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.

 

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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.

 

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(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

 

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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

 

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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

 

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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.

 

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(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

 

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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.

 

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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

 

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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 op