KENNAMETAL INC.
DIRECTORS STOCK INCENTIVE PLAN
As Amended and Restated on
December 30, 2008
ARTICLE I
General Provisions
Section 1.1 Establishment and Purpose .
Kennametal Inc. (the “Company”) established and
maintains the Kennametal Inc. Directors Stock Incentive Plan (the
“Plan”) pursuant to which each member of the Board of
Directors of the Company who is not an employee of the Company or
any of its subsidiaries (a “Non-Employee Director”)
shall be eligible: (a) to elect to receive shares of the
Company’s capital stock, par value $1.25 per share (the
“Capital Stock”), in lieu of cash compensation; and
(b) through an election to defer receipt of compensation to be
earned by such Non-Employee Director, to have Stock Credits (as
hereinafter defined) credited to an account established for such
Non-Employee Director by the Company. The purpose of the Plan is to
assist the Company in attracting, retaining and motivating highly
qualified Non-Employee Directors and to promote identification of,
and align Non-Employee Directors’ interests more closely
with, the interests of the stockholders of the Company. The Plan is
amended and restated as set forth herein to comply with
Section 409A (as hereinafter defined).
Section 1.2 Definitions . In addition to the
terms previously or hereafter defined herein, the following terms
when used herein shall have the meaning set forth below:
“
Board ” shall mean the Board of Directors of the
Company.
“Code” shall mean the Internal Revenue Code of
1986, as amended, or any successor statute thereto.
“
Committee ” shall mean the committee of the Board
appointed by the Board to administer the Plan. Unless otherwise
determined by the Board, the Committee shall be the
Nominating/Corporate Governance Committee of the Board.
“
Compensation ” shall mean all cash fees to be paid to
a Non-Employee Director for service rendered to the Company as a
director (including services on any Committee of the Board of
Directors for which committee fees are specifically authorized),
but excluding Deferred Compensation.
“
Deferred Compensation ” shall mean Compensation that
is deferred pursuant to the Kennametal Inc. Deferred Fee Plan for
Outside Directors, as amended.
“ Fair
Market Value ” shall mean, as of any date, the mean of
the highest and lowest sales prices for the Capital Stock as
reported in the New York Stock Exchange—Composite
Transactions
reporting system for the date in question or, if no sales were
effected on such date, on the next preceding date on which sales
were effected.
“ Plan
Year ” shall mean the twelve-month period beginning
January 1 and ending December 31 in any particular
year.
“Section 409A” shall mean Section 409A
of the Code, the regulations and other binding guidance promulgated
thereunder.
“Separation from Service” shall mean the
Non-Employee Director’s death, retirement or other
termination of service with the Company and all of its controlled
group members within the meaning of Section 409A. For purposes
hereof, the determination of controlled group members shall be made
pursuant to the provisions of Section 414(b) and 414(c) of the
Code; provided that the language “at least
50 percent” shall be used instead of “at least
80 percent” in each place it appears in
Section 1563(a)(1),(2) and (3) of the Code and Treas.
Reg. § 1.414(c)-2. Whether the Non-Employee Director has a
Separation from Service will be determined based on all of the
facts and circumstances and in accordance with the guidance issued
under Section 409A.
“ Stock
Credit ” shall mean a credit that is equivalent to one
share of Capital Stock.
Section 1.3 Administration . The Plan shall be
administered by the Committee. The Committee shall serve at the
pleasure of the Board of Directors. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the
members of the Committee present at any meeting at which a quorum
is present, or acts approved in writing by a majority of the
members of the Committee, shall be deemed the acts of the
Committee. The Committee is authorized and has sole authority and
discretion to interpret and construe the Plan, to make all
determinations and take all other actions necessary or advisable
for the administration of the Plan, and to delegate to employees of
the Company or any subsidiary the authority to perform
administrative functions under the Plan; provided, however ,
that the Committee shall have no authority to determine the persons
entitled to receive Capital Stock or Stock Credits under the Plan
nor the timing, amount or price of Capital Stock or Stock Credits
issued under the Plan.
Section 1.4 Eligibility . An individual who is a
Non-Employee Director shall be eligible to participate in the
Plan.
Section 1.5 Capital Stock Subject to the Plan .
The maximum number of shares of Capital Stock that may be issued
pursuant to the Plan is 400,000. Capital Stock to be issued under
the Plan may be either authorized and unissued shares of Capital
Stock or shares of Capital Stock held in treasury by the
Company.
ARTICLE II
Elections and Distributions
Section 2.1 Elections to Receive Capital Stock from
Compensation . Any Non-Employee Director may elect in
writing, on a form prescribed by the Committee, to receive Capital
Stock under this Plan in lieu of all or a portion of the
Compensation otherwise payable to such Non-Employee Director in any
Plan Year (a “Stock Acquisition Election”). If a
Non-
2
Employee
Director makes a Stock Acquisition Election, the Non-Employee
Director shall receive, on the date that the Compensation otherwise
would have been paid, the number of shares of Capital Stock that
could have been purchased on that date based on the amount of
Compensation subject to the Stock Acquisition Election and the Fair
Market Value of the Capital Stock on that date, rounded up to the
nearest whole share. In the absence of a Stock Acquisition
Election, all Compensation shall be paid to the Non-Employee
Director in cash in accordance with the Company’s policies
and procedures. Certificates for Capital Stock acquired by the
Non-Employee Director pursuant to a Stock Acquisition Election
shall be issued quarterly following the period during which such
Capital Stock is acquired, as provided above.
Section 2.2 Elections to Receive Stock Credits from
Deferred Compensation . Any Non-Employee Director may elect
in writing, on a form prescribed by the Committee, to receive Stock
Credits under this Plan in any Plan Year with respect to all or a
portion of the Compensation otherwise payable to the Non-Employee
Director in that Plan Year (a “Stock Credit Election”).
If a Non-Employee Director makes a Stock Credit Election, an
account established for the Non-Employee Director and maintained by
the Company shall be credited with that number of Stock Credits
equal to the number of shares of Capital Stock (including fractions
of a share to four decimal places) that could have been purchased
with the amount of Compensation subject to a Stock Credit Election
based on the Fair Market Value of the Capital Stock on the day that
the Compensation would have been paid to the Non-Employee Director.
. The Committee may establish one or more Stock Credit accounts for
a Non-Employee Director as deemed necessary or appropriate for the
proper administration of the Plan.
Section 2.3 Terms and Conditions of Elections .
A Stock Acquisition Election or Stock Credit Election (an
“Election”) shall be subject to the following terms and
conditions, as applicable:
(a) An Election
for a Plan Year shall be in writing and shall be irrevocable for
the applicable Plan Year; and
(b) An Election
shall be effective for any Plan Year only if made on or prior to
December 31st of the calendar year immediately preceding the
beginning of the Plan Year to which the Election relates (or such
other date as permitted by the Committee to the extent consistent
with Section 409A). A Non-Employee Director who first becomes
eligible to participate in the Plan may file an Election
(“Initial Election”) at any time prior to the 30-day
period following the date on which the Non-Employee Director
initially becomes eligible to participate in the Plan. With respect
to a Stock Credit Election, any such Initial Election shall only
apply to Compensation earned and payable for services rendered
after the date on which the Stock Credit Election is delivered to
the Company. Accordingly, if a Stock Credit Election is made in the
first-year of eligibility but after the beginning of the Plan Year,
then, with respect to Compensation that is earned based on a
specific performance period, the Initial Election shall only apply
to the total amount of any such Compensation multiplied by the
ratio of (i) the number of days remaining in the performance
period after the Stock Credit Election to (ii) the total
number of days in the performance period; and
3
(c) Except as
otherwise specifically provided in an Election form, an Election
shall remain in effect only for the Plan Year to which it
applies..
Section 2.4 Adjustment of Stock Credit Accounts
.
(a) Cash
Dividends —As of the date that any cash dividend is paid
to stockholders of the Company, the Non-Employee Director’s
Stock Credit account shall be credited with additional Stock
Credits equal to the number of shares of Capital Stock (including
fractions of a share to four decimal places) that could have been
purchased on that date with the dividends paid on the number of
shares of Capital Stock equal to the number of Stock Credits in
such Non-Employee Director’s account based on the Fair Market
Value of the Capital Stock on that date.
(b) Stock
Dividends —In the event that a dividend shall be paid
upon the Capital Stock of the Company in shares of Capital Stock,
the number of Stock Credits in each Non-Employee Director’s
Stock Credit account shall be adjusted by adding thereto additional
Stock Credits equal to the number of shares of Capital Stock which
would have been distributable on the Capital Stock represented by
Stock Credit
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