EMPLOYMENT AGREEMENT
EXHIBIT 10(a)
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into to be effective
as of October 31, 2005 (the “Effective Date”), between PEERLESS MFG. CO.
(“Employer”), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (“Employee”).
Section 1. Employment.
1.1 Employment and Term. Subject to the terms and conditions of this
Agreement, Employer agrees to employ Employee pursuant to this Agreement for a
term beginning on the Effective Date and ending on the third anniversary date of
the Effective Date, unless Employee’s employment is terminated earlier as
provided in Section 4 below. 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.
Section 2. Non-Competition.
2.1 Non Competition.
(a) Employee agrees that during the term of his employment and for a
period of one (1) year following termination of his employment (regardless of
whether Employee is terminated without Cause (as defined in Section 4.
l(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) 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
(iii) 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.
Section 3. Confidentiality; Nondisparagement; Conflict of Interest.
3.1
Confidentiality.
(a) In the course of his employment with Employer, Employee will receive
and have access to commercially valuable, confidential or proprietary
information (“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 others in Employer’s area of business, including
without limitation (i) any trade secrets, work product,
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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 financial statements 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.
(e) Employee acknowledges that on the Effective Date, Employer provided
Employee with selected financial data that constituted Confidential
Information that was not known to Employee prior to his receipt thereof.
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.
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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 Chief Executive Officer or 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, a lump sum payment in an amount equal to the difference of (i)
100% of Employee’s then current base salary annualized less (ii) the amount of base
salary paid to Employee from the date of Employer’s notice of termination to the
effective date of such termination. 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. As used herein, “base salary” excludes any bonus or
incentive compensation.
(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) 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 continued failure by Employee to substantially perform his
duties hereunder, or the intentional wrongdoing by Employee resulting in
material injury to Employer, in each case as reasonably determined by
Employer’s Board of Directors;
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iv) the failure by Employee to follow a reasonable directive of the Board
of Directors or the Chief Executive Officer of Employer; or
(v) violation of any policies or procedures of Employer, including without
limitation, any human relations policy, resulting in material injury to
Employer, in each case as reasonably determined by Employer’s Board of
Directors.
4.2 Termination by Employee.
(a) 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), except as expressly set forth in
Section 4.2(b) below, 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.
(b) If Employee resigns from Employee’s employment hereunder in
accordance with Section 4.2(a) above and at the time of such
resignation at least one of the following events has continued for at least
30 consecutive days after Employee has notified Employer in writing of the
occurrence of such event, Employer shall pay Employee an amount equal to a
lump sum payment in the amount of 50% of Employee’s then current base salary
annualized, less the amount of base salary paid to Employee from the date of
notice of resignation to the effective date of such resignation. Such
payment to be made on the effective date of resignation. In addition, the
Employer will pay the pro rata portion of the annual bonus Employee would
have earned pursuant to Employer’s written bonus incentive plan (if any) if
Employee had remained employed by Employer for the remainder of the
applicable calendar year, with such pro rata amount being determined in
equal amounts over the course of the calendar year (for example, 1/12 of the
bonus for each month Employee was employed during the applicable bonus year)
and such amount being paid in the ordinary course consistent with Employer’s
practice. Such events include:
(i) a material adverse change in the nature or scope of the
authorities, functions or duties that Employee had as of the Effective
Date;
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(ii) a material adverse change in the calculation (but not the
amount) of any annual bonus or a significant reduction in scope or
value in the aggregate of other monetary or nonmonetary benefits to
which Employee was entitled as of the Effective Date;
(iii) a determination by Employee made in good faith that as a
result of a change in circumstances significantly affecting his
position, changes in the composition or policies of Employer’s Board
of Directors, 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 as of the Effective Date, or
(iv) the requirement by Employer that Employee have as his
principal location of work any location not within the greater Dallas
– Fort Worth, Texas metropolitan area.
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 base salary shall terminate immediately; provided, however, Employer
shall pay to Employee’s duly authorized representative all incentive compensation, bonus
and benefits earned or accrued but unpaid as of the date of death, with payment of
Employee’s benefits to be made as provided in Employer’s benefit plan(s) in effect on the
date of death.
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 executive 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. Miscellaneous.
5.1 Notice. Except as set forth below in this Section 5.1, any notice
under this Agreement must be in writing and shall be deemed to have been given when
delivered personally or by overnight courier service or three days after being sent by
mail, postage prepaid, at the address indicated below or to such changed address as such
person may subsequently give such notice of:
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| if to Employer: | ||||
| Peerless Mfg. Co. | ||||
| ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attn: Chairman, Board of Directors | ||||
| if to Employee: | ||||
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ |
Notwithstanding the foregoing, the party receiving notice may waive any
provisions of this Section 5.1 in its sole and absolute discretion.
5.2 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 5.2 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
5.3 Headings. The section headings used herein are for reference and
convenience only and shall not enter into the interpretation hereof.
5.4 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.
5.5 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.
5.6 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
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similar in terms to such invalid or unenforceable provision as may be
possible and be legal, valid, and enforceable.
5.7 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.
5.8 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 injunctive relief sought by the Company or any of its affiliate under
Section 2 or 3 of this Agreement.
5.9 Entire Agreement. This Agreement embodies the complete agreement
between Employer and Employee regarding the subject matter hereof and the same
supersede 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 ▇▇▇.▇▇. |
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| /s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, | ||||
| Chairman of the Board and Chief Executive Officer |
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| EMPLOYEE: |
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| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
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