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EXHIBIT 10.n
THIS AGREEMENT, is made and entered into this 11th day of March, 1997, 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 Xxxxxxx X.
Xxxxxxx, an individual (hereinafter referred to as "Employee"). The company has
entered into identical contracts with the previous officers.
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; and
WHEREAS, in order to have the benefit of Employee's assistance,
Kennametal is desirous of employing or continuing the employment of Employee;
and
WHEREAS, Kennametal and Employee have heretofore entered into and
executed an Officer Employment Agreement, as amended (the "Employment
Agreement"); and
WHEREAS, Kennametal and Employee desire to amend and restate the
Employment Agreement on the terms and conditions hereinafter expressed.
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.
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(b) 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.
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:
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(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
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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, actually 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.
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(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.
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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 I 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
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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 engage 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 1% 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
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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
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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 herein before 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 constitutes the entire agreement between the parties hereto
and supersedes 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.
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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
A 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.
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17. This agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
WITNESS the due execution hereto the day and year first above written.
ATTEST: KENNAMETAL INC.
/s/ XXXXX X. XXXXX By: /s/ XXXXXX X. XXXXXXXX
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WITNESS: Employee:
/s XXXXX XXXXX /s/ XXXXXXX X. XXXXXXX (Seal)
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Exhibit A
RELEASE
KNOW ALL MEN BY THESE PRESENTS that the undersigned for good and valuable
consideration, the receipt of which is hereby acknowledged, and intending to be
legally bound, hereby releases, remises, quitclaims and discharges completely
and forever Kennametal Inc. and its directors, officers, employees,
subsidiaries and affiliates from any and all claims, causes of action or rights
which the undersigned has or may have, whether arising by virtue of contract or
of applicable state laws or federal laws, and whether such claims, causes of
action or rights are known or unknown; provided, however, that this Release
shall not release, raise, quitclaim or discharge any claims, causes of action
or rights which the undersigned may have (i) under that certain Amended and
Restated Employment Agreement dated __________________, ________ between the
undersigned and Kennametal, Inc., (ii) to any unreimbursed expense account or
similar out-of-pocket reimbursement amounts owing the undersigned, or (iii)
under the bylaws of Kennametal, Inc. or the applicable state corporate statutes
to indemnification for having served as an officer and/or employee of
Kennametal, Inc. and/or its subsidiaries.
DATE: _________________ ___________________________________
