KENNAMETAL INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

1.1

The purpose of this Supplemental Executive Retirement Plan is to ensure the payment of a competitive level of retirement income, in order to attract, retain, and motivate selected executives. The Plan is also intended to provide eligible executives with a retirement benefit that cannot be paid from the Company’s qualified Retirement Income Plan, due to various limitations of the United States Internal Revenue Code.

1.2

This Plan was previously amended and adopted, effective April 21, 1995; amended and adopted, effective July 26, 1999; amended and adopted, effective January 1, 2004; amended and adopted July 25, 2005, amended and adopted July 31, 2006 and was most recently amended and adopted, effective as of December 30, 2008. It is effective for each participant on the date he or she is designated as a Participant.

1.3

The terms of this Plan are applicable only to eligible executives who are employed by the Company on or after April 21, 1995. Any executive who retired or otherwise terminated employment prior to such date, shall not be eligible to be designated a Participant under this Plan unless he or she returns to service with the Company on or after April 21, 1995.

1.4

Notwithstanding the foregoing, in connection with the amendment of this Plan adopted effective July 31, 2006, the Company has provided for the closing of the class of officers and key executive employees who will be eligible to receive benefits under this Plan. (In connection with the adoption of such amendment, the Company has adopted a separate “Kennametal Inc. 2006 Executive Retirement Plan” to provide nonqualified retirement benefits for designated officers who are not eligible to participate in this Plan.)

1.5

The Plan is intended to comply with the provisions of Section 409A of the Code, and the regulations and other binding guidance promulgated thereunder (“Section 409A”); provided, however, that the Plan shall be operated and administered in a manner to ensure that Grandfathered Benefits (as defined in Section 9.10) remain exempt from Section 409A.

2.1

Board of Directors means the Directors of the Company.

2.2

Bonus Award means the annual cash award, if any, received by a Participant under the provisions of the Kennametal Inc. Management Performance Bonus Plan of any given fiscal year. Only an award generated by successful attainment of the Bonus Plan’s business objectives shall be considered a “Bonus Award” for the purposes of this Plan, provided that a Bonus Plan award of $0.00 to the Participant for a given fiscal year shall be taken into account for purposes of this Plan. No other kind of bonus award or grant will qualify as a “Bonus Award” for purposes of this Plan.

2.3

Cause means that the Participant:

2.4

Change in Control shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date hereof (“1934 Act”), or if Item 6(e) is no longer in effect, any regulations issued by the Securities and Exchange Commission pursuant to the 1934 Act which serve similar purposes; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) Kennametal shall be merged or consolidated with any corporation or other entity other than a merger or consolidation with a corporation or other entity all of whose equity interests are owned by Kennametal immediately prior to the merger or consolidation, or (ii) Kennametal shall sell all or substantially all of its operating properties and assets to another person, group

of associated persons, or corporation; or (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the 1934 Act), is or becomes a beneficial owner, directly or indirectly, of securities of Kennametal representing 25% or more of the combined voting power of Kennametal’s then outstanding securities coupled with or followed by the existence of a majority of the board of directors of Kennametal consisting of persons other than persons who either were directors of Kennametal immediately prior to or were nominated by those persons who were directors of Kennametal immediately prior to such person becoming a beneficial owner, directly or indirectly, of securities of Kennametal representing 25% or more of the combined voting power of Kennametal’s then outstanding securities.

2.15

Primary Social Security Benefit means the monthly benefit, as provided by the Federal Social Security Act, to which the Participant would be entitled at age 65, based upon the assumption that such Participant will continue to receive until reaching age 65 monthly earnings at the same rate as he or she received such monthly earnings at the time of retirement, termination of employment or death. (Note: This definition is identical to that used under the Retirement Income Plan.)

2.16

Retirement Income Plan means the funded, tax-qualified Kennametal Inc. Retirement Income Plan, as it may be amended and restated, from time to time.

2.17

Retirement Income Plan Benefit means either (a) the monthly benefit that would be payable as a single life annuity under the Retirement Income Plan commencing upon a retirement at age 65, based on credited service and average earnings as of the Participant’s termination of service, calculated pursuant to the terms and provisions of the Retirement Income Plan as such terms and provisions literally apply to the Participant because the Participant is an active participant (accruing additional benefits) in the Retirement Income Plan up to his or her termination of service and will in fact be eligible to receive benefits reflecting credited service and average earnings determined to his or her termination of service; or (b) but for the amendment to the Retirement Income Plan effective December 31, 2003 that excluded such Participant from further active participation in such plan after such date, or in the case of a Participant first hired after December 31, 2003, excluded such Participant from any active participation in such plan, the monthly benefit that would be payable as a single life annuity under the Retirement Income Plan commencing upon a retirement at age 65, based on credited service and average earnings as of the Participant’s termination of service calculated pursuant to the terms and provisions of the Retirement Income Plan (other than vesting provisions) as such terms and provisions theoretically would have applied to the Participant if the Participant had not been excluded from active participation, or from further active participation, in the plan, but had instead been an active participant (accruing benefits) in the Retirement Income Plan up to his or her termination of service, based on his or her credited service and average earnings to such termination of service. That is, the Retirement Income Plan Benefit determined hereunder is either (a) the actual benefit that a Participant is eligible to receive under such plan because he or she is active participant in the Retirement Income Plan at termination of service, or (b) the theoretical benefit the Participant would have been eligible to receive had he or she been eligible to be an active participant in the Retirement Income Plan up to termination of service (determined without regard to the vesting provisions of the Retirement Income Plan).

2.18

SERP Benefit means the benefit, calculated pursuant to Section V and Appendix A, that is payable to a Participant under the Plan who has attained a 100% vested percentage pursuant to Section IV.

2.19

Surviving Spouse means the individual to whom the Participant is legally married at the time of his or her death.

2.20

Vested SERP Benefit means the percentage of the Participant’s SERP Benefit determined pursuant to Section IV.

2.21

Target Retirement Income means the monthly amount determined as the “applicable percentage” of the total of (a) the Participant’s Final Base Salary plus (b) 1/36th of the sum of the Participant’s last three Bonus Awards. For this purpose, the applicable percentage is 60% at 30 Years of Service, plus or minus 1% for each Year of Service greater than or less than thirty.

2.22

Year of Service means each full twelve-month period beyond Employee’s most recent hire date, as determined pursuant to the Company’s regular personnel records and policies. (Note: This definition is not intended to be coextensive with the definition of “Credited Service” as used in the Retirement Income Plan.) Notwithstanding the foregoing, any service credit imputed to an Employee specifically for purposes of this Plan, pursuant to the specific terms of such Employee’s written employment agreement, shall be taken into account in determining such Employee’s Years of Service under this Plan.

3.1

Each officer or key executive Employee of the Company approved by the Committee, in its sole and complete discretion, shall be eligible to participate in the Plan.

3.2

Any officer or key executive who becomes a Participant shall continue to be a Participant until his or her termination of employment, or until a date prior to such time, as determined by the Committee, in its sole discretion.

3.3

Notwithstanding the foregoing, in connection with the amendment of this Plan adopted effective July 31, 2006, the Company has provided for the closing of the class of officers and key executive employees who will be eligible to receive benefits under this Plan. In connection with the adoption of the July 2006 amendment to this Plan, the Company has adopted a separate “Kennametal Inc. 2006 Executive Retirement Plan” to provide nonqualified retirement benefits for designated officers who are not eligible to participate in this Plan. Accordingly:

4.1

A Participant shall become vested in the SERP Benefit, determined under the provisions of Section V, only in accordance with the following vesting schedule:

Age of Participant at

Termination of

Cumulative Vested

Employment

SERP Benefit

0

%

20

%

40

%

60

%

80

%

100

%

4.2

Notwithstanding the percentage vesting schedule in Section 4.1, the SERP Benefit (determined under the provisions of Section V) of each Participant who is an Employee at the time of a Change in Control of the Company, shall become 100% vested.

5.1

The amount of each Participant’s SERP Benefit shall initially be calculated as the excess of the Target Retirement Income over the sum of (a) the Participant’s Retirement Income Plan Benefit plus (b) the Participant’s Primary Social Security Benefit.

6.1

Payment of the Participant’s Vested SERP Benefit, if any, shall commence on the first day of the seventh month following the month in which the Participant’s employment with the Company terminates voluntarily or involuntarily (except for Cause).