and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding, if such person acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation, and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of an action by or in the right of the corporation, such
indemnification is limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person has been adjudged to be liable to the corporation unless, and only to the extent that, a court determines upon application that, despite the adjudication of liability but in view of all the
circumstances, such person is fairly and reasonably entitled to indemnity for the expenses that the court deems proper.
BCL
Section 1744 provides that, unless ordered by a court, any indemnification referred to above shall be made by the corporation only as authorized in the specific case upon a determination that indemnification is proper in the circumstances
because the indemnitee has met the applicable standard of conduct. Such determination shall be made:
(1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding; or
(2) if such a
quorum is not obtainable, or if obtainable and a majority vote of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or
(3) by the shareholders.
Notwithstanding the above, BCL Section 1743 provides that to the extent that a director, officer, employee or agent of a business
corporation is successful on the merits or otherwise in defense of any proceeding referred to above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection therewith.
BCL Section 1745 provides that expenses (including attorneys’ fees)
incurred by an officer, director, employee or agent of a business corporation in defending any proceeding may be paid by the corporation in advance of the final disposition of the proceeding upon receipt of an undertaking to repay the amount
advanced if it is ultimately determined that the indemnitee is not entitled to be indemnified by the corporation.
2. Indemnification
Bylaws. Kennametal’s Bylaws provide that it is obligated to indemnify directors, officers and other persons serving at the request of Kennametal in certain other capacities, against all reasonable expenses (including attorneys’ fees)
and any liability and loss, including judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement incurred or paid by such person in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether or not by or in the right of the Corporation or otherwise, by reason of the fact that such person was an officer or director of Kennametal or served in certain other capacities. The Bylaws provide that no
indemnification shall be made where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness or where the proceeding has been initiated by the person
seeking indemnification and was not pre-authorized by the Board of Directors (except in the case where the person successfully, in whole or in part, brings suit against the Corporation to enforce such
person’s right to indemnification). The Bylaws provide that to the extent required by law, the payment of expenses incurred by an officer or director in advance of the final disposition of a proceeding shall be made only upon receipt of an
undertaking, by or on behalf of such person, to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified. The Bylaws also state that the right to indemnification, including the right to
advancement of expenses, is a contract right which will continue as to a person who has ceased to be a director or officer or trustee, and inure to the benefit of the heirs, executors and administrators of such person.
As permitted by BCL Section 1713, Kennametal’s Bylaws provide that directors generally will not be personally liable for monetary
damages for any action taken or failure to take any action unless the director has breached or failed to perform his or her duty as a fiduciary (the standard of care established by the BCL), and such failure constitutes self-dealing, willful
misconduct or recklessness; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director (i) for any responsibility or liability of such director pursuant to any criminal statute, or (ii) for any
liability of a director for the payment of taxes pursuant to local, State or Federal law.
3. Director and Officer Liability
Insurance. Kennametal purchases and maintains directors’ and officers’ liability insurance. Through this liability insurance, Kennametal provides insurance contracts for its directors and officers which insures them, within the limits
and subject to the limitations of the policies, against certain expenses and liabilities which have been incurred by, or resulted from, any actions, suits or proceedings to which they are parties by reason of being or having served as directors or
officers of Kennametal.
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