Exhibit 10.2
(KENNAMETAL LOGO) [l41583l4158301.gif]
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 2010 (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 conditions 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).
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 Period on a date determined in

 

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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 20XX]; 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, 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 prior to the Payment
Date, 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 LTIP Performance Unit Awards

                          [Financial Metric]     FYXX   FYXX   FYXX
Maximum
    * ******     * ******     * ******
Target
    * ******     * ******     * ******
Threshold
    * ******     * ******     * ******

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.