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Exhibit 10.r
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made and entered into this _____ day of
________________________, 1997, by and between JLK DIRECT DISTRIBUTION INC., a
corporation organized under the laws of the Commonwealth of Pennsylvania which
is a subsidiary of Kennametal Inc. ("Kennametal"), for and on behalf of itself
and on behalf of its subsidiary companies (hereinafter referred to as "JLK" or
the "Corporation"), KENNAMETAL and Xxxxxxx X. Xxxxxx, 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 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 employing; and WHEREAS, Kennametal and Employee may have
heretofore entered into and executed an employment agreement,
as amended (the "Kennametal Employment Agreement").
NOW, THEREFORE, JLK, Kennametal and Employee, each intending to be
legally bound hereby, do mutually covenant and agree as follows:
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1. (a) Subject to the terms and conditions set forth herein, JLK
hereby agrees to employ Employee as of the Effective Date, as such term
is hereinafter defined, and Employee hereby accepts such 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 President and 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 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 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
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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, 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 without Good or 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.
(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 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) 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, 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
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(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.
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 by JLK (or by Kennametal if it had been providing such
benefits prior to the Date of Termination) 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 applicable to employees of JLK (including, if applicable,
Kennametal's Supplemental Executive Retirement Plan) to have
continuously remained in the employment of JLK 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
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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 any employee
medical, dental or group insurance, pension or retirement plan or
other benefit plan in which the Employee is eligible to participate,
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 JLK (or Kennametal if it had been
providing such benefits prior to the Date of Termination) 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, actually paid by such employee medical, dental or
group insurance or pension or retirement plan or other benefit plan.
Neither JLK nor Kennametal shall be required to fund its obligation to
pay the foregoing difference.
(c) 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
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JLK and Kennametal hereby waive and agree 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 JLK or
Kennametal hereunder shall be that JLK and 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 payments relating to pension or retirement
benefits or, if applicable, Kennametal's 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
JLK.
(f) The term "Change-in-Control" shall mean either (i) a Kennametal
Change-in-Control, if such occurs when JLK is a direct or indirect
subsidiary of Kennametal or when Kennametal and its affiliates own
shares of Class B Common Stock of JLK or (ii) a JLK Change-in-Control.
A Kennametal Change-in-Control shall mean a change in control of a
nature that would be required to be reported by Kennametal 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
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Securities and Exchange Commission pursuant to the 1934 Act which
serve similar purposes; provided that, without limitation, such a
Kennametal 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 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. A JLK
Change-in-Control shall mean that both of the following conditions
shall have occurred: (i) either JLK is no longer a direct or indirect
subsidiary of Kennametal or Kennametal and its affiliates no longer
own any shares of Class B Common Stock of JLK and (ii) a change in
control of a nature that would be required to be reported by JLK in
response to Item 6(e) of
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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, the second condition set
forth in subclause (ii) 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,
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 JLK representing 25% or more of the
combined voting power of JLK's then outstanding securities coupled
with or followed by a majority of the board of directors of JLK
consisting of persons other than persons who either were directors of
JLK immediately prior to or were nominated by those persons who were
directors of JLK immediately prior to such person becoming a
beneficial owner, directly or indirectly, of securities of JLK
representing 25% or more of the combined voting power of JLK'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 he 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 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;
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(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 which is a Kennametal
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 Kennametal in
which Employee is participating immediately prior to a Kennametal
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) in the event of a Change-in-Control which is a JLK
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
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immediately prior to a JLK Change-in-Control (provided, however,
that there shall not be deemed to be any such failure 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;
(vi) if the Employee is eligible to participate in any Kennametal
benefit or compensation plan, stock option plan, pension plan, life
insurance plan, health and accident plan or disability plan, the
failure of Kennametal to obtain the assumption of this Agreement by
any successor as contemplated in paragraph 11 hereof;
(vii) the failure of JLK to obtain the assumption of this Agreement
by any successor as contemplated in paragraph 11 hereof
(viii) 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
(ix) any purported termination of the employment of Employee by JLK
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 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 (the matters described in subparagraphs (a), (b)
and (c) are collectively referred to as "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
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 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
(i) if JLK is then a subsidiary of Kennametal, Employee shall be
entitled to receive, the annual supplement under the Supplemental
Executive Retirement Plan and Employee's employment by JLK shall not
be deemed terminated for purposes of the Kennametal Long-Term
Disability Plan, the Kennametal Retirement Income Plan for U.S.
Salaried Employees or any other
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Kennametal benefit plan which so provides and (ii) 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 (which may be located 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 or JLK 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 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 or JLK 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)
if a Change-in-Control, shall have occurred prior to the Date of
Termination 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
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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
Securities Exchange Act of 1934.
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
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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 ("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 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 JLK and/or Kennametal; (ii) the
unauthorized use, misappropriation or
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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 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
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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.
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(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 or 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 the party or
parties in breach of this agreement or which sought to avoid making
payments hereunder (JLK and/or Kennametal) 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, and
shall inure to the benefit of, Employee, JLK and Kennametal, their
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; provided, however, that any prior employment agreement
between the Employee and Kennametal shall only be superseded if the
Effective Date occurs. This agreement may not be amended orally, but
only by an instrument in writing signed by each of the parties to this
agreement.
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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. JLK and 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. 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 Kennametal
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 Kennametal, any person whose actions
result in a change in control or any person affiliated with the
Corporation or Kennametal 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 or Kennametal, 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
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deductible, or the Contract Payments are reduced to zero. In the event
that the Corporation or Kennametal 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 Kennametal 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 or Kennametal
had already withheld any Contract Payments prior to receipt of such
waiver, the Corporation or Kennametal upon receipt of such waiver
shall immediately pay to Employee any withheld Contract Payments which
would have been paid had the Corporation or Kennametal had the
Employee's written waiver prior to the date the Corporation or
Kennametal 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 or Kennametal'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
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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 or Kennametal'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.
18. This agreement shall become effective (the "Effective Date")
immediately upon the closing of the initial public offering of JLK's
Class A Common Stock pursuant to its Registration Statement on Form
S-1 filed under the Securities Act of 1933, Registration No.
333-25989. Until and unless the Effective Date occurs, this agreement
shall be of no force or effect and shall not be binding upon the
Employee, JLK or Kennametal.
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WITNESS the due execution hereto the day and year first above written.
ATTEST: JLK DIRECT DISTRIBUTION INC.
_____________________________ By:________________________________
ATTEST: KENNAMETAL INC.
_____________________________ By:________________________________
WITNESS: Employee:
______________________________ _____________________________(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 _________, 199_ between the undersigned, JLK Direct
Distribution Inc. 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 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.
DATE: __________________ _____________________________
