**Exhibit10.2**

 

**NORCROSSSAFETY PRODUCTS L.L.C.**

**AMENDED ANDRESTATED**

**EMPLOYMENTAGREEMENT**

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of May 20,2005, is entered into by and between Norcross Safety Products L.L.C., aDelaware limited liability company (the “Company”), and Robert A.Peterson (“Executive”). Certain capitalized terms used but not otherwisedefined herein are defined in Section 7.

 

WHEREAS, the Company and the Executive previously entered into anEmployment Agreement dated as of January 1, 2002; and

 

WHEREAS, the Company and the Executive now wish to revise the terms andconditions of Executive’s employment.

 

NOW THEREFORE, the parties hereto, in exchange for good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,and intending to be legally bound, hereby agree as follows:

 

1.             Employment and Duties.

 

(a)           The Company shall continue to employ Executive, and Executive shall continuein employment with the Company, as Chief Executive Officer and President of theCompany, pursuant to the terms and conditions of this Agreement. Executiveshall report to the Board of Directors of Safety Products Holdings, Inc.(the “Board”).

 

(b)           Executive shall devote his best efforts tothe interests of the Company and, to the extent requested, its Affiliates,which interests may change from time to time, and shall devote all of hisprofessional time and attention to the business and affairs of the Company and suchAffiliates; provided that nothing herein shall prevent Executive, withthe prior written approval of the Board, from serving as a director or trusteeof other corporations or businesses which are not in competition with theCompany or its Affiliates; provided,further that nothing hereinshall apply to Executive’s service as a director or trustee of suchcorporations or businesses on which Executive serves as of the date hereof.Notwithstanding this Section 1(b) or any other provision ofthis Agreement to the contrary, Executive may commence seeking other employmentif Company, at least 90 days before the date referred to in clause (i) ofthe first sentence of Section 2(a), shall not have offered toExecutive in writing to continue to employ Executive for at least two years, onterms no less favorable to Executive than those existing at such time.

 

(c)           Executive shall perform such duties and functions commensurate with hisposition as may be reasonably assigned or delegated to him from time to time bythe Board. Executive acknowledges that such duties and functions may or may notinvolve performance of services for or on behalf of Affiliates of the Company.

 

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2.             Term and Termination.

 

(a)           Term.   The “Term” ofExecutive’s employment is from the date hereof until the “Termination Date,”which is defined as the earlier of (i) the fifth anniversary of the datehereof or (ii) the date of termination of Executive’s employment pursuantto any one or more of Sections 2(b), 2(c), 2(d) or 2(e) ofthis Agreement. Executive is an at-will employee of the Company, and his employmentmay be terminated by Executive, in his sole and arbitrary discretion, at anytime with or without Good Reason, or by the Company, in the Company’s sole andarbitrary discretion, at any time with or without Cause, by delivery of awritten termination notice to the other party.

 

(b)           Death.  If Executive dies during theTerm, the Termination Date shall be the date of his death.

 

(c)           Disability.   If Executive becomes Disabledduring the Term, the Termination Date shall be the date as of which such Disabilityis determined.  Subject to applicablelaw, “Disability” or “Disabled” means such physical, mental orpsychological condition or other impairment that prevents Executive fromeffectively performing the duties of his employment for more than ninety (90)calendar days in any six (6) consecutive months commencing on the initialdate of such condition or impairment.  Inconnection with any Disability (or possible Disability):

 

(i)            Executive (and Executive’s spouse or whoeverelse is acting on his behalf) shall cooperate with any physicians engaged orrequested to be engaged by the Company to examine Executive to determinewhether or not Executive is Disabled, and each of Executive and the Companyirrevocably consents to disclosure to each of them by any such physicians ofall matters relating to such examinations.

 

(ii)          The determination of Disability shall be byagreement of the Company and Executive, or if Executive’s condition is suchthat he is unable to participate in such determination, then by agreement ofthe Company and Executive’s spouse or whoever else is then acting on hisbehalf, and if the parties involved in such determination are unable to reachagreement within ten (10) days of a request by either party, then theissue shall be decided by a physician chosen by the Company and reasonablyacceptable to Executive (or Executive’s spouse or whoever else is then actingon his behalf). The Company will pay all expenses incurred in the determinationof whether Executive is Disabled.

 

(d)           Termination By Executive. If Executive terminates his employment,with or without Good Reason, the Termination Date shall be the date indicatedon the written termination notice given by Executive to the Company, which maynot be more than thirty (30) days nor less than fourteen (14) days from itsreceipt by the Company; providedthat upon receipt of Executive’stermination notice, the Company may, in its sole discretion, request that Executivecease his employment activities prior to the date referenced in such notice, andExecutive shall promptly comply with such request, it being understood thatsuch request will

 

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not change the Termination Date specified in this Section 2(d) oraffect the characterization of the termination of Executive’s employment.

 

(e)           Termination by the Company.  Ifthe Company terminates the employment of Executive, with or without Cause, theTermination Date shall be the date on which the Company’s termination notice isgiven to Executive, or such later date indicated on such termination notice,which may not be more than thirty (30) days from its receipt by Executive.

 

(f)            Reversal of Determination.   IfExecutive’s employment is terminated by the Company with Cause or by Executivewith Good Reason, and it is thereafter judicially determined that Cause or GoodReason as appropriate for such termination did not exist at the time of suchtermination, then Executive’s employment shall be deemed to have beenterminated without Cause or Good Reason as appropriate as of the TerminationDate. If matters constituting Cause or Good Reason as appropriate become knownto the Company or to Executive within 90 business days after Executive’semployment is terminated, then either party may, by delivery of written noticeto the other party treat such termination as being with Cause or Good Reason asappropriate.

 

(g)           Definition of Cause.  “Cause”for termination of Executive’s employment by the Company means Executive’s:

 

(i)            embezzlement or misappropriation of funds;

 

(ii)           conviction of a felony involving moralturpitude;

 

(iii)          commission of a material act of dishonesty,fraud, or deceit;

 

(iv)          breach of any material provisions of thisAgreement or other agreement with the Company, Safety Products Holdings, Inc.,or any Subsidiary, to which he is a party;

 

(v)           habitual or willful neglect of his duties;

 

(vi)          breach of fiduciary duty to the Company,Safety Products Holdings, Inc., or any Subsidiary, involving personalprofit; or

 

(vii)         material violation of any other duty to theCompany, Safety Products Holdings, Inc., or any Subsidiary, or its membersimposed by its managers or by law.

 

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(h)           Definition of Good Reason. “Good Reason” for termination byExecutive of Executive’s employment means:

 

(i)            a material breach by the Company of itsobligations under this Agreement which is not cured (if curable) within twenty(20) days after written notice by Executive to the Company;

 

(ii)           the Company’s requiring Executive to move hisprincipal place of employment by more than 25 miles, other than for reasonablebusiness travel, if such move increases Executive’s commute from his primaryresidence, without Executive’s written consent thereto; providedthatExecutive must notify the Company in writing of his intent to terminate hisemployment pursuant to this Section 2(h)(ii) prior to thesixtieth day after the earlier of (x) the date that the Company notifiesExecutive in writing of its intent to relocate Executive and (y) the date thatsuch relocation occurs;

 

(iii)          the failure of any successor to the Companyto assume this Agreement as set forth in Section 9(i); or

 

(iv)          the occurrence of a Change of Control; providedthat Executive must notify the Company in writing of his intent toterminate his employment pursuant to this Section 2(h)(iv) prior tothe sixtieth day after the date of the Change of Control.

 

3.             Compensation.

 

(a)           Executive’s compensation for his services hereunder shall consist of(i) Base Salary, plus (ii) Bonus, if any, plus (iii) Benefits.

 

(b)           “Base Salary” shall be paid by the Company to Executive at anannual rate of $515,000 (subject to increase from time to time in the solediscretion of the Board to reflect cost-of-living increases and as merited toreflect Executive’s performance on behalf of the Company and its Subsidiaries),payable in arrears in equal bi-weekly installments.   Under no circumstances may the Base Salarybe decreased during the Term.

 

(c)           “Bonus,” if any, shall be targeted at 90% of Base Salary, basedon targeted EBITDA and Net Debt or other such financial criteria as may bedetermined by the Board, consistent with the pay out schedule for theBonus plan attached as Exhibit A.  Targets for annual criteria will be subject to approval by theBoard.   All Bonuses due hereunder shallbe payable on or before March 15 of the following year.

 

(d)          “Benefits” consist of whatever, ifany, health, hospitalization, sick pay, life insurance, disability insurance,profit sharing, pension, 401 (k), and deferred compensation plans and programsthat the Company may have in effect from time to time for its employees who arenot members of a collective bargaining unit, all of which Executive shall beentitled to participate in pursuant to their terms and on a basis commensuratewith his position. By way of clarification of the immediately precedingsentence, it is also agreed that the parties hereto will

 

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use their reasonable best efforts to enable Executive to participate inthe Norcross Safety Products L.L.C. Employees’ Pension Plan and the NorthSafety Products Inc. Retirement Benefit Restoration Plan; providedthatsuch participation does not contravene any provision of ERISA, the Code, otherapplicable law or any agreement by which the Company is bound and can beachieved at a reasonable cost. Executive shall also be entitled to four (4) calendarweeks’ paid vacation each year, in addition to regularly scheduled holidays.The Company may initiate, change and discontinue any such plans and programs atany time; providedthat no such change shall be effective as toExecutive unless it is also effective as to the other senior executives of theCompany. If any of such plans or programs require contributions by employees,Executive shall pay the contributions required by his participation at a rateno greater than that applicable to any senior executive of the Company. Companyshall pay Executive a monthly automobile allowance of $700.

 

4.             Termination Provisions.

 

(a)           If the Company terminates Executive’s employment with Cause or if Executiveterminates his employment without Good Reason, then Executive shall be entitledto:

 

(i)            receive Base Salary and Benefits for theperiod ending on the Termination Date; and

 

(ii)           receive any unpaid Bonus for any calendaryear ending prior to the year in which the Termination Date occurs.

 

(b)           If the Company terminates Executive’s employment without Cause (which shallinclude, without limitation, Company’s not offering Executive continuedemployment with the Company in accordance with the second sentence of Section I(b)),if Executive terminates his employment with Good Reason, or if Executive’semployment terminates by reason of his death or Disability, then Executiveshall be entitled to receive the following, except that (v) shall notapply in the case of Executive’s death:

 

(i)            Base Salary and Benefits for the periodending on the Termination Date;

 

(ii)           any unpaid Bonus for any calendar year endingprior to the year in which the Termination Date occurs;

 

(iii)          any Bonus for the calendar year in which theTermination Date occurs, pro rated based on the portion of Base Salary paid toExecutive by the Company in such year if financial targets are met for the yearin which the Termination Date occurs;

 

(iv)          if, and only if, Executive (or his guardian or personalrepresentative, as the case maybe), within 30 days after the Termination Date,signs and delivers to the Company a complete general release of claims forfacts

 

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and circumstances existing before the date of such release in the formof Exhibit B, Base Salary for the period commencing on the TerminationDate and ending two years thereafter, together with any other Benefits as maybe provided under the terms of any applicable written plan, program orarrangement of the Company applicable to senior executives of the Company(including automobile allowance) for such period. If Executive does not complywith the terms of this Section 4(b)(v) within 30 days afterthe Termination Date, the Company shall not be responsible for any furtherpayments to Executive.

 

Notwithstanding the foregoing, in the event that the Executive’semployment has terminated because the Company has not offered Executivecontinued employment with the Company in accordance with the second sentence ofSection 1 (b), any payments or benefits that Executive would beentitled to receive from the Company in the second year of the severance periodshall be reduced by the amounts of any payments or benefits (but the reductionfor benefits shall only be for benefits of a substantially similar nature) thatExecutive shall be entitled to receive during and with respect to the secondyear of the severance period from other employment (including self-employment).Executive shall promptly report to the Company all payments or benefits fromother employment (including self-employment) Executive is entitled to receiveduring and with respect to the second year of such severance period.

 

(c)           Any amounts owed by the Company to Executive pursuant to Section 4(b)(v) shallbe paid at such times and in such manner as if the termination giving rise tosuch payments had not occurred (with the Company retaining the right to prepayall or any portion of such amount at any time in its sole discretion); providedthat in the event that Executive’s employment has been terminated for thereason described in Section 2(h)(iv), amounts owed to Executive shall bepaid in a single lump sum within ten days of the effective date of Executive’s resignation,discounted to present value at a 7% annual rate.

 

(d)           The Company’s obligation to make any payments or Benefits available to Executivepursuant to this Section 4 shall be conditioned upon Executive’scontinued and continuing compliance with the terms and conditions of thisAgreement (including, without limitation, Section 6 hereof) andshall constitute Company’s sole obligation, and the sole obligation of Company’sAffiliates, to Executive (or any Person making any claim through Executive orregarding his employment by Company or any Affiliate) in respect of Company’s terminationof Executive’s employment hereunder or any breach by Company hereof respecting whichExecutive terminates his employment hereunder.

 

(e)           Except as otherwise specified herein, if Executive’s employment terminateson any date other than the last day of a month, Executive’s compensation forthat month shall be calculated on the basis of a fraction, the numerator ofwhich shall be the number of days during that month that Executive shall havebeen in the Company’s employ and the denominator of which shall be the numberof days in that month.

 

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(f)            In the event that Executive’s employment isterminated for Cause, the Company may offset any amounts Executive owes it orits Affiliates pursuant to any written agreement, note or other instrumentrelating to indebtedness for borrowed money to which Executive is a party, orpursuant to any other liability or obligation by which Executive is bound, ineach case which is due or becomes due within ninety days after Executive is tobe paid such amounts hereunder against any amounts it owes Executive hereunder,upon providing written notice to Executive of such offset.

 

5.             Expenses. The Company shall reimburse Executive for all reasonable expenses incurredin the performance of his duties in accordance with the expense reimbursementpolicy of the Company with respect to senior executives of the Company ineffect at the time.

 

6.             Noncompetition, Nonsolicitation,Confidentiality.

 

As a material inducement to the Company to enter into this Agreementand in consideration of the payment by the Company of the compensation detailedherein to Executive:

 

(a)           During the period (the “Noncompete Period”) beginning on thedate hereof and ending 18 months after the Termination Date, Executive shallnot, without the prior written consent of the Company (which consent may begranted or withheld in the Company’s sole discretion), directly or indirectly,Participate in any line of business in which the Company is actively engaged orany line of business competitive with the Company anywhere in the United Statesand any other country in which the Company does business as of the Termination Date(the “Competitive Activities”). For purposes of this Agreement, the term“Participate” includes any direct or indirect interest in, or providingany direct or indirect assistance (whether financial, advisory or otherwise)to, any enterprise (or any affiliate thereof), whether as an officer, director,employee, partner, member, sole proprietor, agent, representative, independent contractor,consultant, creditor, stockholders, unitholder, owner or otherwise; providedthat the term “Participate” shall not include beneficial ownership ofless than 2% of a class of securities traded on a national securities exchangeor the NASDAQ Stock Market.

 

(b)           During the Noncompete Period, Executive (i)  except with respectto Executive’s personal secretary and David F. Myers, Jr., shall not, andshall not attempt to, directly or indirectly contact, approach or solicit forthe purpose of offering employment to or hiring or retaining, or arrange tohave any other Person hire or retain, or actually hire or retain, whether as anemployee, consultant, agent, independent contractor or otherwise, any Person employedor retained by Safety Products Holdings, Inc., Company, or any Subsidiaryas an employee, consultant or independent contractor during the NoncompetePeriod and (ii) shall not, and shall not attempt to, call-on, solicit,service, advise, encourage or induce any customer, supplier,  or other business relation of Safety ProductsHoldings,  Inc.,  Company, or any Subsidiary to cease doing business, or reduce its business, withSafety Products Holdings, Inc., Company, or any Subsidiary or to engage inany business relationship which might materially harm Safety Products Holdings, Inc.,Company, or any Subsidiary.

 

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(c)           Executive acknowledges that certain of the information, observationsand data relating to the Company and its Affiliates, or their business,products or services, which he possesses or has obtained knowledge of or willpossess or obtain knowledge of as an employee, officer, director orequityholder of the Company is and will be the confidential and proprietary propertyof the Company and its Affiliates (“Confidential Information”).Executive agrees that he shall not, directly or indirectly, use for his ownpurposes or use for or disclose to any third party any of such ConfidentialInformation without the prior written consent of the Company, unless and to theextent that the aforementioned matters (i) become generally known to and availablefor use by the public other than as a result of Executive’s acts or failures toact, or (ii) Executive is required by order of a court of competentjurisdiction (by subpoena or similar process) to disclose any ConfidentialInformation (provided that in such case, Executive shall promptly inform theCompany of such order, shall cooperate with the Company at the Company’sexpense in attempting to obtain a protective order or to otherwise restrictsuch disclosure, and shall only disclose Confidential Information to theminimum extent necessary to comply with any such court order).

 

(d)           The parties hereto acknowledge and agree that the Company will suffer irreparableharm from a breach by Executive of any of the covenants or agreements containedin this Section 6. In the event of an alleged or threatened breachby Executive of any of the provisions of this Section 6, theCompany or other appropriate Person may, in addition to all other rights andremedies existing in its or their favor, apply to any court of competent jurisdictionfor specific performance and/or injunctive or other equitable relief in orderto enforce or prevent any violations of the provisions hereof. Executiveacknowledges and agrees that the restrictions contained in this Section 6are reasonable.

 

(e)           If, at the time enforcement of any of the provisions of this Section 6is sought, a court holds that the restrictions stated herein are unreasonableunder the circumstances then existing, the parties hereto agree that themaximum period, scope or geographical area reasonable under such circumstancesshall be substituted for the stated period, scope or geographical area.Executive agrees that the covenants made in this Section 6 shall beconstrued as an agreement independent of any other provision of this Agreementand shall survive any order of a court of competent jurisdiction terminatingany other provision of this Agreement.

 

(f)            Executive hereby agrees and acknowledges (i) thatthe Company and its Affiliates have protectable interests in the information,data, and plans, both technical and business in nature, which are treated asconfidential, as well as the goodwill and specialized knowledge acquired byExecutive during the course of Executive’s employment with the Company; (ii) thatthe provisions of this Section 6 are in consideration of (A) employmentwith the Company, including grants of Equity under the Equity Program, (B) accessto and use of Confidential Information, including but not limited toinformation, data, and plans, both technical and business in nature, such ascustomer lists and records, sales records and marketing plans, research andtechnical reports and records, formulas, processes, programs, inventions, patentapplications, designs and drawings, instructions and training manuals,  business and financial information, salary information,contracts and other legal documents, and

 

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correspondence to which the Company has been a party, (C) accessto and Executive’s development on behalf of the Company of near-permanentrelationships with the Company’s customers, and (D) additional good andvaluable consideration the receipt and sufficiency of which is herebyacknowledged; (iii) that the restrictions contained in this Section 6do not preclude Executive from earning a livelihood, nor do they unreasonablyimpose limitations on Executive’s ability to earn a living, and that thepotential harm to the Company or its Affiliates of the non-enforcement of this Section 6outweighs any harm to Executive of their enforcement by injunction orotherwise; and (iv) that Executive has carefully reviewed this Agreementand that he has consulted with independent legal counsel regarding his rightsand obligations under this Agreement (or, after carefully reviewing thisAgreement, was given the opportunity to, but has freely decided not to, consultwith independent legal counsel), has given careful consideration to therestraints imposed upon Executive by this Agreement, fully understands theterms and conditions contained herein and is in full accord as to theirnecessity for the reasonable and proper protection of the Company’snear-permanent customer relationships and employee relationships andConfidential Information and those of its Affiliates, and Executive intends forsuch terms to be binding on and enforceable against him, and that each andevery restraint imposed by this Agreement is reasonable with respect to subjectmatter, time period and geographical area.

 

(g)           Executive agrees that the provisions of this Section 6shall inure to the benefit of and be enforceable by any Person with whom orinto which the Company shall merge or consolidate, regardless whether theCompany shall be the survivor of such transaction, or to any Person acquiring allor substantially all of the Company’s assets or business.

 

7.*            ***Definitions. The following definitions shall be appliedto the capitalized terms used in this Agreement for all purposes, unlessotherwise clearly indicated:

 

“Affiliates” of any Person means any Person that directly orindirectly controls, is controlled by, or is under common control with thePerson in question.

 

“Business” means the manufacturing and/or marketing of personalprotection and safety equipment products primarily intended for use in theworkplace, including, without limitation, respiratory equipment, handprotection, hearing protection, eye, hand, face and foot protection, industrialfirst aid, fall protection, high voltage lineman equipment, eye wash, anddermatological and single-use applicators for surgical protection.

 

“Change of Control” shall mean any transaction (including,without limitation, a merger, consolidation, sale of stock or sale of assets,but excluding any assignment as security for indebtedness) after which OdysseyInvestment Partners, LLC and its Affiliates or any of them shall not have thepower to elect a majority of the members of the Board or the governing body ofCompany.

 

“Company” shall have the meaning given to such term in thepreamble hereto, any successor to its business and/or assets which assumes thisAgreement by operation of law or otherwise, and their respective Subsidiaries.

 

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“Net Debt” means, at the time of determination, the excess of (i) indebtednessof the Company and its Subsidiaries over (ii) cash and cash equivalents ofthe Company and its Subsidiaries.

 

“Person” means an individual, a partnership, a corporation, alimited liability company, an association, a joint stock company, a trust, ajoint venture, an unincorporated organization and a governmental entity or anydepartment, agency or political subdivision thereof.

 

“Subsidiary” means, with respect to any Person, any corporation,limited liability company, partnership, association or other business entity ofwhich (i) if a corporation, a majority of the total voting power of sharesof stock entitled (without regard to the occurrence of any contingency) to votein the election of directors, managers or trustees thereof is at the time ownedor controlled, directly or indirectly, by that Person or one or more of theother Subsidiaries of that Person or a combination thereof; or (ii) if alimited liability company, partnership, association or other business entity, amajority of the limited liability company, partnership or other similarownership interest thereof is at the time owned or controlled, directly orindirectly, by any Person or one or more Subsidiaries of that Person or acombination thereof. For purposes hereof, a Person or Persons shall be deemedto have a majority ownership interest in a limited liability company,partnership, association or other business entity if such Person or Personsshall be allocated a majority of limited liability company, partnership,association or other business entity gains or losses or shall be or control themanaging member or general partner of such limited liability company,partnership, association or other business entity.

 

8.             Notices. Any notice provided for in this Agreement must be in writing and mustbe either personally delivered, mailed by first class mail (postage prepaid andreturn receipt requested) or sent by reputable overnight courier service(charges prepaid) to the recipient at the address below indicated:

 
|   | To  the Company                                                                                                                                      |   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                 |   |
|   | Norcross  Safety Products L.L.C.  2211 York Road, Suite 215  Oakbrook, IL 60523-1887  Attention: David F. Myers, Jr.  Telecopier: (630)572-8231 |   |
|   |                                                                                                                                                 |
|   | with  copies to:                                                                                                                                     |   |
|        |                                                                                                                                                      |        |  |

 

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To Executive

 

Robert A. Peterson11571 Burr Oak LaneBurr Ridge, IL 60525

or such other address or to the attention of such other person as therecipient party shall have specified by prior written notice to the sendingparty. Any notice under this Agreement shall be deemed to have been given whenso delivered or sent or, if mailed, five days after deposit in the U.S. mail.

 

9.             General Provisions.

 

(a)           Severability. Whenever possible, each provision of this Agreement shall be interpretedin such manner as to be effective and valid under applicable law, but if any provisionof this Agreement is held to be invalid, illegal or unenforceable in anyrespect under any applicable law or rule in any jurisdiction, suchinvalidity, illegality or unenforceability shall not affect any other provisionor any other jurisdiction, but this Agreement shall be reformed, construed andenforced in such jurisdiction as if such invalid, illegal or unenforceableprovision had never been contained herein.

 

(b)           Complete Agreement.  ThisAgreement, those documents expressly referred to herein and other documents ofeven date herewith embody the complete agreement and understanding among theparties and supersede and preempt any prior understandings, agreements orrepresentations by or among the parties, written or oral, which may haverelated to the subject matter hereof in any way, including but not limited tothe Employment Agreement between the parties dated as of January 1, 2002.

 

(c)           Counterparts.  ThisAgreement may be executed in separate counterparts, each of which is deemed tobe an original and all of which taken together constitute one and the sameagreement.

 

(d)           Successors and Assigns.   Unless otherwise expressly provided, this Agreementshall bind and inure to the benefit of and be enforceable by Executive, the Companyand their respective successors and assigns.

 

(e)           Governing Law. The laws of the state of Illinois shallgovern all issues and questions concerning the employment of Executive, withoutgiving effect to any choice of law or conflict of law rules or provisions(whether of the State of Illinois or any other jurisdiction) that would causethe application of the laws of any jurisdiction other than the State ofIllinois. All other issues and questions concerning the construction, validity,enforcement and interpretation of this Agreement and the exhibits and scheduleshereto shall be governed by, and construed in accordance with, the laws of theState of Delaware, without giving effect to any choice of law or conflict oflaw rules or provisions (whether of the State of Delaware or any

 

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other jurisdiction) that would cause the application of the laws of anyjurisdiction other than the State of Delaware.

 

(f)            Amendment and Waiver.  Theprovisions of this Agreement may be amended and waived only with the priorwritten consent of the Company and Executive.

 

(g)           Third-Party Beneficiary.  Except as expressly provided, there are no beneficiariesto this Agreement other than the signatories hereto.

 

(h)           Business Days. If any time period for giving notice ortaking action hereunder expires on a day which is a Saturday, Sunday or legalholiday in the state in which the Company’s chief executive office is located,the time period shall be automatically extended to the business day immediatelyfollowing such Saturday, Sunday or legal holiday.

 

(i)            Assignment. Nothing in this Agreement shall preclude the Company fromconsolidating or merging into or with, or transferring all or substantially allof its assets to, another corporation; providethat the Companywill require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all of the business orassets of the Company to assume this Agreement.

 

(j)            Withholding. All amounts payable to Executive as compensation hereunder shall besubject to customary withholding by the Company.

 

(k)           No Strict Construction. The language used in this Agreement shallbe deemed to be the language chosen by the parties hereto to express theirmutual intent, and no rule of strict construction shall be applied againstany party.

 

(1)           Survival. Section 4, Section 6, Section 9(m),and the rest of Section 9 with respect to Section 4 andSection 6 shall survive and continue in full force in accordancewith their terms notwithstanding any termination of the Term.

 

(m)          Non-Disparagement. The Executive shall not make or publish anynegative statements or communications about Safety Products Holdings, Inc.,Company, any Subsidiary or any officer, manager, member or employee of SafetyProducts Holdings, Inc., Company, or any Subsidiary. The Company shallnot, and shall cause Safety Products Holdings, Inc. and its Subsidiariesnot to, make or publish any negative statements or communications about theExecutive.

 

(n)           Effectiveness. Notwithstanding anything herein to thecontrary, the parties agree that this Agreement is being entered into inconnection with that certain Purchase and Sale Agreement, dated as of May 20,2005, by and among the Company, NSP Holdings, L.L.C. and Safety ProductsHoldings, Inc. (the “Purchase Agreement”) and this Agreement shall becomeeffective only upon consummation of the transactions contemplated by thePurchase Agreement. In the event that the Purchase Agreement is terminated, orthe transactions

 

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thereunder otherwise not consummated, the obligations of the partiesunder this Agreement shall automatically terminate.

 

(o)           Equity Program.  AtClosing under the Purchase Agreement, in addition to any rollover equity issuedto the Executive at that Closing (the “Rollover Equity”), Safety ProductsHoldings, Inc. or its parent company shall issue to Executive 4.25% of itsfully diluted equity (the “Incentive Equity”). The Rollover Equity and theIncentive Equity shall be subject to the terms of an agreement to be negotiatedby the parties that will be substantially consistent with those terms set forthin the term sheet attached hereto as Exhibit C.

 

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IN WITNESS WHEREOF, the parties hereto have executedthis Agreement on the date first written above.

 
|   | **NORCROSS****SAFETY****PRODUCTS L.L.C.** |
|--------|-------------------------------------------|
|   |                                      |
|   |                                      |
|   | By:                                       | /s/ David F. Myers |   |
|   | Name: David F. Myers, Jr.                 |
|   | Title:  Executive Vice President and CFO  |
|   |                                      |
|   |                                      |   |
|   | /s/  Robert A. Peterson                   |   |
|   | Robert  A. Peterson                       |

 

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** **

**EXHIBIT A**

** **

**Bonus Plan Schedule**

 

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**2006Bonus Plan Payout Schedule**

 
| **% of Target (1)** | ** ** | ** **       | ** ** |
|---------------------|------------|------------------|------------|
| **Achieved**        | ** ** | **% Payout (2)** | ** ** |
| 120.0               | %          | 125.0            | %          |
| 117.5               | %          | 125.0            | %          |
| 115.0               | %          | 125.0            | %          |
| 112.5               | %          | 125.0            | %          |
| 110.0               | %          | 125.0            | %          |
| 109.0               | %          | 122.0            | %          |
| 108.0               | %          | 119.0            | %          |
| 107.0               | %          | 116.0            | %          |
| 106.0               | %          | 113.0            | %          |
| 105.0               | %          | 110.0            | %          |
| 104.0               | %          | 108.0            | %          |
| 103.0               | %          | 106.0            | %          |
| 102.0               | %          | 104.0            | %          |
| 101.0               | %          | 102.0            | %          |
| 100.0               | %          | 100.0            | %          |
| 99.0                | %          | 98.0             | %          |
| 98.0                | %          | 96.0             | %          |
| 97.0                | %          | 94.0             | %          |
| 96.0                | %          | 92.0             | %          |
| 95.0                | %          | 90.0             | %          |
| 94.0                | %          | 84.0             | %          |
| 93.0                | %          | 78.0             | %          |
| 92.0                | %          | 72.0             | %          |
| 91.0                | %          | 66.0             | %          |
| 90.0                | %          | 60.0             | %          |
| 89.0                | %          | 0.0              | %          |

 

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(1) Target defined as per Section 3(c) of the EmploymentAgreement 

(2) Payout is expressed as a percentage of the Target Bonus 

 

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**EXHIBIT B**

 

For consideration received (including payments,promises, and agreements), Robert A. Peterson (the “Executive”) on behalf ofhimself and on behalf of any dependents, spouse, heirs, successors and assigns,does hereby generally release, Safety Products Holdings, Inc., NorcrossSafety Products, L.L.C., and each of their respective predecessors, successors,assignees, parent companies, members, subsidiaries, affiliates, officers,directors, managers, partners, employees, agents and attorneys, past andpresent (collectively, the “Released Persons”), from liability on or for anyand all charges, claims, controversies, actions, causes of action,cross-claims, counterclaims, demands, debts, duties, sanctions, fines,compensatory damages, liquidated damages, punitive or exemplary damages, otherdamages, claims for costs, attorney’s fees, sums of money, suits, contacts,covenants, controversies, agreements, promises, responsibilities, obligations andaccounts of any nature whatsoever in law or in equity, direct or indirect, bothpast and present and whether or not now or heretofore known, suspected, orclaimed against the Released Persons including, but not limited to, any claimrelating to, by reason of, or arising out of, any acts, matters or omissions ofthe Released Persons, Executive’s employment with any of the Released Persons,events occurring during the course of such employment, or the terminationthereof; including but not limited to, any claim of unlawful discrimination dueto race, sex, religion, national origin, handicap, ancestry, or age or otherclaim of unlawful employment discrimination; any claim that any of the ReleasedPersons violated any promise or agreement, either express or implied, withExecutive or that any of the Released Persons has terminated or causedtermination of Executive’s employment for any unlawful reason or in an unlawfulfashion, including specifically without limiting the generality of theforegoing, any claim under the Family and Medical Leave Act, the WorkerAdjustment Retraining and Notification Act, the Age Discrimination inEmployment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Actof 1991, the Civil Rights Act of 1866, the Rehabilitation Act, the LaborManagement Relations Act, or the Equal Pay Act, each as amended from time totime, or violated any other federal, state, or local law or regulation; or anyclaim of emotional distress, defamation, wrongful termination, wages, severancepay, bonus, sick leave, holiday pay, vacation pay, life insurance, health andmedical insurance, or any other fringe benefit. This release shall in norespect have any force or effect with respect to (a) claims with respectto Executive’s equity interests in Safety Products Holdings, Inc. to theextent that such claims relate to facts and circumstances which form the basisof a claim brought by an equityholder that is not an employee of SafetyProducts Holdings, Inc. or its Subsidiaries; (b) claims for rights ofindemnification or exculpation under the constitutive documents of SafetyProducts Holdings, Inc. or any of its Subsidiaries, provided thatExecutive (or his guardian or personal representative) certifies to hisknowledge of the existence of any such claims as of the date of such release; (c) claimswith respect to the repurchase price or repurchase procedure of any ofExecutive’s equity, or (d) the rights of the Executive arising frombreaches after the date hereof of any agreement to which the Executive and suchReleased Person are a party.

 

16

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**EXHIBIT C**

 

17

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**TERM SHEET FOR PROPOSEDMANAGEMENT STOCKHOLDERS AGREEMENT**

 
| General                                                                                                   | ** ** | **•****     **Agreement  terminates upon IPO of $100,000,000, complete liquidation or agreement for  sale of all or substantially all assets, or upon termination by the Board.                                                                      |
|-----------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Securities to bear legend                                                                                                                                                                                                                     |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
| Sale  of Restricted Shares(1) and Rollover Shares (collectively “Shares”) by Management  Holder |       | •      Requires written consent of the Company,  authorized by the majority of the Board of Directors.                                                                                                                                               |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Authorized sale of Shares requires notice  to the Company and Odyssey of the relevant details (identity, price, terms)  of the proposed transferee.                                                                                           |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Upon receipt of notice, the Company has 45  days to exercise its right of purchase Shares, in whole or in part.                                                                                                                               |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Odyssey has the right to purchase any or  all Shares the Company does not purchase within 15 days (following the  Company’s 45 days).                                                                                                    |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Transfer must be effectuated within 90 days  of notice to the Company and Odyssey                                                                                                                                                             |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
| Other  Transfer of Shares by  Management  Holder                                                     |       | •      Permitted transferees: Company, Odyssey,  immediate family members, trust for the benefit of immediate family members,  or estate upon death.                                                                                                 |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Voting rights do not pass to family  members, trust, or estate in such a transfer.                                                                                                                                                            |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
| Company  Call Right                                                                                       |       | •      The Company may exercise its right to  repurchase Shares within the nine month period following the later of the  Management Holder’s separation from service or exercise of Vested Options  (subject to 6 month minimum holding period) |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | **•****     **FMV  purchase price except in event of termination for cause, in which case the  purchase price for Restricted Shares shall be the lesser of the FMV or the  purchase price paid by the Management Holder ($0.01 if none).             |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      The Company’s call right is also triggered  immediately before any Change in Control to enable the Shares to be dragged  as part of a Change in Control at the same price per share and form of  consideration.                          |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
|                                                                                                      |       | •      Must repurchase within 60 days (or 10 days  following necessary governmental approval) of exercise of repurchase right.                                                                                                                       |
|                                                                                                      |       |                                                                                                                                                                                                                                                                               |
| Management  Holder’s Put Right                                                                       |       | •      Management Holder may cause the Company to  repurchase all Shares within 9 months following termination not for cause,  death                                                                                                                 |

 

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(1) For purposes hereof, Restricted Shares are shares received upon theexercise of Vested Options.

 

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|                               |   | or disability (but  including termination for good reason)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                               |   | •      Purchase  price is FMV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                               |   | **•****     **Transfer  no earlier than 6 months following Management Holder’s exercise of Vested  Options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                               |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                               |   | •      Must  repurchase within 60 days (or 10 days following necessary governmental  approval) of exercise of put right.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Involuntary Transfer               |   | •      In the  event of default, foreclosure, forfeit, divorce or court order transferring  shares involuntarily, Management Holder must notify the Company within 2  days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                               |   | **•****     **Company  has 60 days to repurchase from transferee at FMV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                               |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Repurchase Upon Company Disability |   | •      If  repurchase pursuant to repurchase right or put by Company would make Company  unable to meet its other obligations, is prohibited by law, or would breach  any credit agreement or indenture, Company will not be required to repurchase  [open as to frequency and size of repurchases]                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Bring-Along Rights                 |   | •      Odyssey  holders can require Management Holders to sell the lesser of a designated  number of shares or such Management Holder’s total number of shares multiplied  by the total number of Odyssey shares over the total number of outstanding  shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                               |   | **•****     **Odyssey  may require Management Holders to exercise vested options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Tag-Along Rights                   |   | **•****     **Management  Holder may require third party purchaser to purchase the total number of  shares to be purchased multiplied by the Management Holder’s number of shares  over the sum of the Odyssey shares, management shares and all other shares  exercising tag-along rights 

 

•      Management  Holders get 7 days notice from Odyssey, must exercise tag-along right within  5 days

 

**•****     **If  third party doesn’t purchase under same terms and conditions from Management  Holder, Odyssey cannot tender shares unless they purchase from management  under same terms and conditions under which they are selling. |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Preemptive Rights                  |   | **•****     **In  connection with purchases by Odyssey and its affiliates, subject to customary  carveouts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 

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