This Indemnity
Agreement, dated as of _________ ___, ______, is made by and
between Altra Holdings, Inc. a Delaware corporation (the
“Company”), and _________ (the
“Indemnitee”).
A.
The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of
corporations unless they are protected by comprehensive liability
insurance or indemnification, due to increased exposure to
litigation costs and risks resulting from their service to such
corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such
directors, officers and other agents.
B.
The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or
conflicting, and therefore fail to provide such directors, officers
and agents with adequate, reliable knowledge of legal risks to
which they are exposed or information regarding the proper course
of action to take.
C.
Plaintiffs often seek damages in such large amounts and the costs
of litigation may be so enormous (whether or not the case is
meritorious), that the defense and/or settlement of such litigation
is often beyond the personal resources of directors, officers and
other agents.
D.
The Company believes that it is unfair for its directors, officers
and agents and the directors, officers and agents of its
subsidiaries to assume the risk of huge judgments and other
expenses which may occur in cases in which the director, officer or
agent received no personal profit and in cases where the director,
officer or agent was not culpable.
E.
The Company recognizes that the issues in controversy in litigation
against a director, officer or agent of a corporation such as the
Company or its subsidiaries are often related to the knowledge,
motives and intent of such director, officer or agent, that he is
usually the only witness with knowledge of the essential facts and
exculpating circumstances regarding such matters, and that the long
period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that
the director, officer or agent can reasonably recall such matters;
and may extend beyond the normal time for retirement for such
director, officer or agent with the result that he, after
retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and
undue hardship in maintaining an adequate defense, which may
discourage such a director, officer or agent from serving in that
position.
F.
Based upon their experience as business managers, the Board of
Directors of the Company (the “Board”) has concluded
that, to retain and attract talented and experienced individuals to
serve as directors, officers and agents of the Company and its
subsidiaries and to encourage such individuals to take the business
risks necessary for the success of the Company and its
subsidiaries, it is necessary for the Company to contractually
indemnify its directors, officers and agents and the directors,
officers and agents of its subsidiaries, and to assume
for
itself maximum
liability for expenses and damages in connection with claims
against such directors, officers and agents in connection with
their service to the Company and its subsidiaries, and has further
concluded that the failure to provide such contractual
indemnification could result in great harm to the Company and its
subsidiaries and the Company’s stockholders.
G.
Section 145 of the General Corporation Law of Delaware, under
which the Company is organized (“Section 145”),
empowers the Company to indemnify its directors, officers,
employees and agents by agreement and to indemnify persons who
serve, at the request of the Company, as the directors, officers,
employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by
Section 145 is not exclusive.
H.
The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officer or agent of the Company
and/or one or more subsidiaries of the Company free from undue
concern for claims for damages arising out of or related to such
services to the Company and/or one or more subsidiaries of the
Company.
I.
Indemnitee is willing to serve, or to continue to serve, the
Company and/or one or more subsidiaries of the Company, provided
that he is furnished the indemnity provided for herein.
NOW, THEREFORE,
the parties hereto, intending to be legally bound, hereby agree as
follows:
(a)
Agent . For the purposes of this Agreement,
“agent” of the Company means any person who is or was a
director, officer, employee or other agent of the Company or a
subsidiary of the Company; or is or was serving at the request of,
for the convenience of, or to represent the interests of the
Company or a subsidiary of the Company as a director, officer,
employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise; or was a
director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee or
agent of another enterprise at the request of, for the convenience
of, or to represent the interests of such predecessor
corporation.
(b)
Expenses . For purposes of this Agreement,
“expenses” include all out-of-pocket costs of any type
or nature whatsoever (including, without limitation, all
attorneys’ fees and related disbursements), actually and
reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or
enforcing a right to indemnification under this Agreement or
Section 145 or otherwise; provided, however, that
“expenses” shall not include any judgments.
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(c)
Proceeding . For the purposes of this Agreement,
“proceeding” means any threatened, pending, or
completed action, suit or other proceeding, whether civil,
criminal, administrative, or investigative.
(d)
Subsidiary . For purposes of this Agreement,
“subsidiary” means any corporation of which more than
50% of the outstanding voting securities are owned directly or
indirectly by the Company, by the Company and one or more other
subsidiaries, or by one or more other subsidiaries.
2.
Agreement to Serve . The Indemnitee agrees to serve and/or
continue to serve as agent of the Company, in the capacity
Indemnitee currently serves as an agent of the Company, so long as
he is duly appointed or elected and qualified in accordance with
the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company (or pursuant to the terms of a separate
agreement, if such agreement exists) or until such time as he is
removed from that capacity or tenders his resignation in writing;
provided, however, that nothing contained in this Agreement is
intended to create any right to employment (or, if applicable,
continued employment) by Indemnitee.
(a)
Maintenance of D&O Insurance . The Company hereby
covenants and agrees that, so long as the Indemnitee shall continue
to serve as an agent of the Company and thereafter so long as the
Indemnitee shall be subject to any possible proceeding by reason of
the fact that the Indemnitee was an agent of the Company, the
Company shall promptly obtain and maintain in full force and effect
directors’ and officers’ liability insurance
(“D&O Insurance”) in amounts determined by the
Board, from time to time, to be reasonable and from established and
reputable insurers.
(b)
Rights and Benefits . In all policies of D&O Insurance,
the Indemnitee shall be named as an insured in such a manner as to
provide the Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company’s directors, if
the Indemnitee is a director; or of the Company’s officers,
if the Indemnitee is not a director of the Company but is an
officer.
4.
Mandatory Indemnification . Subject to Section 9 below,
the Company shall indemnify the Indemnitee as follows:
(a)
Successful Defense . To the extent the Indemnitee has been
successful on the merits or otherwise in defense of any proceeding
(including, without limitation, an action by or in the right of the
Company) to which the Indemnitee was a party by reason of the fact
that he is or was an agent of the Company at any time, against all
expenses of any type whatsoever by him in connection with the
investigation, defense or appeal of such proceeding.
(b)
Third Party Actions . If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of the Company) by reason
of the fact that he is or was an agent of the Company, or by reason
of anything done or not done by him in any such capacity, the
Company shall indemnify the Indemnitee against any and all expenses
and liabilities of any type whatsoever (including, but
not
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limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts
paid in settlement) in connection with or relating to the
investigation, defense, arbitration, settlement or appeal of such
proceeding, provided the Indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company and its stockholders, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
(c)
Derivative Actions . If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any proceeding
by or in the right of the Company by reason of the fact that he is
or was an agent of the Company, or by reason of anything done or
not done by him in any such capacity, the Company shall indemnify
the Indemnitee against all expenses in connection with or relating
to the investigation, defense, arbitration, settlement, or appeal
of such proceeding, provided the Indemnitee acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and its stockholders; except that no
indemnification under this subsection 4(c
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