Exhibit 10.1
AGREEMENT AND GENERAL RELEASE
-----------------------------
THIS AGREEMENT made the 29th day of November, 2004 by and
between Alvaro Cadena and Graham Corporation ("Graham" or the
"Company"), in consideration for the mutual promises contained
herein, as follows:
1. Retirement from Positions. Effective November 29, 2004,
Mr. Cadena retires from the positions of President, Chief
Executive Officer and Director of Graham Corporation and
from all offices and directorships held with any
subsidiaries and affiliates of Graham. Mr. Cadena will
receive base salary earned through that date and accrued
benefits
2. Interim Employment Period. The Company will continue to
employ Mr. Cadena, as a senior advisor to Graham, through his
retirement as an employee at the close of business on December
31, 2004, at the same base salary and with the same benefits as
he had immediately prior to November 29, 2004. Mr. Cadena will
receive base salary earned through December 31, 2004 and
accrued benefits including the cash value of any unused
vacation time. It is understood and agreed by the parties that
Mr. Cadena will be entitled to a Company matching payment to
his 401 (k) account in respect of the year 2004 to the extent
provided by the terms of the Graham Corporation Incentive
Savings Plan.
3. Consultancy. Beginning January 1, 2005 and continuing
until Mr. Cadena reaches the age of 65, the Company will
retain Mr. Cadena as an independent consultant, upon the following
terms and conditions:
a. The Company will pay a consultation fee for the
first year beginning January 1, 2005 at a rate equal
to Mr. Cadena's annual rate of base compensation as
in effect on December 31, 2004 ("Base Amount"); for
the second calendar year at 50% of the Base Amount;
for the third calendar year at 40% of the Base Amount
and for the fourth calendar year at 30% of the Base
Amount. Payment in each calendar year shall be in
equal monthly installments of the amount payable for
that year, except for compensation for the first
year, which shall be paid in eighteen (18) equal
monthly installments commencing in January 2005.
Payment of final six (6) installments of the first
year compensation in calendar year 2006 shall not
affect the Company's obligation to pay monthly
installments of compensation for the second year in
2006 as provided above.
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b. As a consultant, Mr. Cadena's services shall be as
requested by the President and CEO of the Company from
time to time and at the convenience of Mr. Cadena, his
status being that of an independent contractor. Mr. Cadena
shall be available to perform consulting services for
one hundred eighty (180) days in the first calendar
year; ninety (90) days in the second calendar year;
seventy-two (72) days in the third calendar year and
fiftyfour (54) days in the fourth calendar year.
c. While Mr. Cadena provides consulting services on the
premises of the Company, the Company will provide
office space and secretarial service. In addition,
the Company shall reimburse Mr. Cadena for the
reasonable expenses of travel to and from Batavia, New York,
in connection with the performance of his duties as consultant
and for all reasonable out-of-town travel and other reasonable
out-of-town expenses incurred by him on trips taken at the direction
of the Company. Nothing in this section or in this Agreement
requires Mr. Cadena to undertake any such travel, to which he may
agree or may decline, in his sole discretion.
d. In his capacity as consultant, Mr. Cadena shall not be
required to perform any services while he is ill, disabled or on
vacation.
e. The Company will hold harmless and indemnify Mr. Cadena, his
executors, administrators or assigns, for any amount which he is
or becomes legally obligated to pay because of any claim or claims
made against him because of any act or omission or neglect or
breach of duty, including any actual or alleged error or mis
statement or misleading statement, which he commits or suffers
while acting in his capacity as consultant to the Company and
solely because of his service as a consultant (collectively, the
"Covered Liabilities"). The payments which the Company will be
obligated to make hereunder shall include, inter alia, damages,
judgments, settlements and costs, cost of investigation and costs
of defense of legal actions, claims or proceedings and appeals
therefrom, and costs of attachment or similar bonds; provided
however, that the Company shall not be obligated to pay fines or
other obligations or fees imposed by law or otherwise which it is
prohibited by applicable law from paying as indemnity or for any
other reason. The Company shall have no obligation to indemnify
Mr. Cadena for any of the Covered Liabilities arising in
consequence of any illegal acts or omissions on the part of Mr.
Cadena during his service as a consultant to the Company.
f. The Company's obligation to pay the consultancy fee referred
to herein shall terminate automatically upon Mr. Cadena's death
and such obligation shall not be deemed to run to the Consultant's
spouse, estate, heirs, successors, or to any other party, except
with respect to accrued and unpaid compensation at the time of
death.
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Mr. Cadena acknowledges that the Company's undertaking to engage him as a
consultant, upon the terms hereinabove described, is offered freely and
without obligation in consideration for Mr. Cadena entering into this
Agreement and General Release (the "Agreement"), including a release of all
claims for age discrimination pursuant to the Age Discrimination in Employment
Act and any local age discrimination laws.
4. Medical and Dental Benefits. Until Mr. Cadena reaches age 65 the
Company shall continue to provide him with the same medical and dental
benefits to which he would have been entitled had he continued until age
65 as an officer and employee of the Company, and in the same manner.
If before Mr. Cadena attains the age of 65 the Company changes its
medical or dental benefits in a way that would have affected Mr. Cadena
had he remained an officer and employee of the Company, any such such
change shall apply to him. In no case shall the medical and dental
benefits so provided be less in terms of coverage than what the Company
provides to its president and chief executive officer.
5. Life Insurance. No later than December 31, 2004 Mr. Cadena may
elect to convert the company-paid term life insurance policy
currently provided for him to a policy owned by him. Mr. Cadena
will be responsible for paying all premiums on such policy
commencing with the effective date of the conversion. The Company
will pay Mr. Cadena five thousand dollars ($5,000.00) in each
calendar year through the calendar year in which he reaches age
65, which Mr. Cadena may apply toward the payment of life
insurance premiums.
6. Stock Options. For purposes of all stock option agreements
between the Company and Mr. Cadena with respect to stock options
currently exercisable by him, expiration shall be as provided for
in the case of retirement and Mr. Cadena's retirement shall be
deemed effective at the close of business on December 31, 2004.
Consequently, all currently exercisable Stock Options granted to
Mr. Cadena by the Company shall remain exercisable for either two
or three years, in accordance with the terms of each stock option
agreement respectively, as described on Schedule A annexed hereto.
7. Retirement. The terms and conditions of Mr. Cadena's
entitlement to benefits under the Retirement Income Plan of Graham
Corporation ("Retirement Plan") are and will be as set forth in
such plan and are not amended by this Agreement. It is
acknowledged and agreed that for purposes of the Retirement Plan
Mr. Cadena's last day as an employee of the Company is December
31, 2004.
8. Confidentiality. Mr. Cadena understands and agrees that he
may not use or disclose any proprietary information of Graham
including, but not limited to product and service information,
financial and pricing information, data processing and
communication information, marketing and business plans and other
know-how and trade secrets regarding the business of Graham,
including but not limited to any knowledge or information with
respect to confidential or secret processes, formulas,
discoveries, inventions, machinery, plans, design information of
any kind, devices or material of the Company or any of its
subsidiaries or affiliates or with respect to any confidential or
secret engineering development or research work of the Company or
any of its subsidiaries or affiliates or with respect to any other
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confidential or secret aspect including, without limitation, any
lists of the customers of the Company or any of its subsidiaries
or affiliates, all of which are valuable to Graham and constitutes
confidential information.
9. Non-Competition. Mr. Cadena agrees that during the period
of his consultancy and for a period of 12 months thereafter, he
will not, except upon the Company's prior written consent,
directly or indirectly, own, manage, operate, join, control, or
participate in, or derive any benefit whatsoever from or be
connected as an officer, employee, consultant, partner,
stockholder (other than as stockholder in a corporation listed on
a national securities exchange) or otherwise in any business or
enterprise which is engaged in the manufacture or sale and design
of vacuum and heat transfer equipment or pumps for process
industries which is in competition with the business of the
Company, nor shall he render assistance or advice to any person,
firm or enterprise which is so engaged.
10. Remedies. Mr. Cadena acknowledges that in the event of a breach
of sections 6 or 7 of this Agreement, monetary damages alone may
not offer adequate protection of the Companies rights or
sufficient remedy to the Company and that the Company therefore
has the right to bring an action in a court of competent
jurisdiction to obtain injunctive relief in order to secure its
rights under sections 6 and 7.
11. Release by the Company. The Company, intending to be
legally bound, hereby IRREVOCABLY RELEASES, ACQUITS AND FOREVER
DISCHARGES Mr. Cadena from any and all causes of actions, suits,
debts, claims, liabilities, obligations and demands whatsoever, in
law or in equity that the Company might have as of the date hereof
(or might have had prior to the date hereof) against Mr. Cadena,
of whatever kind or nature, whether known or unknown, in respect
of his employment with the Company, provided, however, that
notwithstanding any other provision hereof, the Company does not
waive claims with respect to or arising out of any illegal acts or
omissions on the part of Mr. Cadena during his service and in his
capacity as an officer or director of the Company.
12. Release by Mr. Cadena. Mr. Cadena, intending to be legally
bound, on behalf of himself and his heirs, executors, assigns,
affiliates, representatives and agents, hereby IRREVOCABLY
RELEASES, ACQUITS AND FOREVER DISCHARGES the Company, its
directors, officers, employees, agents or successors from any and
all claims, of whatever kind or nature, whether known or unknown,
arising out of his employment with or departure from the Company,
including, but not limited to: (i) claims Mr. Cadena may have
under any federal, state or local labor, employment,
discrimination, human rights, civil rights, wage/hour, pension, or
tort law, statute, order, rule, regulation or public policy,
including but not limited to, those arising under the Age
Discrimination in Employment Act, the Older Workers Benefit
Protection Act, the National Labor Relations Act, the Fair Labor
Standards Act, the Occupational Safety and Health Act of 1970, the
Americans With Disabilities Act of 1990, the Civil Rights Acts of
1964 and 1991, the Civil Rights Act of 1866, the Employee
Retirement Income Security Act of 1974, the Rehabilitation Act of
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1973, the Family and Medical Leave Act of 1993, and the Equal Pay
Act of 1963, (ii) those arising under common law and (iii) any
other local, state or federal law or regulation as of the date
this Agreement is signed, provided, however, that notwithstanding
any other provision hereof, Mr. Cadena does not waive claims: (a)
with respect to enforcement of this Agreement; (b) with respect to
vested benefits which he may have under any employee benefit plans
maintained by the Company and in which he is a participant; or (c)
that may arise after the date this Agreement is executed and which
are based upon Graham's acts or omissions after that date.
13. Acknowledgement of Effect of Release. Mr. Cadena
acknowledges and confirms that he understands that, by signing
this Agreement, HE WAIVES ANY RIGHT HE MAY HAVE HAD TO PURSUE OR
BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE COMPANY in
respect of his employment with the Company. Mr. Cadena further
acknowledges and confirms that he understands that, by signing
this Agreement, HE IS SPECIFICALLY RELEASING ALL CLAIMS HE MAY
HAVE AGAINST THE COMPANY UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT, AS AMENDED, 29 U.S.C. 621 et seq., which
statute may provide him with substantial rights and protections.
14. Prior Agreements. All stock option agreements between the
Company and Mr. Cadena in effect on the date hereof shall remain
effective in accordance with their respective terms, as the same
may be affected by Section 5 of this Agreement. Agreements
between the Company and Mr. Cadena with respect to indemnifying
him for acts or omissions committed while an officer or director
of the Company similarly shall remain effective in accordance with
their respective terms. Otherwise this Agreement shall expressly
supercede and render void any and all prior agreements between Mr.
Cadena and the Company, including without limitation the
Employment Agreement dated September 26, 1996 and the Senior
Executive Severance Agreement dated July 28, 1995.
15. Cooperation. Mr. Cadena agrees that, during the period during
which he is paid as a consultant to the company as contemplated in
Section 3 of this Agreement, he shall cooperate with Graham in
investigating, preparing or testifying with
respect to any threatened or pending claim, action or proceeding,
whether investigative, administrative, civil or criminal, involving
or affecting Graham. Mr. Cadena will receive no additional
compensation for his time, but will be reimbursed for his reasonable
expenses in connection with these activities in accordance with
Graham's expense reimbursement policies and procedures.
16. Advice of Counsel. Mr. Cadena acknowledges that the Company has
advised him to consult with his own legal counsel in connection
with the review, negotiation and execution of this Agreement and
that neither the Company nor any of its directors, officers,
employees or representatives has made any statement to Mr. Cadena
that he has construed, or is relying upon, as legal, tax or
financial advice. Mr. Cadena confirms that he has had sufficient
time and opportunity to consult with an attorney representing him
prior to executing this Agreement.
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17. Time for Review; Revocation. Mr. Cadena acknowledges and
confirms that: (a) he had at least 21 days from the date this
Agreement was given to him within which to consider whether to
enter into this Agreement; however, after having an opportunity to
consult with legal counsel, he has freely and voluntarily elected
to execute and deliver this Agreement prior to the expiration of
such 21-day consideration period; (b) he may revoke this Agreement
within seven (7) days after he executes it by providing written
notification of such revocation to the Company's Chairman; (c)
this Agreement will not be enforceable, unless and until the seven
day revocation period has expired without being revoked. Mr.
Cadena further acknowledges that by entering into this Agreement,
he understands all of the provisions thereof and its binding legal
effect and is voluntarily entering into this Agreement.
18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof and supersedes any and all prior agreements or
understandings between the parties, except as otherwise provided
herein with respect to stock option agreements.
19. Notices. Any notices required or permitted hereunder shall
be in writing and may be delivered by U.S. Mail, by facsimile
(with the original sent by U.S. Mail), by a courier service of
national reputation or personally. Notice shall be deemed given
upon receipt. Notice shall be sent:
If to Mr. Cadena:
32 Founders Green
Pittsford, N.Y. 14534
Fax: 585-218-4162
If to the Company:
Graham Corporation
20 Florence Avenue
Batavia, N.Y. 14020
Attention: Chairman of the Board
Fax: 585-343-1177
with a copy to:
Smith Law Office, P.C
7 State Street
Pittsford, N.Y. 14534
Attention: William A. Smith, Jr., Esq.
Fax: 585-385-1886
20. Severability and Enforcement. The provisions in this
Agreement are severable, and if any provision is determined by a
court of competent jurisdiction to be prohibited or unenforceable,
the remaining provisions shall nevertheless be binding and
enforceable. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York, without
regard to the of conflict of laws provisions thereof.
21. Amendment. This Agreement may be amended only by a writing
executed by the Company and by Mr. Cadena.
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IN WITNESS WHEREOF the parties have executed this agreement as
of the day and year first above written.
/s/ Alvaro Cadena
-----------------
Alvaro Cadena
GRAHAM CORPORATION
by /s/ Jerald D. Bidlack
---------------------
Jerald D. Bidlack
Chairman of the Board
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Schedule A
SCHEDULE A
TO AGREEMENT AND GENERAL RELEASE BETWEEN
ALVARO CADENA AND GRAHAM CORPORATION
DATED NOVEMBER 29, 2004
<Table>
<Caption>
POST
OPTIONS ORIGINAL 11/29/04
OPTIONS EXERCISE CURRENTLY EXPIRATION EXPIRATION
DATE PLAN GRANTED PRICE EXERCISABLE DATE DATE
- ---- ---- ------- -------- ----------- ---------- ----------
10/23/97 1995 7,500 $21.438 7,500 10/23/07 11/29/06
10/26/98 1995 6,000 $7.500 6,000 10/26/08 11/29/06
10/28/99 1989 7,015 $7.750 7,015 10/28/09 11/29/06
11/2/00 1995 6,000 $11.000 6,000 11/2/10 11/29/07
7/26/01 1995 6,000 $11.700 6,000 7/26/11 11/29/07
10/31/02 2000 6,000 $7.500 6,000 10/31/12 11/29/07
10/24/03 1995 2,400 $8.800 2,400 10/24/13 11/29/07
10/24/03 2000 3,600 $8.800 3,600 10/24/13 11/29/07
------ ------
TOTALS 44,515 44,515
</Table>