BLOUNT INTERNATIONAL INC
DEF 14A, 2000-03-16
CONSTRUCTION - SPECIAL TRADE CONTRACTORS
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            SCHEDULE 14A INFORMATION

                  Proxy Statement Pursuant to Section 14(a) of
              the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:

|_|   Preliminary Proxy Statement
|_|   Confidential, for Use of the Commission Only
      (as permitted by Rule 14a-6(e)(2)
|X|   Definitive Proxy Statement
|_|   Definitive Additional Materials
|_|   Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

                           Blount International, Inc.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)


- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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|X|   No Fee Required

|_|   Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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      3.    Per unit price or other underlying value of transaction computed
            pursuant to Exchange Act Rule 0-11 (set forth the amount on which
            the filing fee is calculated and state how it was determined):

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      5.    Total fee paid:

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|_|   Fee paid previously with preliminary materials.

|_|   Check box if any part of the fee is offset as provided by Exchange Act
      Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
      paid previously. Identify the previous filing by registration number, or
      the Form or Schedule and the date of its filing.

      1.    Amount previously paid:

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<PAGE>

                                     BLOUNT

                               ------------------

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                           To Be Held April 17, 2000

                             -----------------------

TO THE STOCKHOLDERS OF BLOUNT INTERNATIONAL, INC.:

      The Annual Meeting of Stockholders of Blount International, Inc. will be
held at 11:00 A.M., E.D.T., on Monday, April 17, 2000, in the Auditorium at The
Sheraton Imperial Hotel and Convention Center, 4700 Emperor Boulevard,
[Interstate 40/Exit 282 (Page Road)], Durham, NC 27703 for the following
purposes:

      1.    To elect a Board of Directors to serve until the next Annual Meeting
            of Stockholders or until their successors have been elected and
            qualified;

      2.    To consider and act upon a proposal to approve the Blount
            International, Inc. Executive Management Annual Incentive Plan;

      3.    To consider and act upon a proposal to approve the Blount
            International, Inc. 1999 Stock Incentive Plan;

      4.    To consider and act upon a proposal to approve the Blount
            International, Inc. 2000 Stock Incentive Plan;

      5.    To consider and act upon a proposal to ratify the appointment of
            PricewaterhouseCoopers LLP as independent auditors for the
            Corporation for the year ending December 31, 2000; and

      6.    To transact such other business as may properly come before the
            meeting or any adjournment thereof.

      The Board of Directors has fixed the close of business on Thursday,
February 17, 2000, as the record date for determining the stockholders entitled
to notice of and to vote at the Meeting or any adjournment thereof.

      ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING; HOWEVER, TO
FACILITATE OUR PLANNING, WE RESPECTFULLY REQUEST THAT YOU RETURN THE
ACCOMPANYING "RSVP" CARD IN THE ENVELOPE MARKED "RSVP" IF YOU PLAN TO ATTEND THE
MEETING. IN EITHER EVENT, TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING FORM OF PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE MARKED "PROXY."

                                          By Order of the Board of Directors,


                                          /s/Richard H. Irving, III

                                          RICHARD H. IRVING, III
                                          Senior Vice President, General Counsel
                                            and Secretary

4520 Executive Park Drive
Montgomery, Alabama 36116-1602
March 17, 2000

<PAGE>

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<PAGE>

                           BLOUNT INTERNATIONAL, INC.
                            4520 Executive Park Drive
                         Montgomery, Alabama 36116-1602
                                 (334) 244-4000

                       -----------------------------------

                                 PROXY STATEMENT
                                     for the
                         ANNUAL MEETING OF STOCKHOLDERS
                                   to be held
                                 April 17, 2000

                       -----------------------------------

      This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors (the "Board") of Blount International, Inc., a
Delaware corporation, (the "Corporation") of your proxy for use at the Annual
Meeting of Stockholders to be held on April 17, 2000, or at any adjournment
thereof (the "Meeting"). It is anticipated that this Proxy Statement and the
accompanying form of proxy will be mailed to stockholders on or about March 17,
2000.

      Shares represented by each properly signed proxy on the accompanying form
received by the Corporation in time to permit its use at the Meeting or any
adjournment thereof will be voted at the Meeting, but you may revoke your proxy
at any time prior to the actual voting thereof by giving notice in writing to
the Secretary of the Corporation or by voting a subsequently dated proxy. If a
proxy is signed but no specification is made on the proxy, the shares
represented by the proxy will be voted as recommended by the Board. If a
specification is made, the shares will be voted in accordance with the
specification. The presence of a stockholder at the Meeting does not revoke his
or her proxy; however, at the Meeting, there will be an opportunity for a
stockholder in attendance to revoke his or her proxy and vote in person if he or
she so requests.

      Note that, except where expressly stated otherwise, the information
provided in this Proxy Statement constitutes the aggregation of such information
as it related to Blount, Inc. prior to November 4, 1995 and to Blount
International, Inc. after November 3, 1995. As of the close of business on
November 3, 1995, as a result of a reorganization, Blount, Inc. merged with a
wholly-owned subsidiary of Blount International, Inc. and became a wholly-owned
subsidiary of Blount International, Inc. The stock of Blount, Inc. prior to the
reorganization had been traded on the American Stock Exchange. The stock of
Blount International, Inc. has been traded on the New York Stock Exchange, Inc.
since the reorganization.

      Please also note that, as the result of a merger and recapitalization,
which involved the Corporation and a subsidiary of Lehman Brothers Merchant
Banking Partners II, L.P. and was completed on August 19, 1999, the Corporation
issued cash and shares in a single class of common stock in exchange for the
delivery and cancellation of its former Class A and Class B common shares.
Throughout this document this transaction is referred to as the Merger and
Recapitalization.

                                VOTING SECURITIES

Record Date and Vote Required

      The Board has fixed the close of business on Thursday, February 17, 2000,
as the record date for determining stockholders entitled to notice of and to
vote at the Meeting. Holders of shares of the Corporation's single class of
common stock as of the record date are entitled to vote at the Meeting. As of
such date, the Corporation had issued and outstanding 30,795,882 shares. There
are no cumulative voting or preemptive rights.

      The holders of common stock are entitled to one vote per share to elect
the directors and are entitled to one vote per share with respect to any other
matter properly presented at the Meeting.

      Directors are elected by the affirmative vote of a majority of the shares
cast in the election. Similarly, the affirmative vote of a majority of the
shares cast in the election is required to approve any other proposal properly
presented at the Meeting.


                                       1
<PAGE>

                             PRINCIPAL STOCKHOLDERS

      The following table sets forth as of February 17, 2000, to the best
knowledge of the Corporation, information as to (a) beneficial ownership of more
than 5% of the common stock of the Corporation by certain persons (other than
director nominees); and (b) beneficial ownership of common stock of the
Corporation by (i) each director nominee, (ii) each executive officer named in
the Summary Compensation Table other than director nominees, and (iii) all
director nominees and executive officers of the Corporation as a group. Except
as otherwise indicated, all beneficial ownership stated in the table represents
sole voting and investment power.

                                                      Shares         Percent
               Name and Address of                  Beneficially     of Total
                Beneficial Owners                      Owned          Shares
        -----------------------------------         -----------      --------
(a)     Holders of more than 5% of common
        stock (other than director nominees
        and executive officers named in the
        Summary Compensation Table)
        -----------------------------------

        Lehman Brothers Holdings Inc.                26,262,111        85.3%
        3 World Financial Center
        200 Vesey Street
        New York, NY 10285

(b)(i)  Director Nominees
        -----------------------------------

        Eliot M. Fried                               26,267,111(1)     85.3%(1)
        E. Daniel James                              26,262,111(1)     85.3%(1)
        Harold E. Layman                                153,977            *
        Alan L. Magdovitz                            26,262,111(1)     85.3%(1)
        John M. Panettiere                              390,231         1.3%

(ii)    Executive Officers named in
        the Summary Compensation Table
        (other than Director nominees)
        -----------------------------------

        Gerald W. Bersett                                 4,275            *
        James S. Osterman                                44,130            *
        Richard H. Irving, III                           54,689            *

(iii)   All director nominees and                    27,006,805(2)     87.7%(2)
        executive officers as a group
        (11 persons)
        -----------------------------------

(*)   Less than 1.0% of total shares.
(1)   Messrs. Fried, James and Magdovitz are affiliates of Lehman Brothers
      Holdings Inc. and may be deemed to share beneficial ownership of the
      shares of common stock shown as beneficially owned by Lehman Brothers
      Holdings Inc. Such individuals disclaim beneficial ownership of all such
      shares, except that Mr. Fried acknowledges ownership of 5,000 shares held
      by him personally.
(2)   See Footnote (1) with respect to 26,262,111 shares which may be
      attributable to each of Messrs. Fried, James and Magdovitz and which have
      been included in the total. Messrs. Fried, James and Magdovitz disclaim
      any beneficial ownership with respect to these shares.


                                       2
<PAGE>

                             ELECTION OF DIRECTORS
                                   PROPOSAL 1

Directors

      The By-laws of the Corporation, which may be amended by the Board,
presently provide that the number of directors that shall constitute the whole
Board shall be fixed from time to time by a vote of a majority of the whole
Board. The Board has set the exact number at 5 effective August 19, 1999.

      The Board intends to nominate and, unless contrary instructions are
specified, to vote all proxies received by the Board FOR the election of the
persons named below as directors of the Corporation.

      Each director to be elected shall hold office until the next Annual
Meeting of Stockholders of the Corporation or until his successor is elected and
qualified or until his earlier resignation or removal. Should any nominee fail
to accept election, it is expected that the Board will cast all proxies received
by it, as appropriate, in favor of the election of such other person for the
office of director as the Board may recommend. The Board has no reason to
believe that any of the persons named below will fail to accept election as a
director.

Biographical Information

      The following biographical information is furnished with respect to each
nominee for election as director at the Meeting:

ELIOT M. FRIED, Age 67.

Director since August 1999; Chairman of both the Compensation and Audit
Committees.

Retired in February 2000 as Managing Director of Lehman Brothers, Inc., New
York, New York. Mr. Fried had been a member of the Lehman Brothers' Investment
Committee for nine years and was also a member of Lehman Brothers' Commitment
Committee and Fairness Opinion Committee. Mr. Fried joined Shearson, Hayden,
Stone, a predecessor firm, in 1976 and became a Managing Director in 1982.

Mr. Fried is currently a Director of Axsys Technologies, Inc., Englewood, New
Jersey, and Grant Prideco, Inc., The Woodlands, Texas.

E. DANIEL JAMES, Age 35.

Director since August 1999; Member of the Executive, Compensation and Audit
Committees.

Senior Vice President in the Merchant Banking Group at Lehman Brothers, Inc.,
New York, New York. Mr. James has been with Lehman Brothers, Inc. since June
1988. Since 1996, Mr. James has worked in Lehman Brothers' Merchant Banking
Group. Prior to joining the Merchant Banking Group, Mr. James served in the
Mergers and Acquisitions Group from 1990 and the Financial Institutions Group
from 1988.

HAROLD E. LAYMAN, Age 53.

Director since August 1999.

Harold E. Layman was elected President and Chief Operating Officer of the
Corporation in February 2000, Executive Vice President-Finance Operations and
Chief Financial Officer of the Corporation in February 1997 and Senior Vice
President and Chief Financial Officer of the Corporation in January 1993. Prior
to January 1993, he served as Senior Vice President Finance and Administration
and was a member of the Executive Committee of VME Group, N.V., The Netherlands,
a manufacturer of automotive components and industrial equipment, from September
1988.

ALAN L. MAGDOVITZ, Age 43.

Director since August 1999; Member of the Executive, Compensation and Audit
Committees.

Managing Director of Lehman Brothers, Inc. and a Principal of Lehman Brothers
Merchant Banking Partners since December 1996. Prior to joining Lehman Brothers
in December 1996, Mr. Magdovitz served as a Principal of Seaport Capital, Inc.,
a firm formed in 1992 to manage two private equity partnerships on behalf of
Prudential Securities. From 1987 to 1992, he served as a Managing Director of
Prudential Bache Interfunding, a leveraged buyout firm that invested $1.4
billion in debt and equity securities across 14 transactions.


                                       3
<PAGE>

JOHN M. PANETTIERE, Age 62.

Director since May 1992; Chairman of the Executive Committee.

Chairman and Chief Executive Officer of the Corporation since February 2000;
Chairman, President and Chief Executive Officer from August 1999 to February
2000; President and Chief Executive Officer from June 1993 to August 1999;
President and Chief Operating Officer from May 1992 to June 1993; formerly
Chairman, President and Chief Executive Officer from January 1990 to May 1992,
President and Chief Executive Officer from January 1988, Senior Executive Vice
President and Chief Operating Officer from August 1986 of Grove Worldwide
Company, Shady Grove, Pennsylvania, a manufacturer of mobile hydraulic cranes
and aerial work platforms.

Mr. Panettiere is also a director of Altec Industries, Inc., Birmingham,
Alabama, and the Montgomery Area Chamber of Commerce; a member of the Committee
of 100 of Montgomery, Alabama; a Trustee of Westminster College, Fulton,
Missouri; and a Churchill Fellow. He is a Life Honorary Director and Past
Chairman of the Construction Industry Manufacturers Association, Milwaukee,
Wisconsin.

The Board and its Committees

      The property, affairs and business of the Corporation are managed under
the direction of the Board. The Board has standing Executive, Audit and
Compensation Committees, the principal functions of each of which are described
below. The Corporation does not have a Nominating Committee. During the year
ended December 31, 1999, the Board held 5 regular meetings, held 1 special
meeting, and took action 6 times by written consent in lieu of a meeting.
Average attendance by directors at Board and Committee meetings was 98.7%.

      Executive Committee -- The Executive Committee consists of 3 members, 2 of
whom are non-employee directors. The Chairman of the Board of the Corporation is
Chairman of the Committee. The Committee may exercise all of the authority and
powers of the Board to the extent permitted by law during the intervals between
Board meetings. The Committee held 1 regular meeting, held 6 telephone meetings,
and took action 4 times by written consent in lieu of a meeting during 1999. The
present members of the Committee are John M. Panettiere, Alan L. Magdovitz, and
E. Daniel James.

      Audit Committee -- The Audit Committee currently consists of 3 members,
all of whom are non-employee directors. The functions of the Committee include
(i) recommending annually to the Board the appointment of the Corporation's
independent auditors, (ii) reviewing the professional services, proposed fees
and independence of such auditors, (iii) reviewing the annual audit plans of
such auditors, (iv) reviewing the annual audit plans of the outside auditors
serving as an internal audit staff by means of an outsourcing agreement, (v)
monitoring the activities of the independent auditors and such outside audit
staff serving as internal auditors, and (vi) reporting on such activities to the
Board. The Committee held 1 regular meeting during 1999. The present members of
the Committee are Eliot M. Fried, Alan L. Magdovitz, and E. Daniel James.

      Compensation Committee -- The Compensation Committee consists of 3
members, all of whom are non-employee directors. The functions of the Committee
include (i) approving compensation philosophy and guidelines for the
Corporation's executive and managerial employees, (ii) establishing a total
compensation range for the Chairman of the Board and Chief Executive Officer and
appraising the performance of said officer on a timely basis, (iii) approving
salaries and changes in salaries of officers of the Corporation and presidents
of its operating segments and such other executives as the Committee may deem
appropriate, (iv) approving the participants, annual financial or other targets,
and amounts to be paid under the Corporation's Target Incentive Plans, (v)
reviewing and recommending to the Board any new executive incentive or stock
option plans, or additions to or revisions in existing plans, and approving any
awards or options granted under any such plan, (vi) reviewing from time to time
the Corporation's management resources and executive personnel planning,
development and selection processes, and (vii) reporting on all such activities
to the Board. The Committee held 1 regular meeting during 1999. The present
members of the Committee are Eliot M. Fried, Alan L. Magdovitz, and E. Daniel
James.

Compensation of Directors

      Since August 1999 at the time of the Merger and Recapitalization, neither
non-employee directors nor those who are employees of the Corporation receive
any compensation for their services as directors. Employee directors, of course,
receive compensation in their respective capacities as employees of the
Corporation, and all directors receive reimbursement of travel and lodging
expenses incurred in connection with their attendance at Board functions.

      In January 1983, the Board approved a Directors' Fee Deferral Plan under
which directors could defer receipt of their applicable directors' fees until
their retirement or other termination of status as a director. Deferred amounts
bore interest, adjusted quarterly, based on the prime rate set by a New York
bank. Such accumulated fees, together with the interest accrued thereon, were
payable in cash to a director or his or her estate in accordance with the option
selected by the director at the time he or she elected to participate in this
plan. The Directors' Fee Deferral Plan was unfunded and amounts due the
participants covered thereby were general obligations of the


                                       4
<PAGE>

Corporation. Three former directors chose to defer their director's fees. Under
the option selected by each, the Corporation had the opportunity in the first
quarter of the year following their resignation to pay out all amounts vested in
the Plan, including accrued interest. As a result, Mr. Haley Barbour and Dr.
Andrew A. Sorenson were paid $67,998.38 and $90,686.24, respectively, in
February 2000. Under an alternative arrangement reached in January 1998
following his resignation, another former director, Dr. Joab Thomas, received
$215,000 in January 2000 as his third installment, and will receive
approximately the same amount in January 2001 and a like amount plus accrued
interest in January 2002. There remain no other former or current directors in
the Plan, and, subject to the additional installments to Dr. Thomas, the Plan
has been terminated effective at the end of February 2000.

      In May 1991 the Board approved, and in April 1994 amended, the Advisory
Directors' Recognition Plan. Each member of the Board who had served as a
director for at least 5 consecutive years, who had not been an employee vested
in any employee benefits sponsored by the Corporation during his or her service
on the Board and who either (a) was serving upon attainment of age 72 or (b) had
become permanently and totally disabled at any time prior to age 72 became an
advisory director. No advisory director and no other director, except the
co-founders of the Corporation, were eligible to stand for re-election to the
Board after reaching age 72. Under this plan, a director who was or became
eligible for advisory director status after July 1, 1991, was, at the end of his
or her then current term, paid a quarterly benefit for life equal to the
quarterly cash retainer, exclusive of committee chairman fees, then being paid
to that director. A director who had been an employee vested in employee
benefits sponsored by the Corporation was eligible to become an advisory
director, but was not to be entitled to the retainer paid to advisory directors.
When their views on a matter are sought, advisory directors are expected to
consult with management or directors of the Corporation. The status of advisory
director may be terminated upon request by the advisory director or by the Board
if it determines that an advisory director has become a director, officer,
employee or consultant of or to another company that competes with the
Corporation or any of its subsidiaries. The Advisory Directors' Recognition Plan
did not apply to Winton M. Blount, a co-founder of the Corporation. It also did
not apply to W. Houston Blount, a co-founder of the Corporation, until he ceased
to be a member of the Board of Directors regardless of his age at such time. As
a result of the Merger and Recapitalization, Mr. W. Houston Blount resigned as a
director effective August 19, 1999 at the age of 77, and thereupon became an
advisory director. The Advisory Directors' Recognition Plan is unfunded and
amounts due the participants covered thereby are general obligations of the
Corporation. There are presently 4 participants under this plan.

Compensation Committee Interlocks and Insider Participation

      The following members of the Board served as members of the Compensation
Committee during 1999:

            Samuel R. Blount, Chairman of the Board of MeadowCraft, Inc., until
      his resignation from the Board effective August 19, 1999 at the time of
      the Merger and Recapitalization.

            W. Houston Blount, Chairman of the Board Emeritus of Vulcan
      Materials Company, until his resignation from the Board effective August
      19, 1999 at the time of the Merger and Recapitalization.

            R. Eugene Cartledge, former Chairman of Savannah Foods, Savannah,
      Georgia and retired Chairman and Chief Executive Officer of Union Camp
      Corporation, until his resignation from the Board effective August 19,
      1999 at the time of the Merger and Recapitalization.

            H. Corbin Day, Limited Partner of Goldman, Sachs & Co. and Chairman
      of Jemison Investment Co., Inc., until his resignation from the Board
      effective August 19, 1999 at the time of the Merger and Recapitalization.

            Arthur P. Ronan, former President of the Automotive Operations of
      Rockwell International Corporation, until his resignation from the Board
      effective August 19, 1999 at the time of the Merger and Recapitalization.

            Eliot M. Fried, retired Managing Director of Lehman Brothers, Inc.,
      elected to the Board effective August 19, 1999 at the time of the
      Corporation's Merger and Recapitalization.

            E. Daniel James, Senior Vice President of Lehman Brothers, Inc.,
      elected to the Board effective August 19, 1999 at the time of the
      Corporation's Merger and Recapitalization.

            Alan L. Magdovitz, Managing Director of Lehman Brothers, Inc.,
      elected to the Board effective August 19, 1999 at the time of the
      Corporation's Merger and Recapitalization.

      There were no relationships with respect to Compensation Committee
interlocks and insider participation in compensation decisions during 1999.


                                       5
<PAGE>

                             COMPENSATION COMMITTEE
                        REPORT ON EXECUTIVE COMPENSATION

Overall Objectives of the Executive Compensation Program

      The Corporation's executive compensation program is designed to help the
Corporation attract, motivate and retain the executive resources that the
Corporation needs in order to maximize its return to shareholders.

      Toward that end, the Corporation's executive compensation program attempts
to provide:

      o     levels of compensation that are competitive with those provided in
            various markets in which the Corporation competes for its executive
            resources;

      o     incentive compensation that varies in a manner consistent with the
            financial performance of the Corporation; and

      o     incentive compensation that effectively rewards corporate and
            individual performance.

      In designing and administering its executive compensation program, the
Corporation attempts to maintain an appropriate balance among these various
objectives, each of which is discussed in greater detail below.

Providing Competitive Levels of Compensation

      The Corporation attempts to provide its executives with a total
compensation package that, at expected levels of performance, is competitive
with total compensation provided to executives who hold comparable positions or
have similar qualifications in other organizations of similar size and scope
with which the Corporation competes.

      The Corporation projects an executive's competitive level of compensation
based on information drawn from a variety of sources, including proxy
statements, special surveys, and independent compensation consultants. This
information is used to create the basic structure of the Corporation's program.
The market data used in establishing the Corporation's executive compensation
levels reflect a blending of general industry and manufacturing industry
companies comparable to the Corporation's size.

      It should be noted that the value of an executive's compensation package
will vary significantly based on performance. So while the expected value of an
executive's compensation package may be competitive, its actual value can exceed
or fall below competitive levels depending on performance.

Ensuring That Incentive Compensation Varies with Financial Performance

      The Corporation's incentive plans are designed to ensure that the
incentive compensation varies in a manner consistent with the financial
performance of the Corporation and its various business units. The specific
corporate performance factors for CY 1999 are discussed in other sections of
this report.

Rewarding Individual Performance

      The Corporation believes that effectively rewarding individual performance
will ultimately serve to enhance the financial performance of the Corporation
and its various business units. While the Corporation's incentive plans provide
compensation that varies with financial performance, they also provide for
individual awards that are based on quantitative assessments of business unit
and individual performance.

Description of the Executive Compensation Program

      This section describes each of the principal elements of the Corporation's
executive compensation program.

Base Salary Program

      The objective of the Corporation's base salary program for senior
executive management positions is to provide base salaries that are
approximately between the 70th and 85th percentile of the competitive market
norms for companies in the Corporation's business lines and similar in size to
the Corporation. The Committee believes it is crucial to provide competitive
salaries in order to attract and retain managers who are very talented. The
specific competitive markets considered depend on the nature and level of the
positions in question and the markets from which qualified individuals are
recruited.

      Base salary levels are also dependent on the performance of each
individual employee. Thus, employees with higher levels of sustained performance
will be paid correspondingly higher salaries.


                                       6
<PAGE>

      Annual salary reviews are based on three factors: general levels of market
salary increases, individual performance, and the Corporation's overall
financial results. All base salary increases are based on a philosophy of
pay-for-performance and perceptions of an individual's long-term value to the
Corporation.

The Management Incentive Plan

      The objectives of the Annual Target Incentive Plan are to motivate and
reward the accomplishment of annual corporate objectives; reinforce a strong
performance orientation with differentiation and variability in individual
awards based on contributions to business results; and provide a fully
competitive compensation package that will attract, reward and retain
individuals of the highest quality. As a pay-for-performance plan, cash bonus
awards were paid upon the achievement of specific business segment and
individual performance objectives established for CY 1999.

      Targeted bonus award levels are determined for eligible positions each
year using data obtained from independent consultants and surveys. The target
bonus levels reflect competitive market norms for companies similar in size to
the Corporation and the Corporation's philosophy of providing competitive total
annual compensation opportunities.

      A target incentive bonus program is established each year based on the
Corporation's budgeted performance against measures approved by the Committee.
For CY 1999, the key performance measures considered were pre-tax income and
return on capital employed for operating units, operating income for the
Corporate staff, and for all plan participants other than the Chairman,
President and Chief Executive Officer, individually-assigned key base
objectives.

      The weighting of target objectives among each of the Corporation's
operating units was 50% for pre-tax income, 20% for return on capital employed
and 30% for attainment of individual performance objectives. For the corporate
staff and senior corporate officers, 60% of bonus target was based on the
Corporation's operating income and 40% on individual key base objectives. The
bonus target for the Chairman, President and Chief Executive Officer was based
100% on the Corporation's net income target.

      For 1999, target bonuses for Incentive Plan participants ranged from 5% to
65% of the participants' base pay. Participants could have earned from 40%
(minimum threshold) to 200% (maximum) of the target bonus. The actual bonus was
determined by the extent to which performance objectives were accomplished.
Except for the Forestry and Industrial Equipment Division, all units were
profitable for CY 1999. Except for the Forestry and Industrial Equipment
Division and Gear Products, Inc., all units performed above budgeted targets for
return on capital employed and, except for the Forestry and Industrial Equipment
Division, Gear Products, Inc., and Dixon Industries, Inc., all units performed
above budgeted income targets. The Forestry and Industrial Equipment Division
and Gear Products, Inc., failed to meet pre-tax income and return on capital
employed targets.

      As a result, an annual incentive funding pool was created for the CY 1999
performance and awards were made to certain key executives named in the Summary
Compensation Table exceeding target bonus objectives.

Long Term Incentives

      The Corporation's approach to long-term incentives for employees is
focused on the Corporation's stock option plans. The Corporation uses stock
options to align the interests of employees and shareholders by providing value
to the employee when the stock price increases. Options are granted at 100% of
the fair market value of the stock on the date of grant. For stock options
granted after August 19, 1999, the fair market value is determined by
calculating the average closing sale price for the stock for ten consecutive
trading days ending on the trading day immediately prior to the effective date
of such grant.

      Since the Merger and Recapitalization, all options granted have terms of
10 years. Shares received upon exercise of any options that have been granted
are subject to restrictions on transfer, tag-along and drag-along rights, call
and put rights, registration rights and other rights and obligations specified
in an employee stockholders' agreement. Certain options are time options, and
others are performance options. Time options vest annually over time (generally
3 to 5 years) and performance options vest based on attainment of certain annual
EBITDA (earnings before interest, taxes, depreciation and amortization)
performance levels, but in any event within 6 years.

      The Corporation's stock option grant levels are established by considering
competitive market data on grant levels and the level of shares reserved for
such plans. Individual option grants are based on the duties of each participant
in the Corporation, his or her present and potential contributions to the
success of the Corporation and such other factors as the Committee deems
relevant.

      The Executive Compensation Program is revised annually by the Compensation
Committee to provide an appropriate mix of base salary, annual bonus, and
long-term awards within the philosophy of providing competitive direct
compensation opportunities. Stock options granted to the named executives in
CY1999 are shown in the Option Grant Table (see page 12).


                                       7
<PAGE>

CY 1999 Pay for the Chairman of the Board, President and Chief Executive Officer

      As described above, the Corporation determines its pay for all Executive
Officers of the Corporation, including the Chairman, President and Chief
Executive Officer, considering both a pay-for-performance philosophy and market
rates of compensation for the job. Specific actions taken by the Committee
regarding the Chairman, President and Chief Executive Officer's compensation are
summarized below:

            Base Salary -- The Chairman, President and Chief Executive Officer,
      Mr. John Panettiere, received a 9.4% increase on August 19, 1999 at the
      time of the Merger and Recapitalization upon his election as Chairman of
      the Board, in addition to continuing as President and Chief Executive
      Officer.

            Annual Bonus -- The Executive Management Target Incentive Plan which
      covered the Chairman, President and Chief Executive Officer was approved
      by the shareholders in April 1999 and established a targeted net income
      objective.

      Since the complexity and unusual nature of the Merger and Recapitalization
made it difficult for the Committee to determine net income in a manner
consistent with its description in the Plan, operating income was used as an
approximate equivalent. Accordingly, the bonus for CY 1999 for Mr. John
Panettiere, Chairman, President and Chief Executive Officer, was based on the
Corporation's attainment of operating income objectives excluding Merger and
Recapitalization expenses, together with a discretionary component.

                                                  Eliot M. Fried
                                                  E. Daniel James
                                                  Alan L. Magdovitz


                                       8
<PAGE>

                               EXECUTIVE OFFICERS

      The executive officers of the Corporation, in addition to Mr. Panettiere
and Mr. Layman who are also Director nominees, as of February 7, 2000 are:

<TABLE>
<CAPTION>
                                                                       Year First
                                                                       Elected to
Name                                     Office                        Such Office       Age
- ----                                     ------                        -----------       ---
<S>                        <C>                                          <C>            <C>
Gerald W. Bersett          President -- Sporting Equipment Group             1998         59

Rodney W. Blankenship      Vice President & Controller                      1997          51

Richard H. Irving, III     Senior Vice President -- General Counsel     1995 and          56
                             and Secretary of the Corporation               1999

John D. Marshall           Senior Vice President -- Administration       2000 and         49
                             and Treasurer                                   1997

James S. Osterman          President -- Outdoor Products Group               1997         62

Donald B. Zorn             President -- Industrial and Power                1997          63
                             Equipment Group
</TABLE>

      Each of these executive officers serves at the pleasure of the Board.
There were no arrangements or understandings with any other person pursuant to
which any officer was elected. The executive officers of the Corporation may
also be directors or officers of subsidiaries of the Corporation.

      Gerald W. Bersett was elected President of the Sporting Equipment Group in
April 1998. Prior to that date, he served as President and Chief Operating
Officer of Sturm, Ruger & Co., Inc. Mr. Bersett was President of Winchester
Ammunition Division of Olin Corporation from 1988 to 1995. Prior to that date,
he served as Vice President and General Manager of the Winchester Division.

      Rodney W. Blankenship was elected Vice President -- Controller in February
1997. Prior to that date, he served as Corporate Controller from 1985.

      Richard H. Irving, III was elected Senior Vice President and General
Counsel in April 1995, and Secretary of the Corporation in August 1999 at the
time of the Merger and Recapitalization. Prior to April 1995, he served from
1986 as Vice President, General Counsel and Secretary of Duchossois Industries,
Inc., a diversified privately-held company headquartered in Elmhurst, Illinois.
Mr. Irving also served as Associate General Counsel of Union Camp Corporation
from 1979 to 1986, and Assistant General Counsel of Rockwell International
Corporation from 1974 to 1979.

      John D. Marshall was elected Senior Vice President -- Administration and
Treasurer in December 1999. Prior to that date, he served as Vice President and
Treasurer of the Corporation from November 1997; as Senior Vice President of
Operations for the Forestry and Industrial Equipment Division from June 1996;
and as Senior Vice President of Finance and Operations for the Forestry and
Industrial Equipment Division from January 1994.

      James S. Osterman was elected President, Outdoor Products Group in January
1997. Prior to that date, he served as President of the Oregon Cutting Systems
Division of the Corporation from January 1987.

      Donald B. Zorn was elected President, Industrial and Power Equipment Group
in January 1997. Prior to that date, he served as President of the Forestry and
Industrial Equipment Division of the Corporation from January 1994. Prior to
January 1994, he served from March 1988 as President and Chief Operating Officer
of Grove Cranes, a division of Grove Worldwide Company, Shady Grove,
Pennsylvania, a manufacturer of mobile hydraulic cranes and aerial work
platforms.


                                       9
<PAGE>

                             EXECUTIVE COMPENSATION

      The following table summarizes for the fiscal years ended the last day of
December 1999, the last day of December 1998, and the last day of December 1997,
all plan and non-plan compensation awarded to, earned by, or paid to (i) the
Chief Executive Officer, (ii) the four most highly compensated executive
officers other than the CEO of the Corporation (the "Named Executive Officers")
who were serving in executive officer capacities at the end of December 1999,
together with (iii) the former Chairman of the Board who resigned on August 19,
1999 at the time of the Merger and Recapitalization:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                Long-term
                                                                              Compensation
                                                                                 Awards
                                          Annual Compensation                 ------------
                             ---------------------------------------------     Securities
Name and                                                        Other          Underlying
Principal                            Salary      Bonus          Annual          Options        All Other
Position                     Year      ($)        ($)     Compensation ($)(1)     (#)       Compensation ($)
- ----------                   -----   -------   ---------  -------------------  ----------   ----------------
<S>                          <C>     <C>         <C>             <C>             <C>           <C>
John M. Panettiere           1999    827,259     750,000         92,630          887,000       18,199,256(2)
  Chairman of the Board,     1998    791,666     600,000         64,270          160,000          136,833
  President and Chief        1997    741,666   1,000,000         58,685          238,000          119,805
  Executive Officer

Gerald W. Bersett (3)        1999    336,250     340,000         10,556          147,000          146,337(4)
  President-- Sporting       1998    220,416     210,000          5,170           30,000            5,000
  Equipment Group            1997          0           0              0                0                0

James S. Osterman            1999    350,964     325,000         33,675          163,000        2,592,394(5)
  President-- Outdoor        1998    335,386     250,000         10,103           45,000           35,621
  Products Group             1997    316,151     310,000          9,042           62,000           26,920

Harold E. Layman             1999    329,333     250,000         15,905          360,000        7,159,955(6)
  Executive Vice President-- 1998    315,833     240,000         12,585           45,000           29,080
  Finance Operations and     1997    291,666     275,000         12,390           60,000           24,200
  Chief Financial Officer

Winton M. Blount (7)         1999    480,288           0         61,529                0        3,080,778(8)
  Chairman of the            1998    750,000     400,000         67,991                0           86,030
  Board to 8/19/99           1997    750,000     800,000         60,282                0           44,987

Richard H. Irving III        1999    288,666     175,000          9,554          135,000        2,553,489(9)
  Senior Vice President--    1998    279,666     178,000          9,122           30,000           21,839
  General Counsel and        1997    266,000     200,000          9,209           56,000           18,287
  Secretary
</TABLE>

- -------------
(1)   Tax gross-up for premiums on life insurance policies, club dues, personal
      financial planning, and personal use of the Corporation's property.

(2)   Amount is comprised of $63,382 matching contribution to employee's 401(k)
      and excess 401(k) accounts, $52,869 premiums on a life insurance policy
      under our executive life insurance plan and $18,083,005 proceeds from
      cancellation of pre-merger Blount Class A common stock options upon the
      closing of the Merger and Recapitalization on August 19, 1999.

(3)   Gerald W. Bersett was employed by the Company as of April 28, 1998.

(4)   Amount is comprised of $25,674 matching contribution to employee's 401(k)
      and excess 401(k) accounts and $120,663 proceeds from cancellation of
      pre-merger Blount Class A common stock options upon the closing of the
      Merger and Recapitalization on August 19, 1999.

(5)   Amount is comprised of $26,859 matching contribution to employee's 401(k)
      and excess 401(k) accounts, $5,497 accrued pursuant to the Omark Salary
      Continuation Plan and $2,560,038 proceeds from cancellation of pre-merger
      Blount Class A


                                       10
<PAGE>

      common stock options upon the closing of the Merger and Recapitalization
      on August 19, 1999.

(6)   Amount is comprised of $25,462 matching contribution to employee's 401(k)
      and excess 401(k) accounts, $2,302 premiums on a life insurance policy
      under our executive life insurance plan and $7,132,191 proceeds from
      cancellation of pre-merger Blount Class A common stock options upon the
      closing of the Merger and Recapitalization on August 19, 1999.

(7)   Winton M. Blount resigned effective August 19, 1999 at the time of the
      Merger and Recapitalization.

(8)   Amount is comprised of $48,050 matching contribution to employee's 401(k)
      and excess 401(k) accounts, $10,142 premiums on a life insurance policy
      under our executive benefit life insurance and supplemental retirement
      plan, $1,566,333 severance pay due to change-in-control (paid in calendar
      year 2000), and $1,456,250 proceeds from cancellation of pre-merger Blount
      Class A common stock options upon the closing of the Merger and
      Recapitalization on August 19, 1999.

(9)   Amount is comprised of $20,887 matching contribution to employee's 401(k)
      and excess 401(k) accounts, $382 premiums on a life insurance policy under
      our executive life insurance plan and $2,532,220 proceeds from
      cancellation of pre-merger Blount Class A common stock options upon the
      closing of the Merger and Recapitalization on August 19, 1999.


                                       11
<PAGE>

Option Grants

      The following table summarizes pertinent information concerning individual
grants of stock options, including the potential realizable dollar value of
grants of options made during 1999 to each Named Executive Officer, assuming
that the market value of the underlying security appreciates in value from the
date of grant to the end of the option term at the rates indicated in the
following table:

                       OPTION GRANTS IN CALENDAR YEAR 1999

<TABLE>
<CAPTION>
                                           Individual Grants
                                  ----------------------------------                  Potential Realizable Value
                                   Number of   % of Total                            at Assumed Annual Rates of
                                  Securities     Options                             Stock Price Appreciation
                                  Underlying   Granted to  Exercise    Expiration       for Option Term (1)
                                    Options     Employees    Price        Date       --------------------------
Name                              Granted (#)    in 1999   ($/Share)    (MMDDYY)      5% ($)         10% ($)
- ----                              -----------    -------   ---------    --------     ---------     ------------
<S>                      <C>        <C>           <C>        <C>        <C>          <C>             <C>
John M. Panettiere       BLTA       157,000       28.01%     25.531     02-16-09           (2)               (2)
                         BLT        730,000       31.72%     15.00      08-19-09     6,886,000       17,451,000

James S. Osterman        BLTA        43,000        7.67%     25.531     02-16-09           (2)               (2)
                         BLT        120,000        5.21%     15.00      08-19-09     1,132,000        2,869,000

Gerald W. Bersett        BLTA        27,000        4.82%     25.531     02-16-09           (2)               (2)
                         BLT        120,000        5.21%     15.00      08-19-09     1,132,000        2,869,000

Harold E. Layman         BLTA        40,000        7.14%     25.531     02-16-09           (2)               (2)
                         BLT        320,000       13.91%     15.00      08-19-09     3,019,000        7,650,000

Richard H. Irving, III   BLTA        35,000        6.24%     25.531     02-16-09            (2)              (2)
                         BLT        100,000        4.35%     15.00      08-09-09       943,000        2,391,000

Winton M. Blount         BLTA             0           0
                         BLT              0           0
</TABLE>

(1)   The amounts under these columns are the result of calculations at 5% and
      10% rates which were established by rules adopted by the Securities and
      Exchange Commission and therefore are not intended to forecast possible
      future appreciation, if any, in the price of the Corporation's Common
      Stock.

(2)   These options were canceled in exchange for a cash payment immediately
      prior to the consummation of the Merger and Recapitalization on August 19,
      1999.

Option Exercises and Year-End Option Values

      The following table summarizes pertinent information concerning the
exercise of stock options during 1999 by each of the persons named in the
Summary Compensation Table and the year-end value of unexercised options:

                       AGGREGATE OPTION EXERCISES IN 1999
                           AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                              Number of Securities       Value of Unexercised
                                                             Underlying Unexercised          In-the-Money
                                                                   Options at                 Options at
                            Shares                                 Year End (#)               Year End ($)
                          Acquired on    Value           ----------------------------   ---------------------------
Name                     Exercise (#)   Realized ($)     Exercisable    Unexercisable   Exercisable   Unexercisable
- ----                     ------------   ------------     -----------    -------------   -----------   -------------
<S>                           <C>            <C>              <C>         <C>               <C>         <C>
John M. Panettiere             0              0                0           730,000           0           684,375
James S. Osterman              0              0                0           120,000           0           112,500
Gerald W. Bersett              0              0                0           120,000           0           112,500
Harold E. Layman               0              0                0           320,000           0           300,000
Richard H. Irving, III         0              0                0           100,000           0            93,750
Winton M. Blount               0              0                0                 0           0                 0
</TABLE>


                                       12
<PAGE>

Pension Plans

      The Blount Retirement Plan and the Blount, Inc. and Subsidiaries
Supplemental Retirement Benefit Plan (collectively the "Blount Retirement Plan")
estimated annual benefits payable to eligible employees (including executive
officers) in specific classifications following retirement at age 65 (normal
retirement age) after continuous years of credited service are shown below:

                               PENSION PLAN TABLE

<TABLE>
<CAPTION>
 Five-Year Average          Estimated Annual Benefits for Specified Years of Credited Service(a), (b)
    Earnings at    ----------------------------------------------------------------------------------------
   Retirement(c)      10           15           20           25           30            35       40 or More
- -----------------------------------------------------------------------------------------------------------
    <S>            <C>          <C>          <C>          <C>          <C>           <C>          <C>
    $100,000       $20,000      $30,000      $40,000      $50,000      $52,500       $55,000      $57,500
     200,000        40,000       60,000       80,000      100,000      105,000       110,000      115,000
     300,000        60,000       90,000      120,000      150,000      157,500       165,000      172,500
     400,000        80,000      120,000      160,000      200,000      210,000       220,000      230,000
     500,000       100,000      150,000      200,000      250,000      262,500       275,000      287,500
     600,000       120,000      180,000      240,000      300,000      315,000       330,000      345,000
     700,000       140,000      210,000      280,000      350,000      367,500       385,000      402,500
     800,000       160,000      240,000      320,000      400,000      420,000       440,000      460,000
     900,000       180,000      270,000      360,000      450,000      472,500       495,000      517,500
   1,000,000       200,000      300,000      400,000      500,000      525,000       550,000      575,000
</TABLE>

- ----------
(a)   The amounts set out above are based on the benefits under a straight life
      annuity to a participant retiring at age 65 on January 1, 2000. The
      amounts shown are to be reduced for offsetting amounts received as social
      security benefits and benefits payable under master annuity contracts
      (purchased upon termination of prior retirement plans).
(b)   Under Section 415(b) of the Internal Revenue Code, the maximum benefit
      payable under the master annuity contracts (purchased upon termination of
      prior retirement plans) and the Blount Retirement Plan to an employee
      retiring at age 65 in 1999 is $130,000, an amount which may change each
      year in accordance with a determination made by the Internal Revenue
      Service. In addition, Section 401(a)(17) of the Internal Revenue Code
      limits the amount of an employee's compensation which may be taken into
      account under any retirement plan to $160,000 for 1999, an amount which
      also may change each year in accordance with a similar determination.
      These limitations have been disregarded for the purposes of this table
      since the amount of the benefit payable in excess of these limitations is
      covered by the Blount, Inc. and Subsidiaries Supplemental Retirement
      Benefit Plan.
(c)   Earnings covered by the Blount Retirement Plan are based on the
      participant's base salary or wages.

      The years of benefit service used to determine benefits under the Blount
Retirement Plan and the master annuity contracts (purchased upon termination of
prior retirement plans) as of December 31, 1999, for the persons named in the
Summary Compensation Table are: Mr. Panettiere -- 8 years; Mr. Bersett -- 2
years; Mr. Osterman -- 30 years; Mr. Layman -- 7 years; Mr. Blount -- 54 years;
and Mr. Irving -- 5 years.

             SUPPLEMENTAL RETIREMENT PLANS AND EMPLOYMENT CONTRACTS

Supplemental Executive Retirement Plans

      The Corporation maintains separate Supplemental Executive Retirement Plans
for John M. Panettiere and Gerald W. Bersett. The Supplemental Executive
Retirement Plan for Mr. Panettiere will provide a benefit upon his normal
retirement date or earlier termination of employment equal to a benefit
calculated under the benefit formula of the Blount Retirement Plan, but based on
a schedule of years of service granted to him under the Supplemental Executive
Retirement Plan rather than his actual service, reduced by any retirement
benefits payable under the Blount Retirement Plan and any retirement income
actually paid to Mr. Panettiere under any pension plan maintained by a former
employer. The Supplemental Executive Retirement Plan for Mr. Bersett will
provide a benefit upon his normal retirement date or earlier termination of
employment equal to a benefit calculated under the benefit formula of the Blount
Retirement Plan, but based on a schedule of years of service granted to him
under the Supplemental Executive Retirement Plan rather than his actual service,
reduced by any retirement benefits payable under the Blount Retirement Plan.
These plans are administered by the Board or, at its discretion, the
Compensation Committee of the Board. These plans may be amended from time to
time or terminated with the consent of the Corporation and the executive.

      The projected annual benefit payable to Mr. Panettiere under his
Supplemental Executive Retirement Plan, after reduction for the benefits payable
under the Blount Retirement Plan and the retirement income payable under any
pension plan maintained by a former


                                       13
<PAGE>

employer of Mr. Panettiere, is $197,552. The projected annual benefit payable to
Mr. Bersett under his Supplemental Executive Retirement Plan, after reduction
for the benefits payable under the Blount Retirement Plan is $60,154.

Executive Supplemental Retirement Plan of Blount International, Inc.

      On October 9, 1998, the Corporation adopted The Blount Deferred
Compensation Plan for a select group of highly compensated management employees.
The plan name was changed later to the Executive Supplemental Retirement Plan of
Blount International, Inc., (the "Executive Supplemental Retirement Plan"). The
Executive Supplemental Retirement Plan provides supplemental retirement benefits
to participants at age 65 in the form of a life annuity with monthly payments
equal to the excess of (i) the product of .2083% of the participant's highest
3-year average earnings (base salary plus bonuses earned under an executive
management target incentive plan) during the last 10 years of employment
multiplied by his years of benefit service (as provided under the Executive
Supplemental Retirement Plan which, for some participants, may be greater than
actual service) up to, but not in excess of, 20, over (ii) the amount of
retirement benefits payable to the participant under all other qualified and
non-qualified defined benefit plans maintained by the Corporation, any pension
plan maintained by a former employer of the participant, and his primary social
security benefit. Upon the participant's death, a survivor annuity is payable
under the Executive Supplemental Retirement Plan to the participant's surviving
spouse in a monthly amount equal to 662/3% of the monthly benefit payable to the
participant. The Executive Supplemental Retirement Plan provides for retirement
before age 65 with reduced benefits and also provides special rules regarding
benefits payable if the participant becomes disabled or dies before commencing a
benefit. If certain events occur, the Executive Supplemental Retirement Plan
allows participants to elect to receive their benefit in a single lump sum
payment.

      The Executive Supplemental Retirement Plan may be amended or terminated
with the consent of all participants and employers. The Board, in its discretion
and without consent of the participants, may also make certain amendments that
do not adversely affect the rights of participants. The projected annual benefit
payable under the Executive Supplemental Retirement Plan, in addition to the
benefits payable under other defined benefit plans, pension plans of prior
employers, and social security, to the persons named in the Summary Compensation
Table is as follows: Mr. Panettiere -- $429,400; Mr. Osterman -- $147,141; and
Mr. Layman -- $159,678. Mr. Blount resigned August 19, 1999 and received a lump
sum payment of $1,055,707.89 from the Executive Supplemental Retirement Plan on
September 1, 1999. Messrs. Bersett and Irving are not participants in the
Executive Supplemental Retirement Plan.

Omark Plans

      For certain employees of Blount's Outdoor Products Group, Sporting
Equipment Group and Industrial and Power Equipment Group, the Corporation
sponsors:

            (i)   a Supplemental Retirement Plan for key management employees
                  (the "Omark Supplemental Retirement Plan");

            (i)   a retirement protection plan (the "Omark Protection Plan");
                  and

            (iii) a salary continuation plan (the "Omark Salary Continuation
                  Plan").

      The Omark Supplemental Retirement Plan provides a supplemental retirement
benefit to participants equal to the excess, if any, of (i) 50% of the
participant's highest 5-year average base salary during the last 10 years of
employment before age 65, over (ii) the aggregate amount available to the
participant under certain other benefit plans and one-half the primary social
security benefit. Benefits under the Omark Protection Plan are limited to the
amount of any reduction of benefits under the master annuity contracts
(purchased upon termination of the Omark Retirement Plan) or the pre-1992 Omark
Retirement Plan as a result of any deferral of compensation pursuant to the
Omark Deferred Plan prior to its termination in 1986. The Omark Salary
Continuation Plan provides the beneficiary of each participant with a
continuation of 2 years of annual salary upon the death of the participant. The
Omark Plans are unfunded and amounts due participants are general unsecured
obligations of the Corporation. The Omark Plans may be amended or terminated by
the Board, provided that rights vested in participants may not be reduced.

      Mr. Osterman participates in the Omark Supplemental Retirement Plan and
Omark Protection Plan, but no benefits are projected to be payable under these
plans to him. Mr. Osterman participates in the Omark Salary Continuation Plan.

Executive Benefit Life Insurance and Supplemental Retirement Plan

      The Corporation maintains an Executive Benefit Life Insurance and
Supplemental Retirement Plan, (collectively "Keyman Insurance Plan") for certain
former key executive officers of the Corporation and its subsidiaries. The
Keyman Insurance Plan provides life insurance that will pay to the named
beneficiary in the event of the executive officer's death while employed by the
Corporation an amount equal to 2 1/2 times the executive officer's annual
compensation (base salary as of August 1 of each year plus the amount of the
most recent bonus paid under our annual target incentive plan) at the time of
the executive officer's death ("death benefit"). The excess of the face amount
of the policy over the death benefit is paid to the Corporation. The Corporation
currently pays all premiums due on the policies.


                                       14
<PAGE>

      If the executive officer retires directly from employment with the
Corporation, the Corporation, after withdrawing the cash value, will assign its
rights in the policy to the executive officer. Alternatively, the executive
officer may elect to receive an optional supplemental retirement benefit payable
by the Corporation instead of all or a portion of any amount the executive
officer or his beneficiary or beneficiaries may otherwise be entitled to under
the policy, and the death benefit thereupon terminates.

      Mr. Blount resigned on August 19, 1999 at age 79 and started receiving
monthly installments amounting to $280,000 per year as of September 1, 1999.
Messrs. Panettiere, Bersett, Osterman, Layman and Irving do not participate in
the Keyman Insurance Plan.

Employment Contracts And Change-in-Control Arrangements

Employment Contracts

      The Corporation entered into Employment Agreements (the "Agreements")
effective on August 19, 1999 in connection with the Merger and Recapitalization
with all of the executive officers named in the Summary Compensation Table
except for Winton M. Blount. The terms of the Agreements provide that each
executive will be paid a base salary no less than his then current base salary,
be eligible to participate in the Corporation's incentive plans with target
bonuses ranging from 45% to 65% of base salary, participate in the Corporation's
stock option programs and all other benefit plans, arrangements and perquisites
generally available to executive officers. Two executives are covered by the
Corporation's Executive Life Insurance Program. The Agreements with Mr.
Panettiere and Mr. Bersett provide for the Supplemental Executive Retirement
Plan described at page 13 above.

      The duration of the Agreements is a rolling two-year term for Messrs.
Bersett and Irving, and a rolling three-year term for Mr. Layman, each of which
is automatically extended one day for each day employed until such time as the
Agreement would expire on the executive's 65th birthday. Mr. Panettiere's
Agreement expires on July 31, 2002 and Mr. Osterman's Agreement expires on
August 19, 2002; however, each has the option to terminate his Agreement one
year prior to the expiration date. Each Agreement has a clause which prohibits
the executive, for up to three years following the termination of employment,
from competing directly or indirectly with the Corporation or disclosing
proprietary or confidential information.

      The Agreements also contain provisions for severance payments and benefits
(for 24 to 36 months, depending on the executive) if the Corporation terminates
the executive's employment for reasons other than death, disability or cause (as
defined in the Agreements), or if the executive terminates his employment for
"good reason" (as defined in the Agreements). In the event of death, disability
or termination for cause or in the event the employee terminates his employment
for other than "good reason," the Corporation's obligations under the Employment
Agreements cease and no special severance benefits will be paid.

Employee Stockholder Agreement

      Related to the Employment Agreement is an Employee Stockholder Agreement
(the "Stockholder Agreement"). This Agreement is among the Corporation, Lehman
Brothers Merchant Banking Partners II, L.P. and 44 management employees,
including all of the current executive officers named in the Summary
Compensation Table. The Stockholder Agreement sets forth terms and restrictions
relating to common stock either purchased by the named executive in the Merger
and Recapitalization ("Purchased Shares") or received through the exercise of
stock options ("Option Shares") under the 1999 Stock Incentive Plan.

      The Stockholder Agreement restricts the transfer of Purchased Shares,
Option Shares and any underlying options owned by these executives for a period
of five years from the closing of the Merger and Recapitalization. Exceptions to
this restriction include transfers to heirs and trusts, so long as the
transferee agrees to be bound by the terms of the Stockholder Agreement. In
addition, executives have rights to sell their shares on a pro rata basis with
Lehman Brothers Merchant Banking Partners II, L.P. whenever Lehman Brothers
Merchant Banking Partners II, L.P. is selling its shares to third parties.
Similarly, Lehman Brothers Merchant Banking Partners II, L.P. has the right to
cause each of the executives to sell his or her shares of common stock on a pro
rata basis with Lehman Brothers Merchant Banking Partners II, L.P. to a third
party that has made an offer to purchase the Corporation's shares owned by
Lehman Brothers Merchant Banking Partners II, L.P. In the event that the
Corporation registers shares under the Securities Act of 1933 (except for
registrations related to exchange offers or benefit plans) and Lehman Brothers
Merchant Banking Partners II, L.P. is selling its shares in connection with this
registration, the executives have the right to have their shares concurrently
registered and sold on a pro rata basis with Lehman Brothers Merchant Banking
Partners II, L.P. The Purchased Shares and Option Shares owned by the executives
are also subject to "put" and "call" rights that entitle the Corporation to
purchase from the executives, and the executives to sell to the Corporation,
such Purchased Shares and Option Shares at fair market value if the executive's
employment is terminated under certain circumstances.


                                       15
<PAGE>

                               PERFORMANCE GRAPH

      Rules adopted by the Securities and Exchange Commission require that the
Corporation include in the proxy statement a line graph presentation comparing
cumulative, five-year shareholder return on an indexed basis with the cumulative
return of a broad equity market index that includes companies whose equity
securities are traded on the same exchange and either a published industry index
or an index of peer companies selected by the Corporation. Sine the Corporation
is not included in the Standard and Poor's 500 Stock Index and its equity
securities are traded on the New York Stock Exchange, the New York Stock
Exchange Market Value Index was selected as the broad equity market index. The
Corporation chose a group of 11 manufacturing companies that have operations in
those industries in which the Corporation competes as its peer group for
purposes of this performance comparison. A list of these companies ("Peer
Group") follows the graph below.

              Comparison of Five-Year Cumulative Total Return among
                        The Corporation, a Peer Group and
                   New York Stock Exchange Market Value Index

   [The following table was depicted as a line graph in the printed material]

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
                          Feb. 1995    Feb. 1996     Dec. 1996   Dec. 1997   Dec. 1998    Dec. 1999
- ----------------------------------------------------------------------------------------------------
<S>                        <C>           <C>           <C>         <C>         <C>          <C>
The Corporation            100.00        99.75         126.79      178.49      168.56       216.57
- ----------------------------------------------------------------------------------------------------
Peer Group                 100.00       136.83         151.81      208.10      177.39       199.63
- ----------------------------------------------------------------------------------------------------
NYSE Mkt.Val. Index        100.00       132.31         152.51      200.65      238.75       261.44
- ----------------------------------------------------------------------------------------------------
</TABLE>

- ----------
(1)   The companies in the Peer Group are as follows: Brunswick Corp.,
      Caterpillar, Inc., Deere & Co., Ingersoll-Rand Co., Johnson Worldwide
      Assoc., Kaydon Corp., Kennametal Inc., Regal-Beloit Corp., Scott
      Technologies, Inc., Terex Corp., and the Toro Co.
(2)   The comparison of total return on investment (change in year-end stock
      price plus reinvested dividends) for each of the periods assumes that $100
      was invested on February 28, 1995 in each of the Corporation, the Peer
      Group, and the NYSE Market Value Index, with investment weighted on the
      basis of market capitalization as appropriate.

                                FILING DISCLOSURE

      Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Corporation's directors, executive officers and persons
who beneficially own more than 10% of any class of equity securities of the
Corporation to file reports of


                                       16
<PAGE>

ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange and to furnish the Corporation with copies.

      Based on the review of copies of such forms received by it, or written
representations from certain reporting persons, the Corporation believes that
during 1999 all filing requirements were complied with that were applicable to
its directors, officers and greater than 10% beneficial owners.

                     CERTAIN TRANSACTIONS AND OTHER MATTERS

      In connection with the Merger and Recapitalization, Lehman Brothers Inc.,
an affiliate of Lehman Brothers Merchant Banking Partners II, L.P., provided
investment banking, financial advisory and other services to the Corporation,
for which services Lehman Brothers Inc. received customary fees and was
reimbursed expenses incurred in connection therewith. In addition, Lehman
Brothers Inc. acted as advisor, lead arranger and book manager for the debt
transactions used to fund the Merger and Recapitalization, and Lehman Commercial
Paper Inc., an affiliate of Lehman Brothers Inc., was also the syndication agent
and a lender under certain of those debt transactions.

      Messrs. Magdovitz, Fried and James, who are directors of the Corporation,
are investors in Lehman Brothers Merchant Banking Partners II, L.P. As a result
of the Merger and Recapitalization, Lehman Brothers Merchant Banking Partners
II, L.P., through its affiliates, beneficially owns approximately 85.3% of the
Corporation's stock. By virtue of such ownership, Lehman Brothers Merchant
Banking Partners II, L.P. is able significantly to influence the business and
affairs of the Corporation with respect to matters requiring stockholder
approval. From time to time in the future, Lehman Brothers Merchant Banking
Partners II, L.P. or its affiliates may receive customary fees for services
rendered to the Corporation in connection with financings, divestitures,
acquisitions and certain other transactions.

                   ADOPTION OF THE BLOUNT INTERNATIONAL, INC.
                   EXECUTIVE MANAGEMENT ANNUAL INCENTIVE PLAN

                                   PROPOSAL 2

      Subject to approval by the Corporation's stockholders with respect to
payments to the Chief Executive Officer, the Board of Directors on February 3,
2000 adopted the Blount International, Inc. Executive Management Annual
Incentive Plan (the "Incentive Plan") effective as of January 1, 2000.
Stockholder approval of the Incentive Plan is sought in order to qualify the
Incentive Plan under Section 162(m) of the Internal Revenue Code and to thereby
allow the Corporation to deduct for federal income tax purposes all compensation
paid under the Incentive Plan to the Chief Executive Officer.

      This summary of certain features of the Incentive Plan is qualified in its
entirety by reference to the full text of the Incentive Plan, which is set forth
in Exhibit A.

                                     GENERAL

      The purpose of the Incentive Plan is to further the growth and financial
success of the Corporation by offering performance incentives to designated
executives who have significant responsibility for such success. The Incentive
Plan will be administered by the Compensation Committee or other committee
designated by the Board (the "Committee"), subject to the Committee's right to
delegate to the Chief Executive Officer and others responsibility for
administration of the Incentive Plan as it relates to participants other than
the Chief Executive Officer. Persons eligible to participate in the Incentive
Plan are the executive officers and other executives of the Corporation, its
operating units, or its affiliates who are in management positions designated as
eligible for participation by the Committee or its designee. The Incentive Plan
is not subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).

      The Incentive Plan may be amended, suspended or terminated by the
Committee at any time, subject to ratification by the Board and to the consent
of each participant whose rights with respect to an award that has been
determined and approved would be adversely affected. Unless terminated, the
Incentive Plan will remain in effect until awards thereunder are paid for the
Corporation's fiscal year ending in 2005.

                         AWARDS UNDER THE INCENTIVE PLAN

      Prior to, or as soon as practical after, the commencement of each fiscal
year, the Committee will establish plan rules for that year with respect to the
following matters: (a) employees who are eligible to participate; (b)
performance targets and the measurement criteria for determining the level of
achievement of the performance targets; (c) the percentage of a participant's
base salary which may


                                       17
<PAGE>

be paid as an incentive award at specified levels of achievement of the
performance targets; (d) the form of payment of an incentive award; and (e) the
times and conditions subject to which any incentive award may become payable.
Performance criteria for the Chief Executive Officer will include one or more of
the following: earnings before interest and taxes (EBIT), earnings before
interest, taxes, depreciation and amortization (EBITDA), return on capital
employed, cash flow, cash flow return, operating income, SGA expense as a
percentage of sales, inventory turnover ratio, cost reductions, leverage ratios,
gross margin, product introduction, net income, earnings per share, return on
equity, return on assets (or net assets), pre-tax profit, market value of the
Corporation's stock, and total shareholder return. The Committee may establish
other performance criteria for participants other than the Chief Executive
Officer. The maximum incentive award payable to a participant in any year will
be $2.5 million.

      After the end of each fiscal year, the Committee will certify the extent
to which the performance criteria have been achieved for that year. In measuring
performance, the Committee may adjust the Corporation's financial results to
exclude the effect of unusual charges or income items which distort year-to-year
comparisons of results and other events, including acquisitions or dispositions
of businesses or assets, recapitalizations, reorganizations, or reductions in
force. With respect to the Chief Executive Officer the Committee shall exclude
such items the exclusion of which has the effect of increasing achievement of
performance criteria if such items constitute "extraordinary items" under
generally accepted accounting principles or are unusual events or items. The
Committee will also make adjustments to eliminate the effect of unanticipated
changes in the tax or accounting rules and regulations.

      Incentive awards shall be approved by the Committee, subject to
ratification by the Board when required under the Plan or elected by the
Committee, based on the Plan rules then in effect and the achievement of
performance criteria as certified by the Committee. The Committee may in its
discretion grant awards to deserving participants, except the Chief Executive
Officer, notwithstanding levels of achievement of performance criteria.

      Awards will generally be made in lump sum cash payments, in options to
purchase Common Stock of the Corporation, in a combination of cash and options,
or in such other form as the Committee may specify at the beginning of the year.
Payment will be made as soon as practicable after determination of awards.

      A partial incentive award may be authorized by the Committee for a
participant who is terminated without cause or who retires, dies, or becomes
permanently and totally disabled. Otherwise, no award will be paid to a
participant who is not an active employee of the Corporation, an operating unit,
or an affiliate at the end of the fiscal year to which the award relates. In
general and unless with respect to some or all participants the Committee has
established a different rule, upon the occurrence of a Change in Control, the
participant's incentive award for that year will be deemed to have been fully
earned for the year, with deemed performance at the target level; will be
prorated for the portion of the year that has elapsed; and will be paid within
thirty days after the effective date of the Change in Control.

                            FEDERAL TAX CONSEQUENCES

      An award under the Incentive Plan will constitute taxable ordinary income
to the participant to the extent it is paid in cash. The grant of stock options
will not be currently taxable. Generally, the Corporation will be entitled to a
corresponding deduction.

      Section 162(m) of the Internal Revenue Code limits to $1 million the
amount of compensation that may be deducted in any tax year with respect to a
named executive officer (generally, the executive officers who would be listed
for a fiscal year in the Summary Compensation Table appearing on page 10
hereof), with an exception for certain performance-based compensation. The
Incentive Plan is designed, and is to be administered, to qualify payments to
the Chief Executive Officer for that performance-based exception.

                                   2000 AWARDS

      For fiscal year 2000, each of the named executive officers currently
serving as an employee and certain other executives have been granted an
opportunity to receive a cash incentive award under the Incentive Plan based
upon performance goals established with respect to the fiscal year 2000. Because
the performance periods have not yet been completed, the amount of annual
incentive compensation to be paid in the future to the Corporation's current or
future named executive officers and other executives cannot be determined at
this time. Actual amounts will depend on actual performance measured against the
attainment of pre-established performance goals.

                  VOTE REQUIRED AND RECOMMENDATION OF THE BOARD

      The Board recommends a vote "FOR" approval of the Executive Management
Annual Incentive Plan. Approval requires the affirmative vote of a majority of
the shares represented at the meeting which are entitled to vote. In the event
the Incentive Plan is not approved by the Corporation's stockholders, the Board
will take such action with respect to incentive awards as it considers to be in
the best interests of the Corporation, consistent with the compensation policies
set forth in the Report of the Compensation Committee on pages 6-8.


                                       18
<PAGE>

                   ADOPTION OF THE BLOUNT INTERNATIONAL, INC.
                            1999 STOCK INCENTIVE PLAN

                                   PROPOSAL 3

Purpose of the 1999 Stock Incentive Plan

      The Board of Directors voted to adopt the Blount International, Inc. 1999
Stock Incentive Plan (the "1999 Stock Plan") on August 19, 1999, subject to
stockholder approval. The Board of Directors is proposing that the Corporation's
stockholders approve the 1999 Stock Plan for a number of reasons, including
compliance with Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). See "Compliance with Section 162(m) of the Internal Revenue Code"
below.

      The Board of Directors believes that the 1999 Stock Plan will play an
integral role in the ability of the Corporation to attract and retain key
employees and directors and to provide incentives for such persons to promote
the financial success of the Corporation. The following description of the
material features of the 1999 Stock Plan is a summary and is qualified in its
entirety by reference to the full text of the 1999 Stock Plan, which is set
forth in Exhibit B.

Description of Awards

      Awards granted under the 1999 Stock Plan may be "incentive stock options"
("ISOs"), as defined in Section 422 of the Code or "nonqualified stock options"
("NQSOs"). ISOs may be granted only to employees of the Corporation, including
officers. NQSOs may be granted to any person employed by or performing services
for the Corporation, including non-employee directors.

      The Compensation Committee of the Board of Directors or its designee
generally has discretion to set the terms and conditions of grants and awards,
including the term, exercise price, and vesting conditions (including vesting
based on the Corporation's performance); to select the persons who receive such
grants and awards and to interpret and administer the 1999 Stock Plan. The
maximum number of shares of Common Stock with respect to which awards may be
granted under the 1999 Stock Plan is 2,875,000 shares. The maximum number of
shares for which options (ISOs and NQSOs) may be granted to any individual
during any calendar year is 1,000,000 shares, subject to anti-dilution and
similar provisions. The Board of Directors may at any time amend or terminate
the 1999 Stock Plan, subject to applicable laws. The Corporation will pay the
administrative costs of the Plan.

      The option price for each ISO may be not less than 100% of the fair market
value of the Common Stock subject to the option. The option price for a NQSO can
be less than fair market value on the date of grant. ISOs are also subject to
certain limitations prescribed by the Code, including the requirement that such
options may not be granted to employees who own more than 10% of the combined
voting power of all classes of voting stock (a "principal stockholder") of the
Corporation, unless the option price is at least 110% of the fair market value
of the Common Stock subject to the option. In addition, an ISO granted to a
principal stockholder may not be exercisable more than five years from its date
of grant.

      The 1999 Stock Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Full payment of the option price
must be made when an Option is exercised. The purchase price may be paid in cash
or in such other form of consideration as the Committee may approve, which may
include shares of Common Stock valued at their fair market value on the date of
exercise, or by any other means which the Committee determines to be consistent
with the Plan's purpose and applicable law. A Participant will have no rights as
a stockholder with respect to the shares subject to his Option until the Option
is exercised. The shares issued pursuant to the 1999 Stock Plan will be subject
to the rights and restrictions of the Employee Stockholder Agreement (see
"Employee Stockholder Agreement").

Compliance with Section 162(m) of the Internal Revenue Code

      Section 162(m) of the Code denies a deduction by an employer for certain
compensation in excess of $1.0 million per year paid by a publicly traded
corporation to the Chief Executive Officer or any of the four most highly
compensated executive officers other than the Chief Executive Officer (the
"Named Executive Officers"). Compensation realized with respect to stock
options, including upon exercise of an NQSO or upon a disqualifying disposition
of an ISO, as described below under "Certain Federal Income Tax Consequences",
will be excluded from this deduction limit if it satisfies certain requirements,
including a requirement that the 1999 Stock Plan be approved by the
Corporation's stockholders.

Certain Federal Income Tax Consequences

      Under current tax law, a holder of an ISO under the 1999 Stock Plan does
not, as a general matter, realize taxable income upon the grant or exercise of
the ISO. (Depending upon the holder's income tax situation, however, the
exercise of the ISO may have alternative minimum tax implications.) In general,
a holder of an ISO will only recognize income at the time that Common Stock
acquired through exercise of the ISO is sold or otherwise disposed of. In that
situation, the amount of income that the optionee must


                                       19
<PAGE>

recognize is equal to the amount by which the value of the Common Stock on the
date of the sale or other disposition exceeds the option exercise price. If the
optionee disposes of the stock after the required holding period -- that is, no
earlier than a date that is two years after the date of grant of the option and
one year after the date of exercise -- the income is taxed as capital gains. If
disposition occurs prior to expiration of the holding period, the optionee will
recognize ordinary income equal to the difference between the fair market value
of the shares at the exercise date and the option exercise price; any additional
increase in the value of option shares after the exercise date will be taxed as
capital gain. The Corporation is entitled to a tax deduction equal to the amount
of ordinary income recognized by the optionee.

      An optionee will not realize income when an NQSO option is granted to him
or her. Upon exercise of such option, however, the optionee must recognize
ordinary income to the extent that the fair market value of the Common Stock on
the date the option is exercised exceeds the option exercise price. Any such
gain is taxed in the same manner as ordinary income in the year the option is
exercised. Thereafter, any additional gain recognized upon the disposition of
the shares of stock obtained by the exercise of an NQSO will be taxed as short
or long-term capital gain, depending on the optionee's holding period. The
Corporation will not experience any tax consequences upon the grant of an NQSO,
but will be entitled to take an income tax deduction equal to the amount that
the option holder includes in income (if any) when the NQSO is exercised.

New 1999 Stock Plan Benefits

      As of December 31, 1999, options for 2,251,320 shares of Common Stock had
been granted and remained outstanding under the 1999 Stock Plan. The following
table sets forth information on option grants made under the 1999 Stock Plan
during fiscal year 1999 to the specified persons and groups. Additional option
grants may be made, in the discretion of the Compensation Committee.

                            1999 Stock Plan Benefits

       Name and Position                        Dollar Value    Number of Shares
       ----------------                         ------------    ----------------

John M. Panettiere                                684,375(1)        730,000
    Chairman of the Board, President and
    Chief Executive Officer

Gerald W. Bersett,                                112,500(1)        120,000
    President-- Sporting Equipment Group

James S. Osterman                                 112,500(1)        120,000
    President-- Outdoor Products Group

Harold E. Layman                                  300,000(1)        320,000
    Executive Vice President-- Finance
    Operations and Chief Financial Officer

Richard H. Irving III                              93,750(1)        100,000
    Senior Vice President-- General Counsel
    and Secretary

Winton M. Blount                                        0                 0
    Chairman of the Board to 8/19/99

All executive officers as a group (8 persons)   1,476,563(1)      1,575,000

Nonemployee directors as a group (3 persons)            0(1)              0

Non-executive officer employees as a group        634,057(1)        676,320

- ----------

(1)   All options granted as of December 31, 1999 under the 1999 Plan were
      granted with an exercise price of $15.00. As of December 31, 1999, the
      price of the Corporation's Common Stock was $ 15.9375.

Vote Required and Recommendation of the Board

      The affirmative vote of holders of a majority of the shares of the Common
Stock of the Corporation represented and voted at the Annual Meeting, assuming
the presence of a quorum, is required to approve the 1999 Stock Plan.

      The Board of Directors, which unanimously approved the 1999 Stock Plan,
recommends a vote "FOR" approval of the 1999 Stock Plan.


                                       20
<PAGE>

                   ADOPTION OF THE BLOUNT INTERNATIONAL, INC.
                            2000 STOCK INCENTIVE PLAN

                                   PROPOSAL 4

Purpose of the 2000 Stock Incentive Plan

      The Board of Directors voted to adopt the 2000 Stock Incentive Plan (the
"2000 Stock Plan") on February 3, 2000, subject to stockholder approval. The
Board of Directors is proposing that the Corporation's stockholders approve the
2000 Stock Plan for a number of reasons, including compliance with Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). See
"Compliance with Section 162(m) of the Internal Revenue Code" below.

      The principal purpose of the 2000 Stock Plan is to provide for the grant
of stock options to eligible participants in the Corporation's Executive
Management Annual Incentive Plan (see Proposal 2, p.17) as part of the incentive
compensation paid to such participants under such plan. In addition, the Board
of Directors believes that the 2000 Stock Plan will enhance the ability of the
Corporation to attract and retain key employees and directors and to provide
incentives for such persons to promote the financial success of the Corporation.
The following description of the material features of the 2000 Stock Plan is a
summary and is qualified in its entirety by reference to the full text of the
2000 Stock Plan, which is set forth in Exhibit C.

Description of Awards

      Awards granted under the 2000 Stock Plan may be "incentive stock options"
("ISOs"), as defined in Section 422 of the Code or "nonqualified stock options"
("NQSOs"). ISOs may be granted only to employees of the Corporation, including
officers. NQSOs may be granted to any person employed by or performing services
for the Corporation, including non-employee directors.

      The Compensation Committee of the Board of Directors or its designee,
generally has discretion to set the terms and conditions of awards, including
the term, exercise price, and vesting conditions (including vesting based on the
Corporation's performance), if any; to select the persons who receive such
grants and awards; and to interpret and administer the 2000 Stock Plan. The
maximum number of shares of Common Stock with respect to which awards may be
granted under the 2000 Stock Plan is 3,000,000 shares. The maximum number of
shares for which options (ISOs and NQSOs) may be granted to any individual
during any calendar year is 500,000 shares, subject to adjustment for changes in
the capital structure of the Corporation and similar matters. The Board of
Directors may at any time amend or terminate the 2000 Stock Plan, subject to
applicable laws. The Corporation will pay the administrative costs of the 2000
Stock Plan.

      The option price for each ISO may be not less than 100% of the fair market
value of the Common Stock subject to the option. The option price for a NQSO can
be less than fair market value on the date of grant. ISOs are also subject to
certain limitations prescribed by the Code, including the requirement that such
options may not be granted to employees who own more than 10% of the combined
voting power of all classes of voting stock (a "principal stockholder") of the
Corporation, unless the option price is at least 110% of the fair market value
of the Common Stock subject to the option. In addition, an ISO granted to a
principal stockholder may not be exercisable more than five years from its date
of grant.

      The 2000 Stock Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Full payment of the option price
must be made when an Option is exercised. The purchase price may be paid in cash
or in such other form of consideration as the Committee may approve, which may
include shares of Common Stock valued at their fair market value on the date of
exercise, or by any other means which the Committee determines to be consistent
with the Plan's purpose and applicable law. A Participant will have no rights as
a stockholder with respect to the shares subject to his Option until the Option
is exercised.

Compliance with Section 162(m) of the Internal Revenue Code

      Section 162(m) of the Code denies a deduction by an employer for certain
compensation in excess of $1.0 million per year paid by a publicly traded
corporation to the Chief Executive Officer or any of the four most highly
compensated executive officers other than the Chief Executive Officer (the
"Named Executive Officers"). Compensation realized with respect to stock
options, including upon exercise of an NQSO or upon a disqualifying disposition
of an ISO, as described below under "Certain Federal Income Tax Consequences",
will be excluded from this deduction limit if it satisfies certain requirements,
including a requirement that the 2000 Stock Plan be approved by the
Corporation's stockholders.

Certain Federal Income Tax Consequences

      Under current tax law, a holder of an ISO under the 2000 Stock Plan does
not, as a general matter, realize taxable income upon the grant or exercise of
the ISO. (Depending upon the holder's income tax situation, however, the
exercise of the ISO may have alternative minimum tax implications.) In general,
a holder of an ISO will only recognize income at the time that Common Stock


                                       21
<PAGE>

acquired through exercise of the ISO is sold or otherwise disposed of. In that
situation, the amount of income that the optionee must recognize is equal to the
amount by which the value of the Common Stock on the date of the sale or other
disposition exceeds the option exercise price. If the optionee disposes of the
stock after the required holding period -- that is, no earlier than a date that
is two years after the date of grant of the option and one year after the date
of exercise -- the income is taxed as capital gains. If disposition occurs prior
to expiration of the holding period, the optionee will recognize ordinary income
equal to the difference between the fair market value of the shares at the
exercise date and the option exercise price; any additional increase in the
value of option shares after the exercise date will be taxed as capital gain.
The Corporation is entitled to a tax deduction equal to the amount of ordinary
income recognized by the optionee.

      An optionee will not realize income when an NQSO option is granted to him
or her. Upon exercise of such option, however, the optionee must recognize
ordinary income to the extent that the fair market value of the Common Stock on
the date the option is exercised exceeds the option exercise price. Any such
gain is taxed in the same manner as ordinary income in the year the option is
exercised. Thereafter, any additional gain recognized upon the disposition of
the shares of stock obtained by the exercise of an NQSO will be taxed as short
or long-term capital gain, depending on the optionee's holding period. The
Corporation will not experience any tax consequences upon the grant of an NQSO,
but will be entitled to take an income tax deduction equal to the amount that
the option holder includes in income (if any) when the NQSO is exercised.

2000 Stock Plan Benefits

      As of March 17, 2000, no options have been granted under the 2000 Stock
Plan. The number of options that may be granted in the future to eligible
participants is not currently determinable.

Vote Required and Recommendation of the Board

      The affirmative vote of holders of a majority of the shares of the Common
Stock of the Corporation represented and voted at the Annual Meeting, assuming
the presence of a quorum, is required to approve the 2000 Stock Plan.

      The Board of Directors, which unanimously approved the 2000 Stock Plan,
recommends a vote "FOR" approval of the 2000 Stock Plan.

                 RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS

                                   PROPOSAL 5

      Upon recommendation of the Audit Committee, the Board has appointed the
firm of PricewaterhouseCoopers LLP as its independent auditors for the calendar
year ending December 31, 2000. Although stockholder ratification is not
required, the Board has determined that it would be desirable to request an
expression from the stockholders as to whether or not they concur in the
foregoing appointment.

      PricewaterhouseCoopers LLP has served as auditors of the consolidated
financial statements of the Corporation and its subsidiaries from year to year
since 1972. The Corporation has been advised by PricewaterhouseCoopers LLP that
they do not have any direct financial interest or any material indirect
financial interest in the Corporation or any of its subsidiaries, and that
during the above time, PricewaterhouseCoopers LLP has not had any connection
with the Corporation or its subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.

      Representatives of PricewaterhouseCoopers LLP and of the Audit Committee
of the Board will be present at the Meeting and will have the opportunity to
make a statement if they desire to do so. Those representatives will also be
available to respond to appropriate questions.

      The Audit Committee of the Board approved all non-audit services rendered
by PricewaterhouseCoopers LLP during 1999 and concluded that such services did
not affect the independence of the auditors. The audit services provided by
PricewaterhouseCoopers LLP included the audit of the consolidated financial
statements of the Corporation for 1999, the audit of certain subsidiary
financial statements for 1999, reviews of various filings with the Securities
and Exchange Commission, including those made in connection with the Merger and
Recapitalization, and the performance of such other appropriate auditing
services as were required by management or the Board. The non-audit services
include, among other things, tax services and special services regarding
accounting issues.

      PricewaterhouseCoopers LLP has advised that all professional services were
provided at customary rates and terms.

      The Board recommends a vote FOR ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors for the Corporation for the
calendar year ending December 31, 2000. If the stockholders should not ratify
the appointment of PricewaterhouseCoopers LLP by a majority vote, the Board will
reconsider the appointment.


                                       22
<PAGE>

                 STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING

      Stockholders may present proposals which may be proper subjects for
inclusion in the Proxy Statement and for consideration at the Annual Meeting of
Stockholders. In order to be considered, proposals must be submitted on a timely
basis. Proposals for the 2001 Annual Meeting of Stockholders must be received by
the Corporation no later than November 1, 2000. Any such proposals, as well as
any questions related thereto, should be directed to the Secretary of the
Corporation.

                               GENERAL INFORMATION

      The expenses of soliciting proxies will be paid by the Corporation. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or facsimile, by directors, officers and regular employees of the
Corporation and its subsidiaries, who, except for normal overtime pay in certain
instances, will not receive additional compensation therefor. Arrangements will
also be made with brokerage firms and other custodians, nominees and fiduciaries
for the forwarding of proxy soliciting materials to beneficial owners of the
Corporation's common stock, and the Corporation will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.

                                           By Order of the Board of Directors,


                                           /s/ Richard H. Irving, III

                                           Richard H. Irving, III
                                           Senior Vice President-General Counsel
                                           and Secretary of the Corporation

Montgomery, Alabama
March 17, 2000


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                                                                       EXHIBIT A

                           BLOUNT INTERNATIONAL, INC.

                   EXECUTIVE MANAGEMENT ANNUAL INCENTIVE PLAN

                         Effective as of January 1, 2000

1.    ESTABLISHMENT AND EFFECTIVE DATE OF PLAN

            Blount International, Inc. (the "Corporation") hereby adopts the
      Blount International, Inc. Executive Management Annual Incentive Plan (the
      "Plan") for its executive officers and certain other executives of the
      Corporation, its Operating Units and affiliates who are in management
      positions designated as eligible for participation by the Compensation
      Committee (the "Committee") of the Board of Directors of the Corporation
      or its designee. The Plan shall be effective as of January 1, 2000 and
      shall remain in effect, subject to the rights of amendment and termination
      in Section 13, until the Incentive Awards are paid for the Corporation's
      fiscal year ending in 2005. Payments under the Plan shall only be made to
      the Chief Executive Officer after the Plan is approved by the stockholders
      of the Corporation.

2.    PURPOSE OF THE PLAN

            The purpose of the Plan is to further the growth and financial
      success of the Corporation by offering performance incentives to
      designated executives who have significant responsibility for such
      success.

3.    DEFINITIONS

      (a)   "Base Annual Salary" means the actual base salary paid to a
            Participant during the applicable Plan Year, increased by the amount
            of any pre-tax deferrals or other pre-tax payments made by the
            Participant to the Corporation's deferred compensation or welfare
            plans (whether qualified or non-qualified).

      (b)   "Board of Directors" means the Board of Directors of the
            Corporation.

      (c)   "Change in Control" shall have the meaning ascribed to such term in
            the Blount International, Inc. 1999 Stock Incentive Plan, effective
            as of August 19, 1999, and as it may be amended.

      (d)   "Chief Executive Officer" means the chief executive officer of the
            Corporation, unless otherwise specified.

      (e)   "Code" means the Internal Revenue Code of 1986, as amended.

      (f)   "Committee" means the Compensation Committee of the Board of
            Directors or any other committee designated by the Board of
            Directors which is responsible for administering the Plan.

      (g)   "Corporation" means Blount International, Inc., a Delaware
            corporation, and its successors.

      (h)   "Incentive Award" or "Award" means the bonus awarded to a
            Participant under the terms of the Plan.

      (i)   "Maximum Award" means the maximum percentage of Base Annual Salary
            which may be paid based upon the Relative Performance during the
            Plan Year.

      (j)   "Operating Unit" means a separate business operating unit of the
            Corporation with respect to which separate performance goals may be
            established hereunder.

      (k)   "Participant" means an employee of the Corporation, an Operating
            Unit or an affiliate who is designated by the Committee or its
            designee to participate in the Plan.

      (l)   "Plan Rules" means the guidelines established annually by the
            Committee pursuant to Section 4, subject, where applicable, to
            ratification by the Board of Directors.

      (m)   "Plan Year" means the twelve month period which is the same as the
            Corporation's fiscal year. The initial Plan Year shall be January 1,
            2000 through December 31, 2000.

      (n)   "Relative Performance" means the extent to which the Corporation,
            and/or designated Operating Unit, as applicable, achieves the
            performance measurement criteria set forth in the Plan Rules.

      (o)   "Target Award" means the percentage (which may vary among
            Participants and from Plan Year to Plan Year) of Base Annual Salary
            which will be paid to a Participant as an Incentive Award if the
            performance measurement criteria applicable to the


                                      A-1
<PAGE>

            Participant for the Plan Year is achieved, as reflected in the Plan
            Rules for such Plan Year.

      (p)   "Threshold Award" means the percentage of Base Annual Salary which
            corresponds to the minimum acceptable Relative Performance during
            the Plan Year.

4.    ADMINISTRATION OF THE PLAN

            The Plan will be administered by the Committee, subject to its right
      to delegate responsibility for administration of the Plan as it applies to
      Participants other than the Chief Executive Officer pursuant to Section 7.
      The Committee will have authority to establish Plan Rules with respect to
      the following matters for the Plan Year, subject to the right of the Board
      of Directors to ratify such Plan Rules as provided in this Section 4:

      (a)   the employees who are Participants in the Plan;

      (b)   the Target Award, Maximum Award (if any) and Threshold Award that
            can be granted to each Participant and the method for determining
            such award, which the Committee may amend from time to time;

      (c)   the performance targets and the measurement criteria to be used in
            determining the Corporation's or an Operating Unit's Relative
            Performance, which will include one or more of the following, as
            determined by the Committee or its designee each year: earnings
            before interest and taxes (EBIT), earnings before interest, taxes,
            depreciation and amortization (EBITDA), return on capital employed,
            operating income, SGA as a percentage of sales, inventory turnover
            ratio, cost reductions, leverage ratios, gross margin, product
            introduction, sales, net income, earnings per share, return on
            equity, return on assets (or net assets), after-tax or pre-tax
            profit, market value of the Corporation's stock, total shareholder
            return, return on investment, economic profit, capitalized economic
            profit, cash flow and cash flow return; and

      (d)   the time or times, the form of payment, and the conditions subject
            to which any Incentive Award may become payable.

            The Plan Rules will be adopted by the Committee prior to, or as soon
      as practical after, the commencement of each Plan Year. Subject to the
      provisions of the Plan and the Committee's right to delegate its
      responsibilities, the Committee will also have the discretionary authority
      to interpret the Plan, to prescribe, amend and rescind rules and
      regulations relating to it, and to make all other determinations deemed
      necessary or advisable in administering the Plan. The determinations of
      the Committee on the matters referred to in paragraphs (a) through (d) of
      this Section 4 with respect to the Chief Executive Officer (and such other
      Participants as the Committee may determine) shall be submitted at least
      annually to the Board of Directors for its consideration and ratification.
      For Participants other than the Chief Executive Officer, the Committee may
      in its discretion establish performance measures and criteria not listed
      in this Section 4 without obtaining stockholder approval.

5.    PARTICIPATION

            Eligibility for participation in the Plan is limited to executive
      officers of the Corporation and certain other executives of the
      Corporation and its Operating Units or affiliates who hold key management
      and staff positions. From among those eligible and based upon the
      recommendations of the Chief Executive Officer and other designees, the
      Committee will designate by name or position the Participants each Plan
      Year. Any employee who is a Participant in one Plan Year may be excluded
      from participation in any other Plan Year. If, during the Plan Year, a
      Participant other than the Chief Executive Officer changes employment
      positions to a new position which corresponds to a different award level,
      the Committee may, in its discretion, adjust the Participant's award level
      for such Plan Year. The Committee may, in its discretion, designate
      employees who are hired after the beginning of the Plan Year as
      Participants for such Plan Year and as eligible to receive full or partial
      Incentive Awards for such year.

6.    INCENTIVE AWARDS

      6.1 Determination of the Amount of Incentive Awards

            At the end of each Plan Year, the Committee or its designee shall
      certify the extent to which the performance targets and measurement
      criteria established pursuant to Section 4 have been achieved for such
      Plan Year based upon financial information provided by the Corporation. A
      Participant's Incentive Award shall be computed by the Committee based
      upon the achievement of the established performance targets, measurement
      criteria and the requirements of the Plan. In addition to any adjustments
      provided by the Incentive Award, the Committee may in determining whether
      performance targets have been met adjust the Corporation's financial
      results to exclude the effect of unusual charges or income items or other
      events, including acquisitions or dispositions of businesses or assets,
      recapitalizations, reorganizations, restructurings, reductions in force,
      currency fluctuations or changes in accounting, which are distortive of
      results for the year (either on a segment or consolidated basis);
      provided, that for purposes of determining the Incentive Awards of the
      Chief Executive Officer, the Committee shall exclude unusual items whose
      exclusion has the effect of increasing Relative Performance if such items
      constitute "extraordinary items" under generally accepted accounting
      principles or are unusual events or items. In addition, the Committee will
      adjust its calculations to exclude the unanticipated effect on financial
      results of changes in the Code or other tax laws, or the regulations
      relating thereto.


                                      A-2
<PAGE>

            The Committee may, in its discretion, decrease the amount of a
      Participant's Incentive Award if the Corporation fails to comply with its
      debt covenants.

            In the event that the Corporation's or an Operating Unit's
      performance is below the anticipated performance thresholds for the Plan
      Year and the Incentive Awards are below expectations or not earned at all,
      the Committee may in its discretion grant Incentive Awards (or increase
      the otherwise earned Incentive Awards) to deserving Participants, except
      for Incentive Awards to the Chief Executive Officer.

            The Plan Rules and Incentive Awards under the Plan shall be
      administered in a manner to qualify payments under the Plan to the Chief
      Executive Officer (and such other Participants as the Committee may
      determine) for the performance-based exception under Code Section 162(m)
      and the regulations thereunder, except where the Board of Directors
      determines such compliance is not necessary. The maximum Incentive Award
      that may be paid to an individual Participant for a Plan Year shall be $
      2.5 million.

      6.2 Eligibility for Payment of Incentive Award

            No Participant will have any vested right to receive any Incentive
      Award until such date as the Board of Directors has ratified the
      Committee's determination with respect to the payment of individual
      Incentive Awards, except where the Committee determines such ratification
      is not necessary. No Incentive Award will be paid to any Participant who
      is not an active employee of the Corporation, an Operating Unit or an
      affiliate at the end of the Plan Year to which the Incentive Award
      relates; provided, however, at the discretion of the Committee or its
      designee (subject to ratification by the Board of Directors, where
      required, and the limitations of Code Section 162(m)), partial Incentive
      Awards may be paid to Participants (or their beneficiaries) who are
      terminated without cause (as determined by the Committee or its designee)
      or who retire, die or become permanently and totally disabled during the
      Plan Year. No Participant entitled to receive an Incentive Award shall
      have any interest in any specific asset of the Corporation, and such
      Participant's rights shall be equivalent to that of a general unsecured
      creditor of the Corporation.

      6.3 Payment of Awards

            Payment of the Incentive Awards will be made as soon as practicable
      after their determination pursuant to Sections 6.1 and 6.2, subject to the
      Committee's right to allow a Participant to defer payment pursuant to an
      applicable deferred compensation plan of the Corporation. Payment will
      generally be made in a lump sum in cash, in options to purchase Common
      Stock of the Corporation, or in a combination of cash and stock options,
      as determined by the Committee either at the time Awards are established
      or when they are paid (which may be different for different groups of
      Participants). In addition, the Committee may provide some or all of the
      Participants the right to elect, within the time frames provided by the
      Committee, to receive a portion or all of an Incentive Award in options to
      purchase Common Stock, rather than cash

7.    DELEGATION OF AUTHORITY BY THE COMMITTEE

            Notwithstanding the responsibilities of the Committee set forth
      herein, the Committee may delegate to the Chief Executive Officer or
      others all or any portion of its responsibility for administration of the
      Plan as it relates to Participants other than the Chief Executive Officer.
      Such delegation may include, without limitation, the authority to
      designate employees who can participate in the Plan, to establish Plan
      Rules, to interpret the Plan, to determine the extent to which performance
      criteria have been achieved, and to adjust any Incentive Awards that are
      payable. In the case of each such delegation, the administrative actions
      of the delegate shall be subject to the approval of the person within the
      Corporation to whom the delegate reports (or, in the case of a delegation
      to the Chief Executive Officer, to the approval of the Committee).

8.    CHANGE IN CONTROL

            Upon the occurrence of a Change in Control, unless the Participant
      otherwise elects in writing, the Participant's Incentive Award for the
      Plan Year shall be determined as if the Target Award level of performance
      has been achieved (without any reductions under Section 6.1) and shall be
      deemed to have been fully earned for the Plan Year, provided that` the
      Participant shall only be entitled to a pro rata portion of the Incentive
      Award based upon the number of days within the Plan Year that had elapsed
      as of the effective date of the Change in Control. The Incentive Award
      amount shall be paid only in cash within thirty (30) days of the effective
      date of the Change in Control. The Incentive Award payable upon a Change
      in Control to a Participant for the Plan Year during which a Change in
      Control occurs shall be the greater of the amount provided for under this
      Section 8 or the amount of the Incentive Award payable to such Participant
      for the Plan Year under the terms of any employment agreement or severance
      agreement with the Corporation, its Operating Units or affiliates.
      Notwithstanding the above, the Committee may provide in the Plan Rules for
      alternative consequences upon a Change in Control, which may apply to some
      or all Participants and which may vary among Participants.


                                      A-3
<PAGE>

9.    BENEFICIARY

            To the extent provided by the Committee or its designee each
      Participant will designate a person or persons to receive, in the event of
      death, any Incentive Award to which the Participant would then be entitled
      under Section 6.2. Such designation will be made in the manner determined
      by the Committee and may be revoked by the Participant in writing. If the
      Committee does not provide for a designation of beneficiary or if a
      Participant fails effectively to designate a beneficiary, then the estate
      of the Participant will be deemed to be the beneficiary.

10.   WITHHOLDING OF TAXES

            The Corporation shall deduct from each Incentive Award the amount of
      any taxes required to be withheld by any governmental authority.

11.   EMPLOYMENT

            Nothing in the Plan or in any Incentive Award shall confer (or be
      deemed to confer) upon any Participant the right to continue in the employ
      of the Corporation, an Operating Unit or an affiliate, or interfere with
      or restrict in any way the rights of the Corporation, an Operating Unit or
      an affiliate to discharge any Participant at any time for any reason
      whatsoever, with or without cause.

12.   SUCCESSORS

            All obligations of the Corporation under the Plan with respect to
      Incentive Awards granted hereunder shall be binding upon any successor to
      the Corporation, whether such successor is the result of an acquisition of
      stock or assets of the Corporation, a merger, a consolidation or
      otherwise.

13.   TERMINATION AND AMENDMENT OF THE PLAN; GOVERNING LAW

            The Committee, subject to the ratification rights of the Board of
      Directors, has the right to suspend or terminate the Plan at any time, or
      to amend the Plan in any respect, provided that no such action will,
      without the consent of a Participant, adversely affect the Participant's
      rights under an Incentive Award approved under Section 6.2. The Plan shall
      be interpreted and construed under the laws of the State of Delaware.

            AS APPROVED BY THE BOARD OF DIRECTORS OF THE CORPORATION ON THE 3RD
      DAY OF FEBRUARY, 2000.


                                      A-4
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                                                                       EXHIBIT B

                           BLOUNT INTERNATIONAL, INC.

                            1999 STOCK INCENTIVE PLAN

ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

      1.1 Establishment of the Plan. Blount International, Inc., a Delaware
Corporation (hereinafter referred to as the "Company"), hereby establishes a
stock option plan known as the "Blount International, Inc. 1999 Stock Incentive
Plan" (the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Stock Options and Nonqualified Stock Options (each as defined herein).

      The Plan shall become effective on the date it is approved by the Board of
Directors (the "Effective Date"), subject to approval of the Plan by the
Company's shareholders within the 12-month period immediately thereafter, and
shall remain in effect as provided in Section 1.3.

      1.2 Purpose of the Plan. The purpose of the Plan is to secure for the
Company and its shareholders the benefits of the incentive inherent in stock
ownership in the Company by employees, directors, and other persons who perform
services for the Company, who are responsible for its future growth and
continued success. The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract and retain the services of
Participants, as defined herein, upon whose judgment, interest and special
effort the successful conduct of its operation largely depends.

      1.3 Duration of the Plan. The Plan shall commence on the Effective Date,
and shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 9, until the day
prior to the tenth (10th) anniversary of the Effective Date.

ARTICLE 2. DEFINITIONS

      Whenever used in the Plan, the following terms shall have the meanings set
forth below:

      (a)   "Agreement" means an agreement entered into by each Participant and
            the Company, setting forth the terms and provisions applicable to
            Options granted to Participants under this Plan.

      (b)   "Bank Credit Agreement" means the Credit Agreement dated as of
            August 19, 1999, among the Company, Blount, Inc., as borrower, the
            several lenders from time to time party thereto, Lehman Brothers
            Inc., as advisor, lead arranger and book manager, Lehman Commercial
            Paper Inc., as syndication agent and Bank of America, N.A., as
            administrative agent.

      (c)   "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
            ascribed to such term in Rule 13d-3 of the Exchange Act.

      (d)   "Board" or "Board of Directors" means the Board of Directors of the
            Company.

      (e)   "Cause" means "Cause" as defined in the Participant's Employment
            Agreement or, if such agreement does not define such term or the
            Participant does not have an Employment Agreement, "Cause" means the
            involuntary termination of a Participant by the Company for any of
            the following reasons: (i) as a result of an act or acts by the
            Participant which have been found in an applicable court of law to
            constitute a felony (other than traffic-related offenses); (ii) as a
            result of an act or acts by Participant which are, in the good faith
            judgment of the Board, in violation of law or of policies of the
            Company and which result in demonstrably material injury to the
            Company; (iii) as a result of an act or acts of proven dishonesty by
            the Participant resulting or intended to result directly or
            indirectly in significant gain or personal enrichment to the
            Participant at the expense of the Company or public stockholders of
            the Company; or (iv) upon the willful and continued failure by the
            Participant 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), 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 the Participant has not substantially performed his
            duties. With respect to clauses (ii), (iii) or (iv) above, the
            Participant 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 the Participant 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, the Participant was guilty of
            conduct set forth above in clauses (ii), (iii) or (iv) and
            specifying the particulars thereof in detail. For purposes of this
            Agreement, no act or failure to act by the Participant shall be
            deemed to be "willful" unless done or omitted to be done by the
            Participant not in good faith and


                                      B-1
<PAGE>

            without reasonable belief that the Participant's action or omission
            was in the best interests of the Company.

      (f)   "Change in Control" means (i) the acquisition, directly or
            indirectly, by any "person" (as such term is used in Sections 13(d)
            and 14(d) of the Exchange Act), other than any member of the Lehman
            Group, of securities of the Company representing an aggregate of
            more than 50% of the combined voting power of the Company's then
            outstanding securities (excluding the acquisitions by persons who
            acquire such amount through inheritance); (ii) 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; (iii) consummation of (A) 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 Exchange Act)
            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 50% of the outstanding common stock of the Company or such
            surviving entity or partners or affiliate thereof, outstanding
            immediately after such merger, consolidation or business
            combination, or (B) a plan of complete liquidation of the Company or
            an agreement for the sale or disposition by the Company of all or
            substantially all of Company's assets; (iv) an Initial Public
            Offering; or (v) a sale of more than 50% of the assets of the
            Company; provided that none of the events described in clauses (ii)
            through (v) shall be deemed a Change in Control if, immediately
            following such event, the Lehman Group owns 50% or more of the
            combined voting power of the Company's then outstanding securities.

      (g)   "Code" means the Internal Revenue Code of 1986, as amended from time
            to time, or any successor act thereto.

      (h)   "Committee" means the committee appointed to administer the Plan
            with respect to grants of Options, as specified in Article 3, and to
            perform the functions set forth therein.

      (i)   "Common Stock" means the common stock of the Company, par value $.01
            per share.

      (j)   "Company" means Blount International, Inc., a Delaware corporation,
            or any successor thereto as provided in Article 12.

      (k)   "Director" means any individual who is a member of the Board of
            Directors of the Company.

      (l)   "Disability" means the inability as a result of physical or mental
            incapacity of a Participant to substantially perform his duties for
            the Company on a full-time basis for a period of six consecutive
            months.

      (m)   "EBITDA" shall have the meaning ascribed to the term "Consolidated
            EBITDA" in the Bank Credit Agreement as in effect on the Effective
            Date.

      (n)   "EBITDA Target" means the target levels of EBITDA set forth on
            Schedule A and Schedule B attached hereto.

      (o)   "Effective Date" shall have the meaning ascribed to such term in
            Section 1.1.

      (p)   "Effective Time" means the "Effective Time" as defined in the
            Recapitalization Agreement.

      (q)   "Employee" means any employee of the Company or the Company's
            Subsidiaries. Directors who are not otherwise employed by the
            Company or the Company's Subsidiaries are not considered Employees
            under this Plan.

      (r)   "Employee Stockholder Agreement" means the agreement, dated as of
            August 19, 1999, among the Company, Lehman Brothers Merchant Banking
            Partners and the Employees named therein, as it may be amended from
            time to time.

      (s)   "Employment Agreement" means with respect to a Participant who is an
            Employee, the written agreement between the Company or a Subsidiary
            and the Employee providing for the terms of such Employee's
            employment with the Company or a Subsidiary, as it may be amended
            from time to time.

      (t)   "Exchange Act" means the Securities Exchange Act of 1934, as amended
            from time to time, or any successor act thereto.

      (u)   "Fair Market Value" shall be determined by the Committee as follows:

            (i)   If the relevant date is concurrent with or within 30 days of
                  an Initial Public Offering, on the basis of the offering price
                  to the public per share of common stock of such Initial Public
                  Offering;


                                      B-2
<PAGE>

            (ii)  If the relevant date is concurrent with or within 30 days of a
                  Change in Control, the value of the Company's total equity, as
                  determined based upon the price per share paid in connection
                  with such Change in Control, divided by the total number of
                  shares of Common Stock then outstanding;

            (iii) If (i) and (ii) above do not apply and a regular trading
                  market for the Company's common stock exists following an
                  Initial Public Offering, on the basis of the average closing
                  sale price for the Shares for 10 consecutive trading days
                  ending on the trading day immediately prior to the relevant
                  date; and

            (iv)  If (i), (ii), and (iii) above do not apply, on the basis of
                  the good faith determination of the Committee.

      (v)   "Good Reason" means "Good Reason" as defined in the Participant's
            Employment Agreement or if such agreement does not define such term
            or the Participant does not have an Employment Agreement, such term
            shall not be applicable to the Participant for purposes of the Plan
            or any Option granted hereunder.

      (w)   "Incentive Stock Option" or "ISO" means an option to purchase Shares
            granted under Article 6 which is designated as an Incentive Stock
            Option and is intended to meet the requirements of Section 422 of
            the Code.

      (x)   "Initial Public Offering" means the sale after the Effective Time
            pursuant to one or more effective registration statements under the
            Securities Act (other than in connection with employee benefit or
            similar plans or acquisitions of companies or businesses by, or
            business combinations involving the Company or any of its
            Subsidiaries) of Shares which results in an active trading market of
            25% or more of the outstanding Shares. There shall be deemed to be
            an "active trading market" if the Common Stock is listed or quoted
            on a national exchange or The Nasdaq Stock Market on the applicable
            determination date.

      (y)   "Insider" shall mean an Employee who is, on the relevant date, an
            officer or a director, or a ten percent (10%) beneficial owner of
            any class of the Company's equity securities that is registered
            pursuant to Section 12 of the Exchange Act or any successor
            provision, as "officer" and "director" are defined under Section 16
            of the Exchange Act.

      (z)   "Lehman Brothers Merchant Banking Partners" means Lehman Brothers
            Merchant Banking Partners II, L.P., a Delaware limited partnership.

      (aa)  "Lehman Group" means Lehman Brothers Merchant Banking Partners and
            (i) any Affiliate (as defined in the Employee Stockholder Agreement)
            of Lehman Brothers Merchant Banking Partners, (ii) any Associates
            (as defined in the Employee Stockholder Agreement) of Lehman
            Brothers Merchant Banking Partners, (iii) the heirs, executors,
            administrators, testamentary trustees, legatees or beneficiaries of
            any member of the Lehman Group, and (iv) a trust, the beneficiaries
            of which, or a corporation or partnership, the stockholders or
            general or limited partners of which, include only Lehman Brothers
            Merchant Banking Partners, Affiliates and Associates of Lehman
            Brothers Merchant Banking Partners, their spouses, their lineal
            descendants and any other members of their families, if, in the
            cases of clauses (ii) through (iv) above, such Person agrees in
            writing to be bound by the terms of the Employee Stockholder
            Agreement as a member of the Lehman Group.

      (bb)  "Named Executive Officer" means a Participant who, at the relevant
            time, is one of the group of "covered employees," as defined in the
            regulations promulgated under Section 162(m) of the Code, or any
            successor statute. (cc) "Nonqualified Stock Option" or "NQSO" means
            an option to purchase Shares granted under Article 6, and which is
            not intended to meet the requirements of Section 422 of the Code.

      (cc)  "Nonqualified Stock Option" or "NQSO" means an option to purchase
            shares granted under Article 6, and which is not intended to meet
            the requirements of Section 422 of the Code.

      (dd)  "Option" means an Incentive Stock Option or a Nonqualified Stock
            Option.

      (ee)  "Option Price" means the price at which a Share may be purchased by
            a Participant pursuant to an Option, as determined by the Committee.

      (ff)  "Participant" means an Employee, a Director, or other person who
            performs services for the Company or a Subsidiary who has been
            granted an Option under the Plan which is outstanding.

      (gg)  "Performance Option" means an Option granted pursuant to the Plan
            under which the exercisability depends upon the Company's attainment
            of certain EBITDA Targets or other performance goals established by
            the Committee.

      (hh)  "Permitted Transferees" means (i) a Participant's heirs, executors,
            administrators, testamentary trustees, legatees, beneficiaries or
            charitable remainderman, (ii) a trust the beneficiaries of which
            include only a Participant, the spouse, the lineal descendants or
            any other member of the family of such Participant approved by the
            Board, or (iii) any


                                      B-3
<PAGE>

            person if Lehman Brothers Merchant Banking Partners has given its
            prior written consent to the applicable transfer.

      (ii)  "Person" shall have the meaning ascribed to such term in Section
            3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
            thereof, including a "group" as defined in Section 13(d) thereof.

      (jj)  "Recapitalization Agreement" means the Agreement and Plan of Merger
            and Recapitalization, dated April 18, 1999, between the Company and
            Red Dog Acquisition, Corp..

      (kk)  "Retirement" means "Retirement" as defined in the Participant's
            Employment Agreement or if such agreement does not define such term
            or the Participant does not have an Employment Agreement,
            "Retirement" means normal retirement under the terms of any
            tax-qualified retirement plan of the Company or if no such plan is
            in existence or does not define "Retirement", "Retirement" means
            termination of employment (other than an involuntary termination for
            Cause) at any time on or after attainment of age 65, in each case,
            which retirement occurs no earlier than three years after the
            Effective Time. Except as provided in the applicable Employment
            Agreement, any purported retirement prior to the third anniversary
            of the Effective Time shall be treated the same as a voluntary
            termination.

      (ll)  "Sale of Division" means the sale by the Company of substantially
            all of the stock or assets of one or more of the Company's three
            business segments: the outdoor products segment, the industrial and
            power equipment segment, or the sporting equipment segment.

      (mm)  "Securities Act" means the Securities Act of 1933, as amended, and
            regulations promulgated thereunder.

      (nn)  "Shares" means the shares of Common Stock of the Company (including
            any new, additional or different stock or securities resulting from
            the changes described in Section 4.3).

      (oo)  "Significant Corporate Event" means any significant transaction or
            series of related transactions that do not constitute a Change in
            Control (including, without limitation, an asset sale or a sale of
            subsidiary stock) that results in the Company receiving gross
            proceeds which are, within a reasonable time following such event,
            proposed to be distributed to the holders of Shares.

      (pp)  "Subsidiary" means any corporation, partnership, joint venture or
            other entity in which the Company has a fifty percent (50%) or
            greater voting interest.

      (qq)  "Time Option" means an Option granted pursuant to the Plan under
            which the exercisability depends upon the Participant's continuing
            in employment with the Company or a Subsidiary.

ARTICLE 3. ADMINISTRATION

      3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board, or by any other committee or subcommittee appointed by
the Board that is granted authority to administer the Plan. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of the Board of Directors. In the absence of appointment of a
Committee, the Board of Directors shall administer the Plan.

      3.2 Authority of the Committee. Subject to the provisions of the Plan, the
Committee shall have full power to select the Employees, Directors, and other
persons who perform services for the Company or a Subsidiary, who shall
participate in the Plan (who may change from year to year); determine the size
and types of Options; determine the terms and conditions of Options in a manner
consistent with the Plan (including conditions on the exercisability of all or a
part of an Option, restrictions on transferability and the duration of the
Options); construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend or waive rules and regulations for
the Plan's administration; and (subject to the provisions of Article 9) amend
the terms and conditions of any outstanding Option to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan,
including accelerating the time any Option may be exercised and establishing
different terms and conditions relating to the effect of the termination of
employment or other services to the Company. Further, the Committee shall make
all other determinations which may be necessary or advisable in the Committee's
opinion for the administration of the Plan. All expenses of administering this
Plan shall be borne by the Company.

      3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, the shareholders, Employees, Directors, Participants and
their estates and beneficiaries.


                                      B-4
<PAGE>

ARTICLE 4. SHARES SUBJECT TO THE PLAN

      4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant of Options under the Plan shall
be 2,875,000 Shares. The Shares may, in the discretion of the Company, be either
authorized but unissued Shares or Shares held as treasury shares, including
Shares purchased by the Company, whether on the market or otherwise.

      The following rules shall apply for purposes of the determination of the
number of Shares available for grant under the Plan:

            (a)   The grant of an Option shall reduce the Shares available for
                  grant under the Plan by the number of Shares subject to such
                  Option.

            (b)   While an Option is outstanding, it shall be counted against
                  the authorized pool of Shares, regardless of its vested
                  status.

      4.2 Lapsed Options. If any Option granted under this Plan is canceled,
terminates, expires or lapses for any reason, or if Shares are withheld in
payment of withholding taxes, any Shares subject to such Option or that are
withheld shall again be available for the grant of an Option under the Plan.
However, in the event that prior to the Option's cancellation, termination,
expiration or lapse, the holder of the Option at any time received one or more
"benefits of ownership" pursuant to such Option (as defined by the Securities
and Exchange Commission, pursuant to any rule or interpretation promulgated
under Section 16 of the Exchange Act), the Shares subject to such Option shall
not again be made available for regrant under the Plan.

      4.3 Adjustments In Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Options granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Option shall always be a whole number and the Committee shall
make such adjustments as are necessary to insure Options of whole Shares.

      4.4 Employee Stockholder Agreement. All Shares issued pursuant to the Plan
shall be subject to the restrictions on transfer, tag-along and drag-along
rights, call and put rights, registration rights and other rights and
obligations of the Employee Stockholder Agreement.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

      Any Employee of the Company or any Subsidiary, including any such Employee
who is also a director of the Company or any Subsidiary, any non-employee
Director, and any other person who performs services for the Company or a
Subsidiary, whose judgment, initiative and efforts contribute or may be expected
to contribute to the successful performance of the Company or any Subsidiary
shall be eligible to receive an Option under the Plan. In determining the
individuals to whom such an Option shall be granted and the number of Shares
which may be granted pursuant to that Option, the Committee shall take into
account the duties of the respective individual, his or her present and
potential contributions to the success of the Company or any Subsidiary, and
such other factors as the Committee shall deem relevant in connection with
accomplishing the purpose of the Plan.

ARTICLE 6. STOCK OPTIONS

      6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to eligible individuals at any time and from time to time
as shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
No Participant may be granted ISOs (under the Plan and all other incentive stock
option plans of the Company and any Subsidiary) which are first exercisable in
any calendar year for Common Stock having an aggregate Fair Market Value
(determined as of the date an Option is granted) that exceeds $100,000. The
preceding annual limit shall not apply to NQSOs. The Committee may grant a
Participant ISOs, NQSOs or a combination thereof, and may vary such Options
among Participants; provided that only an Employee may be granted ISOs. The
maximum number of Shares subject to Options which can be granted under the Plan
during any calendar year to any individual is one million (1,000,000) Shares.

      6.2 Agreement. Each Option grant shall be evidenced by an Agreement that
shall specify the Option Price, the duration of the Option, the number of Shares
to which the Option pertains and such other provisions as the Committee shall
determine. The Option Agreement shall further specify whether the Option is
intended to be an ISO or an NQSO. Any portion of an Option that is not
designated as an ISO or otherwise fails or is not qualified as an ISO (even if
designated as an ISO) shall be a NQSO.

      6.3 Option Price. The Option Price for each grant of an ISO shall not be
less than one hundred percent (100%) of the


                                      B-5
<PAGE>

Fair Market Value of a Share on the date the Option is granted. In no event,
however, shall any Participant who owns (within the meaning of Section 424(d) of
the Code) stock of the Company possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company be eligible
to receive an ISO at an Option Price less than one hundred ten percent (110%) of
the Fair Market Value of a share on the date the ISO is granted. The Option
Price for each grant of a NQSO shall be established by the Committee and, in its
discretion, may be less than the Fair Market Value of a Share on the date the
Option is granted.

      6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, shall not be exercisable later
than the fifth (5th) anniversary date of its grant.

      6.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, including conditions related to
the employment of the Participant with the Company or any Subsidiary, which need
not be the same for each grant or for each Participant. Each Option shall be
exercisable for such number of Shares and at such time or times, including
periodic vesting based on years of employment, performance of the Company or
such other criteria, as may be determined by the Committee at the time of the
grant. Unless the Committee expressly provides otherwise in the Agreement, the
vesting and exercisability of Performance Options shall be based upon the
Company's attainment of the EBITDA Targets set forth on Schedule A and Schedule
B attached hereto. The Committee may provide in the Agreement for automatic
accelerated vesting and other rights upon the occurrence of a Change in Control,
Sale of Division, Significant Corporate Event, or upon any other event or
occurrence the Committee deems appropriate. Except as otherwise provided in the
Agreement, the right to purchase Shares that are exercisable in periodic
installments shall be cumulative so that when the right to purchase any Shares
has accrued, such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option.

      6.6 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any Option shall be payable to the
Company in full, either: (a) in cash, (b) cash equivalent approved by the
Committee, (c) if approved by the Committee, by tendering previously acquired
Shares (or delivering a certification of ownership of such Shares) having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price (provided that the Shares which are tendered must have been held by the
Participant for six months if required by the Committee and for the period
required by law, if any, prior to their tender to satisfy the Option Price), or
(d) by a combination of (a), (b) and (c). The Committee also may allow cashless
exercises as permitted under Federal Reserve Board's Regulation T, subject to
applicable securities law restrictions, or by any other means which the
Committee determines to be consistent with the Plan's purpose and applicable
law.

      As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s), and may place appropriate
legends on the certificates representing such Shares.

      6.7 Limited Transferability. If permitted by the Committee in the
Agreement, a Participant may transfer an Option granted hereunder, including but
not limited to transfers to Permitted Transferees, if (i) such transfer is
permitted by the Employee Stockholder Agreement, (ii) the Participant does not
receive any consideration in any form whatsoever for such transfer, (iii) such
transfer is permitted under applicable tax laws, and (iv) the Participant is an
Insider, such transfer is permitted under Rule 16b-3 of the Exchange Act as in
effect from time to time. Any Option so transferred shall continue to be subject
to the same terms and conditions in the hands of the transferee as were
applicable to said Option immediately prior to the transfer thereof. Any
reference in any such Agreement to the employment by or performance of services
for the Company by the Participant shall continue to refer to the employment of,
or performance by, the transferring Participant. Any Option that is granted
pursuant to any Agreement that did not initially expressly allow the transfer of
said Option and that has not been amended to expressly permit such transfer,
shall not be transferable by the Participant other than by will or by the laws
of descent and distribution and such Option thus shall be exercisable in the
Participant's lifetime only by the Participant.

      6.8 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to Shares subject to his Option until the issuance of
such Shares to the Participant pursuant to the exercise of such Option.

ARTICLE 7. DEFERRALS

      The Committee may permit a Participant to defer to another plan or program
such Participant's receipt of Shares that would otherwise be due to such
Participant by virtue of the exercise of an Option. If any such deferral
election is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.


                                      B-6
<PAGE>

ARTICLE 8. RIGHTS OF EMPLOYEES

      8.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company or a Subsidiary to terminate any Participant's
employment by, or performance of services for, the Company at any time, nor
confer upon any Participant any right to continue in the employ or service of
the Company or a Subsidiary. For purposes of the Plan, transfer of employment of
a Participant between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment.

      8.2 Participation. No Employee shall have the right to be selected to
receive an Option under this Plan, or, having been so selected, to be selected
to receive a future Option.

ARTICLE 9. AMENDMENT, MODIFICATION AND TERMINATION

      9.1 Amendment, Modification and Termination. The Board may, at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, that, unless approved by the holders of a majority of the
total number of Shares of the Company represented and voted at a meeting at
which a quorum is present, no amendment shall be made to the Plan if such
amendment would (a) materially modify the eligibility requirements provided in
Article 5; (b) increase the total number of Shares (except as provided in
Section 4.3) which may be granted under the Plan; (c) extend the term of the
Plan; or (d) amend the Plan in any other manner which the Board, in its
discretion, determines should become effective only if approved by the
shareholders even if such shareholder approval is not expressly required by the
Plan or by law.

      9.2 Options Previously Granted. No termination, amendment or modification
of the Plan shall adversely affect in any material way any Option previously
granted under the Plan, without the written consent of the Participant holding
such Option. The Committee shall, with the written consent of the Participant
holding such Option, have the authority to cancel outstanding Options and grant
replacement Options therefor.

      9.3 Compliance With Section 162(m) of the Code. At all times when the
Committee determines that compliance with Section 162(m) of the Code is required
or desired, all Options granted under this Plan to Named Executive Officers
shall comply with the requirements of Section 162(m) of the Code. In addition,
in the event that changes are made to Section 162(m) of the Code to permit
greater flexibility with respect to any Option or Options under the Plan, the
Committee may, subject to this Article 9, make any adjustments it deem
appropriate.

ARTICLE 10. WITHHOLDING

      10.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising in connection with an Option under this Plan.

      10.2 Share Withholding. With respect to withholding required upon the
exercise of Options, or upon any other taxable event arising as a result of
Options granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All elections shall be irrevocable, made in writing, signed by the Participant,
and elections by Insiders shall additionally comply with all legal requirements
applicable to Share transactions by such Participants.

ARTICLE 11. INDEMNIFICATION

      Each person who is or shall have been a member of the Committee, or the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him in satisfaction of any judgment in
any such action, suit or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall be in addition to any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

ARTICLE 12. LEGAL CONSTRUCTION

      12.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.


                                      B-7
<PAGE>

      12.2 Successors. All obligations of the Company under the Plan, with
respect to Options granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business and/or assets of the Company.

      12.3 Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

      12.4 Requirements of Law. The granting of Options and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

      12.5 Regulatory Approvals and Listing. The Company shall not be required
to issue any certificate or certificates for Shares under the Plan prior to (i)
obtaining any approval from any governmental agency which the Company shall, in
its discretion, determine to be necessary or advisable, (ii) the admission of
such shares to listing on any national securities exchange or Nasdaq on which
the Company's Shares may be listed, and (iii) the completion of any registration
or other qualification of such Shares under any state or federal law or ruling
or regulation of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable. The Company will register
the Shares to be issued pursuant to the Plan on a Form S-8 under the Securities
Act.

      12.6 Securities Law Compliance. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provisions of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

      12.7 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware, without regard to the conflict of law
provisions thereof.

      AS APPROVED BY THE BOARD OF DIRECTORS OF BLOUNT INTERNATIONAL, INC. ON
AUGUST 19, 1999.


                                      B-8
<PAGE>

                                                                       EXHIBIT C

                           BLOUNT INTERNATIONAL, INC.

                            2000 STOCK INCENTIVE PLAN

ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

      1.1 Establishment of the Plan. Blount International, Inc., a Delaware
Corporation (hereinafter referred to as the "Corporation"), hereby establishes a
stock option plan known as the "Blount International, Inc. 2000 Stock Incentive
Plan" (the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Stock Options and Nonqualified Stock Options (each as defined herein).

      The Plan shall become effective on the date it is approved by the Board of
Directors (the "Effective Date"), subject to approval of the Plan by the
Corporation's stockholders within the 12-month period immediately thereafter,
and shall remain in effect as provided in Section 1.3.

      1.2 Purpose of the Plan. The principal purpose of the Plan is to provide
for the grant of stock options to participants in the Corporation's Executive
Management Annual Incentive Plan (the "Annual Incentive Plan") as part of their
incentive compensation under the Annual Incentive Plan. The Plan is further
intended to provide flexibility to the Corporation in its ability to motivate,
attract and retain the services of Participants, as defined herein, upon whose
judgment, interest and special effort the successful conduct of its operations
largely depends.

      1.3 Duration of the Plan. The Plan shall commence on the Effective Date,
and shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 9, until the day
prior to the tenth (10th) anniversary of the Effective Date.

ARTICLE 2. DEFINITIONS

      Whenever used in the Plan, the following terms shall have the meanings set
forth below:

      (a)   "Agreement" means an agreement entered into by each Participant and
            the Corporation, setting forth the terms and provisions applicable
            to Options granted to Participants under this Plan.

      (b)   "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
            ascribed to such term in Rule 13d-3 of the Exchange Act.

      (c)   "Board" or "Board of Directors" means the Board of Directors of the
            Corporation.

      (d)   "Change in Control" means (i) the acquisition, directly or
            indirectly, by any "person" (as such term is used in Sections 13(d)
            and 14(d) of the Exchange Act), other than any member of the Lehman
            Group, of securities of the Corporation representing an aggregate of
            more than 50% of the combined voting power of the Corporation's then
            outstanding securities (excluding the acquisitions by persons who
            acquire such amount through inheritance); (ii) 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; (iii) consummation of (A) a merger, consolidation or
            other business combination of the Corporation with any other
            "person" (as such term is used in Sections 13(d) and 14(d) of
            Exchange Act) or affiliate thereof, other than a merger,
            consolidation or business combination which would result in the
            outstanding common stock of the Corporation 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 50% of the outstanding common
            stock of the Corporation or such surviving entity or partners or
            affiliate thereof, outstanding immediately after such merger,
            consolidation or business combination, or (B) a plan of complete
            liquidation of the Corporation or an agreement for the sale or
            disposition by the Corporation of all or substantially all of
            Corporation's assets; (iv) an Initial Public Offering; or (v) a sale
            of more than 50% of the assets of the Corporation; provided that
            none of the events described in clauses (ii) through (v) shall be
            deemed a Change in Control if, immediately following such event, the
            Lehman Group owns 50% or more of the combined voting power of the
            Corporation's then outstanding securities.


                                      C-1
<PAGE>

      (e)   "Code" means the Internal Revenue Code of 1986, as amended from time
            to time, or any successor act thereto.

      (f)   "Committee" means the committee appointed to administer the Plan
            with respect to grants of Options, as specified in Article 3, and to
            perform the functions set forth therein.

      (g)   "Common Stock" means the common stock of the Corporation, par value
            $.01 per share.

      (h)   "Corporation" means Blount International, Inc., a Delaware
            corporation, or any successor thereto as provided in Article 12.

      (i)   "Director" means any individual who is a member of the Board of
            Directors of the Corporation.

      (j)   "Disability" means the inability as a result of physical or mental
            incapacity of a Participant to substantially perform his duties for
            the Corporation on a full-time basis for a period of six consecutive
            months.

      (k)   "Employee" means any employee of the Corporation or the
            Corporation's Subsidiaries. Directors who are not otherwise employed
            by the Corporation or the Corporation's Subsidiaries are not
            considered Employees under this Plan.

      (l)   "Employee Stockholder Agreement" means the agreement, dated as of
            August 19, 1999, among the Corporation, Lehman Brothers Merchant
            Banking Partners and the Employees named therein, as it may be
            amended from time to time.

      (m)   "Employment Agreement" means with respect to a Participant who is an
            Employee, the written agreement between the Corporation or a
            Subsidiary and the Employee providing for the terms of such
            Employee's employment with the Corporation or a Subsidiary, as it
            may be amended from time to time.

      (n)   "Exchange Act" means the Securities Exchange Act of 1934, as amended
            from time to time, or any successor act thereto.

      (o)   "Fair Market Value" shall be determined by the Committee as follows:

            (i)   if the Shares are admitted to trading on a national securities
                  exchange, Fair Market Value on any date shall be the last sale
                  price reported for the Shares on such exchange on such date
                  or, if no sale was reported on such date, on the last date
                  preceding such date on which a sale was reported,

            (ii)  if the Shares are admitted to quotation on the National
                  Association of Securities Dealers Automated Quotation System
                  ("NASDAQ") or other comparable quotation system and have been
                  designated as a National Market System ("NMS") security, Fair
                  Market Value on any date shall be the last sale price reported
                  for the Shares on such system on such date or on the last day
                  preceding such date on which a sale was reported,

            (iii) if the Shares are admitted to Quotation on NASDAQ and have not
                  been designated a NMS Security, Fair Market Value on any date
                  shall be the average of the highest bid and lowest asked
                  prices of the Shares on such system on such date; or

            (iv)  if (i), (ii) and (iii) do not apply, on the basis of the good
                  faith determination of the Committee.

      (p)   "Incentive Stock Option" or "ISO" means an option to purchase Shares
            granted under Article 6 which is designated as an Incentive Stock
            Option and is intended to meet the requirements of Section 422 of
            the Code.

      (q)   "Initial Public Offering" means the sale after August 19, 1999
            pursuant to one or more effective registration statements under the
            Securities Act (other than in connection with employee benefit or
            similar plans or acquisitions of companies or businesses by, or
            business combinations involving the Corporation or any of its
            Subsidiaries) of Shares which results in an active trading market of
            25% or more of the outstanding Shares. There shall be deemed to be
            an "active trading market" if the Common Stock is listed or quoted
            on a national exchange or The Nasdaq Stock Market on the applicable
            determination date.


                                      C-2
<PAGE>

      (r)   "Insider" shall mean an Employee who is, on the relevant date, an
            officer or a director, or a ten percent (10%) beneficial owner of
            any class of the Corporation's equity securities that is registered
            pursuant to Section 12 of the Exchange Act or any successor
            provision, as "officer" and "director" are defined under Section 16
            of the Exchange Act.

      (s)   "Lehman Brothers Merchant Banking Partners" means Lehman Brothers
            Merchant Banking Partners II, L.P., a Delaware limited partnership.

      (t)   "Lehman Group" means Lehman Brothers Merchant Banking Partners and
            (i) any Affiliate (as defined in the Employee Stockholder Agreement)
            of Lehman Brothers Merchant Banking Partners, (ii) any Associates
            (as defined in the Employee Stockholder Agreement) of Lehman
            Brothers Merchant Banking Partners, (iii) the heirs, executors,
            administrators, testamentary trustees, legatees or beneficiaries of
            any member of the Lehman Group, and (iv) a trust, the beneficiaries
            of which, or a corporation or partnership, the stockholders or
            general or limited partners of which, include only Lehman Brothers
            Merchant Banking Partners, Affiliates and Associates of Lehman
            Brothers Merchant Banking Partners, their spouses, their lineal
            descendants and any other members of their families, if, in the
            cases of clauses (ii) through (iv) above, such Person agrees in
            writing to be bound by the terms of the Employee Stockholder
            Agreement as a member of the Lehman Group.

      (u)   "Named Executive Officer" means a Participant who, at the relevant
            time, is one of the group of "covered employees," as defined in the
            regulations promulgated under Section 162(m) of the Code, or any
            successor statute.

      (v)   "Nonqualified Stock Option" or "NQSO" means an option to purchase
            Shares granted under Article 6, and which is not intended to meet
            the requirements of Section 422 of the Code.

      (w)   "Option" means an Incentive Stock Option or a Nonqualified Stock
            Option.

      (x)   "Option Price" means the price at which a Share may be purchased by
            a Participant pursuant to an Option, as determined by the Committee.

      (y)   "Participant" means an Employee, a Director, or other person who
            performs services for the Corporation or a Subsidiary who has been
            granted an Option under the Plan which is outstanding.

      (z)   "Permitted Transferees" means (i) a Participant's heirs, executors,
            administrators, testamentary trustees, legatees, beneficiaries or
            charitable remainderman, (ii) a trust the beneficiaries of which
            include only a Participant, the spouse, the lineal descendants or
            any other member of the family of such Participant approved by the
            Board, or (iii) any person if Lehman Brothers Merchant Banking
            Partners has given its prior written consent to the applicable
            transfer.

      (aa)  "Person" shall have the meaning ascribed to such term in Section
            3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
            thereof, including a "group" as defined in Section 13(d) thereof.

      (bb)  "Retirement" means "Retirement" as defined in the Participant's
            Employment Agreement or if such agreement does not define such term
            or the Participant does not have an Employment Agreement,
            "Retirement" means normal retirement under the terms of any
            tax-qualified retirement plan of the Corporation or if no such plan
            is in existence or does not define "Retirement", "Retirement" means
            termination of employment (other than an involuntary termination for
            Cause) at any time on or after attainment of age 65.

      (cc)  "Sale of Division" means the sale by the Corporation of
            substantially all of the stock or assets of one or more of the
            Corporation's three business segments: the outdoor products segment,
            the industrial and power equipment segment, or the sporting
            equipment segment.

      (dd)  "Securities Act" means the Securities Act of 1933, as amended, and
            regulations promulgated thereunder.

      (ee)  "Shares" means the shares of Common Stock of the Corporation
            (including any new, additional or different stock or securities
            resulting from the changes described in Section 4.3).

      (ff)  "Significant Corporate Event" means any significant transaction or
            series of related transactions that do not constitute a Change in
            Control (including, without limitation, an asset sale or a sale of
            subsidiary stock) that results in the Corporation receiving gross
            proceeds which are, within a reasonable time following such event,
            proposed to be distributed to the holders of Shares.


                                      C-3
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      (gg)  "Subsidiary" means any corporation, partnership, limited liability
            company, joint venture or other entity in which the Corporation has,
            directly or indirectly, a fifty percent (50%) or greater voting
            interest.

ARTICLE 3. ADMINISTRATION

      3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board, or by any other committee or individual appointed by the
Board that is granted authority to administer the Plan. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of the Board of Directors. In the absence of appointment of a
Committee, the Board of Directors shall administer the Plan.

      3.2 Authority of the Committee. In accordance with the provisions of the
Annual Incentive Plan and the Plan, the Committee shall have full power to
grant, and to make available, options to Employees, and other persons who
perform services for the Corporation or a Subsidiary; to determine who shall
participate in the Plan (which determination may change from year to year); to
determine the size and types of Options; to determine the terms and conditions
of Options in a manner consistent with the Plan (including conditions on the
exercisability of all or a part of an Option, restrictions on transferability
and the duration of the Options); to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to establish, amend or
waive rules and regulations for the Plan's administration; and (subject to the
provisions of Article 9) to amend the terms and conditions of any outstanding
Option to the extent such terms and conditions are within the discretion of the
Committee as provided in the Plan, including accelerating the time any Option
may be exercised and establishing different terms and conditions relating to the
effect of the termination of employment or other services to the Corporation.
Further, the Committee shall make all other determinations which may be
necessary or advisable in the Committee's opinion for the administration of the
Plan. All expenses of administering this Plan shall be borne by the Corporation.

      3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Corporation, the stockholders, Employees, Directors, Participants
and their estates and beneficiaries.

ARTICLE 4. SHARES SUBJECT TO THE PLAN

      4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant of Options under the Plan shall
be 3,000,000 Shares. The Shares may, in the discretion of the Corporation, be
either authorized but unissued Shares or Shares held as treasury shares,
including Shares purchased by the Corporation, whether on the market or
otherwise.

      The following rules shall apply for purposes of the determination of the
number of Shares available for grant under the Plan:

            (a)   The grant of an Option shall reduce the Shares available for
                  grant under the Plan by the number of Shares subject to such
                  Option.

            (b)   While an Option is outstanding, it shall be counted against
                  the authorized pool of Shares, regardless of its vested
                  status.

      4.2 Lapsed Options. If any Option granted under this Plan is canceled,
terminates, expires or lapses for any reason, or if Shares are withheld in
payment of withholding taxes, any Shares subject to such Option or that are
withheld shall again be available for the grant of an Option under the Plan.
However, in the event that prior to the Option's cancellation, termination,
expiration or lapse, the holder of the Option at any time received one or more
"benefits of ownership" pursuant to such Option (as defined by the Securities
and Exchange Commission, pursuant to any rule or interpretation promulgated
under Section 16 of the Exchange Act), the Shares subject to such Option shall
not again be made available for regrant under the Plan.

      4.3 Adjustments In Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Corporation, any reorganization
(whether or not such reorganization comes within the definition of such term in
Code Section 368) or any partial or complete liquidation of the Corporation,
such adjustment shall be made in the number and class of Shares which may be
delivered under the Plan, and in the number and class of and/or price of Shares
subject to outstanding Options granted under the Plan, as may be determined to
be appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights; provided, however, that the number of
Shares subject to any Option shall always be a whole number and the Committee
shall make such adjustments as are necessary to insure Options of whole Shares.


                                      C-4
<PAGE>

      4.4 Employee Stockholder Agreement. The Shares issued pursuant to the Plan
shall not be subject to the restrictions on transfer, tag-along and drag-along
rights, call and put rights, registration rights and other rights and
obligations of the Employee Stockholder Agreement.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

      In general, participants in the Annual Incentive Plan designated by the
Committee or other person administering such plan shall be eligible to
participate in the Plan upon such terms and conditions as the Committee may
determine. In determining the individuals to whom such an Option shall be
granted and the number of Shares which may be granted pursuant to that Option,
the Committee shall take into account the duties of the respective individual,
his or her present and potential contributions to the success of the Corporation
or any Subsidiary, and such other factors as the Committee shall deem relevant
in connection with accomplishing the purpose of the Plan.

ARTICLE 6. STOCK OPTIONS

      6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to eligible individuals (as described in Article 5) at
any time and from time to time as shall be determined by the Committee. The
Committee shall have discretion in determining the number of Shares subject to
Options granted to each Participant. No Participant may be granted ISOs (under
the Plan and all other incentive stock option plans of the Corporation and any
Subsidiary) which are first exercisable in any calendar year for Common Stock
having an aggregate Fair Market Value (determined as of the date an Option is
granted) that exceeds $100,000. The preceding annual limit shall not apply to
NQSOs. The Committee may grant a Participant ISOs, NQSOs or a combination
thereof, and may vary such Options among Participants; provided that only an
Employee may be granted ISOs. The maximum number of Shares subject to Options
which can be granted under the Plan during any calendar year to any individual
is 500,000 Shares.

      6.2 Agreement. Each Option grant shall be evidenced by an Agreement that
shall specify the Option Price, the duration of the Option, the number of Shares
to which the Option pertains and such other provisions as the Committee shall
determine. The Option Agreement shall further specify whether the Option is
intended to be an ISO or a NQSO. Any portion of an Option that is not designated
as an ISO or otherwise fails or is not qualified as an ISO (even if designated
as an ISO) shall be a NQSO.

      6.3 Option Price. The Option Price for each grant of an ISO shall not be
less than one hundred percent (100%) of the Fair Market Value of a Share on the
date the Option is granted. In no event, however, shall any Participant who owns
(within the meaning of Section 424(d) of the Code) stock of the Corporation
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation be eligible to receive an ISO at an Option
Price less than one hundred ten percent (110%) of the Fair Market Value of a
share on the date the ISO is granted. The Option Price for each grant of a NQSO
shall be established by the Committee and, in its discretion, may be less than
the Fair Market Value of a Share on the date the Option is granted.

      6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
the Corporation possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation, shall not be
exercisable later than the fifth (5th) anniversary date of its grant.

      6.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, including conditions related to
the employment of the Participant with the Corporation or any Subsidiary, which
need not be the same for each grant or for each Participant. Each Option shall
be exercisable for such number of Shares and at such time or times, including
periodic vesting based on years of employment, performance of the Corporation or
such other criteria, as may be determined by the Committee at the time of the
grant. The Committee may provide in the Agreement for automatic accelerated
vesting and other rights upon the occurrence of a Change in Control, Sale of
Division, Significant Corporate Event, or upon any other event or occurrence the
Committee deems appropriate. Except as otherwise provided in the Agreement, the
right to purchase Shares that are exercisable in periodic installments shall be
cumulative so that when the right to purchase any Shares has accrued, such
Shares or any part thereof may be purchased at any time thereafter until the
expiration or termination of the Option.

      6.6 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Corporation, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any Option shall be payable to the
Corporation in full, either: (a) in cash, (b) cash equivalent approved by the


                                      C-5
<PAGE>

Committee, (c) if approved by the Committee, by tendering previously acquired
Shares (or delivering a certification of ownership of such Shares) having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price (provided that the Shares which are tendered must have been held by the
Participant for six months if required by the Committee and for the period
required by law, if any, prior to their tender to satisfy the Option Price), or
(d) by a combination of (a), (b) and (c). The Committee also may allow cashless
exercises as permitted under Federal Reserve Board's Regulation T, subject to
applicable securities law restrictions, or by any other means which the
Committee determines to be consistent with the Plan's purpose and applicable
law.

      As soon as practicable after receipt of a written notification of exercise
and full payment, the Corporation shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s), and may place appropriate
legends on the certificates representing such Shares.

      6.7 Limited Transferability. If permitted by the Committee in the
Agreement, a Participant may transfer an Option granted hereunder, including but
not limited to transfers to Permitted Transferees, if (i) the Participant does
not receive any consideration in any form whatsoever for such transfer, (ii)
such transfer is permitted under applicable tax laws, and (iii) in the event
that the Participant is an Insider, such transfer is permitted under Rule 16b-3
of the Exchange Act as in effect from time to time. Any Option so transferred
shall continue to be subject to the same terms and conditions in the hands of
the transferee as were applicable to said Option immediately prior to the
transfer thereof. Any reference in any such Agreement to the employment by or
performance of services for the Corporation by the Participant shall continue to
refer to the employment of, or performance by, the transferring Participant. Any
Option that is granted pursuant to any Agreement that did not initially
expressly allow the transfer of said Option and that has not been amended to
expressly permit such transfer, shall not be transferable by the Participant
other than by will or by the laws of descent and distribution and such Option
thus shall be exercisable in the Participant's lifetime only by the Participant.

      6.8 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to Shares subject to his Option until the issuance of
such Shares to the Participant pursuant to the exercise of such Option.

ARTICLE 7. DEFERRALS

      The Committee may permit a Participant to defer to another plan or program
such Participant's receipt of Shares that would otherwise be due to such
Participant by virtue of the exercise of an Option. If any such deferral
election is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.

ARTICLE 8. RIGHTS OF EMPLOYEES

      8.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Corporation or a Subsidiary to terminate any Participant's
employment by, or performance of services for, the Corporation at any time, nor
confer upon any Participant any right to continue in the employ or service of
the Corporation or a Subsidiary. For purposes of the Plan, transfer of
employment of a Participant between the Corporation and any one of its
Subsidiaries (or between Subsidiaries) shall not be deemed a termination of
employment.

      8.2 Participation. No Employee shall have the right to be selected to
receive an Option under this Plan, or, having been so selected, to be selected
to receive a future Option.

ARTICLE 9. AMENDMENT, MODIFICATION AND TERMINATION

      9.1 Amendment, Modification and Termination. The Board may, at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, that, unless approved by the holders of a majority of the
total number of Shares of the Corporation represented and voted at a meeting at
which a quorum is present, no amendment shall be made to the Plan if such
amendment would (a) materially modify the eligibility requirements provided in
Article 5; (b) increase the total number of Shares (except as provided in
Section 4.3) which may be granted under the Plan; (c) extend the term of the
Plan; or (d) amend the Plan in any other manner which the Board, in its
discretion, determines should become effective only if approved by the
stockholders even if such stockholder approval is not expressly required by the
Plan or by law.

      9.2 Options Previously Granted. No termination, amendment or modification
of the Plan shall adversely affect in any material way any Option previously
granted under the Plan, without the written consent of the Participant holding
such Option. The Committee shall, with the written consent of the Participant
holding such Option, have the authority to cancel outstanding Options and grant
replacement Options therefor.


                                      C-6
<PAGE>

      9.3 Compliance With Section 162(m) of the Code. At all times when the
Committee determines that compliance with Section 162(m) of the Code is required
or desired, all Options granted under this Plan to Named Executive Officers
shall comply with the requirements of Section 162(m) of the Code. In addition,
in the event that changes are made to Section 162(m) of the Code to permit
greater flexibility with respect to any Option or Options under the Plan, the
Committee may, subject to this Article 9, make any adjustments it deem
appropriate.

ARTICLE 10. WITHHOLDING

      10.1 Tax Withholding. The Corporation shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Corporation, an
amount sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising in connection with an Option under this Plan.

      10.2 Share Withholding. With respect to withholding required upon the
exercise of Options, or upon any other taxable event arising as a result of
Options granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Corporation withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All elections shall be irrevocable, made in writing, signed by the Participant,
and elections by Insiders shall additionally comply with all legal requirements
applicable to Share transactions by such Participants.

ARTICLE 11. INDEMNIFICATION

      Each person who is or shall have been a member of the Committee or its
designee, or a member of the Board or its designee, shall be indemnified and
held harmless by the Corporation against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit or proceeding to which he may be
a party or in which he may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Corporation's approval, or paid by him in
satisfaction of any judgment in any such action, suit or proceeding against him,
provided he shall give the Corporation an opportunity, at its own expense, to
handle and defend the same before he undertakes to handle and defend it on his
own behalf. The foregoing right of indemnification shall be in addition to any
other rights of indemnification to which such persons may be entitled under the
Corporation's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify them or hold
them harmless.

ARTICLE 12. LEGAL CONSTRUCTION

      12.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

      12.2 Successors. All obligations of the Corporation under the Plan, with
respect to Options granted hereunder, shall be binding on any successor to the
Corporation, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Corporation.

      12.3 Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

      12.4 Requirements of Law. The granting of Options and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

      12.5 Regulatory Approvals and Listing. The Corporation shall not be
required to issue any certificate or certificates for Shares under the Plan
prior to (i) obtaining any approval from any governmental agency which the
Corporation shall, in its discretion, determine to be necessary or advisable,
(ii) the admission of such shares to listing on any national securities exchange
or Nasdaq on which the Corporation's Shares may be listed, and (iii) the
completion of any registration or other qualification of such Shares under any
state or federal law or ruling or regulation of any governmental body which the
Corporation shall, in its sole discretion, determine to be necessary or
advisable. The Corporation will register the Shares to be issued pursuant to the
Plan on a Form S-8 under the Securities Act.


                                      C-7
<PAGE>

      12.6 Securities Law Compliance. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provisions of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

      12.7 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware, without regard to the conflict of law
provisions thereof.

      AS APPROVED BY THE BOARD OF DIRECTORS OF BLOUNT INTERNATIONAL, INC. ON THE
3RD DAY OF FEBRUARY, 2000.


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