EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
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This Agreement is made as of the 19th day of January,
2005 by and among Graham Corporation, a Delaware corporation (the
"Company"), and William C. Johnson ("Agent") with reference to the
following facts:
The Agent is currently serving as President and Chief
Executive Officer of the Company and as a member of its Board of
Directors ("Board") and the Company wishes the Agent to continue in
such capacity. The Agent is willing, under certain circumstances,
to continue in such capacity.
In addition to the indemnification to which the Agent is
entitled pursuant to the Certificate of Incorporation of the
Company, and as additional consideration for the Agent's service,
the Company has, in the past, furnished at its expense directors'
and officers' liability insurance protecting the Agent in connection
with such service.
In order to induce the Agent to continue to serve as a
Director and Officer for the Company and in consideration for his
continued service, the Company hereby agrees to indemnify the Agent
as follows:
1. The Company will pay on behalf of the Agent, and his
executors, administrators or assigns, 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 misstatement
or misleading statement, which he has committed or suffered, or which
he commits or suffers, while acting in his capacity as a Director or
Officer of the Company and any of its subsidiaries and solely because of
his status as a Director or Officer. The payments which the Company will be
obligated to make hereunder shall include, inter alia, damages, judgments,
settlements and costs, cost of investigation (excluding salaries of
officers or employees of the Company) 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.
2. If a claim under this Agreement is not paid by the
Company, or on its behalf, within ninety days after a written claim
has been received by the Company, the claimant may at any time
thereafter bring suit against the Company to recover the unpaid
amount of the claim and if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of
prosecuting such claim.
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3. 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 the Agent, who shall execute all
documents required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
4. The Company shall not be liable under this Agreement
to make any payment in connection with any claim made against the
Agent:
(a) for which payment is actually made to the Agent
under a valid and collectible insurance policy, except in respect
of any excess beyond the amount of payment under such insurance;
(b) for which the Agent is entitled to indemnity
and/or payment by reason of having given notice of any circumstance
which might give rise to a claim under any policy of insurance, the
terms of which have expired prior to the effective date of this
Agreement;
(c) for which the Agent is indemnified by the
Company otherwise than pursuant to this Agreement;
(d) based upon or attributable to the Agent gaining
in fact any personal profit or advantage to which he was not
legally entitled;
(e) for an accounting of profits made from the
purchase or sale by the Agent of securities of the Company within
the meaning of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any state statute
or common law; or
(f) brought about or contributed to by illegal or
dishonest conduct on the part of the Agent seeking payment
hereunder; however, notwithstanding the foregoing, the Agent shall
be protected under this Agreement as to any claims upon which suit
may be brought against him by reason of any alleged dishonest
conduct on his part, unless a judgment or other final adjudication
thereof adverse to the Agent shall establish that he (i) committed
acts of active and deliberate dishonesty, with (ii) actual
dishonest purpose and intent, which acts were material to the cause
of action so adjudicated.
5. No costs, charges or expenses for which indemnity
shall be sought hereunder shall be incurred without the Company's
consent, which consent shall not be unreasonably withheld.
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6. The Agent, as a condition precedent to his right to
be indemnified under this Agreement, shall give to the Company
notice in writing as soon as practicable of any claim made against
him for which indemnity will or could be sought under this
Agreement. Notice to the Company shall be directed to the
Secretary of the Company, c/o 20 Florence Avenue, Batavia, New York
14020 (or to such other address as to the Company may designate in
writing to the Agent); notice shall be deemed received if sent by
prepaid mail properly addressed, the date of such notice being the
date postmarked. In addition, the Agent shall give the Company such
information and cooperation as it reasonably may require and as
shall be within the Agent's power.
7. Costs and expenses (including attorneys' fees)
incurred by the Agent in defending or investigating any action,
suit, proceeding or investigation shall be paid by the Company as
they are incurred in advance of the final disposition of such
matter; provided, however, that the Agent must pay to the Company
the amount of any such costs and expenses for which the Agent has
been indemnified with respect to such matter, if it is ultimately
determined by a court of final adjudication that the Agent is not
entitled to indemnification under the terms of this Agreement.
Notwithstanding the foregoing or any other provision of this
Agreement, no indemnification for costs and expenses shall be made
by the Company if a determination is reasonably and promptly made
(1) by the Board by a majority vote of a quorum of disinterested
directors, or alternatively, (2) if so directed by a quorum of
disinterested directors, by independent legal counsel; or (3) if a
quorum of disinterested directors is not obtainable, by independent
legal counsel, that, based upon the facts known to the Board or
such independent counsel at the time such determination is made,
(a) the Agent acted in bad faith or in a manner that he or she did
not believe to be in or not opposed to the best interest of the
Company, or (b) with respect to any criminal proceeding, the Agent
believed or had reasonable cause to believe his conduct was
unlawful, or (c) the Agent deliberately breached his duty to the
Company or its stockholders.
8. In the event that the indemnification provided for
herein is held by a court of competent jurisdiction to be unavailable
to the Agent in whole or part, the Company shall contribute to the
payment of the Agent's liabilities in an amount that is just and
equitable in the circumstances, taking into account, among other things,
payments by other directors and officers of the Company or its
subsidiaries for their respective liabilities in consequence of the event
or events which gave rise to the Agent's liability. The Company and the
Agent agree that, in the absence of personal enrichment, acts of intentional
fraud or dishonesty or criminal conduct on the part of the Agent, it would
not be just and equitable for the Agent to contribute to the payment of
Losses arising out of any action, suit, proceeding or investigation in an
amount greater than five percent (5%) of the aggregate cash compensation
paid to the Agent for service as an officer of the Company during the
12 months preceding the commencement of such action, suit, proceeding or
investigation.
9. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
document.
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10. Nothing herein shall be deemed to diminish or oth
erwise restrict the Agent's right to indemnification under any
provision of the certificate of incorporation or by-laws of the
Company or under Delaware law.
11. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware, without regard to
the conflict of laws provisions thereof.
12. This Agreement shall be binding upon all successors
and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or
operation of law) and shall inure to the benefit of the heirs,
personal representatives and estate of Agent.
13. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any
reason whatsoever (i) the remaining provisions of this 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 by 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 of the parties that
the Company provide protection to Agent to the fullest
enforceable extent.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and signed as of the day and year
first above written.
GRAHAM CORPORATION
By: /s/Jerald D. Bidlack
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Jerald D. Bidlack,
Chairman
WILLIAM C. JOHNSON
/s/William C. Johnson
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