
<PAGE>   1
                                                                  Exhibit 1.4




                                 KENNAMETAL INC.


                          (a Pennsylvania corporation)


                     $150,000,000 ___% Senior Notes due 2001
                     $150,000,000 ___% Senior Notes due 2008
                  $150,000,000 ___% Senior Debentures due 2028



                               PURCHASE AGREEMENT













Dated:  January __, 1998






<PAGE>   2



                                TABLE OF CONTENTS



PURCHASE AGREEMENT........................................................  1

SECTION I.  Representations and Warranties................................  3

     A.  Representations and Warranties by the Company....................  3
               1.      Compliance with Registration Requirements..........  3
               2.      Incorporated Documents.............................  4
               3.      Independent Accountants............................  4
               4.      Financial Statements...............................  4
               5.      No Material Adverse Change in Business.............  4
               6.      Good Standing of the Company.......................  5
               7.      Good Standing of Subsidiaries......................  5
               8.      Capitalization.....................................  5
               9.      Authorization of Agreement.........................  6
               10.     Authorization of the Indenture.....................  6
               11.     Authorization of the Securities....................  6
               12.     Description of the Securities and the Indenture....  6
               13.     Absence of Defaults and Conflicts..................  6
               14.     Absence of Labor Dispute...........................  7
               15.     Absence of Proceedings.............................  7
               16.     Accuracy of Exhibits...............................  7
               17.     Possession of Intellectual Property................  8
               18.     Absence of Further Requirements....................  8
               19.     Possession of Licenses and Permits.................  8
               20.     Title to Property..................................  8
               21.     Compliance with Cuba Act...........................  9
               22.     Investment Company Act.............................  9
               23.     Environmental Laws.................................  9

     B.  Officer's Certificates........................................... 10

SECTION II.  Sale and Delivery to Underwriters; Closing................... 10

     A.  Securities....................................................... 10
     B.  Payment  ........................................................ 11
     C.  Denominations; Registration...................................... 11

SECTION III.  Covenants of the Company.................................... 11

     A.  Compliance with Securities Regulations and Commission Requests... 11
     B.  Filing of Amendments............................................. 12
     C.  Delivery of Registration Statements.............................. 12
     D.  Delivery of Prospectuses......................................... 12


<PAGE>   3



     E.  Continued Compliance with Securities Laws........................ 12
     F.  Blue Sky Qualifications.......................................... 13
     G.  Rule 158 ........................................................ 13
     H.  Use of Proceeds.................................................. 13
     I.  Restriction on Sale of Securities................................ 13
     J.  Reporting Requirements........................................... 14

SECTION IV.  Payment of Expenses.......................................... 14

     A.  Expenses ........................................................ 14
     B.  Termination of Agreement......................................... 14

SECTION V.  Conditions of Underwriters' Obligations....................... 14

     A.  Effectiveness of Registration Statement.......................... 14
     B.  Opinion of Counsel for Company................................... 15
     C.  Opinion of Counsel for Underwriters.............................. 15
     D.  Opinion of German Counsel........................................ 15
     E.  Officers' Certificate............................................ 16
     F.  Accountant's Comfort Letter...................................... 16
     G.  Accountant's Comfort Letter...................................... 16
     H.  Bring-down Comfort Letter........................................ 16
     I.  Bring-down Comfort Letter........................................ 16
     J.  Maintenance of Rating............................................ 17
     K.  Additional Documents............................................. 17
     L.  Termination of Agreement......................................... 17

SECTION VI.  Indemnification.............................................. 17

     A.  Indemnification of Underwriters.................................. 17
     B.  Indemnification of Company, Directors and Officers............... 18
     C.  Actions against Parties; Notification............................ 18
     D.  Settlement without Consent if Failure to Reimburse............... 19

SECTION VII.  Contribution................................................ 19

SECTION VIII. Representations, Warranties and Agreements to 
     Survive Delivery..................................................... 20

SECTION IX.  Termination of Agreement..................................... 21

     A.  Termination; General............................................. 21
     B.  Liabilities...................................................... 21

SECTION X.  Default by One or More of the Underwriters.................... 21

SECTION XI.  Notices...................................................... 22



<PAGE>   4



SECTION XII.  Parties..................................................... 22

SECTION XIII.  GOVERNING LAW AND TIME..................................... 22

SECTION XIV.  Effect of Headings.......................................... 22




SCHEDULES

Schedule A      -       List of Underwriters...........................Sch A-1
Schedule B      -       Pricing Information............................Sch B-1
Schedule C      -       List of Subsidiaries...........................Sch C-1





<PAGE>   5



                                                     Draft of January 5, 1998


                                 KENNAMETAL INC.

                          (a Pennsylvania corporation)

                                  $450,000,000

                     $150,000,000 __% Senior Notes due 2001
                     $150,000,000 __% Senior Notes due 2008
                   $150,000,000 __% Senior Debentures due 2028


                               PURCHASE AGREEMENT

                                                             January __, 1998

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
  Incorporated
Goldman, Sachs & Co.
CIBC Oppenheimer Corp.
Deutsche Morgan Grenfell Inc.
  as Representatives of the several Underwriters
c/o  Merrill Lynch & Co.
         Merrill Lynch, Pierce, Fenner & Smith
          Incorporated
North Tower
World Financial Center
New York, New York  10281-1209

Ladies and Gentlemen:

         Kennametal Inc., a Pennsylvania corporation (the "Company"), confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, Goldman, Sachs & Co., CIBC Oppenheimer Corp.
and Deutsche Morgan Grenfell Inc., are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective principal amounts set forth in said Schedule A of $450,000,000
aggregate principal amount of the Company's $150,000,000 __% Senior Notes due
2001, $150,000,000 __% Senior Notes due 2008, and $150,000,000 __% Senior
Debentures due 2028 (the "Securities"). The Securities are to be issued pursuant
to an indenture dated as of January __, 1998 (the "Indenture") between the
Company and The First National Bank of Chicago, as trustee (the "Trustee").



<PAGE>   6



         The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deems advisable after
this Agreement has been executed and delivered and the Indenture has been
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").

         The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-40809) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated January 2, 1998, together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").

         All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or

                                        2

<PAGE>   7



supplements to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.

         SECTION I.  Representations and Warranties.

         A. Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:

                 1. Compliance with Registration Requirements. The Company meets
         the requirements for use of Form S-3 under the 1933 Act. Each of the
         Registration Statement and any Rule 462(b) Registration Statement has
         become effective under the 1933 Act and no stop order suspending the
         effectiveness of the Registration Statement or any Rule 462(b)
         Registration Statement has been issued under the 1933 Act and no
         proceedings for that purpose have been instituted or are pending or, to
         the knowledge of the Company, are contemplated by the Commission, and
         any request on the part of the Commission for additional information
         has been complied with.

                  At the respective times the Registration Statement, any Rule
         462(b) Registration Statement and any post-effective amendments thereto
         became effective and at the Closing Time, the Registration Statement,
         the Rule 462(b) Registration Statement and any amendments and
         supplements thereto complied and will comply in all material respects
         with the requirements of the 1933 Act and the 1933 Act Regulations and
         the 1939 Act and the rules and regulations of the Commission under the
         1939 Act (the "1939 Act Regulations"), and did not and will not contain
         an untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading. Neither the Prospectus nor any amendments or
         supplements thereto, at the time the Prospectus or any such amendment
         or supplement was issued and at the Closing Time, included or will
         include an untrue statement of a material fact or omitted or will omit
         to state a material fact necessary in order to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading. If Rule 434 is used, the Company will comply with the
         requirements of Rule 434. The representations and warranties in this
         subsection shall not apply to statements in or omissions from the
         Registration Statement or Prospectus made in reliance upon and in
         conformity with information furnished to the Company in writing by any
         Underwriter through Merrill Lynch expressly for use in the Registration
         Statement or Prospectus.

                  Each preliminary prospectus and the prospectus filed as part
         of the Registration Statement as originally filed or as part of any
         amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
         complied when so filed in all material respects with the 1933 Act
         Regulations and each preliminary prospectus and the Prospectus
         delivered to the Underwriters for use in connection with this offering
         was identical to the electronically transmitted copies thereof filed
         with the Commission pursuant to EDGAR, except to the extent permitted
         by Regulation S-T.

                                        3

<PAGE>   8




                 2. Incorporated Documents. The documents incorporated or deemed
         to be incorporated by reference in the Registration Statement and the
         Prospectus, when they became effective or at the time they were or
         hereafter are filed with the Commission, complied and will comply in
         all material respects with the requirements of the 1933 Act and the
         1933 Act Regulations or the 1934 Act and the rules and regulations of
         the Commission thereunder (the "1934 Act Regulations"), as applicable,
         and, when read together with the other information in the Prospectus,
         at the time the Registration Statement became effective, at the time
         the Prospectus was issued and at the Closing Time, did not and will not
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading.

                 3. Independent Accountants. Each of the accountants who
         certified the financial statements and supporting schedules included in
         the Registration Statement are independent public accountants as
         required by the 1933 Act and the 1933 Act Regulations.

                 4. Financial Statements. The financial statements included in
         the Registration Statement and the Prospectus, together with the
         related schedules and notes, present fairly the financial position of
         the Company and its consolidated subsidiaries at the dates indicated
         and the statement of operations, shareholders' equity and cash flows of
         the Company and its consolidated subsidiaries for the periods
         specified; the financial statements of Greenfield Industries, Inc.
         ("Greenfield") included in the Registration Statement and the
         Prospectus, together with the related schedules and notes, present
         fairly the financial position of Greenfield and its consolidated
         subsidiaries at the dates indicated and the statement of operations,
         stockholders' equity and cash flows of Greenfield and its consolidated
         subsidiaries for the periods specified; each of said financial
         statements have been prepared in conformity with generally accepted
         accounting principles ("GAAP") applied on a consistent basis throughout
         the periods involved. The supporting schedules, if any, included in the
         Registration Statement present fairly in accordance with GAAP the
         information required to be stated therein. The selected financial data
         and the summary financial information included in the Prospectus
         present fairly the information shown therein and have been compiled on
         a basis consistent with that of the audited financial statements
         included in the Registration Statement. The pro forma financial
         statements and the related notes thereto included in the Registration
         Statement and the Prospectus present fairly the information shown
         therein, have been prepared in accordance with the Commission's rules
         and guidelines with respect to pro forma financial statements and have
         been properly compiled on the bases described therein, and the
         assumptions used in the preparation thereof are reasonable and the
         adjustments used therein are appropriate to give effect to the
         transactions and circumstances referred to therein.

                 5. No Material Adverse Change in Business. Since the respective
         dates as of which information is given in the Registration Statement
         and the Prospectus, except as otherwise stated therein, (A) there has
         been no material adverse change in the condition, financial or
         otherwise, or in the earnings, business affairs or business prospects
         of the Company and its subsidiaries considered as one enterprise,
         whether or

                                        4

<PAGE>   9



         not arising in the ordinary course of business (a "Material Adverse
         Effect"), (B) there have been no transactions entered into by the
         Company or any of its subsidiaries, other than those in the ordinary
         course of business, which are material with respect to the Company and
         its subsidiaries considered as one enterprise, and (C) except for
         regular quarterly dividends on the common stock, par value 1.25 per
         share, of the Company (the "Common Stock") in amounts per share that
         are consistent with past practice, there has been no dividend or
         distribution of any kind declared, paid or made by the Company on any
         class of its capital stock.

                 6. Good Standing of the Company. The Company has been duly
         organized and is validly existing as a corporation in good standing
         under the laws of the Commonwealth of Pennsylvania and has corporate
         power and authority to own, lease and operate its properties and to
         conduct its business as described in the Prospectus and to enter into
         and perform its obligations under this Agreement; and the Company is
         duly qualified as a foreign corporation to transact business and is in
         good standing in each other jurisdiction in which such qualification is
         required, whether by reason of the ownership or leasing of property or
         the conduct of business, except where the failure so to qualify or to
         be in good standing would not result in a Material Adverse Effect.

                 7. Good Standing of Subsidiaries. Each "significant subsidiary"
         of the Company (as such term is defined in Rule 1-02 of Regulation S-X)
         (each a "Subsidiary" and, collectively, the "Subsidiaries") has been
         duly organized and is validly existing as a corporation in good
         standing under the laws of the jurisdiction of its incorporation, has
         corporate power and authority to own, lease and operate its properties
         and to conduct its business as described in the Prospectus and is duly
         qualified as a foreign corporation to transact business and is in good
         standing in each jurisdiction in which such qualification is required,
         whether by reason of the ownership or leasing of property or the
         conduct of business, except where the failure so to qualify or to be in
         good standing would not result in a Material Adverse Effect; all of the
         issued and outstanding capital stock of each such Subsidiary has been
         duly authorized and validly issued, is fully paid and non-assessable
         and is owned by the Company, directly or through subsidiaries, free and
         clear of any security interest, mortgage, pledge, lien, encumbrance,
         claim or equity; none of the outstanding shares of capital stock of any
         Subsidiary was issued in violation of the preemptive or similar rights
         of any securityholder of such Subsidiary. The only subsidiaries of the
         Company are the subsidiaries listed on Schedule C hereto.

                 8. Capitalization. The authorized, issued and outstanding
         capital stock of the Company is as set forth in the Prospectus in the
         column entitled "Actual" under the caption "Capitalization" (except for
         subsequent issuances, if any, pursuant to this Agreement, pursuant to
         reservations, agreements or employee benefit plans referred to in the
         Prospectus or pursuant to the exercise of convertible securities or
         options referred to in the Prospectus). The shares of issued and
         outstanding capital stock of the Company have been duly authorized and
         validly issued and are fully paid and non-assessable; none of the
         outstanding shares of capital stock of the Company was

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<PAGE>   10



         issued in violation of the preemptive or other similar rights of any
         securityholder of the Company.

                 9. Authorization of Agreement. This Agreement has been duly
         authorized, executed and delivered by the Company.

                10. Authorization of the Indenture. The Indenture has been duly
         authorized by the Company and duly qualified under the 1939 Act and,
         when duly executed and delivered by the Company and the Trustee, will
         constitute a valid and binding agreement of the Company, enforceable
         against the Company in accordance with its terms, except as the
         enforcement thereof may be limited by bankruptcy, insolvency
         (including, without limitation, all laws relating to fraudulent
         transfers), reorganization, moratorium or similar laws affecting
         enforcement of creditors' rights generally and except as enforcement
         thereof is subject to general principles of equity (regardless of
         whether enforcement is considered in a proceeding in equity or at law).

                11. Authorization of the Securities. The Securities have been
         duly authorized and, at the Closing Time, will have been duly executed
         by the Company and, when authenticated, issued and delivered in the
         manner provided for in the Indenture and delivered against payment of
         the purchase price therefor as provided in this Agreement, will
         constitute valid and binding obligations of the Company, enforceable
         against the Company in accordance with their terms, except as the
         enforcement thereof may be limited by bankruptcy, insolvency
         (including, without limitation, all laws relating to fraudulent
         transfers), reorganization, moratorium or similar laws affecting
         enforcement of creditors' rights generally and except as enforcement
         thereof is subject to general principles of equity (regardless of
         whether enforcement is considered in a proceeding in equity or at law),
         and will be in the form contemplated by, and entitled to the benefits
         of, the Indenture.

                12. Description of the Securities and the Indenture. The
         Securities and the Indenture will conform in all material respects to
         the respective statements relating thereto contained in the Prospectus
         and will be in substantially the respective forms filed or incorporated
         by reference, as the case may be, as exhibits to the Registration
         Statement.

                13. Absence of Defaults and Conflicts. Neither the Company nor
         any of its subsidiaries is in violation of its charter or by-laws or in
         default in the performance or observance of any obligation, agreement,
         covenant or condition contained in any contract, indenture, mortgage,
         deed of trust, loan or credit agreement, note, lease or other agreement
         or instrument to which the Company or any of its subsidiaries is a
         party or by which it or any of them may be bound, or to which any of
         the property or assets of the Company or any subsidiary is subject
         (collectively, "Agreements and Instruments") except for such defaults
         that would not result in a Material Adverse Effect; and the execution,
         delivery and performance of this Agreement, the Indenture and the
         Securities and the consummation of the transactions contemplated herein
         and in the Registration Statement (including the issuance and sale of
         the Securities and the use of the proceeds from the sale of the
         Securities as described in the Prospectus

                                        6

<PAGE>   11



         under the caption "Use of Proceeds" and the concurrent issuance and
         sale by the Company of 4,500,000 FELINE PRIDESSM and 4,300,000 shares
         of Common Stock of the Company (the "Concurrent Offerings")) and
         compliance by the Company with its obligations hereunder and under the
         Indenture and the Securities have been duly authorized by all necessary
         corporate action and do not and will not, whether with or without the
         giving of notice or passage of time or both, conflict with or
         constitute a breach of, or default or Repayment Event (as defined
         below) under, or result in the creation or imposition of any lien,
         charge or encumbrance upon any property or assets of the Company or any
         subsidiary pursuant to, the Agreements and Instruments (except for such
         conflicts, breaches or defaults or liens, charges or encumbrances that
         would not result in a Material Adverse Effect), nor will such action
         result in any violation of the provisions of the charter or by-laws of
         the Company or any subsidiary or any applicable law, statute, rule,
         regulation, judgment, order, writ or decree of any government,
         government instrumentality or court, domestic or foreign, having
         jurisdiction over the Company or any subsidiary or any of their assets,
         properties or operations. As used herein, a "Repayment Event" means any
         event or condition which gives the holder of any note, debenture or
         other evidence of indebtedness (or any person acting on such holder's
         behalf) the right to require the repurchase, redemption or repayment of
         all or a portion of such indebtedness by the Company or any subsidiary.

                14. Absence of Labor Dispute. No labor dispute with the
         employees of the Company or any subsidiary exists or, to the knowledge
         of the Company, is imminent, and the Company is not aware of any
         existing or imminent labor disturbance by the employees of any of its
         or any subsidiary's principal suppliers, manufacturers, customers or
         contractors, which, in either case, may reasonably be expected to
         result in a Material Adverse Effect.

                15. Absence of Proceedings. There is no action, suit,
         proceeding, inquiry or investigation before or brought by any court or
         governmental agency or body, domestic or foreign, now pending, or, to
         the knowledge of the Company, threatened, against or affecting the
         Company or any subsidiary, which is required to be disclosed in the
         Registration Statement (other than as disclosed therein), or which
         might reasonably be expected to result in a Material Adverse Effect, or
         which might reasonably be expected to materially and adversely affect
         the properties or assets thereof or the consummation of the
         transactions contemplated in this Agreement or the Concurrent Offerings
         or the performance by the Company of its obligations hereunder; the
         aggregate of all pending legal or governmental proceedings to which the
         Company or any subsidiary is a party or of which any of their
         respective property or assets is the subject which are not described in
         the Registration Statement, including ordinary routine litigation
         incidental to the business, could not reasonably be expected to result
         in a Material Adverse Effect.

                16. Accuracy of Exhibits. There are no contracts or documents
         which are required to be described in the Registration Statement, the
         Prospectus or the documents incorporated by reference therein or to be
         filed as exhibits thereto which have not been so described and filed as
         required.

                                        7

<PAGE>   12




                17. Possession of Intellectual Property. The Company and its
         subsidiaries own or possess, or can acquire on reasonable terms,
         adequate patents, patent rights, licenses, inventions, copyrights,
         know-how (including trade secrets and other unpatented and/or
         unpatentable proprietary or confidential information, systems or
         procedures), trademarks, service marks, trade names or other
         intellectual property (collectively, "Intellectual Property") necessary
         to carry on the business now operated by them, and neither the Company
         nor any of its subsidiaries has received any notice or is otherwise
         aware of any infringement of or conflict with asserted rights of others
         with respect to any Intellectual Property or of any facts or
         circumstances which would render any Intellectual Property invalid or
         inadequate to protect the interest of the Company or any of its
         subsidiaries therein, and which infringement or conflict (if the
         subject of any unfavorable decision, ruling or finding) or invalidity
         or inadequacy, singly or in the aggregate, would result in a Material
         Adverse Effect.

                18. Absence of Further Requirements. No filing with, or
         authorization, approval, consent, license, order, registration,
         qualification or decree of, any court or governmental authority or
         agency is necessary or required for the performance by the Company of
         its obligations hereunder, in connection with the offering, issuance or
         sale of the Securities hereunder or the consummation of the
         transactions contemplated by this Agreement or in the Concurrent
         Offerings or for the due execution, delivery or performance of the
         Indenture by the Company, except such as have been already obtained or
         as may be required under the 1933 Act or the 1933 Act Regulations or
         state securities laws and except for the qualification of the Indenture
         under the 1939 Act.

                19. Possession of Licenses and Permits. The Company and its
         subsidiaries possess such permits, licenses, approvals, consents and
         other authorizations (collectively, "Governmental Licenses") issued by
         the appropriate federal, state, local or foreign regulatory agencies or
         bodies necessary to conduct the business now operated by them; the
         Company and its subsidiaries are in compliance with the terms and
         conditions of all such Governmental Licenses, except where the failure
         so to comply would not, singly or in the aggregate, have a Material
         Adverse Effect; all of the Governmental Licenses are valid and in full
         force and effect, except when the invalidity of such Governmental
         Licenses or the failure of such Governmental Licenses to be in full
         force and effect would not have a Material Adverse Effect; and neither
         the Company nor any of its subsidiaries has received any notice of
         proceedings relating to the revocation or modification of any such
         Governmental Licenses which, singly or in the aggregate, if the subject
         of an unfavorable decision, ruling or finding, would result in a
         Material Adverse Effect.

                20. Title to Property. The Company and its subsidiaries have
         good and marketable title to all real property owned by the Company and
         its subsidiaries and good title to all other properties owned by them,
         in each case, free and clear of all mortgages, pledges, liens, security
         interests, claims, restrictions or encumbrances of any kind except such
         as (a) are described in the Prospectus or (b) do not, singly or in the
         aggregate, materially affect the value of such property and do not
         interfere with the use made and proposed to be made of such property by
         the Company or any of its

                                        8

<PAGE>   13



         subsidiaries; and all of the leases and subleases material to the
         business of the Company and its subsidiaries, considered as one
         enterprise, and under which the Company or any of its subsidiaries
         holds properties described in the Prospectus, are in full force and
         effect, and neither the Company nor any subsidiary has any notice of
         any material claim of any sort that has been asserted by anyone adverse
         to the rights of the Company or any subsidiary under any of the leases
         or subleases mentioned above, or affecting or questioning the rights of
         the Company or such subsidiary to the continued possession of the
         leased or subleased premises under any such lease or sublease.

                21. Compliance with Cuba Act. The Company has complied with, and
         is and will be in compliance with, the provisions of that certain
         Florida act relating to disclosure of doing business with Cuba,
         codified as Section 517.075 of the Florida statutes, and the rules and
         regulations thereunder (collectively, the "Cuba Act") or is exempt
         therefrom.

                22. Investment Company Act. The Company is not, and upon the
         issuance and sale of the Securities as herein contemplated and the
         application of the net proceeds therefrom as described in the
         Prospectus will not be, an "investment company" or an entity
         "controlled" by an "investment company" as such terms are defined in
         the Investment Company Act of 1940, as amended (the "1940 Act").

                23. Environmental Laws. Except as described in the Registration
         Statement and except as would not, singly or in the aggregate, result
         in a Material Adverse Effect, (A) neither the Company nor any of its
         subsidiaries is in violation of any federal, state, local or foreign
         statute, law, rule, regulation, ordinance, code, policy or rule of
         common law or any judicial or administrative interpretation thereof,
         including any judicial or administrative order, consent, decree or
         judgment, relating to pollution or protection of human health, the
         environment (including, without limitation, ambient air, surface water,
         groundwater, land surface or subsurface strata) or wildlife, including,
         without limitation, laws and regulations relating to the release or
         threatened release of chemicals, pollutants, contaminants, wastes,
         toxic substances, hazardous substances, petroleum or petroleum products
         (collectively, "Hazardous Materials") or to the manufacture,
         processing, distribution, use, treatment, storage, disposal, transport
         or handling of Hazardous Materials (collectively, "Environmental
         Laws"), (B) the Company and its subsidiaries have all permits,
         authorizations and approvals required under any applicable
         Environmental Laws and are each in compliance with their requirements,
         (C) there are no pending or threatened administrative, regulatory or
         judicial actions, suits, demands, demand letters, claims, liens,
         notices of noncompliance or violation, investigation or proceedings
         relating to any Environmental Law against the Company or any of its
         subsidiaries and (D) there are no events or circumstances that might
         reasonably be expected to form the basis of an order for clean-up or
         remediation, or an action, suit or proceeding by any private party or
         governmental body or agency, against or affecting the Company or any of
         its subsidiaries relating to Hazardous Materials or any Environmental
         Laws.


                                        9

<PAGE>   14



                24. Registration Rights. There are no persons with registration
         rights or other similar rights to have any securities registered
         pursuant to the Registration Statement or otherwise registered by the
         Company under the 1933 Act.

                25. Related Party Transactions. No relationship, direct or
         indirect, exists between or among the Company on the one hand, and the
         directors, officers, shareholders, customers or suppliers of the
         Company on the other hand, which is required to be described in the
         Prospectus which is not so described.

                26. Employee Matters. The Company and any entity which would be
         treated as a single employer under Section 414(b), (c), (m) or (o) of
         the Internal Revenue Code of 1986, as amended, including the
         regulations and published interpretations thereunder (the "Code") (each
         such entity, an "ERISA Affiliate"), is in compliance in all material
         respects with all presently applicable provisions of the Employee
         Retirement Income Security Act of 1974, as amended, including the
         regulations and published interpretations thereunder ("ERISA"), and, if
         applicable, the Code; no "reportable event" (as defined in ERISA) has
         occurred with respect to any "pension plan" (as defined in ERISA) for
         which the Company or any ERISA Affiliate would have any liability;
         neither the Company nor any ERISA Affiliate has incurred or expects to
         incur liability under (i) Title IV of ERISA with respect to termination
         of, or withdrawal from, any such "pension plan" or (ii) Sections 412 or
         4971 of the Code; and each "pension plan" for which the Company or any
         ERISA Affiliate would have any liability that is intended to be
         qualified under Section 401(a) of the Code is so qualified in all
         material respects and nothing has occurred, whether by action or by
         failure to act, which would cause the loss of such qualification.

                27. Taxes. The Company has filed all federal, state, local and
         foreign income and franchise tax returns required to be filed through
         the date hereof and has paid all taxes due thereon, and no tax
         deficiency has been determined adversely to the Company or any of its
         subsidiaries which has had (nor does the Company have any knowledge of
         any tax deficiency which, if determined adversely to the Company or any
         of its subsidiaries, might have) a Material Adverse Effect or a
         material adverse effect on the condition, financial or otherwise, or on
         the earnings, business affairs or business prospects of the Company and
         its subsidiaries considered as one enterprise.

         B. Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.

         SECTION II. Sale and Delivery to Underwriters; Closing.

         A. Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any

                                       10

<PAGE>   15



additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.

         B. Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Simpson Thacher
& Bartlett, 425 Lexington Avenue, New York, New York 10017, or at such other
place as shall be agreed upon by the Representatives and the Company, at 9:00
A.M. (Eastern time) business day after the date hereof (unless postponed in
accordance with the provisions of Section 10), or such other time not later than
ten business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein called
"Closing Time").

         Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder.

         C. Denominations; Registration. Certificates for the Securities shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time. The Securities, which may be in temporary
form, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time.

         SECTION III. Covenants of the Company. The Company covenants with each
Underwriter as follows:

                  A. Compliance with Securities Regulations and Commission
         Requests. The Company, subject to Section 3(b), will comply with the
         requirements of Rule 430A or Rule 434, as applicable, and will notify
         the Representatives immediately, and confirm the notice in writing, (i)
         when any post-effective amendment to the Registration Statement shall
         become effective, or any supplement to the Prospectus or any amended
         Prospectus shall have been filed, (ii) of the receipt of any comments
         from the Commission, (iii) of any request by the Commission for any
         amendment to the Registration Statement or any amendment or supplement
         to the Prospectus or for additional information, and (iv) of the
         issuance by the Commission of any stop order suspending the
         effectiveness of the Registration Statement or of any order preventing
         or suspending the use of any preliminary prospectus, or of the
         suspension of the qualification of the Securities for offering or sale
         in any jurisdiction, or of the initiation or threatening of any
         proceedings for any of such purposes. The Company will promptly effect
         the filings necessary pursuant to Rule 424(b) and will take such

                                       11

<PAGE>   16



         steps as it deems necessary to ascertain promptly whether the form of
         prospectus transmitted for filing under Rule 424(b) was received for
         filing by the Commission and, in the event that it was not, it will
         promptly file such prospectus. The Company will make every reasonable
         effort to prevent the issuance of any stop order and, if any stop order
         is issued, to obtain the lifting thereof at the earliest possible
         moment.

                  B. Filing of Amendments. The Company will give the
         Representatives notice of its intention to file or prepare any
         amendment to the Registration Statement (including any filing under
         Rule 462(b)), any Term Sheet or any amendment, supplement or revision
         to either the prospectus included in the Registration Statement at the
         time it became effective or to the Prospectus, whether pursuant to the
         1933 Act, the 1934 Act or otherwise, will furnish the Representatives
         with copies of any such documents a reasonable amount of time prior to
         such proposed filing or use, as the case may be, and will not file or
         use any such document to which the Representatives or counsel for the
         Underwriters shall object.

                  C. Delivery of Registration Statements. The Company has
         furnished or will deliver to the Representatives and counsel for the
         Underwriters, without charge, signed copies of the Registration
         Statement as originally filed and of each amendment thereto (including
         exhibits filed therewith or incorporated by reference therein and
         documents incorporated or deemed to be incorporated by reference
         therein) and signed copies of all consents and certificates of experts,
         and will also deliver to the Representatives, without charge, a
         conformed copy of the Registration Statement as originally filed and of
         each amendment thereto (without exhibits) for each of the Underwriters.
         The copies of the Registration Statement and each amendment thereto
         furnished to the Underwriters will be identical to the electronically
         transmitted copies thereof filed with the Commission pursuant to EDGAR,
         except to the extent permitted by Regulation S-T.

                  D. Delivery of Prospectuses. The Company has delivered to each
         Underwriter, without charge, as many copies of each preliminary
         prospectus as such Underwriter reasonably requested, and the Company
         hereby consents to the use of such copies for purposes permitted by the
         1933 Act. The Company will furnish to each Underwriter, without charge,
         during the period when the Prospectus is required to be delivered under
         the 1933 Act or the 1934 Act, such number of copies of the Prospectus
         (as amended or supplemented) as such Underwriter may reasonably
         request. The Prospectus and any amendments or supplements thereto
         furnished to the Underwriters will be identical to the electronically
         transmitted copies thereof filed with the Commission pursuant to EDGAR,
         except to the extent permitted by Regulation S-T.

                  E. Continued Compliance with Securities Laws. The Company will
         comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and
         the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations
         so as to permit the completion of the distribution of the Securities as
         contemplated in this Agreement and in the Prospectus. If at any time
         when a prospectus is required by the 1933 Act to be delivered in
         connection with sales of the Securities, any event shall occur or
         condition

                                       12

<PAGE>   17



         shall exist as a result of which it is necessary, in the opinion of
         counsel for the Underwriters or for the Company, to amend the
         Registration Statement or amend or supplement the Prospectus in order
         that the Prospectus will not include any untrue statements of a
         material fact or omit to state a material fact necessary in order to
         make the statements therein not misleading in the light of the
         circumstances existing at the time it is delivered to a purchaser, or
         if it shall be necessary, in the opinion of such counsel, at any such
         time to amend the Registration Statement or amend or supplement the
         Prospectus in order to comply with the requirements of the 1933 Act or
         the 1933 Act Regulations, the Company will promptly prepare and file
         with the Commission, subject to Section 3(b), such amendment or
         supplement as may be necessary to correct such statement or omission or
         to make the Registration Statement or the Prospectus comply with such
         requirements, and the Company will furnish to the Underwriters such
         number of copies of such amendment or supplement as the Underwriters
         may reasonably request.

                  F. Blue Sky Qualifications. The Company will use its best
         efforts, in cooperation with the Underwriters, to qualify the
         Securities for offering and sale under the applicable securities laws
         of such states and other jurisdictions as the Representatives may
         designate and to maintain such qualifications in effect for a period of
         not less than one year from the later of the effective date of the
         Registration Statement and any Rule 462(b) Registration Statement;
         provided, however, that the Company shall not be obligated to file any
         general consent to service of process or to qualify as a foreign
         corporation or as a dealer in securities in any jurisdiction in which
         it is not so qualified or to subject itself to taxation in respect of
         doing business in any jurisdiction in which it is not otherwise so
         subject. In each jurisdiction in which the Securities have been so
         qualified, the Company will file such statements and reports as may be
         required by the laws of such jurisdiction to continue such
         qualification in effect for a period of not less than one year from the
         effective date of the Registration Statement and any Rule 462(b)
         Registration Statement. The Company will also supply the Underwriters
         with such information as is necessary for the determination of the
         legality of the Securities for investment under the laws of such
         jurisdictions as the Underwriters may request.

                  G. Rule 158. The Company will timely file such reports
         pursuant to the 1934 Act as are necessary in order to make generally
         available to its securityholders as soon as practicable an earnings
         statement for the purposes of, and to provide the benefits contemplated
         by, the last paragraph of Section 11(a) of the 1933 Act.

                  H. Use of Proceeds. The Company will use the net proceeds
         received by it from the sale of the Securities in the manner specified
         in the Prospectus under "Use of Proceeds".

                  I. Restriction on Sale of Securities. During a period of 90
         days from the date of the Prospectus, the Company will not, without the
         prior written consent of Merrill Lynch, directly or indirectly, issue,
         sell, offer or contract to sell, grant any option for the sale of, or
         otherwise transfer or dispose of, any debt securities of the Company.


                                       13

<PAGE>   18



                  J. Reporting Requirements. The Company, during the period when
         the Prospectus is required to be delivered under the 1933 Act or the
         1934 Act, will file all documents required to be filed with the
         Commission pursuant to the 1934 Act within the time periods required by
         the 1934 Act and the 1934 Act Regulations.

         SECTION IV. Payment of Expenses. A. Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters, the Indenture
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectus and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities and (ix) any fees payable in
connection with the rating of the Securities.

         B. Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.

         SECTION V. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:

                  A. Effectiveness of Registration Statement. The Registration
         Statement, including any Rule 462(b) Registration Statement, has become
         effective and at Closing Time no stop order suspending the
         effectiveness of the Registration Statement shall have been issued
         under the 1933 Act or proceedings therefor initiated or threatened by
         the Commission, and any request on the part of the Commission for
         additional information shall have been complied with to the reasonable
         satisfaction of counsel to the Underwriters. A prospectus containing
         the Rule 430A Information shall have been filed with the Commission in
         accordance with Rule 424(b) (or a post-effective amendment providing
         such information shall have been filed and declared effective in
         accordance with the requirements of Rule 430A) or, if the Company has
         elected to

                                       14

<PAGE>   19



         rely upon Rule 434, a Term Sheet shall have been filed with the
         Commission in accordance with Rule 424(b).

                  B. Opinion of Counsel for Company. At Closing Time, the
         Representatives shall have received the favorable opinion, dated as of
         Closing Time, of David T. Cofer, Vice President, Secretary and General
         Counsel to the Company and of Buchanan Ingersoll Professional
         Corporation, special counsel for the Company, in form and substance
         satisfactory to counsel for the Underwriters, together with signed or
         reproduced copies of such letter for each of the other Underwriters to
         the effect set forth in Exhibit A hereto and to such further effect as
         counsel to the Underwriters may reasonably request.

                  C. Opinion of Counsel for Underwriters. At Closing Time, the
         Representatives shall have received the favorable opinion, dated as of
         Closing Time, of Simpson Thacher & Bartlett, counsel for the
         Underwriters, together with signed or reproduced copies of such letter
         for each of the other Underwriters with respect to the matters set
         forth in clauses (i), (ii), (vi) through (xii), inclusive, and the
         penultimate paragraph of Exhibit A hereto. In giving such opinion such
         counsel may rely, as to all matters governed by the laws of
         jurisdictions other than the law of the State of New York and the
         federal law of the United States, upon the opinions of counsel
         satisfactory to the Representatives. Such counsel may also state that,
         insofar as such opinion involves factual matters, they have relied, to
         the extent they deem proper, upon certificates of officers of the
         Company and its subsidiaries and certificates of public officials.

                  D. Opinion of German Counsel. At Closing Time, the
         Representatives shall have received the favorable opinion, dated as of
         the Closing Time, of _________________, German counsel to the Company,
         in form and substance satisfactory to counsel for the Underwriters to
         the effect that:

                           (i) Kennametal Hertel AG has been incorporated and is
                  validly existing as a corporation in good standing under
                  German laws, has the corporate power and authority to own,
                  lease and operate its properties and to conduct its business
                  as presently conducted and as described in the Prospectus, and
                  is qualified as a foreign corporation to transact business and
                  is in good standing in each jurisdiction in which such
                  qualification is required, whether by reason of the ownership
                  or leasing of property or the conduct of business, except
                  where the failure to so qualify or be in good standing would
                  not have a Material Adverse Effect; all of the issued and
                  outstanding capital stock of Kennametal Hertel AG has been
                  authorized and validly issued, is fully paid and
                  non-assessable and all such shares are owned by the Company,
                  directly or through its subsidiaries, free and clear of any
                  security interest, mortgage, pledge, lien, encumbrance, claim
                  or equity; and

                           (ii) Other than as set forth in the Prospectus, there
                  are no legal or governmental proceedings pending to which
                  Kennametal Hertel AG or any of its subsidiaries is a party or
                  to which any property of Kennametal Hertel AG or

                                       15

<PAGE>   20



                  any of its subsidiaries is the subject which reasonably would
                  be expected individually or in the aggregate to have a
                  Material Adverse Effect; and, to the best of such counsel's
                  knowledge, no such proceedings are threatened or contemplated
                  by governmental authorities or threatened by others.

                  E. Officers' Certificate. At Closing Time, there shall not
         have been, since the date hereof or since the respective dates as of
         which information is given in the Prospectus, any material adverse
         change in the condition, financial or otherwise, or in the earnings,
         business affairs or business prospects of the Company and its
         subsidiaries considered as one enterprise, whether or not arising in
         the ordinary course of business, and the Representatives shall have
         received a certificate of the President or a Vice President of the
         Company and of the chief financial or chief accounting officer of the
         Company, dated as of Closing Time, to the effect that (i) there has
         been no such material adverse change, (ii) the representations and
         warranties in Section 1(a) hereof are true and correct with the same
         force and effect as though expressly made at and as of Closing Time,
         (iii) the Company has complied with all agreements and satisfied all
         conditions on its part to be performed or satisfied at or prior to
         Closing Time, and (iv) no stop order suspending the effectiveness of
         the Registration Statement has been issued and no proceedings for that
         purpose have been instituted or are pending or are contemplated by the
         Commission.

                  F. Accountant's Comfort Letter. At the time of the execution
         of this Agreement, the Representatives shall have received from Arthur
         Andersen LLP a letter dated such date, in form and substance
         satisfactory to the Representatives, together with signed or reproduced
         copies of such letter for each of the other Underwriters containing
         statements and information of the type ordinarily included in
         accountants' "comfort letters" to underwriters with respect to the
         financial statements, pro forma financial statements and certain
         financial information of the Company contained in the Registration
         Statement and the Prospectus.

                  G. Accountant's Comfort Letter. At the time of the execution
         of this Agreement, the Representatives shall have received from Price
         Waterhouse LLP a letter dated such date, in form and substance
         satisfactory to the Representatives, together with signed or reproduced
         copies of such letter for each of the other Underwriters containing
         statements and information of the type ordinarily included in
         accountants' "comfort letters" to underwriters with respect to the
         financial statements and certain financial information of Greenfield
         contained in the Registration Statement and the Prospectus.

                  H. Bring-down Comfort Letter. At Closing Time, the
         Representatives shall have received from Price Waterhouse LLP a letter,
         dated as of Closing Time, to the effect that they reaffirm the
         statements made in the letter furnished pursuant to subsection (F) of
         this Section, except that the specified date referred to shall be a
         date not more than three business days prior to Closing Time.

                  I. Bring-down Comfort Letter. At Closing Time, the
         Representatives shall have received from Price Waterhouse LLP a letter,
         dated as of Closing Time, to the

                                       16

<PAGE>   21



         effect that they reaffirm the statements made in the letter furnished
         pursuant to subsection (G) of this Section, except that the specified
         date referred to shall be a date not more than three business days
         prior to Closing Time.

                  J. Maintenance of Rating. At Closing Time, the Securities
         shall be rated at least Baa3 by Moody's Investor's Service Inc. and
         BBB+ by Standard & Poor's Ratings Group, a division of McGraw-Hill,
         Inc., and the Company shall have delivered to the Representatives a
         letter dated the Closing Time, from each such rating agency, or other
         evidence satisfactory to the Representatives, confirming that the
         Securities have such ratings; and since the date of this Agreement,
         there shall not have occurred a downgrading in the rating assigned to
         the Securities or any of the Company's other debt securities by any
         "nationally recognized statistical rating agency", as that term is
         defined by the Commission for purposes of Rule 436(g)(2) under the 1933
         Act, and no such organization shall have publicly announced that it has
         under surveillance or review its rating of the Securities or any of the
         Company's other debt securities.

                  K. Additional Documents. At Closing Time, counsel for the
         Underwriters shall have been furnished with such documents and opinions
         as they may require for the purpose of enabling them to pass upon the
         issuance and sale of the Securities as herein contemplated, or in order
         to evidence the accuracy of any of the representations or warranties,
         or the fulfillment of any of the conditions, herein contained; and all
         proceedings taken by the Company in connection with the issuance and
         sale of the Securities as herein contemplated shall be satisfactory in
         form and substance to the Representatives and counsel for the
         Underwriters.

                  L. Termination of Agreement. If any condition specified in
         this Section shall not have been fulfilled when and as required to be
         fulfilled, this Agreement may be terminated by the Representatives by
         notice to the Company at any time at or prior to Closing Time, and such
         termination shall be without liability of any party to any other party
         except as provided in Section 4 and except that Sections 1, 6, 7 and 8
         shall survive any such termination and remain in full force and effect.

         SECTION VI.  Indemnification.

         A. Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:

                 1. against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the
         Registration Statement (or any amendment thereto), including the Rule
         430A Information and the Rule 434 Information, if applicable, or the
         omission or alleged omission therefrom of a material fact required to
         be stated therein or necessary to make the statements therein not
         misleading or arising out of any untrue statement or alleged untrue
         statement of a material fact contained in any preliminary prospectus or
         the Prospectus (or any amendment or supplement thereto), or the
         omission or alleged

                                       17

<PAGE>   22



         omission therefrom of a material fact necessary in order to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading;

                 2. against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened,
         or of any claim whatsoever based upon any such untrue statement or
         omission, or any such alleged untrue statement or omission; provided
         that (subject to Section 6(d) below) any such settlement is effected
         with the written consent of the Company; and

                 3. against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel chosen by Merrill
         Lynch), reasonably incurred in investigating, preparing or defending
         against any litigation, or any investigation or proceeding by any
         governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).

         B. Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).

         C. Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity

                                       18

<PAGE>   23



agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

         D. Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

         SECTION VII. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.

         The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the

                                       19

<PAGE>   24



offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the total underwriting discount received
by the Underwriters, in each case as set forth on the cover of the Prospectus,
or, if Rule 434 is used, the corresponding location on the Term Sheet, bear to
the aggregate initial public offering price of the Securities as set forth on
such cover.

         The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

         The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

         For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.

         SECTION VIII. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain

                                       20

<PAGE>   25



operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Securities to the Underwriters.

         SECTION IX. Termination of Agreement.

         A. Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by Federal New York or Pennsylvania
authorities.

         B. Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.

         SECTION X. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Securities which
it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:

                  A. if the number of Defaulted Securities does not exceed 10%
         of the aggregate principal amount of the Securities to be purchased
         hereunder, each of the non-defaulting Underwriters shall be obligated,
         severally and not jointly, to purchase the full amount thereof in the
         proportions that their respective underwriting obligations hereunder
         bear to the underwriting obligations of all non-defaulting
         Underwriters, or


                                       21

<PAGE>   26



                  B. if the number of Defaulted Securities exceeds 10% of the
         aggregate principal amount of the Securities to be purchased hereunder,
         this Agreement shall terminate without liability on the part of any
         non-defaulting Underwriter.

         No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

         In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.

         SECTION XI. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of John J. Bolebruch;
and notices to the Company shall be directed to it at Route 981 South at
Westmoreland County Airport, Latrobe, Pennsylvania 15650, attention of David T.
Cofer.

         SECTION XII. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.

         SECTION XIII. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.

         SECTION XIV. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.


                                       22

<PAGE>   27



         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.

                                           Very truly yours,

                                           KENNAMETAL INC.



                                           By ____________________________
                                              Title:

CONFIRMED AND ACCEPTED, 
as of the date first above written:


MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
  INCORPORATED
GOLDMAN, SACHS & CO.
CIBC OPPENHEIMER CORP.
DEUTSCHE MORGAN GRENFELL INC.

By:  MERRILL LYNCH, PIERCE, FENNER & SMITH
           INCORPORATED


By __________________________________________
             Authorized Signatory


For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.

                                       23

<PAGE>   28



                                   SCHEDULE A

                                                                   Principal
                                                                   Amount of
                                    Name of Underwriter           Securities
                                    -------------------           ----------

Merrill Lynch, Pierce, Fenner & Smith
  Incorporated.................................................
Goldman, Sachs & Co............................................
CIBC Oppenheimer Corp..........................................
Deutsche Morgan Grenfell Inc...................................







                                                                  ----------
         Total.................................................  
                                                                  ==========


                                        1

<PAGE>   29



                                   SCHEDULE B


                                 KENNAMETAL INC.

                       $150,000,000 Senior Notes due 2001

         1. The initial public offering price of the Securities shall be __% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.

         2. The purchase price to be paid by the Underwriters for the Securities
shall be __% of the principal amount thereof.

         3. The interest rate on the Securities shall be __% per annum.



                        $150,000,000 Senior Note due 2008

         1. The initial public offering price of the Securities shall be __% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.

         2. The purchase price to be paid by the Underwriters for the Securities
shall be __% of the principal amount thereof.

         3. The interest rate on the Securities shall be __% per annum.



                     $150,000,000 Senior Debentures due 2028

         1. The initial public offering price of the Securities shall be __% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.

         2. The purchase price to be paid by the Underwriters for the Securities
shall be __% of the principal amount thereof.

         3. The interest rate on the Securities shall be __% per annum.





                                        2

<PAGE>   30



                                   SCHEDULE C

                              List of subsidiaries


                                        1
