Document:

Exhibit 10.17

 

TRANSITION AGREEMENT

 

This Transition Agreement (the “Agreement”) is being
entered into this       day of May, 2004 (the “Effective
Date”) by and between [insert name] and Colfax
Corporation, its subsidiaries, and affiliate companies (collectively, the “Company”).

 

1.                                       Except as otherwise provided herein, the term of
this Agreement will be from the Effective Date until one year following the
closing date of the sale (the “Closing Date”) of the Colfax Power Transmission
Group (the “Business”) of the Company, unless earlier terminated as provided
below.

 

2.                                       During the term of this Agreement, you will
continue to devote your entire business skill, time, and effort diligently to
the affairs of the Business and you will perform all such duties, and otherwise
conduct yourself, in a manner reasonably determined to promote the best
interests of the Company.

 

3.                                       Notwithstanding
any other provision of this Agreement, your eligibility to receive from the
Company any Severance Benefit under this Agreement is expressly contingent on
the sale of all of the Business (whether in one transaction or several) or the
sale of the business unit within the Business for which you provide services to
a Buyer (or Buyers) on or before June 30, 2005.  If neither all of the Business nor the
business unit within the Business for which you provide services is sold on or
before June 30, 2005, you shall not be eligible to receive any Severance
Benefit pursuant to this Agreement and this Agreement shall terminate on July 1,
2005.  For the purposes of this
Agreement, a sale shall not be deemed to occur until the transaction closes.

 

4.                                       Severance
Benefit Eligibility:

 

(a)                                  In addition to the requirements in Section 3
above, you will be eligible for a Severance Benefit only if:  you satisfy the requirements of Sections 5
and 6 herein; and if during the first year of your employment with the
Buyer, your employment is terminated by the Buyer other than for Cause or you
voluntarily resign for Good Reason.

 

(b)                                 If you are eligible for a Severance Benefit, it
will be calculated as set forth in Schedule A and will be paid to you in
the form of salary continuation in accordance with the Company’s regular
payroll practices and procedures.  The
Severance Benefit also includes the following: 
if you elect to continue your health care and dental coverage through
COBRA or any similar state law and provided
you continue to authorize the required employee contributions for your share of
the premiums, the Company will continue to pay its share of your premiums
(at the same level of coverage as you have upon termination of employment)
during the period of salary continuation.

 

(c)                                  If payable, the Severance Benefit will not
be included in determining the amount of any benefits under any of the Company’s
qualified or nonqualified employee benefit plans in which you may be a
participant.

 

(d)                                 Any Severance Benefit will cease immediately upon
your securing employment after the end of your employment with the
Company.  You agree that if you do

 

 

secure such employment during the period in which are
receiving Severance Benefit, you shall immediately notify the Company.

 

For purposes of this Agreement, the term “Cause”
means:  (i) your conviction
(including without limitation by plea of guilty or no contest) of a felony or
your conviction (including without limitation by plea of guilty or no contest)
of a misdemeanor crime involving fraud, dishonesty, or moral turpitude; (ii) your
willful misconduct or negligence in the performance of your duties; (iii) your
breach of this Agreement or any other agreement between you and the Company; or
(iv) any breach of your fiduciary duty or act of fraud, dishonesty,
disloyalty, or embezzlement by you.

 

For purposes of this Agreement, the term “Good Reason”
means: (i) a material diminution in your job responsibilities; (ii) a
material reduction in your compensation or bonus
opportunities; or (iii) a change (without your consent) in your principal
location of employment that is more than 30 miles from the current principal
location of your employment.

 

5.                                       To
be eligible for a Severance Benefit, you must execute and deliver to the
Company a General Release of Claims (“General Release”) in the form attached
hereto as Exhibit 1 or in such other form as the Company reasonably
determines is appropriate.  You
understand that you shall sign the General Release no earlier than the first
business day after the last day of your employment.

 

6.                                       In
further consideration for the benefits described in Section 4 above, you
agree to the following:

 

a.                                       Return of Property; Intellectual
Property Rights. Upon your
termination of employment for any reason with the Company or at any other time
requested by the Company, you will return all property owned by the Company or
containing information relating to the Company’s business or customers,
including files, documents, data and records (whether on paper, tapes, disks,
or in any other form, electronic or otherwise), office equipment, credit cards,
and employee identification cards. You acknowledge that the Company is the
rightful owner of any programs, ideas, inventions, discoveries, copyright
material, or trademarks that you may have originated or developed, or assisted
in originating or developing, during your period of employment with the
Company, where any such origination or development involved the use of Company
time or resources, or the exercise of your responsibilities for or on behalf of
the Company. You will at all times, both before and after termination of
employment, cooperate with the Company in executing and delivering documents
and taking any other actions that are necessary or requested by the Company to
assist the Company in patenting, copyrighting, or registering any programs,
ideas, inventions, discoveries, copyright material, or trademarks, and to vest
title thereto in the Company.

 

b.                                      Proprietary and Confidential Information. You will at all times both during and after your
employment with the Company preserve the confidentiality of all proprietary or
confidential information and trade secrets of the Company, except to the extent
that disclosure of such information is legally required, authorized in writing
by the Company, or necessary in the performance of your duties on behalf of the
Company. The phrase “proprietary or confidential information” includes without
limitation information that has not been disclosed to the public or that has
been disclosed to the

 

2

 

public wrongfully or in breach of the disclosing party’s
obligations to the Company and that is treated as confidential within the
business of the Company, such as strategic or tactical business plans;
financial data; ideas, processes, methods, techniques, systems, patented or
copyrighted information, models, devices, programs, computer software, or
related information; documents relating to regulatory matters and
correspondence with governmental entities; information concerning any past,
pending, or threatened legal dispute; pricing and cost data; reports and
analyses of business prospects; business transactions which are contemplated or
planned; research data; personnel information and data; identities or lists of
or information regarding users, purchasers, or customers of any of the Company’s
products or services; and other confidential matters pertaining to or known by
the Company, including confidential information of a third party which you know
or should know the Company is bound to protect.

 

c.                                       Interference with Business Relations.  During
the period of your employment with the Company except in accordance with your
duties and responsibilities on behalf of the Company, and for a period ending
12 months following your termination of employment from the Company for any
reason, you, without the prior written consent of the Company, will not
directly or indirectly on behalf of yourself or any other entity:  (i) recruit, solicit, or hire any
employee of the Company (or any person employed by the Company within six
months of the recruitment, solicitation, or hiring) for employment or for
retention as a consultant or service provider; (ii) solicit or induce, or
in any manner attempt to solicit or induce, any client, customer, or
prospective client or customer of the Company to cease being, or not to become,
a customer of the Company, or to divert any business of such customer or
prospective customer or client from the Company; or (iii) otherwise
interfere with, disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Company and any of its
customers, clients, prospective customers or clients, suppliers, consultants,
or employees.

 

d.                                      Other Agreements and
Policies.  The obligations imposed on you by this Section 6
are in addition to, and not in lieu of, any and all other policies or agreements
of the Company regarding the subject matter of the foregoing obligations.

 

e.                                       You acknowledge that the Company’s customers and
prospective customers are national and international in scope and that the terms
of these covenants are necessary and reasonable and will not prevent you from
earning a livelihood.  You agree that
your agreement to these covenants is a material inducement to the Company to
enter into this Agreement and to make possible to you the benefits provided in
this Agreement.  You further agree that
money damages may be insufficient as remedy for your breach of these
covenants.  Accordingly, you agree that,
in addition to any other relief that may be available, the Company shall be
entitled to specifically enforce these covenants, including without limitation
by means of temporary, preliminary, and permanent injunctive relief.  You also agree that should any court of
competent jurisdiction find any portion of these covenants to be unenforceable
for any reason, that the Court shall modify such portion so that it is
enforceable and then enforce the covenant as modified.  You further agree that if the Court is
unwilling or unable to make such a modification, then it shall sever the
unenforceable provision and shall enforce the remaining portions of these
covenants as fully as possible so as to achieve the original intent of these
covenants.

 

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7.                                       The Company will endeavor to have the Buyer
assume this Agreement. If the Buyer assumes the Agreement, the Company will
assign all of its rights and obligations under this Agreement to the Buyer; and
if the Company makes such an assignment, all references in this Agreement (not
including this Section 7) to “Company” will be deemed to refer to the
Buyer on and after the effective date of such assignment, unless the context
clearly requires a contrary meaning.  The
Company may otherwise assign its rights and obligations under this Agreement to
another entity with or without your consent. 
Upon any assumption or assignment provided in this Section 7, the
Company shall owe no further obligation to you under this Agreement.  You may not assign your rights and
obligations under this Agreement.

 

8.                                       The payment of any benefits under this Agreement
will be in lieu of, and not in addition to, any separation or severance
benefits to which you may otherwise be entitled from the Company. In addition,
no provision of this Agreement will require the Company to provide you with any
payment, benefit, or grant that duplicates any payment, benefit, or grant that
you are entitled to receive under any Company compensation or benefit plan or
other agreement or arrangement.

 

9.                                       Nothing in this Agreement shall be construed as a
right to continued employment with the Company and nothing in this Agreement
limits the Company’s right to terminate your employment with the Company at any
time (including prior to the Closing Date) with or without cause or
notice.  The term of this Agreement shall
end on your last day of employment if the term has not already ended.

 

10.                                 Failure to insist upon strict compliance with any
of the terms, covenants, or conditions of this Agreement will not be deemed a
waiver of such term, covenant, or condition, nor will any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.

 

11.                                 The Company may withhold from any benefits
payable under this Agreement all taxes, deductions, and withholding that the Company
determines to be required pursuant to any law, regulation, or ruling. However,
it is your obligation to pay all required taxes on any amounts provided under
this Agreement, regardless of whether withholding is required.

 

12.                                 Except to the extent otherwise required by law,
you will not disclose, in whole or in part, any of the terms of this Agreement.
However, you may disclose the terms of this Agreement to your spouse and to
your legal or financial adviser, provided that you take all reasonable measures
to assure that he or she does not disclose the terms of this Agreement to a
third party except as otherwise required by law.  In addition, notwithstanding
anything in this paragraph to the contrary, you may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions and other tax
analyses) that are provided to you relating to such tax treatment and tax
structure.

 

13.                                 Dispute Resolution.

 

a.                                       The parties agree that, except for any claims
pursuant to Section 6 of this Agreement, they shall submit to arbitration
and resolve in accordance with the procedures specified in this Section 13
any and all disputes arising from or relating to this Agreement. The parties
further agree that the arbitration process agreed upon herein shall be the
exclusive means for resolving all disputes made subject to arbitration herein.

 

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b.                                      Notwithstanding any other choice of law
provisions in the Agreement, the interpretation and enforcement of the
arbitration provisions of this Agreement shall be governed exclusively by the
Federal Arbitration Act (“FAA”), and shall otherwise he governed by the law of
the Commonwealth of Virginia.

 

c.                                       These arbitration provisions shall not prevent
the Company from obtaining injunctive relief from a court of competent
jurisdiction to enforce any obligations of the Agreement; including without
limitation issues concerning covenants not to compete, the use of trade secrets
or confidential commercial information (which are excluded from this
arbitration process as set forth above), or any other matters for which the
Company in its sole discretion may require provisional relief pending a decision
on the merits by the arbitrator.

 

d.                                      Any arbitration hereunder shall be conducted
under the Model Employment Procedures of the American Arbitration Association (“AAA”),
as modified herein, and, unless otherwise agreed by the parties, shall take
place in Richmond, Virginia, at a place designated by the AAA.

 

e.                                       Each party shall be responsible for its costs
(including attorneys’ fees) incurred in any arbitration, and the arbitrator
shall not have authority to include all or any portion of said costs (including
attorneys’ fees) in an award, regardless of which party prevails. The costs and
fees of the arbitrator and of the AAA shall be borne equally by the parties.

 

f.                                         Except as set forth herein, the arbitrator shall
have authority to award any remedy or relief that a court of the Commonwealth
of Virginia could grant in conformity to applicable law.

 

g.                                      With respect to any claims pursuant to Section 6
of this Agreement, such claims too will be governed by the law of the
Commonwealth of Virginia, and both you and the Company agree to and submit to
the jurisdiction and venue of any state or federal court located in the
Commonwealth of Virginia for the resolution of such claims.

 

14.                                 The provisions contained in this Agreement and
within the General Release will each constitute a separate agreement
independently supported by good and adequate consideration, and will each be
severable from the other provisions of the Agreement and the General Release.
If a court of competent jurisdiction or an arbitrator determines that any term,
provision, or portion of this Agreement or the General Release is void,
illegal, or unenforceable, the other terms, provisions and portions of this
Agreement or the General Release will remain in full force and effect, and the
terms, provisions, and portions that are determined to be void, illegal, or
unenforceable will either be limited so that they will remain in effect to the
extent permissible by law, or such court or arbitrator will substitute, to the
extent enforceable, provisions similar thereto or other provisions, so as to
provide to the Company and you, to the fullest extent permitted by applicable
law, the benefits intended by this Agreement and the General Release.

 

15.                                 The provisions of this Agreement as well as the
General Release shall survive the termination of this Agreement according to
their terms.

 

16.                                 This Agreement sets forth the entire
understanding of you and the Company with respect to severance or separation
pay matters, and supersedes all prior agreements and communications, whether
oral or written, between you and the Company regarding such

 

5

 

matters.
This Agreement will not be modified except by the written agreement of you and
the Company.

 

17.                                 You acknowledge that you have read and
understand this Agreement and execute it voluntarily and without coercion.  You further acknowledge that you have been
advised in writing of your opportunity to consult with counsel and that you
have been given a more than sufficient period of time to consider the terms of
this Agreement.

 

Please indicate your acceptance by signing below.

 

 

AGREED
TO AND ACCEPTED BY:

 

	
   

  	
   

  	
   

  
	
  

  Name

  	
   

  	
  

  Witness

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  Colfax Corporation

  	
   

  	
   

  

 

6

 

EXHIBIT
1

 

General
Release

 

In exchange for the Company’s promises
(including without limitation eligibility for Severance Benefit) in the
Transition Agreement between me and the Colfax
Corporation, its subsidiaries, and affiliate companies (collectively, the “Company”)
dated May [insert], 2004 (the “Transition Agreement”), I hereby
release and discharge the Company, its affiliated companies, and its or their
current and former employees, agents, directors, officers, assigns, attorneys,
shareholders and all other related persons from any and all suits, charges,
demands, causes of action, and/or claims of whatever nature, whether known,
unknown, or unforeseen, that I have or may have against the Company arising out
of or in any way related to my employment and its termination, the Transition
Agreement, or any event, transaction, or matter occurring or existing on or
before the date of my signing of this General Release.  I agree, without limiting the generality of
this release, that this release of claims includes, but is not limited to:  any rights or claims that you may have
arising out of federal, state, or local employment discrimination laws (such
as, for example, the Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act, the Family and Medical Leave Act, and any
similar federal, state, or local statute); claims under the Worker Adjustment
Retraining and Notification Act, the Employee Retirement Income Security Act,
the Fair Labor Standards Act, or any other applicable federal, state, or local
statute relating to payment of wages; claims concerning recruitment, hiring,
termination, salary rate, severance pay, retention benefits, wages or benefits
due, sick leave, vacation pay, life insurance, group medical insurance, any
other fringe benefits of the Company, libel, slander, defamation, intentional
or negligent misrepresentation and/or infliction of emotional distress,
together with any and all tort, contract, or other claims which might have been
asserted by me or on my behalf in any suit, charge, demand, cause of action, or
claim against the persons or entities released in this paragraph.  I further hereby irrevocably and
unconditionally waive any and all rights to recover any relief or damages
concerning the suits, charges, demands, causes of action, or claims that are
lawfully released in this paragraph.  I
represent and warrant that I have not previously filed or joined in any such
suits, charges, demands, causes of action, or claims against the persons or
entities released in this paragraph.

 

I expressly acknowledge and agree that the
foregoing release is a GENERAL RELEASE.

 

I agree that my decision to execute this General
Release is knowing and voluntary and based only on the terms of the Transition
Agreement and this General Release, and not on any other promises or
representations of any kind whatsoever. 
I acknowledge that I am being encouraged by the Company to consult with
an attorney prior to executing this General Release.  I further acknowledge that I have a period of
twenty-one (21) days to consider and review this General Release.  Moreover, for a period of seven (7) days
following my execution of this General Release, I will have the right to revoke
it under the Age Discrimination in Employment Act, a federal statute that
prohibits employers from discriminating against employees who are age 40 or
over.  If I elect to revoke this
Agreement within this seven-day period, I understand that I must inform the
Company by delivering a written notice of revocation to [insert name, title,
and address] no later than 11:59 p.m. on the seventh calendar day after I
sign the General Release.  However, if I
elect to exercise this revocation right, I understand that the Company will be
relieved of its obligations under the Transition Agreement to make any payments
to me, including without limitation any obligation to provide me with the
Severance Benefit, and I further understand that the Transition Agreement may
be voided in its entirety at the Company’s option.  I may, if I wish, elect to sign this General
Release prior to the expiration of the 21-day consideration period, and I

 

 

agree
that if I elect to do so, such election is knowing and voluntary and comes
after full opportunity to consult with counsel.

 

I understand that I shall sign this General
Release no earlier than the first business day after the last day of my
employment.

 

 

	
  Dated:
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  

  [insert employee name]

  	
   

  

 

8Exhibit 10.18

 

GENSTAR
CAPITAL, L.P.

FOUR EMBARCADERO CENTER, SUITE 1900

SAN FRANCISCO, CA 94111

 

NOVEMBER 30,
2004

 

Altra Holdings, Inc. and Altra Industrial Motion, Inc.

c/o Genstar Capital Partners III, L.P.

Four Embarcadero Center, Suite 1900

San Francisco, CA 
94111-4191

 

Attention:

 

Re:                               Advisory Services
Agreement

 

Ladies and Gentlemen:

 

This letter serves to confirm our retention
by Altra Holdings, Inc. (the “Company” or “you”) to provide management, consulting and financial
services to the Company as follows:

 

1.                                       The Company has
retained us, and we hereby agree to accept such retention, to provide to the
Company, when and if called upon, certain management, business strategy,
consulting and financial services of the type customarily performed by us, including
assisting the Company in analyzing, structuring, negotiating and effecting
Transactions (as defined below).

 

2.                                       You agree to pay
us the following:

 

(a)                                  In
consideration of services provided by us in connection with the purchase of all
of the limited liability company interests of the Company pursuant to that
certain LLC Purchase Agreement dated as of October 25, 2004 (the “Purchase Agreement”), by and among Colfax Corporation, a
Delaware corporation, Warner Electric Holdings, Inc., a Delaware corporation
and the Company and the related financing transactions, the Company shall pay
to us a fee of $4,000,000 in cash concurrently with the consummation of the
purchase contemplated by the Purchase Agreement (the “Closing Fee”)
and reimburse all of our expenses incurred by and on behalf of us in connection
with the Purchase Agreement and the transactions contemplated thereby.

 

(b)                                 In
consideration for the services provided by us hereunder, the Company shall pay
to us an annual management fee of $1,000,000 (the “Consulting
Fee”).  The Consulting Fee
shall be payable in equal quarterly installments in arrears on the last day of
each calendar quarter (i.e., the last day of March, June, September and December of
each such year).  Such quarterly payments
shall be (i) subject to withholding as required by applicable law and (ii) prorated
for partial periods based on the actual number of days during such calendar
quarter that we are retained hereunder.

 

 

(c)                                  In
addition to our fees for advisory services, we will separately bill our
expenses as incurred.  Generally, these
expenses include travel costs, document production costs, the reasonable fees
and disbursements of our legal counsel tax, financial and other advisors, and
other expenses of this type.  The Company
agrees to reimburse us, upon request made from time to time, for such expenses.

 

(d)                                 In
the event a Transaction (as defined below) is consummated, the Company agrees
to pay us an advisory fee equal to 2.0% of the Aggregate Consideration (as
defined below) in connection with the Transaction (the “Advisory Fee”).  The Advisory Fee will be fully earned on the
date of closing of the Transaction and shall be payable by the Company to
Genstar in cash on the date of closing.

 

(e)                                  For
purposes of this agreement, a “Transaction”
shall mean (i) the consummation of any transaction involving the direct or
indirect acquisition by the Company or any of its direct or indirect
subsidiaries (whether in one or a series of transactions) of all or a
substantial amount of the assets or the capital stock, voting securities or
equity interests of another entity, as well as any merger, recapitalization,
restructuring or liquidation of another entity by its current owners, a third
party or any combination thereof, or any other form of disposition which
results in the effective sale, in whole or in part, of the business or
operations of the entity to the Company or any of its direct or indirect
subsidiaries (a transaction described in this clause (i), an “Acquisition”), or (ii) the consummation of any
transaction involving the direct or indirect disposition by the Company or any
of its direct or indirect subsidiaries (whether in one or a series of
transactions) of all or a substantial amount of its assets, capital stock,
voting securities or equity interests, as well as any merger, recapitalization,
restructuring or liquidation of the Company or any of its direct or indirect
subsidiaries by their current owners, a third party or any combination thereof,
or any other form of disposition which results in the effective sale, in whole
or in part, of the business or operations of the Company or any of its direct
or indirect subsidiaries to another entity (a transaction described in this
clause (ii), a “Disposition”).

 

For purposes
of this agreement, “Aggregate Consideration”
shall mean (i) in connection with an Acquisition, the total fair market
value (at the time of closing) of all consideration (including cash,
securities, property, all debt remaining on the acquired entity’s financial statements
immediately prior to closing and other indebtedness and obligations assumed by
the Company or any of its direct or indirect subsidiaries, as applicable, and
any other form of consideration) paid or payable, or otherwise to be
distributed, directly or indirectly in connection with the Transaction and (ii) in
connection with a Disposition, the total fair market value (at the time of
closing) of all consideration (including cash, securities, property, all debt
remaining on the Company’s or any of its direct or indirect subsidiaries’
financial statements, as applicable, immediately prior to closing and other
indebtedness and obligations assumed by the purchaser and any other form of
consideration) paid or payable, or otherwise to be distributed, directly or
indirectly in connection with the Transaction.

 

2

 

3.                                       The terms of
this agreement are effective beginning as of the date first set forth
above.  This agreement shall continue in
effect from year to year unless amended or terminated by the mutual consent of
the parties hereto.  Our services
hereunder may also be terminated with or without cause by us at any time and
without liability or continuing obligation to you or us, except for any
compensation earned and expenses incurred by us to the date of termination and
provided that Attachment A (and any other provisions that by their
nature continue to have effect following any such termination) will remain
operative regardless of any such termination.

 

4.                                       The Company
agrees to indemnify us and certain other Indemnified Persons (as defined
therein) as provided on Attachment A, which forms an integral part of
this agreement.

 

5.                                       Any advice or
opinions provided by us may not be disclosed or referred to publicly or to any
third party (other than the Company’s legal, tax, financial or other advisors),
except in accordance with our prior written consent.

 

6.                                       We shall act as
an independent contractor, with duties solely to the Company.  The provisions hereof shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
successors and assigns.  Nothing in this
agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns, and, to the
extent expressly set forth herein, the Indemnified Persons, any rights or
remedies under or by reason of this agreement. 
Without limiting the generality of the foregoing, the parties acknowledge
that nothing in this agreement, expressed or implied, is intended to confer on
any present or future holders of any securities of the Company or its
subsidiaries or affiliates, or any present or future creditor of the Company or
its subsidiaries or affiliates, any rights or remedies under or by reason of
this agreement or any performance hereunder.

 

7.                                       This agreement
shall be governed by and construed in accordance with the laws of New York,
without regard to principles of conflicts of law.

 

8.                                       If any term or
provision of this agreement or the application thereof shall, in any
jurisdiction and to any extent, be invalid and unenforceable, such term or
provision shall be ineffective, as to such jurisdiction, solely to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable any remaining terms or provisions hereof or affecting the
validity or enforceability of such term or provision in any other
jurisdiction.  To the extent permitted by
applicable law, the parties hereto waive any provision of law that renders any
term or provision of this agreement invalid or unenforceable in any respect.

 

9.                                       THE PARTIES
HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR
ARISING OUT OF OUR RETENTION PURSUANT TO, OR OUR PERFORMANCE OF THE SERVICES
CONTEMPLATED BY THIS AGREEMENT.

 

10.                                 This agreement may be
amended, modified or supplemented only by a written instrument executed by both
parties.  The section and other
headings contained in this agreement

 

3

 

are for reference purposes only and shall not affect the meaning or
interpretation of this agreement.  This
agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one
and the same instrument.

 

11.                                 Notwithstanding any
provision hereof, none of our obligations or our affiliates’ obligations under
this agreement shall be an obligation of our or our affiliates’ officers,
directors, members, limited partners or general partners (or of any officer,
director, member, limited partner or general partner of any member, limited
partner or general partner of any of the foregoing entities).  Any such liability or obligation arising out
of this agreement shall be limited to and satisfied only out of our assets or
the assets of our affiliates, as applicable.

 

 

*     *    
*     *     *

 

4

 

If the foregoing sets forth the understanding
between us, please so indicate on the enclosed signed copy of this letter in
the space provided therefor and return it to us, whereupon this letter shall
constitute a binding agreement among us.

 

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Genstar Capital, L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  Genstar Management LLC

  	
   

  
	
   

  	
  Its:   General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
  AGREED TO AND ACCEPTED

  	
   

  
	
   

  	
   

  
	
  Altra Holdings, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Michael L. Hurt

  	
   

  
	
   

  	
  Title: Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Altra Industrial Motion, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Michael L. Hurt

  	
   

  
	
   

  	
  Title: Chief Executive Officer

  	
   

  

 

5

 

ATTACHMENT
A

 

Terms
of Indemnity

 

This Attachment A is attached to and
forms an integral part of that certain letter dated November 30, 2004 from
us, Genstar Capital, L.P., to you, Altra Holdings, Inc., regarding our
Advisory Services Agreement (the “Engagement Letter”).

 

In consideration of our agreement to provide
you with certain services as set forth in the Engagement Letter, you agree to
indemnify and hold harmless us and our affiliates and our and their respective
officers, directors, employees, agents and advisors and each other person, if
any, controlling us or any of our affiliates (each such person, including
ourselves, being an “Indemnified Person”)
from and against any losses, claims, damages or liabilities related to, or
arising out of, any Transaction (as defined in the Engagement Letter) or our
engagement by you pursuant to, and our performance of services as contemplated
by, the Engagement Letter and you will reimburse each Indemnified Person for
all expenses (including reasonable fees and expenses of counsel) as they are
incurred in connection with investigating, preparing, pursuing or defending any
action, claim, suit, investigation or proceeding arising therefrom, whether or
not pending or threatened and whether or not any Indemnified Person is a
party.  You also agree that no
Indemnified Person shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to you or your security holders or creditors
related to or arising out of our engagement pursuant to, and our performance of
services as contemplated by, the Engagement Letter, except for any such
liability for losses, claims, damages or liabilities incurred by you that are
finally judicially determined to have resulted from bad faith or gross
negligence of such Indemnified Person.

 

You will not, without our prior written
consent, settle, compromise, consent to the entry of judgment in or otherwise
seek to terminate any action, claim, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person
is a party thereto) unless such settlement, compromise, consent or termination
includes an irrevocable and unconditional full release of each Indemnified
Person from any and all liabilities arising out of such action, claim, suit or
proceeding.  No Indemnified Person
seeking indemnification, reimbursement or contribution under this agreement
will, without your prior written consent, settle, compromise, consent to the
entry of judgment in or otherwise seek to terminate any action, claim, suit,
investigation or proceeding referred to in the preceding paragraph.

 

If the indemnification provided for in the
second paragraph of this Attachment A is judicially determined to be
unavailable (other than in accordance with the terms hereof) to an Indemnified
Person, in respect of any losses, claims, damages or liabilities referred to herein,
then, in lieu of indemnifying such Indemnified Person hereunder, you shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in
such proportion as is appropriate to reflect the relative benefits to you, on
the one hand, and us, on the other hand, of the Transaction (whether or not the
Transaction is consummated), or (ii) if (but only if) the allocation
provided by clause

 

6

 

(i) above is not available, in such proportion as is appropriate
to reflect not only the relative benefits referred to in such clause (i) but
also the relative fault of each of you and us, as well as any other relevant
equitable considerations, provided  however, in no event shall our
aggregate contribution to amounts paid or payable hereunder exceed the
aggregate amount of fees actually received by us for the specific Transaction
or services in question under the Engagement Letter.  For purposes of this agreement, the relative
benefits to you and us of the Transaction shall be deemed to be in the same
proportion as (a) the total value paid or contemplated to be paid or
received or contemplated to be received or paid by you or your stockholders, as
the case may be, in the Transaction(s) or services that are the subject of the
Engagement Letter, whether or not any such Transaction is consummated, bears to
(b) the related fees paid or to be paid to us under the Engagement Letter.

 

The indemnification
contained herein in no way limits any other indemnification to which we or our
affiliates are entitled pursuant to any other agreements.

 

The provisions of this Attachment A
shall apply to any Transaction and/or services provided under the Engagement
Letter and any modifications thereof, and shall remain in full force and effect
regardless of any termination or the completion of our services under the
Engagement Letter.

 

 

	
  AGREED TO AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  Altra Holdings, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: Michael L. Hurt

  	
   

  
	
  Title: Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Altra Industrial Motion, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Michael L. Hurt

  	
   

  
	
   

  	
  Title: Chief Executive Officer

  	
   

  

 

7

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