EXHIBIT 10.15
OFFICER'S EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made and entered into this 29th day of April, 2003, by and
between KENNAMETAL INC., a corporation organized under the laws of the
Commonwealth of Pennsylvania, for and on behalf of itself and on behalf of its
subsidiary companies (hereinafter referred to as "Kennametal"), and Carlos M.
Cardoso, an individual (hereinafter referred to as "Employee").
WITNESSETH:
WHEREAS, Employee acknowledges that by reason of employment by
Kennametal, it is anticipated that Employee will work with, add to, create, have
access to and be entrusted with trade secrets and confidential information
belonging to Kennametal which are of a technical nature or business nature or
pertain to future developments, the disclosure of which trade secrets or
confidential information would be highly detrimental to the interests of
Kennametal;
WHEREAS, in order to have the benefit of Employee's
assistance, Kennametal is desirous of employing or continuing the employment of
Employee;
WHEREAS, Kennametal offered, and Employee accepted, certain
terms of employment to which the parties mutually agreed, as set forth in the
letter agreement, dated as of March 8, 2003 (the "Letter Agreement"), attached
hereto as Exhibit A;
WHEREAS, on the date hereof, the Board of Directors of
Kennametal elected Employee a Vice President of Kennametal;
NOW, THEREFORE, Kennametal and Employee, each intending to be
legally bound hereby, do mutually covenant and agree as follows:
1. (a) Subject to the terms and conditions set forth herein,
Kennametal hereby agrees to employ Employee as of the date hereof, and
Employee hereby accepts such employment and agrees to devote his full
time and attention to the business and affairs of Kennametal, in such
capacity or capacities and to perform to the best of his ability such
services as shall be determined from time to time by the Chief
Executive Officer and the Board of Directors of Kennametal until the
termination of his employment hereunder.
(b) Subject to the terms of the Letter Agreement, Employee's base
salary, the size of bonus awards, if any, granted to him and other
emoluments for his services, if any, shall be determined by the Board
of Directors or its Committee on Executive Compensation, as
appropriate, from time to time in their sole discretion.
(c) Attached hereto as Exhibits B, C and D are the Incentive Stock
Option Grant, the Nonstatutory Stock Option Grant and the Restricted
Stock Award agreements, respectively, granted by the Company to
Employee in accordance with the terms of the Letter Agreement.
(d) As set forth in the Letter Agreement, Employee will forfeit
the Nonstatutory Stock Options, the Restricted Stock Award, and
eligibility for target bonuses and any guaranteed or sign-on bonuses
paid if Employee shall voluntarily terminate his employment with
Kennametal within twelve (12) months of the commencement of Employee's
employment. In the event that Employee has received any such bonuses or
has sold any stock pursuant to the options or award prior to a
voluntary termination within twelve (12) months of the commencement of
Employee's employment, Employee shall immediately reimburse Kennametal
for such bonuses or gain from such stock sales as the case may be.
2. In addition to the compensation set forth or contemplated elsewhere
herein, Employee, subject to the terms and conditions of this Agreement, shall
be entitled to participate in all group insurance programs, retirement income
(pension) plans, thrift plans and vacation and holiday programs normally
provided for other executives of Kennametal. Nothing herein contained shall be
deemed to limit or prevent Employee, during his employment hereunder, from being
reimbursed by Kennametal for out-of-pocket expenditures incurred for travel,
lodging, meals, entertainment expenses or any other expenses in accordance with
the policies of Kennametal applicable to the executives of Kennametal.
3. Employee's employment may be terminated with or without any reason for
termination by either party hereto at any time by giving the other party prior
written notice thereof, provided, however, that any termination on the part of
Kennametal shall occur only if specifically authorized by its Board of
Directors; provided, further, that termination by Kennametal for Cause (as
hereinafter defined) shall be made by written notice which states that it is a
termination for Cause; and provided, further, that termination by Employee,
other than termination for Good Reason (as hereafter defined) following a
Change-in-Control (as hereafter defined), shall be on not less than 30 days
prior written notice to Kennametal.
4. (a) In the event that Employee's employment is terminated by
Kennametal prior to a Change-in-Control (as hereinafter defined) and
other than for Cause, Employee will receive as severance pay, in
addition to all amounts due him at the Date of Termination (as
hereinafter defined), an amount, payable promptly after the Date of
Termination, equal to three months' base salary at the annual rate in
effect on the Date of termination.
(b) In the event that Employee's employment is terminated by
Employee following a Change-in-Control (as hereafter defined) without
good reason (as such term in defined in paragraph 4(h)) or prior to a
Change-in-Control (as hereinafter defined), Employee will not be
entitled to receive any severance pay in addition to the amounts, if
any, due him at the Date of Termination (as hereinafter defined).
(c) In the event at or after a Change-in-Control and prior to the
third anniversary of the date of the Change-in-Control that Employee's
employment is terminated by Employee for Good Reason or by Kennametal
other than for Cause or Disability pursuant to paragraph 5, Employee
will receive as severance pay (in addition to all other amounts due him
at the Date of Termination) an amount equal to the product of:
(i) the lesser of
(x) two and eight tenths (2.8),
(y) a number equal to the number of calendar
months remaining from the Date of Termination to the
Employee's Retirement Date (as such term is hereafter
defined) divided by twelve (12), or
(z) a number equal to the product obtained by
multiplying thirty-six (36) less the number of
completed months after the date of the Change
in-Control during which the Employee was employed and
did not have Good Reason for termination times one-
twelfth (1/12);
times
(ii) the sum of
(x) Employee's base salary at the annual rate in
effect on the Date of Termination (or, at Employee's
election, at the annual rate in effect on the first
day of the calendar month immediately prior to the
Change-in-Control), plus
(y) the average of any bonuses which Employee
was entitled to or paid during the three most recent
fiscal years ending prior to the Date of Termination.
Such severance pay shall be paid by delivery of a cashier's or
certified check to the Employee at Kennametal's executive offices on a
date which is no later than five business days following the Date of
Termination.
In addition to the severance payments provided for in this
paragraph 4(c), Employee also will receive the same or equivalent
medical, dental, disability and group insurance benefits as were
provided to the Employee at the Date of Termination, which benefits
shall be provided to Employee for a three year period commencing on the
Date of Termination. The Employee shall also be deemed and shall be
credited for computing benefits, for vesting and for all other purposes
under any pension or retirement income plan of Kennametal and under the
Supplemental Executive Retirement Plan to have continuously remained in
the employment of Kennametal for the three year period (or, if clause
(i)(y) or
clause(i)(z) above of this paragraph 4(c) is applicable to determine
the severance payments to be made, the lesser period measured in years
equal to clause (i)(y) or clause (i)(z) above, whichever is applicable)
following the Date of Termination at an annual compensation equal to
the sum of the base salary and bonus which were used to compute the
payment due the Employee under the first paragraph of this paragraph
4(c).
(d) If for any reason, whether by law or provisions of
Kennametal's employee medical, dental or group insurance, pension or
retirement plan or other benefit plans, any benefits which the Employee
would be entitled to under the foregoing subparagraph (c) of this
paragraph 4 cannot be paid pursuant to such employee benefit plans,
then Kennametal hereby contractually agrees to pay to the Employee the
difference between the benefits which the Employee would have received
in accordance with the foregoing subparagraphs of this paragraph 4 if
the relevant employee medical, dental or group insurance or pension or
retirement plan or other benefit plan could have paid such benefit and
the amount of benefits, if any, actual paid by such employee medical,
dental or group insurance or pension or retirement plan or other
benefit plan. Kennametal shall not be required to fund its obligation
to pay the foregoing difference.
(e) In the event of a termination of employment under the
circumstances above described in paragraph 4(c), Employee shall have no
duty to seek any other employment after termination of Employee's
employment with Kennametal and Kennametal hereby waives and agrees not
to raise or use any defense based on the position that Employee had a
duty to mitigate or reduce the amounts due him hereunder by seeking
other employment whether suitable or unsuitable and should Employee
obtain other employment, then the only effect of such on the
obligations of Kennametal hereunder shall be that Kennametal shall be
entitled to credit against any payments which would otherwise be made
for medical, dental or group insurance or similar benefits (excluding,
however, any credit against Kennametal payments relating to pension or
retirement benefits or the Supplemental Executive Retirement Plan)
pursuant to the benefit provisions set forth in the second paragraph of
paragraph 4(c) hereof, any comparable payments to which Employee is
entitled under the employee benefit plans maintained by Employee's
other employer or employers in connection with services to such
employer or employers after termination of his employment with
Kennametal.
(f) The term "Change in Control" shall mean a change in control of
a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A promulgated under the Securities Exchange Act of 1934
as in effect on the date hereof ("1934 Act"), or if Item 6(e) is no
longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the 1934 Act which serve similar purposes;
provided that, without limitation, such a change in control shall be
deemed to have occurred if (A) Kennametal shall be merged or
consolidated with any corporation or other entity other than a merger
or consolidation with a corporation or other entity all of whose equity
interests are owned by Kennametal immediately prior to the merger or
consolidation, or
(B) Kennametal shall sell all or substantially all of its operating
properties and assets to another person, group of associated persons or
corporation, or (C) any "person" (as such term is used in Sections
13(d) and 14(d) of the 1934 Act), is or becomes a beneficial owner,
directly or indirectly, of securities of Kennametal representing 25% or
more of the combined voting power of Kennametal's then outstanding
securities coupled with or followed by the existence of a majority of
the board of directors of Kennametal consisting of persons other than
persons who either were directors of Kennametal immediately prior to or
were nominated by those persons who were directors of Kennametal
immediately prior to such person becoming a beneficial owner, directly
or indirectly, of securities of Kennametal representing 25% or more of
the combined voting power of Kennametal's then outstanding securities.
(g) For purposes of this Agreement "Date of Termination" shall
mean:
(i) if Employee's employment is terminated due to his
death or retirement, the date of death or retirement,
respectively; or
(ii) if Employee's employment is terminated for any other
reason, the date on which the termination becomes effective as
stated in the written notice of termination given to or by the
Employee.
(h) The term "Good Reason" for termination by the Employee shall
mean the occurrence of any of the following at or after a
Change-in-Control:
(i) without the Employee's express written consent, the
assignment to the Employee of any duties materially and
substantially inconsistent with his positions, duties,
responsibilities and status with Kennametal immediately prior
to a Change-in-Control, or a material change in his reporting
responsibilities, titles or offices as in effect immediately
prior to a Change-in-Control, or any removal of the Employee
from or any failure to re-elect the Employee to any of such
positions, except in connection with the termination of the
Employee's employment due to Cause (as hereinafter defined) or
as a result of the Employee's death;
(ii) a reduction by Kennametal in the Employee's base
salary as in effect immediately prior to any
Change-in-Control;
(iii) a failure by Kennametal to continue to provide
incentive compensation, under the rules by which incentives
are provided, comparable to that provided by Kennametal
immediately prior to any Change-in-Control;
(iv) the failure by Kennametal to continue in effect any
benefit or compensation plan, stock option plan, pension plan,
life insurance plan,
health and accident plan or disability plan in which Employee
is participating immediately prior to a Change-in-Control
(provided, however, that there shall not be deemed to be any
such failure if Kennametal substitutes for the discontinued
plan, a plan providing Employee with substantially similar
benefits) or the taking of any action by Kennametal which
would adversely affect Employee's participation in or
materially reduce Employee's benefits under any of such plans
or deprive Employee of any material fringe benefit enjoyed by
Employee immediately prior to a Change-in-Control;
(v) the failure of Kennametal to obtain the assumption of
this Agreement by any successor as contemplated in paragraph
11 hereof;
(vi) the relocation of the Executive to a facility or a
location more than 50 miles from the Executives then present
location, without the Executives prior written consent; or
(vii) any purported termination of the employment of
Employee by Kennametal which is not for Cause as provided in
paragraph 5.
5. In the event that Employee (a) shall be guilty of malfeasance, willful
misconduct or gross negligence in the performance of the services contemplated
by this Agreement, or (b) shall not make his services available to Kennametal on
a full time basis in accordance with paragraph 1(a) hereof for any reason
(including Disability) other than arising from Employee's incapacity due to
physical or mental illness or injury which does not constitute Disability and
other than by reason of the fact Employee's employment has been terminated under
the circumstances described in paragraph 4(a), or (c) shall breach the
provisions of paragraph 8 hereof (the matters described in subparagraphs (a),
(b) and (c) are collectively referred to as "Cause"), Kennametal shall have the
right, exercised by resolution adopted by a majority of its Board of Directors,
to terminate Employee's employment for Cause by giving prior written notice to
Employee of its election so to do. In that event, Employee's employment shall be
deemed terminated for Cause, Employee shall not be entitled to the benefits set
forth in paragraph 4 which shall not be paid or payable and Kennametal only
shall have the obligation to pay Employee the unpaid portion of Employee's base
salary for the period from the last period from which Employee was paid to the
Date of Termination; provided, however, that if Employee's employment is
terminated as a result of the Disability of Employee, the benefits set forth in
paragraph 4 shall not be paid or payable but Employee shall be entitled to
receive the annual supplement under the Supplemental Executive Retirement Plan
and Employee's employment by Kennametal shall not be deemed terminated for
purposes of the Long-Term Disability Plan, Retirement Income Plan for US
Salaried Employees or any other benefit plan which so provides. For purposes of
this Agreement "Disability" shall mean such incapacity due to physical or mental
illness or injury which results in the Employee's being absent from his
principal office at Kennametal's offices for the entire portion of 180
consecutive business days. Prior to a Change-in-Control, a decision by the Board
of Directors of Kennametal that "Cause" exists shall be in the discretion of the
Board of Directors and shall be final and binding upon the
Employee and his rights hereunder. After a Change-in-Control, "Cause" shall not
be deemed to include opposition by Employee to such a Change-in-Control or any
matter incidental thereto and any determination by the Board of Directors that
"Cause" existed shall not be final or binding upon the Employee or his rights
hereunder or entitled to any deference in any court or other tribunal.
6. Employee understands and agrees that, except to the extent Employee is
entitled to the benefits provided in paragraph 4(c) hereof, in the event
Employee resigns or his employment is terminated for any reason other than death
or Disability prior to his "Retirement Date" (as hereinafter defined), he will
forfeit any interest he may have in any Kennametal retirement income plan
(except to the extent vested by actual service to date of separation as per the
plan provisions), and all other benefits dependent upon continuing service. The
term "Retirement Date" shall mean the first day of the month following the day
on which Employee attains his sixty-fifth birthday, or at Employee's request,
any other day that Kennametal's Board of Directors may approve in writing.
7. Nothing herein contained shall affect the right of Employee to
participate in and receive benefits under and in accordance with the then
current provisions of any retirement income, profit-sharing, additional year-end
or periodic remuneration or bonus, incentive compensation, insurance or any
other employee welfare plan or program of Kennametal and all payments hereunder
shall be in addition to any benefits received thereunder (including long term
disability payments).
8. During the period of employment of Employee by Kennametal and for
three years thereafter, (provided, however, that this paragraph 8 shall not
apply to the Employee following a termination of Employee's employment (x) if a
Change-in-Control, shall have occurred prior to the Date of Termination or (y)
if Employee's employment is terminated by Kennametal other than for Cause), he
will not, in any geographic area in which Kennametal is offering its services
and products, without the prior written consent of Kennametal:
(a) directly or indirectly engage in, or
(b) assist or have an active interest in (whether as proprietor,
partner, investor, shareholder, officer, director or any type of
principal whatsoever), or
(c) enter the employ of, or act as agent for, or advisor or
consultant to, any person, firm, partnership, association, corporation
or business organization, entity or enterprise which is or is about to
become directly or indirectly engaged in, any business which is
competitive with any business of Kennametal or any subsidiary or
affiliate thereof in which Employee is or was engaged; provided,
however, that the foregoing provisions of this paragraph 8 are not
intended to prohibit and shall not prohibit Employee from purchasing,
for investment, not in excess of I% of any class of stock or other
corporate security of any company which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
Employee acknowledges that the breach by him of the provisions of this
paragraph 8 would cause irreparable injury to Kennametal, acknowledges and
agrees that remedies at law for any such breach will be inadequate and consents
and agrees that Kennametal shall be entitled, without the necessity of proof of
actual damage, to injunctive relief in any proceedings which may be brought to
enforce the provisions of this paragraph 8. Employee acknowledges and warrants
that he will be fully able to earn an adequate livelihood for himself and his
dependents if this paragraph 8 should be specifically enforced against him and
that such enforcement will not impair his ability to obtain employment
commensurate with his abilities and fully acceptable to him.
If the scope of any restriction contained in this paragraph 8 is too
broad to permit enforcement of such restriction to its full extent, then such
restriction shall be enforced to the maximum extent permitted by law and
Employee and Kennametal hereby consent and agree that such scope may be
judicially modified in any proceeding brought to enforce such restriction.
9. (a) Employee acknowledges and agrees that in the course of his
employment by Kennametal, Employee may work with, add to, create or
acquire trade secrets and confidential information ("Confidential
Information") which could include, in whole or in part, information:
(i) of a technical nature such as, but not limited to,
Kennametal's manuals, methods, know-how, formulae, shapes,
designs, compositions, processes, applications, ideas,
improvements, discoveries, inventions, research and
development projects, equipment, apparatus, appliances,
computer programs, software, systems documentation, special
hardware, software development and similar items; or
(ii) of a business nature such as, but not limited to,
information about business plans, sources of supply, cost,
purchasing, profits, markets, sales, sales volume, sales
methods, sales proposals, identity of customers and
prospective customers, identity of customers' key purchasing
personnel, amount or kind of customers' purchases and other
information about customers; or
(iii) pertaining to future developments such as, but not
limited to, research and development or future marketing or
merchandising.
Employee further acknowledges and agrees that (i) all Confidential
Information is the property of Kennametal; (ii) the unauthorized use,
misappropriation or disclosure of any Confidential Information would constitute
a breach of trust and could cause irreparable injury to Kennametal; and (iii) it
is essential to the protection of Kennametal's goodwill and to the maintenance
of its competitive position that all Confidential Information be kept secret and
that Employee not disclose any Confidential Information to others or use any
Confidential Information to the detriment of Kennametal.
Employee agrees to hold and safeguard all Confidential Information in
trust for Kennametal, its successors and assigns and Employee shall not (except
as required in the performance of Employee's duties), use or disclose or make
available to anyone for use outside Kennametal's organization at any time,
either during employment with Kennametal or subsequent thereto, any of the
Confidential Information, whether or not developed by Employee, without the
prior written consent of Kennametal.
(b) Employee agrees that:
(i) he will promptly and fully disclose to Kennametal or
such officer or other agent as may be designated by Kennametal
any and all inventions made or conceived by Employee (whether
made solely by Employee or jointly with others) during
employment with Kennametal (1) which are along the line of the
business, work or investigations of Kennametal, or (2) which
result from or are suggested by any work which Employee may do
for or on behalf of Kennametal; and
(ii) he will assist Kennametal and its nominees during and
subsequent to such employment in every proper way (entirely at
its or their expense) to obtain for its or their own benefit
patents for such inventions in any and all countries; the said
inventions, without further consideration other than such
salary as from time to time may be paid to him by Kennametal
as compensation for his services in any capacity, shall be and
remain the sole and exclusive property of Kennametal or its
nominee whether patented or not; and
(iii) he will keep and maintain adequate and current
written records of all such inventions, in the form of but not
necessarily limited to notes, sketches, drawings, or reports
relating thereto, which records shall be and remain the
property of and available to Kennametal at all times.
(c) Employee agrees that, promptly upon termination of his
employment, he will disclose to Kennametal, or to such officer or other
agent as may be designated by Kennametal, all inventions which have
been partly or wholly conceived, invented or developed by him for which
applications for patents have not been made and shall thereafter
execute all such instruments of the character hereinbefore referred to,
and will take such steps as may be necessary to secure and assign to
Kennametal the exclusive rights in and to such inventions and any
patents that may be issued thereon any expense therefor to be borne by
Kennametal.
(d) Employee agrees that he will not at any time aid in attacking
the patentability, scope, or validity of any invention to which the
provisions of subparagraphs (b) and (c), above, apply.
10. In the event that (a) Employee institutes any legal action to enforce
his rights under, or to recover damages for breach of this Agreement, or (b)
Kennametal institutes any action to avoid making any payments due to Employee
under this Agreement, Employee, if he is the prevailing party, shall be entitled
to recover from Kennametal any actual expenses for attorney's fees and other
disbursements incurred by him in relation thereto.
11. The terms and provision of this Agreement shall be binding upon, and
shall inure to the benefit of, Employee and Kennametal, it subsidiaries and
affiliates and their respective successors and assigns.
12. This Agreement and the Letter Agreement constitute the entire agreement
between the parties hereto and supersede all prior agreements and
understandings, whether oral or written, among the parties with respect to the
subject matter hereof. This Agreement may not be amended orally, but only by an
instrument in writing signed by each of the parties to this Agreement.
13. The invalidity or unenforceability of any provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provision were
omitted.
14. Any pronoun and any variation thereof used in this Agreement shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the parties hereto may require.
15. Kennametal shall be entitled as a condition to paying any severance pay
or providing any benefits hereunder upon a termination of the Employee's
employment to require the Employee to deliver on or before the making of any
severance payment or providing of any benefit a release in the form of Exhibit E
attached hereto.
16. Notwithstanding any other provision of this Agreement, in the event
that any payment or benefit received, or to be received, by Employee in
connection with a change in control of the Corporation, or the termination of
the Employees' employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Corporation, any person whose
actions result in a change in control or any person affiliated with the
Corporation or such person) (collectively, the "Total Payments") would not be
deductible, in whole or in part, as a result of section 28OG of the Internal
Revenue Code of 1986 (the "Code") by the Corporation, an affiliate or other
person making such payment or providing such benefit, the payments due under
this Agreement (the "Contract Payments") shall be reduced until no portion of
the Total Payments is not deductible, or the Contract Payments are reduced to
zero. In the event that the Corporation determines that the Total Payments would
not be deductible, in whole or part, as a result of section 28OG of the Code,
the Corporation shall immediately notify Employee of this determination and the
amount which would not be so deductible as well as a computation of Total
Payments. Employee shall have five (5) business days after receipt of the
foregoing notice and computation to waive in writing all or any portion of any
of the Total Payments and any portion of the Total Payments the receipt or
enjoyment of which Employee shall have effectively
waived in writing shall not be taken into account. If the Corporation had
already withheld any Contract Payments prior to receipt of such waiver, the
Corporation upon receipt of such waiver shall immediately pay to Employee any
withheld Contract Payments which would have been paid had the Corporation had
the Employee's written waiver prior to the date the Corporation withheld any
such payments.
For purposes of this limitation:
(a) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by the Corporation's
independent auditors and acceptable to Employee does not constitute a
"parachute payment" within the meaning of section 28OG(b)(2) of the
Code,
(b) the Contract Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those Contract
Payments which are waived in writing by the Employee or referred to in
clause (a)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of section 28OG(b)(4) of
the Code or are otherwise not subject to disallowance as deductions, in
the opinion of the tax counsel referred to in clause (a); and
(c) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the
Corporation's independent auditors in accordance with the principles of
section 28OG(d)(3) and (4) of the Code.
17. This Agreement and the Letter Agreement, and any dispute hereunder or
thereunder, shall be governed, interpreted, construed and applied in
accordance with the laws of the Commonwealth of Pennsylvania, without
regard to the conflicts of laws provisions.
WITNESS the due execution hereto the day and year first above written.
ATTEST: KENNAMETAL INC.
/s/ Susan Melbourne /s/ David W. Greenfield
Susan Melbourne By: David W. Greenfield
Vice President, Secretary and General
Counsel
WITNESS: EMPLOYEE:
/s/ Jacqueline L. Zitt /s/ Carlos M. Cardoso
Jacqueline L. Zitt Carlos M. Cardoso
President, Metalworking Solutions and
Services Group