EXHIBIT 10(l)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 16th day of May, 2000,
between PEERLESS MFG. CO. ("Employer"), and XXX X. XXXX ("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.
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.
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
_______________________________________
Xxx X. Xxxx
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 XXX
X. XXXX (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;
(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.
(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 Xxxxxx X.
Xxxxxxx, Xx. 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.
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;
(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.
(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.
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:
Xxx X. Xxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
If to the Company:
Peerless Mfg. Co.
Attn: Secretary
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
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.
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.
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.
_______________________________________
Xxxxxxxx Xxxxx
Chairman of the Board
By Order of the Board of Directors
EXECUTIVE
_______________________________________
Xxx X. Xxxx
