CONSULTING AGREEMENT
Exhibit 10.1
This Agreement (the “Agreement”) is made and entered into as of June 29, 2006 by and among
Peerless Mfg. Co., a Texas corporation, its parents, subsidiaries and affiliates (collectively,
“Peerless”), and Xxxxxxxx Xxxxx, a resident of the State of Texas (“Stone”) (collectively the
“Parties”).
RECITALS
WHEREAS, pursuant to a certain Employment Agreement between Stone and Peerless dated July 20,
2001 (the “Employment Agreement”), Stone has been employed by Peerless as its President and Chief
Executive Officer (“CEO”) and currently serves as Chairman of the Board of Directors. Stone is
retiring from his position as President and Chief Executive Officer of Peerless effective as of
June 30, 2006;
WHEREAS, Stone has given notice of his retirement to Peerless and will be retiring from normal
full time business life, and that all notices of retirement required by the Employment Agreement
have been given or are waived;
WHEREAS, following his retirement, Peerless desires to retain Stone as a Consultant on an
independent contractor basis for a one-year period and desires his continued service on the Board
of Directors;
WHEREAS, Stone possesses unique information and experience which is beneficial to Peerless in
its ongoing business, and Peerless wishes to avoid the loss of such information and experience
during the transition period;
WHEREAS, Stone is willing to provide the consulting services described in this Agreement in
consideration of affirmative covenants made by Peerless;
WHEREAS, Stone agrees and acknowledges that the nondisclosure of confidential information is
essential to the continued growth and stability of Peerless’ businesses and to the continuing
viability of such businesses as expressly permitted under the terms and limitations of this
Agreement.
NOW, THEREFORE, in consideration of the mutual acts, payments and promises described and
agreed to be performed herein, Stone and Peerless agree as follows:
1. Consulting and Other Payments to Stone. In consideration of the services rendered
pursuant to the Agreement (including, without limitation, the services provided pursuant to
Section 2 as a consultant and Director and the covenants and agreements made in
Sections 3, 4 and 5), Peerless agrees to pay Stone the annual sum of $150,000.00, payable
in equal installments on Peerless’ regularly scheduled payroll dates, beginning on the Effective
Date. All cash consideration paid to Stone under the Agreement shall be made without any
withholdings or deductions, including without limitation, deductions or withholdings for social
security, Medicare or income taxes, unless otherwise required by law. Stone and Peerless agree
that the services provided by Stone under this agreement are provided as an independent contractor
and not as an employee of Peerless.
CONSULTING
AGREEMENT—Page 1 of 6
2. Consulting Agreement. For a one-year term following the Effective Date of this
Agreement, Stone shall serve as a consultant to Peerless. Provided, however, Stone shall in no
case be deemed to be an employee of Peerless but instead shall serve as an independent contractor
for all purposes. Subject to being available for consultation as set forth below, Stone shall have
sole discretion over his working hours and locations. He shall use his own equipment and his home
office in providing his services, and except as needed for special projects and at its discretion,
Peerless shall not provide Stone with any office space or equipment for use in providing services
under this Agreement. Stone agrees to hold himself available for consulting upon the reasonable
request of the Peerless by telephone and/or in person, during normal business hours and, if by
mutual agreement at times other than during normal business hours. In connection with the services
to be rendered by Stone to Peerless under this Section 2 (the “Services”), Stone will not,
without the consent or direction of Peerless, act or attempt to act or represent himself, directly
or by implication, as an agent of Peerless or in any manner assume or create, or attempt to create,
any obligation on behalf of, or in the name of Peerless. In the event Peerless requests Stone to
incur any expenses in connection with the Services and pre-approves such expenses, Peerless agrees
to pay, in accordance with the Peerless’ normal documentation and reimbursement policies, all
reasonable expenses actually incurred by Stone in connection with providing the Services, including
without limitation, travel, meals and lodging expenses.
Stone further agrees to cooperate with and assist Peerless in the prosecution or defense of
any litigation, including providing truthful testimony as a witness upon reasonable request.
3. Confidentiality. In the course of his employment with Peerless, Stone has received
and may receive or have access in the future to commercially valuable, confidential or proprietary
information. As used in this Section 3, “Confidential Information” means all information,
whether oral or written, previously or hereafter developed, acquired, or used by Peerless and
relating to the business of Peerless that is not generally known to others in Peerless’ area of
business, including without limitation (i) any trade secrets, work product, processes, analysis or
know-how of Peerless; (ii) Peerless’ advertising, product development, strategic and business plans
and information, including customer and prospect lists; (iii) the prices at which Peerless has sold
or offered to sell its products or services; and (iv) Peerless’ financial statements and other
financial information.
Stone acknowledges and agrees that the Confidential Information is and shall be the sole and
exclusive property of Peerless. Stone shall not use any Confidential Information for his own
benefit and disclose any confidential information to any third party (except in the course of
performing his authorized duties for Peerless under this Agreement), either during or subsequent to
his employment with Peerless.
Specifically, Stone agrees that, except as expressly authorized in writing by Peerless, or as
may be required by law or court order, Stone (i) shall not disclose Confidential Information to any
third party, (ii) shall not copy Confidential Information for any reason, (iii) shall not remove
Confidential Information from Peerless’ premises. Upon termination of his employment with
Peerless, Stone shall promptly deliver to Peerless 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
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Information or otherwise relating in any way to Peerless’ business that are in his possession
or under his control.
Stone acknowledges that his violation or attempted violation of this Section will cause
irreparable damage to Peerless or its affiliates, and Stone therefore agrees that Peerless 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 Stone or others acting on his
behalf. Peerless’ right to injunctive relief will be cumulative and in addition to any other
remedies provided by law or equity.
4. Inventions; Developments. All discoveries, inventions, innovations, or
improvements which are related to the Business (collectively called “Developments”) conceived or
developed by Stone relating to his consulting services under this Agreement, including but not
limited to all written documents pertaining thereto, shall be the exclusive property of Peerless,
as the case may be, and shall be considered Confidential Information subject to the terms of this
Agreement. Stone agrees that within seven days of any request from Peerless, he shall execute all
requested assignments and conveyances necessary to vest in Peerless all discoveries, inventions,
innovations, patents, marks, copyrights, patent applications and any other intellectual property of
whatever kind and character, any right, title or interest that he may hold in such property. Stone
agrees that when appropriate, and upon written request of Peerless, as the case may be, Stone will
acknowledge that Developments are “works for hire” and will file at Peerless’ expense for trade
names, trademarks, patents or copyrights with regard to any or all Developments and will sign
documentation reasonably necessary to evidence ownership of Developments in Peerless, as the case
may be. Stone further agrees to cooperate fully, and at the expense of Peerless, with Peerless in
connection with the filing, prosecution or obtaining of any patent, copyright, or trademark
registration or application in any country, existing as of the date of this Agreement. Stone
further agrees to cooperate with and assist Peerless at its expense in the prosecution or defense
of any litigation involving any intellectual property claimed by Peerless, including providing
truthful testimony as a witness upon reasonable request.
5. Conflict of Interest. Stone agrees that during the one-year term of this Agreement,
without prior approval of the Board of Directors of Peerless, Stone shall not engage, either
directly or indirectly, in any activity which may involve a conflict of interest with Peerless or
its affiliates (a “Conflict of Interest”), including ownership in any supplier, contractor,
subcontractor, customer or other entity with which Peerless 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 Peerless does business and that
Stone shall promptly inform the Board of Directors of Peerless as to each offer received by Stone
to engage in any such activity. Stone further agrees to disclose to Peerless any other facts of
which Stone becomes aware which might involve or give rise to a Conflict of Interest or potential
Conflict of Interest.
6. Non-competition. Stone and Peerless agree that nothing in this Agreement modifies
or supersedes the terms of Section 2 of the Employment Agreement executed between Stone and
Peerless on July 20, 2001 which governs non-competition. Stone and Peerless agree that the terms
and conditions of the Employment Agreement with respect to confidential
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information, inventions and developments, conflict of interest and restrictions on Stone’s
competition shall remain in full force and effect.
7. Remedies for Breach. Each of Peerless and Stone hereby acknowledges that a
violation or attempted violation of any of the covenants contained in Sections 3, 4 and 5
of this Agreement will cause irreparable damage to the other parties, and accordingly each party
agrees that the other parties 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 the violating party or any employees, partners or agents of the violating party; such right to
an injunction, however, shall be cumulative and in addition to whatever other remedies the injured
party may have. The prevailing Party (whether as a plaintiff or defendant) in any legal action
arising out of this Agreement shall be entitled to recover its or his reasonable and necessary
attorneys’ fees, costs, and out of pocket expenses from the non-prevailing Party.
8. Nature of the Agreement. This Agreement and all its provisions are contractual,
not mere recitals, and shall continue in permanent force and effect, unless revoked as provided
herein. In the event that any portion of this Agreement is found to be unenforceable for any
reason whatsoever, the unenforceable provision shall be severed and the remainder of the Agreement
shall continue in full force and effect.
9. Attorneys Fees. Each party shall be responsible for his or its own expenses,
including attorney’s fees incurred in connection with the negotiation, preparation and execution of
this Agreement.
10. Notices. Any notice, demand or request required or permitted to be given or made
under this Agreement shall be in writing and shall be deemed given or made when delivered in
person, when sent by United States registered or certified mail, or postage prepaid, or when faxed
to a party at its address or facsimile number specified below:
| If to Peerless: | Peerless Mfg. Co. | |||||
| 0000 Xxxxxx Xxxx Xxxx | ||||||
| Xxxxxx, Xxxxx 00000 | ||||||
| Attention: Chief Executive Officer | ||||||
| with a copy to: | Xxx Xxxxxx Xxxxx | |||||
| Xxxxxx & Xxxx, L.L.P. | ||||||
| 0000 Xxxx Xxxxxx, Xxxxx 0000 | ||||||
| Xxxxxx, Xxxxx 00000 | ||||||
| (fax) (000)000-0000 | ||||||
| (phone) (000) 000-0000 | ||||||
| If to Stone: | Xxxxxxxx Xxxxx | |||||
| 0000 Xxxxx Xxxx | ||||||
| Xxxxxx, Xxxxx 00000 |
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| with a copy to: | ||||||
The parties to this Agreement may change their addresses for notice in the manner provided
above.
11. Counterparts and Photocopies. This Agreement may be executed in counterparts and
each executed counterpart shall be as effective as a signed original. Photographic copies of such
signed counterparts may be used in lieu of the originals for any purpose.
12. Paragraph Titles Not Binding. The use of section titles in this Agreement is for
ease of reference only. Such titles are not to be considered terms of this Agreement.
13. Governing Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of Texas, without regard to the principles of conflicts of law.
14. Termination Upon Death or Disability. In the event Stone should die during the
term of this Agreement or if he is unable to perform his duties under this Agreement for a period
of ninety (90) days or more due to a mental or physical impairment, the Agreement shall terminate
and Peerless shall have no further obligations to make payments under this Agreement following the
date of such termination.
15. Assignment. The obligations and duties of the Parties set forth in this Agreement
may not be assigned or delegated; provided, however, that nothing in this Agreement shall preclude
Peerless from consolidating or merging with, or transferring all or substantially all of its assets
to, another corporation, person or entity (“Entity”). Upon such a consolidation, merger or
transfer of assets, the term the “Peerless” shall mean such other Entity or Entities that Peerless
consolidates or merges into or with, or transfer all or substantially all of the assets of Peerless
to, and in any such event, the Entity or Entities shall be bound and automatically assume, without
any specific action on the part of the Entity or Entities, this Agreement and all obligations and
undertakings of Peerless set forth in this Agreement, and this Agreement shall continue in full
force and effect, including but not limited to the obligation of Peerless to make the payments set
forth in Section 1. The obligations and duties of Stone hereunder shall be personal and
not assignable or delegable by the Stone in any manner whatsoever. Notwithstanding the foregoing,
Peerless shall have the right to assign its rights under Sections 2, 3, 4 and 5 of this
Agreement to any Entity or Entities which may purchase any part or all of Peerless’ business
(whether by asset purchase, stock sale, merger or otherwise).
16. Entire Agreement. This Agreement constitutes the entire statement of the
agreement between the Parties with respect to its subject matter and there are no oral or written
representations, understandings or agreements relating to this Agreement which are not fully
expressed herein. The Parties agree that any other terms or conditions included in written or
verbal exchanges or representations made by the Parties shall not be incorporated herein or be
binding unless expressly agreed upon in writing by authorized representatives of the Parties
subsequent to the date hereof.
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17. Authorization. Peerless represents and warrants to Stone that the persons
executing this Agreement on behalf of the Peerless are duly authorized to act for and on behalf of
Peerless to execute and deliver this Agreement and that this Agreement is a valid, binding and
enforceable agreement of Peerless.
This Consulting Agreement is executed at Dallas, Texas by Stone, acting in his individual
capacity and by an authorized representative of Peerless as of the date first stated above.
| PEERLESS MFG. CO. | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Name: | Xxxxx Xxxxxxx | |||||
| Title: | Executive Vice President & | |||||
| Chief Operating Officer | ||||||
| XXXXXXXX XXXXX | ||||||
| /s/ Xxxxxxxx Xxxxx | ||||||
| Xxxxxxxx Xxxxx | ||||||
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