Document:

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                                                                   Exhibit 10.26

                                FIRST AMENDMENT
                                      TO
                 CADMUS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                     (As Restated Effective July 1, 1992)
                     ------------------------------------

    Pursuant to due corporate action, Cadmus Communications Corporations, as the
Plan Sponsor of the Cadmus Supplemental Executive Retirement Plan (As Restated
Effective July 1, 1992) (the "Plan"), hereby amends the Plan, effective March 1,
1999:

1.  The following new paragraph 8.10 is added to the Plan:

    8.10   Cashout of Accrued Benefits.  Notwithstanding the usual time and form
           ---------------------------
of payment of Accrued Benefits provided in subparagraphs 8.1 and 8.2, the
actuarial value of the Accrued Benefit of John Mullis shall be paid in a lump
sum in cash as soon as practical after the sale of the financial printing assets
of Washburn Graphics, Inc. to R. R. Donnelley & Sons Company in March, 1999 and
the termination of Mullis' employment with the Employer as a result of such
sale.  Actuarial value for this purposes shall be determined on the basis of the
discount rate (which is 7.25%) and any other applicable factors used to
determine accumulated benefit obligations and net pension cost with respect to
the Plan in the Plan Sponsor's audited financial statements for its fiscal year
ended June 30, 1998.

    IN WITNESS WHEREOF, the Plan Sponsor of the Plan has caused its name to be
signed and its seal to be affixed hereunto as of the      day of June, 1999.

                                         CADMUS COMMUNICATIONS CORPORATION,
                                          Plan Sponsor

                                         By_____________________________________

                                          Its___________________________________

Attest:

_______________________________

Its____________________________<PAGE>

                                                                   Exhibit 10.27

                       CADMUS COMMUNICATIONS CORPORATION
              1997 Non-Employee Director Stock Compensation Plan
                     (Amended Effective February 17, 2000)

                            Plan Summary Supplement

                           ________________________

                      This document constitutes part of a
                      prospectus covering securities that
                        have been registered under the
                            Securities Act of 1933
                           ________________________

     This document contains information that supplements the Plan Summary, dated
February 18, 1998, related to the Company's 1997 Non-Employee Director Stock
Compensation Plan (the "1997 Plan").  The Board of Directors of the Company
approved certain amendments to the 1997 Plan as described below on February 17,
2000.  This Supplement should be read in conjunction with the Plan Summary.

     General.  The 1997 Plan provided that Options were not transferable by a
Participant except by will or by the laws of descent and distribution.

     Amendment of 1997 Plan to Permit Transfers to Family Members.  Effective
February 17, 2000, the Board of Directors approved an amendment to the 1997 Plan
to permit limited transferability of Options to family members.  The following
is a summary of the amendment to the 1997 Plan.

     All or part of an Option may be transferred without consideration by gift
to a family member of the Participant.

     For purposes hereof, "family member" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Participant's household (other than a tenant or employee) or a trust
in which these persons have more than fifty percent of the beneficial interest.
However, no transfer of the Option in whole or in part by gift to a family
member shall be effective until the Company receives written notice of such
transfer in a form acceptable to it.

     During the Participant's lifetime, the Option may be exercised only by the
Participant or, where the Option has been transferred to a family member (as
defined above), the family member.

                                      -1-
<PAGE>

     A Participant or his or her permitted transferee will not have any rights
as a stockholder with respect to shares subject to an Option until the Option is
exercised.

     Federal Income Tax Consequences for Gifted Options.  The gift by a
Participant of an Option to a family member should not result in recognition of
income to the Participant for federal income tax purposes at the time of the
gift.  However, the exercise by a family member of an Option received as a gift
will result in recognition of ordinary income by the Participant (and not by the
family member) in the same amount as if the Participant had not transferred the
Option but had exercised it when the family member exercised it.  If the
Participant dies before the exercise by the family member, the Participant's
estate will be considered to recognize the ordinary income attributable to the
Option exercise and will be liable for the income tax attributable to any
exercise of the Option.

     Following exercise, the family member will have a tax basis in the acquired
Common Stock equal to the sum of the exercise price and the amount of ordinary
income recognized on the Option exercise (i.e., the same basis as the basis the
Participant would have if he had not transferred the Option but had exercised it
when the family member exercised it).

     Federal Gift Tax Consequences for Gifted Options.  The gift by a
Participant of an Option to a family member will be considered a gift for
federal gift tax purposes in an amount equal to the value of the Option the date
the gift is considered made for federal gift tax purposes.  A gift is considered
made for federal gift tax purposes when the donor has completely parted with all
"dominion and control" over the Option (or the portion transferred).  In the
case of the gift of an Option, that date is the date the gift is completed if
the Option is fully exercisable on that date.  If the Option is not exercisable
on the date of the transfer of the Option, it is not clear that a gift for
federal gift tax purposes is considered completed then.   The Internal Revenue
Service may take the view that the gift for federal gift tax purposes is not
considered made until the first date the Option is fully exercisable.

     A gift of Options may qualify as a gift of a present interest for purposes
of entitling the donor to come within the $10,000 annual gift tax exclusion.
Qualification for the $10,000 annual gift tax exclusion may require that the
Option be fully exercisable and contain no restrictions on the transferee's
right to current enjoyment of the Option.

     Because the income, gift and (although not discussed here) estate tax
consequences of gifting Options to family members is complex and because there
is no definitive guidance from the Internal Revenue Service with respect to
certain consequences, each Participant is urged to consult with his or her tax
advisor before making such a gift.

                                      -2-Exhibit 10.24

   MOBIUS MANAGEMENT SYSTEMS, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN AMENDMENT

              Pursuant  to Section 15 of the Mobius  Management  Systems,  Inc.
1998 Employee Stock Purchase Plan (the "Plan"),  and as approved by the Board of
Directors of Mobius Management  Systems,  Inc. (the "Company") and in accordance
with the  resolutions of the  stockholders  of the Company adopted on January 7,
2000, Section 4.1 of the Plan is amended to read as follows:

         4.1 The total  number of shares  of common  stock of the  Company,  par
         value  $.01  per  share  ("Common  Stock"),  which  may be  transferred
         pursuant  to the Plan  shall be  650,000  shares.  Such  shares  may be
         authorized  but unissued  Common Stock or authorized  and issued Common
         Stock held in the Company's treasury or acquired by the Company for the
         purpose of the Plan.  Shares  subject  to any lapsed or expired  option
         shall again become  available for transfer  pursuant to options granted
         or to be granted under the Plan.EXHIBIT 10(l)

                             EMPLOYMENT AGREEMENT

           THIS EMPLOYMENT  AGREEMENT is  made this  16th day  of May,  2000,
 between PEERLESS MFG. CO. ("Employer"), and ROY C. CUNY ("Employee").

                                  Employment

    1.1 Employment and Term.  Employer agrees to employ Employee as a  senior
 executive pursuant  to  this  Agreement from  the  date  hereof  until  such
 employment is terminated as provided herein.   This Agreement shall  survive
 any termination of Employee's employment.

    1.2 Duties.  Employee agrees  to devote his time, attention and  energies
 to perform the duties of the offices he holds as may be prescribed from time
 to time by  The Board  of Directors and/or  the Chief  Executive Officer  of
 Employer.

    1.3 Supervision.  Employee shall  perform the duties of employment  under
 the direction and supervision of Employer's Chief Executive Officer.

                               Non-Competition

    2.1 During  Term.   During  the  period  of  his  employment  under  this
 Agreement, Employee shall be employed only by Employer and shall not  engage
 in any activity in competition with Employer.

    2.2 After  Termination; Non-Competition.    Employee agrees  that  for  a
 period of one (1) year following  termination of employment, without  regard
 to the reason for termination, Employee  shall not, directly or  indirectly,
 compete with Employer or perform any services for a competitor of  Employer,
 including as an employee,  consultant, advisor, owner, partner,  participant
 in a  joint venture  or corporation,  or otherwise.   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 non-competition  agreement contained  in this  section
 shall apply without geographic limitation.
<PAGE>

                               Confidentiality

    3.1 Confidentiality.  All written material (including but not limited  to
 engineered designs,  formulas,  drawings,  studies,  reports,  calculations,
 product  designs,   product  specifications,   engineering   specifications,
 customer specifications, customers names and customer contacts) of any  type
 pertaining to  the  business  of  Employer  (the  "Material"),  the  use  or
 application of such Material, or other information with respect to customers
 of Employer,  is  confidential,  and the  sole  and  exclusive  property  of
 Employer without  regard  to authorship,  and  shall not  be  duplicated  or
 removed from  Employer's  office  except  as  required  in  connection  with
 performance of Employee's duties hereunder.  Upon termination of employment,
 Employee agrees  to  return  all  such Material  and  all  copies  thereof
 (including electronic documents and copies)  to Employer and Employee  shall
 not retain  any  copies (including  electronic  copies) thereof.    Employee
 further agrees that  the design and  application of  Employee's products  is
 confidential and that during  Employee's term of  employment and during  the
 non-competition period  following  termination  of  employment  pursuant  to
 Section 2 of  this Agreement,  not to  divulge any  confidential matters  or
 confidential written material to any person not subject to a confidentiality
 agreement with Employer, except as may be legally required or required by  a
 customer of Employer  in connection with  the customer's  use of  Employer's
 products.

                                 Termination

    4.1     Termination by Employer.

        (a) Employer may  terminate Employee's  employment hereunder  without
 cause or  reason with  thirty (30)  days written  notice of  termination  to
 Employee.   Employer  and Employee  agree  that in  the  event of  any  such
 termination, both  parties  will  use  reasonable  efforts  to  determine  a
 mutually acceptable continuing relationship  (e.g., retention as an  outside
 consultant).

        (b) If a mutually acceptable alternative agreement cannot be  reached
 within  sixty  (60)  days  after  termination,  Employee  shall  receive  as
 severance compensation for a period of one (1) year following termination, a
 lump sum annual payment in an amount equal  to 90% of his then current  base
 salary, plus dividends payable under share grants pursuant to the Employer's
 Stock Grant Plan, and the full range of Employer benefits.

    4.2 Termination  by   Employee.    Employee   may  terminate   Employee's
 employment hereunder upon thirty (30) days written notice to Employer.

    4.3 Termination on Death  of Employee.   This Employment Agreement  shall
 terminate upon the death of Employee.

    4.4 Termination by Disability.   Employment may terminate as a result  of
 Employee becoming permanently disabled,  mentally or physically, and  unable
 to perform the duties hereunder.   Employee shall be  paid a minimum of  six
 (6) months salary plus all other existing Employer disability benefits  upon
 such termination.  Employee and Employer agree to binding arbitration in the
 event of disagreements regarding the meaning or intent of this clause.
<PAGE>

    4.5 Termination by Retirement.  Retirement of Employee is anticipated  at
 age 65.  Retirement prior to  age 65 may occur at  the option of Employee.
 Retirement after  age 65  will be  at  the annual  option  of the  Board  of
 Directors.  Retirement benefits shall be all normal benefits provided by the
 Company.   Severance  benefits defined  by  Section  4.1(b) are  not  to  be
 interpreted as retirement benefits.

                                Miscellaneous

    5.1 This  Agreement and  that certain  Agreement  of even  date  herewith
 between Employer and Employee regarding certain agreements effective upon  a
 change-in-control (as  defined therein)  are the  only agreements  in  force
 between Employer and Employee  regarding the subject  matter hereof and  the
 same supersede all prior agreements.

    5.2 This Agreement  may only be  amended by written  amendment signed  by
 Employer and Employee.

    5.3 This Agreement shall be governed by the laws of the State of Texas.

                                    PEERLESS MFG. CO.

                                    _______________________________________
                                    CHAIRMAN
                                    BOARD OF DIRECTORS
                                    BY ORDER OF THE BOARD OF DIRECTORS

                                    EMPLOYEE

                                    _______________________________________
                                    Roy C. Cuny

<PAGE>

                                  AGREEMENT

    THIS AGREEMENT (the "Agreement") is made and entered into as of the  16th
 day of May, 2000, by and between PEERLESS MFG. CO. (the "Company"), and  ROY
 C. CUNY (the "Executive").

    WHEREAS, the Executive serves as a senior executive of the Company;

    WHEREAS, the  Executive possesses knowledge of  the business and  affairs
 of the Company, its policies, methods,  personnel and plans for the  future;
 and

    WHEREAS, the Board of  Directors of the Company (the "Board")  recognizes
 that the Executive's contribution to the  growth and success of the  Company
 has been substantial and wishes to  offer an inducement to the Executive  to
 remain in the employ of the Company;

    NOW, THEREFORE, in consideration  of the foregoing and of the  respective
 covenants and agreements  of the  parties herein  contained, this  Agreement
 sets forth benefits which the Company will pay to Executive in the event  of
 termination  of  Executive's  employment,  except  as  a  result  of  death,
 disability, retirement or termination by the Company for Cause, following  a
 "Change in Control" of the Company (in each case as such terms or events are
 defined or discussed herein):

    1.  Term.  The  term of this Agreement  shall continue until the  earlier
 of (i) the expiration of the third anniversary of the occurrence of a Change
 in Control, (ii)  the Executive's death,  or (iii)  the Executive's  earlier
 voluntary retirement (except for those events described in Section 3(a)(2));
 provided, however, that on  each anniversary of the  Change in Control,  the
 period referenced in Section (i) above  shall automatically be extended  for
 an additional year  unless, not later  than 90 calendar  days prior to  such
 anniversay date,  the  Company  shall  have  given  written  notice  to  the
 Executive that it does not wish to have the term extended.

    2.  Definitions.

        (a) 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.

        (b) Cause.   For "Cause"  shall mean  that the  Executive shall  have
 committed:

            (i)      The conviction  of Executive,  by a  court of  competent
 jurisdiction, of any felony;

            (ii)     Commission by Executive of  an intentional material  act
 of fraud to his pecuniary  benefit in connection with  his duties or in  the
 course of his employment with the  Company, as reasonably determined by  the
 Board;
<PAGE>

            (iii)    The intentional and  continued failure  by Executive  to
 substantially perform his duties hereunder, or the intentional wrongdoing by
 Executive resulting in material injury to  the Company.  No act, or  failure
 to act, on the part of Executive shall be deemed "intentional" unless  done,
 or omitted to be done, by Executive not in good faith and without reasonable
 belief that his action or omission was in the best interests of the Company.

        (c) Change in Control.   A "Change in  Control" of the Company  shall
 have occurred if at any time  during the term of  this Agreement any of  the
 following events shall occur:

            (i)      The Company 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 Company pursuant to such transaction;

            (ii)     The Company sells all or substantially all of its assets
 to any other corporation  or other legal person  not controlled by or  under
 common control with the Company;

            (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%  or more  of the  then
 outstanding securities of the Company which  are entitled to vote  to  elect
 Directors;

            (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
 Company, as  determined  by the  Board  in its  sole  discretion;  provided,
 however, that a Change in Control of the Company 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  proposed  by,  and  includes  a
 significant equity participation  of, executive officers  of the Company  as
 constituted immediately prior to the occurrence  of such transaction or  any
 Company employee stock ownership plan or pension plan.

        (d) Code.  The "Code" shall  mean the Internal Revenue Code of  1986,
 as amended.
<PAGE>

        (e) Continuing  Director.   A  "Continuing  Director"  shall  mean  a
 Director of the Company 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 Company  on the  date of  this Agreement  or  subsequently
 became a  Director of  the Company  and whose  initial election  or  initial
 nomination for  election by  the Company's  stockholders was  approved by  a
 majority of the Continuing Directors then  on the Board of Directors of  the
 Company.

        (f)     Acquiring  Person:  An  "Acquiring  Person"  shall  mean  any
 person (as defined in  Section 2(d)(iii) of  this Agreement) that,  together
 with all Affiliates and Associates of  such person, is the beneficial  owner
 of 15% or more of the outstanding Common Stock.  The term "Acquiring Person"
 shall not include the Company, any  subsidiary of the Company, any  employee
 benefit plan of the Company or subsidiary of the Company, any person holding
 Common Stock for or  pursuant to the terms  of any such  plan, or Donald  A.
 Sillers, Jr. or members of his immediate family.

        (g) Employment Term.   The "Employment Term"  shall be the period  of
 employment under this Agreement commencing on  the day prior to a Change  in
 Control and continuing until the expiration of this Agreement.

        (h)  Severance Compensation.   The "Severance Compensation" shall be:

            (i)    A lump sum amount equal  to 299%  of  Executive's  average
 annual compensation reported on his Form W-2 paid by the Company  includable
 in gross income during the five most recent full calendar years prior to the
 Change in Control; provided, however, that in no event shall the Company pay
 or be obligated to pay that portion of the amount due which would result  in
 any payment to or  for the benefit of  Executive being an "excess  parachute
 payment" within the meaning of Section 280G of the Internal Revenue Code  of
 1986, as amended (the "Code"), in the opinion of tax counsel selected by the
 Company's independent  accountants and  acceptable to  Executive, and  which
 would result in the imposition  of an excise tax  under Section 4999 of  the
 Code ("Excess  Parachute  Payment").   Any  payment made  pursuant  to  this
 Section  shall  be   reduced  only  in   the  amount   necessary  to   avoid
 characterization of such  payment as an  Excess Parachute  Payment and  only
 after reduction, to the extent necessary, of any other payments (other  than
 payments made under this Agreement) which when aggregated with the  payments
 hereunder result in the imposition of such excise tax under Section 4999  of
 the Code; and

            (ii)     For a  period of  three  years, provide  Executive  with
 benefits substantially  similar to  those which  Executive was  entitled  to
 receive immediately  prior to  the  date of  termination  under all  of  the
 Company's "employee welfare  benefit plans"  within the  meaning of  Section
 3(1) of The Employee  Retirement Income Security Act  of 1974, as amended.
 Notwithstanding the foregoing provisions of this Section, no benefits  shall
 be provided or payments made pursuant to this subsection to the extent  that
 the effect thereof  would result  in a  reduction of  the Severance  Payment
 under subsection (h)(i).

        (i) Termination Date.  The "Termination Date" shall be the date  upon
 which the Executive or the Company effectively terminates the employment  of
 the Executive.
<PAGE>

    3.  Rights of Executive Upon Change in Control Termination

        (a) The  Company  shall  provide  the  Executive,  within  ten   days
 following  the  Termination   Date,  Severance  Compensation   in  lieu   of
 compensation to  the Executive  for periods  subsequent to  the  Termination
 Date, but without affecting the rights of the Executive at law or in equity,
 if, following the occurrence  of a Change in  Control, any of the  following
 events shall occur:

        (1) the  Company terminates  the  Executive's employment  during  the
 Employment Term other than for any of the following reasons:

            (i)      the Executive dies:

            (ii)     the Executive becomes permanently disabled and is unable
 to work for a period of 180 consecutive days; or

            (iii)    for Cause.

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

            (i)     a change in the positions held by Executive or an adverse
 change in  the nature  or  scope of  the  authorities, functions  or  duties
 attached  to  the  positions  with  the  Company  that  the  Executive   had
 immediately prior to the Change in Control, any reduction in the Executive's
 salary during the  Employment Term or  any reduction in  bonus or  incentive
 compensation  (based  upon   the  dollar  amount   of  bonus  or   incentive
 compensation that the  Executive received from  the Company  for the  fiscal
 year preceding the year in which the  Change in Control occurred or for  the
 fiscal year  preceding  the  year in  which  the  Termination  Date  occurs,
 whichever is the larger amount) or a significant reduction in scope or value
 of the  aggregate  other  monetary or  nonmonetary  benefits  to  which  the
 Executive was entitled from the Company  immediately prior to the Change  in
 Control, any of which is not remedied within ten calendar days after receipt
 by the  Company  of  written  notice from  the  Executive  of  such  change,
 reduction, alteration or termination, as the case may be;

            (ii)     a determination by the Executive 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 Company of  written
 notice from the Executive of such determination;
<PAGE>

            (iii)    a change  in  the positions  held  by Executive  or  the
 occurrence, as determined by Executive in  good faith, of an adverse  change
 in  the   nature   or  scope   of   his  authorities,   powers,   functions,
 responsibilities or duties as the Chairman of the Board, President and Chief
 Executive Officer of the Company; any reduction in Salary; any reduction  in
 Executive's bonus or incentive compensation (based  upon the greater of  the
 dollar amount  of  bonus and  other  incentive compensation  that  Executive
 received for the year preceding the Change in Control or the average  yearly
 amount of bonus  and incentive compensation  that Executive received  during
 the five years preceding the Change in Control); a termination, reduction or
 alteration of  the  disability  policies or  life  or  disability  insurance
 benefits maintained for  Executive, any alteration  or reduction of  expense
 allowances or reimbursement policies;  or a reduction in  scope or value  of
 the aggregate other benefits  to which Executive was  entitled prior to  the
 Change in Control;

            (iv)     the liquidation, dissolution,  merger, consolidation  or
 reorganization of the Company or transfer of all or substantially all of its
 business and/or assets, unless the successor or successors (by  liquidation,
 merger,  consolidation,  reorganization  or  otherwise)  to  which  all   or
 substantially all  of  its  business and/or  assets  have  been  transferred
 (directly or by operation of law) shall have specifically assumed all duties
 and obligations of the Company under this Agreement pursuant to Section 16;

            (v)      the relocation  of  the  Company's  principal  executive
 offices, or  the requirement  by  the Company  that  Executive 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

            (vi)     the Company commits any breach of this Agreement.

        (b) Notwithstanding the above section or any other provision of  this
 Agreement, in no  event shall the  Company pay or  be obligated  to pay  the
 Executive an  amount  which would  be  an  Excess Parachute  Payment.    For
 purposes of this Agreement, the term  "Excess Parachute Payment" shall  mean
 any payment  or any  portion thereof  which would  be an  "excess  parachute
 payment" within the meaning of Section 280G of the Code, and would result in
 the imposition of  an excise  tax under  Section 4999  of the  Code, in  the
 opinion of tax counsel selected by the Company's independent accountants and
 acceptable to  the Executive.   If  it is  established pursuant  to a  final
 determination of  a  court or  an  Internal Revenue  Service  administrative
 appeals proceeding that, notwithstanding the good faith of the Executive and
 the Company in applying the terms  of this Agreement, a payment (or  portion
 thereof) made  is an  Excess Parachute  Payment, then,  except as  hereafter
 provided, the Executive shall have an  obligation to repay the Company  upon
 demand an  amount  equal  to  the  minimum  amount  (but  without  interest)
 necessary to  ensure that  no payment  made or  to be  made by  the  Company
 pursuant to  this  Agreement  is  an  Excess  Parachute  Payment;  provided,
 however, that if, in  the opinion of tax  counsel selected by the  Company's
 independent accountants and acceptable to the Executive, such repayment will
 not ensure that no  Excess Parachute Payment would  be made hereunder,  then
 (1) no such repayment obligation will exist and (2) the Company shall pay to
 the Executive an additional amount in cash equal to the amount necessary  to
 cause the amount of the aggregate  after-tax cash compensation and  benefits
 otherwise receivable by the Executive to be equal to the aggregate after-tax
 cash compensation and benefits  he would have received  as if Sections  280G
 and 4999 of the Code had not been enacted.
<PAGE>

        (c) Upon written notice given  by the Executive to the Company  prior
 to the receipt of Severance Compensation, the Executive, 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.

        (d) The  payment of  Severance Compensation  by  the Company  to  the
 Executive shall not affect any rights  and benefits which the Executive  may
 have pursuant to any other agreement,  policy, plan, program or  arrangement
 of the Company providing benefits to the Executive prior to the  Termination
 Date, which  rights shall  be governed  by the  terms thereof,  except  that
 payments hereunder after  termination shall reduce  by an  equal amount  any
 sums payable after  termination under  the Employment  Agreement, dated  the
 date hereof, by  and between  the Company and  the Executive.   The  Company
 shall provide  to  the Executive  throughout  the Employment  Term  benefits
 substantially similar to those which the Executive was receiving or entitled
 to receive immediately  prior to  the Termination  Date.   Such benefits  as
 provided by the Company, however, shall be reduced
 to the extent  comparable benefits are  actually received  by the  Executive
 during the Employment  Term as a  result of employment  other than with  the
 Company.

        (e)  The Company  shall have no right  of set-off or counterclaim  in
 respect of any claim, debt or  obligation against any payment or benefit  to
 or for the benefit of the Executive provided for in this Agreement.

        (f) Without  limiting  the rights  of  the  Executive at  law  or  in
 equity, if  the  Company fails  to  make any  payment  required to  be  made
 hereunder on a timely  basis, the Company shall  pay interest on the  amount
 thereof on demand at  an annualized rate  of interest equal  to 120% of  the
 then applicable Federal rate determined under  Section 1274(d) of the  Code,
 compounded semi-annually (but  in no event  shall such  interest exceed  the
 highest lawful rate).

        (g) Any  termination   of  Executive's  employment   or  removal   of
 Executive as an elected officer of the Company 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 shall be deemed to  be a termination or  removal of Executive after  a
 Change in Control for purposes of this Agreement and shall entitle Executive
 to all benefits under this Agreement.

    4.  No Mitigation  Required.   In the event  that this  Agreement or  the
 employment of the Executive hereunder is terminated, the Executive 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  except
 for the termination of benefits pursuant to Section 3(d), the acceptance  of
 employment elsewhere after termination shall in no way reduce the amount  of
 Severance Compensation payable hereunder.
<PAGE>

    5.  Successors; Binding Agreement.

        (a) The Company  will require any  successor and  any corporation  or
 other legal person (including
 any "person" as defined in Section 2(d)(iii) of this Agreement) which is  in
 control of such successor (as "control" is defined in Regulation 230.405  or
 any successor rule  or regulation promulgated  under the  Securities Act  of
 1933, as amended) to all or substantially all of the business and/or  assets
 of the  Company  (by  purchase,  merger,  consolidation  or  otherwise),  by
 agreement in form and substance satisfactory to the Executive, to  expressly
 assume and agree to  perform this Agreement  in the same  manner and to  the
 same extent that  the Company would  be required to  perform it  if no  such
 succession had taken place.  Failure of the Company to obtain such agreement
 prior to the effectiveness of any such succession shall be a material breach
 of this Agreement by the Company.   Notwithstanding the foregoing, any  such
 assumption shall  not, in  any way,  affect or  limit the  liability of  the
 Company under the terms  of this Agreement or  release the Company from  any
 obligation hereunder.  As used in  this Agreement, "Company" shall mean  the
 Company as herein before  defined and any succcssor  to its business  and/or
 all or  part of  its assets  as aforesaid  which executes  and delivers  the
 agreement provided for in this Section 5 or which otherwise becomes bound by
 all the terms and provisions of this Agreement by operation of law.

        (b) This Agreement  and all rights of  the Executive hereunder  shall
 inure to the benefit  of and be enforceable  by the Executive's personal  or
 legal  representatives,   executors,  administrators,   successors,   heirs,
 distributees, devisees and legatees.

    6.  Notice.  The  Company shall give written  notice to Executive  within
 ten days after any  Change in Control.   Failure to  give such notice  shall
 constitute a  material breach  of  this Agreement.    For purposes  of  this
 Agreement,  notices  and  all  other  communications  provided  for  in  the
 Agreement shall be in writing  and shall be deemed  to have been duly  given
 when delivered or received  after being mailed  by United States  registered
 mail, return receipt requested, postage prepaid, addressed as follows:

        If to the Executive:

                Roy C. Cuny
                2819 Walnut Hill Lane
                Dallas, TX  75229

        If to the Company:

                Peerless Mfg. Co.
                Attn:  Secretary
                2819 Walnut Hill Lane
                Dallas, TX 75229

 or to such other  address as any party  may have furnished  to the other  in
 writing in accordance  herewith, except that  notices of  change of  address
 shall be effective only upon receipt.
<PAGE>

    7.  Miscellaneous.   No provisions  of this  Agreement may  be  modified,
 waived or discharged unless such waiver, modification or discharge is agreed
 to  in  writing  signed  by  the  Executive  and  such  officer  as  may  be
 specifically designated by the Board.  No waiver by either party hereto  of,
 or compliance  with, any  condition or  provision of  this Agreement  to  be
 performed by  such  other party  shall  be deemed  a  waiver of  similar  or
 dissimilar provisions  or  conditions  at  the  same  or  at  any  prior  or
 subsequent time.    No agreements  or  representations, oral  or  otherwise,
 express or implied, unless specifically referred to herein, with respect  to
 the subject matter hereof have been made  by either party which are not  set
 forth  expressly  in   this  agreement.     The  validity,   interpretation,
 construction and  performance of  this Agreement  shall be  governed by  the
 substantive laws of  the State  of Texas,  without regard  to principles  of
 conflicts of law.

    8.  Validity.   The invalidity or  unenforceability of  any provision  or
 provisions of this Agreement shall not affect the validity or enforceability
 of any other provision of this  Agreement, which shall remain in full  force
 and effect.

    9.  Counterparts.     This   Agreement  may   be  executed   in   several
 counterparts, each of which  shall be deemed  to be an  original but all  of
 which together will constitute one and the same instrument.

    10. Employment Rights.   Nothing expressed or  implied in this  Agreement
 shall create any right or duty on the  part of the Company or the  Executive
 to have the Executive remain in the  employment of the Company prior to  any
 Change in Control; provided, however, that any termination of employment  of
 the Executive or removal of  the Executive as Chairman  of the Board and  an
 elected officer of the Company following the commencement of any  discussion
 authorized by the Board of Directors of the Company with a third person that
 ultimately results  in  a  Change  in  Control  shall  be  deemed  to  be  a
 termination or  removal of  the  Executive after  a  Change in  Control  for
 purposes of this Agreement and shall entitle the Executive to all  Severance
 Compensation.  Notwithstanding any other  provision hereof to the  contrary,
 the Executive may, at any time  during the Employment Term, upon the  giving
 of 30 days prior written notice, terminate his employment with the  Company.
 If this  Agreement or  the employment of the  Executive is terminated  under
 circumstances in  which  the Executive  is  not entitled  to  any  Severance
 Compensation, the Executive shall have no further obligation or liability to
 the Company hereunder or otherwise with  respect to his prior or any  future
 employment by the Company.

    11. Withholding of  Taxes.   The Company  may withhold  from any  amounts
 payable under this  Agreement all  federal, state,  city or  other taxes  as
 shall be required pursuant  to any law or  government regulation or  ruling;
 provided, however, that no withholding pursuant to Section 4999 of the  Code
 shall be  made  unless,  in the  opinion  of  tax counsel  selected  by  the
 Company's independent  accountant  and  acceptable to  the  Executive,  such
 withholding relates to payments which result in the imposition of an  excise
 tax pursuant to Section 4999 of the Code.
<PAGE>

    12. Enforcement Fees.   All costs of  litigation necessary for  Executive
 to defend the validity of this Agreement are  to be paid by Employer or  its
 successors or assigns.  The Company shall pay and be solely responsible  for
 any and  all  attorneys' and  related  fees  and expenses  incurred  by  the
 Executive as a result of the Company's failure to perform this Agreement  or
 any provision thereof or as a result of the Company or any person contesting
 the validity or enforceability of this Agreement or any provision thereof as
 aforesaid.

    13. Rights and Remedies Cumulative.  No right or remedy herein  conferred
 upon or reserved to the Executive is  intended to be exclusive of any  other
 right or remedy, and every right  and remedy shall, to the extent  permitted
 by law, be cumulative and in addition to every other right and remedy  given
 hereunder or now or hereafter  existing at law or  in equity or otherwise.
 The assertion or employment of any right or remedy hereunder, or  otherwise,
 including with respect to Executive's  rights under that certain  Employment
 Agreement of even date herewith, shall not prevent the concurrent  assertion
 or employment of any other appropriate right or remedy.

    IN WITNESS  WHEREOF, the parties have  executed this Agreement  effective
 on the date and year first above written.

                                    PEERLESS MFG. CO.

                                    _______________________________________
                                    Sherrill Stone
                                    Chairman of the Board
                                    By Order of the Board of Directors

                                    EXECUTIVE

                                    _______________________________________
                                    Roy C. Cuny

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