Document:

<PAGE>   1
                                                                   EXHIBIT 10.11

                             SPLIT-DOLLAR AGREEMENT

     This Agreement by and between Mark J. Terry (the "Employee") and WARREN
FIVE CENTS SAVINGS BANK (the "Bank") shall be effective as of January 1, 1999.

     WHEREAS, the Employee is employed by the Bank; and

     WHEREAS, the Employee wishes to provide life insurance protection for his
family in the event of his death, under a policy of life insurance insuring his
life (the "Policy"), which is described in Exhibit A attached hereto and by this
reference made a part hereof, and which is being issued by the issuer listed in
Exhibit A (the "Insurer"); and

     WHEREAS, the Bank is willing to pay the premiums due on the Policy as an
additional employment benefit for the Employee, on the terms and conditions
hereinafter set forth;

     WHEREAS, the Employee is the owner of the Policy and, as such, possesses
all incidents of ownership in and to the Policy; and

     WHEREAS, the Bank wishes to have the Policy collaterally assigned to it by
the Employee, in order to secure the repayment of the amounts which it will pay
toward the premiums on the Policy;

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree as follows:

     1.   PURCHASE OF POLICY.

     The Employee will contemporaneously purchase the Policy from the Insurer;
such policy to provide a death benefit to the Employee equal to three times the
Employee's base salary (as in effect on the Effective Date and as subsequently
adjusted). Both parties hereto agree that they will take all necessary action to
cause the Insurer to issue the Policy and shall take any further action which
may be necessary to cause the Policy to conform to the provisions of this
Agreement. Both parties hereto agree that the Policy shall be subject to the
terms and conditions of this Agreement and of the collateral assignment filed
with the Insurer relating to the Policy.

     2.   OWNERSHIP OF POLICY.

     The Employee (or Employee's donee, if applicable) shall be the sole and
absolute owner of the Policy; the Employee may exercise all ownership rights
granted to the owner thereof by the terms of the Policy, except as may be
otherwise provided herein.

                                       1
<PAGE>   2

     3.   PAYMENT OF PREMIUMS.

     So long as the Employee is an employee of the Bank, before the end of any
grace period provided in the Policy for each premium payment, the Bank shall pay
or cause to be paid the full amount of the premium to the Insurer, and shall,
upon request, promptly furnish the Employee evidence of timely payment of such
premium. The Bank shall annually furnish to the Employee a statement of the
amount of income reportable by the Employee for federal and state income tax
purposes, as a result of its payment of such premium.

     4.   APPLICATION OF DIVIDENDS.

     Any dividend declared on the Policy, if any, shall be applied to purchase
paid-up additional insurance on the life of the Employee. The parties hereto
agree that the dividend election provisions of the Policy shall conform to the
provisions hereof.

     5.   COLLATERAL ASSIGNMENT.

     To secure the repayment to the Bank of an amount equal to the aggregate
amount of its premium payments under the Policy, the Employee has
contemporaneously with the execution of this Agreement assigned the Policy to
the Bank as collateral, by means of the form used by the Insurer for such
assignments. The collateral assignment of the Policy to the Bank hereunder shall
not be terminated, altered or amended by the Employee without the express
written consent of the Bank. Both parties hereby agree to take all action
necessary to cause such collateral assignment to conform to the provisions of
this Agreement.

     6.   TRANSFER OF POLICY.

          (a)  Except as provided in subsection (b) below and as otherwise
provided herein, neither the Employee nor any donee of the Employee's, without
the express written consent of the Bank, shall sell, assign, transfer, borrow
against, surrender or cancel the Policy, change the beneficiary designation
provision thereof, or terminate the dividend election thereof.

          (b)  The Employee shall have the right to absolutely and irrevocably
give to a donee, all of his right, title and interest in and to the Policy,
subject to the collateral assignment of the Policy to the Bank pursuant hereto.
The Employee may exercise this right by executing a written transfer of
ownership in the form used by the Insurer for irrevocable gifts of insurance
policies, and delivering this form to the Bank. Upon receipt of such form,
executed by the Employee and duly accepted by the donee thereof, the Bank shall
consent thereto in writing, and shall thereafter treat the Employee's donee as
the sole owner of all of the Employee's right, title and interest in and to the
Policy, subject to the Bank pursuant hereto. Thereafter, the Employee shall have
no right, title or interest in and to the Policy, all such rights being vested
in and exercisable only by such donee.

                                       2
<PAGE>   3

     7.   PAYMENT OF BENEFIT.

     Upon the death of the Employee while the Policy is in effect, the
beneficiary or beneficiaries shall receive an amount of the death benefit equal
to three (3) times the Employee's base salary in effect at the time of his death
and the Bank shall have the unqualified right to receive the remaining portion
of the death benefit. No amount shall be paid from such death benefit to the
designated beneficiary or beneficiaries until the full amount due the Bank
hereunder has been paid. Both parties hereto agree that the beneficiary
designation provision of the Policy shall conform to the provisions hereof.

     8.   PAYMENT OF CASH SURRENDER VALUE.

     Upon the expiration or termination of the Policy prior to the death of the
Employee, the Bank shall have the unqualified right to receive a portion of the
cash surrender value of the Policy equal to the aggregate amount of its premium
payments under the Policy, reduced by any outstanding indebtedness to the
Insurer which was incurred by the Bank and secured by the Policy, including any
interest due on such indebtedness. The balance of the Policy's cash surrender
value, if any, shall be distributed to the Employee or the Employee's donee, if
applicable. In no event shall the amount payable to the Bank hereunder exceed
the Policy's cash surrender value. No amount shall be paid to the Employee or
the Employee's donee, if applicable, until the full amount due the Bank
hereunder has been paid. Both parties hereto agree that the Policy shall conform
to the provisions hereof.

     9.   TERMINATION OF AGREEMENT.

          (a)  This Agreement shall terminate without notice upon the occurrence
of any of the following events: (i) the total cessation of the business of the
Bank, (ii) the bankruptcy, receivership or dissolution of the Bank, or (iii)
failure of the Employee (or the Employee's donee, if applicable) to repay the
Bank pursuant to the provisions of Section 10.

     (b)  In addition, the Employee (or the Employee's donee, if applicable) may
terminate this Agreement, while no premium under this Policy is overdue, by
written notice to the other parties hereto. Such termination shall be effective
as of the date of such notice.

     (c)  Upon the termination of the Agreement, the Bank shall have the
unqualified right to receive a portion of the cash surrender value of the Policy
equal to the aggregate amount of its premium payments under the Policy, reduced
by any outstanding indebtedness to the Insurer which was incurred by the Bank
and secured by the Policy, including any interest due on such indebtedness.

                                       3
<PAGE>   4

     10.  RELEASE OF COLLATERAL ASSIGNMENT AT TERMINATION.

     Within thirty (30) days after the date of the termination of his employment
with the Bank, the Employee (or the Employee's donee, if applicable) shall pay
to the Bank an amount in cash equal to the aggregate amount of premiums paid
under the Policy by the Bank to date reduced by any outstanding indebtedness to
the Insurer secured by the Policy which was incurred by the Bank and remains
outstanding as of the date of such termination (including any interest then due
with respect to such indebtedness). Upon receipt of such amount, the Bank shall
release the collateral assignment of the Policy by the execution and delivery of
any appropriate instrument of release.

     11.  INSURER NOT A PARTY.

     Subject to the terms and conditions of the Policy, the Insurer shall be
fully discharged from its obligations under the Policy by payment of the Policy
death benefit to the beneficiary or beneficiaries named in the Policy, subject
to the terms and conditions of the Policy. In no event shall the insurer be
considered a party to this Agreement, or any modification or amendment hereof.
No provisions of this Agreement nor or any modification or amendment hereof
shall in any way be construed as enlarging, changing, varying or in any other
way affecting the obligations of the Insurer as expressly provided in the
Policy, except insofar as the provisions hereof are made a part of the Policy by
the collateral assignment executed by the Employee and filed with the Insurer in
connection herewith.

     12.  ADMINISTRATION.

     The Bank shall make all determinations concerning rights to benefits under
this Agreement. Any decision by the Bank denying a claim by the Employee, his
donee or his beneficiary, for benefits under this Agreement shall be stated in
writing and delivered or mailed to the Employee or such donee or beneficiary.
Such decision shall set forth the specific reasons for the denial, written to
the best of the Bank's ability in a manner that may be understood without legal
or actuarial counsel.

     13.  NOTICES.

     Any notice required or permitted to be given hereunder shall be effective
when received and shall be sufficient if in writing and if personally delivered
or sent by prepaid cable, telex or registered air mail, return receipt
requested, to the party to receive such notice at this address set forth at the
end of this Agreement or at such other address as a party may be notice specify
to the other.

                                       4
<PAGE>   5

     14.  MISCELLANEOUS.

     To be effective, each modification or amendment to this Agreement must be
in writing and signed by both parties hereto. No waiver shall be valid unless in
writing and signed by the waiving party. No inaction shall constitute a waiver.
Any waiver shall be effective only with respect to past events and shall not
constitute a continuing or prospective waiver unless expressly so stated in
writing. This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts as the forum for any litigation between the parties with respect
to this Agreement. If any provision or provisions of this Agreement is, or
hereafter is adjudged to be, for any reason unenforceable or invalid, it is the
specific intent of the parties that the remainder hereof shall subsist and be
binding upon each of the parties hereto. This Agreement shall bind and inure to
the benefit of the respective assigns, heirs, successors and legal
representatives of each of the parties hereto. The headings and captions of this
Agreement are for the purpose of reference only and shall not limit or defined
any meaning thereof.

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

WARREN FIVE CENTS SAVINGS BANK              EMPLOYEE

By: __________________________          _________________________________
  Title:________________________

_____________________________           _________________________________
Attest                                  Witness

(SEAL)

                                       5
<PAGE>   6

                                    EXHIBIT A
                                    ---------

     The following life insurance policy is subject to the foregoing
Split-Dollar Agreement:

Insurer:          Security Life of Denver Insurance Company

Insured:          Mark J. Terry

Policy Number:    1556072

Face Amount:      $337,837

Date of Issue:    January 1, 1999

                                       6<PAGE>   1
                                                                   EXHIBIT 10.14

                    EMPLOYMENT AND NON-COMPETITION AGREEMENT

           EMPLOYMENT AND NON-COMPETITION AGREEMENT, dated as of August 12,
1999, by and between SIMONDS INDUSTRIES INC., a Delaware corporation (the
"Company"), and Raymond J. Martino of Roxbury, Connecticut ("Employee").

                              W I T N E S S E T H:

           WHEREAS, Employee has agreed to enter into this Agreement in order to
assure Company of Employee's expertise and involvement in the conduct of the
Company's business, subject to the terms and conditions as hereinafter provided;
and

           WHEREAS, the Company desires to employ Employee as Chief Executive
Officer of the Company and Employee desires to be employed by the Company in
such capacity, upon the terms and conditions set forth in this Agreement.

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

                                    ARTICLE I

                                   DEFINITIONS

           For purposes of this Agreement, the following terms shall have the
meanings set forth below:

           "CAUSE". Cause shall mean (a) act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company by Employee as
determined by the Company's Board of Directors in its reasonable discretion, (b)
conviction of Employee by a court of competent jurisdiction of or a plea of
guilty or nolo contendere by Employee to any felony or crime involving moral
turpitude, (c) the habitual drug addiction or intoxication of Employee, (c) the
willful failure or refusal of Employee to perform his duties under the terms of
his employment with the Company, including the willful failure or refusal of
Employee to follow the instructions of the Company's Board of Directors, (e) the
breach by Employee of any material terms of this Agreement (including, without
limitation, the breach of any non-competition, non-disclosure, or other
restrictive covenant) after being giving notice thereof and a reasonable
opportunity to cure such breach, or (f) the material breach by Employee of any
of the covenants, terms, and provisions of the Stockholder Agreement or the
Option Documents after being given notice thereof and a reasonable opportunity
to cure such breach.

                                      -60-

<PAGE>   2

           "DIRECTORS" shall mean the Board of Directors of the Company.

           "DISABILITY". Employee shall be deemed to have a disability if an
independent medical doctor (selected by the Company's health or disability
insurer) certifies that such Employee has for six (6) months, consecutive or
non-consecutive, in any twelve (12) month period been disabled in such a manner
that he is unable to perform the essential functions of his then current
position. Any refusal by Employee to submit to a medical examination for the
purpose of certifying disability shall be deemed to constitute conclusive
evidence of such Employee's disability.

           "EBITDA" means earnings before interest and taxes without adjustment
for depreciation and amortization.

           "EFFECTIVE DATE" shall mean the date of this Agreement.

           "GOOD REASON" shall mean a material breach by the Company of any of
the terms of this Agreement, after being given notice thereof and a reasonable
opportunity to cure such breach.

           "MARTINO OPTIONS" shall mean options to be granted to Employee to
purchase a total of 4,450 Shares for an exercise price of $458.52 per Share,
pursuant to the Option Documents. The Martino Options shall vest as follows:

           a.        1,450 Shares on February 29, 2000;
           b.        1,000 Shares on February 28, 2001;
           c.        1,000 Shares on February 28, 2002;
           d.        1,000 Shares on February 28, 2003.

The Martino Options shall vest immediately upon the occurrence of an Approved
Sale, as defined in the Stockholder Agreement, so long as Employee is actively
employed under this Agreement.

           "OPTION DOCUMENTS" shall mean the Option Plan and related option
grant agreements in respect thereof.

           "OPTION PLAN" shall mean the Company's 1998 Amended and Restated
Stock Incentive Plan.

           "REGISTRATION RIGHTS AGREEMENT" means that Registration Rights
Agreement by and among the Company and the shareholders of the Company dated as
of July 7, 1998.

           "SHARES" means shares of Class A Common Stock of the Company.

           "STOCKHOLDER AGREEMENT" means that certain Stockholder Agreement by
and among the Company and the shareholders of the Company dated as of July 7,
1998.

                                      -61-

<PAGE>   3

                                   ARTICLE II

                             EMPLOYMENT AND SERVICES

           2.01      CAPACITY AND SERVICES; TERM.

           (a) The Company hereby employs Employee to serve in the capacity of
President and Chief Executive Officer of the Company, and Employee hereby
accepts such employment, upon the terms and conditions set forth in this
Agreement. During the period the Employee is employed by the Company, Employee
shall devote substantially all of his attention and energies on a full-time
basis to the business and affairs of the Company and use his best efforts to
promote its interests; provided, however, that Employee may devote reasonable
periods of time for personal purposes, trade associations and charitable
activities so long as such purposes or activities do not (i) cause or result in
a breach of Article III hereof or (ii) adversely affect the interests of the
Company or materially detract from or interfere with the performance of the
services otherwise required to be performed by Employee as set forth herein.
While the Employee is employed by the Company, Employee shall neither accept nor
hold any other employment without approval of the Directors. In his capacity as
Chief Executive Officer of the Company, Employee shall be responsible for the
supervision and control over, and responsibility for, the financial affairs and
operations of the Company, and shall have such other powers and duties as
determined by the Directors from time to time. Such services to be provided by
Employee hereunder shall be provided for the benefit of the Company without
regard to whether any of the Company's operations are conducted directly by the
Company or through any subsidiaries, joint ventures or unincorporated division
of the Company. While the Employee is employed by the Company, the Company shall
provide Employee with an office and support staff reasonably necessary for the
proper performance of his duties hereunder and consistent with the past
practices of the Company. During the term of his employment hereunder as the CEO
of the Company, the Employee shall be a Director.

           (b) This Agreement shall commence on the date hereof and terminate as
set forth herein. This Agreement shall terminate on the earliest to occur of the
following: (i) Employee's voluntary resignation, (ii) termination by the Company
of Employee's employment for Cause, (iii) Employee's death or Disability, or
(iv) termination by the Company of Employee's employment without Cause under
Section 2.09.

           2.02 LIMITATION OF AUTHORITY OF EMPLOYEE. The authority of Employee
as Chief Executive Officer of the Company shall have such limitations as shall
be prescribed by the Directors.

           2.03 BASE SALARY. The Company shall pay Employee a salary, determined
on an annual basis by the Directors, for the services rendered by Employee to
the Company while the Employee is employed by the Company (the "Base Salary").
Employee's Base Salary shall initially be $350,000 per annum, payable monthly in
equal installments of $29,166.67 in accordance with the customary payroll
practices of the Company for its employees. The Base Salary shall be modified
only upon the prior agreement of the Company and the Employee.

                                      -62-
<PAGE>   4

           2.04 BONUS. The Company shall pay an annual bonus to Employee as
follows. For the period ending December 31, 1999, the Company shall pay Employee
a bonus in the amount of $200,000, payable on or prior to March 15, 2000.
Thereafter, the Company shall pay Employee a bonus for succeeding years based
upon the achievement by the Company of targeted increases in the EBITDA of the
Company, which targeted increases shall have been mutually agreed to by the
Company and the Employee. It is intended that such bonus will be equal to 75% of
Employee's Base Salary if target increase in EBITDA of the Company is achieved
and up to a maximum of 150% of Employee's Base Salary upon the achievement of
substantially greater increases in EBITDA.

           2.05 FRINGE BENEFITS. While the Employee is employed by the Company,
Employee shall be entitled to such employee fringe benefits as are set forth in
the Company's Standard Executive Benefits Program, with present provisions as
set forth generally in Exhibit A attached hereto, and to the following
additional benefits: (a) relocation expenses for the move from his existing
domicile to a domicile in the vicinity of the Company headquarters in Fitchburg,
Massachusetts, (b) reasonable tax preparation expenses, (c) country club and
luncheon club dues and Company vehicle expenses consistent with Company policy
for its current CEO and (d) life insurance in an amount equal to 3 times
Employee's Base salary. If Employee recognizes taxable income as a result of the
benefits provided for in subparagraphs (a) - (c), Company shall pay Employee
such additional amount as shall be necessary to cover such additional tax on a
grossed up basis. Except as specifically provided herein, Employee's
participation in any benefit program shall be at the same level of
employee/employer contribution as has been set for all participants in such
plan.

           2.06 BUSINESS EXPENSES. While the Employee is employed by the
Company, the Company will reimburse Employee for all reasonable travel and
out-of-pocket expenses actually incurred by him, consistent with existing
practices of the Company, or as otherwise directed by the Directors for the
purpose of and in connection with performing his services to the Company
hereunder. Such reimbursement shall be made upon presentation by Employee to the
Company of vouchers or other statements itemizing such expenses in reasonable
detail.

           2.07 DEATH OR DISABILITY. In the event of the death or Disability of
Employee while the Employee is employed by the Company, the Company shall have
no further obligations or liability to Employee hereunder, except to pay to
Employee or Employee's estate (i) the amount of Employee's Base Salary in effect
as of the date of death or Disability earned but unpaid to the date of
Employee's death or Disability (including Base Salary for a period of ninety
(90) days between the day of Disability and the commencement of disability
insurance benefits under the Company's policy), plus (ii) any unpaid bonus
declared or to be declared by the Directors for prior periods and for the period
in which his death or Disability shall occur (prorated to the date of such death
or Disability), plus (iii) any unreimbursed business expenses incurred by
Employee prior to his death or Disability and presented for payment pursuant to
Section 2.06 hereof. If the unpaid bonus to be declared under subparagraph (ii)
is not subsequently declared to the mutual agreement of the Company and
Employee, such unpaid bonus shall be calculated by reference to the prior year's
bonus.

                                      -63-
<PAGE>   5

           2.08 VOLUNTARY TERMINATION BY EMPLOYEE OR TERMINATION FOR CAUSE. The
Company may terminate Employee's employment hereunder at any time for Cause. In
the event the Employee voluntarily terminates his employment with the Company,
other than for Good Reason, or the Employee's employment with the Company is
terminated for Cause, the Company shall have no further obligations or liability
to Employee hereunder, except to pay to Employee (in addition to and without
regard for benefits, if any, due or to become due under any insurance,
retirement or other similar plan of the Company or any other person or entity)
(i) the amount of Employee's Base Salary in effect as of the date of termination
earned but unpaid to the date of such termination, plus (ii) any unreimbursed
business expenses incurred by Employee prior to such termination and presented
for payment pursuant to Section 2.06 hereof.

           2.09 TERMINATION NOT FOR CAUSE OR BY EMPLOYEE FOR GOOD REASON. The
Company may terminate Employee's employment at any time for any reason without
Cause. In the event the Company terminates the Employee's employment with the
Company for any reason other than as set forth in Sections 2.07 or 2.08 above or
Employee terminates his employment for Good Reason, the Company shall have no
further obligations or liability to Employee hereunder, except to pay to
Employee (in addition to benefits, if any, due or to become due under any
insurance, retirement or other similar plan of the Company or any other person
or entity) (i) the amount of Employee's Base Salary in effect as of the date of
termination earned but unpaid to the date of such termination, plus (ii) any
unpaid bonus declared or to be declared by the Directors for prior periods and
for the period in which such termination shall occur (pro-rated to the date of
such termination), plus (iii) any unreimbursed business expenses incurred by
Employee prior to his termination and presented for payment pursuant to Section
2.06 hereof, plus (iv) the amount of Employee's Base Salary and benefits
provided in Section 2.05 in effect as of the date of termination, payable for a
period of 12 months from the date of such termination in monthly installments in
accordance with customary payroll practices of the Company for its employees.
Employee's right to receive the payments set forth in subparagraph (iv) of this
Section 2.09 shall be conditioned upon the Employee's full and continued
performance of Employee's obligations under ARTICLE III hereof. If the unpaid
bonus to be declared under subparagraph (ii) is not subsequently declared to the
mutual agreement of the Company and Employee, such unpaid bonus shall be
calculated by reference to the prior year's bonus.

           2.10      NOTICE AND POST-TERMINATION ARRANGEMENTS.

           (a) Employee may terminate Employee's employment under this Agreement
only upon at least thirty (30) days' prior written notice.

           (b) Upon Company's termination of this Agreement under Section 2.08
or 2.09 hereof, Company may require that Employee remain actively on the job for
a period ending thirty (30) days from the date of termination, with full Base
Salary and fringe benefits, but Employee shall have no right to remain on the
job upon receipt of such notice.

                                      -64-

<PAGE>   6

           2.11 OPTIONS. The Company hereby agrees to grant to Employee the
Martino Options. The terms of the Martino Options shall be governed by the
Option Documents, previously furnished to the Employee. Any of the Shares
purchased by Employee pursuant to the Martino Options shall be held by Employee
subject to the terms and conditions of the Stockholder Agreement, and upon the
first purchase of Shares, Employee agrees to become a party to the Stockholder
Agreement and Registration Rights Agreement .

           2.12 OTHER PLAN MATTERS. To the extent permitted by applicable law,
the Company will waive the eligibility and waiting periods of its Pension Plan
401(k), Profit Sharing Plan, Life Insurance, Supplemental Life Insurance,
Accidental Death and Dismemberment, Long-Term Disability, Health Insurance and
Dental Care Benefit Plans, or if not permitted by applicable law, the Company
will use reasonable efforts to provide comparable arrangements to Employee. The
Company also agrees to make a contribution, on behalf of Employee, of 3% of
Employee's Base Salary and bonus payable under Section 2.04 to both (i) its
Pension Plan 401(k) (provided Employee makes a required 3% contribution) and
(ii) the Profit Sharing Plan. If necessary with respect to subparagraphs (i) and
(ii), the Company will adopt a supplemental benefit plan to effect such
contributions provided that any such supplemental benefit plan does not
jeopardize the qualified status of the Pension Plan 401(k) and the Profit
Sharing Plan.

                                   ARTICLE III

                       CONFIDENTIALITY AND NONCOMPETITION

           The parties acknowledge that the Company presently conducts business
throughout the United States, Canada and Europe. Further, the parties
acknowledge that Employee is extremely knowledgeable about Company's services,
pricing, operations and customers. In addition, Employee is receiving
consideration and other benefits under this Agreement, including without
limitation those set forth in Sections 2.11 and 2.12 hereof, that the Employee
would not otherwise receive except for his agreement to perform and abide by the
covenants under this ARTICLE III.

           3.01 CONFIDENTIALITY. Under no circumstances and at no time, during
or after the Employee's employment with the Company, shall Employee in any
manner whether directly or indirectly, use for his own benefit or the benefit of
any other person, firm, entity or corporation or disclose, divulge, render or
offer, any knowledge or information with respect to the confidential affairs or
plans, trade secrets or know-how of the Company and its subsidiaries and
affiliates, including, without limitation, any work product prepared by Employee
in the course of his employment with the Company ("Confidential Information"),
except on behalf of the Company in the course of the proper performance of his
duties hereunder. Employee acknowledges and agrees that any and all such
Confidential Information will be received and held by him in a confidential
capacity, and that disclosure of such Confidential Information would pose a
direct threat to the Company in the hands of its competitors. For purposes of
this Section 3.01, the term "Confidential Information" shall not include any
information which is generally available to the public other than as a result of
a disclosure by Employee.

                                      -65-

<PAGE>   7

           3.02 COVENANT NOT TO COMPETE.

           (a) During such time as Employee is employed by the Company and for a
period of two (2) years after the termination of his employment, however such
termination may arise, Employee hereby agrees that Employee will not, singly,
jointly, or as an employee, agent or partner of any partnership or as an
officer, agent, employee, director, stockholder (except for not more than one
percent (1%) of the outstanding stock of any company listed on a national
securities exchange or actively traded in the over-the-counter market) or
investor in any other corporation or entity, or as a consultant, advisor, or
independent contractor to any such partnership, corporation or entity, or in any
other capacity, directly, indirectly or beneficially;

                    (i) own, manage, operate, join, control or participate in
the ownership, management, operation, or control of, or work for (as an
employee, agent, consultant, advisor or independent contractor), or permit the
use of his name by, or provide financial or other assistance to, any person,
partnership, corporation, or entity which is in direct or indirect competition
within the United States or Canada (the "Protected Territory") with the business
as conducted by the Company on the date hereof or at any time during Employee's
employment with the Company;

                    (ii) induce or attempt to induce any person who, on the date
hereof or at any time during Employee's employment with the Company, is an
employee of the Company, to terminate his or her employment with the Company,
except in the proper performance of his duties hereunder; or

                    (iii) induce or attempt to induce any person, business or
entity which is a contracting party with the Company or any of its affiliates,
as of the date hereof or at any time during Employee's employment with the
Company (a "Customer"), to terminate or modify in any way adverse to the
interests of the Company, any written or oral agreement with the Company, except
in the proper performance of his duties hereunder.

           (b) The Company and Employee agree that the covenants set forth in
this Section 3.02 have been negotiated with advice of counsel in the course of
the negotiation and execution of this Agreement and the provision of the
consideration set forth above, which endeavor shall result in the receipt by
Employee of greater tangible and intangible benefits than would otherwise accrue
to him, and therefore the Company and Employee agree that these covenants should
and shall be enforced to the fullest extent permitted by law. Accordingly, if in
any judicial or similar proceeding a court or any similar judicial body shall
determine that such covenant is unenforceable because it covers too extensive a
geographical area or survives too long a period of time, or for any other
reason, then the parties intend that such covenant shall be deemed to cover only
such maximum geographical area and maximum period of time and shall otherwise be
deemed to be limited in such manner as will permit enforceability by such court
or similar body.

           3.03 SPECIFIC PERFORMANCE. Employee agrees that his breach of the
provisions of Sections 3.01 or 3.02 above will cause irreparable damage to the
Company and that the recovery by the Company of money damages will not
constitute an adequate remedy for such breach. Accordingly, Employee agrees that
the provisions of Sections 3.01 and 3.02 above may be

                                      -66-
<PAGE>   8

specifically enforced against him in addition to any other rights or remedies
available to the Company on account of any such breach, and Employee expressly
waives the defense in any equitable proceeding that there is an adequate remedy
at law for any such breach.

                                   ARTICLE IV

                                  MISCELLANEOUS

           4.01 ASSIGNMENT. This Agreement is personal to Employee and shall not
be assigned, transferred, hypothecated, pledged or in any way encumbered by him;
provided, that the rights and obligations of Employee hereunder shall be binding
upon, and inure to the benefit of, Employee's estate. This Agreement shall be
binding upon, and inure to the benefit of, the Company's successors and assigns.

           4.02 AMENDMENT. This Agreement may not be amended, modified or
supplemented in any respect except by written agreement entered into by the
parties hereto.

           4.03 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts without resort to its conflict of laws rules.

           4.04 COUNTERPART; HEADINGS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The headings of the
Articles and Sections of this Agreement are inserted for convenience only and
shall not constitute a part hereof.

           4.05 ENTIRE AGREEMENT. This Agreement contains the entire agreement
of the parties pertaining to the subject matter contained in it.

           4.06 NOTICES. All notices given hereunder shall be in writing and
shall be delivered personally or sent by prepaid registered or certified mail,
return receipt requested, or by nationally recognized overnight courier service,
and addressed as follows:

                     If to the Company:

                               Simonds Industries Inc.
                               135 Intervale Road
                               Fitchburg, MA  01420

                     with a copy to each of:

                               Fleet Venture Resources, Inc.
                               50 Kennedy Plaza, Suite 1200
                               Providence, RI 02903
                               Attention:  Habib Y. Gorgi, President

                                      -67-
<PAGE>   9

                               Edwards & Angell, LLP
                               2800 BankBoston Plaza
                               Providence, RI 02903
                               Attention:  Richard G. Small, Esq.

                     If to Employee:

                               Raymond J. Martino
                               Chief Executive Officer
                               Simonds Industries Inc.
                               135 Intervale Road
                               Fitchburg, MA 01420

           All notices shall be deemed to be given on the date received at the
address of the addressee, or, if delivered personally, on the date delivered.

           4.07 SEVERABILITY. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

           IN WITNESS WHEREOF, Employee has executed this Agreement and the
Company has caused this Agreement to be executed as an instrument under seal as
of the day and year first above written.

                                      SIMONDS INDUSTRIES INC.

                                      By:
                                         -----------------------------------
                                      Title:

                                      --------------------------------------
                                      Raymond J. Martino

                                      -68-

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