Exhibit 10.1





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.


 


 









 





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.




 


 









 











	 	(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.




 


 









 











	 	(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.


 


 









 





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;




 


 









 











	 	(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.


 


 









 





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;




 


 









 











	 	(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




 


 









 





	 	(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;




 


 









 





	 	(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.




 


 









 





	 	(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:


 


 









 






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.


 


 









 





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.


 


 









 





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