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Exhibit (10)
FORM OF INDEMNIFICATION AGREEMENT
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This Indemnification Agreement ("Agreement") is made as of the
____ day of _____, 19__, by and between The Gorman-Rupp Company, an Ohio
corporation (the "Company"), and (the "Indemnitee"), a Director and an officer
of the Company.
RECITALS
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A. The Indemnitee is presently serving as a Director and
an officer of the Company and the Company desires the Indemnitee to continue in
those capacities. The Indemnitee is willing, subject to certain conditions,
including, without limitation, the execution and performance of this Agreement
by the Company, to continue in those capacities.
B. In addition to the indemnification to which the
Indemnitee is entitled under the Regulations of the Company, as amended (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and Directors, including the
Indemnitee, against certain losses arising out of actual or threatened actions,
suits or proceedings to which such persons may be made or threatened to be made
parties. However, as a result of circumstances having no relation to, and
beyond the control of, the Company and the Indemnitee, the scope of that
insurance has been reduced, and there can be no assurance of the continuation
or renewal of that insurance.
Accordingly, and in order to induce the Indemnitee to continue
to serve in his present capacities, the Company and the Indemnitee agree as
follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to
serve at the will of the Company as a Director and an officer of the Company so
long as he is duly elected and qualified in accordance with the Regulations or
until he resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify
the Indemnitee if or when he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the
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Company), by reason of the fact that he is or was a Director or an officer of
the Company or is or was serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
any such capacity, against any and all costs, charges, expenses (including,
without limitation, fees and expenses of attorneys and/or others; all such
costs, charges and expenses being herein jointly referred to as "Expenses"),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by the Indemnitee in connection therewith including any appeal of or
from any judgment or decision, unless it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company. In addition, with respect to any criminal action or
proceeding, indemnification hereunder shall be made only if the Indemnitee had
no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or 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 satisfy the foregoing standard
of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee if or when
he is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is
or was a Director or an officer of the Company or is or was serving at the
request of the Company as a director, trustee, officer, employee or agent of
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust or other enterprise, against any and all Expenses actually
and reasonably incurred by the Indemnitee in connection with the defense or
settlement thereof or any appeal of or from any judgment or decision, unless it
is proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company, except that no
indemnification shall be made in respect of any action or suit in which the
only liability asserted against the Indemnitee is pursuant to Section 1701.95
of the Ohio Revised Code (the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth
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in Section 2(a) or 2(b). Such authorization shall be made (i) by the Directors
of the Company (the "Board") by a majority vote of a quorum consisting of
Directors who were not and are not parties to or threatened with such action,
suit or proceeding, or (ii) if such a quorum of disinterested Directors is not
available or if a majority of such quorum so directs, in a written opinion by
independent legal counsel (designated for such purpose by the Board) which
shall not be an attorney, or a firm having associated with it an attorney, who
has been retained by or who has performed services for the Company, or any
person to be indemnified, within the five years preceding such determination,
or (iii) by the shareholders of the Company (the "Shareholders"), or (iv) by
the court in which such action, suit or proceeding was brought.
(d) To the extent that the Indemnitee has been successful
on the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Section 2(a) or 2(b), or in defense of any claim, issue or matter
therein, he shall be indemnified against Expenses actually and reasonably
incurred by him in connection therewith. Expenses actually and reasonably
incurred by the Indemnitee in defending any such action, suit or proceeding
shall be paid by the Company as they are incurred in advance of the final
disposition of such action, suit or proceeding under the procedure set forth in
Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; and references to the
singular shall include the plural and VICE VERSA.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section
1701.13(E)(6) of the ORC, without limiting any right which the Indemnitee may
have pursuant to Section 2 hereof or any other provision of this Agreement or
the Articles of Incorporation, as amended, of the Company (the "Articles"), the
Regulations, the ORC, any policy of insurance, or otherwise, but subject to any
limitation on the maximum permissible indemnity which may exist under
applicable law at the time of any request for indemnity hereunder and subject
to the following provisions of this Section 3, the Company shall indemnify the
Indemnitee against any amount which he is or becomes obligated to pay relating
to or arising out of any claim made against him because of any act,
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failure to act or neglect or breach of duty, including any actual or alleged
error, misstatement or misleading statement, which he commits, suffers, permits
or acquiesces in while acting in his capacity as a Director or an officer of
the Company. The payments which the Company is obligated to make pursuant to
this Section 3 shall include, without limitation, judgments, fines and amounts
paid in settlement and any and all Expenses actually and reasonably incurred by
the Indemnitee in connection therewith including any appeal of or from any
judgment or decision; PROVIDED, HOWEVER, that the Company shall not be
obligated under this Section 3 to make any payment in connection with any claim
against the Indemnitee:
(a) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from paying
which results from a final, nonappealable order; or
(b) to the extent based upon or attributable to the
Indemnitee having actually realized a personal gain or profit to which
he was not legally entitled, including, without limitation, profit from
the purchase and sale by the Indemnitee of equity securities of the
Company which are recoverable by the Company pursuant to Section 16(b)
of the Securities Exchange Act of 1934, or profit arising from
transactions in publicly traded securities of the Company which were
effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to
which this Section 3 applies shall be paid by the Company as they are actually
and reasonably incurred in advance of the final disposition of such claim under
the procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a)
For purposes of pursuing his rights to indemnification under Section 3 hereof,
the Indemnitee shall (i) submit to the Board a sworn statement of request for
indemnification substantially in the form of Exhibit 1 attached hereto and made
a part hereof (the "Indemnification Statement") averring that he is entitled to
indemnification hereunder; and (ii) present to the Company reasonable evidence
of all amounts for which indemnification is requested. Submission of an
Indemnification Statement to the Board shall create a presumption that the
Indemnitee is entitled to indemnification hereunder, and the Company shall,
within sixty (60) calendar days after submission of the Indemnification
Statement, make the payments requested in the Indemnification Statement to or
for the benefit of the Indemnitee, unless (i)
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within such 60-calendar-day period the Board shall resolve by vote of a
majority of the Directors at a meeting at which a quorum is present that the
Indemnitee is not entitled to indemnification under Section 3 hereof, (ii) such
vote shall be based upon clear and convincing evidence (sufficient to rebut the
foregoing presumption) and (iii) the Indemnitee shall have received within such
period notice in writing of such vote, which notice shall disclose with
particularity the evidence upon which the vote is based. The foregoing notice
shall be sworn to by all persons who participated in the vote and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of the Indemnitee to
indemnification under Section 3 of this Agreement so long as the Indemnitee
follows the prescribed procedure, and any determination by the Board that the
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to
judicial review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in
advance of final disposition pursuant to the second sentence of Section 2(d) or
the last sentence of Section 3 hereof, the Indemnitee shall submit to the
Company a sworn request for advancement of Expenses substantially in the form
of Exhibit 2 attached hereto and made a part hereof (the "Undertaking"),
averring that he has reasonably incurred actual Expenses in defending an
action, suit or proceeding referred to in Section 2(a) or 2(b) or any claim
referred to in Section 3, or pursuant to Section 7 hereof. Unless at the time
of the Indemnitee's act or omission at issue, the Articles or Regulations of
the Company prohibit such advances by specific reference to ORC Section
1701.13(E)(5)(a) and unless the only liability asserted against the Indemnitee
in the subject action, suit or proceeding is pursuant to ORC Section 1701.95,
the Indemnitee shall be eligible to execute Part A of the Undertaking by which
he undertakes to (a) repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim. In all cases, the Indemnitee
shall be eligible to execute Part B of the Undertaking by which he undertakes
to repay such amount if it ultimately is determined that he is not entitled to
be indemnified by the Company under this Agreement or otherwise. In the event
that the Indemnitee is eligible to and does execute both Part A and Part B of
the Undertaking, the Expenses which are paid by the Company pursuant thereto
shall be required to be repaid by the Indemnitee only if he is required to do
so under the terms of both Part A and Part B of the Undertaking. Upon
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receipt of the Undertaking, the Company shall thereafter promptly pay such
Expenses of the Indemnitee as are noticed to the Company in writing and in
reasonable detail arising out of the matter described in the Undertaking. No
security shall be required in connection with any Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything
contained herein to the contrary, the Company shall not be required hereby to
indemnify the Indemnitee with respect to any action, suit or proceeding that
was initiated by the Indemnitee unless (i) such action, suit or proceeding was
initiated by the Indemnitee to enforce any rights to indemnification arising
hereunder and such person shall have been formally adjudged to be entitled to
indemnity by reason hereof, (ii) authorized by another agreement to which the
Company is a party whether heretofore or hereafter entered or (iii) otherwise
ordered by the court in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) 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 Indemnitee, who shall
execute all papers 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.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee to
the extent the Indemnitee has actually received payment (under any insurance
policy, the Company's Regulations or otherwise) of the amounts otherwise
payable hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent
of the Company that the Indemnitee not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any action, suit
or proceeding to deny, or to recover from, the Indemnitee the benefits intended
to be provided to the Indemnitee hereunder, the Company irrevocably authorizes
the Indemnitee from time to time to retain counsel of his choice, at the
expense of the Company as hereafter provided, to represent the Indemnitee in
connection with the initiation or defense of any litigation or other legal
action, whether by or against the Company or any director, officer, shareholder
or
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other person affiliated with the Company, in any jurisdiction. Regardless of
the outcome thereof, the Company shall pay and be solely responsible for any
and all costs, charges and expenses, including, without limitation, fees and
expenses of attorneys and others, reasonably incurred by the Indemnitee
pursuant to this Section 7.
8. MERGER OR CONSOLIDATION. In the event that the Company
shall be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
acquiring corporation therein, shall require as a condition thereto that the
surviving, resulting or acquiring corporation agree to assume all of the
obligations of the Company hereunder and to indemnify the Indemnitee to the
full extent provided herein. Regardless of whether the Company is the
resulting, surviving or acquiring corporation in any such transaction, the
Indemnitee shall also stand in the same position under this Agreement with
respect to the resulting, surviving or acquiring corporation as he would have
with respect to the Company if its separate existence had continued.
9. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to
indemnification provided by this Agreement shall not be exclusive of any other
rights of indemnification to which the Indemnitee may be entitled under the
Articles, the Regulations, the ORC or any other statute, any insurance policy,
agreement or vote of shareholders or directors or otherwise, as to any actions
or failures to act by the Indemnitee, and shall continue after he has ceased to
be a Director, officer, employee or agent of the Company or other entity for
which his service gives rise to a right hereunder, and shall inure to the
benefit of his heirs, executors and administrators.
(b) If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
11. MODIFICATION. This Agreement and the rights and duties
of the Indemnitee and the Company hereunder may be modified only by an
instrument in writing signed by both parties hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE GORMAN-RUPP COMPANY
By____________________________
______________________________
("Indemnitee")
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Exhibit 1
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INDEMNIFICATION STATEMENT
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STATE OF _______________)
) SS:
COUNTY OF ______________)
I, _______________, being first duly sworn, do depose and say as
follows:
1. This Indemnification Statement is submitted pursuant to
the Indemnification Agreement, dated ________, 19__, between The Gorman-Rupp
Company (the "Company"), an Ohio corporation, and the undersigned.
2. I am requesting indemnification against costs, charges,
expenses (which may include fees and expenses of attorneys and/or others),
judgments, fines and amounts paid in settlement (collectively, "Liabilities"),
which have been actually and reasonably incurred by me in connection with a
claim referred to in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim,
I am entitled to be indemnified as herein contemplated pursuant to the
aforesaid Indemnification Agreement.
4. Without limiting any other rights which I have or may
have, I am requesting indemnification against Liabilities which have or may
arise out of ________________________________________________________________
_____________________________________________________________________________
______________________________________.
______________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this _____ day of _________, 19__.
______________________________
[Seal]
My commission expires the _____ day of __________, 19__.
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Exhibit 2
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UNDERTAKING
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STATE OF _______________)
) SS:
COUNTY OF ______________)
I, ________________, being first duly sworn, do depose and say
as follows:
1. This Undertaking is submitted pursuant to the Indem-
nification Agreement, dated _______, 19__, between The Gorman-Rupp Company, an
Ohio corporation (the "Company") and the undersigned.
2. I am requesting payment of costs, charges and expenses
which I have reasonably incurred or will reasonably incur in defending an
action, suit or proceeding, referred to in Section 2(a) or 2(b) or any claim
referred to in Section 3, or pursuant to Section 7, of the aforesaid
Indemnification Agreement.
3. The costs, charges and expenses for which payment is
requested are, in general, all expenses related to _________________________
_______________________________________________________________________________.
4. Part A
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I hereby undertake to (a) repay all amounts paid pursuant
hereto if it is proved by clear and convincing evidence in a court of competent
jurisdiction that my action or failure to act which is the subject of the
matter described herein involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
______________________________
(Signature of Indemnitee)
4. Part B
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I hereby undertake to repay all amounts paid pursuant hereto if
it ultimately is determined that I am not entitled to be indemnified by the
Company under the aforesaid Indemnification Agreement or otherwise.
______________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this _____ day of _________, 19__.
_____________________________
[Seal]
My commission expires the ____ day of ___________, 19__.