-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nwrj5WI/RJ4yMwY2EEEWUvObBgtqvSlgywZ6eOVVFOOvBhsLnPoyCH/ycYmAvFOy Oss241LrRRzmqdZtkTrY1Q== 0000897101-04-002737.txt : 20041220 0000897101-04-002737.hdr.sgml : 20041220 20041220172322 ACCESSION NUMBER: 0000897101-04-002737 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041214 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041220 DATE AS OF CHANGE: 20041220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SELAS CORP OF AMERICA CENTRAL INDEX KEY: 0000088790 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL PROCESS FURNACES & OVENS [3567] IRS NUMBER: 231069060 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05005 FILM NUMBER: 041214961 BUSINESS ADDRESS: STREET 1: 2034 LIMEKILN PK CITY: DRESHER STATE: PA ZIP: 19025 BUSINESS PHONE: 2156466600 MAIL ADDRESS: STREET 1: 2034 LIMEKILN PIKE CITY: DRESHER STATE: PA ZIP: 19025 8-K 1 selas046003_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act Of 1934 Date of Report (Date of earliest event reported) December 14, 2004 SELAS CORPORATION OF AMERICA (Exact name of registrant as specified in its charter) Pennsylvania 1-5005 23-1069060 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1260 Red Fox Road, Arden Hills, MN 55112 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (651) 636-9770 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(C) under the Exchange Act (17CFR240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. In an effort to ensure the Company retains its executive officers, on December 14, 2004 the Company entered into a change of control or asset sale agreement with each of Mark S. Gorder, Chief Executive Officer and Robert F. Gallagher, Chief Financial Officer. The agreements call for payments of two years base salary and unpaid bonus, if any, to Messrs. Gorder and Gallagher should there be a change of control or asset sale as defined in the agreements and Messrs. Gorder or Gallagher are not retained for a period of at least one year following such change of control or asset sale. Under the agreements, all stock options granted to Messrs. Gorder or Gallagher shall vest immediately and be exercisable in accordance with the terms of such stock options. The Company also agreement that if it enters into an agreement to sell substantially all of its assets, it will obligate the buyer to fulfill its obligations pursuant to the agreements. The agreements terminate, except to the extent that any obligation remains unpaid, upon the earlier of termination of Messrs. Gorder or Gallagher's employment prior to a change of control or asset sale for any reason or the termination of Messrs. Gorder or Gallagher after a change of control or asset sale for any reason other than by involuntary termination as defined in the agreements. In addition, the Company entered into a separation agreement with Mr. Gerald H. Broecker, the Company's former Vice President on December 14, 2004. Under the agreement, the Company will pay an equivalent to Mr. Broecker's share of the premiums for medical and dental insurance through November 8, 2005. The Company agreed to retain Mr. Broecker as an independent consultant for consultation and assistance regarding any transition issues (hereinafter the "Consulting Services"). This independent contractor relationship will commence immediately after the expiration of the revocation period stipulated in the agreement and end on November 8, 2005, ("Consulting Period") except that Mr. Broecker may terminate the consulting relationship at any time for any reason prior to November 8, 2005, with one (1) month written notice. During the Consulting Period, Mr. Broecker will provide up to 500 hours of Consulting Services as requested by the Company. In consideration for services during the Consulting Period, the Company will pay Mr. Broecker a retainer of $10,500 per month. The Company will pay Mr. Broecker any accrued salary plus compensate Mr. Broecker for unused and accrued vacation time to which Mr. Broecker was entitled as of his resignation date. Mr. Broecker retains all stock options under the Company's stock option plans that vested or became exercisable prior to his resignation date and he is able to exercise these options in accordance with such stock option plans during a period of not more than 90 days after his resignation date (but in no event after the expiration date set forth in such option), after which date such options shall expire; provided, however, that he is entitled to exercise in full (a) options to purchase 6,000 shares granted to him on December 19, 2000 and (b) options to purchase 5,000 shares granted to him on July 26, 2004, in each case on or prior to December 31, 2006, after which date such options shall expire. For a period of one year, following the end of the Consulting Period, Mr. Broecker agreed not to compete with the Company and its subsidiaries. Item 5.02 Departure of Directors or Principal Officers or Election or Appointment of Directors or Principal Officers At the December 14, 2004 Board of Directors meeting, Mr. Frederick L. Bissinger, age 93, announced his retirement from the Board of Directors effective immediately. The Board determined it will not replace Mr. Bissinger's Board position in the foreseeable future. Item 9.01. Financial Statements and Exhibits (c) Exhibits 99.1 Termination agreement following change of control or asset sale between the Company and Mark S. Gorder dated December 14, 2004 99.2 Termination agreement following change of control or asset sale between the Company and Robert F. Gallagher dated December 14, 2004 99.3 Separation Agreement between the Company and Gerald H. Broecker dated December 14, 2004 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Selas Corporation of America By: /s/ Mark S. Gorder ------------------------------ Mark S. Gorder President and Chief Executive Officer (principal executive officer) Date: December 20, 2004 EXHIBIT INDEX 99.1 Termination agreement following change of control or asset sale between the Company and Mark S. Gorder dated December 14, 2004 99.2 Termination agreement following change of control or asset sale between the Company and Robert F. Gallagher dated December 14, 2004 99.3 Separation Agreement between the Company and Gerald H. Broecker dated December 14, 2004 EX-99.1 2 selas046003_ex99-1.txt EXHIBIT 99.1 AGREEMENT RE: TERMINATION FOLLOWING CHANGE OF CONTROL OR ASSET SALE This AGREEMENT is made and dated as of December 14, 2004, between Mark S. Gorder ("Executive") and Selas Corporation of America ("Selas"). WHEREAS, Executive has been effective in performing his services to Selas; and WHEREAS, Executive is President and Chief Executive Officer of Selas; and WHEREAS, Selas recognizes the valuable services that Executive has rendered and desires to induce Executive to continue his active participation in the business of Selas by giving Executive certain assurances in the event of major changes in the structure or control of Selas; NOW, THEREFORE, in consideration of the agreements herein contained, and intending to be legally bound, the parties hereto agree as follows: 1. Termination Payment. If a Change of Control of Selas occurs during the term of this Agreement, and if Executive's employment by Selas is Involuntarily Terminated within one year after such Change of Control, Selas shall pay or cause to be paid to Executive, simultaneously with such Involuntary Termination, two years base salary at the base salary rate being earned by Executive immediately prior to the Change of Control or immediately prior to such Involuntary Termination, whichever is greater, together with all unpaid bonus, salary and benefits due to Executive. If a Change of Control of Selas occurs during the term of this Agreement, all stock options previously granted to Executive under any Selas stock option plan or otherwise shall vest immediately upon such Change of Control and be exercisable in accordance with the terms of such stock options. If an Asset Sale occurs during the term of this Agreement, and if Executive's employment by Selas is Involuntarily Terminated within one year after such Asset Sale, Selas shall pay or cause to be paid to Executive, simultaneously with such Involuntary Termination, two years base salary at the base salary rate being earned by Executive immediately prior to such Asset Sale or immediately prior to such Involuntary Termination, whichever is greater, together with all unpaid bonus, salary and benefits due to Executive; PROVIDED, HOWEVER, that Selas need not make such payment if the purchaser in such Asset Sale or an affiliate of such purchaser offers to employ Executive commencing at the time of closing of the Asset Sale at not less than the same rate of compensation (including both base salary and good faith bonus potential) and level of benefits as Executive was receiving immediately prior to the Asset Sale and does not Involuntarily Terminate Executive's employment during the one year period after the consummation of the Asset Sale. Selas agrees that any agreement to sell substantially all of the assets of Selas shall include a provision obligating the purchaser to fulfill any of Selas' obligations to Executive under this Agreement should Selas fail to fulfill said obligations. With respect to payment of bonus and benefits as provided in this section, if any bonus or benefits plan would compensate Executive only on the condition that Executive remains employed through the end of the applicable year, said condition shall not prevent Executive from receiving a pro rata portion of said bonus or benefits in the event of an Involuntary Termination within one year of a Change of Control or Asset Sale. If an Asset Sale occurs during the term of this Agreement, all stock options previously granted to Executive under any Selas stock option plan or otherwise shall vest immediately upon such Asset Sale and be exercisable in accordance with the terms of such stock options. For the purposes of any compensation, benefits, or other sums to be paid to Executive under this section, "simultaneously with" shall mean that any earned but unpaid vacation, and any unpaid salary and bonus, shall be paid within three business days of an Involuntary Termination; any other employee benefits shall 2 be paid according to the terms of the applicable plans; and the severance in an amount equal to two years base salary to be paid under this Agreement shall be paid in a lump sum within two weeks of an Involuntary Termination. Notwithstanding any other provision hereof, the obligations of Selas hereunder shall arise, if at all, only in connection with the earlier of the first Change of Control or first Asset Sale to occur after the date hereof; any second Change of Control or second Asset Sale which may occur within the one year period following the first Change of Control or first Asset Sale shall neither diminish nor trigger again the obligations set forth herein to the extent that such obligations may be applicable, it being understood that such obligations shall in no event extend beyond one year after the first Change of Control or Asset Sale. The following terms used herein have the meanings set forth below: "Asset Sale" means the sale of the assets of Selas (including the stock of subsidiaries of Selas) to which are attributable 90% or more of the consolidated sales volume of Selas; notwithstanding the foregoing and without limiting the generality of the foregoing, the sale of all or substantially all of the assets or stock of Selas' Precision Miniature Medical and Electronics Products Business shall constitute an Asset Sale. "Cause" means the following, provided that, in the case of circumstances described in clauses (iv) through (vi) below, Selas shall have given written notice thereof to Executive, and Executive shall have failed to remedy the circumstances as determined in the sole discretion of the Board of Directors of Selas within 30 days thereafter: (i) fraud or dishonesty in connection with Executive's employment or theft, misappropriation or embezzlement of Selas's funds; (ii) conviction of any felony, crime involving fraud or knowing misrepresentation, or of any other crime (whether or not such felony or crime is connected with 3 his employment) the effect of which in the judgment of the Board of Directors of Selas is likely to adversely affect Selas or its affiliates; (iii) material breach of Executive's employment obligations; (iv) repeated and consistent failure of Executive to be present at work during normal business hours unless the absence is because of a Disability; (v) willful violation of any express direction or requirement established by the Board of Directors of Selas, as determined by a majority of Board of Directors of Selas; (vi) insubordination, gross incompetence or misconduct in the performance of, or gross neglect of, Executive's duties hereunder, as determined by a majority of Board of Directors of Selas; or (vii) use of alcohol or other drugs which interfere with the performance by Executive of his duties, or use of any illegal drugs or narcotics. "Change of Control" of Selas means the acquisition by any "person"(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), including any affiliate or associate as defined in Rule 12b-2 under the Exchange Act of such person, other than Selas, any trustee or other fiduciary holding securities under an employee benefit plan of Selas, or any corporation owned, directly or indirectly, by the shareholders of Selas in substantially the same proportion as their ownership of capital stock of Selas, becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the combined voting power of Selas' then outstanding securities. "Disability" of Executive means that after being provided with any accommodation or leave required of Selas by law, the Executive still shall be physically or mentally incapacitated and as a result thereof shall be unable to continue substantially proper performance of his duties (reasonable absences because of sickness for up to six consecutive months excepted). If Executive shall not agree with a determination to terminate him because of Disability, the question of Executive's ability shall be submitted to an impartial and reputable 4 physician selected either by a mutual agreement of the parties or by the then president of the Medical Society of the county in which Executive is employed, and such physician's determination of disability shall be binding on the parties. "Involuntary Termination" (or "Involuntarily Terminated") means (a) any termination of employment of the Executive by Executive following (i) any reduction without his consent within the year following a Change of Control or Asset Sale in the amount of annual base compensation or in the employee benefits (but not in the amount of bonuses) inuring to Executive, as compared to the level of base compensation or benefits inuring to Executive immediately prior to the preceding Change of Control or Asset Sale, (ii) the imposition on Executive of a requirement that he change the location of his principal employment to a location more than 20 miles from the location immediately prior to the Change of Control or Asset Sale in order to maintain his employment or to maintain his compensation at its level immediately prior to the preceding Change of Control or Asset Sale if such change of location would impose a substantial burden on the Executive in commuting from his then residence to the new place of employment or (iii) the assignment to the Executive of duties that do not constitute managerial duties or duties for which his training and experience do not qualify him or (b) any termination of the employment of Executive by Selas other than for Cause, death or Disability. 2. Other Benefits. This Agreement shall not prejudice Executive's or his beneficiary's right to receive any death, disability, pension, 401-k, qualified benefit, or other benefits under any contract or plan otherwise due to Executive upon or following termination. 3. No Duty to Mitigate. Executive's benefits hereunder shall be considered severance pay in consideration of his past service to Selas, and pay in consideration of his continued service from the date hereof, and his entitlement thereto shall not be governed by any 5 duty to mitigate his damages by seeking further employment, nor offset by any compensation which he may receive from future employment. 4. Withholding; Other Tax Matters. Any payment required under this Agreement shall be subject to all applicable requirements of law with regard to withholding, filing, making of reports and the like. 5. Term. This Agreement shall terminate, except to the extent that any obligation hereunder remains unpaid as of such time, upon the earlier of (i) the termination of Executive's employment with Selas prior to a Change of Control or Asset Sale for any reason; or (ii) the termination of Executive's employment with Selas (or any successor) after a Change of Control or Asset Sale for any reason other than by Involuntary Termination. 6. Miscellaneous. a. This Agreement represents the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements in connection therewith. Without limiting the generality of the preceding sentence: (i) this Agreement supersedes the Amended and Restated Agreement Re: Termination Following Change of Control or Asset Sale dated June 19, 2001 between Selas and Executive and (ii) Executive hereby acknowledges that Selas shall have no obligation to him under the termination program established in 1986. b. In the event that any provision of this Agreement shall be determined to be invalid, the remaining provisions shall be unaffected thereby and shall remain in full force and effect. c. This Agreement shall not be assignable by Executive, but Selas' obligation under the third sentence of Section 1 in connection with an Asset Sale may be 6 assigned by Selas to the purchaser in connection with such Asset Sale if the Executive becomes an employee of the purchaser or an affiliate immediately after the Asset Sale, in which case the assignee shall expressly assume and agree to perform the obligations set forth in the second sentence of Section 1 in connection with such Asset Sale in the same manner and to the same extent as if it were Selas and Selas shall by virtue thereof and without further act be released from its obligations hereunder. d. Any notice given hereunder shall be deemed to be given when personally delivered or mailed by certified or registered mail, return receipt requested, addressed to Selas at its principal offices or addressed to Executive at his latest address shown on the employment records. e. A waiver of breach of any provision hereof shall not be construed as a waiver of any subsequent breach hereof. f. If it is necessary for Executive to sue for payment hereunder, and such suit results in any payment to Executive, the employer shall pay Executive's reasonable counsel fees relating to such litigation. g. This Agreement may be amended, waived or terminated only by written instrument signed by both parties hereto. h. This Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania. i. Upon the occurrence of a Change of Control or Asset Sale, Selas or its assignee waives, and will not assert, any right to set off the amount of any claims, liabilities, damages or losses Selas or its assignee may have against any amounts payable by it to Executive hereunder, and any amounts payable to or otherwise accrued for the account of 7 Executive in respect of any period prior to the termination of this Agreement shall be paid when due. j. Nothing herein shall diminish Selas' right to terminate the employment of the Executive prior to a Change of Control or Asset Sale or impose any obligation to make any payment to the Executive in connection with any such termination. [Signatures begin on the next page] 8 IN WITNESS WHEREOF, Selas and Executive have executed this Agreement as of the date first above written. SELAS CORPORATION OF AMERICA By: /s/ Michael J. McKenna ------------------------------------ Name: Michael J. McKenna Title: Chairman of the Board /s/ Mark S. Gorder --------------------------------------- Mark S. Gorder 9 EX-99.2 3 selas046003_ex99-2.txt AGREEMENT RE: TERMINATION FOLLOWING CHANGE OF CONTROL OR ASSET SALE This AGREEMENT is made and dated as of December 14, 2004, between Robert F. Gallagher ("Executive") and Selas Corporation of America ("Selas"). WHEREAS, Executive has been effective in performing his services to Selas; and WHEREAS, Executive is Chief Financial Officer, Vice President, Treasurer and Secretary of Selas; and WHEREAS, Selas recognizes the valuable services that Executive has rendered and desires to induce Executive to continue his active participation in the business of Selas by giving Executive certain assurances in the event of major changes in the structure or control of Selas; NOW, THEREFORE, in consideration of the agreements herein contained, and intending to be legally bound, the parties hereto agree as follows: 1. Termination Payment. If a Change of Control of Selas occurs during the term of this Agreement, and if Executive's employment by Selas is Involuntarily Terminated within one year after such Change of Control, Selas shall pay or cause to be paid to Executive, simultaneously with such Involuntary Termination, two years base salary at the base salary rate being earned by Executive immediately prior to the Change of Control or immediately prior to such Involuntary Termination, whichever is greater, together with all unpaid bonus, salary and benefits due to Executive. If a Change of Control of Selas occurs during the term of this Agreement, all stock options previously granted to Executive under any Selas stock option plan or otherwise shall vest immediately upon such Change of Control and be exercisable in accordance with the terms of such stock options. If an Asset Sale occurs during the term of this Agreement, and if Executive's employment by Selas is Involuntarily Terminated within one year after such Asset Sale, Selas shall pay or cause to be paid to Executive, simultaneously with such Involuntary Termination, two years base salary at the base salary rate being earned by Executive immediately prior to such Asset Sale or immediately prior to such Involuntary Termination, whichever is greater, together with all unpaid bonus, salary and benefits due to Executive; PROVIDED, HOWEVER, that Selas need not make such payment if the purchaser in such Asset Sale or an affiliate of such purchaser offers to employ Executive commencing at the time of closing of the Asset Sale at not less than the same rate of compensation (including both base salary and good faith bonus potential) and level of benefits as Executive was receiving immediately prior to the Asset Sale and does not Involuntarily Terminate Executive's employment during the one year period after the consummation of the Asset Sale. Selas agrees that any agreement to sell substantially all of the assets of Selas shall include a provision obligating the purchaser to fulfill any of Selas' obligations to Executive under this Agreement should Selas fail to fulfill said obligations. With respect to payment of bonus and benefits as provided in this section, if any bonus or benefits plan would compensate Executive only on the condition that Executive remains employed through the end of the applicable year, said condition shall not prevent Executive from receiving a pro rata portion of said bonus or benefits in the event of an Involuntary Termination within one year of a Change of Control or Asset Sale. If an Asset Sale occurs during the term of this Agreement, all stock options previously granted to Executive under any Selas stock option plan or otherwise shall vest immediately upon such Asset Sale and be exercisable in accordance with the terms of such stock options. For the purposes of any compensation, benefits, or other sums to be paid to Executive under this section, "simultaneously with" shall mean that any earned but unpaid vacation, and any unpaid salary and bonus, shall be 2 paid within three business days of an Involuntary Termination; any other employee benefits shall be paid according to the terms of the applicable plans; and the severance in an amount equal to two years base salary to be paid under this Agreement shall be paid in a lump sum within two weeks of an Involuntary Termination. Notwithstanding any other provision hereof, the obligations of Selas hereunder shall arise, if at all, only in connection with the earlier of the first Change of Control or first Asset Sale to occur after the date hereof; any second Change of Control or second Asset Sale which may occur within the one year period following the first Change of Control or first Asset Sale shall neither diminish nor trigger again the obligations set forth herein to the extent that such obligations may be applicable, it being understood that such obligations shall in no event extend beyond one year after the first Change of Control or Asset Sale. The following terms used herein have the meanings set forth below: "Asset Sale" means the sale of the assets of Selas (including the stock of subsidiaries of Selas) to which are attributable 90% or more of the consolidated sales volume of Selas; notwithstanding the foregoing and without limiting the generality of the foregoing, the sale of all or substantially all of the assets or stock of Selas' Precision Miniature Medical and Electronics Products Business shall constitute an Asset Sale. "Cause" means the following, provided that, in the case of circumstances described in clauses (iv) through (vi) below, Selas shall have given written notice thereof to Executive, and Executive shall have failed to remedy the circumstances as determined in the sole discretion of the Board of Directors of Selas within 30 days thereafter: (i) fraud or dishonesty in connection with Executive's employment or theft, misappropriation or embezzlement of Selas's funds; (ii) conviction of any felony, crime involving fraud or knowing 3 misrepresentation, or of any other crime (whether or not such felony or crime is connected with his employment) the effect of which in the judgment of the Board of Directors of Selas is likely to adversely affect Selas or its affiliates; (iii) material breach of Executive's employment obligations; (iv) repeated and consistent failure of Executive to be present at work during normal business hours unless the absence is because of a Disability; (v) willful violation of any express direction or requirement established by the Board of Directors of Selas, as determined by a majority of Board of Directors of Selas; (vi) insubordination, gross incompetence or misconduct in the performance of, or gross neglect of, Executive's duties hereunder, as determined by a majority of Board of Directors of Selas; or (vii) use of alcohol or other drugs which interfere with the performance by Executive of his duties, or use of any illegal drugs or narcotics. "Change of Control" of Selas means the acquisition by any "person"(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), including any affiliate or associate as defined in Rule 12b-2 under the Exchange Act of such person, other than Selas, any trustee or other fiduciary holding securities under an employee benefit plan of Selas, or any corporation owned, directly or indirectly, by the shareholders of Selas in substantially the same proportion as their ownership of capital stock of Selas, becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the combined voting power of Selas' then outstanding securities. "Disability" of Executive means that after being provided with any accommodation or leave required of Selas by law, the Executive still shall be physically or mentally incapacitated and as a result thereof shall be unable to continue substantially proper performance of his duties (reasonable absences because of sickness for up to six consecutive months excepted). If Executive shall not agree with a determination to terminate him because of 4 Disability, the question of Executive's ability shall be submitted to an impartial and reputable physician selected either by a mutual agreement of the parties or by the then president of the Medical Society of the county in which Executive is employed, and such physician's determination of disability shall be binding on the parties. "Involuntary Termination" (or "Involuntarily Terminated") means (a) any termination of employment of the Executive by Executive following (i) any reduction without his consent within the year following a Change of Control or Asset Sale in the amount of annual base compensation or in the employee benefits (but not in the amount of bonuses) inuring to Executive, as compared to the level of base compensation or benefits inuring to Executive immediately prior to the preceding Change of Control or Asset Sale, (ii) the imposition on Executive of a requirement that he change the location of his principal employment to a location more than 20 miles from the location immediately prior to the Change of Control or Asset Sale in order to maintain his employment or to maintain his compensation at its level immediately prior to the preceding Change of Control or Asset Sale if such change of location would impose a substantial burden on the Executive in commuting from his then residence to the new place of employment or (iii) the assignment to the Executive of duties that do not constitute managerial duties or duties for which his training and experience do not qualify him or (b) any termination of the employment of Executive by Selas other than for Cause, death or Disability. 2. Other Benefits. This Agreement shall not prejudice Executive's or his beneficiary's right to receive any death, disability, pension, 401-k, qualified benefit, or other benefits under any contract or plan otherwise due to Executive upon or following termination. 3. No Duty to Mitigate. Executive's benefits hereunder shall be considered severance pay in consideration of his past service to Selas, and pay in consideration of his 5 continued service from the date hereof, and his entitlement thereto shall not be governed by any duty to mitigate his damages by seeking further employment, nor offset by any compensation which he may receive from future employment. 4. Withholding; Other Tax Matters. Any payment required under this Agreement shall be subject to all applicable requirements of law with regard to withholding, filing, making of reports and the like. 5. Term. This Agreement shall terminate, except to the extent that any obligation hereunder remains unpaid as of such time, upon the earlier of (i) the termination of Executive's employment with Selas prior to a Change of Control or Asset Sale for any reason; or (ii) the termination of Executive's employment with Selas (or any successor) after a Change of Control or Asset Sale for any reason other than by Involuntary Termination. 6. Miscellaneous. a. This Agreement represents the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements in connection therewith. Without limiting the generality of the preceding sentence, Executive hereby acknowledges that Selas shall have no obligation to him under the termination program established in 1986. b. In the event that any provision of this Agreement shall be determined to be invalid, the remaining provisions shall be unaffected thereby and shall remain in full force and effect. c. This Agreement shall not be assignable by Executive, but Selas' obligation under the third sentence of Section 1 in connection with an Asset Sale may be assigned by Selas to the purchaser in connection with such Asset Sale if the Executive becomes 6 an employee of the purchaser or an affiliate immediately after the Asset Sale, in which case the assignee shall expressly assume and agree to perform the obligations set forth in the second sentence of Section 1 in connection with such Asset Sale in the same manner and to the same extent as if it were Selas and Selas shall by virtue thereof and without further act be released from its obligations hereunder. d. Any notice given hereunder shall be deemed to be given when personally delivered or mailed by certified or registered mail, return receipt requested, addressed to Selas at its principal offices or addressed to Executive at his latest address shown on the employment records. e. A waiver of breach of any provision hereof shall not be construed as a waiver of any subsequent breach hereof. f. If it is necessary for Executive to sue for payment hereunder, and such suit results in any payment to Executive, the employer shall pay Executive's reasonable counsel fees relating to such litigation. g. This Agreement may be amended, waived or terminated only by written instrument signed by both parties hereto. h. This Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania. i. Upon the occurrence of a Change of Control or Asset Sale, Selas or its assignee waives, and will not assert, any right to set off the amount of any claims, liabilities, damages or losses Selas or its assignee may have against any amounts payable by it to Executive hereunder, and any amounts payable to or otherwise accrued for the account of Executive in respect of any period prior to the termination of this Agreement shall be paid when due. 7 j. Nothing herein shall diminish Selas' right to terminate the employment of the Executive prior to a Change of Control or Asset Sale or impose any obligation to make any payment to the Executive in connection with any such termination. [Signatures begin on the next page] 8 IN WITNESS WHEREOF, Selas and Executive have executed this Agreement as of the date first above written. SELAS CORPORATION OF AMERICA By: /s/ Michael J. McKenna --------------------------------------- Name: Michael J. McKenna Title: Chairman of the Board /s/ Robert F. Gallagher --------------------------------------- Robert F. Gallagher 9 EX-99.3 4 selas046003_ex99-3.txt December 17, 2004 PERSONAL/CONFIDENTIAL - --------------------- HAND DELIVERED - -------------- Mr. Gerald Broecker Vice President Selas Corporation of America c/o Resistance Technology, Inc. 1260 Red Fox Road Arden Hills, MN 55112 RE: SEPARATION PACKAGE ------------------ Dear Jerry: As a result of cost cutting efforts, Selas is eliminating your position. We appreciate your past commitment and many contributions over the years to Selas. We have always found you to be an asset to Selas, and you have consistently acted with the highest integrity and professionalism. In recognition of your commitment and past contributions, Selas is pleased to offer you the separation package that is described below. Selas advises you to consult with legal counsel of your choice in making the determination of whether to accept this separation package. 1. You will resign, effective November 8, 2004 ("Resignation Date"), (a) your employment with Selas and each of its subsidiaries, (b) each position you hold as an officer of Selas and any of its subsidiaries, and (c) each position you hold as a director of any subsidiary of Selas. At the time you sign this Letter Agreement, you will also sign and deliver to me a letter of resignation in the form of Exhibit A, which is hereby incorporated. 2. Selas will pay an equivalent to the employer's share of the premiums for medical and dental insurance through November 8, 2005 if you elect and receive COBRA coverage, or until you find other employment which provides you with health insurance. You will remain responsible for the employee's share of the premiums during this time period. Thereafter, you will remain eligible as provided by law for continuing your medical and dental insurance coverage for the remaining COBRA period (which, under current law, will expire 18 months after your Resignation Date) at your own expense. If you rescind this Letter Agreement pursuant to section 14 below, Selas will not be obligated to make any payments specified in this section. You will still have the right to continue to participate in Selas' medical and dental plans upon timely payment of the full premiums therefore as provided under COBRA. Mr. Gerald Broecker December 17, 2004 Page 2 3. For purposes of general communication, your separation from employment will be represented by Selas and you as the elimination of a position as a cost-cutting measure. If you wish me to do so, I would be glad to provide you with a mutually agreeable letter of reference which we will draft together prior to your leaving your employment. 4. Selas agrees to retain you as an independent consultant for consultation and assistance regarding any transition issues (hereinafter the "Consulting Services"). This independent contractor relationship will commence immediately after the expiration of the revocation period set forth in section 14 of this Agreement and end on November 8, 2005, ("Consulting Period") except that you may terminate the consulting relationship at any time for any reason prior to November 8, 2005, with one (1) month written notice. Upon termination of the consulting relationship by you, all further payments of the retainer described below will cease. You agree to notify me immediately if you accept other consulting or employment elsewhere during this term. At all times during the consulting relationship, you shall be an independent contractor and not an employee, principle, agent, partner or joint venturer of Selas. During this term, you shall provide up to 500 hours of Consulting Services as requested by me, Bob Gallagher or by the Chairman of the Board of Directors of Selas. You agree to be reasonably available in a manner consistent with the scope of the Consulting Services hereunder. Your liaison at Selas for purposes of your Consulting Services will be me, Bob Gallagher, or the Chairman of the Board of Directors of Selas. In consideration for your Consulting Services, Selas shall pay you a retainer of $10,500 per month. In addition, Selas will also pay all reasonable business expenses you incur in providing the Consulting Services, including reasonable travel, lodging, meals, and other expenses related to those services, provided you submit to me a monthly expense report in a timely manner. Because you will perform the Consulting Services as an independent contractor, Selas will issue you a Form 1099 and not withhold any taxes. You will be solely responsible for all taxes. Your consulting retainer payment will be paid on or about the fifteenth day of each month during the consulting period and will be mailed to your home address of record. You will, however, not be entitled to any additional benefits such as vacation or sick pay during this consulting period since you will no longer be a Selas employee. During this consulting period, your Company stock options will not continue to vest. If you rescind this Letter Agreement pursuant to section 14 below, Selas will not be obligated to make the payments specified in this section. 5. Selas shall pay you any accrued salary plus 158.62 hours of vacation which represents your unused accrued and carry-over vacation compensation to which you are entitled as of your Resignation Date. The vacation pay will be paid to you on Selas' next regularly scheduled pay date and mailed to your home address of record. 6. You will not be entitled to any bonus under any bonus plan for Selas employees. 7. All life insurance and disability insurance benefits provided to you by or through Selas will terminate on the Resignation Date. 8. The terms and conditions of this Letter Agreement will be treated as confidential by the undersigned parties and will not be disclosed to any person other than the parties' Mr. Gerald Broecker December 17, 2004 Page 3 attorneys, accountants, financial and tax advisors, and by you to your spouse and by Selas only to its employees and Board members who have been informed of the confidentiality requirements of this Letter Agreement, who have agreed to abide by those requirements, and who have a legitimate business need to know. Other disclosure may be made as required by law or by any legal proceeding required by either party to enforce its or your rights under the terms and conditions of this Letter Agreement. The parties acknowledge that Selas may be required to disclose the terms of this Agreement in its filings with the Securities and Exchange Commission. 9. Nothing in this Letter Agreement is intended to be or will be deemed to be an admission by Selas or you that Selas or you or any of Selas' agents or employees has violated any state, local or federal law statute, regulation or ordinance, or principal of common law, or that Selas or you have engaged in any wrongdoing. 10. You agree that you will not disparage Selas, its Board, its management, or its employees in any respect. Selas agrees that its Board members and its management will not disparage you in any respect. 11. You agree that by signing this Letter Agreement you are, for yourself and anyone who asserts or obtains legal rights from you, releasing unconditionally and forever discharging Selas, its subsidiaries, affiliates and related entities, past and present Board members, officers, and employees and any entity affiliated with any of the foregoing, ("Released Parties") from any and all past or present claims, demands, obligations, actions, damages and expenses of any nature, whether known or unknown, whether based in tort, contract or other theory of recovery and whether for compensatory or punitive damages, which you now have, whether known or unknown, on account of or in any way arising out of the employment relationship between the parties and the termination of the employment relationship, including but not limited to any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Pennsylvania Human Relations Act, all other federal, state, or local civil rights law or common law, including but not limited to, retaliatory discharge, breach of contract, promissory estoppel, wrongful termination of employment, defamation, intentional or negligent infliction of emotional distress, and/or any other claims for unlawful employment practices, whether legal or equitable, including claims for attorney's fees. You acknowledge that you have been paid all wages and benefits due you as an employee of Selas as of the date you sign this Letter Agreement, other than accrued salary and vacation compensation specified in section 5. You agree not to institute or participate voluntarily in any law suit or proceeding brought by any individual relating in any way to your employment relationship with Selas up to the time of your signing this Agreement. You acknowledge that this release includes a waiver of any right to money or other individual remedies or damages awarded by any governmental agency including the EEOC and understand that this Agreement does not prohibit you from participating in any investigation or proceeding conducted by the EEOC. You also acknowledge that you are not a prevailing party under state or federal law. Mr. Gerald Broecker December 17, 2004 Page 4 12. You acknowledge and confirm that you have not caused or permitted any charge, compliant, lawsuit or any other action or proceeding whatsoever to be filed against the Released Parties based on your employment or termination of employment with Selas. 13. You have twenty-one (21) days, not counting the day you receive this Letter Agreement, to consider this separation package. You acknowledge that if you sign this Letter Agreement before the end of the 21-day period, it will be your personal, voluntary decision to waive the remainder of the consideration period. Selas and you agree that any changes in this Letter Agreement made prior to signing do not automatically restart the 21-day period for consideration. 14. You may rescind and revoke this Letter Agreement for any reason within seven (7) days after you sign this Letter Agreement, and it will not become effective or enforceable until this seven-day period has expired. To be effective, the rescission must be in writing and delivered by hand or mailed to Mark Gorder, President, Selas Corporation of America, 1260 Red Fox Road, Arden Hills, MN 55112, within such seven-day period. If mailed, the rescission must be (a) postmarked within the seven-day period; (b) properly addressed to me as shown above; and (c) sent by certified mail, return receipt requested. This Letter Agreement shall not become effective until the rescission period has expired. You will not be entitled to any payment if you rescind this Letter Agreement, other than salary, vacation, or other benefits payable as of your Resignation Date. 15. You retain all stock options under the Company's stock option plans that vested or became exercisable prior to your Resignation Date and you shall be able to exercise these options in accordance with such stock option plans during a period of not more than 90 days after your Resignation Date (but in no event after the expiration date set forth in such option), after which date such options shall expire; provided, however, that you shall be entitled to exercise in full (a) options to purchase 6,000 shares granted to you on December 19, 2000 and (b) options to purchase 5,000 shares granted to you on July 26, 2004, in each case on or prior to December 31, 2006, after which date such options shall expire. You understand that any incentive stock options that you exercise more than 90 days after your Resignation Date will be treated as non-qualified stock options and will not be treated as incentive stock options. 16. You agree that you will not retain any copies of company property or documents, except for those that I specifically authorize that you may retain for purposes of performing the Consulting Services. You agree that this obligation is ongoing and that if you subsequently discover any additional Company property you will promptly return it to Selas. On or before your Resignation Date, you agree to return promptly all other Company property and equipment of any kind and all files, documents, and copies of such. For the purposes of this section, "Confidential Information" means information not readily available to persons not employed by Selas or others who are not in a confidential relationship with Selas. Confidential information includes, but is not limited to, financial, customer, pricing, sales, marketing, investments, and strategic planning information and other Mr. Gerald Broecker December 17, 2004 Page 5 proprietary information further defined in the 1983 RTI, Inc. Patent and Secrecy Agreement, which is attached hereto as Exhibit B and incorporated as if set forth fully herein. You recognize and acknowledge that during your employment with Selas, you had access to, worked with and became familiar with Confidential Information of Selas and its subsidiaries. You further agree that you have established longstanding relationships with Selas' and its subsidiaries' customers, that Selas and its subsidiaries are engaged in highly competitive activities, and that Selas and its subsidiaries could suffer irreparable harm if you engage in competitive activities. You agree that until one year after the expiration or earlier termination of the consulting arrangement described in section 4, you will not on your own behalf or as a partner, officer, director, employee, agent, or consultant of any other person or entity, directly or indirectly, engage in the business of providing products or services to customers of Selas or any of its subsidiaries which are the same or similar to services provided by Selas or any of its subsidiaries. You and Selas agree that the products and services which Selas and its subsidiaries provide to their customers include services related to specialized industrial heat-processing systems used by manufacturers of steel, glass, and other materials; hearing device components and systems, molded plastics, medical plastics, termistors, capacitors, and other high technology products. You also agree that until one year after the expiration or earlier termination of the consulting arrangement described in section 4, you will not on your own behalf or as a partner, officer, director, employee, agent, or consultant of any other person or entity, solicit or induce any employee of Selas or any of its subsidiaries to leave their employment with Selas or any of its subsidiaries or consider employment with another person or entity. You further agree that until one year after the expiration or earlier termination of the consulting arrangement described in section 4, you will not solicit employment with any customers of Selas or any of its subsidiaries. You also agree that until one year after the expiration or earlier termination of the consulting arrangement described in section 4, you will not directly or indirectly solicit employment with a competitor of Selas or any of its subsidiaries. For purposes of this Letter Agreement, the term "competitor" includes, but is not limited to, any person, firm, company, corporation, or other legal entity engaged in the business of providing products or services which are the same or similar to services provided by Selas or any of its subsidiaries. You further understand and agree that you will not disclose or communicate any Confidential Information to any third party without the consent of Selas and that you will not make use of Confidential Information on your own behalf or on behalf of any third party. You understand that any breach of these paragraphs would cause irreparable harm to Selas, and that, therefore, Selas shall be entitled to an injunction prohibiting you from any such breach. This provision with respect to injunctive relief will not, however, diminish the rights of Selas to claim and recover damages in addition to injunctive relief. You expressly acknowledge Mr. Gerald Broecker December 17, 2004 Page 6 that the undertaking regarding Confidential Information set forth above shall survive the expiration or termination of other agreements or duties in this Letter Agreement. If you breach any of your obligations contained in the paragraphs set forth in this section 17 of this Letter Agreement, all consulting amounts paid and/or owed to you pursuant to this Letter Agreement at the election of Selas, shall be forfeited and returned to Selas. If you breach any of your obligations contained herein, Selas shall be able to pursue all legal and equitable remedies available. You may also be liable to Selas for any and all costs, including attorney's fees, incurred in enforcing this Letter Agreement. 17. You acknowledge and agree that Selas' payments to you and all other promises of Selas to you set forth in this Letter Agreement constitute full and adequate consideration for this Letter Agreement and that, if you do not sign this Letter Agreement or if you rescind pursuant to section 14, or otherwise challenge the effectiveness of all or any part of this Letter Agreement at any time, or breach any of your obligations contained in this Letter Agreement at any time, Selas shall have no obligation to provide any portion of the consideration. If either you or Selas breaches this Letter Agreement, the breaching party will pay all reasonable costs, including attorneys' fees, incurred by the non-breaching party in enforcing this Letter Agreement. 18. This Letter Agreement may not be modified or amended in any way except in a writing signed by both parties. This Letter Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors, and assigns and shall be interpreted in accordance with the laws of the Commonwealth of Pennsylvania. 19. If any provision of this Letter Agreement is held to be illegal, invalid or unenforceable under present or future laws, rules, or regulations, such provision shall be fully severable, and this Letter Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Letter Agreement, and the remaining provisions of this Letter Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Letter Agreement. 20. This Letter Agreement, the Stock Option Plan and the RTI Patent and Secrecy Agreement executed on June 30, 1983 (which is attached hereto as Exhibit B and incorporated as if set forth fully herein), constitutes the entire agreement of the parties concerning its subject matter and supersedes all prior agreements, statements, promises and negotiations, written or oral, concerning such subject matter. 21. By signing this Letter Agreement, you acknowledge that you have had the opportunity to be represented by your own attorney, that you have read and understood the terms of this Letter Agreement, and that you are voluntarily entering into this Letter Agreement to resolve any disputes with Selas and to receive the benefits of this separation package. Mr. Gerald Broecker December 17, 2004 Page 7 Please indicate your acceptance of this separation package by signing, dating, and returning to me the extra copy of this Letter Agreement that I have enclosed for you within the time provided in section 14. I look forward to hearing from you. SELAS CORPORATION OF AMERICA By /s/ Mark S. Groder ----------------------------- Mark S. Gorder, President Mr. Gerald Broecker December 17, 2004 Page 8 ACCEPTANCE ---------- I accept and agree to the terms of this Letter Agreement. Dated: 12/17/04 /s/ Gerald Broecker --------------------------- ----------------------------- Gerald Broecker Mr. Mark Gorder President Selas Corporation of America 1260 Red Fox Road Arden Hills, MN 55112 Dear Mark: I voluntarily resign, effective November 8, 2004, (a) my employment with Selas Corporation of America ("Selas") and each of its subsidiaries, (b) each position I hold as an officer of Selas and any of its subsidiaries, and (c) each position I hold as a director of any subsidiary of Selas. Yours truly, Mr. Gerald Broecker Vice President Selas Corporation of America EXHIBIT A --------- -----END PRIVACY-ENHANCED MESSAGE-----