Document:

Ex-4.1

 

Exhibit 4.1

FIRST AMENDMENT TO

RIGHTS AGREEMENT

     THIS FIRST AMENDMENT TO RIGHTS AGREEMENT (this “First Amendment”) is made
and entered into as of this 6th day of October, 2004, by and between KENNAMETAL
INC. (the “Company”) and MELLON INVESTOR SERVICES LLC, as Rights Agent (the
“Rights Agent”).

Recitals

     A.     The Company and the Rights Agent’s predecessor, ChaseMellon
Shareholder Services, L.L.C., entered into a Rights Agreement effective as of
November 2, 2000 (the “Rights Agreement”); and

     B.     The Board of Directors of the Company, by resolution duly adopted on
October 6, 2004, authorized this First Amendment to the Rights Agreement.

Agreement

     The Company and the Rights Agent hereby amend the Rights Agreement as
follows:

          1.      Section 1(a) of the Rights Agreement is hereby amended by deleting the
phrase “upon the affirmative vote of a majority of the Disinterested Directors”
from the 11th line and 15th line of Section 1(a).

          2.      Section 1(h) of the Rights Agreement (“Disinterested Director") shall
be deleted in its entirety. The term "[Reserved]” shall be used in its place.

          3.      Section 11(a)(ii)(B) of the Rights Agreement is hereby amended by
deleting the phrase “upon the affirmative vote of a majority of the
Disinterested Directors” from the 13th line and 17th line of Section
11(a)(ii)(B).

          4.      Section 23(a) of the Rights Agreement is hereby amended by deleting in
its entirety the first proviso phrase ” provided, however, if the Board of
Directors of the Company authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) below, then there must be
Disinterested Directors then in office and such authorization shall require the
concurrence of a majority of such Disinterested Directors: (i) such
authorization occurs on or after the time a Person becomes an Acquiring Person,
or (ii) such authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the directors in office
at the commencement of such solicitation if any Person who is a participant in
such solicitation has stated (or, if upon the commencement of such
solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event unless, concurrent with such solicitation,
such Person (or one or more of its Affiliates or Associates) is making a cash
tender offer pursuant to a Schedule TO (or any successor form) filed with the Securities and Exchange

 

 

Commission
for all outstanding shares of Common Stock not beneficially owned by such
Person (or by its Affiliates or Associates);” beginning on the 11th line and
ending on the 26th line of Section 23(a). Section 23(a) is further amended by
deleting the word “further” after the second proviso therein.

          5.      Section 26 of the Rights Agreement is hereby amended by deleting the
parenthetical "(which suspension, following the first occurrence of an event
set forth in clauses (i) and (ii) of the first proviso to Section 23(a) hereof,
shall be effective only if there are Disinterested Directors and shall require
the concurrence of a majority of such Disinterested Directors)” beginning on
the 15th line and ending on the 18th line of Section 26. Section 26 is further
amended by deleting the parenthetical "(which lengthening or shortening,
following the first occurrence of an event set forth in clauses (i) and (ii) of
the first proviso to Section 23(a) hereof, shall be effective only if there are
Disinterested Directors and shall require the concurrence of a majority of such
Disinterested Directors)” beginning on the 19th line and ending on the 22nd
line of Section 26.

          6.      Section 28 of the Rights Agreement is hereby amended by deleting the
parenthetical "(with, where specifically provided for herein, the concurrence
of the Disinterested Directors)” from the 7th line, 10th line and 17th line of
Section 28. Section 28 is further amended by deleting the phrase “or the
Disinterested Directors” from the second to last line of Section 28.

          7.      The remainder of the Rights Agreement shall remain unchanged, and the
Rights Agreement as amended above, shall remain in full force and effect.

[The Remainder of this Page has been Intentionally Left Blank]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be fully executed on their behalf as of the date first above written.

	 	 	 	 	 
	 	 	KENNAMETAL INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ David W. Greenfield

	

	 	 	 	
 
	

	 	Name:	 	David W. Greenfield

	

	 	Title:	 	Vice President, Secretary and
General Counsel
	 
	 	 	 	 
	 	 	MELLON INVESTOR SERVICES LLC
	 
	 	 	 	 
	

	 	By:	 	/s/ Cynthia Pacolay
	

	 	 	 	
 
	

	 	Name:	 	Cynthia Pacolay
	

	 	Title:	 	Client Services Managerexv10w1

 

EXHIBIT 10.1

October 5, 2004

Mr. John E. Jackson

62 North Knights Gate Circle

Cypress, Texas 77382

Dear John:

This letter summarizes Hanover Compressor Company’s offer to you to serve as
the Company’s President and Chief Executive Officer (“President and CEO”) in
Hanover’s corporate office in Houston, Texas. In this role, you will report to
the Company’s board of directors.

As a current employee, certain of the benefits offered and conditions of
employment are already familiar to you but are repeated herein for completeness
and clarity. As Hanover’s President and CEO, your compensation and the other
terms and conditions of employment are set by the Company’s board of directors.
Initial compensation for this position is as follows.

	 	 	 
	Base Salary:

	 	$540,000.00 annual base salary for the remainder of
2004, on a pro-rata basis, and for 2005 ($20,769.23
per pay period for 26 pay
periods per full year).
	 
	 	 
	Bonus

Opportunity:

	 	0 – 100% of annual base salary to be paid annually
based upon personal performance as well as Company
performance, and as determined by the Company’s board
of directors.
	 
	 	 
	Stock Option

Program:

	 	As of the date hereof, the Company is granting to you
100,000 restricted shares of Company common stock,
which will vest at the rate of 25% per year over a
four-year period and will otherwise be subject to the
provisions of the 2003 Stock Incentive Plan. In
addition, provided that you remain continually
employed by the Company in a role substantially
similar to that described herein, you will be given
the full opportunity to participate in the stock,

 

 

	 	 	 
	October 5, 2004

Page 2
	 	 
	 
	 	 
	

	 	incentive, retirement and other plans offered to the most senior officers of
the Company.
	 
	 	 
	Severance:

	 	The Company will make an immediate lump sum severance
payment to you equal to three times the sum of your
annual base salary and target bonus which was in
effect immediately before the “Change of Control”, if
within the first twelve months following a “Change of
Control” of the Company (i) you terminate your
employment with the Company for “Good Reason” or (ii)
the Company terminates your employment without
“Cause”. Otherwise, the Company will make a
severance payment to you equal to one times your
annual base salary, payable in 24 equal monthly
installments, if the Company terminates your
employment without “Cause” at any time other than the
first twelve month period immediately following a
“Change of Control”. In either of these
circumstances, the Company shall also reimburse you
for your COBRA premiums, paid to continue your
current health benefits, for a period of up to
eighteen months.
	 
	 	 
	

	 	Please note, however, that this agreement will not obligate
the Company to make any severance payment to you in the
event that (i) you resign or voluntarily terminate your
employment with the Company for any reason, other than
“Good Reason” within the first twelve months following a
“Change of Control”, (ii) your employment ends due to your
death or inability to perform the essential requirements of
the job, with or without reasonable accommodation, due to
disability, or (iii) you are terminated for “Cause”.
Additionally, in the event that the Company subsequently
implements employment contracts for its executive managers
that contain Change of Control-related severance provisions
more favorable to managers than that described above, you
will be offered similar protections.
	 
	 	 
	

	 	These commitments regarding your severance are contingent
upon, and are in consideration for your continued
compliance with your post-termination obligations,
including the Cooperation, Confidential Information and
Non-competition and Non-solicitation provisions, which are
addressed below.
	 
	 	 
	

	 	For purposes of this letter agreement, the terms “Change of
Control” and “Cause” will have the same definition as used
in the Company’s 2003 Stock Incentive Plan under the terms
“Corporate Change” and “Cause,” respectively, and are
incorporated herein by reference. Moreover, voluntary
termination of employment for “Good Reason” shall be
defined as any situation within the first twelve months
following a “Change in Control” of the Company in which
your termination of employment with the Company (i)

 

 

	 	 	 
	October 5, 2004

Page 3
	 	 
	 
	 	 
	

	 	promptly follows a material reduction of your duties and
responsibilities or a permanent change in your duties and
responsibilities which are materially inconsistent with the
type of duties and responsibilities then in effect or your
title, (ii) promptly follows a reduction in your annual
base salary (without regard to bonus compensation, if any)
or a reduction in your annual bonus opportunity as set
forth in this letter (it is acknowledged that a reduction
in the actual amount of your bonus from year to year as a
result of the criteria addressed above will not be
considered a reduction in bonus opportunity), (iii)
promptly follows a material reduction in your employee
benefits (without regard to bonus compensation, if any) if
such reduction results in you receiving benefits which are,
in the aggregate, materially less than the benefits
received by other comparable employees of the Company
generally, (iv) promptly follows a material failure by the
Company to comply with the terms of this letter or to pay
any compensation when due, but only after you provide
notice to the Company of such failure and the Company has
reasonable opportunity to cure, or (v) the Board otherwise
determines that a voluntary termination by you is for “Good
Reason” under the circumstances then prevailing.
	 
	 	 
	Benefits &

Vacation:

	 	As a full time employee, you are also eligible to participate
in the various benefit programs offered by the Company. You
will be entitled to up to four weeks of vacation per year.
	 
	 	 
	Cooperation:

	 	We ask that you agree to act at all times in a manner
consistent with the interests of Hanover Compressor Company
and it affiliated entities with respect to our shareholders,
customers, employees, agents, and lenders. Neither you nor
the Company will defame or disparage each other. You further
agree that should your employment end, you will provide
reasonable cooperation to the Company in response to
reasonable requests made by the Company for information or
assistance, including but not limited to, participating upon
reasonable notice in conferences and meetings, providing
documents or information, aiding in the analysis of
documents, or complying with any other reasonable requests by
the Company including execution of any agreements that are
reasonably necessary.
	 
	 	 
	Confidential

Information:

	 	During your employment you will be given access to
information relating to the business and affairs of Hanover
Compressor Company and its affiliated entities, including,
without limitation, trade secrets, designs, technology,
processes, data, techniques,

 

 

	 	 	 
	October 5, 2004

Page 4
	 	 
	 
	 	 
	

	 	inventions (whether patentable or not), works of
authorship, formulas, business and development plans,
customer lists, software programs and subroutines, source
and object code, algorithms, terms of compensation and
personnel assessments of employees, information regarding
the Company’s facilities, processes, operating procedures,
financial data, purchasing practices, marketing, management
procedures, books and records, employee or personnel data,
contractual arrangements or proposals, properties and
business affairs of the Hanover entities, as well as the
Company’s business plans and budgets, information
concerning the Company’s actual or anticipated business,
research or development, and may receive information in
confidence by or for any of the Hanover entities from any
other person (collectively “Confidential Information”). We
ask that you agree that you will not, at any time, directly
or indirectly, for any reason whatsoever, with or without
cause, except in the appropriate course of Company business
or unless pursuant to a lawful subpoena, disclose or
disseminate any Confidential Information to any person or
entity, nor will you use any Confidential Information in
competing with Hanover Compressor Company or its affiliated
entities in any manner. It is expressly understood that
the Confidential Information covered by this paragraph
includes only information that is confidential or
proprietary information of one or more of the Hanover
entities and therefore does not include information which
is generally available to the public.
	 
	 	 
	Non-competition
and Non-solicitation:

	 	We also request that you agree that in exchange for
your compensation and other consideration, as well
as the Company’s providing you access to its
Confidential Information, for a two (2) year period
following your termination from employment with the
Company for any reason, you will not directly or
indirectly on behalf of yourself or any other
person(s), company, partnership, corporation, or
business of whatever nature compete with the Company
or its affiliated entities, which includes your
promise not to: (i) engage in, carry on, or have a
financial interest in (in any capacity whatsoever,
including, without limitation, as an officer,
director, shareholder, owner, partner, joint
venturer, manager, advisor, employee, independent
contractor or consultant) any entity that competes
with the business of Hanover Compressor Company or
its affiliated entities; (ii) induce or attempt to
influence any employee, agent, consultant or
independent contractor of Hanover Compressor Company
or its affiliated entities to terminate work or
employment with the Company, or otherwise adversely
interfere with or affect the business relationship
between them; or (iii) divert, take, solicit and/or
accept

 

 

	 	 	 
	October 5, 2004

Page 5
	 	 
	 
	 	 
	

	 	the business of any entity that is or has been a customer
of Hanover Compressor Company or its affiliated entities,
or any potential customer of Hanover Compressor Company or
affiliated entities. This agreement shall apply regardless
of whether your employment terminates under circumstances
which entitle you to receive the severance payments
described above. If you breach the foregoing covenants,
the Company shall be no longer obligated to provide you
severance payments or continued reimbursement for health
care benefits; however, this shall not prohibit the Company
in any way from pursuing or obtaining other or additional
remedies at law or at equity. These non-competition and
non-solicitation provisions will control over any other
non-competition or related agreements in the Company’s
plans and policies, including the stock option agreement
and/or plan.
	 
	 	 
	Injunctive Relief:

	 	Please also agree that the covenants set forth herein pertaining to Cooperation, Confidential Information
and Non-competition and Non-solicitation impose a reasonable restraint in light of the activities and
business of the Company. Because of the difficulty of measuring economic loss to the Company as a result of
the breach of any of these covenants and because of the immediate and irreparable damage that could be
caused to the Company for which it would have no other adequate remedy, in the event of an alleged breach
any of these covenants, the covenants may be enforced by the Company by injunctions, restraining orders, and
other equitable actions.
	 
	 	 
	Start Date:

	 	Your new position with the Company will become effective on
October 25, 2004.
	 
	 	 
	Dispute

Resolution:

	 	Any controversy or claim arising out of or relating to your employment, separation from, and/or affiliation
with the Company, except for those pertaining to the Cooperation, Confidential Information, and
Non-competition and Non-solicitation provisions above, shall be resolved by arbitration in accordance with
the Employment Dispute Resolution Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. In reaching his or her decision,
the arbitrator shall have no authority to change or modify any provision of this Agreement.
	 
	 	 
	Choice of Law:

	 	This Agreement is made and shall be enforced pursuant to the laws of the State of Texas in Houston.

 

 

	 	 	 
	October 5, 2004

Page 6
	 	 
	 
	 	 
	Entire Agreement:

	 	This letter contains the entire agreement between you and the Company concerning the subject matter hereof
and supersedes any prior or contemporaneous agreements between you and the Company, and cannot be changed,
modified, or amended without a written agreement signed by the Company and you.
	 
	 	 
	Successors and
Assigns:

	 	This agreement shall be binding upon you, your heirs, successors, and assigns and the Company and its
successors and assigns.
The Company may assign its rights, duties and obligations
under this agreement. However, your rights, duties and
obligations are personal and therefore shall not be
transferred or assigned by you to another.

Your acceptance of this offer can be confirmed by signing the acceptance below
and returning a copy to my attention.

We are very pleased to extend this offer to you.

Sincerely,

Hanover Compressor Company

	 	 	 	 	 
	By:

	 	/s/ Victor E. Grijalva

	 	 
	

	 	Name: Victor E. Grijalva	 	 
	

	 	Title: Chairman of the Board	 	 
	 
	 	 	 	 
	Accepted:

	 	/s/ John E. Jackson

	 	Date: October 5, 2004
	

	 	John E. Jackson

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