Exhibit
10.1


 


EMPLOYMENT
AGREEMENT


 


THIS AGREEMENT is
made and entered into as of the 14th day of December, 2009, by and between
BLOUNT INTERNATIONAL, INC., a Delaware corporation (the “Company”), and DAVID
A. WILLMOTT (“Executive”).


 


W I
T N E S S E T H:


 


WHEREAS, the
Company desires to hire Executive and Executive desires to accept such
employment; and


 


WHEREAS, the
Company and Executive desire to enter into an agreement providing for Executive’s
employment by the Company and specifying the terms and conditions of such
employment.


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained
herein, the parties hereby agree as follows:


 


1.                                       Employment and Term.


 


(a)                                  Subject to the terms and conditions of
this Agreement, the Company hereby employs Executive and Executive hereby
accepts employment as the Senior Vice President, Corporate Development and
Strategy of the Company and shall have such responsibilities, duties and
authority that are consistent with such positions as may be from time to time
assigned to Executive by the President, Chief Operating Officer and Chief
Executive Officer-Designate prior to January 4, 2010 and by the Chief
Executive Officer from and after January 4, 2010 or the Board of
Directors.  Executive agrees that during
the Term of this Agreement he will devote substantially all his working time,
attention and energies to the diligent performance of his duties and
responsibilities for the Company; provided that, Executive may spend up to five
(5) hours per month performing services in connection with CW Gas
Partners, L.P., an investment fund for which he currently performs
services.  With the consent of the Chief
Executive Officer, Executive may serve as a director on the boards of directors
or trustees of additional companies and organizations.


 


(b)                                 Unless earlier terminated as provided
herein, Executive’s employment under this Agreement shall be for a rolling,
two-year term (the “Term”) commencing on December 14, 2009 (the “Effective
Date”) and shall be deemed to extend automatically, without further action by
either the Company or Executive, each day for an additional day, such that the
remaining term of the Agreement shall continue to be two years; provided,
however, that either party may, by written notice to the other, cause this
Agreement to cease to extend automatically and, upon such notice, the “Term” of
this Agreement shall be the two-year period following the date of such notice
and this Agreement shall terminate upon the expiration of such Term; provided,
further, that the Term of this Agreement shall cease to extend automatically on
the date Executive attains age 63 and at such time, the remaining Term of the
Agreement shall be two years.


 


2.                                       Compensation and Benefits. 
As compensation for his services during the Term of this Agreement,
Executive shall be paid and receive the amounts and benefits set forth in
subsections (a) through (f) below:


 


(a)                                  An annual base salary (“Base Salary”) at
a rate of Three Hundred Fifty Thousand Dollars ($350,000.00) per year, prorated
for any partial year of employment. 
Executive’s Base Salary shall be subject to annual review starting in
2011 for increase at such time as the Company conducts salary reviews for its
executives generally.  Executive’s salary
shall be payable in substantially equal installments on a semi-monthly basis,
or in accordance with the Company’s regular payroll practices in effect from
time to time for executives of the Company.


 


(b)                                 Executive shall be eligible to
participate in the Executive Management Annual Incentive Program (“Incentive
Program”) and such other annual incentive plans as may be established by 


 

















 


the Company from time to
time for executives.  The Company will
establish performance goals for Executive each year under the Incentive
Program, and Executive’s annual Target Bonus shall be 50% of Base Salary; the
maximum award for exceeding the performance goals shall be 100% of Base
Salary.  The annual incentive bonus
payable under this subsection (b) shall be payable as a lump sum at the
same time bonuses are paid to other senior executives after certification by
the Compensation Committee that the applicable performance objectives have been
met, unless Executive elects to defer all or a portion of such amount pursuant
to any deferral plan established by the Company for such purpose.


 


(c)                                  Executive shall be entitled to
participate in, or receive benefits under, any “employee benefit plan” (as
defined in Section 3(3) of ERISA) or employee benefit arrangement
made generally available by the Company to its executives, including plans
providing 401(k) benefits, matching and Savings Plus benefits, deferred
compensation, health care (including Exec-U-Care), dental and vision care, life
insurance, disability, accidental death and similar benefits.


 


(d)                                 On the Effective Date, the Company will
grant Executive an option (the “Option”) to purchase 100,000 shares of the
Company’s Common Stock under the Company’s 2006 Equity Incentive Plan (“Equity
Plan”) that will vest in installments of 33,333 shares, 33,333 shares and
33,334 shares, respectively, on the first, second and third anniversaries of
the Effective Date.  To the extent
unvested, the Option will automatically fully vest upon the occurrence of a
Change in Control (as defined in Section 5.3 below).  The exercise price for the Option will be the
closing sales price of the Company’s Common Stock on the New York Stock
Exchange on the trading day immediately preceding the Effective Date.  The other terms and conditions of the Stock
Option Agreement granting the Option will be consistent with the agreements
under the Equity Plan for other senior executives of the Company.


 


(e)                                  The Company will reimburse Executive for
initiation fees, membership dues and any assessments at a country club of Executive’s
choice in the Portland area and will assist Executive in reducing any waiting
period in regard to membership in such club to the extent that it is able to do
so.  Executive will be provided an
automobile in accordance with the Company’s automobile policy for Executives,
and the Company will pay all insurance, maintenance, fuel, oil and related
operational expenses for such automobile. 
Executive will be entitled to four (4) weeks vacation during
calendar year 2010, which amount will be subject to increase during the Term in
accordance with Company policy. 
Executive will be provided an annual physical examination and a
financial/tax consultant for personal financial and tax planning.  Executive will be promptly reimbursed by the
Company for all reasonable business expenses he incurs in carrying out his
duties and responsibilities under this Agreement.  If any of the perquisite amounts provided to
Executive pursuant to this subsection (e) are subject to federal, state or
local income taxes, Executive will be provided an appropriate tax gross-up on
such amounts.


 


(f)                                    With respect to Executive’s relocation to
the Portland, Oregon area, the Company will provide Executive (i) a
furnished townhouse or apartment for three (3) months or until Executive
is permanently relocated, whichever first occurs, including reasonable and
customary living expenses for such period, (ii) one month’s Base Salary to
take care of incidental and miscellaneous moving expenses payable upon his
relocation to Portland; (iii) reimbursement for the reasonable expenses
for house hunting trips for Executive and his family, including trips taken to
Portland prior to the Effective Date in connection with contemplating
employment with the Company, (iv) transportation expenses to move Executive
and his family to Portland; (v) reimbursement for the costs of packing,
shipping and unpacking Executive’s furniture and personal effects, including
storage as appropriate; (vi) with respect to the purchase of a home in the
Portland area, house finding assistance and upon the purchase of a home,
reimbursement of Executive’s closing costs; (vii) if applicable, with
respect to the sale of Executive’s current residence in New York City, the
Company will provide marketing assistance and, if necessary, a guaranteed
buyout in accordance with the customary terms through the Company’s third-party
relocation service provider; and (viii) an appropriate tax gross-up on any
non-tax deductible relocation expenses.


 


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3.                                       Confidentiality and Noncompetition.


 


(a)                                  Executive acknowledges that, prior to and
during the Term of this Agreement, the Company has furnished and will furnish
to Executive Confidential Information which could be used by Executive on
behalf of a competitor of the Company to the Company’s substantial
detriment.  Moreover, the parties
recognize that Executive during the course of his employment with the Company
will develop important relationships with customers and others having valuable
business relationships with the Company. 
In view of the foregoing, Executive acknowledges and agrees that the
restrictive covenants contained in this Section are reasonably necessary
to protect the Company’s legitimate business interests and good will.  Executive acknowledges that at least two
weeks prior to the Effective Date, he was notified in writing that his offer of
employment was conditioned upon his agreement to the noncompetition restriction
in subsection (d)(i) below.


 


(b)                                 Executive agrees that he shall protect
the Company’s Confidential Information and shall not disclose to any Person, or
otherwise use, except in connection with his duties performed in accordance
with this Agreement or otherwise for the Company, any Confidential Information
at any time, including following the termination of his employment with the
Company for any reason; provided, however, that Executive may make disclosures
required by a valid order or subpoena issued by a court or administrative
agency of competent jurisdiction, in which event Executive will promptly notify
the Company of such order or subpoena to provide the Company an opportunity to
protect its interests.  Executive’s
obligations under this Section 3(b) shall survive any expiration or
termination of this Agreement for any reason, provided that Executive may after
such expiration or termination disclose Confidential Information with the prior
written consent of the Board.


 


(c)                                  Upon the termination or expiration of his
employment hereunder, Executive agrees to deliver promptly to the Company all
Company files, customer lists, management reports, memoranda, research, Company
forms, financial data and reports and other documents supplied to or created by
him in connection with his employment hereunder (including all copies of the
foregoing) in his possession or control, and all of the Company’s equipment and
other materials in his possession or control. 
Executive’s obligations under this Section 3(c) shall survive
any expiration or termination of this Agreement.


 


(d)                                 Upon the termination or expiration of his
employment under this Agreement, Executive agrees that for a period of one (1) year
from his Date of Termination or until the end of the period for which he is
entitled to receive compensation under Section 4.1(a) below, whichever
is longer, he shall not (i) be employed by or provide services to any
company or business engaged in the design, manufacture, marketing or sale of
any products similar to those produced or offered by the Company or its
affiliates in the geographic areas of the world in which the Company conducts
its principal manufacturing and sales operations, including China, Brazil,
Germany and North America, provided that this noncompetition restriction shall
in no event extend longer than two years from Executive’s Date of Termination, (ii) divert
or attempt to divert any person, concern or entity which is furnished products
or services by the Company from doing business with the Company or otherwise
change its relationship with the Company, or (iii) solicit, lure or
attempt to hire away any of the employees of the Company with whom the
Executive interacted directly or indirectly, while employed with the Company.


 


(e)                                  Executive acknowledges that if he
breaches or threatens to breach this Section 3, his actions may cause
irreparable harm and damage to the Company that could not be compensated in
damages.  Accordingly, if Executive
breaches or threatens to breach this Section 3, the Company shall be
entitled to seek injunctive relief, in addition to any other rights or remedies
available to the Company.  The existence
of any claim or cause of action by Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of Executive’s agreement under this Section 3(e).


 


4.                                       Termination.


 


4.1                                 By
Executive. 
Executive shall have the right to terminate his employment hereunder at
any time by Notice of Termination (as described in Section 6).  If Executive terminates his 


 


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employment
because (i) the Company has materially breached this Agreement, and such
breach has not been cured within thirty (30) days after written notice of such
breach is given by Executive to the Company; or (ii) Executive has
determined that his termination is for Good Reason (as defined in Section 5.7),
Executive shall be entitled to receive the compensation and benefits set forth
in subsections (a) through (g) below. 
If Executive terminates his employment other than pursuant to clauses (i) or
(ii) above of this Section 4.1, the Company’s obligations under this
Agreement shall cease as of the date of such termination.  Unless specified otherwise, if Executive is
entitled to compensation and benefits under this Section 4.1, the time
period (such time period described hereinafter is referred to as the “Severance
Period”) in (a) through (g) below shall be the lesser of (A) the
24-month period commencing on Executive’s Date of Termination, or (B) the
time period remaining from Executive’s Date of Termination until the date he
attains age 65.  The Company agrees that
if Executive terminates employment and is entitled to compensation and benefits
under this Section 4.1, he shall not be required to mitigate damages by
seeking other employment, nor shall any amount he earns reduce the amount
payable by the Company hereunder.


 


(a)                                  Base Salary - Executive will continue to receive his
Base Salary as then in effect (subject to withholding of all applicable taxes)
for the Severance Period in the same manner as it was being paid as of the Date
of Termination; provided, however, that the salary payments
provided for hereunder shall be paid in a single lump sum payment, to be paid
not later than 30 days after his termination of employment; provided, further,
that the amount of such lump sum payment shall be determined by taking the
salary payments to be made and discounting them to their Present Value (as
defined in Section 5.9) on the date Executive’s employment under this
Agreement is terminated.


 


(b)                                 Bonuses and Incentives - Executive shall receive bonus payments
from the Company for each month of the Severance Period in an amount for each
such month equal to one-twelfth of the average of the bonuses (“Average Bonus”)
earned by him for the two fiscal years in which bonuses were paid to him
(including, if applicable, any completed fiscal year for which the bonus has
been earned but has not yet been paid) immediately preceding the year in which
such termination occurs.  Any bonus
amounts that Executive had previously earned from the Company but which may not
yet have been paid as of the Date of Termination shall be payable on the date
such amounts are payable to other executives and Executive’s termination shall
not affect the payment of such bonus. 
Executive shall also receive a pro rated bonus for any uncompleted
fiscal year at the Date of Termination, calculated based upon the Average Bonus
and the number of days compared to 365 that he was employed during such fiscal
year.  The bonus amounts determined
herein shall be paid in a single lump sum payment, to be paid not later than 60
days after termination of employment; provided, that
the amount of such lump sum payment representing the monthly bonus payments
shall be determined by taking the monthly bonus payments to be made and
discounting them to their Present Value on the date Executive’s employment
under this Agreement is terminated.


 


(c)                                  Health and Life Insurance Coverage - The health care coverage (including
Exec-U-Care) and group term life insurance coverage provided to Executive at
his Date of Termination shall be continued for the Severance Period at the same
level and in the same manner as then provided to actively employed executive
participants as if his employment under this Agreement had not terminated.  Any additional coverages Executive had at
termination, including dependent coverage, will also be continued for such
period on the same terms, to the extent permitted by the applicable policies or
contracts.  Any costs Executive was paying
for such coverages at the Date of Termination shall be paid by Executive by
separate check payable to the Company each month in advance.  If the terms of the life insurance coverage
referred to in this subsection (c), or the laws applicable to such life
insurance coverage, do not permit continued participation by Executive, then
the Company will arrange for other life insurance coverage at its expense
providing substantially similar benefits (even if the costs of such coverage
are higher than if Executive had remained in the Company plan).


 


If the terms of
the healthcare benefits program referred to in this subsection (c) do not
permit continued participation by Executive as required by this subsection or
if the healthcare benefits to be provided to Executive and his dependents
pursuant to this subsection (c) cannot be provided in a 


 


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manner
such that the benefit payments will continue to be tax-free to Executive and his
dependents, then the Company shall (i) pay to Executive within five (5) days
after Executive’s Date of Termination a lump sum amount equal to the monthly
rate for COBRA coverage at Executive’s termination date that is then being paid
by former active employees for the level of coverage that applies to Executive
and his dependents, minus the amount active employees are then paying for such
coverage, multiplied by the number of months in the Severance Period (plus a
gross-up on the lump sum amount determined under this subsection (c)), and (ii) permit
Executive and his dependents to elect to participate in the healthcare plan for
the length of the Severance Period upon payment of the applicable rate for
COBRA coverage during the Severance Period.


 


(d)                                 Employee Retirement Plans - To the extent permitted by the
applicable plan, Executive will be entitled to continue to participate,
consistent with past practices, in all employee retirement and deferred
compensation plans maintained by the Company in which Executive participates as
of his Date of Termination, including, to the extent such plans are still
maintained by the Company, the Blount 401(k) Plan and the Blount Excess
401(k) Plan.  Executive’s
participation in such retirement plans shall continue for the Severance Period,
the compensation payable to Executive under (a) and (b) above shall
be treated (unless otherwise excluded) as compensation under the plan as if it
were paid on a monthly basis, and he will receive credit for years of service
for the length of the Severance Period. 
For purposes of the Blount 401(k) Plan and the Blount Excess 401(k) Plan,
he will receive an amount equal to the Company’s contributions to the plans as
though Executive had contributed to such plans at the maximum permissible
contributions level and the Company had continued to make Matching
Contributions and Savings Plus Contributions to such plans for the Severance
Period.  If continued participation in
any plan is not permitted by the plan or by applicable law, the Company shall
pay to Executive or, if applicable, his beneficiary a supplemental benefit
equal to the Present Value on the Date of Termination under this Agreement of
the excess of (i) the benefit Executive would have been paid under such
plan if he had continued to be covered for the Severance Period (less any
amounts Executive would have been required to contribute), over (ii) the
benefit actually payable under such plan. 
The Company shall pay the Present Value of such additional benefits (if
any) in a lump sum within 30 days of his termination of employment.


 


(e)                                  Effect of Lump Sum Payment. 
The lump sum payment under (a) or (b) above shall not alter
the amounts Executive is entitled to receive under the benefit plans described
in this section.  Benefits under such
plans shall be determined as if Executive had remained employed and received
such payments over the Severance Period. 
The lump sum payments under subsections (a), (b) (c) and (d) above
are intended to satisfy the “short-term deferral exception” of Section 409A
of the Code; provided that, if such exception does not apply, the provisions of
Section 4.4, including the provisions relating to the delay in payments to
“key employees”, shall apply.


 


(f)                                    Stock Options And Other Equity Awards. 
As of Executive’s Date of Termination, any outstanding stock options and
other equity awards granted to Executive by the Company shall become vested and
exercisable as provided in the agreements for such stock options and equity
awards.


 


(g)                                 Office Space; Secretarial. 
Executive will be provided appropriate office space, secretarial
assistance and reasonable expenses related thereto for a period of twelve (12)
months from Executive’s Date of Termination. 
The benefits under this subsection (g) shall be provided in a
manner consistent with the requirements of Section 409A of the Code.


 


4.2                                 By
Company.  The Company shall
have the right to terminate Executive’s employment under this Agreement at any
time during the Term by Notice of Termination (as described in Section 6).  If the Company terminates Executive’s employment
under this Agreement (i) for Cause, as defined in Section 5.2, (ii) if
Executive becomes Disabled, or (iii) upon Executive’s death, the Company’s
obligations under this Agreement shall cease as of the Date of Termination;
provided, however, that Executive will be entitled to whatever benefits are
payable pursuant to the terms of any health, life insurance, disability,
welfare, retirement or other plan or program maintained by the Company.  If the Company terminates Executive during
the Term of this Agreement other than pursuant to clauses (i) 


 


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through
(iii) of this Section 4.2, Executive shall be entitled to receive the
compensation and benefits provided in subsections (a) through (g) of Section 4.1
above for the Severance Period (as defined in Section 4.1), and subject to
the provisions (including the non-mitigation provision) and limitations
therein.


 


4.3                                 Limitation
on Benefits Upon Termination.


 


(a)                                  Notwithstanding anything in this
Agreement to the contrary, any benefits payable or to be provided to Executive
by the Company or its affiliates, whether pursuant to this Agreement or
otherwise, which are treated as Severance Payments shall be modified or reduced
in the manner provided in (b) below to the extent necessary so that the
benefits payable or to be provided to Executive under this Agreement that are
treated as Severance Payments, as well as any payments or benefits provided
outside of this Agreement that are so treated, shall not cause the Company to
have paid an Excess Severance Payment. 
In computing such amount, the parties shall take into account all
provisions of Code Section 280G, and the regulations thereunder, including
making appropriate adjustments to such calculation for amounts established to
be Reasonable Compensation.


 


(b)                                 In the event that the amount of any
Severance Payments which would be payable to or for the benefit of Executive
under this Agreement must be modified or reduced to comply with this Section 4.3,
Executive shall direct which Severance Payments are to be modified or reduced;
provided, however, that no increase in the amount of any payment or change in
the timing of the payment shall be made without the consent of the Company.


 


(c)                                  This Section 4.3 shall be interpreted
so as to avoid the imposition of excise taxes on Executive under Section 4999
of the Code or the disallowance of a deduction to the Company pursuant to Section 280G(a) of
the Code with respect to amounts payable under this Agreement or
otherwise.  Notwithstanding the
foregoing, in no event will any of the provisions of this Section 4.3
create, without the consent of Executive, an obligation on the part of
Executive to refund any amount to the Company following payment of such amount.


 


(d)                                 In addition to the limits otherwise
provided in this Section 4.3, to the extent permitted by law, Executive
may in his sole discretion elect to reduce any payments he may be eligible to
receive under this Agreement to prevent the imposition of excise taxes on
Executive under Section 4999 of the Code.


 


(e)                                  For purposes of this Section 4.3,
the following definitions shall apply:


 


(i)                               “Excess Severance Payment” - The term “Excess Severance Payment”
shall have the same meaning as the term “excess parachute payment” defined in Section 280G(b)(1) of
the Code.


 


(ii)                            “Severance Payment” - The term “Severance Payment” shall
have the same meaning as the term “parachute payment” defined in Section 280G(b)(2) of
the Code.


 


(iii)                         “Reasonable Compensation” - The term “Reasonable Compensation”
shall have the same meaning as provided in Section 280G(b)(4) of the
Code.  The parties acknowledge and agree
that, in the absence of a change in existing legal authorities or the issuance
of contrary authorities, amounts received by Executive as damages under or as a
result of a breach of this Agreement shall be considered Reasonable
Compensation.


 


4.4                                 Section 409A
Compliance. To the extent applicable, this
Agreement shall at all times be operated in accordance with the requirements of
Section 409A of the Code, including any applicable exceptions.  The Company shall have authority to take
action, or refrain from taking any action, with respect to the payments and benefits under this Agreement that is reasonably
necessary to comply with Section 409A. 
The Company shall have the authority to delay the
commencement of all or a part of the payments to Executive under this Section 4
if Executive is a “key employee” of the Company (as 


 


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determined
by the Company in accordance with procedures established by the Company that
are consistent with Section 409A) to a date which is six months after the
date of Executive’s termination of employment (and on such date the payments
that would otherwise have been made during such six-month period shall be made)
to the extent (but only to the extent) such delay is required under the
provisions of Section 409A to avoid imposition of additional income and
other taxes, provided that the Company and Executive agree to take into account
any transitional rules and exemption rules available under Section 409A.


 


4.5                                 Release
of Claims. 
To be entitled to any of the compensation and benefits described above
in this Section 4, Executive shall sign a release of claims in the form required
by the Company.  No payments shall be
made under this Section 4 until such release has been properly executed
and delivered to the Company and until the expiration of the revocation period,
if any, provided under the release.  If
the release is not properly executed by Executive and delivered to the Company
within the reasonable time periods specified in the release, the Company’s
obligations under this Section 4 will terminate.


 


5.                                       Definitions. 
For purposes of this Agreement the following terms shall have the
meanings specified below:


 


5.1                                 “Board”
or “Board of Directors”.  The
Board of Directors of the Company.


 


5.2                                 “Cause”
..  The involuntary termination of
Executive by the Company for the following reasons shall constitute a
termination for Cause:


 


(a)                                  If the termination shall have been the
result of an act or acts by Executive which have been found in an applicable
court of law to constitute a felony (other than traffic-related offenses);


 


(b)                                 If the termination shall have been the
result of a willful act or acts by Executive which are in the good faith
judgment of the Chief Executive Officer to be in material violation of law or
of policies of the Company and which result in demonstrably material injury to
the Company;


 


(c)                                  If the termination shall have been the
result of an act or acts of proven dishonesty by Executive resulting or
intended to result directly or indirectly in significant gain or personal
enrichment to the Executive at the expense of the Company; or


 


(d)                                 Upon the willful and continued failure by
the Executive substantially to perform his duties with the Company (other than
any such failure resulting from incapacity due to mental or physical illness
not constituting a Disability, as defined herein), after a demand in writing
for substantial performance is delivered by the Chief Executive Officer, which
demand specifically identifies the manner in which the Chief Executive Officer
believes that Executive has not substantially performed his duties.


 


(e)                                  With respect to clauses (b), (c) or (d) above
of this Section, Executive shall not be deemed to have been involuntarily
terminated for Cause unless and until there shall have been delivered to him a
notice by the Chief Executive Officer (or his designee) setting forth (i) the
conduct deemed to qualify as Cause, (ii) reasonable action that would
remedy such objectionable conduct, and (iii) a reasonable time (not less
than thirty days) within which Executive may take such remedial action, and
Executive shall not have taken such specified remedial action within such
specified reasonable time.  For purposes
of this Agreement, no act or failure to act by Executive shall be deemed to be “willful”
unless done or omitted to be done by Executive not in good faith and without
reasonable belief that Executive’s action or omission was in the best interests
of the Company.


 


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5.3                                 “Change
in Control”.  Either


 


(a)                                  the acquisition, directly or indirectly,
by any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), of securities of the Company
representing an aggregate of more than fifty percent (50%) of the combined
voting power of the Company’s then outstanding securities (excluding the
acquisition by persons who own such amount of securities on the date hereof, or
acquisitions by persons who acquire such amount through inheritance), or


 


(b)                                 during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board,
cease for any reason to constitute at least a majority thereof, unless the
election of each new director was approved in advance by a vote of at least a
majority of the directors then still in office who were directors at the
beginning of the period; or


 


(c)                                  consummation of (i) a merger,
consolidation or other business combination of the Company with any other “person”
(as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other than a merger,
consolidation or business combination which would result in the outstanding
common stock of the Company immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into common stock of the
surviving entity or a parent or affiliate thereof) more than fifty percent
(50%) of the outstanding common stock of the Company, or such surviving entity
or parent or affiliate thereof, outstanding immediately after such merger,
consolidation or business combination, or (ii) a plan of complete
liquidation of Company or an agreement for the sale or disposition by Company
of all or substantially all of Company’s assets;


 


(d)                                 a sale of more than 50% of the assets of
the Company.


 


5.4                                 “Code”.  The Internal Revenue Code of 1986, as it may
be amended from time to time.


 


5.5                                 “Confidential
Information”. 
All technical, business, and other information relating to the business
of the Company or its subsidiaries or affiliates, including, without
limitation, technical or nontechnical data, formulae, compilations, programs,
devices, methods, techniques, processes, financial data, financial plans,
product plans, and lists of actual or potential customers or suppliers that (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other Persons, and (ii) is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy or confidentiality.  Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret.  Confidential Information does
not include confidential business information which does not constitute a trade
secret under applicable law two years after any expiration or termination of
this Agreement.


 


5.6                                 “Disability”
or “Disabled”.  Executive’s
inability as a result of physical or mental incapacity substantially to perform
his duties for the Company on a full-time basis for a continuous period of six (6) months.


 


5.7                                 “Good
Reason”.  A “Good Reason” for
termination by Executive of Executive’s employment shall mean the occurrence
during the Term (without the Executive’s express written consent) of any one of
the acts or failures to act by the Company set forth in (a) through (d) below,
and satisfaction of the following conditions: 
(i) Executive provides notice to the Company of such Good Reason
condition within 90 days of its initial existence, (ii) the Company is
given 30 days to remedy the Good Reason condition and fails to do so, and (iii) Executive
terminates employment within one year of the initial existence of the Good
Reason condition.  For purposes of this
Agreement, the Good Reason conditions are as follows:


 


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(a)                                  a material adverse change in the nature
or status of Executive’s job responsibilities from those set forth in Section 1(a) above;


 


(b)                                 the relocation of the Company’s principal
executive offices to a location more than fifty (50) miles from Portland,
Oregon or the Company’s requiring Executive to be based anywhere other than the
Company’s principal executive offices, except for reasonably required travel on
the Company’s business;


 


(c)                                  a material reduction by the Company in
Executive’s Base Salary as in effect on the date hereof or as the same my be
increased from time to time, except in connection with an across-the-board pay
reduction for executives of similar status;


 


(d)                                 a material reduction by the Company in
the compensation and benefits provided in the aggregate to Executive on the
date hereof under the Company’s 401(k), deferred compensation, incentive
compensation, life insurance, health care, AD&D, or disability plans,
except in connection with an across-the-board reduction that impacts executives
at Executive’s level generally;


 


(e)                                  the failure by the Company to obtain a
successor’s consent to be bound by the Agreement as provided in Section 8.1;
or


 


(f)                                    because a material inducement to
Executive’s acceptance of employment with the Company is the fact that he will
report directly to, and work for, Joshua L. Collins (“Collins”) for a period of
24 months from the Effective Date, the termination by the Company of Collins as
Chief Executive Officer (or Chief Executive Officer-Designate) of the Company
for any reason other than Cause or the termination by Collins for Good Reason
(as such terms are defined in the Employment Agreement dated September 29,
2009 between Collins and the Company).


 


Executive’s right
to terminate Executive’s employment for Good Reason shall not be affected by
the Executive’s incapacity due to physical or mental illness.  Executive’s continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.


 


5.8                                 “Person”
..  Any individual, corporation, bank,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or other entity.


 


5.9                                 “Present
Value”.  The term “Present Value” on
any particular date shall have the same meaning as provided in Section 280G(d)(4) of
the Code.


 


6.                                       Termination Procedures.


 


6.1                                 Notice
of Termination. 
During the Term of this Agreement, any purported termination of
Executive’s employment (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 10.  For
purposes of this Agreement, a “Notice of Termination” shall mean a notice
which, if applicable, shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated. 
Further, a Notice of Termination for Cause is required to include the
information set forth in Section 6.2.


 


6.2                                 Date
of Termination. 
“Date of Termination,” with respect to any purported termination of
Executive’s employment during the Term of this Agreement, shall mean (i) if
Executive’s employment is terminated by his death, the date of his death, (ii) if
Executive’s employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that Executive shall not have returned
to the full-time performance of Executive’s duties during such thirty (30) day
period), and (iii) if 


 


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Executive’s
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a termination by the Company, shall not
be less than thirty (30) days (except in the case of a termination for Cause)
and, in the case of a termination by the Executive, shall not be less than
thirty (30) days nor more than sixty (60) days, respectively, from the date
such Notice of Termination is given); provided, however, that the “Date of
Termination” for purposes of this Agreement shall not be the last day of the
Company’s fiscal year and, in the event the last day of the fiscal year is
designated as the “Date of Termination”, the “Date of Termination” for purposes
hereof shall automatically be the first day of the next following fiscal year.


 


7.                                       Contract Non-Assignable. 
The parties acknowledge that this Agreement has been entered into due
to, among other things, the special skills of Executive, and agree that this
Agreement may not be assigned or transferred by Executive, in whole or in part,
without the prior written consent of the Company.


 


8.                                       Successors; Binding Agreement.


 


8.1                                 In
addition to any obligations imposed by law upon any successor to, or transferor
of, the Company, the Company will require any successor to, or transferor of,
all or substantially all of the business and/or assets of the Company or stock
of the Company (whether direct or indirect, by purchase, merger,
reorganization, liquidation, consolidation or otherwise) to expressly assume
and agree to perform this Agreement, in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place.  Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall constitute the basis
for Executive to terminate his employment for Good Reason during the 90-day
period after succession and to receive the compensation and benefits provided
in Section 4.1 above.


 


8.2                                 This
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees and by the Company’s successors and
assigns.  If Executive shall die while
any amount would still be payable to Executive hereunder (other than amounts
which, by their terms, terminate upon the death of Executive) if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of Executive’s estate.


 


9.                                       Other Agents. 
Nothing in this Agreement is to be interpreted as limiting the Company
from employing other personnel on such terms and conditions as may be
satisfactory to the Company.


 


10.                                 Notices.  All notices,
requests, demands and other communications required or permitted hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
seven days after mailing if mailed, first class, certified mail, postage
prepaid:


 


	
  To the Company

  	
   

  	
  Blount
  International, Inc.

  4909 SE
  International Way

  Portland, OR 97222

   

  ATTN: General Counsel

  
	
   

  	
   

  	
   

  
	
  To the Executive:

  	
   

  	
  David A. Willmott

  



 


Any
party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.


 


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11.                                 Provisions Severable. 
If any provision or covenant, or any part thereof, of this Agreement
should be held by any court to be invalid, illegal or unenforceable, either in
whole or in part, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of the remaining provisions or
covenants, or any part thereof, of this Agreement, all of which shall remain in
full force and effect.


 


12.                                 Waiver.  Failure of
either party to insist, in one or more instances, on performance by the other
in strict accordance with the terms and conditions of this Agreement shall not
be deemed a waiver or relinquishment of any right granted in this Agreement or
the future performance of any such term or condition or of any other term or
condition of this Agreement, unless such waiver is contained in a writing
signed by the party making the waiver.


 


13.                                 Indemnification. 
During the term of this Agreement and after Executive’s termination, the
Company shall indemnify Executive and hold Executive harmless from and against
any claim, loss or cause of action arising from or out of Executive’s
performance as an officer, director or employee of the Company or any of its
subsidiaries or other affiliates or in any other capacity, including any
fiduciary capacity, in which Executive serves at the Company’s request, in each
case to the maximum extent permitted by law and under the Company’s Articles of
Incorporation and By-Laws (the “Governing Documents”), provided that in no
event shall the protection afforded to Executive hereunder be less than that
afforded under the Governing Documents as in effect on the date of this
Agreement except from changes mandated by law. 
During the Term and after Executive’s termination, Executive shall be
covered by any policy of directors’ and officers’ liability insurance
maintained by the Company for the benefit of its officers and directors.


 


14.                                 Amendments and Modifications. 
This Agreement may be amended or modified only by a writing signed by
both parties hereto.


 


15.                                 Governing Law. 
The validity and effect of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.


 


16.                                 Arbitration of Disputes; Expenses. 
All claims by Executive for compensation and benefits under this
Agreement shall be directed to and determined by the Board and shall be in
writing.  Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon.  The Board shall afford a reasonable
opportunity to Executive for a review of a decision denying a claim and shall
further allow Executive to appeal to the Board a decision of the Board within
sixty (60) days after notification by the Board that Executive’s claim has been
denied.  Unless prohibited by applicable
law, any further dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Portland, Oregon,
in accordance with the employment arbitration rules of the American
Arbitration Association then in effect. 
To the extent administratively practicable, the Company and the
Executive agree to select an arbitrator who is an attorney with experience in
employment law disputes.  Judgment may be
entered on the arbitrator’s award in any court having jurisdiction.  In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any material rights or benefits through settlement, arbitration or
otherwise, the Company shall pay Executive’s reasonable legal fees and expenses
incurred in enforcing this Agreement and the fees of the arbitrator.  If applicable, the Executive’s reasonable
legal fees and expenses shall be paid within thirty (30) days of Executive’s
submission of the invoices for such amounts. 
Except to the extent provided in the preceding sentence, each party
shall pay its own legal fees and other expenses associated with any dispute.


 


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IN WITNESS WHEREOF, the
parties have executed this Employment Agreement as of the day and year first
above written.


 


	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  s/ David A. Willmott

  
	
   

  	
  DAVID A. WILLMOTT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  BLOUNT INTERNATIONAL,
  INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  s/ Richard H.
  Irving, III

  
	
   

  	
   

  	
  Senior Vice President

  



 


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