Exhibit 10.04
[HMI LOGO] [PRESIDENT'S E LOGO]
January 1, 1998
Xxx Xxxxxx
HMI Industries
0000 Xxxxxxx Xxx.
Cleveland, OH 44114
Dear Xx. Xxx Xxxxxx:
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 January 1, 1998, and
shall continue in effect through September 30, 1998; provided, however, that
commencing on October 1, 1998 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:
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(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 recapitalization
of the Company (or similar transaction) in which no "person" (as hereinabove
defined) beneficially 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;
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(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 13G (or
any successor filing) pursuant to the Exchange Act and the rules and regulations
thereunder, 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 embezzlement, against the Company which is intended to enrich you at the
expense of the Company or upon your
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conviction of a felony involving moral turpitude or (b) in the 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 "willful" 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(vi))
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 all 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 and shall set forth in
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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 not
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 properly 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 all 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
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determined under the Co 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 therefor 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.
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(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 fully 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) All 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.
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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 States
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 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. All 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 unenforceabiity 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 Oklahoma, 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.
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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 voluntarily. 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, 1998. 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 XXX
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Accepted and Agreed this
5 day of Jan, 1998 Xxxx X. Xxxxx XXX
--- --- President
/s/ Xxx Xxxxxx
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Xxx Xxxxxx
