INDEMNITY AGREEMENT
Exhibit 10.1
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of _________ ___, ______, is made by and between Altra
Holdings, Inc. a Delaware corporation (the “Company”), and _________ (the “Indemnitee”).
RECITALS
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.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions.
(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.
3. Liability Insurance.
(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) shall be made in respect to any claim, issue or matter
as to which such person shall have been finally adjudged to be liable to the Company by a court of
competent jurisdiction unless and only to the extent that the court in which such proceeding was
brought shall determine upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for
such amounts which the court shall deem proper.
(d) Actions where Indemnitee is Deceased. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding 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,
and if prior to, during the pendency or after completion of such proceeding Indemnitee becomes
deceased, the Company shall indemnify the Indemnitee’s heirs, executors and administrators against
any and all expenses and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) to the extent
Indemnitee would have been entitled to indemnification pursuant to Sections 4(a), 4(b), or 4(c)
above were Indemnitee still alive.
(e) No Duplication of Payments. Notwithstanding the foregoing, the Company shall not
be obligated to indemnify the Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts
paid in settlement) for which payment is actually made to or on behalf of Indemnitee under a valid
and collectible insurance policy of D&O Insurance, or under a valid and enforceable indemnity
clause, by-law or agreement.
(f) Presumption of Entitlement. In making any determination as to whether the
Indemnitee met an applicable standard of conduct, it shall be presumed that the Indemnitee has
satisfied the applicable standard of conduct, and the Company may overcome such presumption only by
its adducing clear and convincing evidence to the contrary. Any standard of conduct determination
that is adverse to the Indemnitee may be challenged by the Indemnitee in a court of competent
jurisdiction. No determination by the Company that the Indemnitee has not satisfied any applicable
standard of conduct shall be a defense to any claim by the Indemnitee for indemnification or
reimbursement or advance payment of expenses by the Company hereunder or create a presumption that
the Indemnitee has not met any applicable standard of conduct.
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(g) No Other Presumption. For purposes of this Agreement, the termination of any
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Indemnitee did not meet any
applicable standard of conduct or that indemnification hereunder is otherwise not permitted.
5. Partial Indemnification. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and
penalties, and amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a proceeding, but not entitled, however, to indemnification for all of the
total amount hereof, the Company shall nevertheless indemnify the Indemnitee for such total amount
except as to the portion hereof to which the Indemnitee is not entitled.
6. Mandatory Advancement of Expenses. Subject to Section 8(a) below, the Company
shall advance all expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any proceeding to which the Indemnitee is a party or is threatened
to be made a party by reason of the fact that the Indemnitee is or was an agent of the Company upon
a receipt of an undertaking executed by the Indemnitee in which the Indemnitee undertakes to repay
such advanced amount only if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company as authorized hereby. Indemnitee’s
right to such advancement is not subject to the satisfaction of any standard of conduct. The
advances to be made hereunder shall be paid by the Company to the Indemnitee within twenty (20)
days following delivery of a written request therefor by the Indemnitee to the Company. In the
event that the Company fails to pay expenses as incurred by the Indemnitee as required by this
paragraph, Indemnitee may seek mandatory injunctive relief from any court having jurisdiction to
require the Company to pay expenses as set forth in this paragraph. If Indemnitee seeks mandatory
injunctive relief pursuant to this paragraph, it shall not be a defense to enforcement of the
Company’s obligations set forth in this paragraph that Indemnitee has an adequate remedy at law for
damages.
7. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the commencement of or the threat of
commencement of any proceeding, the Indemnitee shall, if the Indemnitee believes that
indemnification with respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat of commencement thereof. The failure by the Indemnitee
to timely notify the Company of any proceeding shall not relieve the Company from any liability
hereunder unless, and only to the extent that, the Company did not otherwise learn of such
proceeding and such failure results in forfeiture by the Company of substantial defenses, rights or
insurance coverage.
(b) If, at the time of the receipt of a notice of the commencement of a proceeding pursuant to
Section 7(a) hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice
(with a copy to the Indemnitee) of the commencement of such
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proceeding to the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(c) In the event the Company shall be obligated to pay the expenses and / or liabilities
relating to any proceeding against the Indemnitee, the Company, if appropriate, shall be entitled
to assume the defense of such proceeding, with counsel approved by the Indemnitee, upon the
delivery to the Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by the Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same proceeding, provided that
(i) the Indemnitee shall have the right to employ his counsel in any such proceeding at the
Indemnitee’s expense; and (ii) if (A) the employment of counsel by the Indemnitee has been
previously authorized by the Company, (B) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee in the conduct of any such
defense, or (C) the Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the
Company. Neither the Company nor the Indemnitee shall unreasonably withhold consent to any
proposed settlement, provided that the Indemnitee may withhold consent to any settlement that does
not provide a complete and unconditional release of the Indemnitee.
8. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to the
Indemnitee with respect to proceedings or claims initiated or brought voluntarily by the Indemnitee
and not by way of defense, unless (i) such indemnification is expressly required to be made by law,
(ii) the proceeding was authorized by the Board, (iii) such indemnification is provided by the
Company, in its sole discretion, pursuant to the powers vested in the Company under the General
Corporation Law of Delaware or (iv) the proceeding is brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as required under
Section 145; or
(b) Unauthorized Settlements. To indemnify the Indemnitee under this Agreement for
any amounts paid in settlement of a proceeding unless the Company consents to such settlement,
which consent shall not be unreasonably withheld.
9. Non-exclusivity. The provisions for indemnification and advancement of expenses
set forth in this Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote
of the Company’s stockholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while occupying his position
as an agent of the Company, (collectively, “Other Indemnity Provisions”); provided, however, that
(a) to the extent that the Indemnitee otherwise would have any greater right to indemnification
under any Other Indemnity Provision, the Indemnitee will be deemed to have such greater right
hereunder and (b) to the extent that any change is made to any
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Other Indemnity Provision which permits any greater right to indemnification than that
provided under this Agreement as of the date hereof, the Indemnitee will be deemed to have such
greater right hereunder. The Company will not adopt any amendment to its Certificate of
Incorporation or Bylaws the effect of which would be to deny, diminish or encumber the Indemnitee’s
right to indemnification under this Agreement or any Other Indemnity Provision. The Indemnitee’s
rights hereunder shall continue after the Indemnitee has ceased acting as an agent of the Company
and shall inure to the benefit of the heirs, executors and administrators of the Indemnitee.
10. Enforcement. Any right to indemnification or advances granted by this Agreement
to Indemnitee shall be enforceable by or on behalf of Indemnitee in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or
(ii) no disposition of such claim is made within ninety (90) days of request therefor. Indemnitee,
in such enforcement action, if successful in whole or in part, shall be entitled to be paid also
the expense of prosecuting his claim. It shall be a defense to any action for which a claim for
indemnification is made under this Agreement (other than an action brought to enforce a claim for
expenses pursuant to Section 6 hereof, provided that the required undertaking has been tendered to
the Company) that Indemnitee is not entitled to indemnification because of the limitations set
forth in Sections 4 and 8 hereof. Neither the failure of the Corporation (including its Board of
Directors or its stockholders) to have made a determination prior to the commencement of such
enforcement action that indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors or its stockholders) that such
indemnification is improper, shall be a defense to the action or create a presumption that
Indemnitee is not entitled to indemnification under this Agreement or otherwise.
11. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all documents required and shall do all acts that may be necessary to secure such rights
and to enable the Company effectively to bring suit to enforce such rights.
12. Survival of Rights.
(a) All agreements and obligations of the Company contained herein shall continue during the
period Indemnitee is an agent of the Company and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of
the fact that Indemnitee was serving in the capacity referred to herein.
(b) The Company shall require any successor to the Company (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets
of the Company, expressly to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such succession had taken
place.
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13. Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification to the Indemnitee to the
fullest extent permitted by law including those circumstances in which indemnification would
otherwise be discretionary.
14. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement (including without limitation, all
portions of any paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to Section 13 hereof.
15. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted
for by the party addressee or (ii) if mailed by certified or registered mail with postage prepaid,
on the third business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement, or as subsequently modified by written notice.
17. Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of Delaware as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware.
[Remainder of Page Intentionally Left Blank]
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The parties hereto have entered into this Indemnity Agreement effective as of the date first
above written.
| COMPANY: | |||||||
| Altra Holdings, Inc. | |||||||
| By: | |||||||
| Title: | Chief Executive Officer | ||||||
| Address: | 00 Xxxxxxx Xxxxxx | ||||||
| Xxxxxx, XX 00000 | |||||||
| INDEMNITEE: | |||||||
| By: | |||||||
| Name: | |||||||
| Address: | |||||||
[Signature Page to Indemnity Agreement of Altra Holdings, Inc.]
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