CHANGE OF CONTROL
AGREEMENT
THIS CHANGE OF
CONTROL AGREEMENT (the “ Agreement ”), dated as
of [
___], 2008, is entered into by and among Altra Holdings, Inc., a
Delaware corporation (“ Holdings ”), Altra
Industrial Motion, Inc., a Delaware corporation and wholly-owned
subsidiary of Holdings (the “ Company ”), and [
] (the “ Executive ”).
WHEREAS, Executive
is a skilled and dedicated employee who has important management
responsibilities and talents that benefit Holdings, the Company and
its Subsidiaries. Holdings and the Company believe that their
respective best interests will be served if Executive is encouraged
to remain with the Company or its Subsidiaries. Holdings and the
Company have determined that Executive’s ability to perform
Executive’s responsibilities and utilize Executive’s
talents for the benefit of Holdings, the Company and its
Subsidiaries, and the Company’s ability to retain Executive
as an employee, will be significantly enhanced if Executive is
provided with fair and reasonable protection from the risks of a
change in control of Holdings or the Company.
Accordingly,
Holdings, the Company and Executive agree as follows:
Unless otherwise
indicated, capitalized terms used in this Agreement which are
defined in Schedule A shall have the meanings set forth
in Schedule A .
2.
Effective Date; Term .
This Agreement
shall be effective as of [
, 2008] (the “ Effective Date ”) and shall
remain in effect until [
, 2009] (the “ Term ”); provided ,
however , that commencing with first (1
st ) anniversary date and on each anniversary
thereof (each an “ Extension Date ”), the Term
shall be automatically extended for an additional one-year period,
unless the Company or Executive provides the other party hereto at
least 90 days’ prior written notice before the
applicable Extension Date that the Term shall not be so extended.
Notwithstanding the foregoing, this Agreement shall, if in effect
on the date of a Change of Control, remain in effect for
twenty-four (24) months following the Change of
Control.
3.
Change of Control Benefits .
If
Executive’s employment with the Company and its Subsidiaries
is terminated at any time upon or within the twenty-four
(24) months immediately following a Change of Control by the
Company and its Subsidiaries without Cause or by Executive for Good
Reason (the effective date of either such termination hereafter
referred to as the “ Termination Date ”),
Executive shall be entitled to, and Holdings and the Company shall
be required to provide, subject to Executive’s execution of
an effective general release (i.e., not revoked) in favor of
Holdings and the Company in the form attached hereto as
Exhibit A (the “ Release ”) and the
Executive’s compliance with the restrictive covenants
attached hereto as Exhibit B , the payments and
benefits provided hereafter in this Section 3 and as set forth
in this Agreement. If Executive’s employment by the Company
and any of its Subsidiaries is terminated within
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ninety
(90) days prior to a Change of Control by the Company without
Cause in connection with or in anticipation of such Change of
Control at the request of, or upon the initiative of, the buyer in
the Change of Control transaction (an “ Anticipatory
Termination ”), Executive shall be entitled to, and
Holdings and the Company shall be required to provide, subject to
Executive’s execution of the Release, the benefits provided
hereafter in this Section 3 and as otherwise set forth in this
Agreement (but only if an anticipated Change of Control actually
occurs during the Term) and Executive’s Termination Date
shall be deemed to have occurred immediately following the Change
of Control. If Executive is terminated for any other reason (e.g.,
for Cause, due to death or Total Disability, or resignation without
Good Reason), the Company shall have no obligation to make any
payments under this Agreement.
Notice of
termination without Cause or resignation for Good Reason shall be
given in accordance with Section 10, and shall indicate the
specific termination provision hereunder relied upon, the relevant
facts and circumstances and the Termination Date.
(a) Severance
Payments . Subject to execution of the Release, and the
provisions of Section 5 (relating to parachute payments) and
Section 8 (in the case that Executive is a “specified
employee”), within the period commencing on the Termination
Date and ending on the later of (i) 15 business days after the
Termination Date and (ii) the day following the end the
revocation period under the Release (the “ Payment
Period ”), the Company shall pay Executive a cash lump
sum equal to [___times (___x)] the Executive’s Base Salary
then in effect immediately prior to the event set forth in the
notice of termination giving rise to the Termination Date
plus an amount equal to [___times (___x)] the
Executive’s target Bonus amount for the year of
termination.
(b)
Continuation of Active Employee Benefits . For [___(___)]
months following the Termination Date (the “ Welfare
Continuation Period ”), the Company shall provide
Executive and Executive’s spouse and dependents (each as
defined under the applicable program) with medical and dental
insurance coverages at the same benefit level as provided to
similarly situated active employees of the Company during the
Welfare Continuation Period, for which the Company will reimburse
Executive during the Welfare Continuation Period or, if shorter,
the period of actual COBRA continuation coverage received by
Executive during the Welfare Continuation Period, for the total
amount of the monthly COBRA medical and dental insurance premiums
paid by Executive for such continued benefits (thereby reducing
such premium obligations to zero); provided , however
, that if Executive becomes employed by a new employer that offers
any medical and/or dental, continuing medical and/or dental
coverage from the Company shall cease, regardless of the Welfare
Continuation Period.
(c) Payment of
Earned But Unpaid Amounts . Within the Payment Period, the
Company shall pay Executive any unpaid Base Salary and/or Bonus
through the Termination Date. For the avoidance of doubt, Executive
shall be entitled to a pro-rated Bonus for the year of termination.
In addition, Executive shall be entitled to prompt reimbursement of
any unreimbursed expenses properly incurred by Executive in
accordance with Company policies prior to the Termination
Date.
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(d) Equity
Incentive Awards . Any time periods, conditions or
contingencies relating to the exercise or realization of, or lapse
of restrictions under, any outstanding equity incentive award then
held by Executive shall be automatically accelerated or waived
effective as of the Termination Date.
Executive shall
not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or
otherwise, and, subject to Section 3(b), compensation or
benefits earned from such employment or otherwise shall not reduce
the amounts otherwise payable under this Agreement.
If the Executive
becomes subject to the excise tax imposed by Code Section 4999
(the “ Parachute Excise Tax ”) with respect to
any payment(s), benefit(s) or distribution(s) received by, or
payable to or for the benefit of, Executive (or otherwise) in
connection with, or by reason of, any Change in Control or any
change in ownership or effective control of the Company (as
determined under IRC Section 280G), the Company and the
Executive agree that the Company shall pay to the Executive a tax
gross-up payment so that after payment by the Executive of all
federal, state and local excise, income, employment, Medicare and
any other taxes (including any related penalties and interest)
resulting from the payment of the parachute payments and the tax
gross-up payments to the Executive by the Company, the Executive
retains on an after-tax basis an amount equal to the amount that
the Executive would have retained if he had not been subject to the
Parachute Excise Tax.
All disputes and
controversies arising under or in connection with this Agreement
shall be settled by arbitration conducted before one arbitrator
sitting in Suffolk County, Massachusetts, or such other location
agreed by the parties hereto, in accordance with the rules for
expedited resolution of employment disputes of the American
Arbitration Association then in effect. The determination of the
arbitrator shall be made within thirty days following the close of
the hearing on any dispute or controversy and shall be final and
binding on the parties. Judgment may be entered on the award of the
arbitrator in any court having proper jurisdiction. Each party
shall pay its own costs and expenses in connection with any
arbitration relating to the interpretation or enforcement of any
provision of this Agreement.
Except as
otherwise provided herein, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by Holdings, the Company
and Executive and their respective heirs, legal representatives,
successors and assigns. If Holdings or the Company shall be merged
into or consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of the
entity surviving such merger or resulting from such consolidation.
Holdings and the Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of
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the business or
assets of Holdings or the Company, by operation of law or
agreement, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that Holdings and the
Company would be required to perform it if no such succession had
taken place. The provisions of this Section 7 shall continue
to apply to each subsequent employer of Executive hereunder in the
event of any subsequent merger, consolidation or transfer of assets
of such subsequent employer.
8.
Withholding and Deferral .
Notwithstanding
any other provision of this Agreement, Holdings and the Company
may, to the extent required by law, withhold applicable federal,
state and local income and other taxes from any payments due to
Executive hereunder. Notwithstanding any other provision of this
Agreement or certain compensation and benefit plans of Holdings,
the Company or its Subsidiaries, the Company shall from time to
time compile a list of “specified employees” as defined
in, and pursuant to, Reg. Section 1.409A-1(i) of the Code or
any successor regulation. Notwithstanding any other provision
herein, if the Executive is a specified employee on the Termination
Date, no payment of compensation under this Agreement (other than a
payment that the Company determines is not subject to, or is
subject to an exception from, Section 409A of the Code) shall
be made to the Executive before the date that is six months after
the Termination Date of employment, unless the Company determines
that there is no reasonable basis for believing that making such
payment would cause Executive to suffer any adverse tax
consequences pursuant to Section 409A of the Code. If any
payment to Executive is delayed pursuant to the immediately
preceding sentence, such payment instead shall be made on the first
business day following the expiration of the six-month period
referred to in that sentence; provided that any such payment
may be made upon Executive’s death if the death occurs before
the date that is six months after the Termination Date. In
addition, if any payment to Executive is delayed pursuant to this
Section 8, the Executive shall be entitled to receive interest
on any delayed amounts, calculated at the annualized rate of the
prime rate, published in the Wall Street Journal on the date the
payments under this Agreement would otherwise be due, minus one
(1) percentage point.
This Agreement
shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts, without regard to conflicts of
laws principles thereof.
Any notice
provided for in this Agreement must be in writing and must be
either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested), sent by reputable overnight
courier service (charges prepaid), or faxed to the recipient at the
address below indicated or such other address or to the attention
of such other person as the recipient party shall have specified by
prior written notice to the sending party.
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If to Holdings
or the Company:
Altra
Industrial Motion, Inc.
14 Hayward Street
Quincy, MA 02171
Attention: Corporate Secretary
To the most recent
address of Executive set forth in the personnel records of the
Company.
Any notice under
this Agreement shall be deemed to have been given when personally
delivered, one business day after sent by reputable overnight
courier service, five days after deposit in the U.S. mail (or when
actually received, if earlier), or at such time as it is
transmitted via facsimile, with receipt confirmed.
11.
Entire Agreement; Offset; Modification .
(a) This Agreement
constitutes the entire agreement between the parties and, except as
expressly provided herein, supersedes the provisions of all other
prior agreements (including any employment agreement that may be in
effect at the time of the Change of Control between Holdings, the
Company and the Executive) expressly concerning the effect of a
termination of employment in connection with or following a Change
of Control on the relationship between Holdings, the Company and
its Affiliates and Executive.
(b) This Agreement
shall not interfere in any way with the right of Holdings or the
Company to reduce Executive’s compensation or other benefits
or terminate Executive’s employment, with or without
Cause.
(c) This Agreement
may be changed only by a written agreement executed by Holdings,
the Company and Executive.
Notwithstanding
anything herein to the contrary, in the event Executive has a
separate employment agreement or other agreement with the company,
or is subject to a policy or plan with the Company, that provides
Executive with benefits or other payments in connection with a
severance, such Executive shall be entitled to receive benefits and
payments under only one of this change of control agreement or such
other agreement or such other policy, whichever is most favorable
to the Executive at the time of such severance.
This Agreement may
be signed in counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon
the same instrument.
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IN WITNESS
WHEREOF , the parties have executed this Agreement on the
day of
, 2008.
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ALTRA HOLDINGS,
INC.
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By:
Title:
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ALTRA
INDUSTRIAL MOTION, INC.
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By:
Title:
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EXECUTIVE
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[Name]
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As used in this
Agreement, and unless the context requires a different meaning, the
following terms, when capitalized, have the meaning indicated
below:
I. “
Affiliate ” means, with respect to any entity, any
other corporation, organization, association, partnership,
so
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