EXHIBIT 10.01
[HEALTH-MOR LETTERHEAD]
September 11, 2001
Xx. Xxxx X. Xxxxx
HMI Industries Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Dear Xx. Xxxxx:
HMI Industries (the "Company") considers it essential to its best
interests to xxxxxx the continuous employment of key management personnel.
Recognizing that there may be some distracting questions or uncertainty
concerning the Company's future direction, the Company agrees that you shall
receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "change in control of the
Company". (as defined in section 2.)
1. TERM OF AGREEMENT. This agreement shall commence on October 1, 2001,
and shall continue in effect through September 30, 2002; provided, however, that
commencing on October 1, 2002 and each October 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than July 31 of such year, the Company shall have given notice that it
does not wish to extend this Agreement (provided that no such notice may be
given during the pendency of a potential change in control of the Company as
defined in Section 2); and provided, further, that if a change in control of the
Company, as defined in section 2, shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect for a
period of not less than twelve (12) months beyond the month in which such change
in control occurred. Notwithstanding anything provided herein to the contrary,
the term of this Agreement shall not extend beyond the end of the month in which
you attain "normal retirement age" under the provisions of the HMI Pension Plan
(or successor thereto) or any other tax-qualified retirement plan of the Company
or any of its subsidiaries in which you are participating (any such plan being
referred to herein as the "Company Pension Plan").
2. CHANGE IN CONTROL; POTENTIAL CHANGE IN CONTROL. (i) No benefits
shall be payable hereunder unless there shall have been a change in control of
the Company, as set forth below. For purposes of the Agreement, a "change in
control of the Company" shall be deemed to have occurred if:
(a) any "Person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
Company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of either (i) the
then outstanding shares of common stock of the Company or (ii) the
combined voting power of the Company's then outstanding voting
securities;
(b) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
clause (a), (c), or (d) of this Section) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve a reorganization,
merger or consolidation of the Company with any other Company, other
than (1) a reorganization, merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than 50% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
reorganization, merger or consolidation or (2) a reorganization, merger
or consolidation effected to implement a reorganization of the Company
(or similar transaction) in which no "person" (as hereinabove defined)
beneficiary owns, directly or indirectly, 20% or more of the combined
voting power of the Company's then outstanding voting securities; or
(d) the stockholders of the Company approve a plan of
dissolution or complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of
the Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(a) the Company enters in an agreement, the consummation of
which would result in the occurrence of a change in control of the
Company;
2
(b) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a change in control of the Company;
(c) any person (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company (or a
company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), or a person who is then currently properly
eligible to file and has properly filed a Schedule l3G (or any
successor filing) pursuant to the Exchange Act and the rules and
regulations there under, indicating beneficial ownership of securities
of the Company and stating that the securities were acquired in the
ordinary course of business and were not acquired with the purpose nor
with the effect changing or influencing the control of the Company, for
so long as such statement is true and correct) who is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the combined voting power of the Company's
then outstanding securities and, without the written consent of the
ownership of such securities by 3 percentage points or more; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential change in control of the
Company has occurred.
3. TERMINATION FOLLOWING CHANGE IN CONTROL (i) GENERAL. If any
of the events described in Section 2 constituting a change in control
of the Company shall have occurred, you shall be entitled to the
benefits provided in Section 4 (iii) upon termination of your
employment within 12 months following such a change in control of the
Company unless such termination is (a) because of your death or
Disability, (b) by the company for Cause, or (c) by you other than for
Good Reason. In the event your employment with the Company is
terminated for any reason and subsequently a change in control of the
Company should have occurred, you shall not be entitled to any benefits
hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability".
(iii) CAUSE. Termination by the Company of your employment for
"Cause" shall mean termination (a) upon the commission by you of a
willful serious act, such as embezzlements a against the Company which
is intended to enrich you at the expense of the Company or upon your
conviction of a felony involving moral turpitude or (b) in the
3
event of a willful, gross neglect or willful, gross misconduct,
resulting in either case in material harm to the Company. For purposes
of this Subsection, no act, or failure to act, on your part shall be
deemed unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best
interest of the Company.
(iv) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For purposes of the Agreement, "Good
Reason" shall mean, without your express written consent, the
occurrence after a change in control of the Company of any of the
Following circumstances unless such circumstances are fully corrected
prior to the Date of Termination (as defined in Section 3(v) specified
in the Notice of Termination (as defined in Section 3(v) given in
respect thereof:
(a) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary reductions similarly
affecting management personnel of the Company;
(b) the Company's requiring you to be based at a Company
office more than 50 miles from the Company's offices at which you are
principally employed immediately prior to the date of the change in
control except for required travel on the Company's business travel
obligations;
(c) the failure by the Company to pay to you any portion of
your current compensation within seven (7) days of the date of such
compensation is due or any portion of your compensation under any
deferred compensation program of the Company within thirty (30) days of
the date such compensation is due;
(d) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (v) hereof (and, if applicable, the
requirements of Subsection (iii) hereof), which purported termination
shall not be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute consent
to, or a waiver of rights with respect to any circumstance constituting
Good Reason hereunder.
(v) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 6. "Notice of Termination" shall mean a notice that shall
indicate the specific termination provision in this Agreement relied
upon
4
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so Indicated.
(vi) DATE OF TERMINATION. ETC. "Date of Termination" shall
mean (a) if your employment is terminated for Disability thirty (30)
days after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such
thirty (30)-day period), and (b) if your employment is terminated
pursuant to Subsection (iii) or (iv) hereof or for any other reason
(other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination for Cause shall no be
less than thirty (30) days from the date such notice of Termination is
given, and in the case of a termination for Good Reason shall not be
less than thirty (30) days nor more than sixty (60) days from the date
such Notice of Termination is given)- provided, however, that if within
fifteen (15) days after any Notice of Termination is given, or, if the
Notice of Termination is not property given, prior to the Date of
Termination (as determined without regard to an extension of such Date
of Termination as described in this proviso), the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual
written agreement of the parties or by a binding arbitration award;
and provided, further, that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any dispute,
the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given (including but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
Subsection. Amounts paid until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this Subsection are
in addition to 9 other amounts due under this Agreement, and shall not
be offset against or reduce any other amounts due under this Agreement
and shall not be reduced by any compensation earned by you as the
result of employment by another employer.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
Following a change in control of the Company, you shall be entitled to
the following benefits during a period of disability, or upon
termination of your employment, as the case may be, provided that such
period of disability or termination occurs during the term of this
Agreement,
(i) During, any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive your base salary at the
rate in effect at the commencement of any such period, together with
all compensation payable to you under the Company's disability plan or
program or other similar plan during such period, until this Agreement
is terminated pursuant to Section 3(ii) hereof. Thereafter, or in the
event your employment shall be terminated by reason of your death, your
benefits shall be determined under the
5
Company's retirement, insurance and other compensation programs then in
effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, the Company shall pay you
your full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company shall have
no further obligations to you under this Agreement.
(iii) If your employment by the Company should be terminated
by the Company other than for Cause or Disability or if you should
terminate your employment for Good Reason, you shall be entitled to the
benefits provided below:
(a) The Company shall pay to you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled
under any compensation plan of the Company, at the time such payments
are due; and
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you, at the time specified in subsection (iv), a lump
sum Severance Payment equal to twelve (12) months salary in effect on
the Date of Termination.
(iv) The payments provided for in Subsection (iii) shall be
made not later than the fifth day following the Date of Termination-
provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of
the minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in 1274(b)(2)(B)
of the Code) as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the Date of Termination. In
the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute
a loan by the Company to you payable on the fifth day after demand
therefore by the Company (together with interest at the rate provided
in section 1274(b)(2)(B) of the Code.)
(v) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or
otherwise.
6
(vi) Notwithstanding any provision of this Agreement to the
contrary, the aggregate present value of all "payments in the nature
of compensation" (within the meaning of Section 280G of the Code)
provided to you in connection with a change in control of the Company
or the termination of your employment shall be one dollar less than the
amount that is finally deductible by the Company under Section 280G of
the Code and, to the extent necessary, payments and benefits under this
Agreement shall be reduced in order that this limitation not be
exceeded. It is the intention of this Subsection (vi) to avoid excise
taxes on you under Section 4999 of the Code or the disallowance of a
deduction to the Company pursuant to Section 280G of the Code.
5. SUCCESSORS: BINDING AGREEMENT. (i) The Company will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from the Company
in the same amount and on the same terms to which you would be entitled
hereunder if you terminate your employment for Good Reason following a
change in control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
the Agreement, "Company shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(ii) This agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees. If you should die while any amount would still be payable
to you hereunder had you continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to your devisee, legatee or other designee or, if
there is no such designee, to your estate.
(iii) The Company expressly acknowledges and agrees that you
shall have a contractual right to the benefits provided hereunder,
and the Company expressly waives any ability, if possible, to deny
liability for any breach of its contractual commitment hereunder upon
the grounds of lack of consideration, accord and satisfaction or any
other defense. In any dispute arising after a change in control of the
Company as to whether you are entitled to benefits under this
Agreement, there shall by a presumption that you are entitled to such
benefits and the burden of proving otherwise shall be on the Company.
(iv) AR benefits to be paid hereunder shall be in addition to
any disability, workers' compensation or other Company benefit plan
distribution, unpaid vacation or other unpaid benefits that you have at
the Date of Termination.
7
6. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed
by the United Sates certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notice to
the Company shall be directed to the attention of the Board with a copy
to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective
only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged as agreed unless such waiver,
modification or discharge is agreed to in writing and signed by you and
such officer as may be specifically designated by the Board. No waiver
by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements, or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth
in this Agreement. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the
State of Ohio without regard to its conflicts of law principles. Any
references to sections of the Exchange Act or the Code shall be deemed
also to refer to any successor provisions to such sections. Any
payments provided hereunder shall be paid net of any applicable
withholding required under federal, state, or local law. In the event
of a change in control of the Company during the term of this
Agreement, the obligations of the Company under Section 4 shall survive
the expiration of the term of this Agreement, the obligations of the
Company under Section 4 shall survive the expiration of the term of
this Agreement consistent with the periods referenced in Section 4.
8. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in the State
of Ohio, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid
until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
8
11. ENTIRE AGREEMENT. This Agreement does not constitute an
employment agreement between you and the Company. No representation,
promise or inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound by or
liable for any alleged representation, promise or inducement not so set
forth.
You acknowledge that you have read this Agreement, understand
its terms and that it has been entered into by you voluntary. You
acknowledge that the payments to be made hereunder constitute
additional compensation to you. You further acknowledge that you have
had sufficient opportunity to consider this Agreement and discuss it
with advisors of your choice, including your attorney and accountants.
You acknowledge that you have been informed that you have the right to
consider this Agreement for a period of at least twenty-one (21) days
prior to entering into it. You acknowledge that you have taken
sufficient time to consider this Agreement before signing it. You also
acknowledge that you have the right to revoke this Agreement for a
period of seven (7) days following the Agreement's execution by giving
written notice to the Company.
12. EFFECTIVE DATE. This Agreement shall become effective as
of January 1, 2001. If this letter sets forth our agreement on the
subject matter thereof, kindly sign and return to the Company the
enclosed copy of this letter, which with then constitute our agreement
on this subject.
Sincerely,
HMI Industries Inc.
/s/ Xxxx X. Xxxxx /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
Chairman and CEO
Accepted and agreed to this
11th day of September, 2001.
9
