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EXHIBIT 10.23
AGREEMENT
THIS AGREEMENT, is made and entered into this 21st day of January, 2000, by
and between JLK DIRECT DISTRIBUTION INC., a corporation organized under the laws
of the Commonwealth of Pennsylvania (hereinafter referred to as "JLK" or the
"Corporation"), and XXXXXXX X. XXXXX, an individual (hereinafter referred to as
"Employee").
WITNESSETH:
WHEREAS, Employee acknowledges that by reason of employment by JLK, 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 JLK and
Kennametal Inc. ("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 JLK
and Kennametal; and
WHEREAS, in order to have the benefit of Employee's assistance, JLK is
desirous of continuing to employ Employee.
NOW, THEREFORE, JLK 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, JLK hereby agrees
to continue to employ Employee and Employee hereby accepts such continued
employment and agrees to devote his full time and attention to the business
and affairs of JLK, 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 Board of Directors of JLK until the termination of his employment
hereunder.
(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 of JLK or its Executive Compensation Committee, 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 continue 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 and its subsidiaries for so long as
JLK remains a subsidiary of Kennametal. Nothing herein contained shall be deemed
to limit or prevent Employee, during his employment hereunder, from being
reimbursed by JLK for out-of-pocket expenditures incurred for travel, lodging,
meals, entertainment expenses or any other expenses in accordance with the
policies of JLK applicable to the executives of JLK.
3. Employee's employment may be terminated with or without any reason for
termination by JLK or Employee at any time by giving the other party prior
written notice thereof; provided, however, that any termination on the part of
JLK shall occur only if specifically authorized by its Board of Directors;
provided, further, that termination by JLK 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 JLK.
4. (a) In the event that Employee's employment is terminated by JLK prior to a
Change-in-Control and other than for Cause, Employee will receive as
severance pay from JLK, 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 (i) due to the
death of the Employee or (ii) by Employee following a Change-in-Control
without Good Reason or (iii) by Employee prior to a Change-in-Control,
Employee will not be entitled to receive any severance pay in addition to
the amounts, if any, due him at the Date of Termination.
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(c) In the event that at or after a Change-in-Control and prior to the
third anniversary of the date of the Change-in-Control Employee's
employment is terminated by Employee for Good Reason or by JLK 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) from JLK 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, if positive, obtained by
multiplying (AA) 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 (BB) 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 (or, at Employee's election, the average
of any bonuses which Employee was entitled to or paid for the
three fiscal years preceding the fiscal year in which the
Change-in-Control occurred).
Such severance pay shall be paid by delivery of a cashier's or
certified check to the Employee at JLK's executive offices on a date which
is no later than five business days following the Date of Termination.
(d) If Employee is entitled to receive the severance payment set forth in
paragraph 4(c), Employee also will receive from JLK the same or equivalent
medical, dental, disability and group insurance benefits as were provided
to the Employee by JLK at the Date of Termination, which benefits shall be
provided by JLK to Employee for a three year period commencing on the Date
of Termination. Pursuant to the terms of Kennametal's various benefit
plans, Employee will not following a Change-in-Control have any rights to
receive from Kennametal or from any medical, dental, disability, group
insurance, retirement or pension plan or other benefit plan maintained or
sponsored by Kennametal any benefits or other sums other than (i) to
receive from the Kennametal Inc. Retirement Income Plan and Kennametal's
Supplemental Executive Retirement Plan any vested benefits to the extent
and at the times payable under the terms of the Kennametal Inc. Retirement
Income Plan and Kennametal's Supplemental Executive Retirement Plan, (ii)
to receive from the Kennametal Inc. Thrift Plan any vested benefits to the
extent and at the times payable under the terms of the Kennametal Inc.
Thrift Plan and (iii) to exercise any stock options held under Kennametal's
stock option plans to the extent, if any, exerciseable and in accordance
with the terms of Kennametal's stock option plans.
If for any reason, whether by law or provisions of any employee
medical, dental or group insurance, or other benefit plan of JLK in which
the Employee is eligible to participate, any benefits which the Employee
would be entitled to under the foregoing paragraph of this subparagraph (d)
cannot be paid pursuant to such employee benefit plans, then JLK hereby
contractually agrees to pay to the Employee the difference between the
benefits which the Employee would have received in accordance with the
foregoing paragraph of this subparagraph (d) 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, actually paid by such employee medical, dental or group insurance or
pension or retirement plan or other benefit plan. JLK shall not be required
to fund its obligation to pay the foregoing difference.
If Employee is entitled to receive the severance payment set forth in
paragraph 4(c), JLK shall also make
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supplemental pension payments to Employee equal in amount to the difference
between the pension payable to Employee pursuant to the terms of the
Kennametal Inc. Retirement Income Plan and Kennametal's Supplemental
Executive Retirement Plan (as both plans are in existence on the date of
the Change-in-Control) and any increased pension which would have been
payable to Employee under the terms of the Kennametal Inc. Retirement
Income Plan and Kennametal's Supplemental Executive Retirement Plan (as
both plans are in existence on the date of the Change-in-Control) assuming
(i) JLK had remained a subsidiary of Kennametal and (ii) Employee had
remained continuously in the employment of JLK for the three year period
(or, if clause (i)(y) or clause (i)(z) of paragraph 4(c) is applicable to
determine the severance payment to be made, the lesser period measured in
years and fractions thereof rounded to the nearest one-twelfth which equals
the number determined by 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 severance payment due the Employee under the first paragraph of
paragraph 4(c) and had attained the age of 60 at the end of such period.
Such supplemental pension payments shall be paid by JLK to Employee ratably
at the times when pension payments are made under the Kennametal Inc.
Retirement Income Plan and Kennametal's Supplemental Executive Retirement
Plan. JLK 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 JLK and
JLK 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 shall be that JLK 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
payments relating to pension or retirement benefits) pursuant to the
benefit provisions set forth in paragraph 4(e) 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 JLK.
(f) The term "Change-in-Control" shall mean that all of the following
conditions shall have occurred: (i) JLK is no longer a direct or indirect
subsidiary of Kennametal, (ii) Kennametal and its affiliates no longer own
any shares of Class B Common Stock of JLK and (iii) one or more persons
(other than Kennametal or its subsidiaries) have acquired control of a
nature that would be required to be reported by JLK in response to Item
6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934
as in effect on the date hereof (the "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, the third condition set forth in subclause (iii)
of this sentence shall be deemed to have occurred if (A) JLK 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 (1) by JLK immediately prior to the merger or
consolidation or (2) by Kennametal and/or its subsidiaries if JLK is at the
time of such merger or consolidation a direct or indirect subsidiary of
Kennametal or if Kennametal and its affiliates at the time of such merger
or consolidation own shares of Class B Common Stock of JLK, or (B) JLK
shall sell all or substantially all of its operating properties and assets
to another person, group of associated persons or corporation other than
Kennametal or its subsidiaries.
(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 JLK
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
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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 or as a result of the Employee's death;
(ii) a reduction by JLK in the Employee's base salary as in effect
immediately prior to any Change-in-Control;
(iii) a failure by JLK to continue to provide incentive compensation
comparable to that provided by JLK immediately prior to any
Change-in-Control;
(iv) in the event of a Change-in-Control, the failure to continue in
effect any benefit or compensation plan, stock option plan, pension
plan, life insurance plan, health and accident plan or disability plan
of JLK 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 (x) due to Employee's no longer participating
in any plan of Kennametal or (y) if JLK substitutes for the
discontinued plan, a plan providing Employee with substantially
similar benefits) or the taking of any action by JLK 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 JLK to obtain the assumption of this Agreement by
any successor as contemplated in paragraph 11 hereof;
(vi) the relocation of the Employee to a facility or a location more
than 50 miles from the Employee's then present location, without the
Employee's prior written consent; or
(vii) any purported termination of the employment of Employee by JLK
which is not for Cause as provided in paragraph 5.
(i) Employee shall not be entitled to receive any severance payment from
Kennametal and Kennametal shall have no obligation to pay any severance to
Employee upon a termination of Employee's employment.
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 JLK on a full
time basis in accordance with paragraph 1 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 (each of the matters described in subparagraphs (a), (b) and
(c) shall be "Cause"), JLK 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 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 JLK 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's employment by JLK shall not be deemed terminated for purposes of any
benefit plan of JLK. 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 JLK'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 JLK 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(d) 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 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 JLK's Board of Directors may approve in writing.
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7. Nothing herein contained shall affect the right of Employee to participate in
and receive benefits under and in accordance with and to the extent provided for
in the then current terms and 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 JLK
applicable to Employee 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 JLK 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) after a
Change-in-Control shall have occurred or (y) if Employee's employment is
terminated by JLK other than for Cause), he will not, in any geographic area in
which JLK (or Kennametal, if JLK on the Date of Termination is a subsidiary of
Kennametal) is offering its services and products, without the prior written
consent of JLK:
(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 JLK (or Kennametal, if JLK on the Date of Termination is a
subsidiary 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 1934 Act.
Employee acknowledges that the breach by him of the provisions of this
paragraph 8 would cause irreparable injury to JLK (or Kennametal, if JLK on the
Date of Termination is a subsidiary of Kennametal), acknowledges and agrees that
remedies at law for any such breach will be inadequate and consents and agrees
that JLK (or Kennametal, if JLK on the Date of Termination is a subsidiary of
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 JLK (and Kennametal, if JLK on the Date of Termination is a
subsidiary of 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
JLK, Employee may work with, add to, create or acquire trade secrets and
confidential information of JLK or Kennametal ("Confidential Information") which
could include, in whole or in part, information:
(i) of a technical nature such as, but not limited to, JLK's or
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 JLK's or Kennametal's 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 of JLK or Kennametal 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 JLK and/or Kennametal; (ii) the unauthorized use,
misappropriation or disclosure of any Confidential Information would constitute
a breach of trust and could cause irreparable injury to JLK and/or Kennametal;
and (iii) it is essential to the protection of JLK's and/or Kennametal's good
will and to the maintenance of its competitive position that all Confidential
Information be kept
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secret and that Employee not disclose any Confidential Information to others or
use any Confidential Information to the detriment of JLK or Kennametal.
Employee agrees to hold and safeguard all Confidential Information in trust
for JLK and Kennametal, each of their 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 JLK's or Kennametal's
organization at any time, either during employment with JLK or subsequent
thereto, any of the Confidential Information, whether or not developed by
Employee, without the prior written consent of JLK and Kennametal.
(b) Employee agrees that:
(i) he will promptly and fully disclose to JLK or such officer or
other agent as may be designated by JLK any and all inventions made or
conceived by Employee (whether made solely by Employee or jointly with
others) during employment with JLK (1) which are along the line of the
business, work or investigations of JLK or Kennametal, or (2) which
result from or are suggested by any work which Employee may do for or
on behalf of JLK or Kennametal; and
(ii) he will assist JLK (and Kennametal, if JLK on the Date of
Termination is a subsidiary of 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 JLK as compensation for his services in any
capacity, shall be and remain the sole and exclusive property of JLK
(and Kennametal, if JLK on the Date of Termination is a subsidiary 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 JLK (and
Kennametal, if JLK on the Date of Termination is a subsidiary of
Kennametal) at all times.
(c) Employee agrees that, promptly upon termination of his employment, he
will disclose to JLK (or Kennametal, if JLK on the Date of Termination is a
subsidiary of Kennametal), or to such officer or other agent as may be
designated by JLK (or Kennametal, if JLK on the Date of Termination is a
subsidiary of 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 will 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 JLK (or Kennametal, if JLK on the Date of
Termination is a subsidiary of Kennametal) the exclusive rights in and to
such inventions and any patents that may be issued thereon any expense
therefor to be borne by JLK.
(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) JLK
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 JLK any actual expenses for attorney's fees and other disbursements
incurred by him in relation thereto.
11. The terms and provisions of this Agreement shall be binding upon Employee
and JLK, and shall inure to the benefit of, Employee, JLK and Kennametal (which
shall be deemed an express third party beneficiary of this Agreement) and their
subsidiaries and affiliates, and the parties respective successors and assigns.
The Employee's employment shall not be deemed terminated for purposes of this
Agreement if the Employee is employed by a successor to JLK, which successor
shall be deemed to be JLK for purposes of this Agreement.
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. Any prior
employment agreement between the Employee and Kennametal is hereby terminated
and Employee shall not be entitled to any severance or other benefits under any
prior employment agreement with Kennametal. This Agreement may not be amended
orally, but only by an instrument in writing signed by each of the parties to
this Agreement and consented to in writing by Kennametal. This Agreement does
not create any right to continued employment by JLK and the Employee shall
remain an "at will" employee of JLK.
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13. The invalidity or enforceability 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. A condition to Employee's right to receive or receipt of any severance pay
or any benefits hereunder upon a termination of the Employee's employment shall
be for the Employee to execute and to deliver to JLK and Kennametal 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. Not withstanding 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 Employee's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Corporation, or 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 part, as a result of section 280G 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 or the affiliate or other person making such payment or
providing such benefit determines that the Total Payments would not be
deductible, in whole or part, as a result of section 280G of the Code, the
Corporation or the affiliate or other person making such payment or providing
such benefit 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 (and, 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 (i) 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 280G(b)(2) of the Code, (ii) 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 (i)) in their entirety constitute reasonable compensation
for services actually rendered within the meaning of section 280G(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 (i); and (iii) 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 280G(d)(3) and (4) of the Code.
17. This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania without regard to its conflicts or choice of law provisions.
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WITNESS the due execution hereto the day and year first above written.
ATTEST: JLK DIRECT DISTRIBUTION INC.
/s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: Vice President and Chief Financial Officer
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WITNESS: XXXXXXX X. XXXXX, EMPLOYEE:
/s/ Xxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxx (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 JLK Direct Distribution Inc. and Kennametal
Inc. and each of their respective 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, remise, quitclaim or discharge any claims, causes of action or rights
which the undersigned may have (i) under that certain Employment Agreement dated
January 21, 2000 between the undersigned and JLK Direct Distribution Inc., (ii)
to any unreimbursed expense account or similar out-of-pocket reimbursement
amounts owing the undersigned, or (iii) under the bylaws of JLK Direct
Distribution Inc. or 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 or JLK Direct Distribution Inc., and/or its
subsidiaries.
DATE: January 21, 2000 /s/ Xxxxxxx X. Xxxxx
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