Document:

EXHIBIT 10.2

 

AMENDMENT TO
EMPLOYMENT AGREEMENT

 

Amendment (“Amendment”),
dated May 21, 2008, to the letter agreement of employment, dated as of May 27,
2005 (the “Agreement”), between Arch Capital Group Ltd., a Bermuda
company (the “Company”), and W. Preston Hutchings (the “Executive”).  Capitalized terms used without definition
herein have the meanings given to them in the Agreement.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties have agreed to amend the Agreement as follows:

 

1.               The following shall
be hereby added at the end of paragraph 4 of the Agreement as follows:

 

“In the event that the Executive’s employment shall be terminated by
the Company not for Cause (as defined in the Company’s Incentive Compensation
Plan) or by the Executive for Good Reason (as defined below), the Company shall
pay to the Executive an amount equal to the Executive’s annual base salary for
a period of twelve (12) months, provided the Executive shall be entitled to such
payments only if the Executive has not breached and does not breach the
provisions of paragraphs 7 and 8 of the Agreement and the Executive has entered
into a general release of claims reasonably satisfactory to the Company on or
before the date that is fifty (50) days following the date of termination and
does not revoke such release prior to the end of the statutory seven (7) day
revocation period.  Such amounts
will be paid in twelve (12) equal installments, the first two (2) of which
shall be paid on the date that is two (2) months following the date of
termination and the next ten (10) of which will be paid in ten (10) equal
monthly installments commencing on the date that is three (3) months
following the date of termination and continuing on each of the next nine (9) monthly
anniversaries of the date of termination.

 

‘Good Reason’ means, without the Executive’s written
consent and subject to the timely notice requirement and the Company’s opportunity
to cure set forth below, (a) the material diminution of any material
duties or responsibilities of the Executive; or (b) a material reduction
in the Executive’s annual base salary.

 

It shall be a condition precedent to the Executive’s
right to terminate employment for Good Reason that (i) the Executive shall
first have given the Company written notice that an event or condition
constituting Good Reason has occurred within ninety (90) days after such
occurrence, and any failure to give such written notice within such period will
result in a waiver by the Executive of his right to terminate for Good Reason
as a result of such event or condition, and (ii) a period of thirty (30)
days from and after the giving of such written notice shall have elapsed
without the Company having effectively cured or remedied such occurrence during
such 30-day

 

 

period, unless such occurrence cannot be cured or
remedied within thirty (30) days, in which case the period for remedy or cure
shall be extended for a reasonable time (not to exceed an additional fifteen
(15) days) provided that the Company has made and continues to make a diligent
effort to effect such remedy or cure.

 

Notwithstanding any provision hereof to the
contrary, in order for the Executive to terminate the Employment Period for
Good Reason, such termination of employment must occur no later than sixty (60)
days after the date the Executive gives written notice in accordance with the
above provisions to the Company of the occurrence of the event or condition
that constitutes Good Reason.”

 

2.               All other provisions of the
Agreement shall remain in full force and effect.  This amendment shall be governed by and
construed in accordance with the laws of Bermuda, without giving effect to
principles of conflict of laws, and may be executed in two or more counterparts,
each of which shall constitute one and the same instrument.

 

2

 

IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the date and year first above written.

 

	
   

  	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ John D.
  Vollaro

  
	
   

  	
  Printed Name:

  	
   /s/ John D.
  Vollaro

  
	
   

  	
  Title: 

  	
   EVP &
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ W.
  Preston Hutchings

  
	
   

  	
  W.
  Preston Hutchings

  
					

 

3Exhibit 10.1

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into as of the 14th  day of July, 2008, by and between BLOUNT
INTERNATIONAL, INC., a Delaware corporation (the “Company”), and RICHARD
H. IRVING, III (“Executive”).

 

W I T N E S S E T H:

 

WHEREAS,
the Company and Executive entered into an Employment Agreement, which Agreement
became effective on August 19, 1999, and which Agreement has previously
been amended by Amendment Nos. 1 and 2 (such Agreement as so amended is
hereinafter referred to as the “Prior Employment Agreement”), providing for
Executive’s employment by the Company and specifying the terms and conditions
of such employment; and

 

WHEREAS,
the parties now desire to amend the Prior Employment Agreement in a number of
respects and to restate such agreement as hereinafter provided to reflect
Executive’s current employment arrangements with the Company; and

 

WHEREAS,
Executive desires to continue his employment with the Company on the terms and
conditions provided herein;

 

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

 

1.             Purpose and
Effective Date.

 

(a)           The purpose of this Amended and Restated
Employment Agreement is to amend the Prior Employment Agreement, to recognize
Executive’s 

 

 

 

significant
contributions to the success of the Company, and to provide a single,
integrated document which shall provide the basis for Executive’s continued
employment by the Company.

 

(b)           This Agreement shall be effective as of July 14,
2008 (“Effective Date”) and this Agreement shall terminate as hereinafter
provided.

 

2.             Employment and
Term.

 

(a)           Subject to the terms and conditions of this
Agreement, the Company hereby employs Executive and Executive hereby accepts
employment as Senior Vice President, General Counsel and Secretary of the
Company and shall have such responsibilities, duties and authority that are
consistent with such position as may be from time to time assigned to Executive
by 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. 
With the consent of the Board of Directors, 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 Amended and Restated Employment
Agreement shall commence on the Effective Date and shall end on August 7,
2010 (the “Term”), unless the parties otherwise agree to an extension in
writing (in which case such extended period shall constitute the Term).  If Executive’s employment is terminated by
the Company or if Executive terminates his employment prior to August 7,
2010, his rights will be determined in accordance with Section 5 of this
Agreement.

 

2

 

3.             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 (e) below:

 

(a)           An annual base salary (“Base Salary”) of
Three Hundred Forty-Eight Thousand Dollars ($348,000.00), prorated for any
partial year of employment.  Executive’s
Base Salary shall be subject to annual review for increase at such time as the
Company conducts salary reviews for its executive officers generally.  Executive’s salary shall be payable in
substantially equal installments on a bi-monthly basis, or in accordance with
the Company’s regular payroll practices in effect from time to time for
executive officers 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 its executive officers. 
The Board, a committee of the Board or the Chief Executive Officer will
establish performance goals 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 (which will be determined in accordance
with the current plan design) 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 of the Board, 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.

 

3

 

(c)           Except as provided in Section 3(d),
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 executive
officers, including plans providing retirement, 401(k) benefits, deferred
compensation, health care (including Exec-U-Care), life insurance (including
the Executive Life Insurance Program), disability (including the Corporate
Office Long-Term Disability Plan) and similar benefits.

 

(d)           On or about August 15, 2002, Executive
was paid in a lump sum a 100% vested benefit under the Blount, Inc. and
Subsidiaries Supplemental Retirement Benefit Plan (“SERP”) and the Blount
International, Inc. Supplemental Executive Retirement Plan for Richard H.
Irving, III (“Individual SERP”), which included an amount as if Executive
had earned two (2) additional years of benefit service, and as if he were
two (2) years older.  Following the
making of such payments, the Company had no further obligations to Executive in
respect of the SERP or the Individual SERP, except that commencing August 1,
2004, Executive was again eligible to participate in the SERP (but Executive
acknowledges that such SERP was frozen as of December 31, 2006).  Any benefit to which Executive is entitled
under the SERP will be calculated using his total years of benefit service
while the SERP was in effect and will be reduced in an equitable manner by the
SERP benefit (but not the Individual SERP benefit) previously paid to Executive
in August, 2002.

 

(e)           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 

 

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will be
entitled to five (5) weeks vacation during 2008, 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.

 

4.             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
may 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.

 

(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, 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 

 

5

 

such order or
subpoena to provide the Company an opportunity to protect its interests.  Executive’s obligations under this Section 4(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 4(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 5.1(a) below,
whichever is longer, he shall not (i) enter into or engage in the design,
manufacture, marketing or sale of any products similar to those produced or
offered by the Company or its affiliates in the area of North America, either
as an individual, partner or joint venturer, or as an employee, agent or
salesman, or as an officer, director, or shareholder of a corporation, (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 

 

6

 

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 4, his actions may cause irreparable
harm and damage to the Company which could not be compensated in damages.  Accordingly, if Executive breaches or
threatens to breach this Section 4, the Company shall be entitled to seek
injunctive relief, in addition to any other rights or remedies of 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 4(e).

 

5.             Termination.

 

5.1           By Executive.  Executive shall have the right to terminate
his employment hereunder at any time by Notice of Termination (as described in Section 7).  If Executive terminates his 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, provided that it shall not be a
breach of this Agreement for the Company to promote or hire a replacement for
Executive during the Term for purposes of providing a transition of all or part
of Executive’s duties and responsibilities so long as the Company continues to
provide Executive with the compensation and benefits set forth in Section 3;
or (ii) Executive has determined that his termination is for Good Reason
(as defined in Section 6.7), Executive shall be entitled to receive the
compensation and benefits set 

 

7

 

forth in subsections (a) through (h) below.  If Executive terminates his employment other
than pursuant to clauses (i) or (ii) of this Section 5.1, the
Company’s obligations under this Agreement shall cease as of the date of such
termination.  Unless specified otherwise,
the time periods in (a) through (h) below shall be the lesser of (i) the
12-month period (or the 24-month period if Executive is terminated within 12
months following the date of a Change in Control, as defined in Section 6.3),
commencing on Executive’s Date of Termination, or (ii) the time period
remaining from the date of Executive’s termination until August 7, 2010,
unless the parties have agreed in writing to extend the expiration date of the
Term (such time period under (i) or (ii) is hereinafter referred to as
the “Severance Period”).  Except as
otherwise provided in Section 5.3, the Company agrees that if Executive
terminates employment and is entitled to compensation and benefits under this Section 5.1,
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 6.9) on the date Executive’s
employment under this Agreement is terminated.

 

8

 

(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 earned by him for the two fiscal years in which bonuses were paid
to him 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 prorated bonus for any uncompleted fiscal year at the date of termination
(calculated as if a bonus at the Target Award level had been achieved), based
upon the number of days 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 30 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 executive medical) 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 

 

9

 

applicable
policies or contracts.  Any costs
Executive was paying for such coverages at the time 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 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.

 

10

 

Executive and his dependents shall be entitled to receive coverage
under the Company’s retiree healthcare plan commencing at the end of the
Severance Period.  The level of coverage
and costs under the retiree healthcare plan for Executive and his dependents
will be the same level of coverage and costs provided under the Company’s
retiree healthcare plan for executive level employees on Executive’s Date of
Termination and such retiree healthcare coverage shall be 100% vested and shall
not be terminated in the future (regardless of any termination of such coverage
that may occur that affects other executives). 
The Executive’s entitlement to retiree healthcare coverage shall
terminate upon the later of:  (i) the
death of the Executive and (ii) the death of his spouse.

 

(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 Retirement Plan (this plan has
been frozen effective as of December 31, 2006), the SERP (this plan has
been frozen effective as of December 31, 2006), 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 

 

11

 

the plans,
assuming Executive had participated in 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 of employment under this
Agreement (calculated as provided in the plan) 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.

 

(f)            Stock Options.  As of his date of termination, all of the
Time Options and the Performance Options, and any other outstanding stock
options granted to Executive by the Company, shall become vested and
exercisable as provided in the Stock Option Agreements for such stock options.

 

(g)           Office Space; Secretarial.  Executive will be provided appropriate office
space, his then current administrative assistant (such assistant shall be paid
or 

 

12

 

provided
similar compensation and benefits to that being provided at the time Executive
terminates employment), and reasonable expenses related thereto for a period of
twelve (12) months from Executive’s date of termination.

 

(h)           Executive Life Insurance Program.  During the Severance Period, the Company will
continue to pay the premiums on Executive’s policy under the Executive Life
Insurance Program.

 

5.2           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 7).  If the Company terminates Executive’s
employment under this Agreement (i) for Cause, as defined in Section 6.2,
(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) through
(iii) of this Section 5.2, Executive shall be entitled to receive the
compensation and benefits provided in subsections (a) through (h) of Section 5.1
above for the Severance Period (as defined in Section 5.1), and subject to
the provisions (including the nonmitigation provision) and limitations therein.

 

5.3           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 

 

13

 

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.  If Executive becomes entitled to compensation
and benefits under Section 5.1 or Section 5.2 and such payments are
considered to be Severance Payments contingent upon a Change in Control,
Executive shall be required to mitigate damages (but only with respect to
amounts that would be treated as Severance Payments) by reducing the amount of
Severance Payments he is entitled to receive by any compensation and benefits
he earns from subsequent employment (but shall not be required to seek such
employment) during the 24-month period after termination (or such lesser period
as he is entitled to extended benefits).

 

(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 5.3,
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.

 

14

 

(c)           This Section 5.3 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 5.3 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 5.3, 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 5.3, 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, 

 

15

 

amounts received by Executive as damages
under or as a result of a breach of this Agreement shall be considered
Reasonable Compensation.

 

5.4           Section 409A Compliance.   The Company shall have the authority to
delay the commencement of all or a part of the payments to Executive under this
Section 5 if Executive is a “key employee” of the Company (as 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.

 

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

 

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

 

6.2           “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);

 

16

 

(b)           If the termination shall have been the
result of an act or acts by Executive which are in the good faith judgment of
the Board to be in 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 Board, which demand
specifically identifies the manner in which the Board believes that Executive
has not substantially performed his duties.

 

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 copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
Executive and an opportunity for him, together with his counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board,
Executive was guilty of conduct set forth above in clauses (b), (c) or (d) 
and specifying the particulars thereof in detail.  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 

 

17

 

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.

 

6.3           “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 

 

18

 

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.

 

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

 

6.5           “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, which (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.

 

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

 

19

 

6.7           “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 following acts by the Company, or failures by the
Company to act, and such act or failure to act has not been corrected within
thirty (30) days after written notice of such act or failure to act is given by
Executive to the Company:

 

(i)          a material adverse change in the nature or
status of Executive’s job responsibilities from those set forth in Section 2(a) above,
except in connection with (A) a job change of Executive that is
necessitated by changes in the operation of the business; or (B) a
performance-related job change of Executive that the Company deems necessary to
the operation of the business; provided, however, that it shall not constitute
a Good Reason for termination by Executive nor a breach of this Agreement for
the Company to promote or hire a replacement for Executive during the Term for
purposes  of providing a transition of
all or part of Executive’s duties and responsibilities so long as the Company
continues to provide Executive with the compensation and benefits set forth in Section 3;

 

(ii)         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;

 

20

 

(iii)        a 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 (A) an across-the-board pay reduction
for executives of similar status, or (B) a change described in (i)(A) or
(i)(B) above;

 

(iv)        the failure by the Company to continue to provide
Executive with compensation and benefits substantially similar in the aggregate
to those enjoyed by Executive on the date hereof under the Company’s
retirement, 401(k), deferred compensation, incentive compensation, life
insurance, health care, AD&D, or disability plans, or the taking of any
action by the Company which would directly or indirectly materially reduce any
of such compensation or benefits, except in connection with (A) an
across-the-board reduction that impacts executives at Executive’s level
generally, or (B) a change described in (i)(A) or (i)(B) above;
or

 

(v)         any purported termination of Executive’s employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1 (for purposes of this Agreement, no such
purported termination shall be effective).

 

The
Executive’s right to terminate the Executive’s employment for Good Reason shall
not be affected by the Executive’s incapacity due to physical or mental
illness.  The 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.

 

21

 

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

 

6.9           “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.

 

7.             Termination Procedures.

 

7.1           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 11.  For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which 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.

 

7.2           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
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 

 

22

 

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.

 

8.             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.

 

9.             Successors; Binding Agreement.

 

9.1           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 entitle the Executive to compensation from the Company in the same
amount and on the same terms as the Executive would be entitled to hereunder if
the Executive were to terminate the 

 

23

 

Executive’s employment for Good Reason,
except that, for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination.

 

9.2           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.

 

10.           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.

 

11.           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: Chief Executive Officer

  

 

24

 

	
  To
  the Executive:

  	
  Richard
  H. Irving, III

  3600 Piper Court

  Lake Oswego, Oregon 97034

  

  With a copy to: Kilpatrick Stockton LLP

  ATTN: William J. Vesely, Jr.

  Suite 2800

  1100 Peachtree Street

  Atlanta, GA 30309-4530

  

 

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.

 

12.           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.

 

13.           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.

 

14.           Indemnification. 
During the term of this Agreement and after Executive’s termination for
a period of three (3) years, the Company shall indemnify Executive and
hold Executive harmless from and against any claim, loss or cause of action
arising 

 

25

 

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 for a period of three (3) years, 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.

 

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

 

16.           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.

 

17.           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 

 

26

 

been denied.  To the extent permitted 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 rules of the American Arbitration Association then in
effect.  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 promptly pay Executive’s reasonable legal fees and
expenses incurred in enforcing this Agreement and the fees of the
arbitrator.  Except to the extent
provided in the preceding sentence, each party shall pay its own legal fees and
other expenses associated with any dispute.

 

27

 

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

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ Richard H.
  Irving, III

  
	
   

  	
  RICHARD H.
  IRVING, III

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  BLOUNT INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James S. Osterman

  
	
   

  	
   

  	
  JAMES
  S. OSTERMAN

  
	
   

  	
   

  	
  Chairman
  and Chief Executive Officer

  

 

28

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