**Exhibit3.1**

 

**SECONDAMENDED AND RESTATEDLIMITED LIABILITY COMPANY AGREEMENT**

** **

**OF**

** **

**NSPHOLDINGS L.L.C.**

** **

**ADELAWARE LIMITED LIABILITY COMPANY**

** **

**DATEDAS OF FEBRUARY 26, 2004**

 

 

THE UNITS REPRESENTED BYTHIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THEUNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLESECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISETRANSFERRED AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWSOR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ONTRANSFERABILITY SET FORTH HEREIN.

 

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**TABLE OF CONTENTS**

 
| **ARTICLE I ORGANIZATIONAL  MATTERS** |   |
|---------------------------------------|--------|
|                                  | 1.1    | Formation  of Company |   |
|                                  | 1.2    | Limited Liability  Company Agreement |   |
|                                  | 1.3    | Name |   |
|                                  | 1.4    | Purpose |   |
|                                  | 1.5    | Principal Office:  Registered Office |   |
|                                  | 1.6    | Term |   |
|                                  | 1.7    | No  State-Law Partnership |   |
|                                  |   |   |
| **ARTICLE II MEMBERS:  MEMBER UNITS** |   |
|                                  | 2.1    | Member Units |   |
|                                  | 2.2    | Additional  Units |   |
|                                  | 2.3    | Time of  Meetings |   |
|                                  | 2.4    | Notice of  Meetings |   |
|                                  | 2.5    | Voting |   |
|                                  | 2.6    | Proxies |   |
|                                  | 2.7    | Regulatory Compliance  Matters |   |
|                                  | 2.8    | Conversion of  Common Units in General |   |
|                                  | 2.9    | Conversion of Class  B Common Units |   |
|                                  | 2.10   | Conversion  Procedure |   |
|                                  | 2.11   | SBIC Regulatory Provisions |   |
|                                  | 2.12   | Deliveries |   |
|                                  |   |   |
| **ARTICLE III MANAGERS**              |   |
|                                  | 3.1    | Selection  of Managers |   |
|                                  | 3.2    | Management |   |
|                                  | 3.3    | Restrictions |   |
|                                  | 3.4    | Procedures |   |
|                                  | 3.5    | Designation of  Chairman and Officers |   |
|                                  | 3.6    | The Chief Executive Officer |   |
|                                  | 3.7    | The President |   |
|                                  | 3.8    | Vice President |   |
|                                  | 3.9    | Secretary |   |
|                                  | 3.10   | Chief  Financial Officer |   |
|                                  | 3.11   | Assistant  Secretaries and Assistant Treasurers |   |
|                                  |   |   |
| **ARTICLE IV CAPITAL**                |   |
|                                  | 4.1    | Initial Capital  Contributions |   |
|                                  | 4.2    | In-kind Capital  Contributions |   |
|                                  | 4.3    | Additional Capital  Contributions |   |
|                                  | 4.4    | Interest |   |
|                                  | 4.5    | Capital  Accounts |   |

 

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|                                                   | 4.6    | Negative Capital Accounts               |   |
|--------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                   | 4.7    | No Withdrawal                           |   |
|                                                   | 4.8    | Company Assets                          |   |
|                                                   |   |                                    |
| **ARTICLE V PROFITS, LOSSES  AND DISTRIBUTIONS**       |   |
|                                                   | 5.1    | Distributions                           |   |
|                                                   | 5.2    | Allocations                             |   |
|                                                   | 5.3    | Special  Allocations                    |   |
|                                                   | 5.4    | Tax Allocations                         |   |
|                                                   | 5.5    | Curative  Allocations                   |   |
|                                                   |   |                                    |
| **ARTICLE VI BOOKS, RECORDS,  ACCOUNTING AND REPORTS** |   |
|                                                   | 6.1    | Records; Accounting and  Notice         |   |
|                                                   | 6.2    | Fiscal Year                             |   |
|                                                   | 6.3    | Transmission of  Communications         |   |
|                                                   |   |                                    |
| **ARTICLE VII TAX MATTERS**                            |   |
|                                                   | 7.1    | Preparation of Tax Returns              |   |
|                                                   | 7.2    | Tax Elections                           |   |
|                                                   | 7.3    | Tax Controversies                       |   |
|                                                   |   |                                    |   |
| **ARTICLE VIII  NON-COMPETITION**                      |   |
|                                                   | 8.1    | Noncompete                              |   |
|                                                   | 8.2    | Nonsolicitation                         |   |
|                                                   | 8.3    | Enforceability                          |   |
|                                                   | 8.4    | Reasonable Restrictions                 |   |
|                                                   |   |                                    |
| **ARTICLE IX TRANSFER AND  WITHDRAWAL**                |   |
|                                                   | 9.1    | Restrictions on  Transfer of Securities |   |
|                                                   | 9.2    | Right of First Refusal                  |   |
|                                                   | 9.3    | Sale of the Company                     |   |
|                                                   | 9.4    | Tag-Along Rights                        |   |
|                                                   | 9.5    | Termination of Employment               |   |
|                                                   | 9.6    | Withdrawal of Members                   |   |
|                                                   | 9.7    | Legend                                  |   |
|                                                   | 9.8    | Transfer Cost  Considerations           |   |
|                                                   |   |                                    |
| **ARTICLE X ADMISSION OF  MEMBERS**                    |   |
|                                                   | 10.1   | Substituted Members                     |   |
|                                                   | 10.2   | Additional Members                      |   |
|                                                   | 10.3   | Optionholders                           |   |
|                                                   |   |                                    |
| **ARTICLE XI INCORPORATION**                           |   |
|                                                   |   |                                    |
| **ARTICLE XII LIQUIDATION**                            |   |
|                                                   | 12.1   | Dissolution                             |   |
|                                                   | 12.2   | Accounting                              |   |
|                                                   | 12.3   | Compensation of Trustee                 |   |

 

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| **ARTICLE XIII INDEMNITY**   |   |
|------------------------------|--------|
|                         | 13.1   | Indemnification |   |
|                         |   |   |
| **ARTICLE XIV DEFINITIONS**  |   |
|                         | 14.1   | Certain Definitions |   |
|                         | 14.2   | Other Definitions |   |
|                         |   |   |
| **ARTICLE XV MISCELLANEOUS** |   |
|                         | 15.1   | Wills |   |
|                         | 15.2   | Spousal Consent |   |
|                         | 15.3   | Third-Party Beneficiaries |   |
|                         | 15.4   | Designees |   |
|                         | 15.5   | Amendments |   |
|                         | 15.6   | Notices |   |
|                         | 15.7   | Waiver of Certain Rights |   |
|                         | 15.8   | Entire Agreement |   |
|                         | 15.9   | Effect of Waiver or Consent |   |
|                         | 15.10  | Creditors |   |
|                         | 15.11  | Indemnification  and Reimbursement for Payments on Behalf of a Member |   |
|                         | 15.12  | Descriptive  Headings; Interpretation |   |
|                         | 15.13  | Further Assurances |   |
|                         | 15.14  | Counterparts |   |
|                         | 15.15  | Representations  and Warranties of Unitholder |   |
|                         | 15.16  | Representations  and Warranties of Company |   |
|                              |        |  |  |  |

 

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**SECOND AMENDED ANDRESTATED LIMITED LIABILITY COMPANY AGREEMENTOF NSP HOLDINGS L.L.C. A Delaware Limited Liability Company**

** **

This SECOND AMENDED ANDRESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”), enteredinto and adopted on February 26, 2004 (the “Effective Date”), by theMembers of NSP Holdings L.L.C., a Delaware limited liability company (the “Company”).

 

This Agreement amends andrestates in its entirety that certain Limited Liability Company Agreement,dated as of the October 2, 1998, by and among the Company and its members (asamended and restated on February 17, 2000 and as further amended, modified orsupplemented from time to time, the “Prior Agreement”).  This Agreement shall become effective uponexecution hereof by the holders of a majority of the Common Voting Units (withRequired Approval) (each as defined in the Prior Agreement).

 

NOW, THEREFORE, inconsideration of the mutual covenants contained herein and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto, intending to be legally bound, hereby agreeas follows:

 

ARTICLE I

 

# ORGANIZATIONALMATTERS

 

## 1.1        Formation of Company.  The Company was formed on September 25, 1998pursuant to the provisions of the Delaware Act and the provisions of thisAgreement.

 

## 1.2        Limited Liability Company Agreement.  The Members hereby execute this Agreementfor the purpose of establishing the affairs of the Company and the conduct ofits business in accordance with the provisions of the Delaware Act.  The Members hereby agree that during theterm of the Company set forth in Section 1.6 the rights and obligationsof the Members with respect to the Company will be determined in accordancewith the terms and conditions of this Agreement and, except where the DelawareAct provides that such rights and obligations specified in the Delaware Actshall apply “unless otherwise provided in a limited liability companyagreement” or words of similar effect, and such rights and obligations are setforth in this Agreement, the Delaware Act; provided that,notwithstanding the foregoing, Section 18-210 of the Delaware Act shall notapply or be incorporated into this Agreement.

 

## 1.3        Name.  The name of the Company shall be “NSPHoldings L.L.C.”  The Managers in theirsole discretion may change the name of the Company at any time and from time totime.  Notification of any such changeshall be given to all Unitholders.  TheCompany’s business may be conducted under its name and/or any other name ornames deemed advisable by the Managers.

 

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## 1.4        Purpose.  The purpose and business of the Companyshall be any business which may lawfully be conducted by a limited liabilitycompany formed pursuant to the Delaware Act.

 

## 1.5        Principal Office: Registered Office.  The principal office of the Company shall beat 2211 York Road, Suite 215, Oak Brook, Illinois 60523-1887, or such otherplace as the Managers may from time to time designate.  The Company may maintain offices at suchother place or places as the Managers deem advisable.  Notification of any such change shall be given to allMembers.  The address of the registeredoffice of the Company in the State of Delaware shall be c/o The CorporationTrust Company, 1209 Orange Street, Wilmington, Delaware 19805, and theregistered agent for service of process on the Company in the State of Delawareat such registered office shall be The Corporation Trust Company.

 

## 1.6        Term.  The term of the Company commenced upon thefiling of the Certificate in accordance with the Delaware Act and, shalldissolve on the earlier of: (a) the entry of a decree of judicial dissolutionunder § 18-802 of the Delaware Act and (b) the determination of the Managerswith Required Approval.

 

## 1.7        No State-Law Partnership.  The Members intend that the Company not be apartnership (including, without limitation, a limited partnership) or jointventure, and that no Member be a partner or joint venturer of any other Memberby virtue of this Agreement, for any purposes other than as set forth in thelast sentence of this Section 1.7, and neither this Agreement nor anyother document entered into by the Company or any Member relating to thesubject matter hereof shall be construed to suggest otherwise.  The Members intend that the Company shall betreated as a partnership for federal and, if applicable, state or local incometax purposes, and that each Member and the Company shall file all tax returnsand shall otherwise take all tax and financial reporting positions in a mannerconsistent with such treatment.

 

ARTICLE II

 

# MEMBERS:MEMBER UNITS

 

## 2.1        MemberUnits.

 

### (a)        Each Member’s interest in theCompany, including such Member’s interest, if any, in the capital, income,gains, losses, deductions and expenses of the Company and the right to vote, ifany, on certain Company matters as provided in this Agreement, shall berepresented by “Units” (each, individually, a “Unit,” and anynumber of Units, including fractions thereof, “Units”).  Initially, the Units shall be comprised of “ClassA Common Units,” “Class B Common Units,” “Class C Common Units,”and “Class D Common Units”, “Class E Units”  and “Preferred Units”.  The Managers may cause the Company to issueto each Member certificates representing the Units held by such Member.

###  

### (b)        (i)     Whenever this Agreement refers to the “FairMarket Value” of any Units, such value shall be determined as follows:first, the Fair Market Value of the Company as a going concern shall bedetermined (excluding the amount of any indebtedness for borrowed money butincluding all other liabilities and obligations) in good faith by the unanimous

 

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### agreementof the disinterested Managers (or all of the Managers if no Manager isdisinterested) (the “Disinterested Managers”), or absent such anagreement within 10 days of the commencement of an attempt to reach an agreement,by an independent, unaffiliated business evaluation expert appointed by theDisinterested Managers (the “Managers’ Evaluation Expert”), who shall inmaking such determination be instructed by the Disinterested Managers toconsider all relevant factors including, but not limited to, the most recentarm’s-length transaction, if any, involving any interests in the Company.  After a determination of the Fair MarketValue of the Company is made as provided above, the Fair Market Value of a Unitwill equal the amount which would be distributable in respect of such Unit ifthe Company were deemed to have sold all of its assets and liabilities (otherthan liabilities in respect of indebtedness for borrowed money) for such FairMarket Value in cash and then dissolved in accordance with Section 12.1and assuming that all of the convertible debt and other convertible securitieswere repaid or converted (whichever would yield more cash to the holders ofsuch convertible securities) and all options and warrants to acquire Units(whether or not currently exercisable) that have an exercise price below theFair Market Value of the Units into which such Units are exercisable wereexercised and the exercise price therefor paid.  Any Member affected by such valuation (the “Challenging Person”)may, as the sole and exclusive means of challenging such valuation, provide anotice of objection challenging such valuation within 10 days of being notifiedof the initial determination of Fair Market Value, and within 90 days afterbeing notified of the initial determination of Fair Market Value, obtain at itsown expense a valuation of the Fair Market Value of the Company based on theprinciples set forth above from another independent, unaffiliated businessevaluation expert (the “Second Evaluation Expert”); provided, however,that the selection of the Second Evaluation Expert shall be subject to theapproval of the Company, which approval shall not be withheld or delayedunreasonably.  If the valuation by theSecond Evaluation Expert is not less than ninety percent (90%) nor more thanone-hundred ten percent (110%) of the valuation by the Disinterested Managersor the Managers’ Evaluation Expert (as applicable), the Fair Market Value shallbe the average of the two valuations for purposes of clause (ii) below.  In any other case, the DisinterestedManagers or the Managers’ Evaluation Expert (as applicable) and the SecondEvaluation Expert shall select a third, mutually acceptable evaluation expert,who shall perform a third valuation, the cost of which shall be equally sharedby the Company and the Challenging Person, and the Fair Market Value shall bethe average of the three valuations.

###  

(ii)        Notwithstanding anythingin this Agreement to the contrary, the Company shall not be prohibited fromconsummating any transaction notwithstanding the fact that the determination ofFair Market Value is required to be made pursuant to the terms of thisAgreement and remains in dispute.  If atthe conclusion of the determination of Fair Market Value in accordance with theforegoing paragraph, the Fair Market Value of any Unit is greater by tenpercent (10%) or more than the Unit price upon which such transaction wasconsummated with respect to such Unit (the “Unit Price Difference”), theChallenging Person (but no other person) will receive from the Companyadditional cash, as reasonably determined by the Managers, sufficient tosatisfy the Unit Price Difference in respect of any Units transferred by suchChallenging Person pursuant to such transaction.

 

### (c)        Ownership of a CommonVoting Unit by a Member shall entitle such Member to one vote on any mattervoted on by all Members as provided in this Agreement and/or as required byapplicable law.  At every meeting of theMembers, each Member shall be 

 

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### entitledto one vote for every Common Voting Unit held by such Member; provided thatunless otherwise required by law, ownership of a Class B Common Unit, Class DCommon Unit, Class E Unit or Preferred Unit by a Member shall not entitle suchMember to any voting rights.

###  

### (d)        The Company shall have theright to redeem all of the Preferred Units then outstanding in exchange for anote payable by the Company. Upon such a redemption, each holder of PreferredUnits shall be entitled to receive a note with a principal amount equal to theRedemption Distribution with respect to such holder’s outstanding PreferredUnits.  Interest on such note shallaccrue and be payable on the same basis as Preferred Yield previously accruedand was payable on such Preferred Units. Such note shall mature and become due and payable (together with allaccrued and unpaid interest thereon) on the Scheduled Redemption Date (asdefined below) or, if sooner, upon a Sale of the Company.  Such note shall contain terms that are noless favorable to such holder than the terms of the Preferred Units and shallotherwise be reasonably acceptable to the holders of a majority of thePreferred Units.  The Company shallredeem all of the outstanding Preferred Units on September 30, 2013 (the “ScheduledRedemption Date”) at a price equal to the Redemption Distribution; provided,however, that if a Sale of the Company occurs prior to the ScheduledRedemption Date, the Company shall, simultaneously with the occurrence of suchSale of the Company, redeem all of the outstanding Preferred Units held by suchholder at a price equal to the Redemption Distribution.

###  

### (e)        All Common Units issued toemployees of the Company or any Subsidiary thereof for management incentiveand/or compensation purposes, other than Common Units issued pursuant to theUnit Exchange Agreement, dated as of October 1, 1998, among the Company, RobertA. Peterson, David F. Myers, Jr. and Robert A. Larsen (the “Unit ExchangeAgreement”) shall be issued as “Class C Common Units”.

###  

## 2.2        AdditionalUnits.

 

### (a)        Additional Units and theinterests in the Company represented by such Units shall be established by theManagers pursuant to the terms of this Agreement and shall be indicated in therecords of the Company.

###  

### (b)        Subject to Sections2.2(d) and 3.3(a), the Managers may, in their discretion, issueadditional Units to existing Members and/or to Persons who are not Members (“OfferedUnits”).  At least thirty (30) daysprior to the date of the proposed issuance the Managers shall provide writtennotice to the Members of the terms of the proposed issuance (the “IssuanceNotice”) and shall grant to all Members the right (a “Preemptive Right”),subject to the limitations set forth below, to subscribe for and, uponconsummation of such issuance, purchase its pro rata share (for each Member,the percentage determined by dividing the number of Common Units held by suchMember divided by the number of Common Units held by all Members) of each classand type of the Offered Units to be so issued (the “Pro Rata Share”) atthe same price and on the same terms as reflected in the Issuance Notice; providedthat with respect to Offered Units, at the request of any Member, the Companyshall offer to such Member Units which have no voting rights (other thanrequired by applicable law) and which are convertible into voting securities onthe same terms as Common Units are convertible into other Common Units pursuantto Section 2.8, but which are otherwise identical to the Offered Units.Each Member shall be entitled to exercise such Preemptive Right for the OfferedUnits by giving 

 

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### writtennotice to the Managers within fifteen (15) days after receipt of the IssuanceNotice (the “Election Notice”). The failure by a Member to exercise its Preemptive Right within suchtime period shall be deemed a waiver by such Member of its Preemptive Right.The delivery of an Election Notice shall be irrevocable on the Member deliveringsuch Election Notice and each participating Member shall be bound and obligatedto acquire in any such issuance on the same terms and conditions the number ofUnits such participating Member shall have specified in the Election Notice.  If any Member does not purchase its Pro RataShare within the time period provided, then each of the Members that haselected to exercise its Preemptive Right shall have the right to exercise itsPro Rata Share of the unexercised portion of the Offered Units.  As soon as practicable, and in any eventwithin ten (10) days, after the expiration of the fifteen (15) day period setforth above, the Managers shall deliver written notice to the Members settingforth the number of Offered Units such Member is entitled to purchase, theaggregate purchase price and the time and place of the closing of thetransaction.

###  

### (c)        Upon the expiration of theoffering periods described above, the Company shall be entitled to issue suchOffered Units which such Members have not elected to purchase during the ninety(90) days following such expiration, at a price that is not less thanninety-five percent (95%) of the price set forth in the Issuance Notice and onother terms and conditions no more favorable to the purchasers thereof than thoseoffered to such Members.  Any OfferedUnits not sold by the Company after such ninety (90) day period must bereoffered to the Members pursuant to the terms of Section 2.2(b).

###  

### (d)        Anything stated in Section2.2(b) to the contrary notwithstanding, no Member shall have PreemptiveRights with respect to (i) the issuance of any Common Units after the datehereof for management incentive and/or compensation purposes for the benefit ofemployees as long as the number of such Units issued after the date hereof doesnot exceed 5% in the aggregate of the fully diluted Common Units, (ii) theissuance of up to 42,247 Class A Common Units and 42,247 Preferred Units (assuch amounts may be adjusted to reflect the effects of Unit splits, Unitdividends and similar events) in exchange for units of Morning PrideManufacturing LLC. (“Morning Pride”) held by William and Mary Grilliot(the “Grilliots”) pursuant to the option agreement, as amended, betweenMorning Pride, Norcross Safety Products LLC., a Delaware limited liabilitycompany, and the Grilliots (the “Option Agreement”), (iii) the issuanceof Class A Common Units and Preferred Units to Claude Roberge, F. Nato Sergiand Andre Paquette in connection with the acquisition of Arkon SafetyEquipment, Inc. by North Safety Products Ltd. or another Affiliate of theCompany, (iv) Units issued as consideration for an acquisition or joint venturetransaction, (v) Units issued as an “equity kicker” in respect of indebtednessfor borrowed money to persons not affiliated with any Member, or to any Memberor other person that is affiliated with any Member, but only if such affiliateis receiving more than 50% of the equity so issued, (vi) Units issued pursuantto a Public Sale or (vii) Class E Units issued to Member Employees.  For all purposes under this Agreement, alloutstanding options or warrants or similar rights to acquire Common Units,issued after the date hereof, owned by or in favor of management and any CommonUnits purchased by management after the date hereof with the proceeds of loansor bonuses from the Company shall in all events be deemed issued for managementincentive and/or compensation purposes.

###  

### (e)        Each Member may delegateits rights and obligations under this Section 2.2 to its Affiliates oramong other Members of the group.

 

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## 2.3        Timeof Meetings. There shall be at least one meeting of the Members eachyear, which shall be scheduled by the Managers.  Additional meetings of the Members shall be called by the Managerson the request of Members owning Common Voting Units representing, in theaggregate, not less than twenty-five percent (25%) of the total outstandingCommon Voting Units.  In addition to theMembers, holders of instruments directly or indirectly convertible into orexercisable for Units, shall be invited to attend (but not vote at) themeetings of Members; provided, the failure of the Company to invite suchholders to any meeting shall not render invalid any action taken at suchmeeting or create any liability on the part of the Company, the Members or theofficers and directors of the Company to any person.

 

## 2.4        Noticeof Meetings.  Written notice ofany meeting of the Members shall be given, personally or by facsimile(answerback confirmed), to each Unitholder not less than three (3) days priorto the meeting, except as otherwise required by the Delaware Act. Such noticeshall state the place, date and hour of the meeting.

 

## 2.5        Voting.  At all meetings of Members, the holders of amajority of the Common Voting Units entitled to vote thereat, present in personor represented by proxy, shall constitute a quorum for the transaction ofbusiness, except as otherwise provided by the Delaware Act, the Certificate ofFormation or this Agreement.  At allmeetings, each Member entitled to vote thereat may vote in person or by proxy,provided such proxy complies with Section 2.6.  A majority of the Common Voting Units voted in person or by proxyshall decide any question brought before such meeting, unless the question oraction is one upon which a different vote is required by express provision oflaw, the Certificate of Formation or this Agreement.

 

## 2.6        Proxies.  Members who are unable to attend a meetingmay appear and vote by proxy; provided, however, that a proxyshall only be valid if it is in writing and has been duly executed by theMember.  No proxy shall be valid unlesson the face of such proxy it specifically names the individual who shall beauthorized to act on such Member’s behalf, which individual must be either aManager or another Member.  No Membermay hold, or act in any capacity pursuant to, the proxy of more than one Memberat any meeting, except that the Managers of the Company shall not be restrictedfrom voting multiple proxies duly delivered to the Company.  All proxies granted in violation of this Section2.6 shall be void.

 

## 2.7        Regulatory Compliance Matters.

 

### (a)        Before the Company shallredeem, purchase or otherwise acquire, directly or indirectly, or convert ortake any action with respect to the voting rights of, any interest in any Unitsor any securities convertible into or exchangeable for any interest in anyUnits, the Company shall give written notice of such pending action to theRegulated Members.  Upon the writtenrequest of any Regulated Member made within 5 days after its receipt of anysuch notice stating that after giving effect to such action such RegulatedMember would have a Regulatory Problem, the Company shall defer taking suchaction for such period (not to extend beyond 15 days after such RegulatedMember’s receipt of the Company’s original notice) as such Regulated Memberrequests to permit it and its Affiliates to avoid the Regulatory Problem inaccordance with this Agreement.

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### (b)        In the event that anyRegulated Member determines that it has a Regulatory Problem (and obtains anddelivers to the Managers an opinion of counsel (who may be independent counselor an employee of such Member or an affiliate of such Member, and who shall bereasonably satisfactory to the Managers) to such effect, such Regulated Memberand its Affiliates shall have the right to Transfer all or any portion of itsUnits pursuant to an Exempt Transfer or otherwise in compliance with Section9.2(a) as if each such person were a “Transferring Holder” and the Unitsbeing proposed to be Transferred were “Transferred Units”, and the Company andthe Members shall take all such actions as are reasonably requested by suchRegulated Member to effectuate and facilitate any Transfer by such Member ofany Units of the Company pursuant to the immediately preceding sentence.

###  

## 2.8        Conversion of Common Units in General.  At any Member’s request at any time, suchMember shall have the right to convert and reconvert all or any portion of anyclass of Common Units held by such Member into an equal number of any otherclass of Common Units; providedthat, in the case of a BHCARegulated Member the conversion of a Class B Common Unit into another class ofCommon Unit shall be made only pursuant to Section 2.9; and providedfurtherthat, no Member Employee or any of such Member Employee’sFamily Group shall be permitted to convert any of its Class C Common Units intoany other class of Common Units.

 

## 2.9        Conversion of Class B Common Units.

 

### (a)        In connection with theoccurrence (or the expected occurrence as described in (c) below) of anyConversion Event, each holder of Class B Common Units shall be entitled toconvert into an equal number of Class A Common Units any or all of suchholder’s Class B Common Units being (or expected to be) distributed, disposedof or sold in connection with such Conversion Event.

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### (b)        For purposes of this Section2.9, a “Conversion Event” shall mean (i) any Public Sale or publicoffering of securities of the Company (including a public offering registeredunder the Securities Act), (ii) any sale of securities of the Company to aPerson or group of Persons (within the meaning of the U.S. Securities ExchangeAct of 1934, as amended (the “1934 Act”)) if, after such sale, suchPerson or group of Persons in the aggregate would own or control securitieswhich possess in the aggregate the ordinary power to elect a majority of theCompany’s board of managers (provided that such sale has been approved by theCompany’s board of managers, equivalent governing body, or a committeethereof), (iii) any sale of securities of the Company to a Person or group ofPersons (within the meaning of the 1934 Act) if, after such sale, such Personor group of Persons in the aggregate would own or control securities of theCompany (excluding any Class B Common Units being converted and disposed of inconnection with such Conversion Event) which possesses in the aggregate theordinary power to elect a majority of the Company’s board of managers orequivalent governing body, (iv) any sale of securities of the Company to aPerson or group of Persons (within the meaning of the 1934 Act) if, after suchsale, such Person or group of Persons would not, in the aggregate, own, controlor have the right to acquire more than two percent (2%) of the outstandingsecurities of any class of voting securities of the Company, and (v) a merger,consolidation or similar transaction involving the Company if, after suchtransaction, a Person or group of Persons (within the meaning of the 1934 Act)in the aggregate would own or control securities which 

 

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### possessin the aggregate the ordinary voting power to elect a majority of the survivingcompany’s directors or equivalent governors (provided that the transaction hasbeen approved by the Company’s board of managers, equivalent governing body, ora committee thereof).

###  

### (c)        Each BHCA Regulated Memberholding Class B Common Units shall be entitled to convert Class B Common Unitsin connection with any Conversion Event if such BHCA Regulated Memberreasonably believes that such Conversion Event shall be consummated, and awritten request for conversion from any BHCA Regulated Member holding Class B CommonUnits to the Company stating such BHCA Regulated Member’s reasonable beliefthat a Conversion Event shall occur shall be conclusive and shall obligate theCompany to effect such conversion in a timely manner so as to enable each suchBHCA Regulated Member to participate in such Conversion Event.  The Company shall not cancel the Class BCommon Units so converted before the tenth day following such Conversion Eventand shall reserve such Class B Common Units until such tenth day for reissuancein compliance with the next sentence. If any Class B Common Units are convertedinto Class A Common Units in connection with a Conversion Event and such ClassA Common Units are not actually distributed, disposed of or sold pursuant tosuch Conversion Event, such Class A Common Units shall be promptly convertedback into the same number of Class B Common Units.

###  

### (d)        At any BHCA RegulatedMember’s request at any time in the event that such BHCA Regulated Member’sownership percentage of Class A Common Units is reduced by additional issuancesof Class A Common Units by the Company, such BHCA Regulated Member shall havethe right to convert a number of Class B Common Units originally issued to suchBHCA Regulated Member (whether then held by such BHCA Regulated Member or anytransferee of such BHCA Regulated Member or any transferee of any transferee)into a number of Class A Common Units (with each Class B Common Unit beingconvertible into one Class A Common Unit) such that, after giving effect tosuch conversion, the sum of (i) the number of outstanding Class A Common Unitsoriginally issued to such BHCA Regulated Member (whether then held by such BHCARegulated Member or any transferee of such BHCA Regulated Member or anytransferee of any transferee) and (ii) the number of other outstanding votingsecurities of the Company then held by such BHCA Regulated Member, constitutesnot more than 4.9% of the aggregate voting securities of the Company.

###  

### (e)        If at any time RegulationY promulgated by the Federal Reserve Board is amended to allow BHCA RegulatedMembers to hold more than 4.9% of the aggregate voting securities of theCompany, then upon any BHCA Regulated Member’s request, such BHCA RegulatedMember shall have the right to convert a number of Class B Common Units originallyissued to such BHCA Regulated Member (whether then held by such BHCA RegulatedMember or any transferee of such BHCA Regulated Member or any transferee of anytransferee) into an equal number of Class A Common Units to the extentpermissible at such time under Regulation Y.

###  

### (f)         For purposes of this Section2.9, “originally issued” means such Class B Common Units which were firstissued by the Company to such BHCA Regulated Member, regardless of whether suchClass B Common Units are then held by such BHCA Regulated Member or anytransferee of such BHCA Regulated Member or any transferee of any transferee.

 

8

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## 2.10      ConversionProcedure.

 

### (a)        Unless otherwise providedin this Agreement, each conversion of Common Units of one class into CommonUnits of the other class shall be effected by (i) delivery to the principaloffice of the Company a written notice by the Member holding such Common Unitsstating that such Member desires to convert the number of Common Units statedin the notice into Common Units of the other class (and such statement shallobligate the Company to issue such Common Units) and (ii), if the Common Unitsare represented by certificates, surrender of the certificate or certificatesrepresenting the Common Units to be converted. Unless otherwise provided in connection with any conversion, eachconversion shall be deemed to have been effected as of the close of business onthe date on which such notice has been received and, in the case of CommonUnits represented by certificates, such certificate or certificates have beensurrendered, and at such time, the rights of the Member holding the convertedCommon Units as such holder shall cease and the Person or Persons in whose nameor names, in the case of uncertificated Common Units being converted into, willappear in the Company’s books and records or, in the case of certificatedCommon Units being converted into, the certificate or certificates for sharesof Common Units to be issued upon such conversion, shall be deemed to havebecome the holder or holders of record of the Common Units represented thereby.

###  

### (b)        Promptly after theconversion of Common Units is deemed effective as set forth in the immediatelypreceding paragraph, in the case of uncertificated Common Units, the Companyshall promptly reflect such conversion of Common Units in its books and recordsand, in the case of certificated Common Units, the Company shall issue anddeliver in accordance with the surrendering Member’s instructions (i) thecertificate or certificates for the Common Units issuable upon such conversionand (ii) a certificate representing any Common Units which were represented bythe certificate or certificates delivered to the Company in connection with suchconversion but which were not converted.

###  

### (c)        The Company shall notclose its books against the transfer of Common Units in any manner which wouldinterfere with the timely conversion of any Common Units.  The Company shall assist and cooperate withany holder of Common Units required to make any governmental filings or obtainany governmental approval prior to or in connection with any conversion ofCommon Units hereunder (including, without limitation, making any filingsrequired to be made by the Company).

###  

### (d)        If the Company in anymanner subdivides or combines the outstanding Common Units of one class, theoutstanding Common Units of the other class of Common Units shall beproportionately subdivided or combined in a similar manner.

###  

## 2.11      SBIC Regulatory Provisions.

 

### (a)        Number of Unit holders.  As long as any SBIC Holder holds any Units,the Company shall notify the SBIC Holder (a) at least 15 days prior to takingany action after which the number of record holders of the Company’s CommonVoting Units would be increased from fewer than 50 to 50 or more, and (b) ofany other action or occurrence after which the number of record holders of theCompany’s Common Voting Units was increased (or would increase) from 

 

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### fewerthan 50 to 50 or more, as soon as practicable after the Company becomes awarethat such other action or occurrence has occurred or is proposed to occur.

###  

### (b)        Small Business Matters.  At any time as any SBIC Holder reasonablyrequests, and in any event, as promptly as practicable after the end of eachFiscal Year, the Company shall deliver to such SBIC Holder a written statementcertified by the Company’s Chief Financial Officer describing in reasonabledetail the use of the proceeds of each Financing provided by such SBIC Holderto the Company and its Subsidiaries.  Inaddition to any other rights granted hereunder, the Company shall grant eachSBIC Holder and the SBA access to the Company’s books and records, and provideany reports and information, subject in each case to the prior execution ofappropriate confidentiality and nondisclosure agreements, necessary for suchSBIC holder to comply with the SBIC Act and SBIC Regulations, including for thepurpose of verifying the use of such proceeds and verifying the certificationsmade by the Company in SBA Forms 480 and 652 delivered pursuant to thisAgreement and for the purpose of determining whether the principal businessactivity of the Company and its Subsidiaries continues to constitute an eligiblebusiness activity (within the meaning of the SBIC Regulations).

###  

### (c)        SBIC RegulatoryViolation.  Upon the occurrence ofan SBIC Regulatory Violation (as defined below) or in the event that any SBICHolder determines in its reasonable good faith judgment that an SBIC RegulatoryViolation has occurred, in addition to any other rights and remedies to whichit may be entitled (whether under this Agreement or any other agreement, theCertificate or otherwise), such SBIC Holder shall have the right, to the extentrequired under SBIC Regulations, to demand the immediate repurchase of all ofthe outstanding Units owned by such SBIC Holder at a price equal to the FairMarket Value of such Units by delivering written notice of such demand to theCompany.  The Company shall pay thepurchase price for such Units by a cashier’s or certified check or by wiretransfer of immediately available funds (unless any financing agreements towhich the Company is subject prevent such payment in cash, in which case, theCompany will pay with a note that shall mature and become due and payable uponan Sale of the Company, shall bear interest at the Base Rate and shall be onother terms reasonably designated by the Managers) to such SBIC Holder within30 days after the Company’s receipt of the demand notice, and, upon suchpayment, such SBIC Holder shall deliver the certificates (if any) evidencingthe Units being repurchased duly endorsed for transfer or accompanied by dulyexecuted forms of assignment.

###  

For purposes of this Agreement,“SBIC Regulatory Violation” means, with respect to any SBIC Holder achange in the principal business activity of the Company and its Subsidiariesto an ineligible business activity (within the meaning of the SBICRegulations), but only if such change occurs within one year after the date ofthe initial Financing provided by such SBIC Holder.

 

### (d)        Economic ImpactInformation.  Promptly after the endof each Fiscal Year, the Company shall, to the extent required to comply withthe SBIC Regulations, deliver to each SBIC Holder a written assessment of theeconomic impact of such SBIC Holder’s investment in the Company, specifying thefull-time equivalent jobs created or retained in connection with theinvestment, the effect of such SBIC Holder’s Financing on the revenues and 

 

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### profitsof the Company and its Subsidiaries and on taxes paid by the Company and itsemployees.

###  

## 2.12      Deliveries.  The Company shall deliver to each SBICHolder as of, or promptly following, each Financing: (a) duly completed andexecuted SBA Forms 480,652 and Parts A and B of 1031; (b) a writtencertification from the Company regarding its intended use of the proceeds ofthe Financing, and (c) an acknowledgment (to the extent true and correct) that(x) the Company has been informed that each SBIC Holder is a federally licensedSBIC under the SBIC Act, (y) the Company, together with its “affiliates” (asthat term is defined in 13 CFR §121.1O3), is a “small business concern” within themeaning of the SBIC Regulations, including 13 CFR §121.301, and (z) theinformation regarding the Company and its affiliates set forth in SBA Form 480,Form 652 and Parts A and B of Form 1031 being delivered is, to the Company’sknowledge, accurate and complete. Neither the Company nor any Subsidiary presently engages in, or shallhereafter engage in, any activities, nor shall the Company or any Subsidiaryuse the proceeds of the Financing directly or indirectly for any purpose, forwhich an SBIC is prohibited from providing funds by SBIC Regulations (including13 CFR §1O7.720).

 

ARTICLE III

 

# MANAGERS

 

## 3.1        Selection of Managers.

 

### (a)        Except as otherwiserequired by applicable law or this Agreement, the business and affairs of theCompany shall be managed by the Managers. The Managers of the Company on the date of this Agreement are Robert A.Peterson, Edward Levy and David F. Myers, Jr., each of whom shall serve untilhis successor is appointed or until his earlier resignation or death or removalin accordance with this Agreement or any other agreement of the Company whichhas been duly adopted by the Managers.

###  

### (b)        The number of Managersshall be no less than three (3) and no more than six (6).  As long as members of the Argosy Group shallcollectively own at least 15% of the outstanding Common Units and the Companyhas not completed an initial public offering, Argosy-Safety Products, L.P. (“Argosy”)shall have the right to appoint three Managers (the “Argosy Managers”),one of which, as of the date of this Agreement, shall be David F. Myers,Jr.   As long as members of the HancockGroup shall collectively own at least 15% of the outstanding Common Units andthe Company has not completed an initial public offering, the Members holding amajority of the Common Units held by members of the Hancock Group (“MajorityHancock Holders”) shall have the right to appoint one Manager (the “HancockManager”).  As long as ContinentalIllinois Venture Corp. (“CIVC”) shall own at least 13% of theoutstanding Common Units and the Company has not completed an initial publicoffering, CIVC shall have the right to appoint one Manager (the “CIVCManager”).  The remaining Manager(s)shall be appointed by consent or vote of a majority of the Common Voting Units.

###  

### (c)        Subject to Section3.1(d) below, a Manager may be removed, with or without cause, by the voteof the Members owning at least fifty-one percent (51%) of the Common VotingUnits entitled to appoint or vote for such Manager.

 

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### (d)        At any time that theownership of Units held by members of the Argosy Group decreases to a levelthat would no longer entitle Argosy to appoint the Argosy Managers that hadbeen appointed pursuant to Section 3.1(b), the Argosy Managers shall resign.  At any time that the ownership of Units heldby members of the Hancock Group decreases to a level that would no longerentitle Majority Hancock Holders to appoint the Hancock Manager that had beenappointed pursuant to Section 3.1(b), the Hancock Manager shallresign.  At any time that the ownershipof Units held by CIVC decreases to a level that would no longer entitle CIVC toappoint the CIVC Manager that had been appointed pursuant to Section 3.1(b),the CIVC Manager shall resign.

###  

### (e)        Within thirty (30) daysafter the removal, resignation or death of any Manager, the Managers thenserving shall select one natural person, who may but need not be a Member, tofill each vacancy created thereby; provided, that, except as setforth in Section 3.1(b) and in the immediately succeeding sentence, aslong as any such Person is entitled to appoint directors, to the extent aManager has been appointed by Argosy, any replacement Manager shall beappointed by Argosy, to the extent that a Manager has been appointed by theMajority Hancock Holders, any replacement Manager shall be appointed by theMajority Hancock Holders and to the extent a Manager has been appointed byCIVC, any replacement Manager shall be appointed by CIVC.  In the event that David F. Myers, Jr. ceasesto be a Manager for any reason whatsoever, the replacement Manager for David F.Myers, Jr. appointed by Argosy shall be subject to the approval of the MajorityHancock Holders so long as the Majority Hancock Holders are entitled to appointthe Hancock Manager.  The board ofdirectors or managers of any Subsidiary of the Company shall be comprised ofRobert A. Peterson and David F. Myers, Jr., unless otherwise determined at anytime by the Managers with Required Approval.

###  

### (f)         Each Member who is a holderof not less than 2.5% of the Common Units on a fully diluted basis (includingCitizens Capital, Inc.) is entitled to have one representative designated bysuch Member, at such Member’s sole cost and expense, attend all meetings of theManagers in the capacity of a nonvoting observer who may participate indiscussions and, in this respect, copies of all notices, minutes, consents, andother materials that the Company provides to its Managers shall be given tosuch representative; provided, however, that such representativeshall agree to hold in confidence and trust and to act in a fiduciary mannerwith respect to all information so provided; and, provided, further,that the Company reserves the right to withhold any information and to excludesuch representative from any meeting or portion thereof if access to suchinformation or attendance at such meeting could adversely affect theattorney-client privilege between the Company and its counsel or would resultin disclosure of trade secrets to such representative or if such Member or itsrepresentative is a direct competitor of the Company.

###  

## 3.2        Management.  The Managers shall, except as otherwiseexpressly provided herein or by applicable law, be responsible and have soleauthority for all aspects of the management and direction of the Company andshall have all of the authorities permitted to be exercised by managers underthe Delaware Act in furtherance thereof. No Member (other than a Manager or an Officer) shall have the right,power or authority to act for or on behalf of the Company.  Except as otherwise expressly providedherein or by applicable law, the vote of a majority of the Managers shall bethe act of the Managers.  The Managersshall not meet less often than quarterly. Without limiting the generality ofthe foregoing, but subject to the 

 

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## limitations set forthherein and in applicable law, the authority of the Managers shall include, butnot be limited to:

 

### (a)        Employing or otherwiseengaging officers of the Company.

###  

### (b)        Negotiating, approving andexecuting contracts and incurring obligations on behalf of the Company outsideof the ordinary course of business.

###  

### (c)        Supervising the capitalstructure of the Company and negotiating, approving and binding the Company tooperating and capital financing arrangements, including capital assessments anddebt and equity financings.

###  

### (d)        Establishing financialpolicies, determining distributions, and overseeing maintenance of the books ofaccount and other records for the Company.

###  

### (e)        Delegating to any Memberssuch responsibilities and authority as may, in the judgment of the Managers, beappropriate.

###  

### (f)         Overseeing and reviewingcompensation.

###  

### (g)        Admitting additionalMembers into the Company, and establishing the terms and conditions applicablethereto.

###  

### (h)        Reviewing annual operatingplans and budgets of the Company.

###  

## 3.3        Restrictions.Without first obtaining Required Approval, the Company shall not:

 

### (a)        and shall not permit anySubsidiary to authorize, issue or enter into any agreement providing for theissuance (contingent or otherwise) and whether in a public offering registeredunder the Securities Act of 1933, as amended (the “Securities Act”) orpursuant to a private placement exempt from registration thereunder, of anyequity securities or any securities or rights (other than debt securities)convertible into or exercisable or exchangeable for any equity securities,other than, in the case of the Company, (v) issuances to a Regulated Member ascontemplated hereby, (w) issuances pursuant to Section 2.2(d)(i), (ii)or (vii), (x) issuances pursuant to the Unit Exchange Agreement or (y)issuances of Units to existing Members and any designees permitted pursuant to Section15.4 following compliance with Section 2.2(b) and, in the case ofany Subsidiary, to the parent thereof;

###  

### (b)        and shall not permit anySubsidiary to, consolidate or merge with, or sell, assign, transfer or leaseall or substantially all of its assets in a single transaction or a series oftransactions to any person;

###  

### (c)        permit any Subsidiary to,directly or indirectly, issue, contingently or otherwise, and whether in apublic offering registered under the Act or pursuant to a private placementexempt from registration thereunder, any shares representing an equity interestin the Subsidiary, warrants, rights or options to purchase or acquire an equityinterest now or hereafter authorized for issuance except to the Company or awholly-owned Subsidiary of the Company;

 

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### (d)        and shall not permit anySubsidiary to, transfer (other than in the ordinary course of business) anymaterial assets or property to any Subsidiary;\

###  

### (e)        acquire, or permit anySubsidiary to acquire, any interest in any business including any assumption ofliabilities, contingent or otherwise, and whether by a purchase of assets,purchase of stock, merger or otherwise, or make any loans or advances to anyperson or entity (other than a Subsidiary) where the total considerationincluding the assumption of liabilities and issuance of stock is, in theaggregate, more than $15,000,000;

###  

### (f)         declare or pay anydividend or make any distribution on the Units (other than pursuant to Section5.1(a)), and except in connection with the repurchase of Class C CommonUnits from management in which the purchase price is paid solely bycancellation of amounts owed to the Company under non-recourse notes from suchmanagement, the Company shall not, and shall not cause or, the extent of itspower to do so, permit any Subsidiary to, purchase, redeem or otherwise acquireor retire for value any of the Units;

###  

### (g)        make any amendment to theCertificate of Formation of the Company or this Agreement, or file anyresolution of the Managers with the Secretary of State of the state pursuant tothe laws of which the Company is then organized;

###  

### (h)        make acquisitions of otherthan wholly owned subsidiaries or make any dispositions of the Company’s equityinterest in any of its material Subsidiaries other than to a wholly ownedsubsidiary;

###  

### (i)         permit any Subsidiary tobecome subject to, (including, without limitation, by way of amendment to ormodification of) any agreement or instrument which by its terms would restrictthe right of such Subsidiary to make loans or advances or pay dividends to,transfer property to, or repay any indebtedness owed to, the Company that wouldbe more restrictive than the Credit Agreement as in effect as of the originaldate thereof;

###  

### (j)         hire or terminate theemployment of the any member of senior management of the Company;

###  

### (k)        except in connection withrepurchases or redemptions of Units as contemplated herein, incur indebtednessfor borrowed money in excess of $5,000,000;

###  

### (l)         increase the compensationor issue additional equity as compensation to executive officers of the Companyor its Subsidiaries; and

###  

### (m)       enter into any transaction,whether related to property or services, with an Affiliate of any Member.

###  

In connection with amerger, sale, consolidation, assignment, transfer or lease of all orsubstantially all of the assets of the Company in a single transaction or aseries of related transactions, the surviving entity shall be required to havebylaws, operating agreements and/or shareholder agreements (as the case may be)with terms and provisions substantially identical to this Agreement.

 

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## 3.4        Procedures.  The Managers may adopt such rules,regulations and procedures for the conduct of the Company’s business as theManagers, from time to time, deem appropriate.

 

## 3.5        Designation of Chairman and Officers.

 

### (a)        The Managers shalldesignate one of the Managers to be Chairman of the Company.  The Chairman shall not have any day-to-dayoperating responsibilities except for those responsibilities assigned to theChairman by Managers constituting a majority of the Managers that includes atleast one Argosy Manager.

###  

### (b)        The Managers shall electofficers of the Company, including a Chief Executive Officer, a President, aSecretary and a Chief Financial Officer of the Company, and may elect orappoint one or more Vice Presidents and such other officers of the Company asthe Managers may determine (“Officers”).  No Officer need be a resident of the State of Delaware or a Member.  The Managers may use descriptive words orphrases to designate the standing, seniority or area of special competence ofthe Officers elected or appointed.  Anytwo or more offices may be held by the same person.  All Officers as between themselves and the Company shall havesuch authority and perform such duties in the management of the Company as maybe provided in Sections 3.5 through 3.11 or as the Managers mayfrom time to time determine, and may act on behalf of the Company in the mannerand regarding such matters as is provided for in Sections 3.5 through 3.11or as may be authorized by the Managers. From time to time the Managers may establish, increase, reduce orotherwise modify responsibilities of the Officers of the Company or may create oreliminate offices as the Company may consider appropriate. The initial Officersof the Company are as follows:

###  

| Chief Executive Officer   |   | Robert A. Peterson  |
|---------------------------|--------|---------------------|
| President                 |   | Robert A. Peterson  |
| Executive Vice  President |   | David F. Myers, Jr. |
| Secretary                 |   | David F. Myers, Jr. |
| Chief Financial Officer   |   | David F. Myers, Jr. |

 

 

### (c)        The salaries or othercompensation, if any, of the Officers and agents of the Company shall be fixedfrom time to time by the Managers. Each Officer elected by the Managers shallserve until his or her successor is duly elected or, if earlier, until his orher death, resignation or removal in the manner provided herein.  A vacancy in any office because of death,resignation, removal, or any other cause shall be filled by the Managers.

###  

### (d)        Any Officer may resign atany time by so notifying the Managers and the Secretary in writing.  Such resignation shall take effect uponreceipt of such notice or at such later time as is therein specified, andunless otherwise specified, the acceptance of such resignation shall not benecessary to make it effective.  AnyOfficer elected by the Managers may be removed with or without cause by theManagers whenever in their judgment the best interest of the Company shall beserved thereby.  The election of an individualas an Officer shall not of itself create a right to continued employment withthe Company.

 

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## 3.6        The Chief Executive Officer. Subjectto the limitations imposed by the Managers, the Chief Executive Officer shallhave general powers and duties of supervision and direction of the business andemployees of the Company and, in addition, shall have such other powers andduties as the Managers assign to him or her; and shall see that all orders andresolutions of the Managers are carried into effect.

 

## 3.7        ThePresident.  The President shallhave such powers and duties as the Managers and Chief Executive Officer assignsto him or her.

 

## 3.8        VicePresident.  The Vice Presidentor, if there shall be more than one, the Vice Presidents, if any, in the orderof their seniority or in any other order determined by the Managers, shallperform, in the absence or disability of the President, the duties and exercisethe powers of the President and shall have such other powers and duties as theManagers and Chief Executive Officer assigns to him or her or to them.

 

## 3.9        Secretary.  The Secretary, if present, shall act assecretary of all meetings of the Members and the Managers; shall keep theminutes thereof in the proper book or books to be provided for that purpose;shall see that all notices required to be given by the Company or the Managersare duly given and served; shall have charge of the books, records and papersof the Company relating to its organization and management and shall see thatthe reports, statements and other documents required by law are properly keptand filed at the Company’s principal office; and shall, in general, perform allthe duties as from time to time may be assigned to him or her by the Managersand the Chief Executive Officer.

 

## 3.10      Chief Financial Officer.  The Chief Financial Officer shall havecharge and custody of, and be responsible for, all funds, securities and booksof the Company; and, in general, perform all the duties as from time to timemay be assigned to him or her by the Managers and the Chief Executive Officer.

 

## 3.11      Assistant Secretaries andAssistant Treasurers.  AssistantSecretaries and Assistant Treasurers shall perform such duties as shall beassigned to them by the Secretary or by the Treasurer, respectively, or by theManagers and the Chief Executive Officer.

 

ARTICLE IV

 

# CAPITAL

 

## 4.1        Initial Capital Contributions.

 

### (a)        Capital Contributions.  Each Member existing as of the date of thisAgreement has made Capital Contributions to the Company in the amount set forthopposite such Member’s name on Schedule A attached hereto.  As of the date hereof, the number and typeof Units held by each Member shall be as set forth opposite his or its name on ScheduleA attached hereto.  Each AdditionalMember shall be required to make a Capital Contribution to the Company andreceive therefor Units in the Company, in cash or in kind and in amounts to bedetermined by the Managers pursuant to this Agreement and, if required, agreedto by such Additional Members prior to his or her admittance into the Company.

 

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### (b)        Class E Units.

###  

#### (i)            Initial Issuances.  On or prior to the date hereof, the LLC hasentered into a unit purchase agreement (as amended, modified and waived fromtime to time in accordance with its terms, and including any unit purchaseagreements entered into pursuant to Section 4.1(b)(ii) below, the “ClassE Unit Purchase Agreements”) with each of Robert A. Peterson and David F.Myers, Jr., pursuant to which the LLC has agreed to issue to Robert A. Peterson514.2857 Class E Units and to David F. Myers, Jr. 342.8571 Class E Units on theterms and subject to the conditions set forth therein.

####  

#### (ii)           Subsequent Issuances.  From time to time after the date hereof, theManagers shall have the sole power and discretion to approve (subject to theapproval of Robert A Peterson and David F. Myers, Jr., in each case for so longhe is serving as an officer of the Company, which approval shall not beunreasonably withheld or delayed) the issuance of authorized but unissued ClassE Units to any employee of the Company or its Subsidiaries pursuant to a ClassE Unit Purchase Agreement (each, a “Management Purchaser”).  The Managers shall have sole and completepower and discretion to approve which employees shall be offered Class E Units,the number of Class E Units to be offered and issued to each such ManagementPurchaser and the purchase price therefor. In connection with any approved issuance of Class E Units to aManagement Purchaser hereunder, such Management Purchaser shall execute acounterpart to this Agreement, accepting and agreeing to be bound by all termsand conditions hereof as a “Member Employee”, and shall enter into such otherdocuments and instruments to effect such purchase as are required by theManagers (including, without limitation, a Class E Unit Purchase Agreement).

####  

#### (iii)          Number of Class EUnits.  Without the prior writtenconsent of the holders of a majority of the outstanding Class E Units, theCompany shall not authorize for issuance more than 1,000 Class E Units.  Class E Units repurchased by or forfeited tothe LLC may be subsequently reissued in accordance with Section 4.1(b)(ii).

####  

## 4.2        In-kind Capital Contributions.  Members who, with the consent of theManagers, have made or will make in-kind Capital Contributions, shall be solelyand personally responsible for any Tax liability that may be imposed upon themwith respect to the sale of the contributed asset by the Company.

 

## 4.3        Additional Capital Contributions.  Except as otherwise agreed to in writing bysuch Member, no Member shall be required to make any Capital Contribution aftersuch person’s admittance as a Member.

 

## 4.4        Interest.  Members are not entitled to the payment ofinterest on their capital contributions or on the balance of their CapitalAccounts.

 

## 4.5        CapitalAccounts.  The Company shallmaintain a separate Capital Account for each Unitholder according to the rulesof Treasury Regulation Section 1.704-1(b)(2)(iv).  For this purpose, the Company may (in the discretion of theManagers), upon the occurrence of the events specified in Treasury RegulationSection 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts inaccordance with the rules of such regulation and Treasury 

 

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## Regulation Section1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property.  For purposes of computing the amount of anyitem of Company income, gain, loss or deduction to be allocated pursuant to ArticleV and to be reflected in the Capital Accounts, the determination,recognition and classification of any such item shall be the same as itsdetermination, recognition and classification for federal income tax purposes(including any method of depreciation, cost recovery or amortization used forthis purpose); providedthat:

 

##### (i)            Thecomputation of all items of income, gain, loss and deduction shall includethose items described in Code Section 705(a)(l)(B) or Code Section 705(a)(2)(B)and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to thefact that such items are not includable in gross income or are not deductiblefor federal income tax purposes.

#####  

##### (ii)           If theBook Value of any Company property is adjusted pursuant to Treasury RegulationSection 1.704-1(b)(2)(iv)(f), the amount of such adjustment shall be taken intoaccount as gain or loss from the disposition of such property.

#####  

##### (iii)          Itemsof income, gain, loss or deduction attributable to the disposition of Companyproperty having a Book Value that differs from its adjusted basis for taxpurposes shall be computed by reference to the Book Value of such property.

#####  

##### (iv)          Items ofdepreciation, amortization and other cost recovery deductions with respect toCompany property having a Book Value that differs from its adjusted basis fortax purposes shall be computed by reference to the property’s Book Value inaccordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

#####  

##### (v)           To theextent an adjustment to the adjusted tax basis of any Company asset pursuant toCode Sections 732(d), 734(b) or 743(b) is required, pursuant to TreasuryRegulation Section 1.704-1(b)(2)(iv)(m), to be taken into account indetermining Capital Accounts, the amount of such adjustment to the CapitalAccounts shall be treated as an item of gain (if the adjustment increases thebasis of the asset) or loss (if the adjustment decreases such basis).

#####  

Any references in thisAgreement to the Capital Accounts of a Member shall be deemed to refer to suchCapital Account as the same may be increased or decreased from time to time asset forth herein.

 

## 4.6        Negative Capital Accounts.  No Member shall be required to pay to anyother Member or the Company any deficit or negative balance which may existfrom time to time in such Member’s Capital Account (including upon and afterdissolution of the Company).

 

## 4.7        NoWithdrawal.  Except as expresslyprovided herein, no Member shall be entitled to withdraw any part of suchMember’s Capital Contribution or Capital Account or to receive any Distributionfrom the Company.

 

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## 4.8        CompanyAssets.  All Company assetsshall be in the name of the Company, and no Member shall have any rights in anyCompany assets unless otherwise specifically agreed to in writing by theCompany.

 

ARTICLE V

 

# PROFITS,LOSSES AND DISTRIBUTIONS

 

## 5.1        Distributions.

 

### (a)        The Managers may in theirsole discretion make Distributions at any time or from time to time; provided,however, that within fifteen (15) days after the end of each quarter theCompany shall, subject to any restrictions contained in the financingagreements to which the Company or any of its Affiliates is a party, makedistributions of cash (“Tax Distributions”) to each holder of Units inan aggregate amount equal to the product obtained by multiplying such holder’sallocable share of the Company’s net taxable income (reduced by such holder’sunused losses previously allocated to such holder by the Company) by apercentage equal to the sum of the maximum marginal federal, state and localincome tax rates applicable to any Member or its partners, members orstockholders without regard to the tax status or any other tax liabilities orcredits to which a Member may be subject or entitled.  Tax Distributions made to a Member shall be treated as an advanceagainst Distributions made to such Member pursuant to Section 5.1(c); itbeing understood, however, that Members shall have no obligation to return anyTax Distributions received by them except to the extent required by theDelaware Act.

###  

### (b)        Except as providedelsewhere herein, no Member shall be entitled to any Distribution in return ofa Capital Contribution.

###  

### (c)        Except as otherwise setforth in Section 5.1(a), each Distribution shall be made in thefollowing order and priority:

###  

#### (i)            First, to the holdersof Preferred Units, an amount equal to the aggregate Unpaid Preferred Yieldwith respect to such holders’ outstanding Preferred Units (in the proportionthat each holder’s share of Unpaid Preferred Yield bears to the aggregateUnpaid Preferred Yield with respect to all Preferred Units outstandingimmediately prior to such Distribution) until each such holder has receivedDistributions under this clause (i) in respect of such holder’s Preferred Unitsin an amount equal to the Unpaid Preferred Yield on such holder’s outstandingPreferred Units immediately prior to such distribution, and no Distribution orany portion thereof may be made under any of the other paragraphs below untilthe entire amount of the Unpaid Preferred Yield on the outstanding PreferredUnits immediately prior to such distribution has been paid in full; and

####  

#### (ii)           Second, to the holdersof Preferred Units in respect of the aggregate Unreturned Preferred Capitalwith respect to such holders’ outstanding Preferred Units (in the proportionthat each holder’s share of the Unreturned Preferred Capital with respect toPreferred Units bears to the aggregate amount of Unreturned Preferred Capitalwith respect to all such Preferred Units outstanding immediately prior to suchDistribution) until the holders of 

 

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#### PreferredUnits shall have received Distributions under clause (i) above and this clause(ii) in an aggregate amount equal to $125,000,000 and no Distribution or anyportion thereof may be made under clause (iii) or (iv) below prior to suchholders receiving aggregate Distributions in such amount;

####  

#### (iii)          Third, (A) to theholders of outstanding Vested Class E Units (ratably among such holders basedupon the number of Vested Class E Units held by each such holder immediatelyprior to such Distribution and determined after giving effect to anyaccelerated vesting thereon) in an amount equal to (1) 7.0% multiplied by (2)the Class E Factor, multiplied by (3) the lesser of (x) the aggregate amountavailable to be distributed pursuant to the terms of this clause (iii) and (y)the aggregate Unreturned Preferred Capital (after giving effect to thedistribution contemplated by clause (ii) foregoing) and (B) all remainingamounts to the holders of Preferred Units with respect to such holders’outstanding Preferred Units (in the proportion that each holder’s share of theUnreturned Preferred Capital with respect to Preferred Units bears to theaggregate amount of Unreturned Preferred Capital with respect to all suchPreferred Units outstanding immediately prior to such Distribution) until suchtime as the aggregate Unreturned Preferred Capital with respect to the outstandingPreferred Units has been reduced to zero; and

####  

#### (iv)         Fourth, all remainingamounts (A) to the holders of the Common Units (ratably among such holdersbased upon the number of outstanding Common Units held by each such holdersimmediately prior to such Distribution) and (B) to the holders of outstandingVested Class E Units (ratably among such holders based upon the number ofVested Class E Units held by each such holder immediately prior to suchDistribution and determined after giving effect to any accelerated vestingthereon) in such amounts that the cumulative amount of distributions pursuantto this clause (iv) will have been distributed in the following proportion: (x)an amount equal to 7.0% multiplied by the Class E Factor to the holders of outstandingVested Class E Units and (y) the remainder to the holders of outstanding CommonUnits.

####  

### (d)        Each Distribution pursuantto Section 2.1(d) or Section 5.1 shall be made to the Personsshown on the Company’s books and records as Members as of the date of suchDistribution; provided, however, that any transferor andtransferee of Units may mutually agree as to which of them should receivepayment of any Distribution under Section 2.1(d) or Section 5.1(a).

###  

### (e)        Notwithstanding anyprovision in this Agreement to the contrary, including without limitation theprovisions of this Section 5.1, any Member may elect, by notice inwriting to the Managers or the liquidating trustee as applicable, to declinethe receipt of distributions in kind if the receipt thereof would cause suchMember to be in violation of any applicable law or regulation, in which eventthe Managers or liquidating trustee shall use reasonable efforts to cause theproperty which would otherwise have been distributed to such Member to be disposedof and the proceeds of such disposition to be distributed to such Member, ormake other arrangements approved by such Member.

###  

## 5.2        Allocations.  Except as otherwise provided in Section5.3, Profits and Losses for any Fiscal Year or portion thereof shall beallocated among the Unitholders in such a manner that, as of the end of suchFiscal Year, the sum of (i) the Capital Account of each 

 

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## Unitholder, (ii) suchUnitholder’s share of Minimum Gain (as determined according to TreasuryRegulation Section 1.704-2(g)) and (iii) such Unitholder’s partner nonrecoursedebt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3))shall be equal to the respective net amounts, positive or negative, which wouldbe distributed to them or for which they would be liable to the Company underthe Delaware Act, determined as if the Company were to (i) liquidate the assetsof the Company for an amount equal to their Book Value and (ii) distribute theproceeds of liquidation pursuant to Section 12.1.  For purposes of allocating Profits and Losses, and all otheritems of income, gain, deduction and loss, pursuant to this Section 5.2(and Sections 5.3, 5.4 and 5.5, to the extent applicable),all outstanding Class E Units shall be treated as Vested Class E Units.

 

## 5.3        Special Allocations.

 

### (a)        Losses attributable topartner nonrecourse debt (as defined in Treasury Regulation Section1.704-2(b)(4)) shall be allocated in the manner required by Treasury RegulationSection 1.704-2(i).  If there is a netdecrease during a Taxable Year in partner nonrecourse debt minimum gain (asdefined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such TaxableYear (and, if necessary, for subsequent Taxable Years) shall be allocated tothe Unitholders in the amounts and of such character as determined according toTreasury Regulation Section 1.704-2(i)(4).

###  

### (b)        Nonrecourse deductions (asdetermined according to Treasury Regulation Section 1.704-2(b)(1)) for anyTaxable Year shall be allocated to the Common Unitholders, ratably based uponthe number of outstanding Common Units held by each such Common Unitholderimmediately prior to such allocation. Except as otherwise provided in Section5.3(a), if there is a net decrease in the Minimum Gain during any TaxableYear, each Unitholder shall be allocated Profits for such Taxable Year (and, ifnecessary, for subsequent Taxable Years) in the amounts and of such characteras determined according to Treasury Regulation Section 1.7042(f).  This Section 5.3(b) is intended to bea minimum gain chargeback provision that complies with the requirements ofTreasury Regulation Section 1.704-2(f), and shall be interpreted in a mannerconsistent therewith.

###  

### (c)        If any Unitholder thatunexpectedly receives an adjustment, allocation or distribution described inTreasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has anAdjusted Capital Account Deficit as of the end of any Taxable Year, computedafter the application of Sections 5.3(a) and 5.3(b) but beforethe application of any other provision of this Article IV, then Profitsfor such Taxable Year shall be allocated to such Unitholder in proportion to,and to the extent of, such Adjusted Capital Account Deficit.  This Section 5.3(c) is intended to bea qualified income offset provision as described in Treasury Regulation Section1.704-1(b)(2)(ii)( d) and shall be interpreted in a manner consistenttherewith.

###  

### (d)        Profits and Lossesdescribed in Section 4.5(v) shall be allocated in a manner consistentwith the manner that the adjustments to the Capital Accounts are required to bemade pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(j), (k) and (m).

###  

### (e)        If, and to the extentthat, any Unitholder is deemed to recognize any item of income, gain, loss,deduction or credit as a result of any transaction between such Unitholder 

 

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### andthe Company pursuant to Code Sections 1272-1274, 7872, 483, 482 or any similarprovision now or hereafter in effect, and the Managers determine that anycorresponding Profit or Loss of the Company should be allocated to theUnitholder who recognized such item in order to reflect the Unitholder’seconomic interests in the Company, then the Board may so allocate such Profitor Loss.

###  

## 5.4        TaxAllocations.

 

### (a)        The income, gains, losses,deductions and credits of the Company will be allocated, for federal, state andlocal income tax purposes, among the Unitholders in accordance with theallocation of such income, gains, losses, deductions and credits among theUnitholders for computing their Capital Accounts; except that if any suchallocation is not permitted by the Code or other applicable law, the Company’ssubsequent income, gains, losses, deductions and credits will be allocatedamong the Unitholders so as to reflect as nearly as possible the allocation setforth herein in computing their Capital Accounts.

###  

### (b)        Items of Company taxableincome, gain, loss and deduction with respect to any property contributed tothe capital of the Company shall be allocated among the Unitholders inaccordance with Code Section 704(c) so as to take account of any variationbetween the adjusted basis of such property to the Company for federal incometax purposes and its Book Value.

###  

### (c)        If the Book Value of anyCompany asset is adjusted pursuant to the requirements of Treasury RegulationSection 1.704-1(b)(2)(iv)(e) or (t), subsequent allocations of items of taxableincome, gain, loss and deduction with respect to such asset shall take accountof any variation between the adjusted basis of such asset for federal incometax purposes and its Book Value in the same manner as under Code Section704(c).

###  

### (d)        Allocations of taxcredits, tax credit recapture, and any items related thereto shall be allocatedto the Unitholders according to their interests in such items as determined bythe Board taking into account the principles of Treasury Regulation Section1.7041 (b)(4)(ii).

###  

### (e)        Allocations pursuant tothis Section 5.4 are solely for purposes of federal, state and localtaxes and shall not affect, or in any way be taken into account in computing,any Member’s Capital Account or share of Profits, Losses, Distributions orother Company items pursuant to any provision of this Agreement.

###  

## 5.5        Curative Allocations.  The allocations set forth in Section 5.3(the “Regulatory Allocations”) are intended to comply with certainrequirements of Sections 1.704-1(b) and 1.704-2 of the TreasuryRegulations.  The Regulatory Allocationsmay not be consistent with the manner in which the Unitholders intend toallocate Profit and Loss of the Company or make Company Distributions.Accordingly, notwithstanding the other provisions of this Article V, butsubject to the Regulatory Allocations, income, gain, deduction, and loss shallbe reallocated among the Unitholders so as to eliminate the effect of theRegulatory Allocations and thereby cause the respective Capital Accounts of theUnitholders to be in the amounts (or as close thereto as possible) they wouldhave been if Profit and Loss (and such other items of 

 

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## income, gain, deductionand loss) had been allocated without reference to the RegulatoryAllocations.  In general, theUnitholders anticipate that this will be accomplished by specially allocatingother Profit and Loss (and such other items of income, gain, deduction andloss) among the Unitholders so that the net amount of the RegulatoryAllocations and such special allocations to each such Unitholder is zero.  In addition, if in any Fiscal Year orportion thereof there is a decrease in partnership minimum gain, or in partnernonrecourse debt minimum gain, and application of the minimum gain chargebackrequirements set forth in Section 5.3(a) or Section 5.3(b) wouldcause a distortion in the economic arrangement among the Unitholders, theUnitholders may, if they do not expect that the Company will have sufficientother income to correct such distortion, request the Internal Revenue Serviceto waive either or both of such minimum gain chargeback requirements.  If such request is granted, this Agreementshall be applied in such instance as if it did not contain such minimum gainchargeback requirement.

 

ARTICLE VI

 

# BOOKS,RECORDS, ACCOUNTING AND REPORTS

 

## 6.1        Records; Accounting and Notice.  The Company shall keep, or cause to be kept,appropriate books and records with respect to the Company’s business, and eachUnitholder shall have reasonable access to and be allowed to visit and inspectany of the properties (including the unprivileged books and records) of theCompany and its subsidiaries, subject to, if the Company requests, the priorexecution of appropriate confidentiality and nondisclosure agreements.  In addition, the Company shall provide toeach Unitholder any quarterly and annual financial statements of the Companyand its Subsidiaries that are provided to its senior lenders.  The Company shall also provide to eachUnitholder notice of the acceleration of the unpaid principal amount of indebtednessfor borrowed money with its or its Subsidiaries’ senior lenders.  All matters concerning (i) the determinationof the relative amount of allocations and distributions among the Memberspursuant to Article V and (ii) accounting procedures and determinations,and other determinations not specifically and expressly provided for by theterms of this Agreement, shall be determined by the Managers, whosedetermination shall be final and conclusive as to all of the Members absentmanifest clerical error.

 

## 6.2        FiscalYear.  The Fiscal Year of theCompany shall end on December 31 of each year or such other annual accountingperiod as may be established by the Managers.

 

## 6.3        Transmission of Communications.  Each Person that owns or controls Units onbehalf of, or for the benefit of, another Person or Persons shall beresponsible for conveying any report, notice or other communication receivedfrom the Managers to such other Person or Persons.

 

ARTICLE VII

 

# TAXMATTERS

 

## 7.1        Preparation of Tax Returns.  The Company shall arrange for thepreparation and timely filing of all returns required to be filed by theCompany.

 

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## 7.2        TaxElections.  The Taxable Yearshall be the Fiscal Year set forth in Section 6.2, unless the Managersshall determine otherwise in their sole discretion and in compliance withapplicable laws.  The Managers shall, intheir sole discretion, determine whether to make or revoke any availableelection pursuant to the Code.  EachMember will upon request supply any information necessary to give proper effectto such election.

 

## 7.3        TaxControversies.  David F. Myers,Jr. is hereby designated the Tax Matters Member and is authorized and requiredto represent the Company (at the Company’s expense) in connection with allexaminations of the Company’s affairs by tax authorities, including resultingadministrative and judicial proceedings, and to expend Company funds forprofessional services and reasonably incurred in connection therewith.  Each Member agrees to cooperate with theCompany and to do or refrain from doing any or all things reasonably requestedby the Company with respect to the conduct of such proceedings.  The Tax Matters Member shall keep all Membersfully informed of the progress of any examinations, audits or otherproceedings, and all Members shall have the right to participate in any suchexaminations, audits or other proceedings. Notwithstanding the foregoing, the Tax Matters Member shall not settleor otherwise compromise any issue in any such examination, audit or otherproceeding without first obtaining approval of the Managers.

 

ARTICLE VIII

 

# NON-COMPETITION

 

## 8.1        Noncompete.  Except with the prior written consent of theManagers, in their sole discretion, no Member Employee shall, while a Member ofthe Company and for twenty-four (24) months following termination of membershipfor any reason other than the dissolution, winding up or liquidation of theCompany, be an officer, director, agent, employee, consultant, committee-memberof, or have a direct or indirect five percent (5%) or greater equity interestin, any business located anywhere in the world, if such business (a “Competitor”)engages in the manufacturing and/or marketing of personal protection and safetyequipment products primarily intended for use in the workplace, includingrespiratory equipment, hand protection, hearing protection, eye, hand, face andfoot protection, industrial first aid, fall protection, high-voltage linemanequipment, eye wash, and dermatological and single-use applicators for surgicalprotection.

 

## 8.2        Nonsolicitation.  Each Member who is also an employeeacknowledges and agrees such Member will have access to confidentialinformation of the Company and its Subsidiaries.  Therefore, while a Member of the Company and for a period oftwenty four (24) months after the termination of membership for any reasonother than dissolution, winding up or liquidation of the Company, such Membershall not, without the prior written consent of the Company, directly orindirectly: (a) call-on, solicit, service, advise or encourage any customer,prospective customer, partners, vendors, or strategic alliance participants ofthe Company or any Subsidiary to withdraw, curtail, or cancel its business withthe Company or any Subsidiary; or (b) employ or retain or solicit foremployment or arrange to have any other person, firm, or other entity employ orretain or solicit for employment or otherwise participate in the employment orretention of any employee, prospective employee, consultant or independentcontractor of the Company or any Subsidiary in any business that provides oroffers products or services that are

 

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## competitive with, aresimilar to, or may be used as substitutes for the products and services offeredby the Company or any Subsidiary. Nothing in this Section shall be deemed to prohibit the acquisition orholding for mere passive investment purposes by such Member of not more thantwo percent (2%) of the shares or other securities of a publicly tradedcorporation if such securities are regularly traded on a national securitiesexchange or over the counter.

 

## 8.3        Enforceability.  The Members intend that this Article VIIIbe enforced to the fullest extent permissible under applicable law and byinjunctive or other appropriate equitable relief.  If any portion of this Article VIII is found to beunenforceable, the Members intend that the remaining provisions shall be fullyenforced upon their terms.

 

## 8.4        Reasonable Restrictions.  Each Member agrees that this Article VIIIis fair and reasonable, and that this Article VIII will not unfairly orunreasonably restrict such Member’s ability to earn a living or pursue his orher chosen career or profession.

 

ARTICLE IX

 

# TRANSFERAND WITHDRAWAL

 

## 9.1        Restrictions on Transfer of Units.  The holders of Units shall not Transfer anyinterest in any Units except for Transfers (i) with the prior written consentof all of the Disinterested Managers (which consent may be granted or withheldin their sole discretion), (ii) within each Member’s Family Group, if anindividual, or to such Member’s Affiliates or any other Unitholder, if not anindividual, (iii) pursuant to a Public Sale, (iv) pursuant to Section 9.4or 9.5 or the repurchase or forfeiture provisions set forth in anyapplicable Class E Unit Purchase Agreement, (v) pursuant to a Sale of theCompany, (vi) pursuant to Section 2.7(b) (subject to the limitationscontained therein), Section 2.11(c) and Section 9.6(b) (subjectto any limitations contained therein) (any such Transfer in (i) through (vi),an “Exempt Transfer”) or (vii) pursuant to the other provisions of this ArticleIX; providedthat no holder of Units shall Transfer anyinterest in any Class C Common Units within such Member’s Family Group so longas any principal or interest on any promissory note issued by such Member tothe Company for the purchase of Class C Common Units remains unpaid.  Any Transfer by any Member of any Units orother interest in the Company in contravention of this Agreement or which wouldcause the Company to not be treated as a partnership for U.S. federal incometax purposes shall be void and ineffectual and shall not bind or be recognizedby the Company or any other party.  Nopurported assignee shall have any right to any profits, losses or distributionsof the Company, and the transferor shall retain all of its rights andobligations hereunder with respect to the Transfer Units or other interest inthe Company unless already a Member or until the purported assignee is admittedas a Member pursuant to Section 10.1.

 

## 9.2        Right of First Refusal.

 

### (a)        General.  Subject in all events to the generalrestrictions on Transfers contained in Section 9.1 and except for anExempt Transfer, a Unitholder (a “Transferring Holder”) that is (or amember of whose Family Group is) employed by the Company or any Subsidiary maytransfer (an “Employee Transfer”) Class A Common Units and PreferredUnits held as of October 2, 1998 (together with any securities issued withrespect to such Units by way 

 

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### ofsplit or dividend or in connection with a combination of securities,recapitalization, merger, consolidation or other reorganization) only afterfirst complying with the provisions of this Section 9.2.  At least 30 days prior to making anyEmployee Transfer (the “Election Period”), the Transferring Holder shalldeliver a written notice (the “Offer Notice”) to the Company disclosingin reasonable detail the proposed number of Units to be Transferred (the “TransferUnits”), the identity of the proposed Transferee and the proposed price (“OfferPrice”) and other terms and conditions of the Transfer.  No Transferring Holder may consummate anyTransfer (other than an Exempt Transfer) of such Transfer Units during theElection Period unless the parties to such Transfer have been finallydetermined pursuant to this Section 9.2.

###  

### (b)        Company’s Rights.  The Company may elect to purchase all or anyportion of the Transfer Units at the Offer Price and on the terms specified inthe Offer Notice by delivering written notice of such election (and specifyingthe number of Transfer Units if any, it has elected to purchase) to theTransferring Holder within 10 days of receipt of the Offer Notice.

###  

### (c)        Investors Rights.  If the Company has not elected to purchaseall of the Transfer Units within such 10 day period, the Transferring Holdershall deliver a written notice reoffering (the “Reoffer Notice”) theremaining Transfer Units to the Investors on the same terms as disclosed in theOffer Notice, and the Investors may elect to purchase all or any portion of theremaining Transfer Units at the Offer Price and on the terms specified in theReoffer Notice by delivering written notice of such election (and specifyingthe number of Transfer Units, if any, it has elected to purchase) to theCompany within 10 days after receipt of the Reoffer Notice.  Each of the Investors shall be entitled topurchase its pro rata share of each type of Transfer Units based on suchInvestor’s ownership of such type of Transfer Units.  If all of the securities offered to the Investors are not fullysubscribed by such Investors after such initial offer, the remaining securitiesshall be reoffered in the same manner by the Transferring Holder to suchInvestors which have elected to purchase their full allotment, except that suchInvestors must exercise their purchase rights within 5 days after receipt ofsuch reoffer.

###  

### (d)        Other Members’ Rights.  If the Investors have not elected topurchase all of the Transfer Units pursuant to Section 9.2(c), theTransferring Holder shall deliver a written notice reoffering (the “FinalNotice”) the remaining Transfer Units to the other Unitholders on the sameterms as disclosed in the Offer Notice. Each of the other Unitholders shall be entitled to purchase its pro ratashare of each type of the remaining Transfer Units based on such Unitholder’sfully-diluted ownership or rights to acquire such types of remaining TransferUnits by delivering written notice of such election (and specifying the numberof Transfer Units, if any, it has elected to purchase) to the Company within 5days after receipt of the Final Notice. If all of the securities offered to the other Unitholders are not fullysubscribed by such Unitholders after such initial offer, the remainingsecurities shall be reoffered in the same manner by the Transferring Holder tosuch Unitholders which have elected to purchase their full allotment, exceptthat such Unitholders must exercise their purchase rights within 5 days afterreceipt of such reoffer.

###  

### (e)        General.  If the Company, the Investors and the otherMembers have collectively elected to purchase all of the Transfer Units fromthe Transferring Holder, the Transfer of such Transfer Units shall beconsummated as soon as practical after the delivery of the election notices,but in any event within 15 days after the expiration of the Election Period. 

 

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### Notwithstandingthe foregoing, in the event that the Members, the Investors and the Companyhave not collectively elected to purchase all of the Transfer Units, theTransferring Holder may, within 90 days after the expiration of the ElectionPeriod, Transfer such Transfer Units to the Transferee identified in the OfferNotice at a price no less than the price specified in the Offer Notice and onother terms no more favorable to the Transferee than offered to the Company,the Investors or the other Unitholders in the Offer Notice, the Reoffer Noticeor the Final Notice, as applicable.  Thepurchase price for such Units shall be payable solely in cash at the closing ofthe transaction.

###  

## 9.3        Sale of theCompany.

 

### (a)        If the Managers (with Required Approval)approve a Sale of the Company (the “Approved Company Sale”), theUnitholders will consent to and raise no objections against the ApprovedCompany Sale.  If the Approved CompanySale is structured as a (i) merger or consolidation, each Unitholder shallwaive any dissenters rights, appraisal rights or similar rights in connectionwith such merger or consolidation or (ii) sale of Units, each holder of Unitsshall agree to sell all or, if the structure of the transaction requiresotherwise (i.e., a leveraged recapitalization), substantially all of his Unitsand rights to acquire Units on the terms and conditions approved by theManagers (with Required Approval).  EachUnitholder shall take all necessary or desirable actions (other than, except asprovided in clause (e) below, incurring any liability) in connection with theconsummation of the Approved Company Sale as requested by the Company. At leastthirty (30) days prior to the proposed closing date of any Approved CompanySale, the Managers shall use commercially reasonable best efforts to give toeach Unitholder written notice of the material terms of the proposed ApprovedCompany Sale (which material terms may be set forth in a draft of the purchaseand sale agreement with respect to such Approved Company Sale) and statementthat the Managers, the members of the Hancock Group and the members of theArgosy Group are intending to participate in the Approved Company Sale andintend to exercise their rights under this Section 9.3.  An executed version of a purchase and saleagreement shall be delivered to each Unitholder within a commerciallyreasonable time period after execution of such agreement and an ApprovedCompany Sale shall be consummated within 150 days after the execution of apurchase and sale agreement therefor. Upon request, the Managers shall provide any Unitholder with acalculation of the anticipated consideration to be paid to such Unitholder insuch Approved Company Sale. Notwithstanding the foregoing, in connection with and as part of anyApproved Company Sale, the Company shall use commercially reasonable efforts toTransfer all of the outstanding shares of capital stock of CNIC in lieu of theUnits of Company owned by CNIC for the same aggregate consideration that CNICwould have received had it transferred all of its Units in the Company.

###  

### (b)        The obligations of the holders of Unitswith respect to the Approved Company Sale are subject to the satisfaction ofthe following conditions: (i) upon the consummation of the Approved CompanySale, each holder of each type of Units participating in the Approved CompanySale shall receive the same form of consideration and the same portion ofconsideration such holder would have received if the aggregate considerationhad been distributed by the Company in complete liquidation pursuant to therights and preferences set forth in this Agreement (but without the Companypaying any amounts in such liquidation with respect to any obligations that arebeing assumed by the buyer in connection with such Approved Company Sale); and(ii) if any holders of a type of Units are given an option as to the form and 

 

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### amountof consideration to be received, each holder of such type of Units shall begiven the same option; provided that if the capital stock of CNIC isTransferred in accordance with the last sentence of Section 9.3(a), theobligation of each other Unitholder shall be as if CNIC Transferred the Unitsof the Company and distributed the proceeds to its shareholders (with it beingunderstood that the shareholders of CNIC shall bear the pro rata share of anyobligations that CNIC would have been required to assume if it had sold Unitsof the Company.

###  

### (c)        If the Company or any of the holders ofthe Units enter into any negotiation or transaction for which Rule 506 (or anysimilar rule then in effect) promulgated by the Securities Exchange Commissionmay be available with respect to such negotiation or transaction (including amerger, consolidation or other reorganization), each holder of Units will, atthe request of the Company, appoint either a purchaser representative (as suchterm is defined in Rule 501) designated by the Company, in which event theCompany will pay the fees of such purchaser representative, or anotherpurchaser representative (reasonably acceptable to the Company), in which eventsuch holder will be responsible for the fees of the purchaser representative soappointed.

###  

### (d)        All holders of Units will bear their prorata share (based upon their share of the proceeds received) of the costs ofany sale of Units pursuant to an Approved Company Sale to the extent such costsare incurred for the benefit of all such holders of Units and are not otherwisepaid by the Company or the acquiring party. Costs incurred by the holders of Units on their own behalf will not beconsidered costs of the Approved Company Sale.

###  

### (e)        In connection with an Approved CompanySale, the holders of the Units may be required to make representations orwarranties regarding such holder to enter into and consummate such sale andproviding the purchaser with good and marketable title to the Units being soldby such holder, free and clear of all liens created by such holder.  In addition, any such holder may be requiredto provide indemnification with respect to the breach of any representations,warranties or covenants regarding the Company contained in the agreementsrelating to such sale.  Any suchindemnification liability of a holder described in the preceding sentence shallbe several only, and not joint, and shall not in any event exceed such holder’spro rata share (based on the proceeds to be received by all of the Unitholdersparticipating in such sale) of any such liability or exceed the proceedsreceived by such holder in such Approved Company Sale.

###  

## 9.4        Tag-AlongRights.  If any Investor (the “TransferringInvestor”) desires to Transfer all or any portion of any of its Units toany Person(s) (other than pursuant to another Exempt Transfer), it must firstdeliver to all of the other Unitholders (the “Other Securitvholders”) awritten notice (the “Sale Notice”) in which the prospective TransferringInvestor states the price and other material terms and conditions on which theypropose to effect such Transfer of such Units, or portion thereof, and theidentity of the proposed Transferee(s). Such notice shall be delivered not less than 30 days prior to theclosing of the proposed Transfer. Each Other Unitholder to whom such a Sale Noticeis required to be given may within 15 days following receipt of the SaleNotice, give to the Company and the Transferring Investor a written notice (“Tag-AlongNotice”) indicating that it desires to participate in such Transfer.  If any Other Unitholders have elected toparticipate in such Transfer, each of the Transferring Investor and such OtherUnitholders will be entitled to sell in the contemplated Transfer, at the sameprice

 

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## and on the same terms andconditions, a number of Units of each type of Units contemplated as beingTransferred equal to the product of (A) the quotient determined by dividing thenumber of Units of such type owned by such person by the aggregate number ofUnits of such type owned by the Transferring Investor and the Other Unitholdersparticipating in such Transfer and (B) the number of units of such type ofUnits to be sold in the contemplated Transfer. Notwithstanding the foregoing, (x) in the event that the Transferring Investorintends to Transfer more than one type of Units, the Other Unitholdersparticipating in such Transfer shall be required to sell in the contemplatedTransfer a pro rata portion of each type of Units contemplated as beingTransferred (to the extent such Other Unitholders own any Units of such othertype), which portion shall be determined in the manner set forth immediatelyabove, (y) the purchase price being paid on account of Preferred Units shall beallocated among the Transferring Investors transferring Preferred Units on thebasis of the amount of Unreturned Preferred Capital and Unpaid Preferred Yieldwith respect to such Preferred Units and (z) the consideration to be receivedby any holder of rights to acquire Common Units or Preferred Unitsparticipating in such sale that has not exercised the right to acquire CommonUnits or Preferred Units shall be after giving effect to the exercise pricetherefor.  No Transfer pursuant to this Section9.4 shall be considered an Exempt Transfer unless the Transferring Investorhas complied with the terms of this Section 9.4.  All expenses and costs of any Transferpursuant to this Section 9.4 shall be for the account of and paid by theOther Unitholders participating in such Transfer.

 

## 9.5        Terminationof Employment.

 

### (a)        In the event the employment of a Memberwho is also an employee of the Company (or any Subsidiary thereof) isterminated for any reason, if the promissory notes evidencing such loans arestill outstanding, the disposition of all Units acquired by such employee withthe proceeds of loans from the Company (or any Subsidiary thereof) shall, tothe extent such provisions conflict with the provisions of this Section 90S, bedetermined by the provisions of the documents pursuant to which such loans weremade (including promissory notes of such employee payable to the Company (orany Subsidiary thereof) and resolutions of Managers of the Company authorizingsuch loans).

###  

### (b)        Except as provided in Section 9.5(a)above, in the event a Member who is also an employee of the Company (or anySubsidiary thereof) voluntarily terminates his employment for any reason withintwo years of the date of being admitted as a Member, the Company shall have theright to purchase all or any portion of the Class C Common Units held by suchMember and such Member’s Family Group at the Purchase Price (as defined below)by delivering written notice to such Member within sixty (60) days after thetermination of employment.  If theCompany has not exercised its right to purchase by delivering the notice setforth in the immediately preceding sentence or has not purchased all of theClass C Common Units held by such Member, the other Members shall have theright to purchase (pro rata on the basis of the number of Common Units held byall Members electing to purchase), all or any portion of the Class C CommonUnits held by such Member or such Member’s Family Group that were not purchasedby the Company at the Purchase Price by delivering written notice to suchMember within 75 days after termination of employment.  “Purchase Price” shall mean withrespect to any Class C Common Units held by such Member or such Member’s FamilyGroup, the lower of (i) such Member’s original cost of such Class C CommonUnits plus a return of ten percent (10%) per annum or (ii) the Fair Market Valueof such Class C Common Units (which 

 

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### FairMarket Value shall in no event be lower than the quotient of the unpaid amountsof principal and interest on all notes issued by such Member to the Company forthe purchase of Class C Common Units divided by the number of Class C CommonUnits held by such Member and such Member’s Family Group).  In the event that (x) the Company or theother Members do not elect to purchase any Class C Common Units pursuant tothis Section 9.5(b) or (y) more than two years have passed since thedate of such Member’s admittance as a member, such Class C Common Units may beheld by such Member and such Member’s Family Group subject to the terms of thisAgreement or may be transferred by the Member and such Member’s Family Groupupon compliance with the other provisions of Article IX.

###  

### (c)        Except as provided in Section 9.5(a)above, in the event a Member who is also an employee of the Company (or anySubsidiary thereof) involuntarily terminates his or her employment for anyreason (including, without limitation, death or disability) or upon a materialbreach by the Company of his or her employment agreement with the Company(whether or not such employment or agreement exists on the date hereof), theCompany shall have the right to purchase all or any portion of the Class CCommon Units held by such Member and such Member’s Family Group at Fair MarketValue (or at the lower of cost or Fair Market Value, if such Member isterminated for Cause) by delivering written notice to such Member within sixty(60) days after the termination of employment. If the Company has not exercised its right to purchase by delivering thenotice set forth in the immediately preceding sentence or has not purchased allof the Class C Common Units held by such Member and such Member’s Family Group,the other Members shall have the right to purchase (pro rata on the basis ofthe number of Common Units held by all Members electing to purchase) all or anyportion of the Class C Common Units held by such Member or such Member’s FamilyGroup that were not purchased by the Company at Fair Market Value (or at thelower of cost or Fair Market Value, if such Member is terminated for Cause) bydelivering written notice to such Member within 75 days after termination ofemployment.  Notwithstanding theforegoing, at such Member’s option, unless such Member is terminated for Cause,such Member may elect to defer the sale of his or her Class C Common Units (andthe determination of Fair Market Value) to the date which is the one yearanniversary of his or her termination of employment.  For the purposes of this Section 9.5, the reasonableexpense of second and third valuations, if any, made pursuant to Section2.1(b)(i) shall be borne by the Company. In the event that the Company and the other Members do not elect topurchase any Class C Common Units pursuant to this Section 9.5, suchClass C Common Units may be held by such Member and such Member’s Family Groupsubject to the terms of this Agreement or may be transferred by the Member andsuch Member’s Family Group upon compliance with the other provisions of this ArticleIX.

###  

### (d)        For purposes of this Section 9.5,Units owned by a Member shall include all options, rights and warrants toacquire Class C Common Units of the Company owned by such Member (provided thatthe Fair Market Value thereof in all events shall be net of any exercise pricethereof); provided that, to the extent of any inconsistency, the termscontained in the documents pursuant to which such options, rights or warrantswere granted shall govern.

###  

## 9.6        Withdrawalof Members.

 

### (a)        Except as otherwise provided in Section9.6(b), no Unitholder shall have the power or right to withdraw orotherwise resign from the Company except, simultaneous with 

 

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### theTransfer of all of a Unitholder’s Units in a Transfer permitted by thisAgreement and, if such Transfer is to a Person that is not a Unitholder, theadmission of such person or entity as a Unitholder pursuant to Section 10.1.

###  

### (b)        Notwithstanding any provision of thisAgreement to the contrary, any Member may elect, upon written notice to theManagers, to withdraw from the Company, or make a partial withdrawal any timein the manner herein provided, if such Member shall obtain and deliver to theManagers an opinion of counsel (who may be independent counsel or an employeeof such Member or an affiliate of such Member, and who shall be reasonablysatisfactory to the Managers) that such Member has a Regulatory Problem or willhave a Regulatory Problem if such Member were to continue as a Member or ifsuch partial withdrawal were not effected. Upon such withdrawal, the Company shall repurchase such withdrawingMember’s Units at the lower of Fair Market Value upon the date of suchwithdrawal and Fair Market Value upon a Sale of the Company, assuming that suchUnits were still outstanding, with a subordinated note that shall mature andbecome due and payable on the fifth day following a Sale of the Company, shallbe non-interest bearing, and shall otherwise have terms reasonably designatedby the Managers.

###  

## 9.7        Legend.  In the event that certificates representingthe Units are issued, such certificates will bear the following legend:

 

“THE UNITS REPRESENTED BYTHIS CERTIFICATE WERE ORIGINALLY ISSUED ON HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLESTATE SECURITIES LAWS (“STATE ACTS”) AND MAY NOT BE SOLD OR TRANSFERREDIN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR STATEACTS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.  THE TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE ISSUBJECT TO THE CONDITIONS SPECIFIED IN THE LIMITED LIABILITY COMPANY AGREEMENT,DATED AS OF FEBRUARY     , 2004 GOVERNING THE ISSUER (THE “COMPANY”)AND BY AND AMONG ITS MEMBERS, AS SUCH MAY BE AMENDED FROM TIME TO TIME.  A COPY OF SUCH CONDITIONS SHALL BE FURNISHEDBY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

## 9.8        TransferCost Considerations.  Anycapital gains, income, transfer, gift or other taxes imposed upon anytransferor or transferee as a result of any conveyance of any interest in theCompany shall be exclusively the responsibility of the person upon whom suchtax is imposed; the Company shall have no responsibility whatsoever for suchtax.  In the event that any tax, expense(including legal and accounting fees) or cost is incurred by or imposed uponthe Company as a result of any conveyance of an interest in the Company, exceptas a result of the Company’s issuing or purchasing any interest in the Company,the Member conveying such 

 

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## interest shall indemnify,or cause the transferee to indemnify, the Company for such tax, expense orcost.

 

ARTICLE X

 

# ADMISSIONOF MEMBERS

 

## 10.1      SubstitutedMembers.  In connection with thepermitted transfer of a Unit, the transferee shall become a Substituted Memberon the effective date of such transfer, which effective date shall not beearlier than the date of compliance with the conditions to such transfer(without the Managers or any Member consent unless one of the conditions tosuch transfer is that Managers or Member consent is required for the admissionof such transferee, in which case such consent must first be obtained), andsuch admission shall be shown on the books and records of the Company.

 

## 10.2      AdditionalMembers.  Notwithstandinganything contained herein to the contrary, a Person may be admitted to theCompany as an Additional Member and issued Units only upon furnishing to theManagers (a) a letter of acceptance, in form satisfactory to the Managers, ofall the terms and conditions of this Agreement, and (b) such other documents orinstruments as may be reasonably necessary or appropriate to effect suchPerson’s admission as a Member.  Suchadmission shall become effective on the date that such conditions have beensatisfied.

 

## 10.3      Optionholders.  No person or entity that holds securities(including, without limitation, options, warrants or rights) exercisable,exchangeable or convertible into Units (“Optionholder”) shall have anyrights with respect to such Units until such person or entity is actuallyissued Units upon such exercise, exchange or conversion and, if such person orentity is not then a Member, is admitted as a Member pursuant to Section10.2.  Each Optionholder that isalso a Member agrees to be bound by all of the obligations of an Optionholderset forth herein, including, without limitation, those set forth in Section9.3.

 

ARTICLE XI

 

# INCORPORATION

 

If at any time theManagers (with Required Approval) approve the incorporation (whether by merger,exchange, contribution, a combination of the foregoing or otherwise) of theCompany (whether in connection with a public offering of any of the equitysecurities of the Company to be registered under the Securities Act orotherwise), each Unitholder, each holder of rights to acquire units and theCompany will take all necessary or desirable actions in connection with theincorporation of the Company and, if applicable, the consummation of suchregistered offering approved by the Managers, subject to Section 3.3(a).  Without limiting the generality of theforegoing, each holder of Units hereby waives any dissenters rights, appraisalrights or similar rights in connection with any such incorporation of theCompany and transactions entered into in connection therewith.  The incorporation of the Company will beeffected in such a manner so that, immediately thereafter, either (i) eachUnitholder holds common stock having an aggregate value equal to the FairMarket Value of all of the Units held by such Unitholder immediately

 

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prior to suchincorporation or (ii) each Unitholder receives one or more classes of capitalstock that, to the fullest extent possible, maintain and contain termsreflecting, the relative rights and preferences of the Units previously held bysuch Unitholder.  In no event shall theprovisions of this Article XI abrogate or otherwise modify the rights orobligations, if any, of the holders of Units as set forth in the RegistrationRights Agreement.

 

ARTICLE XII

 

# LIQUIDATION

 

## 12.1      Dissolution.  Upon dissolution of the Company, the assetsof the Company shall be liquidated by the Managers (or a Liquidating Trusteeappointed by the Managers, which may be a Member) as promptly as possible, butin an orderly and businesslike manner so as not to involve undue sacrifice, andwill apply and distribute the proceeds thereof in the following priority,unless otherwise required by applicable law:

 

### (a)        to pay all creditors of the Company, inthe order of priority provided by law; and

###  

### (b)        after the payment of all debts,liabilities and obligations of the Company, to distribute to the Members theirrespective shares of the remaining assets, if any pursuant to Section 5.1(c).

###  

## 12.2      Accounting.  Within one hundred eighty (180) days aftercompletion of final distributions, the Managers or Liquidating Trustee shallcause to be prepared by a firm of certified public accountants a statementsetting forth the assets and liabilities of the Company as at the date ofdissolution, which statement shall be furnished to all of the Members.

 

## 12.3      Compensationof Trustee.  The LiquidatingTrustee, if engaged, shall be entitled to receive reasonable compensation.

 

ARTICLE XIII

 

# INDEMNITY

 

## 13.1      Indemnification.  Every person (and the heirs, executors andadministrators of such person) who is or was a Unitholder, Manager, officer,employee or agent of the Company or of any other company, including anothercompany, partnership, joint venture, trust or other enterprise which suchperson serves or served as such at the request of the Company shall beindemnified by the Company against all judgments, payments in settlement(whether or not approved by court), fines, penalties and other reasonable costsand expenses (including fees and disbursements of counsel) imposed upon orincurred by such person in connection with or resulting from any action, suit,proceeding, investigation or claim, whether civil, criminal, administrative,legislative or other (including any criminal action, suit or proceeding inwhich such person enters a plea of guilty or nolo contendere or itsequivalent), or any appeal relating thereto which is brought or threatened byany other person, governmental authority or instrumentality (herein called a “third-partyaction”) and in which such person is made a party or is otherwise involvedby reason of his or her being or having been such

 

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## Unitholder, Manager,officer, employee, or agent or by reason of any action or omission, or allegedaction or omission by such person in his or her capacity as such Unitholder,Manager, officer, employee or agent if either (a) such person is whollysuccessful, on the merits or otherwise, in defending such third-party action or(b) in the judgment of a court of competent jurisdiction or, in the absence ofsuch determination, in the judgment of the Managers of the Company, such personacted in good faith and in what he or she reasonably believed to be the bestinterest of the Company or such other company and, in addition, in any criminalaction, had no reasonable cause to believe that his or her conduct wasunlawful.  In case such person issuccessful, on the merits or otherwise, in defending part of such action, or,in the judgment of such a court or the Managers, has met the applicablestandard of conduct specified in the preceding sentence with respect to part ofsuch action, he or she shall be indemnified by the Company against thejudgments, settlement payments, fines, penalties, and other costs and expensesattributable to such part of such action.

 

The foregoing rights ofindemnification shall be in addition to any rights which any such Unitholder,Manager, officer, employee or agent may otherwise be entitled.

 

In any case in which, inthe judgment of the Managers, any such Member, Manager, officer or employeewill be entitled to indemnification under the foregoing provisions of this ArticleXIII, such amounts as they deem necessary to cover the reasonable costs andexpenses incurred by such person in connection with the action, suit, proceeding,investigation or claim prior to final disposition thereof may be advanced tosuch person upon receipt of an undertaking by or on behalf of such person torepay such amounts if it is ultimately determined that he or she is not soentitled to indemnification.

 

ARTICLE XIV

 

# DEFINITIONS

 

## 14.1      CertainDefinitions.  For the purpose ofthis Agreement, the following terms have the meanings set forth below:

 

“Additional Member”means a Person admitted to the Company as a Member pursuant to Section 10.2.

 

“Adjusted CapitalAccount Deficit” means, with respect to any Unitholder, the deficitbalance, if any, in such Unitholder’s Capital Account as of the end of therelevant Taxable Year, after giving effect to the following adjustments:

 

#### (i)            Credit to such Capital Account anyamounts which such Unitholder is obligated to restore pursuant to any provisionof this Agreement or is deemed to be obligated to restore pursuant to thepenultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);and

####  

#### (ii)           Debit to such Capital Account theitems described in Sections 1.704-1(b)(2)(ii)(d)(4),1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6)of the Regulations.

 

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The foregoing definitionof Adjusted Capital Account Deficit is intended to comply with the provisionsof Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall beinterpreted consistently therewith.

 

“Affiliate” of anyPerson means any Person that directly or indirectly controls, is controlled by,or is under common control with the Person in question.

 

“Argosy Group”means Argosy, Canadian Imperial Bank of Commerce, CIBC WMV Inc., CIBC WMC Inc.,CIBC Wood Gundy Ventures, Inc., Co-Investment Merchant Fund 2, L.L.C., anyother Person designated as such pursuant to this definition, and each of theirrespective Affiliates, successors, and, to the extent that the assignordesignates such assignee as a member of the “Argosy Group” by notifying theCompany and the Unitholders, assigns.

 

“Base Rate” meansa rate per annum equal to the United States corporate base rate announced bythe Canadian Imperial Bank of Commerce from time to time, changing when and assuch rate changes.

 

“BHCA Regulated Member”means any Member which is subject to Regulation Y of the Federal Reserve Board.

 

“Book Value”means, with respect to any Company property, the Company’s adjusted basis forfederal income tax purposes, adjusted from time to time to reflect theadjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).

 

“Capital Account”means the capital account maintained for a Member pursuant to Section 4.5.

 

“Capital Contribution”means any cash, cash equivalents, promissory obligations or the Fair MarketValue of other property which a Member contributes or is deemed to havecontributed to the Company pursuant to Section 4.1.

 

“Cause” means,with respect to any Member who is an employee of the Company (or any Subsidiarythereof), such Member’s (i) embezzlement or misappropriation of funds, (ii)conviction of a felony involving moral turpitude, (iii) commission of amaterial act of dishonesty, fraud, or deceit, (iv) breach of any materialprovisions of any employment agreement with the Company (or any Subsidiarythereof) to which he is a party, (v) habitual or willful neglect of his duties,(vi) breach of fiduciary duty to the Company (or any Subsidiary thereof)involving personal profit or (vii) material violation of any other duty to theCompany (or any Subsidiary thereof) or its Members imposed by law or by theManagers.

 

“Certificate”means the Company’s certificate of formation filed with the Delaware Secretaryof State.

 

“Class E Factor”means, as of the date of any Distribution, the fraction, (i) the numerator ofwhich is the number of issued and outstanding Vested Class E Units as of thedate of such Distribution and (ii) the denominator of which is 1,000.

 

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“CNIC” meansCaravelle Norcross Investment Corporation, a Delaware corporation.

 

“Code” means theUnited States Internal Revenue Code of 1986, as amended from time to time.  All references herein to sections of theCode shall include any corresponding provision or provisions of succeeding lawto the extent the Managers determines that any such amendments do not adverselyaffect the relative economic interests of the Members hereunder.

 

“Common Units”means, collectively, the Class A Common Units, Class B Common Units, Class CCommon Units and Class D Common Units. For avoidance of doubt, “Common Units” shall not include Class E Unitsor Preferred Units.

 

“Common Voting Units”means all of the Common Units other than the Class B Common Units and the ClassD Common Units.

 

“Competitor” shallhave the meaning ascribed to it in Section 9.1.

 

“Credit Agreement”means that Credit Agreement, dated October 2, 1998, among Norcross SafetyProducts L.L.C., North Safety Products Corp., Morning Pride ManufacturingL.L.C. and each of the other signatories thereto, as the same has been and maybe amended, modified, supplemented or waived from time to time.

 

“Delaware Act”means the Delaware Limited Liability Company Act, 6 Del.L. § 18-101, et seq.,as it may be amended from time to time, and any successor to the Delaware Act.

 

“Distribution”means each distribution made by the Company to a Member, whether in cash,property or securities of the Company and whether by liquidating distribution,redemption, repurchase or otherwise; providedthat none of thefollowing shall be a Distribution: (a) any redemption or repurchase by theCompany of any securities, and (b) any recapitalization or exchange ofsecurities of the Company, and any subdivision (by Unit split or otherwise) orany combination (by reverse Unit split or otherwise) of any outstanding Units.

 

“Effective Date”shall have the meaning ascribed to it in the Preamble.

 

“Exempt Transfer”shall have the meaning ascribed to it in Section 9.1.

 

“Family Group”means a Member’s spouse and descendants (whether natural or adopted) and anytrust, partnership or corporation or similar entity created by or at thedirection of a Member for the benefit of either the Member or the Member’sspouse and/or descendants and any Affiliates of the foregoing.

 

“Financing” meansthe purchase of Units by the SBIC Holder(s) hereunder from time to time.

 

“Fiscal Year”means the Company’s annual accounting period established pursuant to Section6.2.

 

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“Freely TradeableSecurities” means securities: (i) which are of a class (a) of securitiesissued or fully guaranteed by the United States of America or any agencythereof and entitled to the full faith and credit of the United States ofAmerica, for which price quotations are routinely quoted and for which, in theopinion of a majority of the Managers, there is a ready liquid market; or (b)both registered pursuant to either Section 12(b) or Section 12 (g) of the 1934Act and either listed on a national securities exchange or on the NASDAQnational market and (ii) which may be resold immediately in the public marketsby each holder of Units without requirement of further registration under theSecurities Act.

 

“Hancock” meansJohn Hancock Life Insurance Company, a Massachusetts mutual life insurancecompany or its successors.

 

“Hancock Group”means Hancock, Hancock Mezzanine Partners L.P. any other Person designated assuch pursuant to this definition, and each of their respective Affiliates,successors, and, to the extent that the assignor designates such assignee as amember of the “Hancock Group” by notifying the Company and the Unitholders,assigns.

 

“Independent ThirdParty” means any person who, immediately prior to the contemplatedtransaction, does not own in excess of 5% of the Company’s Common Units on afully-diluted basis (a “5% Owner”), who is not controlling, controlledby or under common control with any such 5% Owner and who is not the spouse ordescendent (by birth or adoption) of any such 5% Owner or a trust for thebenefit of any such 5% Owner and/or such other persons.

 

“Investor” means amember of the Argosy Group or a member of the Hancock Group and “Investors”means, collectively, members of the Argosy Group and members of the HancockGroup.

 

“Losses” meansitems of Company loss and deduction determined according to Section 4.5.

 

“Member” meanseach of the members named on Schedule A attached hereto and any Person admittedto the Company as a Substituted Member or Additional Member; but only so longas such Person is shown on the Company’s books and records as the owner of oneor more Units.

 

“Member Employee”means any Member who is or at any time was an employee of the Company or anySubsidiary.

 

“Person” means anindividual, a partnership, a corporation, a limited liability company, anassociation, a joint stock company, a trust, a joint venture, an unincorporatedorganization and a governmental entity or any department, agency or politicalsubdivision thereof.

 

“Preferred Yield”means, with respect to each Preferred Unit, the amount accruing on suchPreferred Unit on a daily basis, at the rate of 10% per annum, compounded onthe last day of June and December of each year, on (a) the Unreturned PreferredCapital of such Preferred Unit plus (b) Unpaid Preferred Yield thereon, for allprior semi-annual periods. In 

 

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calculating the amount of any Distribution to be madeduring a period, the portion of a Preferred Unit’s Preferred Yield for suchportion of such period elapsing before such Distribution is made shall be takeninto account.

 

“Profits” meansitems of Company income and gain determined according to Section 4.5.

 

“Public Sale”means any sale of Units to the public pursuant to an offering registered underthe Securities Act or to the public through a broker, dealer or market makerpursuant to the provisions of Rule 144 (or any similar provision then ineffect) adopted under the Securities Act.

 

“RedemptionDistribution” means, with respect to any Preferred Unit at any time, anamount equal. to the sum of aggregate Unpaid Preferred Yield on such PreferredUnit and Unreturned Preferred Capital on such Preferred Unit at such time.

 

“Registration RightsAgreement” means the Amended and Restated Registration Rights Agreement,dated as of the date hereof, by and among the Company and the other signatoriesthereto (as the same may be amended, modified, supplemented or waived from timeto time).

 

“Regulated Member”means any Member that provides satisfactory evidence to the Company that suchMember’s investment is subject to regulation by a governmental authority(excluding securities laws), including a BHCA Regulated Member and an SBICHolder.

 

“Regulatory Problem”means any transaction, circumstance or situation whereby (A) a Regulated Memberand such Regulated Member’s Affiliates would own, control or have power over agreater quantity of securities of any kind issued by the Company or any otherentity than are permitted under any requirement of any governmental authority,or would cause such Regulated Member to not be able to hold an investment in orprovide financing to the Company in compliance with any applicable requirementof any governmental authority, or (B) it has been asserted by any governmentalregulatory agency (or such Regulated Member believes that there is a risk ofsuch assertion) that such Regulated Member and its Affiliates are not entitledto hold the Units held by such Regulated Member or exercise any significantright with respect to the Units held by such Person or provide financing to theCompany in compliance with any applicable requirement of any governmentalauthority.

 

“Required Approval”means the approval of each of (i) members of the Argosy Group holding amajority of the Class A Common Units held by members of the Argosy Group or, inlieu thereof, a majority of the Argosy Managers and (ii) members of the HancockGroup holding a majority of the Class A Common Units held by members of theHancock Group or, in lieu thereof, the Hancock Manager.

 

“Sale of the Company”means the sale of the Company to an Independent Third Party or group ofIndependent Third Parties pursuant to which such party or parties acquire (i)equity securities of the Company constituting a majority of the residual equityof the Company (whether by merger, consolidation, or sale or transfer of theCommon Units or otherwise) or (ii) all or substantially all of Company’s assetsdetermined on a consolidated basis.

 

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“SBA” means theUnited States Small Business Administration, and any successor agencyperforming the functions thereof.

 

“SBIC” means aSmall Business Investment Company licensed by an SBA under the SBIC Act.

 

“SBIC Act” meansthe Small Business Investment Act of 1958, as amended. “SBIC Holder” means anymember which is an SBIC.

 

“SBIC Regulations”means the SBIC Act and the regulations issued by the SBA thereunder, codifiedat Title 13 of the Code of Federal Regulations (“13 CFR”), Parts 107 and121.

 

“Subsidiary”means, with respect to any Person, (i) a corporation a majority of whosecapital stock with voting power, under ordinary circumstances, to electdirectors is at the time, directly or indirectly, owned by such Person and/orby one or more Subsidiaries thereof or (ii) any other Person (other than acorporation), including without limitation a joint venture, in which suchPerson, and/or one or more Subsidiaries thereof or such Person and one or moreSubsidiaries thereof, directly or indirectly, at the date of determinationthereof, has at least a majority ownership interest entitled to vote in theelection of directors, managers or trustees thereof (or other personsperforming similar functions). For purposes of this definition, any directors’qualifying shares or investments by foreign nationals mandated by applicablelaw shall be disregarded in determining the ownership of a Subsidiary.

 

“Substituted Member”means a Person that is admitted as a Member to the Company pursuant to Section10.1.

 

“Tax” or “Taxes”means federal, state, county, local, foreign or other income, gross receipts,ad valorem, franchise, profits, sales or use, transfer, registration, excise,utility, environmental, communications, real or personal property, capitalstock, license, payroll, wage or other withholding, employment, social security,severance, stamp, occupation, alternative or add-on minimum, estimated andother taxes of any kind whatsoever (including, without limitation,deficiencies, penalties, additions to tax, and interest attributable thereto)whether disputed or not.

 

“Tax Return” meansany return, information report or filing with respect to Taxes, including anyschedules attached thereto and including any amendment thereof.

 

“Transfer” meansany sale, transfer, assignment, pledge, mortgage, exchange, hypothecation,grant of a security interest or other direct or indirect disposition orencumbrance of an interest (including, without limitation, by operation of law)or the acts thereof, but explicitly excluding the conversions of one class ofCommon Unit to another class of Common Unit. The terms “Transferee,” “Transferred,” and other forms ofthe word “Transfer” shall have correlative meanings.

 

“Treasury Regulations”means the regulations promulgated by the United States Department of theTreasury pursuant to and in respect of provisions of the Code.  All references herein to sections of theTreasury Regulations shall include any corresponding provision or 

 

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provisions of succeeding, similar, substitute,proposed or final Treasury Regulations to the extent the Managers determinethat any such amendments and succeeding regulations do not adversely affect therelative economic interests of the Members hereunder.

 

“type” of Unitmeans a Preferred Unit or a Common Unit, as the case may be.

 

“Unit ExchangeAgreement” means the Unit Purchase and Exchange Agreement, dated October 2,1998, among the Company, Argosy-Safety Products, L.P., John Hancock Mutual LifeInsurance Company, CIBC Wood Gundy Ventures, Inc., Co-Investment Merchant Fund,L.L.C., Hancock Mezzanine Partners L.P., Citizens Capital, Inc., ContinentalIllinois Venture Corp., Caravelle Investment Fund, L.L.C., CIBC OppenheimerCorp. and Randolph Street Partners II.

 

“Unitholder” meansany owner of one or more Units as reflected on the Company’s books and records.

 

“Unpaid PreferredYield” of any Preferred Unit means, as of any date, an amount equal to theexcess, if any, of (a) the aggregate Preferred Yield accrued on such PreferredUnit for all periods prior to such date, over (b) the aggregate amount of priorDistributions made by the Company that constitute payment of Preferred Yield onsuch Preferred Unit.

 

“Unreturned PreferredCapital” means, with respect to a Preferred Unit, the excess, if any, of(a) the Capital Contribution made in exchange for or on account of such Unitover (b) all Distributions made by the Company on account of such PreferredUnit after all Unpaid Preferred Yield on account of such Preferred Unit shallhave been paid in full.

 

“Vested Class E Units”means any Class E Units which have vested in accordance with the terms of theClass E Unit Purchase Agreement pursuant to which such Class E Units wereacquired.

 

## 14.2      OtherDefinitions.  Capitalized termsused herein but not defined in Section 14.1 have the meaning given suchterm in the Section where such term is first defined in this Agreement.

 

ARTICLE XV

 

# MISCELLANEOUS

 

## 15.1      Wills.  Each Member who is a natural person agreesto execute a will which shall contain a direction and authorization to his orher personal representative, executor or administrator to comply with theprovisions of this Agreement and to sell his or her Units, as the case may be,in accordance with this Agreement; provided, however, that thefailure of any such Member to do so shall not affect the validity orenforceability of this Agreement.

 

## 15.2      Spousal Consent.  Each married Member, and each such Memberwho, subsequent to the date hereof, marries or remarries, shall concurrentlywith his or her execution hereof deliver to the Managers the written consent ofhis or her spouse, substantially in the form 

 

40

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## attached hereto as ScheduleC; provided, however, that the failure of any such Member todo so shall not affect the validity or enforceability of this Agreement.

 

## 15.3      Third-PartyBeneficiaries.  This Agreementis not intended to nor will it confer upon any other person (other than theparties hereto) any rights or remedies; and this Agreement is binding upon andis solely for the benefit of the parties hereto and their respectivesuccessors, legal representatives and assigns.

 

## 15.4      Designees.  Any rights granted to any Member of theArgosy Group may be delegated to any other Member of the Argosy Group and anyrights granted to any Member of the Hancock Group may be delegated to any otherMember of the Hancock Group.

 

## 15.5      Amendments.

 

### (a)        This Agreement may be amended only bythe affirmative vote of a majority of the Common Voting Units (with RequiredApproval) or, as the result of an issuance or transfer permitted by thisAgreement, by the Managers; providedthat, no amendment ormodification pursuant to this Section 15.5 that would adversely affectholders of one class of Units in a manner different than holders of any otherclass of Units (as the case may be) shall be effective against the holders ofsuch class of Units without the prior written consent of holders of at least amajority of Units of such class so adversely affected thereby; providedfurtherthat, no amendment or modification pursuant to this Section 15.5that would adversely affect a holder of one class or type of Units in a mannerdifferent than the other holders of the same class or type of Units shall beeffective against such holder without the prior written consent of such holder;providedfurtherthat, no amendment or modification of Sections2.7, 2.8, 2.9 or 2.10 shall be effective without theprior written consent of all Regulated Members affected thereby and noamendment or modification of Sections 2.11 or 2.12 shall beeffective without the prior written consent of all of the SBIC Holders; providedfurtherthat no amendment or modification pursuant to this Section15.5 that would affect the rights of a Member or group of Membersspecifically granted such rights by name shall be modified without thatMember’s (or a majority of that group of Members’) consent; and providedfurtherthat amendments or modifications to the terms of theClass E Units shall be effective only upon the prior written consent of the holdersof a majority of the Class E Units then outstanding.

###  

### (b)        In the event that any amendment is to bemade to Section 9.8 hereof, the foregoing required vote must include thevotes of all affected employee Members and terminated employee Members.  The Managers shall not enter into any otheragreement that would have the effect of amending the provisions of thisAgreement without the foregoing required vote.

###  

## 15.6      Notices.  Except as expressly set forth to thecontrary in this Agreement, all notices, requests or consents provided for orpermitted to be given under this Agreement must be in writing and shall bedeemed delivered: (a) upon delivery if delivered in person; (b) upontransmission if sent via telecopier, with a confirmation copy sent via overnightmail, provided that confirmation of such overnight delivery is received; or (c)one (1) business day after deposit with a national overnight courier providedthat confirmation of such overnight delivery is received.  All notices, requests and consents to besent to a Member or Unitholder must be sent to or made at the address given forthat Member on Schedule A or such other address as that 

 

41

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## Member or Unitholder mayspecify by notice to the other Members. Any notice, request, or consent to the Company or the Managers must begiven to the Managers at the following address:

 

NSP Holdings L.L.C.

2211 York Road, Suite 215

Oak Brook, Illinois60523-1887

Attention:      Robert A. Peterson

Telecopy:      (630) 572-8231

 

Whenever any notice isrequired to be given by law, the Certificate or this Agreement, a writtenwaiver thereof, signed by the Person entitled to notice, whether before orafter the time stated therein, shall be deemed equivalent to the giving of suchnotice.

 

## 15.7      Waiver ofCertain Rights.  Each Memberirrevocably waives any right it may have to demand any distributions orwithdrawal of property from the Company or to maintain any action fordissolution of the Company or for partition of the property of the Company.

 

## 15.8      EntireAgreement.  Except as providedin the Registration Rights Agreement, this Agreement constitutes the entireagreement of the Members and their affiliates relating to the Company andsupersedes all prior contracts or agreements with respect to the Company,whether oral or written.

 

## 15.9      Effectof Waiver or Consent.  A waiveror consent, express or implied, to or of any breach or default by any Person inthe performance by that Person of its obligations with respect to the Company isnot a consent or waiver to or of any other breach or default in the performanceby that Person of the same or any other obligations of that Person with respectto the Company.  Failure on the part ofa Person to complain of any act of any Person or to declare any Person indefault with respect to the Company, irrespective of how long that failurecontinues, does not constitute a waiver by that Person of its rights withrespect to that default until the applicable statute-of-limitations period hasrun.

 

## 15.10    Creditors.  None of the provisions of this Agreementshall be for the benefit of or enforceable by any creditors of the Company orany of its Affiliates, and no creditor who makes a loan to the Company or anyof its Affiliates may have or acquire (except pursuant to the terms of aseparate agreement executed by the Company in favor of such Creditor) at anytime as a result of making the loan any direct or indirect interest in CompanyProfits, Losses, Distributions, capital or property other than as a securedcreditor.

 

## 15.11    Indemnification and Reimbursementfor Payments on Behalf of a Member.

 

### (a)        If the Company is obligated to pay anyamount to a governmental agency or body or, as directed by a court of competentjurisdiction or a governmental agency or body, to any other Person because ofthe status of a Member or otherwise specifically attributable to a Member(including, without limitation, federal withholding taxes with respect toforeign 

 

42

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### partners,state personal property taxes, state unincorporated business taxes, etc.), thensuch Member (the “Indemnifying Person”) shall indemnify the Company infull for the entire amount paid (including, without limitation, any interest,penalties and expenses associated with such payment).  At the option of the Managers, the amount to be indemnified maybe charged against the Capital Account of the Indemnifying Person, and, at theoption of the Managers, either:

###  

#### (i)            promptly upon notification of anobligation to indemnify the forth in the preceding sentence, shall be resolvedby final and binding arbitration before a single arbitrator selected andserving under the Commercial Arbitration Rules of the American ArbitrationAssociation. The arbitration shall be held in Wilmington, Delaware unlessanother location is mutually agreed upon by the parties to such arbitration.Such arbitration shall be the exclusive remedy hereunder. The decision of thearbitrator may, but need not, be entered as judgment in accordance with theprovisions of the laws of Delaware. If this Arbitration provision is for anyreason held to be invalid or otherwise inapplicable to any dispute, the partieshereto agree that any action or proceeding brought with respect to any disputearising under this Agreement, or to interpret or clarify any rights orobligations arising hereunder, shall be maintained solely and exclusively inthe United States Federal Courts, venue in Wilmington, Delaware.

####  

### (b)        Anything set forth in the foregoingparagraph notwithstanding, the Unitholders agree that the exclusive procedurefor resolving disputes over the determination of Fair Market Value shall be asset forth in Section 2.1(b) of this Agreement. All Unitholders and theCompany shall be bound by the determination of Fair Market Value made inaccordance therewith.  Accordingly, theUnitholders agree that no arbitration, or action or proceeding in any court orother tribunal, shall be brought with respect to any dispute over thedetermination of Fair Market Value.

###  

## 15.12    DescriptiveHeadings; Interpretation.  Thedescriptive headings of this Agreement are inserted for convenience only and donot constitute a substantive part of this Agreement.  Whenever required by the context, any pronoun used in thisAgreement shall include the corresponding masculine, feminine or neuter forms,and the singular form of nouns, pronouns and verbs shall include the plural andvice versa.  The use of the word“including” in this Agreement shall be by way of example rather than by limitation.  Reference to any agreement, document orinstrument means such agreement, document or instrument as amended or otherwisemodified from time to time in accordance with the terms thereof, and ifapplicable hereof.  Without limiting thegenerality of the immediately preceding sentence, no amendment or othermodification to any agreement, document or instrument that requires the consentof any Person pursuant to the terms of this Agreement or any other agreementwill be given effect hereunder unless such Person has consented in writing tosuch amendment or modification. Wherever required by the context, references to a Fiscal Year shallrefer to a portion thereof.  The use ofthe words “or,” “either” and “any” shall not be exclusive.  The parties hereto have participated jointlyin the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretationarises, this Agreement shall be construed as if drafted jointly by the partieshereto, and no presumption or burden of proof shall arise favoring ordisfavoring any party by virtue of the authorship of any of the provisions ofthis Agreement.  Wherever a conflictexists between this Agreement and any other agreement, except as otherwiseprovided in this Agreement, this Agreement shall control but solely to theextent of such conflict.

 

43

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## 15.13    FurtherAssurances.  In connection withthis Agreement and the transactions contemplated hereby, each Unitholder shallexecute and deliver any additional documents and instruments and perform anyadditional acts that may be necessary or appropriated to effectuate and performthe provisions of this Agreement and those transactions.

 

## 15.14    Counterparts.  This Agreement may be executed in any numberof counterparts with the same effect as if all signing parties had signed thesame document.  All counterparts shallbe construed together and constitute the same instrument.

 

## 15.15    Representations and Warranties ofUnitholder.  In connection withany Capital Contribution for which a Unitholder receives Units hereunder or anyother transaction hereunder in which a Unitholder receives Units, suchUnitholder represents and warrants to the Company that:

 

### (a)        The Units to be acquired by suchUnitholder pursuant to this Agreement will be acquired for such Unitholder’sown account and not with a view to, or intention of, distribution thereof inviolation of any applicable securities laws, and the Units will not be disposedof in contravention of any such laws.

###  

### (b)        In the case of a Unitholder that is anatural person, such Unitholder is a director, executive officer, or generalpartner of the Company or in the case of a Unitholder that is an entity, suchUnitholder is an organization described in Section 501(c)(3) of the InternalRevenue Code of 1986, as amended, a corporation, limited liability company orpartnership, or a Massachusetts or similar business trust, which entity was notformed for the specific purpose of making an investment in the Company and hastotal assets in excess of $5,000,000.

###  

### (c)        Such Unitholder is sophisticated infinancial matters and is able to evaluate the risks and benefits of theinvestment in the Units.

###  

### (d)        Such Unitholder is able to bear theeconomic risk of his investment in the Units for an indefinite period of timebecause the Units have not been registered under any applicable securities lawsand, therefore, cannot be sold unless subsequently registered under allapplicable securities laws or an exemption therefrom is available.

###  

### (e)        Such Unitholder has had an opportunityto ask questions and receive answers concerning the terms and conditions of theoffering of Units and has had full access to such other information concerningthe Company as he has requested and each such Unitholder is making theinvestment independently of, and without reliance on, all other Unitholders.

###  

### (f)         This Agreement constitutes the legal,valid and binding obligation of such Unitholder, enforceable in accordance withits terms, and the execution, delivery and performance of this Agreement bysuch Unitholder does not and will not conflict with, violate or cause a breachof any agreement, contract or instrument to which such Unitholder is a party orany judgment, order or decree to which such Unitholder is subject.

###  

## 15.16    Representations and Warranties ofCompany.  In connection with anyCapital Contribution for which a Unitholder receives Units or any othertransaction hereunder in which a Unitholder receives Units, the Companyrepresents and warrants to such Unitholder that:

 

44

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### (a)        Organization; Power and Authority.  The Company is a limited liability company,duly formed, validly existing and in good standing under the Delaware LimitedLiability Company Act.  The Company isnot qualified as a foreign limited liability company in any jurisdiction. TheCompany has all requisite power and authority to own or hold under lease theproperties it purports to own or hold under lease, to transact the business itproposes to transact, to execute and deliver this Agreement and the Units andto perform the provisions hereof and thereof except where the failure to holdsuch power or authority would not have a material adverse effect on the Companyand its subsidiaries taken as a whole.

###  

### (b)        Authorization.  This Agreement and the issuance of the Unitshave been duly authorized by the Company, and this Agreement constitutes thelegal, valid and binding obligation of the Company enforceable against the Companyin accordance with its terms, subject, in the case of enforcement, tobankruptcy, fraudulent transfer, reorganization, moratorium and other laws ofgeneral applicability relating to creditor’s rights and to general equityprinciples.  Upon issuance, the Unitswill be validly issued and fully paid to the extent payment has been made infull.  The issuance of the Unitshereunder is not subject to any preemptive rights which have not been waived.

###  

### (c)        Ownership.  Schedule D is a complete and correctlist of direct and indirect subsidiaries of the Company.  Each subsidiary of the Company is acorporation or limited liability company, duly organized, validly existing andin good standing under the laws of its jurisdiction of incorporation orformation and is duly qualified as a foreign corporation or limited liabilitycompany in each jurisdiction in which the failure to be so qualified would havea material adverse effect on the Company and its subsidiaries taken as awhole.  Each such subsidiary has thepower and authority to own or hold under lease the properties it purports toown or hold under lease and to transact the business it transacts and proposesto transact except where the failure to hold such power or authority would nothave a material adverse effect on the Company and its subsidiaries taken as awhole.

###  

### (d)        Compliance with Laws; Conflicts.  The execution, delivery and performance bythe Company of this Agreement and the issuance of the Units will not (i)contravene, result in a breach of or constitute a default under, or result inthe creation of any lien in respect of any property of the Company or anysubsidiary under the organizational documents of any of them or under anymaterial instrument or agreement to which they are parties or by which theirrespective properties are bound, or (ii) conflict with or result in the breachof any of the terms or provisions of any order, judgment, decree or ruling ofany court or governmental authority applicable to the Company or any of itssubsidiaries or violate any provision of any statute or other rule orregulation of any governmental authority applicable to the Company or any ofits subsidiaries, except those contraventions, breaches, defaults, creations ofliens or other requirements described above which would not have a materialadverse effect on the Company and its subsidiaries, taken as a whole.

###  

### (e)        Governmental Authorizations.  No consent, approval or authorization of, orregistration with any governmental authority is required in connection with theexecution, delivery or performance by the Company of the Agreement or theissuance of the Units, other than compliance with applicable state and federalsecurities laws, and except where the failure to 

 

45

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### obtainsuch consents, approvals, authorizations, or registrations would not have amaterial adverse effect on the Company and its subsidiaries, taken as a whole.

###  

### (f)         Private Offering.  Assuming the accuracy of the representationscontained in Section 15.18 hereof, the Company has not violated any state orfederal securities laws in connection with the offer and sale of the Units inthe manner contemplated by this Agreement and registration under the SecuritiesAct is not required.

###  

### (g)        Use of Proceeds.  Neither the Company nor any subsidiary ownsor has any present intention of acquiring any “margin stock” as defined inRegulation U (12 CFR Part 221) of the Board of Governors of the Federal ReserveSystem (“margin stock”).  None of theproceeds of the sale of the Units will be used, directly or indirectly, for thepurpose, whether immediate, incidental or ultimate, of purchasing or carryingany margin stock or for the purpose of maintaining, reducing or retiring anyindebtedness which was originally incurred to purchase or carry any stock thatis currently a margin stock or for any other purpose which might constitutethis transaction a “purpose credit” within the meaning of such Regulation U.

###  

### (h)        Indebtedness.  The Company has made available to the Memberstrue, complete and correct copies of each of the material agreements forindebtedness for borrowed money to which the Company and its subsidiaries areparty (the “Credit Agreements”) and all other instruments and agreementsexecuted in connection therewith and which are in effect on the date hereof.

###  

### (i)         Status under Certain Statutes.  The Company is not required to be registeredas an “investment company” under the Investment Company Act and is not subjectto regulation under the Public Utilities Holding Company Act.

###  

### (j)         Credit Agreements.  To the best of the Company’s knowledge, therepresentations and warranties made by the Company or an Affiliate contained inthe Credit Agreement were true and correct in all material respects when made.

###  

### (k)        Solvency.  After giving effect to the transactionscontemplated hereby, to the best of the Company’s knowledge, as of the datehereof, the aggregate fair saleable value of the assets of the Company on aconsolidated basis exceeds the amount required to pay its non-contingentliabilities (assuming all of its debt is refinanced at maturity).

###  

### (l)         Violations of Certain Laws.  Neither the sale of the Units by the Companyhereunder nor its use of the proceeds thereof will violate the Trading with theEnemy Act, as amended, or any of the foreign assets control regulations of theUnited States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)or any enabling legislation or executive order relating thereto.

 

46

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###  

|   | CIBC WMV, INC.                        |                                    |
|--------|---------------------------------------|-----------------------------------------|
|   |                                  |                                    |   |
|   | By:                                   | /s/ JAY R. BLOOM                        |   |
|   |                                  |                                    |   |
|   | Its:                                  |                                    |   |
|   |                                  |                                    |   |
|   | CIBC WG ARGOSY MERCHANT FUND 1, LP    |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ JAY R. BLOOM                        |   |
|   |                                  |                                    |   |
|   | Its:                                  |                                    |   |
|   |                                  |                                    |   |
|   | CO-INVESTMENT MERCHANT FUND 2, L.L.C. |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ JAY R. BLOOM                        |   |
|   |                                  |                                    |   |
|   | Its:                                  | ­                                  |   |
|   |                                  |                                    |   |
|   | CONTINENTAL CASUALTY COMPANY          |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ MARILOU R. MCGIRR                   |   |
|   |                                  |                                    |   |
|   | Its:                                  | VICE PRESIDENT AND ASSISTANT CONTROLLER |   |
|   |                                  |                                    |   |
|   |                                  |                                    |   |
|   | ROBERT A. PETERSON                    |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ ROBERT A. PETERSON                  |   |
|   |                                  |                                    |   |
|   | DAVID F. MYERS, JR.                   |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ DAVID F. MYERS, JR.                 |   |
|   |                                  |                                    |   |
|   | ROBERT J. LARSEN                      |                                    |
|   |                                  |                                    |   |
|   | By:                                   |                                    |   |
|   |                                  |                                    |   |
|   | WILLIAM L. GRILLIOT                   |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ WILLIAM L. GRILLIOT                 |   |
|   |                                  |                                    |   |
|   | MARY G. GRILLIOT                      |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ MARY G. GRILLIOT                    |   |
|   |                                  |                                    |   |
|   | JOHN HANCOCK LIFE INSURANCE COMPANY   |                                    |
|   |                                  |                                    |   |
|   | By:                                   | /s/ STEVEN J. BLEWITT                   |   |
|   |                                  |                                    |   |
|   | Its:                                  |  SENIOR  MANAGING DIRECTOR         |   |
|   |                                  |                                    |   |
|   | HANCOCK MEZZANINE PARTNERS L.P.       |                                    |
|   |                                  |                                    |   |
|   | By:                                   | JOHN HANCOCK LIFE INSURANCE COMPANY     |   |
|   |                                  |                                    |   |
|   | By:                                   | /s/ STEVEN J. BLEWITT                   |   |

 

----

 
|   | Its:                                      | SENIOR MANAGING DIRECTOR  |   |
|--------|-------------------------------------------|---------------------------|--------|
|   |                                      |                      |   |
|   | CITIZENS CAPITAL, INC.                    |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ DAVID MORRIS          |   |
|   |                                      |                      |   |
|   | Its:                                      | DIRECTOR                  |   |
|   |                                      |                      |   |
|   | CONTINENTIAL ILLINOIS VENTURES CORP.      |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ MARCUS D. WEDNER      |   |
|   |                                      |                      |   |
|   | Its:                                      |                      |   |
|   |                                      |                      |   |
|   | CARAVELLE INVESTMENT FUND, L.L.C.         |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ JAY R. BLOOM          |   |
|   |                                      |                      |   |
|   | Its:                                      |                      |   |
|   |                                      |                      |   |
|   | CARAVELLE NORCROSS INVESTMENT CORPORATION |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ JAY R. BLOOM          |   |
|   |                                      |                      |   |
|   | Its:                                      |                      |   |
|   |                                      |                      |   |
|   | THE ALBION ALLIANCE MEZZANINE FUND, L.P.  |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ CHARLIE GONZALES      |   |
|   |                                      |                      |   |
|   | Its:                                      | MANAGING DIRECTOR         |   |
|   |                                      |                      |   |
|   | ALLIANCE INVESTMENT OPPORTUNITIES FUND    |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ JAMES E. KENNEDY, JR. |   |
|   |                                      |                      |   |
|   | Its:                                      | AUTHORIZED SIGNATORY      |   |
|   |                                      |                      |   |
|   | RANDOLPH STREET PARTNERS II               |                      |
|   |                                      |                      |   |
|   | By:                                       | /s/ RICHARD J. CAMPBELL   |   |
|   |                                      |                      |   |
|   | Its:                                      |                      |   |

 

[ Signature Page toLimited Liability Company Agreement ]

 

----

 

**SCHEDULEA**

 
|                                                                                                                                                                  |   | **Total  Capital  Contribution in  Respect of  Common Units** |      | **Total  Capital  Contribution in  Respect of  Preferred Units** |   | **Total  Capital  Account Balance** |   | **Total  Preferred  Units** |       | **Total  Class A  Common Units** |        | **Total  Class B  Common Units** |        | **Total  Class C  Common Units** |   | **Total  Class D  Common Units** |     | **Total  Class E Units** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|------------------------------------------------------------------|--------|-------------------------------------|--------|-----------------------------|------------|----------------------------------|-------------|----------------------------------|-------------|----------------------------------|--------|----------------------------------|----------|--------------------------|--------|
| CIBC WMV Inc.  425 Lexington Avenue, 3rd Floor  New York, NY  10017  Attn:  Jay Bloom  Phone (212) 885-4474  Telecopy (212) 885-4934                        |   | $                                                             | 1,513,758 |                                                             | $      | 2,811,265                           |   | $                           | 4,325,023  |                             | 257,179.0   |                             | 257,179.0   |                             | — |                             | —   |                     | — |   | — |   |
|                                                                                                                                                                  |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |     |                     |   |   |   |   |
| CIBC WG Argosy Merchant  Fund 1, LP.  425 Lexington Avenue, 3rd Floor  New York, NY  10017  Attn:  Jay Bloom  Phone (212) 885-4474  Telecopy (212) 885-4934 |   |                                                          | 6,548,594 |                                                             |   | 12,173,345                          |   |                        | 18,721,939 |                             | 1,113,636.9 |                             | 1,112,646.3 |                             | — |                             | —   |                     | — |   | — |   |
|                                                                                                                                                                  |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |     |                     |   |   |   |   |
| Co-Investment Merchant Fund  2, LLC  425 Lexington Avenue, 3rd Floor  New York, NY  10017  Attn:  Jay Bloom  Phone (212) 885-4474  Telecopy (212) 885-4934  |   |                                                          | 727,622   |                                                             |   | 1,352,594                           |   |                        | 2,080,216  |                             | 123,737.5   |                             | 123.627.4   |                             | — |                             | —   |                     | — |   | — |   |
|                                                                                                                                                                  |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |     |                     |   |   |   |   |
| Argosy-Safety Products,  L.P.  425 Lexington Avenue, 3rd Floor  New York, NY  10017  Attn:  Jay Bloom  Phone (212) 885-4474  Telecopy (212) 885-4934        |   |                                                          | 2,662,013 |                                                             |   | 4,946,668                           |   |                        | 7,608,681  |                             | 452,529.1   |                             | 452,280.5   |                             | — |                             | —   |                     | — |   | — |   |
|                                                                                                                                                                  |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |     |                     |   |   |   |   |
| Robert A. Peterson  11571 Burr Oak Lane  Burr Ridge, IL  60525  Phone (630) 662-0113                                                                             |   |                                                          | 1,257,634 |                                                             |   | 655,813                             |   |                        | 1,913,447  |                             | 59,994.8    |                             | 121,412.4   |                             | — |                             | 92,261.7 |                     | — |   | 514.2857 |   |
|                                                                                                                                                                  |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |     |                     |   |   |   |   |
| David F. Myers, Jr.  1302 Scott Avenue  Winnetka, IL  60093  Phone (847) 446-9818                                                                                |   |                                                          | 779,749   |                                                             |   | 401,305                             |   |                        | 1,181,054  |                             | 36,712.0    |                             | 74,355.8    |                             | — |                             | 58,124.8 |                     | — |   | 342.8571 |   |
|                                                                                                                                                                  |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |     |                     |   |   |   |   |
| Robert Larsen  6770 Spirit Lake Drive No. 402

Indianapolis, IN 46220

Phone: (317) 205-8426                                                                          |   |                                                          | 466,940   |                                                             |   | 485,409                             |   |                        | 952,349    |                             | 44,406.0    |                             | 45,197.00   |                             | — |                             | 34,136.9 |                     | — |   | — |   |

 

1

----

 
|                                                                                                                                                           |   | **Total  Capital  Contribution in  Respect of  Common Units** |       | **Total  Capital  Contribution in  Respect of  Preferred Units** |   | **Total  Capital  Account Balance** |   | **Total  Preferred  Units** |       | **Total  Class A  Common Units** |        | **Total  Class B  Common Units** |        | **Total  Class C  Common Units** |     | **Total  Class D  Common Units** |   | **Total  Class E Units** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|------------|------------------------------------------------------------------|--------|-------------------------------------|--------|-----------------------------|------------|----------------------------------|-------------|----------------------------------|-------------|----------------------------------|----------|----------------------------------|--------|--------------------------|--------|
| William Grilliot  One Innovation Court  Dayton, OH  45414  Phone (937) 454-4925  Fax (937) 264-2677                                                       |   | $                                                             | 36,797     |                                                             | $      | 142,683                             |   | $                           | 179,480    |                             |        | 13,052.9                         |        |                             | 13,045.8 |                             |   | —                   |   |   | — |   |   | — |   |   | 42.8571 |   |
|                                                                                                                                                           |   |                                                          |       |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |     |                             |   |                     |   |   |   |   |
| Mary  Grilliot  One Innovation Court  Dayton, OH  45414  Phone (937) 454-4925  Fax (937) 264-2677                                                         |   |                                                          | 36,797     |                                                             |   | 142,683                             |   |                        | 179,480    |                             | 13,052.9    |                             | 13,045.8    |                             | —   |                             | — |                     | — |   | — |   |
|                                                                                                                                                           |   |                                                          |       |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |     |                             |   |                     |   |   |   |   |
| John Hancock Life Insurance  Company  200 Clarendon Street  Boston, MA  02117  Attn:  Stephen Blewitt  Phone (617) 572-9624  Telecopy (617) 450-8053 |   |                                                          | 11,115,151 |                                                             |   | 20,670,314                          |   |                        | 31,785,465 |                             | 1,890,952.9 |                             | 1,888,586.0 |                             | —   |                             | — |                     | — |   | — |   |
|                                                                                                                                                           |   |                                                          |       |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |     |                             |   |                     |   |   |   |   |
| Hancock Mezzanine Partners,  L.P.  200 Clarendon Street  Boston, MA  02117  Attn:  Stephen Blewitt  Phone (617) 572-9624  Telecopy (617) 450-8053    |   |                                                          | 6,239,706  |                                                             |   | 11,588,026                          |   |                        | 17,827,732 |                             | 1,060,091.1 |                             | 1,060,091.1 |                             | —   |                             | — |                     | — |   | — |   |
|                                                                                                                                                                |        |                                                               |            |                                                                  |        |                                     |        |                             |            |                                  |             |                                  |             |                                  |          |                                  |        |                          |        |  |  |  |  |  |  |  |  |  |

 

2

----

 
|                                                                                                                                                                                                 |   | **Total  Capital  Contribution in  Respect of  Common Units** |      | **Total  Capital  Contribution in  Respect of  Preferred Units** |   | **Total  Capital  Account Balance** |   | **Total  Preferred  Units** |       | **Total  Class A  Common Units** |        | **Total  Class B  Common Units** |        | **Total  Class C  Common Units** |   | **Total  Class D  Common Units** |   | **Total  Class E Units** |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|------------------------------------------------------------------|--------|-------------------------------------|--------|-----------------------------|------------|----------------------------------|-------------|----------------------------------|-------------|----------------------------------|--------|----------------------------------|--------|--------------------------|-----------|
| Citizens Capital, Inc.  28 State Street, 15th Floor  Boston, MA  02109  Attn:  David Morris  Phone (617) 725-5720  Telecopy (617) 725-5630

                                          |   | $                                                             | 1,247,941 |                                                             | $      | 2,317,605                           |   | $                           | 3,565,546  |                             | 212,018.2   |                             | —      |                             | — |                             | — |                     | 212,018.2 |   | — |   |
|                                                                                                                                                                                                 |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |   |                     |      |   |   |   |
| CIVC Partners Fund, L.P. (Continental  Illinois Venture Corp.)

231  South LaSalle Street  Chicago, IL  60697  Attn:  Marcus Wedner  Phone (312) 828-8133  Telecopy (312) 987-0887

  |   |                                                          | 6,239,707 |                                                             |   | 11,588,026                          |   |                        | 17,827,733 |                             | 1,060,091.2 |                             | 1,060,091.2 |                             | — |                             | — |                     | —    |   | — |   |
|                                                                                                                                                                                                 |   |                                                          |      |                                                             |   |                                |   |                        |       |                             |        |                             |        |                             |   |                             |   |                     |      |   |   |   |
| Caravelle Private  Investment Corporation  425 Lexington Avenue, 2nd Floor  New York, NY  10017  Attn: Jay Bloom  Phone (212) 885-4474  Telecopy (212) 885-4934                                 |   |                                                          | 1,750,000 |                                                             |   | 3,250,000                           |   |                        | 5,000,000  |                             | 297,315.2   |                             | 297,315.2   |                             | — |                             | — |                     | —    |   | — |   |

 

3

----

 
|                                                                                                                                                                                                     |   | **Total  Capital  Contribution in  Respect of  Common Units** |      | **Total  Capital  Contribution in  Respect of  Preferred Units** |   | **Total  Capital  Account Balance** |   | **Total  Preferred  Units** |      | **Total  Class A  Common Units** |      | **Total  Class B  Common Units** |      | **Total  Class C  Common Units** |   | **Total  Class D  Common Units** |   | **Total  Class E Units** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|------------------------------------------------------------------|--------|-------------------------------------|--------|-----------------------------|-----------|----------------------------------|-----------|----------------------------------|-----------|----------------------------------|--------|----------------------------------|--------|--------------------------|--------|
| Caravelle Norcross Investment  Corporation

425 Lexington Avenue, 2nd  Floor  New York, NY  10017  Attn:  Jay Bloom  Phone (212) 885-4474  Telecopy (212) 885-4934                             |   | $                                                             | 347,402   |                                                             | $      | 645,176                             |   | $                           | 992,578   |                             | 59,021.7  |                             | 59,021.7  |                             | — |                             | — |                     | — |   | — |   |
|                                                                                                                                                                                                     |   |                                                          |      |                                                             |   |                                |   |                        |      |                             |      |                             |      |                             |   |                             |   |                     |   |   |   |   |
| Continental Casualty Company (Loews Corporation)

667 Madison Avenue, 7th  Floor  New York, NY  10021  Attn:  Kevin Cuskley  Phone (212) 521-2730  Telecopy (212) 521-2858                     |   |                                                          | 1,663,922 |                                                             |   | 3,090,140                           |   |                        | 4,754,062 |                             | 282,690.9 |                             | 282,690.9 |                             | — |                             | — |                     | — |   | — |   |
|                                                                                                                                                                                                     |   |                                                          |      |                                                             |   |                                |   |                        |      |                             |      |                             |      |                             |   |                             |   |                     |   |   |   |   |
| AA-NSP I  (formerly, The Albion Alliance Mezzanine  Fund, L.P.)  1345 Avenue of the Americas  New York, NY  10105  Attn:  Charles Gonzales  Phone (212) 969-1587  Telecopy (212) 969-1529 |   |                                                          | 1,254,482 |                                                             |   | 2,332,078                           |   |                        | 3,586,560 |                             | 213,342.2 |                             | 213,144.7 |                             | — |                             | — |                     | — |   | — |   |
|                                                                                                                                                                                                     |   |                                                          |      |                                                             |   |                                |   |                        |      |                             |      |                             |      |                             |   |                             |   |                     |   |   |   |   |
| Alliance Investment  Opportunities Fund  1345 Avenue of the Americas  New York, NY  10105  Attn:  Charles Gonzales  Phone (212) 969-1587  Telecopy (212) 969-1529                              |   |                                                          | 875,000   |                                                             |   | 1,625,000                           |   |                        | 2,500,000 |                             | 148,657.6 |                             | 148,657.6 |                             | — |                             | — |                     | — |   | — |   |
|                                                                                                                                                                                                     |   |                                                          |      |                                                             |   |                                |   |                        |      |                             |      |                             |      |                             |   |                             |   |                     |   |   |   |   |
| Randolph Street Partners II  200 East Randolph Drive  Chicago, IL  60601  Attn:  Jack S. Levin  Phone (312) 861-2000  Telecopy (312) 861-2200                                                  |   |                                                          | 255,537   |                                                             |   | 474,849                             |   |                        | 730,386   |                             | 43,439.9  |                             | 43,416.2  |                             | — |                             | — |                     | — |   | — |   |
|                                                                                                                                                                                                     |   |                                                          |      |                                                             |   |                                |   |                        |      |                             |      |                             |      |                             |   |                             |   |                     |   |   |   |   |
| Charles S. Ellis  237 Camelot Court  Knoxville, TN 37922  Telecopy:  (401)  946-6125                                                                                                           |   | —                                                        |      | —                                                           |   | —                              |   | —                      |      | —                           |      | —                           |      | —                           |   | —                           |   | 42.8571                  |   |

 

4

----

 
|                                                   |   | **Total  Capital  Contribution in  Respect of  Common Units** |           | **Total  Capital  Contribution in  Respect of  Preferred Units** |   | **Total  Capital  Account Balance** |       | **Total  Preferred  Units** |            | **Total  Class A  Common Units** |   | **Total  Class B  Common Units** |       | **Total  Class C  Common Units** |            | **Total  Class D  Common Units** |   | **Total  Class E Units** |       |
|--------------------------------------------------------|--------|---------------------------------------------------------------|----------------|------------------------------------------------------------------|--------|-------------------------------------|------------|-----------------------------|-----------------|----------------------------------|--------|----------------------------------|------------|----------------------------------|-----------------|----------------------------------|--------|--------------------------|------------|
| Ken Martell  696 Wedgewood Dr.  Crystal Lake, IL 60014 |   | $                                                             | —         |                                                             | $      | —                              |       | $                           | —          |                             |   | —                           |       |                             | —          |                             |   | —                   |       |   | — |   |   | — |   |   | 28.5714 |   |
|                                                   |   |                                                          |           |                                                             |   |                                |       |                        |            |                             |   |                             |       |                             |            |                             |   |                     |       |
| Jeff Morris  121 S. Summit St.  Wheaton, IL 60187      |   | —                                                        |           | —                                                           |   | —                              |       | —                      |            | —                           |   | —                           |       | —                           |            | —                           |   | 14.2858                  |       |
|                                                   |   |                                                          |           |                                                             |   |                                |       |                        |            |                             |   |                             |       |                             |            |                             |   |                     |       |
| **Total**                                              |   | **$**                                                         | **45,018,752** | ** **                                                       | **$**  | **80,692,979**                      | ** ** | **$**                       | **125,711,731** | ** **                       |   | **7,381,921.9**                  | ** ** | **$**                            | **7,265,804.5** | ** **                       | **$**  | **—**               | ** ** |   | **184,523.4** | ** ** |   | **212,018.2** | ** ** |   | **985.7142** | ** ** |
|                                                        |        |                                                               |                |                                                                  |        |                                     |            |                             |                 |                                  |        |                                  |            |                                  |                 |                                  |        |                          |            |  |  |  |  |  |  |  |  |  |  |  |

 

5

----

 

**SCHEDULEB**

 

Intentionally Omitted

 

----

 

**SCHEDULEC**

 

CONSENT OF SPOUSE

 

I acknowledge that I haveread the foregoing Limited Liability Company Agreement (the “Agreement”)and that I understand and am aware of its contents.  I am aware that by its provisions, my spouse agrees to certainrestrictions on all of his or her certificates of Membership interest in theCompany (the “Units”), including any community interest or otherinterest which I may possess in the Units. I hereby approve of the provisions of the Agreement, and agree that allshares now owned by my spouse, and my interest in such Units, are subject tothe provisions of the Agreement and that I will take no action at any time tohinder the performance of the Agreement or to commit or omit any act whichwould have a material adverse effect upon the ability of any party to performpursuant to the Agreement.

 
| Dated: |      |   |   |
|--------|-----------|--------|--------|
|   |      |
|   |      |
|   |      |
|   | Spouse of |   |
|   |      |
|   |      |
|   |      |
|   | Witness   |

 

7

----

 

SCHEDULE D

 

SUBSIDIARIES

 

 
| **Subsidiary**                                       |   | **Jurisdiction  of  Organization** |   | **Company or  Subsidiary that owns  such Subsidiary**                           |   | **Percentage  Owned** |   |
|------------------------------------------------------|--------|------------------------------------|--------|---------------------------------------------------------------------------------|--------|-----------------------|--------|
| Norcross Safety Products L.L.C.                      |   | Delaware                           |   | NSP Holdings L.L.C.                                                             |   | 100                   | %      |
| Norcross Capital Corp.                               |   | Delaware                           |   | Norcross Safety Products L.L.C.                                                 |   | 100                   | %      |
| Morning Pride Manufacturing L.L.C.                   |   | Delaware                           |   | Norcross Safety Products L.L.C.                                                 |   | 100                   | %      |
| North Safety Products Inc.                           |   | Delaware                           |   | Norcross Safety Products L.L.C.                                                 |   | 100                   | %      |
| North Safety Products Pty Ltd.                       |   | South Africa                       |   | Norcross Safety Products L.L.C.                                                 |   | 100                   | %      |
| Rocsi (Pty) Ltd.                                     |   | Channel Islands                    |   | North Safety Products Pty Ltd.                                                  |   | 100                   | %      |
| James North Zimbabwe Pvt. Ltd.                       |   | Zimbabwe                           |   | Rocsi (Pty) Ltd.                                                                |   | 66.67                 | %      |
| Valhalla Pty Ltd.                                    |   | South Africa                       |   | North Safety Products Pty Ltd.                                                  |   | 100                   | %      |
| James North Natal Pty Ltd.                           |   | South Africa                       |   | North Safety Products Pty Ltd.                                                  |   | 100                   | %      |
| Arrow Glove Works Pty Ltd.                           |   | South Africa                       |   | North Safety Products Pty Ltd.                                                  |   | 100                   | %      |
| Industrie Shutz Produkte GmbH                        |   | Germany                            |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| North Safety Products Ltd.                           |   | England                            |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| Salisbury Export Corporation -FSC                    |   | Virgin Islands                     |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| Siebe North International Inc. --FSC                 |   | Virgin Islands                     |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| North Safety Products Ltd.                           |   | Canada                             |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| North Safety Mexico Holdings LLC                     |   | Delaware                           |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| Siebe North SA                                       |   | Haiti                              |   | North Safety Products Inc.                                                      |   | 100                   | %      |
| North Safety  Products de Mexicali S de R.L. de C.V. |   | Mexico                             |   | Norcross Safety Products LLC. (99%)  North Safety Mexico Holdings LLC (1%) |   | 100                   | %      |

 

----

 
| **Subsidiary**                           |   | **Jurisdiction  of  Organization** |   | **Company or  Subsidiary that owns  such Subsidiary**                                                              |   | **Percentage  Owned** |   |
|------------------------------------------|--------|------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|
| North Safety de Mexicali S de RL de C.V. |   | Mexico                             |   | Norcross Safety Products LLC.  (95.67%)   North Safety Mexico Holdings LLC (4.33%)                       |   | 100                   | %      |
| Arkon Safety UK Ltd.                     |   | England                            |   | North Safety Products Inc.                                                                                         |   | 100                   | %      |
| North Safety Products (Europe) B.V.      |   | Netherlands                        |   | North Safety Products Ltd (Canada) — 100% of common  stock Arkon Safety UK Ltd — 100% of preferred stock |   | 100                   | %      |
| Arbin Velligheid B.V.                    |   | Netherlands                        |   | North Safety Products (Europe) B.V.                                                                                |   | 100                   | %      |
| Arbin Personal Protection Beheer B.V.    |   | Netherlands                        |   | Arbin Velligheid B.V.                                                                                              |   | 100                   | %      |
| Arbin Personal Protection B.V.           |   | Netherlands                        |   | Arbin Personal Protection Beheer B.V.                                                                              |   | 100                   | %      |
| North Safety Products Holding GmbH       |   | Germany                            |   | North Safety Products Inc.                                                                                         |   | 100                   | %      |
| Kachele-Cama Latex GmbH                  |   | Germany                            |   | North Safety Products Holding GmbH                                                                                 |   | 100                   | %      |
| Kachele Cama Nederland B.V.              |   | Netherlands                        |   | North Safety Products Holding GmbH                                                                                 |   | 100                   | %      |
| KCL CZ s.v.o.                            |   | Czech Republic                     |   | Kachele-Cama Latex GmbH                                                                                            |   | 60                    | %      |

 

Note that the Company also has a joint venture interest in AnhuiNorcross Safety Products Co. Ltd. and has equity interests in each of thefollowing:

 
| KCL Guba Kft  |   | Hungary  |   | Kachele-Cama Latex GmbH |   | 50 | % |
|---------------|--------|----------|--------|-------------------------|--------|----|---|
| KCL SK s.v.o. |   | Slovakia |   | Kachele-Cama Latex GmbH |   | 50 | % |

 

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