An exemplary breaking or excavating tool includes a body having a mounting end and a working end. A seating surface at the working end includes a cavity and axially projecting sidewalls formed integral to the body, an insert mounted within the cavity has a tip at an axially forwardmost end, a tapered forward surface, a side surface and a transition edge at an intersection of the forward surface and the side surface. A ring located radially outward of the projecting sidewalls is formed of a material harder than the body of the tool. The transition edge and an axially forwardmost surface of each of the sidewalls and the ring are arranged in an axially rearwardly extending stepped configuration. A material removal machine on which the breaking or excavating tool is mounted and a method of manufacturing the breaking or excavating tool are also disclosed.