachs derived ranges of illustrative enterprise values for the Company by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for the Company the adjusted net debt and tax-effected underfunded pension liability of the Company as of September 30, 2022, as provided by and approved for Goldman Sachs’ use by the management of the Company to derive a range of illustrative equity values for the Company. Goldman Sachs then divided the range of illustrative equity values it derived by fully diluted outstanding Shares as of September 30, 2022, calculated using the treasury stock method using information provided by and approved for Goldman Sachs’ use by the management of the Company to derive a range of illustrative present values per share ranging from $48 to $64 per Share, rounded to the nearest dollar.

Illustrative Present Value of Future Share Price Analysis. Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per Share, which is designed to provide an indication of the present value of a theoretical future value of the Company’s equity as a function of the Company’s next twelve months (“NTM”) EV/EBITDA multiples. For this analysis, Goldman Sachs used the Management Forecasts for each of the fiscal years 2023, 2024 and 2025. Goldman Sachs first calculated the implied enterprise values of the Company as of December 31 for each of the fiscal years 2023, 2024 and 2025 by applying NTM EV/EBITDA multiples of 8.0x to 11.0x to estimates of the Company’s forward adjusted EBITDA (excluding stock-based compensation expenses) for each of the fiscal years 2024, 2025 and 2026, respectively, based on the Management Forecasts. These illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical NTM EV/EBITDA multiples for the Company. Goldman Sachs then subtracted from the Company’s illustrative enterprise value the Company’s forecasted adjusted net debt as provided by and approved for Goldman Sachs’ use by management of the Company, to derive a range of implied equity values for the Company for each of the fiscal years 2023, 2024 and 2025. Goldman Sachs then divided the results by the projected year-end fully diluted outstanding Shares, calculated using the treasury stock method based on information provided by and approved for Goldman Sachs’ use by the management of the Company, to derive a range of implied future Share prices excluding dividends. Goldman Sachs then discounted the resulting implied future Share prices excluding dividends for December 31, 2023, 2024 and 2025 to present value as of September 30, 2022, using an illustrative discount rate of 12.6%, reflecting an estimate of the Company’s cost of equity. Goldman Sachs derived such discount rate by application of the CAPM, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then assessed the forecasted number of cumulative dividends per Share, as provided by and approved for Goldman Sachs’ use by the management of the Company, and discounted to present value the amount of such dividends using the above mentioned 12.6% discount rate. Goldman Sachs added this amount to the present value of future share price excluding dividends to arrive at a range of implied present values of $42 to $64 per Share, rounded to the nearest dollar.

Selected Transactions Analysis. Goldman Sachs analyzed certain information relating to the following selected transactions in the motion control industry since 2013.

 

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For each of the selected transactions where information was publicly available, Goldman Sachs calculated and compared the implied EV/LTM EBITDA multiple of the applicable target company based on the total consideration paid in the transaction as a multiple of the target company’s LTM EBITDA based on publicly available information at the time each selected transaction was announced. While none of the target companies that participated in the selected transactions are directly comparable to the Company, the target companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of the Company’s results, market size and product profile.

The following table presents the results of this analysis:

Selected Precedent Transactions

 

Announcement Date		Acquiror		Target		EV/LTM EBITDA
July 2021		RBC Bearings Incorporated		ABB Ltd.’s DODGE Mechanical Power Transmission Business		16.7x
February 2021		Regal Beloit Corporation		Rexnord Corporation’s Process & Motion Control Segment		14.2x
January 2020		Danfoss		Eaton’s Hydraulics Business		13.2x
March 2018		Altra Industrial Motion Corp.		Fortive Corporation’s Automation & Specialty Platform		13.6x
August 2016		Nidec Corporation		Emerson Electric Co.’s Motors, Drives and Electric Power Generation Businesses		6.9x
March 2015		RBC Bearings Incorporated		Dover Corporation’s Sargent Aerospace & Defense Business		13.3x
December 2014		Regal Beloit Corporation		Emerson Electric Co.’s Power Transmission Solutions Business		11.8x
April 2014		Blackstone		Gates Corporation		9.6x
September 2013		SKF		Kaydon Corporation		12.7x
Median						13.2x

Based on the results of the foregoing calculations and Goldman Sachs’ analyses of the various transactions and its professional judgment, Goldman Sachs applied a reference range of EV/LTM EBITDA multiples of 6.9x to 16.7x to the Company’s LTM EBITDA for the twelve months ended September 30, 2022, as provided by the management of the Company, to derive a range of implied enterprise values for the Company. Goldman Sachs then subtracted from the range of implied enterprise values the Company’s net debt as of September 30, 2022, as provided by and approved for Goldman Sachs’ use by the management of the Company, to derive a range of illustrative equity values for the Company. Goldman Sachs divided the results by fully diluted outstanding Shares as of September 30, 2022, calculated using the treasury stock method based on information provided by and approved for Goldman Sachs’ use by the management of the Company, to derive a range of implied values per Company share of $25 to $79, rounded to the nearest dollar.

Premia Paid Analysis. Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash acquisition transactions announced between January 1, 2012 and October 25, 2022 involving a public company based in the United States as the target where the disclosed enterprise values for the transactions were between $1 billion and $10 billion. This analysis excluded transactions in the real estate industry and financial institutions industry, and transactions with premia greater than 100% or less than 0% relative to the target’s last undisturbed closing price prior to announcement, using information from FactSet. For the entire period, using publicly available information, Goldman Sachs calculated the median, 25th percentile and 75th percentile premia of the price paid in the 406 transactions relative to the target’s last undisturbed closing

 

49

stock price prior to announcement of the transaction. This analysis indicated a median premium of 30% across the period. This analysis also indicated a 25th percentile premium of 19% and 75th percentile premium of 50% across the period. Using this analysis, Goldman Sachs applied a reference range of illustrative premia of 19% to 50% to the Undisturbed Share Price of $39.48 as of October 25, 2022 and calculated a range of implied equity values per Share of $47 to $59, rounded to the nearest dollar.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Company, Regal Rexnord or the Merger.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Board that, as of the date of the opinion, the $62.00 in cash per Share to be paid to the holders (other than Regal Rexnord and its affiliates) of such Shares pursuant to the Merger Agreement was fair from a financial point of view to such holders. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of the Company, Regal Rexnord, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The Merger Consideration was determined through arm’s-length negotiations between the Company and Regal Rexnord and was approved by the Board. Goldman Sachs provided advice to the Company during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to the Company or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

As described above, Goldman Sachs’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Regal Rexnord, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the Merger. Goldman Sachs acted as financial advisor to the Company in connection with, and participated in certain of the negotiations leading to, the Merger. Goldman Sachs expects to receive fees for its services in connection with the Merger, the principal portion of which is contingent upon consummation of the Merger, and the Company has agreed to reimburse certain of Goldman Sachs’ expenses arising, and indemnify Goldman Sachs against certain liabilities that may arise, out of its engagement. During the two-year period ended October 26, 2022, the Investment Banking Division of Goldman Sachs has not been engaged by the Company or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. During the two-year period ended October 26, 2022, the Investment Banking Division of Goldman Sachs has not been

 

50

engaged by Regal Rexnord or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may in the future provide financial advisory and/or underwriting services to the Company, Regal Rexnord and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

The Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated October 24, 2022, the Company engaged Goldman Sachs to act as its financial advisor in connection with the Merger. The engagement letter between the Company and Goldman Sachs provides for a transaction fee of $45 million, $5 million of which became payable at announcement of the Merger, and the remainder of which is contingent upon consummation of the Merger. In addition, the Company has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.    

Certain Financial Forecasts

Other than annual guidance – including the guidance included in the Company’s press release dated February 16, 2022, and the updates of such guidance in the Company’s press releases dated April 28, 2022 and July 28, 2022 (the “2022 earnings guidance”), with respect to sales, adjusted EBITDA, diluted EPS, capital expenditures, free cash flow and certain other performance measures, which guidance the Company presents as a range – the Company does not, as a matter of course, publicly disclose forecasts or internal projections as to future performance, or results of operations, earnings or other results, due to, among other things, the unpredictability of the underlying assumptions and estimates. In September 2022, in connection with the evaluation of a proposed transaction, at the direction of the Board, senior management of the Company provided Goldman Sachs with certain preliminary non-public, unaudited prospective financial information for fiscal years 2022 through 2026. Over the course of the next several weeks, in the context of evaluating the proposal from Regal Rexnord, Altra senior management updated such preliminary non-public, unaudited prospective financial information to take into account certain adjustments relating to, among other things, foreign exchange rate changes, surcharge revenues and the evolving macroeconomic environment (the “Management Forecasts”).

Altra is including a summary of the Management Forecasts to provide Altra stockholders with access to information that was made available to the Board in connection with its evaluation of, and Regal Rexnord in connection with discussions regarding, the Merger and the Merger Consideration.

The Board reviewed the Management Forecasts and, following discussions with Altra management, the Board authorized Goldman Sachs to use the Management Forecasts, or a subset thereof, for purposes of its financial analyses and fairness opinion summarized in the sections of this proxy statement entitled “—Opinion of Goldman Sachs”. Management of the Company modeled the Management Forecasts based on its reasonable best estimates and assumptions with respect to the future financial performance of the Company on a standalone basis. The Management Forecasts were based upon certain financial, operating and commercial assumptions developed solely using the information available to management of the Company at the time the Management Forecasts were created.

The following tables summarize the Management Forecasts, as described above:

Management Forecasts

Fiscal Year Ending December 31

(Amounts in $Millions)

 

		2022E				2023E				2024E				2025E				2026E
Revenue		$	1,893			$	1,993			$	2,093			$	2,197			$	2,307
Operating Income			257				311				357				403				447
Adj. EBITDA(1)			378				426				473				520				564

 

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(1)

“Adj. EBITDA” is defined as earnings before interest, taxes, depreciation, acquisition-related amortization, acquisition-related costs, restructuring costs, stock-based compensation, asset impairment and other income or charges that management does not consider to be directly related to the Company’s core operating performance. Adj. EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity.

 

		Q422E				2023E				2024E				2025E				2026E
Unlevered Free Cash Flow(1)			61				283				297				345				372

 

(1)

“Unlevered Free Cash Flow” is defined as Adj. EBITDA less unlevered taxes, less capital expenditures less (plus) increase (decrease) in net working capital, less stock-based compensation, plus deferred taxes. Unlevered Free Cash Flow is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity.

 

		2027E				2028E				2029E				2030E				2031E				2032E				2033E				2034E				2035E				2036E				2037E
Future Tax Savings from Amortization			14				13				10				10				10				9				9				9				9				9				9
		2038E				2039E				2040E				2041E				2042E				2043E				2044E				2045E
Future Tax Savings from Amortization			9				9				8				6				5				2				2				1

Important Information Concerning the Management Forecasts

The Management Forecasts were prepared for internal use only and not for public disclosure and were provided to the Board for the purposes of Altra’s strategic review process. The Management Forecasts were also provided to and used by Goldman Sachs, Altra’s financial advisor, for the purpose of performing financial analyses in connection with the strategic review process and for the purpose of evaluating the fairness of the Merger Consideration from a financial point of view.

The summary of the Management Forecasts is included in this proxy statement solely to give Altra stockholders access to certain financial forecasts that were made available to the Board, Goldman Sachs and Regal Rexnord and is not being included in this proxy statement to influence an Altra stockholder’s decision whether to vote for the Merger Agreement Proposal or for any other purpose.

The Management Forecasts were generated solely for internal use and not developed with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or GAAP, but, in the view of Altra management, were reasonably prepared in good faith on a basis reflecting the best available estimates and judgments at the time of preparation, and presented as of the time of preparation. No independent registered public accounting firm provided any assistance in preparing the Management Forecasts. Accordingly, no independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the Management Forecasts or expressed any opinion or given any other form of assurance with respect thereto, and they assume no responsibility for the information contained in the Management Forecasts. The Deloitte & Touche LLP report included in Altra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 relates solely to the historical financial information of Altra and to an assessment of Altra’s internal controls over financial reporting. Such reports do not extend to the Management Forecasts and should not be read to do so.

The inclusion of the Management Forecasts should not be regarded as an indication that Altra, Regal Rexnord, their affiliates or financial advisors or any of their respective representatives or any other recipient of

 

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this information considered, or now considers, the Management Forecasts to be necessarily predictive of future results. There can be no assurance that the projected results will be realized or that actual results will not be materially lower or higher than estimated, whether or not the Merger is completed. None of Altra, Parent or their respective affiliates, officers, directors, advisors or other representatives can provide any assurance that actual results will not differ from the Management Forecasts, and, except as required by applicable law, none of Altra, Parent or their respective affiliates undertakes any obligation to update, or otherwise revise or reconcile, the Management Forecasts to reflect circumstances existing after the date the Management Forecasts were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Management Forecasts are shown to be inappropriate. None of Altra or its affiliates, officers, directors, advisors or other representatives has made or makes any representation to any Altra stockholder or other person regarding the information included in the Management Forecasts or Altra’s ultimate performance compared to the information contained in the Management Forecasts or that forecasted results will be achieved. Altra has made no representation to Parent, in the Merger Agreement or otherwise, concerning the Management Forecasts. The Management Forecasts are forward-looking statements. The assumptions and estimates underlying the Management Forecasts, all of which are difficult to predict and many of which are beyond the control of Altra, may not be realized. Neither Altra nor any of its affiliates assumes any responsibility to holders of shares of Altra common stock for the accuracy of this information. In particular, the Management Forecasts, while presented with numerical specificity, necessarily, were based on numerous variables and assumptions that are inherently uncertain and are subject to a wide variety of significant business, economic, competitive and regulatory risks and uncertainties that could cause actual results to differ materially from those contained in the Management Forecasts. Because the Management Forecasts cover multiple years, by their nature, they become subject to greater uncertainty with each successive year and are unlikely to anticipate each circumstance that will have an effect on the Company’s results of operations, financial condition and cash flows. Important factors that may affect actual results and result in the Management Forecasts not being achieved include, but are not limited to: the Company’s ability to invest in new technologies and manufacturing techniques and to develop or adapt to changing technology and manufacturing techniques, international operations, including currency risks, the accuracy of estimated forecasts of OEM customers, the scope and duration of the COVID-19 global pandemic and its impact on global economic systems, our employees, sites, operations, customers, and supply chain, including the impact of the pandemic on manufacturing and supply capabilities throughout the world, disruption of our supply chain including the impact of the global semiconductor chip shortage, the Company’s ability to achieve its business plans, including with respect to an uncertain economic environment, the Company’s ability to recruit, retain and motivate key sales, marketing or engineering personnel, the Company’s ability to obtain or protect intellectual property rights and avoid infringing on the intellectual property rights of others, changes in labor or employment laws, environmental laws and regulations and the Company’s failure to comply with such laws and other risk factors described in Altra’s SEC filings, including Altra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022 and our other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and described under the section above entitled “Cautionary Note Regarding Forward-Looking Statements”. The Management Forecasts also reflect assumptions as to certain business decisions that are subject to change.

Some or all of the estimates and assumptions underlying the Management Forecasts may have changed since the date the Management Forecasts were prepared. The information set forth in the Management Forecasts is not fact and should not be relied upon as being necessarily indicative of future results, and the Management Forecasts may differ in important respects from the 2022 earnings guidance, which the Company’s management prepared based on a different set of assumptions. The Management Forecasts were developed on a standalone basis without giving effect to the Merger, and therefore the Management Forecasts do not give effect to the Merger or any changes to Altra’s operations or strategy that may be implemented after the consummation of the Merger, including cost synergies realized as a result of the Merger, or to any costs incurred in connection with the Merger. Furthermore, the Management Forecasts do not take into account the effect of any failure of the Merger to be completed and should not be viewed as accurate or continuing in that context.

 

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The Management Forecasts contain certain non-GAAP financial measures that Altra management believes are helpful in understanding Altra’s past financial performance and future results. Altra management regularly uses a variety of financial measures that are not in accordance with GAAP for comparing the Company’s operating performance on a consistent basis. The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. While Altra believes that these non-GAAP financial measures enhance the overall understanding of its underlying operating performance trends compared to historical and prospective periods and its peers and that these measures provide important supplemental information to management and investors regarding financial and business trends relating to Altra’s financial condition, results of operations and cash flows as well as insight into the compliance with its debt covenants, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of Altra’s competitors and may not be directly comparable to similarly titled measures of Altra’s competitors due to potential differences in the exact method of calculation. The SEC rules that would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures provided to a board of directors or a financial advisor in connection with a proposed business combination such as the Merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by the Board or Altra’s financial advisor in connection with their respective evaluations of the Merger. Accordingly, Altra has not provided a reconciliation of the non-GAAP financial measures included in the Management Forecasts to the relevant GAAP financial measures.

The Management Forecasts summarized in this section were prepared prior to the execution of the Merger Agreement and have not been updated to reflect any changes after the date they were prepared. THE COMPANY DOES NOT INTEND, AND UNDERTAKES NO OBLIGATION, TO UPDATE OR OTHERWISE REVISE THE MANAGEMENT FORECASTS TO REFLECT CIRCUMSTANCES EXISTING SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE NO LONGER APPROPRIATE. In light of the foregoing factors and the uncertainties inherent in the Management Forecasts, readers of this proxy statement are cautioned not to place undue reliance on the Management Forecasts.

Interests of Altra’s Directors and Executive Officers in the Merger

Altra’s directors and executive officers have financial interests in the Merger that may be different from, or in addition to, the interests of Altra stockholders generally. The members of the Board were aware of and considered these interests in reaching the determination to approve the Merger Agreement and recommend that Altra stockholders vote their Altra common shares to adopt the Merger Agreement.

Treatment of Company Equity-Based Awards

At the Effective Time, subject to all required withholding taxes, outstanding equity awards will be treated as follows:

 

•

each outstanding Company Option that is vested and exercisable as of immediately prior to the Effective Time or portion thereof, will be canceled in exchange for the right to receive an amount in cash, without interest, equal to (i) the number of shares of Altra common stock subject to such Company Option immediately prior to the Effective Time multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option; provided that any such Company Option with an exercise price per share that is equal to or greater than the Merger Consideration will be canceled for no consideration;

 

•

each outstanding Company Option that is unvested, as of immediately prior to the Effective Time or portion thereof, will be converted into an award of stock options to purchase a number of Parent common shares (rounded down to the nearest whole number) equal to (i) the number of shares of Altra

 

54

common stock subject to such unvested Company Option immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (x) the exercise price per share of such Company Option immediately prior to the Effective Time divided by (y) the Equity Award Conversion Ratio. Each converted Company Option will be subject to substantially similar terms and conditions with respect to vesting and exercisability as were applicable to the related Company Option immediately prior to the Effective Time;

 

•

each outstanding Company RSU that is unvested immediately prior to the Effective Time will be converted into a restricted stock unit denominated in Parent common shares (rounded to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company RSU immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company RSU will be subject to substantially similar terms and conditions with respect to vesting as were applicable to the related Company RSU immediately prior to the Effective Time;

 

•

each outstanding Company RSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) (x) the Merger Consideration multiplied by (y) the number of shares of Altra common stock subject to such Company RSU immediately prior to the Effective Time plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents;

 

•

each outstanding Company PSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) the product of (x) the number of shares of Altra common stock subject to such vested Company PSU (assuming all applicable performance measures for vested Company PSUs are satisfied at the actual level of performance (measured as of the Effective Time), as determined by the Board in consultation with Parent) and (y) the Merger Consideration plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents);

 

•

each outstanding Company PSU that is unvested prior to the Effective Time will be canceled and converted into an award of time-based restricted stock denominated in Parent common shares equal to the product (rounded to the nearest whole number) of (i) the sum of (x) the number of shares of Altra common stock subject to such unvested Company PSU immediately prior to the Effective Time and (y)(1) the amount of any accrued unpaid dividend equivalents divided by (2) the Merger Consideration (assuming all applicable performance measures are satisfied at (i) the actual level of performance (measured as of the Effective Time) with respect to any performance period that expires on or prior to the Effective Time and (ii) the greater of (x) the target level of performance and (y) the actual level of performance (measured as of the Effective Time) with respect to any performance period that is scheduled to expire after the Effective Time, in each case, as determined by the Board in consultation with Parent) multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company PSU will be subject to substantially similar terms and conditions with respect to vesting terms as were applicable to the applicable Company PSU immediately prior to the Effective Time, except that the award will only be subject to time-based vesting conditions; and

 

•

each outstanding Company Restricted Share will be converted into a Restricted Cash Award equal to the product of (i) the number of shares of Altra common stock subject to such Company Restricted Share immediately prior to the Effective Time and (ii) the Merger Consideration. Each Restricted Cash Award will be subject to substantially similar terms and conditions with respect to vesting and forfeiture as were applicable to the applicable Company Restricted Share immediately prior to the Effective Time, except that the form of payment upon vesting and settlement will be in cash.

The Company’s outstanding equity awards currently provide that awards will accelerate upon an award holder’s termination of employment without “cause” or resignation for “good reason”, in each case, within two

 

55

years following a change in control. Between the date hereof and the Effective Time, the Company will amend the terms of the outstanding equity-based awards to provide that such awards will vest upon an award holder’s termination of employment without “cause” within three (rather than two) years following the Effective Time. In addition, equity-based awards granted after the date of the Merger Agreement, and prior to the Effective Time, will provide that such awards will accelerate upon an award holder’s (x) termination of employment without “cause” or (y) resignation for “good reason”, except that with respect to clause (x), such provision will apply for three years following the Effective Time and clause (y) will only be applicable during the two-year period following the Effective Time.

Pursuant to the terms of the Merger Agreement, the Company is permitted, upon the Effective Time, to accelerate the vesting of all outstanding and unvested equity awards held by each of Messrs. Christenson, Deegan, Patriacca and Schuele.

The following table sets forth the number of Company Options, Company RSUs and Company PSUs held by each of the Company’s directors and executive officers as of November 17, 2022, the latest practicable date to determine such amounts before the filing of this proxy statement, and the cash amounts payable (on a pre-tax basis) in respect thereof. The amounts reflected in the table below exclude any grants that may be made following November 17, 2022 and any Company Options, Company RSUs and Company PSUs that are vested or are expected to vest in accordance with their terms prior to December 31, 2022 (the assumed date of the completion of the Merger solely for purposes of this transaction-related compensation disclosure). Company Options are valued based on the difference between the per-share exercise price of such Company Option and the Merger Consideration of $62.00 per share. As a result, any Company Option included in the table below that has an exercise price that is greater than or equal to the Merger Consideration does not have any value for purposes of the table below. Company RSUs and Company PSUs are valued based on the Merger Consideration of $62.00 per share and, in the case of Company PSUs, based on the assumed level of performance described below. Payments in respect of all Company Options, Company RSUs and Company PSUs held by Messrs. Christenson, Deegan, Patriacca and Schuele are “double-trigger” in that they will be paid only if the holder experiences a “qualifying termination” of employment prior to or following the Effective Time, or if the awards otherwise vest in accordance with their terms.

 

Name		Unvested Options								Unvested RSUs or Restricted Shares								Unvested PSUs(1) (2)								Total ($)
		#				($)				#				($)				#				($)				#				($)
Executive Officers
Carl Christenson			125,577				1,956,030				31,395				1,946,490				182,404				11,309,048				339,376				15,211,568
Christian Storch(3)			14,095				194,141				3,525				218,550				16,987				1,053,194				34,607				1,465,885
Glenn Deegan			23,003				359,970				5,752				356,624				32,881				2,038,622				61,636				2,755,216
Todd Patriacca			13,546				218,209				3,388				210,056				17,351				1,075,762				34,285				1,504,027
Craig Schuele			13,470				212,262				3,368				208,816				18,783				1,164,546				35,621				1,585,624
Directors(4)
Lyle Ganske			—				—				—				—				—				—				—				—
J. Scott Hall			—				—				—				—				—				—				—				—
Nicole Parent Haughey			—				—				—				—				—				—				—				—
Margot Hoffman			—				—				—				—				—				—				—				—
Thomas Swidarski			—				—				—				—				—				—				—				—
La Vonda Williams			—				—				—				—				—				—				—				—

 

1

Under the Merger Agreement, upon the Effective Time, vested Company PSUs will be canceled and converted into the right to receive cash (assuming all applicable performance measures are satisfied at the actual level of performance (measured as of the Effective Time)) plus an amount equal to accumulated and unpaid dividend equivalents. The number of Company PSUs shown assumes that Company PSUs granted in 2020 have been earned at the maximum level (i.e., 150%). Such assumptions were made based on the

 

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Company’s latest performance estimates for the applicable performance measures, as of November 17, 2022.

2

Under the Merger Agreement, upon the Effective Time, unvested Company PSUs will be canceled and converted into an award of time-based restricted stock denominated in Parent common shares equal to the product of (i) the sum of (x) the number of Company common shares subject to the unvested Company PSU immediately prior to the Effective Time and (y) plus the amount of any accrued unpaid dividend equivalents divided by (2) the Merger Consideration (assuming all applicable performance measures are satisfied at (a) the actual level of performance (measured as of the Effective Time) with respect to any performance period that expires on or prior to the Effective Time and (b) the greater of (x) the target level of performance and (y) the actual level of performance (measured as of the Effective Time) with respect to any performance period that is scheduled to expire after the Effective Time). The number of Company PSUs shown assumes that (1) Company PSUs granted in 2021 have been earned at 115.78% and (2) Company PSUs granted in 2020 and 2022 have been earned at 150% (the maximum level). Such assumptions were made based on the Company’s latest performance estimates for the applicable performance measures, as of November 17, 2022.

3

Mr. Storch retired from the Company effective as of January 31, 2022. As an authorized retiree, Mr. Storch’s equity awards remain outstanding and, following the Effective Time, Mr. Storch’s unvested equity awards will be converted into corresponding equity awards of Parent under the terms of the Merger Agreement and continue to vest pursuant to the terms of the Company Stock Plan and the applicable awards agreements. Upon Mr. Storch’s retirement, his 3,525 Company RSUs were converted into 3,525 Company Restricted Shares.

4

Each non-employee director receives quarterly grants of restricted stock with an annual value equal to $130,000 and such quarterly installments vest immediately upon the grant date. As a result, as of December 31, 2022, each non-employee director will have received all four annual installments and, therefore, none of the directors will hold outstanding and unvested equity awards.

Severance Entitlements

Each of the executive officers entered into a Change of Control Agreement, dated as of February 15, 2015 (or, in the case of Mr. Patriacca, February 8, 2022) with the Company (the “CIC Agreements”). Each CIC Agreement provides for severance payments and other benefits in the event of a “qualifying termination”, which generally means a termination of employment by the Company without “cause” within the ninety 90 day period prior to a change in control that is in connection with or in anticipation of such change in control at the request of, or upon the initiative of, the buyer in the change in control transaction), or by the Company without “cause” or by the executive officer for “good reason” (as described below) within the 24-month period following, a change in control of Altra. The Merger will constitute a change in control of Altra for purposes of the CIC Agreements. For purposes of the CIC Agreements, “good reason” generally means (i) without the executive’s express consent, any material change in the executive’s job title, any significant change in the executive’s reporting relationships or a significant reduction of the executive’s duties, position or responsibilities relative to the executive’s duties, position or responsibilities in effect immediately prior to such reduction, or the executive’s removal from such position, duties and responsibilities, unless the executive is provided with comparable duties, position and responsibilities, (ii) a material reduction by the Company (other than a reduction on the same basis as other senior executives) in the kind or level of employee benefits to which the executive is entitled immediately prior to such reduction with the result that the executive’s overall benefits package is significantly reduced, (iii) a relocation that is more than 50 miles from the executive’s then-current principal work location or (iv) the Company’s failure to cause executive’s employment agreement and its obligations thereunder to be expressly assumed by Company’s successor.

In the event of a “qualifying termination”, each executive officer would be entitled to receive: (i) a lump-sum cash payment equal to the product of (x) the executive’s applicable multiple (which is 3 in the case of Mr. Christenson and 2 in the case of all other executive officers) and (y) the sum of (a) the executive’s annual base salary and (b) the executive’s target annual cash bonus; (ii) a pro-rated annual bonus for the portion of the

 

57

year in which the termination occurs (with the proration based on the executive’s date of termination); and (iii) subsidized health and dental COBRA premiums for up to 18 months. Receipt of the above-described payments and benefits is conditioned upon the applicable executive officer executing a release of claims in favor of the Company. In addition, upon an executive officer’s “qualifying termination” all outstanding and unvested equity awards would accelerate and vest in full.

The CIC Agreements provide that in the event that any payment or benefit (regardless of whether payable under the CIC Agreement or otherwise and including the acceleration of equity awards) payable to an executive officer would constitute a parachute payment within the meaning of Section 280G of the Code, then such payment or benefit will be reduced below the limit under Section 280G of the Code if the executive officer would end up in a better financial position than receiving the full amount and paying the 20% excise tax (such reduction, a “280G best-net cutback”). The CIC Agreements do not provide for a gross-up in the event the executive officer is subject to the “golden parachute” excise tax under Section 4999 of the Code.

Please see the section below entitled “Quantification of Payments and Benefits” for a summary of the amounts payable to the Company’s executive officers pursuant to the terms of the CIC Agreements.

Continuing Employee Benefits

The Merger Agreement provides that, subject to any applicable collective bargaining agreement, for a period of not less than one year following the Effective Time, Parent will, and will cause the Surviving Corporation to, provide each individual who was an employee of the Company or any of its subsidiaries immediately prior to the Effective Time (a “continuing employee”), subject to such individual’s continued employment, with (i) a base salary or wage rate, target annual cash bonus and long-term incentive opportunities that are, in each case, no less favorable than such continuing employee’s base salary or wage rate, target annual cash bonus and long-term incentive opportunities as in effect immediately prior to the Effective Time, (ii) severance benefits that are no less favorable than those provided to such continuing employee immediately prior to the Effective Time (after giving effect to any provisions relating to a change in control) and (iii) other compensation and benefits (other than base salary, wage rate, bonus and long-term incentive opportunities, change in control and severance payments) that have a value that is substantially similar in the aggregate to those provided to such continuing employee immediately prior to the Effective Time.

Parent has agreed to, or to cause the Surviving Corporation to, (i) recognize a continuing employee’s service with the Company or any of its subsidiaries prior to the Effective Time for all purposes, including determining such continuing employee’s eligibility to participate, level of benefits and vesting, benefit accruals and early retirement subsidies, under benefit plans in which continuing employees will participate after the Effective Time (subject to certain exceptions), (ii) cause all pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods applicable to continuing employees under the Parent’s, or the Surviving Corporation’s, or any of their respective subsidiaries’ welfare plans to be waived, to the extent such limitations were waived or satisfied prior to the Effective Time and (iii) provide continuing employees with credit under any such welfare plan for any co-payments, deductibles or similar payments incurred during the calendar year in which the Effective Time occurs.

With respect to annual bonuses payable under the Company’s annual bonus plan during the fiscal year in which the closing of the Merger occurs, Parent has agreed to pay or cause the Surviving Corporation to pay pro-rated bonuses equal to the product of (i) a fraction, the numerator of which is the number of days in the calendar year in which the closing of the Merger occurs that have elapsed as of the closing of the Merger, and the denominator of which is 365, and (ii) the amount of the applicable continuing employee’s target bonus or, if greater, the bonus he or she would be entitled to receive based on actual performance.

The Merger Agreement provides that the Company may establish a retention and transaction bonus program for the benefit of employees and other service providers of the Company and any of its subsidiaries, make

 

58

individual awards thereunder and enter into individual award agreements; provided that under such programs the aggregate amount payable cannot exceed $19.7 million ($13.7 million of which will be used for individual awards to employees below the named executive officer level (the “General Pool”) and the remaining $6 million of which may be granted to the named executive officers if, despite mitigation efforts, such executives will receive “excess parachute payments” (as defined in Section 280G of the Internal Revenue Code)). The named executive officers are not eligible to receive a retention award from the General Pool.

Director Compensation

Pursuant to the terms of the Merger Agreement, members of the Board will continue to receive cash and equity retainers in the ordinary course of business, provided that the Company may pay any unpaid cash retainer for the calendar quarter in which the Effective Time occurs without proration. 

Director and Officer Indemnification

Pursuant to the terms of the Merger Agreement, members of the Board and executive officers of the Company will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies immediately following the completion of the Merger. For a more detailed description of the provisions of the Merger Agreement relating to director and officer indemnification, please see the section of this proxy statement entitled “The Merger Agreement—Indemnification and Insurance”.

Quantification of Payments and Benefits

In accordance with Item 402(t) of Regulation S-K, the table below sets forth for each of the Company’s named executive officers estimates of the amounts of compensation that are based on or otherwise relate to the Merger and that will or may become payable to the named executive officer either immediately at the Effective Time (i.e., on a “single-trigger” basis) or in the event of a qualifying termination of employment on or following the completion of the Merger (i.e., on a “double-trigger” basis). The holders of shares of Altra common stock are being asked to approve, on a non-binding, advisory basis, such compensation for these named executive officers. Because the vote to approve such compensation is advisory only, it will not be binding on either the Company, the Board or Parent. Accordingly, if the proposal to approve the Merger Agreement is approved by the holders of shares of Altra common stock and the Merger is completed, the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions applicable thereto, which are described in the footnotes to the tables below and above under “—Interests of the Company’s Directors and Executive Officers in the Merger”.

The potential payments in the tables below are quantified in accordance with Item 402(t) of Regulation S-K. The estimated values are based on (a) an assumption that the Merger is completed on December 31, 2022, (b) a per share Merger Consideration of $62.00, (c) the named executive officers’ salary and total eligible bonus levels as in effect as of the date of this proxy statement, (d) the number of unvested Company Options, Company RSUs and Company PSUs held by the named executive officers as of November 17, 2022, the latest practicable date to determine such amounts before the filing of this proxy statement, and excluding any additional grants that may occur following such date and any Company Options, Company RSUs and Company PSUs that are vested or are expected to vest in accordance with their terms prior to December 31, 2022, and (e) an assumption that each named executive officer (other than Mr. Storch) is terminated by the Company without “cause” or by the named executive officer for “good reason” (each, as defined in the CIC Agreement) immediately following the completion of the Merger. In addition, the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement, and do not reflect certain compensation actions that may occur before the completion of the Merger. As a result, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below. Under the terms of the Merger Agreement, the Company may accelerate the payment of the Company PSUs granted in 2020, which will vest in the ordinary course on December 31, 2022 based on actual performance, and settle such awards in early December 2022.

 

59

The amounts shown below do not attempt to quantify any reduction that may be required as a result of a Section 280G best-net cutback; therefore, actual payments to the named executive officers may be less than the amounts indicated below.

Golden Parachute Payments to Named Executive Officers

 

Name		Cash ($)(1)				Equity ($)(2)				Perquisites/ Benefits ($)(3)				Other ($)				Total ($)
Carl Christenson			7,365,620				15,211,568				48,000				0				22,625,188
Christian Storch(4)			0				1,465,885				0				0				1,465,885
Glenn Deegan			1,703,160				2,755,216				48,000				0				4,506,376
Todd Patriacca			1,817,000				1,504,027				48,000				0				3,369,027
Craig Schuele			1,263,108				1,585,624				48,000				0				2,896,732

 

(1)

The estimated amounts shown in this column represent (a) a lump-sum cash payment equal to the product of (1) the executive’s applicable multiple (which is 3 in the case of Mr. Christenson and 2 in the case of all other named executive officers) and (2) the sum of (x) the named executive officer’s annual base salary and (y) the named executive officer’s target annual cash bonus and (b) a pro-rated annual bonus for the year of termination, assuming a termination date of December 31, 2022. The value of the pro-rated annual bonus for the year of termination, assuming a termination date of December 31, 2022, for Messrs. Christenson, Deegan, Patriacca and Schuele is $1,094,889, 268,920, 299,000 and 180,444, respectively. These payments are “double-trigger”, as they will only be payable in the event of a “qualifying termination” within the 90 day period prior to or within the 24 month period following the change of control (including the Merger). In addition, such payments are subject to the executive’s execution and non-revocation of a general release of claims and compliance with certain restrictive covenants. Details of the cash amounts are shown in the following supplementary table:

 

Name		Cash Severance Payments ($)				Pro-Rated Bonus ($)				Total ($)
Carl Christenson			6,270,730				1,094,889				7,365,620
Christian Storch			0				0				0
Glenn Deegan			1,434,240				268,920				1,703,160
Todd Patriacca			1,518,000				299,000				1,817,000
Craig Schuele			1,082,664				180,444				1,263,108

 

(2)

The estimated amounts shown in this column represent the aggregate intrinsic value of the named executive officers’ outstanding unvested Company Options (the excess, if any, of the per share Merger Consideration of $62.00 over the applicable exercise price) and the aggregate value of outstanding unvested Company RSUs and Company PSUs. Under the terms of the Merger Agreement, the estimated payments in respect of the named executive officers’ (other than Mr. Stoch) unvested Company Options, Company RSUs and Company PSUs as shown in the following table are “double-trigger” benefits in that they will be paid to the named executive officer only if the named executive officer experiences a qualifying termination of employment within the 90 day period prior to, or within the 24 month period following, the change of control (including the Merger). Mr. Storch retired from the Company effective as of January 31, 2022. As an authorized retiree, Mr. Storch’s equity awards remain outstanding and, following the Effective Time, Mr. Storch’s unvested equity awards will be converted into corresponding equity awards of Parent under the

 

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terms of the Merger Agreement and continue to vest pursuant to the terms of the Company Stock Plan and the applicable awards agreements.

 

Name		Unvested Options								Unvested RSUs or Restricted Shares								Unvested Company PSUs								Total ($)
		#				($)				#				($)				#				($)				($)
Carl Christenson			125,577				1,956,030				31,395				1,946,490				182,404				11,309,048				15,211,568
Christian Storch			14,095				194,141				3,525				218,550				16,987				1,053,194				1,465,885
Glenn Deegan			23,003				359,970				5,752				356,624				32,881				2,038,622				2,755,216
Todd Patriacca			13,546				218,209				3,388				210,056				17,351				1,075,762				1,504,027
Craig Schuele			13,470				212,262				3,368				208,816				18,783				1,164,546				1,585,624

 

(3)

The estimated amounts shown in this column represent subsidized health and welfare benefits premiums for 18 months, which is the maximum period under the CIC Agreement and calculated based on the applicable premium rates in effect as of the date of this proxy statement. These are “double-trigger” benefits in that they will be paid to the named executive officer only if the named executive officer experiences a qualifying termination of employment under the CIC Agreement within the 90 day period prior to, or within the 24 month period following, the change of control (including the Merger).

(4)

As noted in footnote (2) above, Mr. Storch retired from the Company, effective January 31, 2022 and will not receive any merger-related compensation other with respect to his equity awards. Under applicable SEC disclosure rules, Mr. Storch is considered a named executive officer for purposes of this table.

New Management Arrangements

As of the date of this proxy statement, there are no employment, equity or other agreements, arrangements or understandings between any of the Company’s directors or executive officers, on the one hand, and Parent or the Surviving Corporation, on the other hand, and the Merger is not conditioned upon any of the Company’s directors or executive officers entering into any such agreement, arrangement or understanding.

Financing of the Merger

There is no financing condition to the Merger. Regal Rexnord plans to fund the Merger Consideration with cash on hand and committed debt financing, as described below.

In connection with the Merger, on October 26, 2022, Regal Rexnord entered into the Commitment Letter with JPMorgan pursuant to which JPMorgan (i) committed to provide Regal Rexnord with, among other things, the Bridge Facility for the purpose of funding, in part, the Merger Consideration, paying certain fees and expenses related to the Merger and related transactions and for general corporate purposes and (ii) agreed to use commercially reasonable efforts to arrange financing (through the issuance of notes and/or the incurrence of term loans) in an aggregate principal amount of up to $5.5 billion for the purpose of replacing the Bridge Facility.

On March 28, 2022, Regal Rexnord entered into the Second Amended and Restated Credit Agreement providing for the Parent Existing Credit Facility. In connection with the Merger, on November 17, 2022, Regal Rexnord entered into the First Amendment to the Parent Existing Credit Facility pursuant to which, among other things, the lenders party thereto agreed to provide $600 million of additional commitments under the Term Loan Credit Facilities and $500 million of additional commitments under the Revolving Credit Facility, the Merger was permitted, the incurrence of debt in connection with the Merger was permitted and certain covenants were modified. Subject to the terms and conditions thereof, the increased commitments under the Term Loan Credit Facilities will be available to fund, in part, the Merger Consideration, pay certain fees and expenses related to the Merger and related transactions and for general corporate purposes.

 

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The aggregate principal amount of the increased commitments under the Term Loan Credit Facilities have reduced on a dollar for dollar basis a corresponding amount of the commitments in respect of the Bridge Facility in accordance with the terms of the Commitment Letter. As a result, there are now $4.9 billion in Bridge Facility commitments remaining.

Closing and Effective Time

The closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York City time, on the third business day after the satisfaction or waiver (to the extent such waiver is permitted by applicable law) of all conditions to Closing, which are described below in the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger” (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time), at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, or remotely by exchange of documents and signatures (or their electronic counterparts), unless (a) another date, time or place is agreed to in writing by Regal Rexnord and Altra or (b) the Marketing Period has not ended at the time of the satisfaction or waiver of all conditions to Closing (other than those conditions that by their nature are to be satisfied at the Closing) in which case the parties shall not be required to effect the Closing until the earlier of (i) a business day during the Marketing Period specified by Regal Rexnord on no less than two business days’ prior written notice to Altra and (ii) the third business day after the final day of the Marketing Period in each case, subject to the satisfaction or waiver of all conditions to Closing (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time). The date on which the Closing occurs is herein referred to as the “Closing Date”.

Accounting Treatment

The Merger will be accounted for as a “purchase transaction” for financial accounting purposes.

Appraisal Rights

If the Merger is consummated, persons who do not wish to accept the Merger Consideration are entitled to seek appraisal of their shares of Altra common stock under Section 262 and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their shares of Altra common stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of your shares of Altra common stock as determined by the Delaware Court may be more or less than, or the same as, the Merger Consideration that you are otherwise entitled to receive under the Merger Agreement. These rights are known as “appraisal rights”. This proxy statement serves as a notice of such appraisal rights pursuant to Section 262.

Persons who exercise appraisal rights under Section 262 will not receive the Merger Consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their shares of Altra common stock following petition to, and an appraisal by, the Delaware Court. Persons considering seeking appraisal should recognize that the fair value of their shares of Altra common stock determined under Section 262 could be more than, the same as or less than the Merger Consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 is required. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A copy of Section 262 may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. The following summary is not a

 

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complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. The following summary does not constitute legal or other advice, nor does it constitute a recommendation that persons seek to exercise their appraisal rights under Section 262. Failure to comply timely and properly with the requirements of Section 262 will result in the loss of a person’s appraisal rights under the DGCL. A person who loses his, her or its appraisal rights will be entitled to receive the Merger Consideration under the Merger Agreement.

A holder of record or a beneficial owner of shares of Altra common stock who (i) continuously holds such shares through the Effective Time, (ii) has not consented to or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (iii) strictly complies with the procedures under Section 262, (iv) does not thereafter withdraw his, her or its demand for appraisal of such shares and (v) in the case of a beneficial owner, a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by the Company and to be set forth on the Chancery List (as defined below), will be entitled to receive the fair value of his, her or its shares of Altra common stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court, together with interest, if any, to be paid upon the amount determined to be the fair value.

Section 262 requires that where a merger agreement is to be submitted for adoption at a meeting of stockholders, the stockholders be notified that appraisal rights will be available not less than twenty (20) days before the meeting to vote on the merger. Such notice must include either a copy of Section 262 or information directing the stockholders to a publicly available electronic resource at which Section 262 may be accessed without subscription or cost. This proxy statement constitutes the Company’s notice to our stockholders that appraisal rights are available in connection with the Merger, in compliance with the requirements of Section 262.

If you elect to demand appraisal of your shares of Altra common stock, you must satisfy each of the following conditions: you must deliver to the Company a written demand for appraisal of your shares of Altra common stock before the taking of the vote on the Merger, which demand must reasonably inform us of the identity of the holder of record of shares of Altra common stock for which appraisal is demanded and, for beneficial owners only, such demand must be accompanied by documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and must provide an address at which such beneficial owner consents to receive notices given by the Company and to be set forth on the Chancery List; you must not vote or submit a proxy in favor of the proposal to adopt the Merger Agreement; you must hold your shares of Altra common stock continuously through the Effective Time; and you must comply with the other applicable requirements of Section 262.

An Altra stockholder who elects to exercise appraisal rights must mail his, her or its written demand for appraisal to the following address:

Altra Industrial Motion Corp.

300 Granite Street, Suite 201

Braintree, MA 02184

Attention: Glenn Deegan, Chief Legal Officer and Human Resources Officer

 

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with a copy to (which shall not constitute notice):

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

Attention:

Thomas E. Dunn

Daniel J. Cerqueira

A record holder who holds shares of Altra common stock as a nominee for others, such as a broker, fiduciary, depositary or other nominee, may exercise appraisal rights with respect to the shares held for all or less than all beneficial owners of shares as to which such person is the record owner. In such case, the demand must set forth the number of shares of Altra common stock covered by such demand. Where the number of shares of Altra common stock is not expressly stated, the demand will be presumed to cover all shares of Altra common stock outstanding in the name of such record owner.

Within ten (10) days after the Effective Time, the Surviving Corporation must give written notice that the Merger has become effective to each of (a) the Company’s stockholders who has properly filed a written demand for appraisal and who did not vote in favor of the proposal to adopt the Merger Agreement and (b) the beneficial owners who has demanded appraisal under Section 262. At any time within sixty (60) days after the Effective Time, any person who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the demand and accept the Merger Consideration specified by the Merger Agreement for that person’s shares of Altra common stock by delivering to the Surviving Corporation a written withdrawal of the demand for appraisal.

Within one hundred twenty (120) days after the Effective Time, but not thereafter, the Surviving Corporation and any person who has properly and timely demanded appraisal and otherwise complied with Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court, with a copy served on the Surviving Corporation in the case of a petition filed by a person, demanding a determination of the fair value of the shares of Altra common stock held by all persons that have demanded appraisal. There is no present intent on the part of the Company or the Surviving Corporation to file an appraisal petition and persons seeking to exercise appraisal rights should assume that the Company and the Surviving Corporation will not file such a petition or initiate any negotiations with respect to the fair value of shares of Altra common stock. Accordingly, persons who desire to have their shares of Altra common stock appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262. If, within one hundred twenty (120) days after the Effective Time, no petition has been filed as provided above, all rights to appraisal will cease and any person that previously demanded appraisal will become entitled only to the Merger Consideration under the Merger Agreement.

In addition, within one hundred twenty (120) days after the Effective Time, any person who has theretofore complied with the applicable provisions of Section 262 will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares of Altra common stock not voted in favor of the Merger and with respect to which demands for appraisal were received by the Surviving Corporation and the aggregate number of holders of such shares. Such statement must be given within ten (10) days after the written request therefor has been received by the Surviving Corporation or within ten (10) days after the expiration of the period for the delivery of demands as described above, whichever is later.

Upon the filing of a petition by a person, service of a copy of such petition shall be made upon the Surviving Corporation. The Surviving Corporation shall be required to, within twenty (20) days after such service, file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all persons who have demanded appraisal of their shares of Altra common stock and with whom the Surviving Corporation has not reached agreements as to the value of such shares (the “Chancery List”). The

 

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Register in Chancery, if so ordered by the Delaware Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the Surviving Corporation and to all such persons set forth on the Chancery List.

If a petition for an appraisal is timely filed by a person, at the hearing on such petition, the Delaware Court will determine which persons have complied with Section 262 and have become entitled to appraisal rights provided thereby. The Delaware Court may require the persons who have demanded an appraisal of their shares of Altra common stock and who hold shares represented by certificates to submit their certificates of shares of Altra common stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any person fails to comply with such direction, the Delaware Court may dismiss the proceedings as to such person. The Delaware Court will dismiss the appraisal proceedings as to all holders of shares of Altra common stock who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of Altra common stock or (2) the value of the consideration provided in the merger for such total number of shares exceeds $1 million.

Upon application by the Surviving Corporation or any person entitled to participate in the appraisal proceedings, the Delaware Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to appraisal. Any person whose name appears on the Chancery List may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under Section 262.

Where proceedings are not dismissed, the appraisal proceeding shall be conducted in accordance with the rules of the Delaware Court, including any rules specifically governing appraisal proceedings. Through such proceedings the Delaware Court shall determine the fair value of shares of Altra common stock taking into account all relevant factors, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Unless the Delaware Court, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the Effective Time through the date the judgment is paid at five percent (5%) over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the Surviving Corporation may pay to each person entitled to appraisal an amount in cash, in which case interest shall accrue after such payment only on the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares of Altra common stock as determined by the Delaware Court, and (2) interest theretofore accrued, unless paid by the Surviving Corporation as part of the pre-judgment payment to the person.

When the fair value of the shares of Altra common stock is determined, the Delaware Court will direct the payment of such value, with interest thereon, if any, to the persons entitled to receive the same.

Although the Company believes that the Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court and persons should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the Merger Consideration. Moreover, the Surviving Corporation does not anticipate offering more than the Merger Consideration to any person exercising appraisal rights and reserves the right to assert, in any appraisal proceeding, that, for purposes of Section 262, the “fair value” of the relevant shares of Altra common stock is less than the Merger Consideration.

In determining “fair value”, the Delaware Court is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of

 

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a company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were known or could be ascertained as of the date of the Merger which throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the Merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value”, but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the Merger and not the product of speculation, may be considered.” In addition, the Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenting person’s exclusive remedy.

The cost of the appraisal proceeding may be determined by the Delaware Court and taxed upon the parties as the Delaware Court deems equitable in the circumstances. However, costs do not include attorneys’ and expert witness fees. Each person is responsible for his, her or its attorneys’ and expert witness fees, although, upon application of a person whose name appears on the Chancery List who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court may order that all or a portion of such expenses, including, without limitation, reasonable attorneys’ and expert witness fees, be charged pro rata against the value of all shares of Altra common stock entitled to appraisal not dismissed pursuant to Section 262(k) of the DGCL or subject to such an award pursuant to a reservation of jurisdiction under Section 262(k) of the DGCL. Determinations by the Delaware Court are subject to appellate review by the Delaware Supreme Court.

Any person who has duly demanded appraisal in compliance with Section 262 will not be entitled to vote for any purpose any shares of Altra common stock subject to such demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to Altra stockholders of record at a date prior to the Effective Time.

No appraisal proceeding in the Delaware Court shall be dismissed as to any person without the approval of the Delaware Court, and such approval may be conditioned upon such terms as the Delaware Court deems just, including without limitation, a reservation of jurisdiction for any application to the Delaware Court made under Section 262(j) of the DGCL; provided, however, that this provision shall not affect the right of any person who has not commenced an appraisal proceeding or joined such a proceeding as a named party to withdraw such person’s demand for appraisal and to accept the terms offered upon the Merger within sixty (60) days after the Effective Time. If no petition for appraisal is filed with the Delaware Court within one hundred twenty (120) days after the Effective Time, all rights to appraisal will cease and any person that previously demanded appraisal will become entitled only to the Merger Consideration under the Merger Agreement.

To the extent there are any inconsistencies between the foregoing summary, on the one hand, and Section 262, on the other hand, Section 262 will govern.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of certain material U.S. federal income tax consequences of the Merger that may be relevant to U.S. Holders and non-U.S. Holders (each, as defined below) of shares of Altra common stock whose shares of Altra common stock are converted into the right to receive cash pursuant to the Merger. This discussion is limited to U.S. Holders and non-U.S. Holders who hold their shares of Altra common stock as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment). This discussion is based upon the Code, Treasury Regulations promulgated under the Code, rulings and other published positions of the Internal Revenue Service (the “IRS”) and judicial decisions, each as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. Any such change or

 

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differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax considerations described in this discussion. No ruling has been or will be sought from the IRS, and no opinion of counsel has or will be rendered, regarding any matter discussed below or the U.S. federal income tax consequences of the Merger.

This discussion is for general information purposes only and does not purport to be a complete analysis of all of the U.S. federal income tax considerations that may be relevant to particular holders in light of their particular facts and circumstances, or to holders subject to special rules under the U.S. federal income tax laws, including, for example:

 

•

banks and other financial institutions;

 

•

mutual funds;

 

•

insurance companies;

 

•

brokers or dealers in securities, currencies or commodities;

 

•

dealers or traders in securities subject to a mark-to-market method of accounting with respect to shares of Altra common stock;

 

•

regulated investment companies and real estate investment trusts;

 

•

retirement plans, individual retirement and other deferred accounts;

 

•

tax-exempt organizations, governmental agencies, instrumentalities or other governmental organizations and pension funds;

 

•

holders that hold shares of Altra common stock as part of a “straddle”, hedge, constructive sale, or other integrated transaction or conversion transaction or similar transactions;

 

•

U.S. Holders whose functional currency is not the U.S. dollar;

 

•

partnerships, other entities or arrangements classified as partnerships for U.S. federal income tax purposes, “S corporations”, or any other pass-through entities for U.S. federal income tax purposes (or investors in such entities);

 

•

holders that own or have owned at any time (directly, indirectly or constructively) 5% or more of Altra common stock (by vote or value);

 

•

holders that received their shares of Altra common stock in a compensatory transaction, through a tax-qualified retirement plan, pursuant to the exercise of options or warrants or otherwise as compensation;

 

•

U.S. expatriates and former citizens or long-term residents of the United States;

 

•

expatriated entities subject to Section 7874 of the Code;

 

•

holders subject to any alternative minimum tax;

 

•

grantor trusts;

 

•

controlled foreign corporations or passive foreign investment companies;

 

•

holders that hold their Altra common stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside of the United States;

 

•

holders that exercise their appraisal rights in connection with the Merger;

 

•

holders that own, directly, indirectly or constructively, an equity interest in Parent following the Merger; and

 

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•

persons required to accelerate the recognition of any item of gross income with respect to Altra common stock as a result of such income being taken into account on an applicable financial statement.

This discussion of material U.S. federal income tax consequences is not a complete description of all potential U.S. federal income tax consequences of the Merger. This discussion does not address any U.S. federal tax considerations other than those pertaining to the income tax (such as the federal estate or gift tax, any alternative minimum tax, or the application of the Medicare tax on net investment income under Section 1411 of the Code) or any state, local or non-U.S. income or non-income tax considerations. In addition, this discussion does not address any considerations in respect of any withholding required pursuant to the Foreign Account Tax Compliance Act of 2010 (including the Treasury Regulations promulgated thereunder and intergovernmental agreements entered into in connection therewith and any laws, regulations or practices adopted in connection with any such agreement). This discussion does not address the tax consequences of any transaction other than the Merger.

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of Altra common stock, the U.S. federal income tax treatment of a partner in such partnership generally will depend upon the status of the partner, the activities of the partner and the partnership and certain determinations made at the partner level. Accordingly, partners in partnerships holding shares of Altra common stock should consult their tax advisors as to the particular tax consequences to them of the Merger.

THE U.S. FEDERAL INCOME TAX TREATMENT OF THE TRANSACTIONS DISCUSSED HEREIN TO ANY PARTICULAR ALTRA STOCKHOLDER WILL DEPEND ON THE ALTRA STOCKHOLDER’S PARTICULAR TAX CIRCUMSTANCES. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE MERGER IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME, ALTERNATIVE MINIMUM TAX AND OTHER TAX LAWS AND OF CHANGES IN THOSE TAX LAWS.

For purposes of this discussion, a “U.S. Holder” means a beneficial owner of shares of Altra common stock that is for U.S. federal income tax purposes:

 

•

an individual who is a citizen or resident of the United States;

 

•

a corporation, or other entity or arrangement taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

•

an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

 

•

a trust, if (a) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more “United States persons” (within the meaning of the Code) have the authority to control all substantial decisions of the trust or (b) the trust validly elected to be treated as a United States person for U.S. federal income tax purposes.

A “non-U.S. Holder” means a beneficial owner of Altra common stock that is neither a U.S. Holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

U.S. Holders

The receipt of cash by a U.S. Holder in exchange for shares of Altra common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. Holder will recognize gain or loss in an amount equal to the difference, if any, between the

 

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amount of cash received pursuant to the Merger and the U.S. Holder’s adjusted tax basis in the shares of Altra common stock surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis in its shares of Altra common stock will generally equal the amount that such U.S. Holder paid for such shares. A U.S. Holder’s gain or loss on the disposition of shares of Altra common stock generally will be characterized as capital gain or loss, and any such capital gain or loss generally will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the Merger. Long-term capital gains of certain non-corporate holders, including individuals, currently are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of Altra common stock at different times or different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Altra common stock that it holds.

Non-U.S. Holders

In general, subject to the discussion below regarding potential backup withholding, the receipt of cash by a non-U.S. Holder in exchange for shares of Altra common stock pursuant to the Merger will not be subject to U.S. federal income tax unless:

 

•

the gain, if any, recognized by the non-U.S. Holder is effectively connected with a trade or business conducted by the non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to the non-U.S. Holder’s permanent establishment in the United States);

 

•

the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the Merger and certain other conditions are met; or

 

•

shares of Altra common stock constitute a United States real property interest by reason of Altra’s status as a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code (a “USRPHC”) at any time during the shorter of the five-year period ending on the date of the Effective Time or the period that the non-U.S. Holder held the applicable shares of Altra common stock (the “Relevant Period”).

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis in substantially the same manner as if the non-U.S. Holder were a U.S. Holder (unless an applicable income tax treaty provides otherwise), and if the non-U.S. Holder is a corporation for U.S. federal income tax purposes, it may also be subject to an additional “branch profits tax” at a 30% rate (or such lower rate as may be provided by an applicable income tax treaty) on its “effectively connected earnings and profits” for the taxable year, as adjusted for certain items.

A non-U.S. Holder described in the second bullet point above generally will be subject to U.S. federal income tax at a rate of 30% (or such lower rate as may be provided by an applicable income tax treaty) on any gain recognized, which generally may be offset by U.S.-source capital losses of the non-U.S. Holder recognized in the same taxable year (if any), provided the non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, Altra believes it has not been, is not and will not be a USRPHC during the five-year period ending on the date of the Effective Time. Even if Altra is or was a USRPHC during the Relevant Period, gain arising from a non-U.S. Holder’s receipt of cash in exchange for shares of Altra common stock pursuant to the Merger will not be subject to U.S. federal income tax if the Altra common stock is “regularly traded”, as defined in applicable Treasury Regulations, on an established securities market, and such non-U.S. Holder owned, actually and constructively, 5% or less of the Altra common stock throughout the Relevant Period.

Information Reporting and Backup Withholding

Generally, information reporting requirements may apply in connection with payments made to U.S. Holders and non-U.S. Holders in connection with the Merger.

 

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Backup withholding of tax (currently, at a rate of 24%) generally will apply to the proceeds received by a U.S. Holder pursuant to the Merger, unless the U.S. Holder provides the applicable withholding agent with a properly completed and executed IRS Form W-9 providing such U.S. Holder’s correct taxpayer identification number and certifying that such U.S. Holder is not subject to backup withholding, or otherwise establishes an exemption, and otherwise complies with the backup withholding rules.

A non-U.S. Holder may be subject to information reporting and backup withholding tax (currently, at a rate of 24%) unless the non-U.S. Holder provides the applicable withholding agent with a properly completed and executed IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable IRS Form W-8), attesting to such non-U.S. Holder’s status as a non-U.S. person and otherwise complies with applicable certification requirements.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder or a non-U.S. Holder generally will be allowed as a credit against such U.S. Holder’s or non-U.S. Holder’s U.S. federal income tax liability, if any, and may entitle such U.S. Holder or non-U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

THIS DISCUSSION IS FOR GENERAL INFORMATION PURPOSES ONLY. IT DOES NOT ADDRESS TAX CONSIDERATIONS THAT MAY VARY WITH, OR ARE CONTINGENT ON, YOUR INDIVIDUAL CIRCUMSTANCES OR THE APPLICATION OF ANY U.S. NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. JURISDICTION, AND HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING SUCH MATTERS AND THE TAX CONSEQUENCES OF THE MERGER TO THEM IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME, ALTERNATIVE MINIMUM TAX AND OTHER TAX LAWS AND OF CHANGES IN THOSE TAX LAWS.

Regulatory Approvals Required for the Merger

General

Each of the parties to the Merger Agreement has agreed (subject to the terms and conditions of the Merger Agreement) to use its reasonable best efforts to, among other things, cooperate in all reasonable respects with each other in connection with any filing, submission or written communication with a governmental authority in connection with the transactions contemplated by the Merger Agreement and in connection with any investigation or other inquiry by or before a governmental authority related to the transactions contemplated by the Merger Agreement. In addition, Parent has agreed to, as promptly as reasonably practicable, take all actions necessary to (a) secure the expiration or termination of any applicable waiting period under the HSR Act or, with respect to any Other Regulatory Approval, any other antitrust law or investment screening law, (b) obtain the Other Regulatory Approvals and (c) resolve any objections asserted with respect to the transactions contemplated by the Merger Agreement under any applicable law raised by any governmental authority, in order to prevent the entry of, or to have vacated, lifted, reverted or overturned, any Restraint that would prevent, prohibit, restrict or delay the consummation of the transactions contemplated by the Merger Agreement (such expirations, terminations, approvals and resolutions, collectively, the “Required Approvals”), in each case subject to certain limitations, including that Parent will not be required to take any such action if it would or would reasonably be expected to result in the imposition of or require a Burdensome Condition. For a detailed description of regulatory matters, please see below under the section of this proxy statement entitled “The Merger Agreement—Efforts to Consummate the Merger”.

The approvals required under the Merger Agreement include expiry or termination of the waiting period under the HSR Act, as well as receipt of the Other Regulatory Approvals.

We currently expect to complete the Merger in the first half of 2023. However, we cannot predict the exact timing of completion of the Merger because we cannot guarantee when all of the necessary regulatory approvals will be obtained, or if they will be obtained at all.

 

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U.S. Regulatory Clearances

Under the HSR Act, the Merger cannot be completed until the waiting period applicable to the Merger has expired or been terminated. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-day waiting period following the parties’ filings of their HSR Act notification and report forms. If the Federal Trade Commission (the “FTC”) or the Antitrust Division of the Department of Justice (the “DOJ”) issues a request for additional information and documentary materials (a “Second Request”) prior to the expiration of the initial waiting period, the parties must observe a second 30-day waiting period, which would begin to run only after the parties have substantially complied with the Second Request, unless the waiting period is terminated earlier or the parties otherwise agree to extend the waiting period. The parties made the required filings with the FTC and the DOJ on November 9, 2022, and the initial 30-day waiting period is scheduled to expire at 11:59 p.m. Eastern Time on December 9, 2022.

At any time before or after consummation of the Merger, notwithstanding the termination or expiration of the waiting period under the HSR Act, the FTC or the DOJ could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the Merger, seeking divestiture of substantial assets of the parties, or requiring the parties to license or hold separate assets or terminate existing relationships and contractual rights. At any time before or after the completion of the Merger, any state could take such action under the antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the completion of the Merger or seeking divestiture of substantial assets of the parties. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. We cannot be certain that a challenge to the Merger will not be made or that, if a challenge is made, we will prevail.

Other Regulatory Approvals

In addition to the HSR Act, the consummation of the Merger is also subject to receipt of consents, approvals or other clearances under (a) the antitrust laws of Australia, China, the European Union, Turkey and the United Kingdom, (b) the investment screening laws of Australia, the Czech Republic, Denmark, France, Germany, Italy and the United Kingdom, (c) the investment screening laws of certain specified jurisdictions, to the extent such laws enter into force prior to Closing and Parent determines in accordance with terms set forth in the confidential disclosure schedules that approval is required under such laws and (d) the investment screening laws of a specified jurisdiction if, prior to the Effective Time, the applicable governmental authority in such jurisdiction requests Parent to provide notice of the Merger (collectively, the “Other Regulatory Approvals”).

In each case, the relevant regulatory authorities could take such actions under the applicable regulatory laws as they deem necessary or desirable, including seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. We cannot be certain that a challenge to the Merger will not be made or that, if a challenge is made, we will prevail.

The Board unanimously recommends that you vote “FOR” the Merger Agreement Proposal.

 

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THE MERGER AGREEMENT

Explanatory Note Regarding the Merger Agreement

The following summarizes the material provisions of the Merger Agreement. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. We recommend that you read the Merger Agreement attached to this proxy statement as Annex A carefully and in its entirety, as the rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

The Merger Agreement is included with this proxy statement only to provide you with information regarding the terms of the Merger Agreement and not to provide you with any other factual information regarding the Company, Parent, Merger Sub or their respective subsidiaries, affiliates or businesses. The Merger Agreement contains representations and warranties by each of the parties to the Merger Agreement. These representations and warranties have been made solely for the benefit of the other parties to the Merger Agreement and:

 

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have been made only for purposes of the Merger Agreement;

 

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have been qualified by certain documents filed with, or furnished to, the SEC by the Company and publicly available one business day prior to the date of the Merger Agreement;

 

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have been qualified by confidential disclosures made by the Company or Parent and Merger Sub, as applicable, in connection with the Merger Agreement;

 

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are subject to materiality qualifications contained in the Merger Agreement that may differ from what may be viewed as material by investors;

 

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were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement; and

 

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have been included in the Merger Agreement for the purpose of allocating risk between the Company, on the one hand, and Parent and Merger Sub, on the other hand, rather than establishing matters as facts.

You should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent, Merger Sub or any of their respective subsidiaries, affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Accordingly, the representations and warranties and other provisions of the Merger Agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. The Company will provide additional disclosure in its public reports of any material information necessary to provide Altra stockholders with a materially complete understanding of the disclosures relating to the Merger Agreement. See “Where You Can Find Additional Information” beginning on page 103 of this proxy statement.

The summary of the material terms of the Merger Agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate by reference into this proxy statement.

Effects of the Merger

The Merger Agreement provides that, on the terms and subject to the conditions of the Merger Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub will merge with and into the Company, the

 

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separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence as the Surviving Corporation, becoming a wholly owned subsidiary of Parent. Following the consummation of the merger, all of the Altra common stock will be beneficially owned by Parent, and none of the current holders of Altra common stock will, by virtue of the merger, have any ownership interest in, or be a stockholder of, the Company, the Surviving Corporation or Parent.

Closing and Effective Time of the Merger

Unless the parties agree in writing otherwise, the closing of the merger will take place at 10:00 a.m. (New York City time) on the third business day after all conditions to the consummation of the merger have been satisfied or (to the extent permitted by law) waived; provided that if the Marketing Period has not ended at the time of such satisfaction or waiver, then the parties shall not be required to effect the closing until the earlier of (a) a business day during the Marketing Period specified by Parent on no less than two business days’ prior written notice to the Company and (b) the third business day after the final day of the Marketing Period.

The merger will be effective at the time that the certificate of merger is filed with the Secretary of State of the State of Delaware or, to the extent permitted by applicable law, at such later time as may be agreed by the Company and Parent prior to filing the certificate of merger and specified in the certificate of merger.

At the Effective Time, the certificate of incorporation and bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will be the certificate of incorporation and bylaws of the Surviving Corporation until as thereafter amended or restated in accordance with their terms or by applicable law (in each case, in compliance with the requirements of the Merger Agreement), except that the name of the Surviving Corporation will be “Altra Industrial Motion Corp.”

The Company and Parent currently expect to consummate the merger in the first half of 2023, subject to receipt of the Company Stockholder Approval and the required regulatory approvals and the satisfaction or waiver of the other conditions to the merger described in the Merger Agreement. For additional information, please see the section of this proxy statement entitled “Proposal 1: Adoption of the Merger Agreement—Regulatory Approvals Required for the Merger” beginning on page 70.

Consideration To Be Received in the Merger

The Merger Agreement provides that, at the Effective Time, each share of Altra common stock issued and outstanding immediately prior to the Effective Time (other than Excluded Altra Shares) will be converted into the right to receive the Merger Consideration of $62.00 in cash, without interest and less any applicable withholding taxes. Following the Effective Time, each holder of Altra common stock will cease to have any rights with respect to such common stock, except for the right to receive the Merger Consideration therefor.

If, between October 26, 2022 and the Effective Time, the number of shares of outstanding Altra common stock changes into a different number of shares or a different class, by reason of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Altra common stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change, or any such action shall have been declared with a record date within said period, then the Merger Consideration and any other amounts payable pursuant to the Merger Agreement will be appropriately and equitably adjusted to reflect such event; provided that (i) the aggregate amount payable by Parent pursuant to the Merger Agreement after giving effect to such event will not exceed the amount that would have been payable had such event not occurred and (ii) the Company may not take any action with respect to its securities that is expressly prohibited by the terms of the Merger Agreement.

Excluded Shares

Each share of Altra common stock outstanding and held by the Company as treasury stock immediately prior to the Effective Time will be automatically canceled and will cease to exist and no payment will be made

 

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with respect therefor. Each share of Altra common stock outstanding and held by Parent or Merger Sub immediately prior to the Effective Time will be automatically canceled and shall cease to exist and no payment will be made with respect therefor. Each share of Altra common stock outstanding and held by any subsidiary of the Company or Parent (other than Merger Sub) immediately prior to the Effective Time will be, at the election of Parent, either (i) converted into one share of common stock, par value $0.001 per share of the Surviving Corporation or (ii) canceled with no consideration delivered in exchange therefor.

Treatment of Company Equity-Based Awards

At the Effective Time, subject to all required withholding taxes, outstanding equity awards will be treated as follows:

 

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each outstanding Company Option that is vested and exercisable as of immediately prior to the Effective Time or portion thereof, will be canceled in exchange for the right to receive an amount in cash, without interest, equal to (i) the number of shares of Altra common stock subject to such Company Option immediately prior to the Effective Time multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option; provided that any such Company Option with an exercise price per share that is equal to or greater than the Merger Consideration will be canceled for no consideration;

 

•

each outstanding Company Option that is unvested as of immediately prior to the Effective Time or portion thereof, will be converted into an award of stock options to purchase a number of Parent common shares (rounded down to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company Option immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio, at an exercise price (rounded up to the nearest whole cent) equal to (x) the exercise price of such Company Option immediately prior to the Effective Time divided by (y) the Equity Award Conversion Ratio. Each converted Company Option will be subject to substantially similar terms and conditions with respect to vesting and exercisability as were applicable to the related Company Option immediately prior to the Effective Time;

 

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each outstanding Company RSU that is unvested immediately prior to the Effective Time will be converted into a restricted stock unit denominated in Parent common shares (rounded to the nearest whole number) equal to (i) the number of shares of Altra common stock subject to such unvested Company RSU immediately prior to the Effective Time multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company RSU will be subject to substantially similar terms and conditions with respect to vesting as were applicable to the related Company RSU immediately prior to the Effective Time;

 

•

each outstanding Company RSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) (x) the Merger Consideration multiplied by (y) the number of shares of Altra common stock subject to such Company RSU immediately prior to the Effective Time plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents;

 

•

each outstanding Company PSU that is vested prior to the Effective Time will be canceled and converted into the right to receive an amount in cash, without interest, equal to (i) the product of (x) the number of shares of Altra common stock subject to such vested Company PSU (assuming all applicable performance measures for vested Company PSUs are satisfied at the actual level of performance (measured as of the Effective Time), as determined by the Board in consultation with Parent) and (y) the Merger Consideration plus (ii) an amount in cash equal to any accumulated and unpaid dividend equivalents);

 

•

each outstanding Company PSU that is unvested prior to the Effective Time will be canceled and converted into an award of time-based restricted stock denominated in Parent common shares equal to the product (rounded to the nearest whole number) of (i) the sum of (x) the number of shares of Altra

 

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common stock subject to such unvested Company PSU immediately prior to the Effective Time and (y)(1) the amount of any accrued unpaid dividend equivalents divided by (2) the Merger Consideration (assuming all applicable performance measures are satisfied at (i) the actual level of performance (measured as of the Effective Time) with respect to any performance period that expires on or prior to the Effective Time and (ii) the greater of (x) the target level of performance and (y) the actual level of performance (measured as of the Effective Time) with respect to any performance period that is scheduled to expire after the Effective Time, in each case, as determined by the Board in consultation with Parent) multiplied by (ii) the Equity Award Conversion Ratio. Each converted Company PSU will be subject to substantially similar terms and conditions with respect to vesting terms as were applicable to the applicable Company PSU immediately prior to the Effective Time, except that the award will only be subject to time-based vesting conditions; and

 

•

each outstanding Company Restricted Share will be converted into a Restricted Cash Award equal to the product of (i) the number of shares of Altra common stock subject to such Company Restricted Share immediately prior to the Effective Time and (ii) the Merger Consideration. Each Restricted Cash Award will be subject to substantially similar terms and conditions with respect to vesting and forfeiture as were applicable to the applicable Company Restricted Share immediately prior to the Effective Time, except that the form of payment upon vesting and settlement will be in cash.

Prior to the Effective Time, the Board (or, if appropriate, any committee administering the Company Stock Plan) will adopt such resolutions and take such other actions as may be required to effectuate the actions required by Section 2.03 of the Merger Agreement. All amounts payable pursuant to Section 2.03 of the Merger Agreement will be subject to any required withholding of Taxes and will be paid without interest.

Promptly following the Effective Time (but in no event later than the first payroll date that occurs more than five (5) business days following the Effective Time), Parent will, or will cause the Surviving Corporation to, pay all amounts payable pursuant to Section 2.03 of the Merger Agreement to the former holders of vested Company Options, vested Company RSUs and vested Company PSUs, as applicable; provided, however, that, to the extent any such amounts constitute nonqualified deferred compensation subject to Section 409A of the Code, such amounts will be paid at the earliest time following the Effective Time permitted under the terms of the applicable agreement or Company Stock Plan relating to such Company Option, Company RSU or Company PSU that will not trigger a tax or penalty under Section 409A of the Code.

If Parent does not elect to assume the Company Stock Plan, the Company will, prior to the Effective Time, take such actions as are necessary to cause the Company Stock Plan to terminate at or prior to the Effective Time and Parent will grant the converted Company Options, Company RSUs, Company PSUs and Restricted Cash Awards under an equity plan of Parent.

“Company Stock Plan” means the 2014 Omnibus Incentive Plan, as amended and restated.

Exchange and Payment Procedures

Parent will appoint a paying agent reasonably acceptable to the Company (the “Paying Agent”) to make payment of the Merger Consideration as contemplated by the Merger Agreement. At or prior to the Effective Time, Parent will cause to be deposited with the Paying Agent funds sufficient to pay the aggregate Merger Consideration.

From and after the Effective Time, there will be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Altra common stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any shares of Altra common stock are presented to the Surviving Corporation for any reason, they will be canceled and exchanged pursuant to and in accordance with the Merger Agreement.

 

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Promptly after the Effective Time, and in any event not later than the third business day after the Effective Time, Parent and the Surviving Corporation will cause the Paying Agent to mail to each Altra stockholder of record of a certificate whose shares were converted into the Merger Consideration pursuant to the Merger Agreement a letter of transmittal and instructions for use in effecting the surrender of certificates in exchange for the Merger Consideration. Each such Altra stockholder will be entitled to receive the Merger Consideration upon surrender of such certificates, together with the associated letter of transmittal, duly completely and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required by the Paying Agent. ALTRA STOCKHOLDERS SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO THE PAYING AGENT WITHOUT A LETTER OF TRANSMITTAL AND SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.

The transmittal instructions will tell holders of Altra common stock what to do if they have lost a certificate or if a certificate has been stolen or destroyed. Any such Altra stockholder will have to provide an affidavit to that fact and, if required by Parent, post a bond in such reasonable amount as Parent directs as indemnity against any claim that may be made against it with respect to such certificate, upon which the Paying Agent shall issue the Merger Consideration to be paid in respect of the shares of Altra common stock represented by such lost, stolen or destroyed certificate.

Each Altra stockholder of record that holds their shares in book-entry will not be required to deliver an executed letter of transmittal to the Paying Agent. Each such Altra stockholder whose shares were converted into the Merger Consideration pursuant to the Merger Agreement will receive from the Paying Agent, as promptly as practicable after the Effective Time, the Merger Consideration for each such book-entry share, and such book-entry shares shall be forthwith canceled.

Interest will not be paid or accrue in respect of any of the Merger Consideration, and the amount of any Merger Consideration paid to Altra stockholders may be reduced by the amount of applicable withholding taxes.

Representations and Warranties

The Merger Agreement contains representations and warranties that the Company, on the one hand, and Parent and Merger Sub, on the other hand, have made to one another, which are qualified (i) by confidential disclosures made by the Company or Parent and Merger Sub, as applicable, (ii) in many cases by materiality or Material Adverse Effect standards and (iii) with respect to the disclosures made by the Company, by certain documents filed with, or furnished to, the SEC by the Company and publicly available one business day prior to the date of the Merger Agreement.

A “Material Adverse Effect” with respect to the Company and its subsidiaries is defined in the Merger Agreement to mean any effect, change, event or occurrence that has a material adverse effect on the business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole; provided, however, that none of the following, and no effect, change, event or occurrence to the extent arising out of, or resulting from, the following, shall constitute or be taken into account in determining whether a Material Adverse Effect has occurred, is continuing or would reasonably be expected to occur: any effect, change, event or occurrence (A) generally affecting (1) the industry in which the Company and its subsidiaries operate or (2) the economy, credit, financial, commodity or capital markets, in the United States or elsewhere in the world, including changes in interest or exchange rates, monetary policy or inflation, or (B) arising out of, resulting from or attributable to (1) changes or prospective changes in law or in GAAP or in accounting standards, or any changes or prospective changes in the interpretation or enforcement of any of the foregoing, or any changes or prospective changes in general legal, regulatory, political or social conditions, (2) the negotiation, execution, announcement or performance of the Merger Agreement or the pendency or consummation of the transactions contemplated by the Merger Agreement or the identity of Parent, Merger Sub or any of their respective affiliates, in each case, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, landlords, distributors, partners, employees or regulators, or any litigation arising from the Merger Agreement or

 

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the transactions contemplated by the Merger Agreement; provided, however, that this clause (2) shall not apply with respect to the representations and warranties (in whole or in relevant part) made by the Company in the Merger Agreement, the purpose of which is to address the consequences resulting from, relating to or arising out of the entry into or the announcement or pendency of the Merger Agreement or the transactions contemplated by the Merger Agreement, (3) acts of war (whether or not declared), military activity, sabotage, civil disobedience, social unrest, protests or terrorism (including cyberattacks), or any escalation or worsening of any such acts of war (whether or not declared), military activity, sabotage, civil disobedience, social unrest, protests or terrorism (including cyberattacks), (4) public health conditions (including any illness, epidemic, pandemic or disease outbreak, including COVID-19), or any actions taken to comply with certain COVID-19 related laws, directives or recommendations or other restrictions to the extent relating to, or arising out of, any illness, epidemic, pandemic or disease outbreak or other public health condition or any worsening thereof, earthquakes, fires, floods, hurricanes, tornados or other natural disasters, weather-related events or other comparable events, (5) any action taken by the Company or its subsidiaries that is required by the Merger Agreement (other than the obligation to operate in the ordinary course of business) or with Parent’s written consent or at Parent’s written request, or the failure to take any action by the Company or its subsidiaries if that action is prohibited by the Merger Agreement, (6) any change or prospective change in the Company’s credit ratings, (7) any decline in the market price, or change in trading volume, of the shares of the Company or (8) any failure to meet any internal or published projections, forecasts, guidance, estimates, milestones, budgets or internal or published financial or operating predictions of revenue, earnings, cash flow or cash position (it being understood that the exceptions in clauses (B)(6), (7) and (8) shall not prevent or otherwise affect a determination that the underlying cause of any such change or prospective change, decline or failure referred to therein (if not otherwise falling within any of the exceptions provided by clause (A) and clauses (B)(1) through (8) hereof) is or contributed to a Material Adverse Effect); provided further, however, that any effect, change, event or occurrence referred to in clause (A) or clause (B)(1), (3) or (4) may be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect to the extent such effect, change, event or occurrence has or has had a disproportionate adverse effect on the Company and its subsidiaries, taken as a whole, as compared to other participants in the industry in which the Company and its subsidiaries operate (in which case only the incremental disproportionate impact or impacts may be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect).

A “Material Adverse Effect” with respect to Parent and Merger Sub is defined in the Merger Agreement to mean any effect, change, event or occurrence that would prevent or materially delay, interfere with, hinder or impair (i) the consummation by Parent or Merger Sub of any of the transactions contemplated by the Merger Agreement on a timely basis or (ii) the compliance by Parent or Merger Sub with its obligations under the Merger Agreement.

The representations and warranties made by the Company relate to, among other topics, the following:

 

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the organization, valid existence, good standing, qualification to do business and power and authority to carry on the businesses of each of the Company and each subsidiary;

 

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the capital structure and voting indebtedness of, and the absence of restrictions or encumbrances with respect to the Company and its material subsidiaries;

 

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the power and authority to execute and deliver the Merger Agreement, and, subject to the approval of Altra stockholders representing a majority of the outstanding shares, to consummate the transactions contemplated by the Merger Agreement, and the absence of conflicts with, or violations of, laws or organizational documents, the absence of any consents under, conflicts with or defaults under contracts to which the Company or its subsidiaries is a party and the absence of any consultation, approval or consent of any works council or labor union, in each case as a result of executing, delivering and performing under or consummating the transactions contemplated by, the Merger Agreement;

 

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approvals of or filings with governmental entities required in connection with executing, delivering, performing under or consummating the transactions contemplated by the Merger Agreement;

 

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•

the accuracy of SEC documents filed by the Company since January 1, 2020, financial statements contained in those filings (including undisclosed liabilities) and the information supplied by the Company in this proxy statement, and the existence of effective internal controls and disclosure controls and procedures;

 

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the absence of liabilities required to be recorded on a balance sheet under GAAP or of any Material Adverse Effect since June 30, 2022;

 

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the absence of certain legal proceedings;

 

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compliance with laws, including certain anti-corruption laws, export laws, import laws and sanctions, and possession of all permits necessary for the Company and its subsidiaries to lawfully conduct their business;

 

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certain tax matters;

 

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certain employee benefits matters;

 

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certain labor matters;

 

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certain environmental matters relating to the Company and its subsidiaries;

 

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intellectual property used by, owned by or licensed by the Company and its subsidiaries;

 

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the absence of anti-takeover provisions;

 

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real property owned and leased by the Company and its subsidiaries;

 

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material contracts of the Company and its subsidiaries, performance thereunder and the absence of any breach of or default under the terms of any material contract;

 

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the sufficiency of existing insurance policies of the Company and its subsidiaries;

 

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receipt of an opinion from the Company’s financial advisor;

 

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broker’s, finder’s, investment banker’s or financial advisor’s fees payable in connection with the merger; and

 

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the absence of certain events with respect to the top customers and suppliers of the Company and its subsidiaries.

The representations and warranties made by Parent and Merger Sub relate to, among other topics, the following:

 

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the organization, valid existence, good standing, qualification to do business and power and authority to carry on their respective businesses;

 

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the power and authority to execute and deliver the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement, and the absence of conflicts with, or violations of, laws or organizational documents and the absence of any consents under, conflicts with or defaults under contracts to which Parent or Merger Sub is a party, in each case as a result of executing, delivering and performing under or consummating the transactions contemplated by, the Merger Agreement;

 

•

approvals of or filings with governmental entities required in connection with entering into, performing under or consummating the transactions contemplated by the Merger Agreement;

 

•

the capital structure of Merger Sub as a wholly owned subsidiary of Parent, and the lack of prior business activities of Merger Sub;

 

•

the debt commitment letter and related fee letters made available by Parent to the Company (including the enforceability thereof) and, assuming that the funding is provided in accordance with such debt commitment letter, Parent will have sufficient cash on hand to pay the amounts required to be paid in connection with, or as a result of, the consummation of the Merger and the other transactions contemplated by the Merger Agreement;

 

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