exv10w1











Exhibit 10.1                                




KENNAMETAL INC.




PERFORMANCE UNIT AWARD




Grant Date: ____________________



     Kennametal Inc. (the “Company”) hereby grants to [NAME] (the “Awardee”), as of the Grant Date
listed above, this Performance Unit Award (the “Award”) for [TARGET NUMBER OF STOCK UNITS] Stock
Units, subject to the terms and conditions of the Kennametal Inc. Stock and Incentive Plan of 2002,
as amended (the “Plan”) and the additional terms listed below. Capitalized terms used herein, but
not otherwise defined, shall have the same meaning ascribed to them in the Plan.


1.  Each Stock Unit represents the right to receive one Share of the Company’s Capital Stock, par
value $1.25 per share, subject to the satisfaction of the Service Condition described herein and
the Performance Conditions attached hereto as Exhibit A. Stock Units as initially awarded
have no independent economic value, but rather are mere units of measurement used for purposes of
calculating the number of Shares, if any, to be delivered under this Award. The maximum amount of
Stock Units that may be earned under this Award is equal to two times the target number of Stock
Units listed in the preamble above. Subject to the terms and provisions of this Award, one-third
of the maximum number of Stock Units may be earned in each fiscal year of the three-year
Performance Period (as defined in Exhibit A attached to this Award).



2.  Except as otherwise provided in this Award, Awardee must be actively employed by the Company on
the Payment Date (defined below) to be eligible to receive Shares in payment of any Stock Units
earned under this Award (the “Service Condition”).



3.  In addition to satisfaction of the Service Condition, payment under this Award is subject to,
and contingent upon, achievement of the annual Performance Conditions during the Performance
Period. The amount of this Award payable to Awardee will be determined by the level of achievement
of the annual Performance Conditions as set forth in Exhibit A. Achievement of the
Performance Conditions, including the level of achievement, if any, for each fiscal year in the
Performance Period, shall be determined by the Compensation Committee of the Board of Directors
(the “Compensation Committee”), in its sole discretion, and Awardee agrees to be bound by such
determination. For each fiscal year of the Performance Period, any Stock Units that are not earned
will be cancelled and forfeited at the end of such fiscal year.



4.  Issuance and Distribution.




     a.  At the end of each fiscal year to which this Award relates, the Compensation Committee will
certify in writing the extent to which the applicable Performance Conditions have been achieved.
For purposes of this provision, and for so long as the Code permits, the approved minutes of the
Committee meeting in which the certification is made may be treated as written certification.



     b.  Subject to the terms and conditions of this Award and unless otherwise specifically
provided herein, Stock Units earned by an Awardee will be settled and paid in Shares of the
Company’s Capital Stock as soon as practicable following the end of the Performance Periodon a date
determined in



 









 





the Company’s discretion, but in no event later than the last day of the “applicable 21/2 month
period” specified in Treas. Reg. §1.409A-1(b)(4) (the “Payment Date”).




     c.  Subject to the terms and conditions of this Award and unless otherwise specifically
provided herein, in the event an Awardee Separates from Service on account of death or Disability
during the Performance Period, the Stock Units, to the extent earned by the Awardee, shall be paid
as soon as practicable following the date of such Separation from Service, but in no event later
than the last day of the “applicable 21/2 month period” specified in Treas. Reg. §1.409A-1(b)(4).



     d.  Unless otherwise specifically provided herein, in the event of a Change in Control, any
Stock Units earned by the Awardee based on Performance Conditions achieved prior to the closing
date of the Change-in-Control transaction shall be paid on the closing date of the Change in
Control transaction; provided, further, in the event of a Change in Control, Stock Units may, in
the Committee’s discretion, be settled in cash and/or securities or other property.



     e.  Notwithstanding any other provision of this Award to the contrary, with respect to an
Awardee who is or becomes eligible to Separate from Service on account of Retirement during the
Performance Period (a “Retirement Eligible Awardee”), any payment made to such Retirement Eligible
Awardee under this Award by reason of (i) a Separation from Service on account of death shall be
paid in the month following the month containing the date of such Separation from Service; (ii) a
Separation from Service on account of Disability shall be paid in the month following the month
containing the 6-month anniversary of the date of such Separation from Service; or (iii)
achievement of the annual Performance Conditions during the Performance Period as specified herein
(and regardless of whether Retirement Eligible Awardee Separates from Service on account of
Retirement) shall be paid in August 2013; or (iv) a Change in Control shall be paid in accordance
with Section 4.d above only to the extent such event qualifies as a change in the ownership or
effective control of the Company, or a change in the ownership of a substantial portion of the
assets of the Company, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5).


5.  Change in Awardee’s Status.




     a.  Death or Disability. In the event an Awardee Separates from Service during the Performance
Period on account of death or Disability, the Service Condition will be waived. For completed
fiscal years, Awardee shall be entitled to receive payment for any Stock Units that have been
earned based on the achievement of the Performance Conditions applicable to such fiscal year. For
fiscal years not completed, the Performance Conditions will be deemed to have been achieved at the
target level and the Awardee will be deemed to have earned for each such fiscal year a number of
Stock Units that were able to be earned for such fiscal year.



     In the event an Awardee Separates from Service during the period between the end of the
Performance Period and the Payment Date on account of death or Disability, the Service Condition
will be waived and the Awardee shall be entitled to receive payment for any Stock Units that have
been earned based on the achievement of the Performance Conditions prior to the date of death or
Disability.



     b.  Retirement. In the event a Retirement Eligible Awardee Separates from Service on account
of Retirement during the Performance Period, the amount of this Award to be paid, if any, will be
determined as follows. For completed fiscal years, Awardee shall be entitled to receive payment for
any Stock Units that have been earned based on the achievement of the Performance Conditions
applicable to such fiscal year. For the fiscal year in which the Separation from Service occurs,
the Awardee will be entitled to receive payment for a number of Stock Units determined by
multiplying (x) the number of Stock Units that are earned based on the achievement of the
Performance Conditions applicable to such fiscal year, times (y) the fraction equal to the number
of completed months starting with July 1st of the fiscal year in which the Separation
from Service occurs and ending with the month of the Awardee’s



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Retirement, divided by 12. All other Stock Units granted under this Award, including Stock
Units that could have been earned for fiscal years after the fiscal year in which the Separation
from Service occurred, shall be cancelled and forfeited without payment by the Company or any
Affiliate.




     c.  All Other Separations from Service. In the event an Awardee Separates from Service for any
other reason (other than death, Disability, or Retirement), including, but not limited to,
voluntarily by the Awardee or involuntarily by the Company with or without cause, prior to the
Payment Date, all Stock Units granted to the Awardee shall be cancelled and forfeited, whether
payable or not, without payment by the Company or any Affiliate.



6.  The Stock Units will be entitled to receive dividend equivalents, credited in the form of cash,
which will be subject to all conditions and restrictions applicable to the underlying Stock Units
to which they relate. Dividend equivalents will accrue during the Performance Period. At the end
of each fiscal year, dividend equivalents will be earned only for Stock Units that are earned or
deemed earned under this Award for that fiscal year. With respect to Stock Units that are not
earned for a fiscal year (because the applicable Performance Conditions are not satisfied or
otherwise), dividend equivalents that were accrued for those Stock Units will be cancelled and
forfeited along with the Stock Units and underlying Shares, without payment by the Company or any
Affiliate. Dividend equivalents will be paid in cash at such time as the underlying Stock Units to
which they relate are paid.



7.  The Stock Units may not be sold, assigned, pledged, exchanged, hypothecated, gifted or otherwise
transferred, encumbered or disposed of in any manner, except as described herein or in the Plan.



8.  The Shares underlying the Stock Units shall not be sold or otherwise disposed of in any manner
that would constitute a violation of any applicable federal or state securities laws. The Company
may refuse to register a transfer of the Shares on the stock transfer records of the Company if the
transfer constitutes a violation of any applicable securities law and the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer of the Shares.



9.  This Performance Unit Award is intended to comply with Section 409A of the Internal Revenue Code
(which deals with nonqualified deferred compensation) or an exception thereto and the regulations
promulgated thereunder and will be construed accordingly. To the extent a payment is subject to
Section 409A and not excepted therefrom, such payment shall be treated as made on the specified
date of payment if such payment is made at such date or a later date in the same calendar year or,
if later, by the 15th day of the third calendar month following the specified date of payment, as
provided and in accordance with Treas. Reg. § 1.409A-3(d). An Awardee shall have no right to
designate the date of any payment under this Award. The Company reserves the right to administer,
amend or modify the Award or to take any other action necessary or desirable to enable the Award to
be interpreted and construed accordingly. Notwithstanding the foregoing, the Awardee acknowledges
and agrees that Section 409A may impose upon the Awardee certain taxes or interest charges for
which the Awardee is and shall remain solely responsible.



10.  All other terms and conditions applicable to this Award are contained in the Plan. A copy of
the Plan and related Prospectus is available on the Kennametal InfoNet in the Shared Services -
Human Resources Portal under the Total Rewards tab, as well as on your account page at
www.Fidelity.com under Plan Information and Documents.



	 	 	 	 	 
	 	 	KENNAMETAL INC.



	 
	 	By:   	Kevin G. Nowe
 	 
	 	Title:   	Vice President, Secretary and General Counsel 
 	 
	 	 	 	 



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Exhibit A




Performance Conditions for FYXX-FYXX Performance Unit Awards




	 	 	 	 	 	 	 
	[Metric]
	 
	 	FYXX	 	FYXX	 	FYXX
	 Maximum
	 	XX	 	XX	 	XX
	 Target
	 	XX	 	XX	 	XX
	 Threshold
	 	XX	 	XX	 	XX
	       




Note: The table sets forth the three-year period beginning July 1, 20XX and ending June 30,
20XX (“Performance Period”) referenced in the Performance Unit Award Agreement to which this
Exhibit A is attached.




	 	 	 	 	 	 	 
	Performance Conditions Payout Table
	 Maximum Performance
	 	120%	 	120%	 	120%
	 Payout at Maximum
	 	200%	 	200%	 	200%
	 Target Performance
	 	100%	 	100%	 	100%
	 Payout at Target
	 	100%	 	100%	 	100%
	 Threshold Performance
	 	80%	 	80%	 	80%
	 Payout at Threshold
	 	50%	 	50%	 	50%





Note: Interpolation between values shown in the above table will be made on a straight line
basis. There will be no payment for performance below Threshold, and no additional payment for
performance above Maximum.