Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered
into to be effective as of March 1, 2010, (the “Effective Date”), between
PEERLESS MFG. CO. (“Employer”), and PETER J. BURLAGE (“Employee”). This
Agreement amends and restates that certain Employment Agreement by and between
the Employers and the Employee dated March 21, 2007. The Agreement supersedes
and replaces that March 21, 2007 Employment Agreement.
Section 1. Employment.
1.1 Employment and Term. Subject to the terms and conditions of this Agreement,
Employer agrees to employ Employee as the Chief Executive Officer of the
Employer pursuant to this Agreement for a term beginning on the Effective Date
and ending on February 28, 2013, (the “Term”) unless Employee’s employment is
terminated earlier as provided in Section 4 below. The Term will be
automatically extended for an additional one year period unless either Party
gives notice to the other of its intent not to extend the Term no later than
90 days prior to March 1, 2013. If Employer provides notice to Employee in
accordance with this Section 1.1 that Employer does not intend to renew this
Agreement and/or enter into a new employment agreement with Employee, Employer
agrees that Employee will be entitled to receive, upon the expiration of the
Term, a lump sum payment in an amount equal 100% of Employee’s then current base
salary in effect on the date such non-renewal notice is sent to Employee.
Notwithstanding the foregoing, in no event will the term of Employee’s
employment hereunder be less than 90 days from the Effective Date. Sections 2,
3, and 5 of this Agreement shall survive any termination of Employee’s
employment with Employer.
1.2 Duties. At all times during the course of Employee’s employment with
Employer, Employee agrees to perform the duties associated with his position
diligently and to devote all of his business time, attention and efforts to the
business of Employer. Employee agrees to comply with the policies, procedures
and guidelines established by Employer from time to time. Employee agrees to
perform his duties faithfully and loyally and to the best of his abilities, and
shall use his best efforts to promote the business of Employer. Employee
understands and agrees that both the business and personal standards and ethics
of Employer’s employees must at all times be above reproach. Employee agrees to
act at all times so as to reflect this high standard. Employee further agrees to
abide by all rules, policies, or procedures established by Employer from time to
time. Employee may serve on the board of directors of non-profit or charitable
organizations without the prior approval of the Board of Directors so long as
Employee continues to meet his obligations to Employer as set forth in this
Agreement. Subject to the prior approval of the Board of Directors, which shall
not be unreasonably withheld, Employee may serve on boards of directors or
similar management bodies of other businesses or entities provided that such
service does not violate the provisions of Section 3 and 4 below and does not
materially affect Employee’s time and attention to his duties under this
Agreement.

 

 

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1.3 Compensation. During Employee’s employment, Employer will pay Employee a
base annualized salary of Three Hundred Fifty Thousand Dollars ($350,000.00)
(“Base Salary”), less all applicable withholding as required by law and/or
voluntarily elected by Employee, to be paid in installments in accordance with
Employer’s standard payroll practice and schedule. The Board of Directors may
adjust the Employee’s annualized salary from time to time at its sole
discretion, but Employee’s annualized salary shall not be reduced below
$350,000.00 without his consent. Employer will provide Employee with Employee
benefits generally made available by Employer to other similarly situated
employees, as per Employer policy. During Employee’s employment, Employer shall
reimburse Employee for all reasonable and necessary expenses incurred by
Employee in furtherance in Employer’s business interests upon appropriate
documentation of such expenditures in accordance with Employer’s general policy.
Section 2. Non-Competition.
2.1 Non Competition.

  (a)   In consideration of his employment under this Agreement and Employer’s
agreement to provide Employee with Confidential Information under Section 3
below, Employee agrees that during the term of his employment and for a period
of two (2) years following termination of his employment (regardless of whether
Employee is terminated without Cause (as defined in Section 4.1(c) below), for
Cause, voluntarily resigns or otherwise), neither Employee nor any person or
entity directly or indirectly controlling, controlled by or under common control
with Employee, shall directly or indirectly, on his own behalf or as an employee
or other agent of or an investor in another person:

  (i)   engage in any business conducted by Employer during Employee’s term of
employment with Employer (collectively, the “Business”);     (ii)   use or
disclose any Confidential Information of Employer (as defined in Section 3.1),
including but not limited to, salary and bonus information and data, customer
contracts and customer lists;     (iii)   influence or attempt to influence any
customer or supplier of Employer or any affiliate of Employer to purchase goods
or services related to the Business from any person other than Employer or such
affiliate; or     (iv)   employ or attempt to employ any individuals who are
then or have been employees of Employer or any affiliate of Employer during the
preceding 12 months, or influence or seek to influence any such employees to
leave Employer’s or such affiliate’s employment.

  (b)   Employee specifically acknowledges that Employer’s products are sold in
a world market and that Employee has been engaged with regard to Employer’s
products and Employer’s customers throughout the world without geographic
limitation, and accordingly that the restrictive covenant regarding competition
contained in this Section 2.1 shall apply without geographic limitation.

 

 

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  (c)   Employee acknowledges that his obligations under this Section 2.1 are a
material inducement and condition to Employer’s entering into this Agreement and
a material inducement and condition to Employee receiving or having access to
Confidential Information (as defined in Section 3.1). Employee acknowledges and
agrees that the terms and provisions of this Agreement (including the severance
provisions of Section 4.1) and Employee’s receipt and access to Confidential
Information are sufficient consideration for the restrictions set forth in this
Section 2.1. Employee acknowledges and agrees further that such restrictions are
reasonable as to time, geographic area and scope of activity and do not impose a
greater restraint than is necessary to protect the goodwill and other business
interests of Employer, and Employee agrees that Employer is justified in
believing the foregoing.     (d)   If any provision of this Section 2.1 should
be found by any court of competent jurisdiction to be unenforceable by reason of
its being too broad as to the period of time, territory, and/or scope, then, and
in that event, such provision shall nevertheless remain valid and fully
effective, but shall be considered to be amended so that the period of time,
territory, and/or scope set forth shall be changed to be the maximum period of
time, the largest territory, and/or the broadest scope, as the case may be,
which would be found enforceable by such court     (e)   Employee acknowledges
that Employee’s violation or attempted violation of this Section 2.1 will cause
irreparable damage to Employer or its affiliates, and Employee therefore agrees
that Employer shall be entitled as a matter of right to an injunction, out of
any court of competent jurisdiction, restraining any violation or further
violation of such agreements by Employee or others acting on his behalf.
Employer’s right to injunctive relief will be cumulative and in addition to any
other remedies provided by law or equity.     (f)   Employee shall not be
subject to the provisions of this Section 2 if Employer fails to pay any
uncontested amounts due to Employee under Section 4 and such failure is not
cured within thirty (30) days after written notice to Employer.

Section 3. Confidentiality; Nondisparagement; Conflict of Interest.
3.1 Confidentiality.

  (a)   In the course of his employment with Employer, Employer shall provide
Employee with access to commercially valuable, confidential or proprietary
information of the Employer (“Confidential Information”). Confidential
Information means all information, whether oral or written, previously or
hereafter developed, acquired or used by Employer and relating to the business
of Employer that is not generally known to the public or others in Employer’s
area of business, including without limitation (i) any trade secrets, work
product, processes, analyses or know-how of Employer; (ii) Employer’s
advertising, product development, strategic and business plans and information,
including customer and prospect lists; (iii) the prices at which Employer has
sold or offered to sell its products or services; and (iv) Employer’s internal
financial statements, budgets, cost information, pricing information and other
financial information.

 

 

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  (b)   Employee acknowledges and agrees that the Confidential Information is
and shall be the sole and exclusive property of Employer. Employee shall not use
any Confidential Information for his own benefit or disclose any Confidential
Information to any third party (except in the course of performing his
authorized duties for Employer under this Agreement), either during or
subsequent to his employment with Employer.     (c)   Specifically, Employee
agrees that, except as expressly authorized in writing by Employer, or as may be
required by law or court order, Employee shall (i) not disclose Confidential
Information to any third party, (ii) not copy Confidential Information for any
reason, and (iii) not remove Confidential Information from Employer’s premises.
Upon termination of his employment with Employer, Employee shall promptly
deliver to the Employer all Confidential Information, including documents,
computer disks and other computer storage devices and other papers and materials
(including all copies thereof in whatever form) containing or incorporating any
Confidential Information or otherwise relating in any way to the Employer’s
business that are in his possession or under his control.     (d)   Employee
acknowledges that Employee’s violation or attempted violation of this
Section 3.1 will cause irreparable damage to Employer or its affiliates, and
Employee therefore agrees that Employer shall be entitled as a matter of right
to an injunction, out of any court of competent jurisdiction, restraining any
violation or further violation of such agreements by Employee or others acting
on his behalf. Employer’s right to injunctive relief will be cumulative and in
addition to any other remedies provided by law or equity.

3.2. Covenant of Nondisparagement. In consideration of this Agreement, Employee
agrees and promises that, during the term of and at all times after the
termination of this Agreement (regardless of whether Employee is terminated
without Cause, for Cause, voluntarily resigns or otherwise), not to make any
libelous, disparaging or otherwise injurious statements about or concerning
Employer or any of its affiliates, their officers, employees or representatives.
Such prohibited statements include any statement that is injurious to the
business or business reputation of any of Employer, its affiliates or their
employees or representatives, but does not include reasonable statements of
disagreement that Employee makes for the purpose of protecting or enforcing any
of his rights or interests hereunder or defending against any claim or claims of
Employer, so long as such statements are not slanderous or libelous and are
delivered in terms as would ordinarily be considered customary and appropriate.
3.3. Conflict of Interest. Employee agrees that during the term of this
Agreement without the prior approval of the Board of Directors of Employer,
Employee shall not engage, either directly or indirectly, in any activity which
may involve a conflict of interest with Employer or its affiliates (a “Conflict
of Interest”), including ownership in any supplier, contractor, subcontractor,
customer or other entity with which Employer does business (other than as a
shareholder of less than one percent of a publicly traded class of securities)
or accept any material payment, service, loan, gift, trip, entertainment or
other favor from a supplier, contractor, subcontractor, customer or other entity
with which Employer does business and that Employee shall promptly inform the
Board of Directors of Employer as to each offer received by Employee to engage
in any such activity. Employee further agrees to disclose to Employer any other
facts of which Employee becomes aware which might involve or give rise to a
Conflict of Interest or potential Conflict of Interest.

 

 

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Section 4. Termination.
4.1 Termination by Employer.

  (a)   Employer may terminate Employee’s employment without Cause upon no less
than 30 days prior notice of termination to Employee. In the event of any such
termination without Cause, on the effective date of such termination Employer
shall pay Employee as severance compensation, (i) a lump sum payment in an
amount equal to 100% of Employee’s then current base salary in effect
immediately prior to the termination without cause to be paid within 10 business
days of the date of termination and (ii) Employee’s earned incentive bonus for
the fiscal year in which Employee was terminated, which will be prorated in
accordance with Employee’s date of the termination and will be calculated and
paid to Employee following the end of the fiscal year when such incentive
bonuses are paid in the Employer’s ordinary course. Employer further agrees that
(a) any and all granted stock options, restricted stock or similar stock
incentive instruments previously granted to Employee that are not yet vested as
of the date of the termination without cause will be accelerated and will be
deemed vested within 10 days of such termination, and (b) for period of
18 months, it will provide Employee with benefits substantially similar to those
which Employee was entitled to receive immediately prior to the date of
termination under all of the Employer’s “employee welfare benefit plans” within
the meaning of Section 3(1) of The Employee Retirement Income Security Act of
1974, as amended. In the event of any such termination without Cause, except as
aforesaid, Employer shall have no other obligations to pay any base salary,
incentive compensation or bonus or provide for any benefits to Employee after
the effective date of such termination.     (b)   Employer may discharge
Employee for Cause at any time without prior notice. In the event of any such
termination for Cause, Employer’s obligations to pay any base salary, incentive
compensation or bonus or provide for any benefits to Employee shall terminate
immediately upon the effective date of such termination.     (c)   As used
herein, “Cause” shall mean any of the following:

  (i)   the conviction of Employee by a court of competent jurisdiction of any
felony or crime involving moral turpitude;     (ii)   the commission by Employee
of an act of fraud or other act reflecting unfavorably upon the public image of
Employer as reasonably determined by Employer’s Board of Directors;     (iii)  
the failure by Employee to substantially perform his duties hereunder to the
satisfaction of the Board of Directors, which the Employee fails to cure to the
satisfaction of the Board of Directors within 30 days after receiving written
notice thereof;

 

 

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  (iv)   the wrongdoing by Employee resulting in injury to Employer, as
reasonably determined by Employer’s Board of Directors;     (v)   the failure by
Employee to follow a directive of the Board of Directors of Employer not
inconsistent with the provisions of this Agreement; or     (vi)   violation of
any policies or procedures of Employer, including without limitation, any
material human relations policy or the violation of Sections 2 or 3 of this
Agreement.

4.2 Termination by Employee. Employee may resign from Employee’s employment
hereunder (whether for voluntary retirement or otherwise) upon no less than
30 days prior notice of resignation to Employer, unless such prior notice is
otherwise waived by Employer in its absolute and sole discretion. The effective
date of Employee’s resignation shall be as stated in Employee’s notice of
resignation or at the sole option of Employer, such earlier date as determined
by Employer in its sole discretion. If Employee voluntarily resigns from his
employment with Employer during the term hereof (whether for voluntary
retirement or otherwise), Employer’s obligations to pay any base salary,
incentive compensation or bonus or provide for any benefits shall terminate
immediately upon the effective date of such resignation. Upon retirement,
Employee shall be entitled to all benefits (if any) provided by Employer in the
ordinary course to other employee officers of Employer at comparable retirement
age.
4.3 Termination on Death of Employee. This Agreement shall terminate
automatically upon the death of Employee and all rights of Employee, his heirs,
executors and administrators to salary, bonus, incentive compensation or
benefits shall terminate immediately, except as otherwise provided in Employer’s
benefit plans in effect at such time.
4.4 Termination by Disability. Employer may terminate Employee’s employment
hereunder upon Employee becoming Disabled (as defined below). Upon such
termination, Employer shall pay Employee an amount equal to his then current
monthly base salary for a period of six months, which payment amounts will be
reduced by any disability payments Employee receives during such period from the
disability insurance provided through Employer, if any. Employee shall be
entitled to all other disability benefits then in effect (if any) provided by
Employer to all other employee officers of Employer. In the event of termination
due to Employee being Disabled, except as aforesaid, Employer shall have no
other obligation to pay any base salary, incentive compensation or bonus or
provide for any benefits to Employee after the effective date of termination.
For purposes of this Agreement, “Disabled” means any mental or physical
impairment lasting (or that will last) more than 180 consecutive or
non-consecutive calendar days that prevents Employee from performing the
essential functions of his position with or without reasonable accommodation as
determined by a competent physician chosen by Employer and consented to by
Employee or his legal representatives, which consent will not be unreasonably
withheld or delayed. Employee agrees to submit to appropriate medical
examinations and authorize his physicians to release medical information
necessary to determine whether Employee is Disabled for purposes of this
Agreement.

 

 

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Section 5. Termination Following a Change in Control
5.1 Definitions. For Purposes of this Section 5, the following definitions
apply.

  (a)   Acquiring Person. An “Acquiring Person” shall mean any person that,
together with all Affiliates and Associates of such person, is or becomes the
beneficial owner of 50.1% or more of the outstanding Common Stock of Employer.
The term “Acquiring Person” shall not include the Employer, any subsidiary of
the Employer, any parent or holding company of Employer, whether now existing or
newly created as approved by the majority of the Continuing Directors, any
employee benefit plan of the Employer (or trust with respect thereto) or
subsidiary of the Employer, or any person holding Common Stock of the Employer
for or pursuant to the terms of any such plan.     (b)   Affiliate and
Associate. “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in effect
on the date of this Agreement.     (c)   Cause. For “Cause” shall have the
meaning set forth in Section 4.1(c) above.     (d)   Change in Control. A
“Change in Control” of the Employer shall have occurred if at any time during
the term of this Agreement any of the following events shall occur:

  (i)   The Employer is merged, consolidated or reorganized into or with another
corporation or other legal person and as a result of such merger, consolidation
or reorganization less than 50.1% of the combined voting power to elect
Directors of the then outstanding securities of the remaining corporation or
legal person or its ultimate parent immediately after such transaction is
available to be received by all stockholders on a pro rata basis and is actually
received in respect of or exchange for voting securities of the Employer
pursuant to such transaction;     (ii)   The Employer sells or transfers all or
substantially all of its assets to any other corporation or other legal person
not controlled by or under common control with the Employer;     (iii)   Any
person or group (including any “person” as such term is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act has become the beneficial owner (as the
term “beneficial owner” is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities which when added to
any securities already owned by such person would represent in the aggregate
50.1% or more of the then outstanding securities of the Employer which are
entitled to vote to elect Directors; provided that Employee acknowledges and
agrees that Brown Advisory Holdings, Inc. (“Brown Advisory”) will not be deemed
to beneficially own more than 50.1% of the securities of Employer and the
holdings of Employer by Brown Advisory will not be deemed a Change in Control of
the Company except as determined by the Continuing Directors in its sole
discretion;

 

 

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  (iv)   If at any time, the Continuing Directors then serving on the Board
cease for any reason to constitute at least a majority thereof;     (v)   Any
occurrence that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A or any successor rule or regulation promulgated
under the Exchange Act; or     (vi)   Such other events that cause a change in
control of the Employer, as determined by the Board in its sole discretion;
provided, however, a Change in Control of the Employer shall not be deemed to
have occurred as the result of any transaction having one or more of the
foregoing effects if such transaction is both (1) proposed by and (2) includes a
significant equity participation of, executive officers of the Employer as
constituted immediately prior to the occurrence of such transaction of any
Employer employee stock ownership plan or pension plan.

  (e)   Code. The “Code” shall mean the Internal Revenue Code of 1986, as
amended.     (f)   Continuing Director. A “Continuing Director” shall mean a
Director of the Employer who (i) is not an Acquiring Person, an Affiliate or
Associate, a representative of an Acquiring Person or nominated for election by
an Acquiring Person, and (ii) was either a member of the Board of Directors of
the Employer on the date of this Agreement or subsequently became a Director of
the Employer and whose initial election or initial nomination for election by
the Employer’s stockholders was approved by a majority of the Continuing
Directors then on the Board of Directors of the Employer.     (g)   Employer.
“Employer” shall mean Peerless Mfg. Co. and/or its parent company, PMFG, Inc.  
  (h)   Disabled. “Disabled” shall have the meaning defined in Section 4.4
above.     (i)   Severance Compensation. The “Severance Compensation” shall be:

  (i)   A lump sum amount equal to 200% of an amount calculated by adding the
Employee’s then current annualized salary, plus any earned incentive bonus paid
in the fiscal year preceding the Termination Date.     (ii)   For a period of
18 months, provide Employee with benefits substantially similar to those which
Employee was entitled to receive immediately prior to the date of termination
under all of the Employer’s “employee welfare benefit plans” within the meaning
of Section 3(1) of The Employee Retirement Income Security Act of 1974, as
amended;     (iii)   Employer agrees that any and all granted stock options,
restricted stock or similar stock incentive instruments previously granted to
Employee that are not yet vested as of the Termination Date will be accelerated
and will be deemed vested within 10 days of the Termination Date; and

 

 

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  (iv)   The Gross-Up Payment, as set forth in Section 5.2(c).

  (j)   Termination Date. The “Termination Date” shall be the effective date
upon which Employee or the Employer terminates the employment of Employee with
the Employer, as set forth in Section 5.2, within one year following a Change in
Control.

5.2. Rights of Employee Upon Change in Control and Subsequent Termination.

  (a)   The Employer shall provide Employee, within ten days following the
Termination Date, Severance Compensation, but without affecting the rights of
Employee or the Employer at law or in equity, if, within one year following the
occurrence of a Change in Control, any of the following two events shall occur:

  (1)   the Employer terminates Employee’s employment during the Employment Term
except for any of the following reasons:

  (i)   Employee dies;     (ii)   Employee becomes Disabled; or     (iii)   The
Employer terminates the Employee for Cause; or

  (2)   Employee terminates his employment after such Change in Control and the
occurrence of at least one of the following events:

  (i)   an adverse change in the positions held by Employee or an adverse change
in the nature or scope of the authorities, functions or duties attached to the
positions with the Employer that Employee had immediately prior to the Change in
Control, any reduction in Employee’s base salary (excluding bonus and incentive
compensation) during the Employment Term or any adverse change in the
calculation of the annual bonus or incentive compensation or a significant
reduction in scope or value of the aggregate other monetary or nonmonetary
benefits to which Employee was entitled from the Employer immediately prior to
the Change in Control, any of which is not remedied within ten calendar days
after receipt by the Employer of written notice from Employee of such change,
reduction, alteration or termination, as the case may be;     (ii)   a
determination by Employee made in good faith that as a result of a Change in
Control and a change in circumstances thereafter significantly affecting his
position, changes in the composition or policies of the Board, or of other
events of material effect, he has been rendered substantially unable to carry
out, or has been substantially hindered in the performance of, the authorities,
functions or duties attached to his position immediately prior to the Change in
Control, which situation is not remedied within ten calendar days after receipt
by the Employer of written notice from Employee of such determination;

 

 

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  (iii)   the relocation of the Employer’s principal executive offices, or the
requirement by the Employer that Employee have as his principal location of work
any location not within the greater Dallas, Texas metropolitan area or that he
travel away from his office in the course of discharging his duties hereunder
significantly more (in terms of either consecutive days or aggregate days in any
calendar year) than required of him prior to the Change in Control; or     (iv)
  the Employer commits any breach of this Agreement, which is not cured within
ten calendar days after receipt by the Employer of written notice from Employee
of such breach.

  (b)   Upon written notice given by Employee to the Employer prior to the
receipt of Severance Compensation, Employee, at his sole option, may elect to
have all or any part of any such amount paid to him, without interest, on an
installment basis selected by him.     (c)   In the event that any payment,
benefit or distribution by or on behalf of the Employer to or for the benefit of
the Employee made in connection with a termination following a Change in Control
as set forth in this Section 5.2 (whether paid or payable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section) (the “Total Payments”) is determined to be
an “excess parachute payment” pursuant to Section 280G of the Code, with the
effect that the Employee is liable for the payment of the excise tax described
in Section 4999 of the Code (the “Excise Tax”), then the Employer shall pay to
the Employee an additional amount (the “Gross-Up Payment”) such that the net
amount retained by the Employee, after deduction of the Excise Tax on the Total
Payments and any federal, state and local income and employment taxes on the
Gross-Up Payment, shall be equal to the Total Payments. A public accounting firm
selected by the Employer shall, at the Employer’s expense, determine whether an
“excess parachute payment” will be made to the Employee, and if so, the amount
of the Gross-Up Payment. The Employer will pay the Gross-Up Payment as soon as
practicable following the public accounting firm’s determination of the Gross-Up
Payment, but no later than the last day of the calendar year that begins after
the Change in Control. In the event the Internal Revenue Service (“IRS”)
determines that the Excise Tax due is less than the Excise Tax on which the
Gross-Up Payment is based, the Employee shall repay the Employer, at the time
the IRS’s determination of the Excise Tax, the portion of the Gross-Up Payment
attributable to the higher Excise Tax, plus interest on the amount of such
repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined by the IRS to exceed the amount
taken into account hereunder in calculating the Gross-Up Payment (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Employer shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by Employee with respect to such excess) within sixty
(60) days following such determination. The Employee and Employer shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Total Payments. The Employer shall pay all fees and
expenses relating to such proceedings.

 

 

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  (d)   The payment of Severance Compensation by the Employer to Employee shall
not affect any rights and benefits which Employee may have pursuant to any other
agreement, policy, plan, program or arrangement with the Employer prior to the
Termination Date, which rights shall be governed by the terms thereof, except
that payments hereunder after termination under this Section 5 shall reduce by
an equal amount any sums payable after termination of employment under
Section 4.1(a) above, as may be amended, restated or modified.     (e)   If any
of the events set forth in Section 5.2(a)(1) or 5.2(a)(2) occurs prior to a
Change in Control but following the commencement of any discussion authorized by
the Board with a third person that ultimately results in a Change in Control
involving that person or a different third party, such event shall be deemed to
be a termination or removal of Employee after a Change in Control for purposes
of this Agreement and shall entitle Employee to all benefits under this
Agreement.

5.3 No Mitigation Required. In the event that this Agreement or the employment
of Employee hereunder is terminated, Employee shall not be obligated to mitigate
his damages nor the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, and the acceptance of employment
elsewhere after termination shall in no way reduce the amount of Severance
Compensation payable under this Section 5.
Section 6. Miscellaneous.
6.1 Section 409A. For purposes of Section 4 or 5, whether a “termination of
employment” has occurred shall be determined as set forth in Proposed Regulation
§1.409A-3(h)(1) or any successor regulations. Notwithstanding the foregoing
provisions of this Section 4 or 5, as of the date of termination of employment,
Employee is a “specified employee” as such term is defined under Section 409A of
the Internal Revenue Code of 1986 (the “Code”) (or any regulations or proposed
regulations promulgated thereunder) and each payment that would have been due to
be made to employee during the first six (6) months after such termination shall
be delayed to the extent required and all such delayed payments shall be made in
a single lump sum on the first business day after the six month anniversary of
such termination unless an exception to such delay is otherwise applicable under
the Code or regulations thereunder.
6.2 Notice. Except as set forth below in this Section 5.1, any notice under this
Agreement must be in writing and shall be deemed to have been given when
delivered personally or by overnight courier service or three days after being
sent by mail, postage prepaid, at the address indicated below or to such changed
address as such person may subsequently give such notice of:

 

 

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if to Employer:
Peerless Mfg. Co.
14651 N. Dallas Parkway, Suite 500
Dallas, Texas 75229
Attn: Chairman, Board of Directors
if to Employee:
Peter J. Burlage
5704 Danmire Court
Plano, Texas 75093
With a copy to:
James T. Drakeley, Esq.
Hiersche, Hayward, Drakeley & Urbach, P.C.
15303 Dallas Parkway, Suite 700
Addison, Texas 75001
Notwithstanding the foregoing, the party receiving notice may waive any
provisions of this Section 6.2 in its sole and absolute discretion.
6.3 Assignment. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, personal representatives,
successors, and assigns. Except as otherwise provided herein, this Agreement may
not be assigned by any party hereto without the prior written consent of the
other party hereto. Employer shall require any successor, and any corporation or
other person which is in control of such successor, to all or substantially all
of the business and/or assets of Employer (by purchase, merger, consolidation or
otherwise), by agreement in form and substance reasonably satisfactory to
Employee, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Employer would be required to perform it if
no such succession had taken place. Failure of Employer to obtain such agreement
prior to the effectiveness of any such succession shall be a material breach of
this Agreement by Employer. As used in this Agreement, “Employer” shall mean
Employer as herein before defined and any successor to its business and/or all
or part of its assets as aforesaid which executes and delivers the assumption
agreement provided for in this Section 6.3 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
6.4 Headings. The section headings used herein are for reference and convenience
only and shall not enter into the interpretation hereof.
6.5 Counterparts. This Agreement may be executed in one or more counterparts for
the convenience of the parties hereto, all of which together shall constitute
one and the same instrument.
6.6 Amendment and Waiver. The provisions of this Agreement may be amended or
waived only by written agreement of Employer and Employee, and no course of
conduct, failure or delay in enforcing the provisions of this Agreement shall
effect the validity, binding effect or enforceability of this Agreement.

 

 

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6.7 Severability. Any provision or portion of a provision of this Agreement that
is held to be invalid or unenforceable will be severable, and this Agreement
will be construed and enforced as if such provision, or portion thereof, did not
comprise a part hereof, and the remaining provisions or portions of provisions
will remain in full force and effect. In lieu of each invalid or unenforceable
provision there will be added automatically as part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be legal, valid, and enforceable.
6.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to any
conflicts of law rule or principle that might require the application of the
laws of another jurisdiction.
6.9 Expenses. Employer will reimburse Employee for reasonable legal fees and
expenses incurred by Employee in the preparation of and negotiation of this
Agreement, subject to review and approval by the Chair of the Employer’s
Compensation Committee.
6.10 Indemnification. Employee shall be subject to, and entitled to the benefit
of, the indemnification provisions contained in the Employer’s Articles of
Incorporation and Bylaws, as amended, to the same extent and degree as other
similarly situated officers and/or directors of Employer.
6.11 Disputes. The parties to this Agreement agree that in the event there is a
dispute or controversy between them that cannot be settled through direct
discussions, it is in the best interests of all for such dispute or controversy
to be resolved in the shortest time and with the lowest cost of resolution as
practicable. Consequently, any such dispute, controversy or claim between the
parties to this Agreement will not be litigated, but instead will be resolved by
arbitration in accordance with Title 9 of the U.S. Code (United States
Arbitration Act) and the Commercial Arbitration Rules of the American
Arbitration Association (the “Rules”), and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitration will be before one neutral arbitrator and will proceed under the
Expedited Procedures of said Rules. The arbitration will be held in Dallas,
Texas, or such other place as may be selected by mutual agreement. The
arbitrator will have the discretion to order a prehearing exchange of
information by the parties, and to set limits for both the scope and time period
of such exchange. All issues regarding exchange requests will be decided by the
arbitrator. Neither party nor the arbitrator may disclose the existence, content
or results of any arbitration hereunder, unless required to do so by court or
regulatory order, without the prior written consent of both parties.
Administrative fees and expenses of the arbitration itself will be borne by the
parties equally unless otherwise required by law, a court of competent
jurisdiction or the Rules; provided, that, in no event will Employee be required
to pay in excess of $1,000 of such fees and expenses. The arbitrator will also
be authorized to award to the prevailing party all or that fraction of its
reasonable costs and fees as is deemed equitable. Costs of a party’s
representation by counsel or preparation costs for hearing are not considered
administrative fees and expenses for purposes hereof. This provision will not
apply to any claim for injunctive relief sought by the Employer or any of its
affiliates under Section 2 or 3 of this Agreement.

 

 

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6.12 Entire Agreement. This Agreement embodies the complete agreement between
Employer and Employee regarding the subject matter hereof and supersedes all
prior agreements or understandings, whether oral, written or otherwise, between
the parties hereto that may have related in any way to the subject matter
hereof.
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            EMPLOYER:

PEERLESS MFG. CO.
            Sherrill Stone,      Chairman of the Board of PMFG, Inc.       
EMPLOYEE:
            Peter J. Burlage