Document:

<PAGE>   1
                              SEVENTH AMENDMENT TO
                       AMENDED AND RESTATED LOAN AGREEMENT
                         DATED AS OF SEPTEMBER 30, 1996

         THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the
"Seventh Amendment") effective as of the 11th day of January, 2001, by and among
MAXCO, INC., a Michigan Corporation ("Borrower") and COMERICA BANK, a Michigan
banking corporation ("Bank").

                               W I T N E S S E T H

         WHEREAS, Borrower and Bank entered into a certain Amended and Restated
Loan Agreement dated September 30, 1996, as amended by First Amendment thereto
dated as of August 1, 1997, as further amended by Second Amendment thereto dated
as of June 24, 1998, as further amended by Third Amendment thereto dated as of
September 24, 1998, as further amended by Fourth Amendment thereto dated as of
June 22, 1999, as further amended by Fifth Amendment thereto dated as of
September 1, 1999 and as further amended by Sixth Amendment thereto dated as of
July 10, 2000 (the "Agreement"); and

         WHEREAS, Borrower and Bank now desire to amend the Agreement to provide
for the purpose of (i) confirming the Commitment Amount, (ii) extending the
Termination Date, (iii) modifying the interest rate provided in the Revolving
Credit Note, and (iv) incorporating the Advance Formula Agreement (as defined
herein).

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Borrower and the Bank hereby agree as follows:

         1.       In Sub-Section 1.1 of Section 1 of the Agreement,
the following definition is hereby added:

                  "Advance Formula Agreement" shall mean that certain Advance
         Formula Agreement of even date herewith between Borrower and the Bank.

         2.       In Sub-Section 1.1 of Section 1 of the Agreement, the
following definitions are hereby deleted in their entirety and replaced by the
following:

                   "Commitment Amount" shall mean $18,000,000 (or such lesser
         amount to which the Commitment Amount may be reduced by the Borrower
         from time to time under Section 2.8.1 of this Agreement), subject to
         the terms, limitations and conditions of the Advance Formula Agreement.

                  "Termination Date" shall mean, as to the Revolving Credit
         Loan, August 1, 2002 (or such earlier date on which the Borrower shall
         permanently terminate the Bank's commitment under Section 2.8.1 of this
         Agreement).

         3.       Notwithstanding anything contained in the Agreement to the
contrary, the Agreement is hereby amended to incorporate the terms and
conditions of the Advance Formula Agreement, as if the same were set forth
herein verbatim, provided, that it is the express intent of this provision of
this Seventh Amendment and the Advance Formula Agreement to limit the

                                      -1-

<PAGE>   2

Indebtedness (as defined in the Agreement) of the Borrower to the Bank as
specified in the Advance Formula Agreement.

         4.       Subsection  7.1 of  Section 1 of the  Agreement is hereby
deleted in its entirety and replaced by the following:

                  7.1 Dividends. Borrower shall not declare or pay any dividend
         on, or make any other distribution with respect to (whether by
         reduction of capital or otherwise), any shares of its capital stock,
         including but not limited to dividends previously permitted under the
         Agreement relative to any of Borrower's preferred stock series, except
         that (i) dividends from any Subsidiary to the Borrower are permitted,
         and (ii) dividends on the preferred stock series are permitted, but
         only to the extent fully funded by a loan (subordinated, to the
         satisfaction of the Bank, in all respects to the Indebtedness) made by
         Mr. Max A. Coon to the Borrower.

         5.       Except as specifically modified hereby, the terms and
conditions of the Agreement and the Notes, as the same may be amended from time
to time, remain in full force and effect and the undersigned hereby ratify and
agrees to be bound by the terms of the Agreement as hereby amended.

         6.       Neither the extension of this Seventh Amendment by the Bank,
nor any other act or omission by the Bank in connection herewith, shall be
deemed an express or implied waiver by the Bank of any default under the
Agreement.

         IN WITNESS WHEREOF, the Borrower and the Bank have caused this Seventh
Amendment to be executed by their duly authorized officers as of the day and
year first written above.

                                            MAXCO, INC.

                                            By    \S\ VINCENT SHUNSKY
                                               -------------------------------
                                                  Vincent Shunsky
                                                  Its: Vice President

                                            COMERICA BANK

                                            By    \S\ DAVID G. GRANTHAM
                                               -------------------------------
                                                  David G. Grantham
                                                  Its: Vice President

                                      -2-

<PAGE>   3

         The Undersigned Guarantors hereby acknowledge and consent to the above
Seventh Amendment.

Ersco Corporation                           Pak-Sak Industries, Inc.

By  \S\ VINCENT SHUNSKY                     By   \S\ VINCENT SHUNSKY
    ---------------------------                  -----------------------------
    Vincent Shunsky                              Vincent Shunsky
    Its: Treasurer                               Its: Treasurer

Atmosphere Annealing, Inc.

By  \S\ VINCENT SHUNSKY
    --------------------------
    Vincent Shunsky
    Its: Treasurer

                                      -3-<PAGE>   1
                                                                    Exhibit 10.1

                       AMENDMENT TO TRANSACTION DOCUMENTS

                  THIS AMENDMENT, dated as of December 6, 2000, by and among
KENNAMETAL INC., a Pennsylvania corporation (the "Borrower"), the Lenders
parties to the Credit Agreement referred to below, and MELLON BANK, N.A., as
Administrative Agent under such Credit Agreement.

                                    RECITALS:

                  WHEREAS, the Borrower has entered into a Credit Agreement,
dated as of November 17, 1997, by and among the Borrower, the Lenders parties
thereto from time to time, and Mellon Bank, N.A., as Administrative Agent (as
amended by Amendments to Transaction Documents dated as of November 26, 1997,
December 19, 1997, March 19, 1998, December 15, 1998, March 31, 1999, and
October 1, 1999, respectively, the "Credit Agreement");

                  WHEREAS, the parties hereto desire to amend further the Credit
Agreement as set forth herein; and

                  WHEREAS, capitalized terms used herein which are defined in
the Credit Agreement are used herein as therein defined; and

                  WHEREAS, the Borrower expects to enter into a credit facility
providing for revolving credit loans in a principal amount not exceeding EUR
225,000,000 to be provided by a group of lenders for which Deutsche Bank AG New
York Branch will act as agent (the "Euro Credit Facility"), such loans to be
made to the Borrower and to be guaranteed by certain Subsidiaries of the
Borrower.

                  NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:

                  SECTION 1. AMENDMENT TO ADD A DEFINITION. Section 1.01 of
Annex A of the Credit Agreement is amended by adding thereto, in appropriate
alphabetical sequence, the following definition:

                               "Euro Credit Facility" means the Revolving Credit
                           Agreement, expected to be dated as of a date in
                           December, 2000, and as amended from time to time,
                           between the Borrower, the lenders party thereto and
                           Deutsche Bank AG New York Branch, as agent for such
                           lenders, providing for revolving credit loans to the
                           Borrower in a principal amount not exceeding EUR
                           225,000,000.

                  SECTION 2. AMENDMENT RELATING TO MANDATORY REDUCTION OF
REVOLVING CREDIT COMMITTED AMOUNTS UPON INCURRENCE OF RECAPTURE INDEBTEDNESS
UNDER THE EURO CREDIT FACILITY. The second sentence of Section 2.07(b)(i) of the
Credit Agreement is hereby

<PAGE>   2

amended by adding, immediately before the period at the end of such sentence,
the following proviso:

                           ; and provided, further, that, notwithstanding the
                           immediately preceding proviso, the Borrower shall be
                           obligated to make application pursuant to the
                           foregoing clause (y) upon incurrence of Indebtedness
                           under the Euro Credit Facility whether or not the
                           Investment Grade Rating Condition is satisfied on the
                           relevant Reduction Event Date

The Borrower confirms that Indebtedness of the Borrower under the Euro Credit
Facility will be Recapture Indebtedness for purposes of Section 2.07(b) and,
accordingly, that incurrence of such Indebtedness will be a Reduction Event as
described in Section 2.07(b)(vii). The related Reduction Event Application
Amount will be calculated based on the prevailing market exchange rate at the
time of incurrence of Indebtedness under the Euro Credit Facility.

                  SECTION 3. AMENDMENT RELATING TO INCREASE IN THE AMOUNT OF
PERMITTED INDEBTEDNESS. Section 7.02(f) of the Credit Agreement is hereby
amended by deleting the figure "$225,000,000" appearing therein and inserting in
lieu thereof the figure"$350,000,000".

                  SECTION 4. AMENDMENT RELATING TO PERMITTED LIENS. Section 7.03
of the Credit Agreement is hereby amended by deleting the word "and" at the end
of Section 7.03(l), redesignating Section 7.03(m) as Section 7.03(n), and adding
a new Section 7.03(m) as follows:

                                    (m) Liens securing repayment of obligations
                           under the Euro Credit Facility if, and only if, the
                           Obligations under this Agreement are equally and
                           ratably secured by all such Liens pursuant to
                           security documentation in form reasonably
                           satisfactory to the Administrative Agent which
                           documentation provides, among other things, that such
                           Liens are granted to a single collateral agent acting
                           for the ratable benefit of both the Lenders and the
                           Administrative Agent hereunder and the lenders and
                           the agent under the Euro Credit Facility and that
                           directions to such collateral agent with respect to
                           exercise of remedies may be given by lenders holding
                           more than 50% of the aggregate outstanding principal
                           amount of obligations under this Agreement and the
                           Euro Credit Facility at the relevant time.

                  SECTION 5. AMENDMENT RELATING TO CHANGE IN A PARTICULAR
REQUIREMENT FOR RECAPTURE INDEBTEDNESS. Section 7.02(j) of the Credit Agreement
is hereby amended by deleting the words "Other unsecured Indebtedness" appearing
at the beginning thereof and inserting in lieu thereof the words "Other
unsecured (or, in the case of the Euro Credit Facility, secured only by Liens
permitted by Section 7.03(m) hereof) Indebtedness".

                  SECTION 6. EFFECTIVENESS AND EFFECT, ETC. This Amendment shall
become effective when both (i) Mellon Bank, N.A., as Administrative Agent, shall
have received counterparts hereof duly executed by the Borrower and the
Administrative Agent and consents

                                       2
<PAGE>   3

hereto duly executed by the Required Lenders (as defined in the Credit
Agreement) and (ii) the Euro Credit Facility, containing an exception to its
limitation on liens substantially identical to the amendatory language set forth
in Section 4 above, is executed and delivered by the parties thereto and is in
effect and Mellon Bank, N.A., as Administrative Agent under the Credit
Agreement, shall have received a counterpart of the Euro Credit Facility and a
certificate of the Borrower that the same is in effect. The Credit Agreement, as
previously amended and as further amended hereby, is and shall continue to be,
in full force and effect and is hereby in all respects ratified and confirmed.
Except to the extent expressly set forth herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy under the Credit Agreement or constitute a waiver of any
provision of the Credit Agreement.

                  SECTION 7. MISCELLANEOUS. This Amendment may be executed in
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same document. Section and other headings herein are for reference purposes only
and shall not affect the interpretation of this Amendment in any respect. This
Amendment shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to choice of law principles. This
Amendment is a requested amendment within the meaning of Section 10.06(a)(ii) of
the Credit Agreement.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first written above.

                                      KENNAMETAL INC.

                                      By: /s/ James E. Morrison
                                          --------------------------------
                                      Name:  James E. Morrison
                                      Title:  Vice President and Treasurer

                                      MELLON BANK, N.A.,
                                      individually and as Administrative Agent

                                      By: /s/ Edward L. McGrath, C.F.A.
                                          --------------------------------
                                      Name:  Edward L. McGrath, C.F.A.
                                      Title:  First Vice President

                                        3
<PAGE>   4

                        LENDER CONSENT AND ACKNOWLEDGMENT

                  The undersigned, a "Lender" under that certain Credit
Agreement, dated as of November 17, 1997, by and among Kennametal Inc., a
Pennsylvania corporation (the "Borrower"), the Lenders parties thereto from time
to time, and Mellon Bank, N.A., as Administrative Agent (as amended, the "Credit
Agreement"), hereby (a) acknowledges receipt of a counterpart of the Amendment
to Transaction Documents, dated as of December 6, 2000, by and among the
Borrower, the Lenders parties to the Credit Agreement and Mellon Bank, N.A., as
Administrative Agent, and (b) pursuant to Section 10.03 of the Credit Agreement,
consents and agrees to such Amendment to Transaction Documents and directs the
Administrative Agent to enter into it.

                                                                          ,
                                       -----------------------------------
                                       as Lender

                                       By
                                          --------------------------------
                                       Name:
                                       Title:

Date:
      ----------------------------

                                       4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}]]