OPERATING AGREEMENT

OF

BI, L.L.C.

LIMITED LIABILITY COMPANY

TABLE OF CONTENTS

Operating Agreement

of

BI, L.L.C.

This Limited Liability Company Operating Agreement (this ?Agreement?) of BI, L.L.C. is entered into and shall be effective as of March 1, 1997, by and between Blount, Inc., a Delaware corporation (?Blount?), and BI Holdings Corp., a Delaware corporation (?BIH?) (collectively, the ?Members?), for purposes of forming a limited liability company under the Delaware Limited Liability Company Act.

ARTICLE I

DEFINITIONS

For purposes of this Agreement, the following capitalized terms shall have the following meanings:

1.1                                 Act - The Delaware Limited Liability Company Act and all amendments thereto.

1.2                                 Additional Member - A Member who acquires a Membership Interest from the Company pursuant to Section 11.2 hereof.

1.3                                 Adjusted Capital Account Deficit - With respect to any Member, the deficit balance, if any, in such Member?s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:

(i) Add to such Capital Account (a) any amount, if any, that such Member is obligated to contribute to the Company upon liquidation of such Member?s Membership Interest; and (b) the amount that such Member is obligated to restore or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(l) and 1.704-2(i)(5); and

(ii) Subtract from such Capital Account such Member?s share of the items described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith.

1.4                                 Affiliate - A Person that, directly or indirectly, through one or more intermediaries, has voting control of, or has its voting controlled by, or is under common control with, the Person specified.

1.5                                 Agreement - As defined in the Preamble.

1.6                                 Capital Account - The Capital Account maintained for each Member in accordance with the following provisions:

(i) To each Member?s Capital Account there shall be added (a) such Member?s Capital Contributions and (b) such Member?s allocable share of Net Profits and any items in the nature of income or gain that are specially allocated to such Member pursuant to Article IX hereof or other provisions of this Agreement.

(ii)  From each Member?s Capital Account there shall be subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any Company Property distributed to such Member pursuant to any provision of this Agreement (net of liabilities encumbering the distributed Company Property that such Member is considered to assume or take subject to under Code Section 752) and (b) such Member?s allocable share of Net Losses and any other items in the nature of expenses or losses that are specially allocated to such Member pursuant to Article IX hereof. With respect to distributions of Company Property, Capital Accounts shall first be adjusted to reflect the manner in which the unrealized income, gain, loss and deduction inherent in such property (that has not been previously reflected in Capital Accounts) would be allocated, pursuant to Article IX hereof, to the Members if there were a taxable disposition of such property for its fair market value (taking Code Section 770l(g) into account) on the date of distribution.

(iii)  The Managing Member in its discretion and in accordance with the Code and Regulations, may increase or decrease the Capital Accounts of the Members to reflect a revaluation of Company Property on the Company?s books and records.  Any such adjustments shall be made in accordance with Regulations Section l.704-l(b)(2)(iv)(g).

(iv)  The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-l(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Regulations. In the event that the Managing Member shall determine that it is prudent to modify the manner in which the Capital Accounts, or any additions or subtractions thereto, are computed in order to comply with such Regulations, the Managing Member may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member pursuant to Article IX hereof upon the Dissolution of the Company. The Managing Member shall also make any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Sections 1.704-l(b) and 1.704-2.

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