SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
                                       OR
           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                        COMMISSION FILE NUMBER 333-53987

                             JACKSON PRODUCTS, INC.
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             (Exact name of registrant as specified in its charter)
DELAWARE                                                              75-2470881

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(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                               2997 CLARKSON ROAD
                          CHESTERFIELD, MISSOURI 63017
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               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (636) 207-2700
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              (Registrant's telephone number, including area code)
                                       N/A
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(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     Securities registered pursuant to Section 12(b) of the Act: None Securities
     registered  pursuant to Section  12(g) of the Act:  None  Indicate by check
     mark whether the registrant (1) has filed all reports  required to be filed
     by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the
     preceding 12 months (or for such  shorter  period that the  registrant  was
     required  to file such  reports),  and (2) has been  subject to such filing
     requirements for the past 90 days. YES [X] NO [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
     405 of Regulation S-K is not contained  herein,  and will not be contained,
     to the best of registrant's  knowledge,  in definitive proxy or information
     statements  incorporated  by reference in Part III of this Form 10-K or any
     amendment to this Form 10-K. [X]

     The  common  stock of the  registrant  is not traded on any  exchange  and,
     therefore,  its  aggregate  market  value and the  value of shares  held by
     non-affiliates cannot be determined.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
     classes of common stock, as of March 15, 2002.

                      43,172 shares of Class A Common Stock
                      15,647 shares of Class B Common Stock
                      2,849 shares of Class C Common Stock




<PAGE>


                                TABLE OF CONTENTS

ITEM 1         BUSINESS......................................................1
ITEM 2         PROPERTIES...................................................12
ITEM 3         LEGAL PROCEEDINGS............................................12
ITEM 4         SUBMISSION OF MATTERS TO A VOTE OF SECURITY
               HOLDERS......................................................13
ITEM 5         MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS..........................................13
ITEM 6         SELECTED FINANCIAL DATA......................................13
ITEM 7         MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS..........................14
ITEM 7A        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
               MARKET RISK..................................................25
ITEM 8         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................26
ITEM 9         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
               ON ACCOUNTING AND FINANCIAL DISCLOSURE.......................27
ITEM 10        DIRECTORS AND EXECUTIVE OFFICERS.............................27
ITEM 11        EXECUTIVE COMPENSATION.......................................29
ITEM 12        SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
               OWNERS AND MANAGEMENT........................................33
ITEM 13        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............36
ITEM 14        EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
               REPORTS ON FORM 10-K.........................................37




<PAGE>


ITEM 1.    BUSINESS

GENERAL

     The Company is a leading  designer,  manufacturer and distributor of safety
products serving a variety of niche applications within the personal and highway
safety markets,  principally throughout North America and in Europe. The Company
markets its products under  established,  well-known brand names to an extensive
network of distributors,  wholesalers,  contractors and government agencies. The
Company currently has two reportable business segments: Personal Safety Products
(PSP) and Highway Safety Products (HSP).

COMPANY HISTORY

     Jackson Acquisition Corp., a Delaware  corporation,  was formed on July 27,
1995 for the purpose of acquiring all of the outstanding common stock of Jackson
Holding  Company,  a  Delaware  corporation  (Holding),  which  owned all of the
outstanding  common stock of Jackson Products,  Inc. On August 16, 1995, Jackson
Acquisition Corp. purchased all of the outstanding stock of Holding. Immediately
following this stock purchase,  Jackson  Acquisition Corp. and Jackson Products,
Inc. were merged into Holding, with Holding surviving the merger.  Following the
merger,  Holding was renamed Jackson  Products,  Inc. and is referred to in this
document as the Company.

     Since 1995, the Company has made several  acquisitions  in both its PSP and
HSP segments:

         PSP Acquisitions

               Jackson.  Jackson Products,  Inc. (its  predecessors  entity) was
          founded in 1932. Jackson designs,  manufactures and distributes safety
          products  primarily  to welding and other  industrial  markets.  These
          products are designed to protect  individuals  from various head,  eye
          and face hazards. Jackson's product offering includes welding helmets,
          hardhats,  face shields,  safety  spectacles and  prescription  safety
          eyewear frames.

               OSD. OSD Envision,  Inc.  (OSD),  founded in 1990 and acquired by
          the  Company  in  1996,  believes  it  is  the  only  manufacturer  of
          auto-darkening  welding filter lenses in North  America.  OSD offers a
          wide range of  auto-darkening  welding  filter lenses and  distributes
          these products internationally through welding distributors.  In 1999,
          OSD was merged into the Company.

               Allsafe. American Allsafe Company (Allsafe),  founded in 1929 and
          acquired by the Company in 1998, designs, manufactures and distributes
          safety products to industrial,  construction,  janitorial,  healthcare
          and food  service  customers.  These  products are designed to protect
          individuals  from various head,  eye, ear and face and other  hazards.
          Allsafe's product offering includes safety goggles,  hardhats, hearing
          protection products and general hazard warnings.

               Kedman. Kedman Company (Kedman),  founded in 1924 and acquired by
          the Company in 1998,  designs,  manufactures  and  distributes  safety
          products  primarily  to welding and other  industrial  markets.  These
          products are designed to protect  individuals  from various head,  eye
          and face  hazards.  Kedman's  product  offering  includes  welding and
          specialty  helmets,  goggles and glasses,  faceshields  and  brackets,
          filters and lenses and electronic  lenses.  In 1999, Kedman was merged
          into Allsafe and its operations were  consolidated  with the Company's
          Belmont, Michigan operations.

               Crystaloid.  Crystaloid  Technologies,  Inc., founded in 1976 and
          acquired  by the  Company in 1998,  designs  and  manufactures  liquid
          crystal   displays  and  filters  for  mid-market   manufacturers   of
          industrial,   commercial  and  aviation   equipment.   The  Crystaloid
          Acquisition  provides the Company with  in-house  production of liquid
          crystal  shutters  for  use in the  Company's  auto-darkening  welding
          filter lenses.

               Jackson  Products  Europe.  Jackson Products Europe GmbH (Jackson
          Products Europe)  (formerly Lansec Holding GmbH),  founded in 1983 and

                                       1
<PAGE>

          acquired  by the  Company in 1997,  currently  operates  in the United
          Kingdom.  This business distributes welding safety products throughout
          Europe.  Jackson  Products  Europe  provides the Company with in house
          European  distribution  capabilities  for its  auto-darkening  product
          line.

               Silencio/Safety    Direct.     Silencio/Safety    Direct,    Inc.
          (Silencio/Safety  Direct), founded in 1972 and acquired by the Company
          in 1998,  designs,  manufactures  and distributes  hearing  protection
          products for the sporting industry.

         HSP Acquisitions

               Flex-O-Lite. Flex-O-Lite, Inc. (Flex-O-Lite), founded in 1942 and
          acquired by Jackson Products,  Inc. (its predecessors entity) in 1994,
          designs,  manufactures and distributes reflective and industrial glass
          beads.  Reflective  glass beads are used as the reflective  agent in a
          wide range of  applications,  including  pavement  striping,  aviation
          runways,  reflective  sheeting,  pavement  tape,  license  plates  and
          essentially any product with reflective  characteristics.  Flex-O-Lite
          believes it is the only North American manufacturer and distributor of
          high index glass  beads,  which  offer a high  degree of  reflectivity
          required  for  applications  such as  reflective  sheeting and signage
          products.

               Services and Materials.  Services and Materials (SMC), founded in
          1971 and acquired by Jackson Products Inc. (its  predecessors  entity)
          in 1994, manufactures and distributes a broad range of safety products
          primarily to highway construction  markets. Its broad product offering
          includes traffic cones, channelizers, barricade lights, traffic flags,
          reflective vests and reflective pavement tape.

               TMT-Pathway.  TMT-Pathway,  LLC (TMT  Pathway)  was formed by the
          Company in 1999 to acquire the assets of Morton  Traffic  Markings,  a
          division of Morton  International,  Inc. TMT-Pathway  manufactures and
          distributes  traffic  coatings and  specialized  coating  applications
          equipment for the highway safety market.

               As part of its acquisition  strategy,  the Company does not brand
          acquired  businesses or products  with the Jackson  name.  Even though
          certain of the  Company's  acquired  companies  have merged into other
          companies  within the Company's  corporate  structure,  brand names of
          acquired  companies  continue to exist  within the  Company's  product
          lines. The Company's current organizational structure is as follows:


                              Jackson Product, Inc.
                                       ||
                                       ||
                                       ||
                =======================  ====================
                |                                           |
                |                                           |
                \/                                          \/
             Personal                                    Highway
              Safety                                     Safety
             Products                                    Products
                |                                           |
   -------------|------------------                ---------|-------------
   |            |                 |                |                     |
   |            |                 |                |                     |
American        Crystaloid      Jackson       TMT-Pathway,          Flex-O-Lite,
Allsafe         Technoligies,   Products          LLC                Inc. (A)
Company         Inc.            Europe GmbH                              |
   |                                                                     |
   |                                                                Flex-O-Lite,
Silencio/                                                               Ltd.
Safety
Direct,
 Inc.


(A) Some of the  Flex-O-Lite  products  are  marketed  under  the  Services  and
Materials brand name.

                                       2
<PAGE>

CORPORATE RESTRUCTURING

     On February 2, 2001, the closing of the transactions contemplated under the
Stock Purchase  Agreement,  (the Purchase  Agreement),  dated December 29, 2000,
between the Company,  SCG Acquisition LLC, an affiliate of Summit Capital Group,
LLC (SCG),  and the then  stockholders  of the Company  (the  Stockholders),  as
amended  February  1,  2001,  occurred.  Pursuant  to the terms of the  Purchase
Agreement,  the  Stockholders  sold 50% of the common  stock of the Company (the
Common Stock) to affiliates of SCG.

SEGMENTS

     The  Company  has  two  reportable  business  segments.   The  PSP  segment
manufactures and sells thousands of safety products  including  welding helmets,
auto-darkening  welding  filter  lenses,  safety caps,  hardhats,  face shields,
visors,  safety goggles,  spectacles and hearing  protection  products under its
well-known  brand names:  American  Allsafe  Co.,  Huntsman,  Jackson  Products,
Jackson Safety,  Lamba and Silencio.  PSP represented  approximately  44% of the
Company's net sales in 2001.

     The HSP segment sells reflective glass beads, cones, channelizers, pavement
tape, flags, vests, roll-up signs,  barricades,  high-intensity  lights, traffic
coatings and specialized coatings applications  equipment under well-known brand
names: Blast-O-Lite, Dura-Line, Dura-Stripe, Flex-O-Lite, Legend-Build, Morline,
Norline,  Services & Materials,  TMT-Traffic  Marking  Technologies  and Weather
Line. HSP represented approximately 56% of the Company's net sales in 2001.

PRODUCT GROUPS

     The following table depicts the Company's product groups by segment,  major
product lines and primary end-users:


--------------------------------------------------------------------------------
                             JACKSON PRODUCTS, INC.
                         2001 NET SALES: $200.2 MILLION
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--------------------------------------        ----------------------------------
        PERSONAL SAFETY PRODUCTS                    HIGHWAY SAFETY PRODUCTS
     2001 net sales: $87.8 million              2001 net sales: $112.4 million
          (Approximately 44%)                         (Approximately 56%)

OPERATING UNITS                                 OPERATING UNITS
o Allsafe                                       o Flex-O-Lite
o Crystaloid                                    o SMC
o Jackson                                       o TMT-Pathway
o Jackson Products Europe
o Silenco/Safety Direct
           -------------------                       -------------------

MAJOR PRODUCT LINES                             MAJOR PRODUCT LINES
o Auto-darkening welding filter lenses          o Barricades
o Face Shields                                  o Channelizers
o First aid supplies                            o Cones
o Hardhats                                      o Flags, vests and roll-up signs
o Hearing protection                            o Glass beads
o Prescription  safety eyewear frames               Traffic beads
o Safety goggles                                    High index beads
o Safety  spectacles                                Industrial beads
o Welding helmets                               o Pavement tape
                                                o Plastic barrier/safety fencing
                                                o Reflective sheeting
                                                o Sign stands
           -------------------                       -------------------


PRIMARY END-USERS                               PRIMARY END-USERS
o Construction                                  o Highway contractor supply and
o Food service                                      rental companies
o Healthcare                                    o Independent contract road
o Industrial                                        stripers
o Janitorial                                    o Industrial
o Sporting                                      o State and local municipalities
o Welding                                       o Thermoplastic manufacturers

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



                                       3
<PAGE>

PRODUCTS - PERSONAL SAFETY PRODUCTS SEGMENT

     Within PSP, the Company  classifies  its products in four main  categories:
eye and face protection, head protection,  hearing protection and other personal
safety.  The Company's  personal safety products are designed to protect workers
from various eye, face and head hazards in manufacturing environments, including
flying debris, chemical splashes, excessive noise, fumes and ultra violet rays.

     Eye And Face Protection. The Company produces auto-darkening welding filter
lenses and non-prescription protective eyewear, goggles, face shield and visors.
The  Company's  auto-darkening  lenses  automatically  change tint when a welder
begins to weld.  The  Company's  auto-darkening  lenses are highly  advanced and
feature the  Company's  proprietary  Electronic  Quick Change (EQC)  technology.
Prior to the  introduction of the  auto-darkening  lenses,  welding filters were
opaque,  forcing a welder to lift his helmet  when not  welding.  The  Company's
auto-darkening lenses allow welders to see without lifting their helmets,  which
improves productivity and reduces injuries.

     The Company sells a complete line of  non-prescription  safety  spectacles,
known as "planos", primarily to the construction,  manufacturing and health-care
industries. These non-prescription protective spectacles protect an individual's
eyes from  flying  objects,  sparks and  chemical  splashes  in a  multitude  of
industrial and commercial settings.  All of the Company's safety spectacles have
been designed to comply with ANSI  Z-87.1989,  which  requires each spectacle to
sustain the impact of a  one-quarter  inch ball  traveling  at a velocity of 150
feet per second and to resist melting at temperatures  up to 400 degrees.  These
products are marketed under the American Allsafe, Huntsman, Jackson and Silencio
brand names. The Company also produces certain of its goggles,  face shields and
visors under private label brands.

     Head  Protection.  The  Company  sells  a broad  line  of  head  protection
products,  including  hardhats  and safety  caps for  construction,  welding and
general industry use. The Company's head protection  products are sold under the
Jackson, Morsafe and American Allsafe Co. brand names. The product line includes
"bump" caps, full-brim hats and traditional hardhats, all with four or six point
suspensions,  ratchet  adjustments,  and a wide  selection  of colors and custom
imprintings.  These products are marketed under the American  Allsafe,  Huntsman
and Jackson brand names.  The Company also produces  certain of its hardhats and
safety caps under private label brands.

     Hearing  Protection.  The  Company's  line of hearing  protection  products
includes earplugs,  earmuffs and  "auto-blocking"  technology that ensures sound
levels never exceed 82 dBA while amplifying normal conversation,  warning shouts
and alarms up to 16 dBA. This technology  protects the wearer from harmful noise
while  permitting  the  wearer  to  communicate  with  co-workers  and  maintain

                                       4
<PAGE>

awareness  of his or her  surroundings.  The  Company is a leading  provider  of
hearing protection products within the shooting sports industry and is a leading
supplier of these ear protection  products to mass  merchandisers and government
agencies.

     Other Personal  Safety.  The Company's other personal  protection  products
include safety warning  products.  The Company's line of safety warning products
provide visual warnings against hazards and help to prevent costly slip and fall
and other accidents.  These products include cones, signs,  barricades,  fences,
tape, lights, flags, floor stands and banners. These products are marketed under
the American  Allsafe,  Jackson,  Lamba and Silencio  brand names in addition to
private label brands.

PRODUCTS - HIGHWAY SAFETY PRODUCTS SEGMENT

     Within  HSP,  the  Company  classifies  its  products  in four  categories:
reflective  glass  beads,  traffic  safety and work zone  protection  equipment,
traffic  markings and traffic  markings  applications  equipment.  The Company's
highway safety  products are designed to make both driving and  construction  on
highways safer by enhancing driving visibility and marking construction sites.

     Reflective Glass Beads.  The Company designs,  manufactures and distributes
industrial and traffic  reflective  glass beads,  which are used in applications
that  require  enhanced  visibility.  Glass beads are used in highway  striping,
industrial cleaning and polishing, airport runway striping, reflective sheeting,
pavement tape, and  reflective  tape applied to traffic cones,  safety vests and
clothing,  and traffic signs. Beads with a low refractive index are used in road
striping and industrial  applications  while beads with a high refractive  index
are used in airport  runway  striping,  reflective  sheeting,  pavement tape and
other  applications.  These  products are  marketed  under the  Flex-O-Lite  and
Blast-O-Lite brand names.

         Traffic  Safety  And  Work  Zone  Protection  Equipment.   The  Company
manufactures  over 300 traffic safety and work zone protection  products such as
traffic cones,  delineators,  barricades,  channelizers,  pavement tape,  flags,
vests,  roll-up  signs,  sign stands and  barricade  lights.  The  products  are
designed to enhance visual  recognition of highway hazards and reduce  accidents
and injury.  These  products are marketed  under the Services & Materials  brand
name.

         Traffic  Markings.  The Company  manufactures  primarily  low  volatile
organic  content  (VOC)   solvent-based  and  waterborne  coatings  for  traffic
markings.  Markings  are  organized  into  conventional  and  durable  types  of
products.   Durable  markings   (including  the  Dura-Line,   Dura-Stripe,   and
Legend-Build  brands) are brighter and longer  lasting than  conventional  paint
products (the Company's Morline and Norline brands).  Durable markings have life
expectancies of five to ten years, while conventional  markings generally have a
life expectancy of one-year.

         Traffic  Markings  Application  Equipment.  The Company  custom  builds
traffic paint  application  equipment for its  customers  under the  TMT-Pathway
brand  name.   Using   precision   engineering  and   computer-assisted   design
capabilities,  the Company  customizes  application  equipment to meet  specific
requirements,  which often include custom built enclosed cabs and airless or air
spray systems.  In addition,  the Company installs numerous guidance systems for
better safety,  accuracy and  productivity,  which include  mirrors,  booms, and
camera systems. The equipment is designed to apply to existing  conventional and
durable coating systems.

SALES AND DISTRIBUTION

         Personal Safety Products

         Primary  customers  for  personal  safety  products  are  found  in the
welding, construction, janitorial, healthcare, sporting and food service sectors
as well  as  throughout  general  industry,  including  oil,  gas  and  chemical
processors,  metal fabricators and auto and aircraft manufacturers.  The Company
distributes  its  personal  safety  products  domestically  primarily  through a
network of wholesalers and  distributors.  The Company's sales force directs its
efforts  at  the   distributor  and  end-user  levels  to  create  an  effective
distribution of products to the market.  The Company's in-house sales forces are
covered   by   incentive   bonus   plans   while  the   Company's   manufacturer
representatives  are  compensated  on  a  varying  commission  structure.  These

                                       5
<PAGE>

salespeople  and agents are  supported by  regionally  based sales and technical
specialists  allowing  the Company to deliver  high  levels of customer  service
locally  in  its   significant   markets.   The   Company's  web  sites  include
www.jacksonproducts.com,  www.huntsmanproducts.com,  www.americanallsafe.com and
www.crystaloid.com.   Internationally,  the  Company  distributes  its  products
primarily  through a  subsidiary  located in the United  Kingdom  and through an
independent agency in Latin America.

         Highway Safety Products

         Primary  customers for highway safety products  include state and local
municipalities, independent contract road stripers, thermoplastic manufacturers,
and highway contractor supply and rental companies.  The Company distributes its
highway safety products through direct sales and catalogs. The Company's line of
reflective and industrial glass beads are sold by salespeople  directly to state
and local  municipalities,  independent  contract road  stripers,  thermoplastic
manufacturers, and highway contractor supply and rental companies. The Company's
other  highway  safety  products  are sold through  distribution  via a combined
effort  of  in-house   sales   personnel,   manufacturers   representatives,   a
well-circulated  Company catalog,  the Company's web sites  (www.tmtpathway.com,
www.flexolite.com  and  www.servmat.com) and inclusion of the Company's products
in various industrial supply catalogs.

MANUFACTURING

         The  Company  uses a variety  of  manufacturing  processes  to  produce
products  for  the  personal  and  highway  safety  product  industry.  Products
manufactured from plastic,  polycarbonate,  polyvinylchloride  (PVC), resins and
similar raw materials are produced using injection molding, compression molding,
flow  molding  and blow  molding  techniques.  These  products  include  welding
helmets, hardhats, cones, channelizers, safety goggles and face shields.

         The Company (through  Crystaloid)  possesses liquid crystal technology,
which  it  uses  to  produce  liquid  crystal  shutters  used  in the  Company's
auto-darkening  welding filter lenses. The Company also utilizes this technology
for liquid crystal displays used in the aviation industry.

         The  Company  (through  Flex-O-Lite)  produces  low index  glass  beads
through a process  by which  cullet,  or scrap  glass,  is  processed  through a
pulverizer,  screened and stored by size. The ground cullet is then fed into the
bottom of a gas burner, and as the cullet rises it melts to form spheres,  which
are cooled and  packed.  High index  glass  beads are  produced  with virgin raw
materials, which are mixed in a hopper then heated into molten glass. The molten
glass is passed  through a break-up  burner where it is formed into glass beads.
The 1.9x beads are cooled and sorted,  the 2.1x beads are passed through another
burner, which effectively polishes the beads to result in the higher refraction.

         The  Company  (through   TMT-Pathway)   produces  conventional  traffic
markings,  which consist of a carrier,  either water or organic solvent,  resin,
pigment,  fillers and additives for wetting, flow, stability and drying rate. In
addition,  the  Company  produces  durable  traffic  markings  which are  methyl
methacrylate-based  markings  applied by hand or  machine  to provide  extremely
durable marking for traffic control edge lines, legends and crosswalks.

RAW MATERIALS

         Raw materials  used by the Company in the  manufacture  of its products
are purchased both domestically and  internationally.  The Company believes that
its supply sources are well  established and reliable.  Although the Company has
no long-term  supply  contracts,  it has experienced no significant  problems in
supplying  its  operations.  While the Company has  ongoing  relationships  with
certain suppliers of raw materials, the Company believes that if these suppliers
were  unavailable,   it  could  obtain  raw  materials  from  other  vendors  at
competitive prices. Raw material prices fluctuate over time depending on supply,
demand and other  factors.  Increases  in certain raw material  prices,  such as
natural gas,  could have a material  adverse  impact on the Company's  financial
performance.  In 2001, high natural gas prices resulted in the Company's natural
gas expense increasing from $5.3 million in 2000 to $7.5 million in 2001.



                                       6
<PAGE>

INTELLECTUAL PROPERTY

         It is the  Company's  policy to  protect  certain  of its  intellectual
property through a range of measures, including trademark registrations, patents
and confidentiality  agreements.  The Company owns and uses trademarks and brand
names to identify itself as a source of certain goods. The following brand names
of certain PSP products and product lines are  registered in the United  States:
American Allsafe Co., EQC, Huntsman,  Jackson, Lamba, Morsafe and Team Silencio.
The  following  brand  names of  certain  HSP  products  and  product  lines are
registered  in  the  United  States:   Blast-O-Lite,   Dura-Line,   Dura-Stripe,
Flex-O-Lite,   Legend-Build,   Morline,  Night  Flasher,   Norline,   Sundowner,
TMT-Traffic Marking Technologies and Weather Line.

         The Company  generally  protects  its  material  intellectual  property
rights through the filing of applications  for and  registrations  of trademarks
and  patents.  In  addition,  the  Company  requires  certain of its  employees,
consultants  and certain  other  suppliers,  customers,  agents and  advisors to
execute confidentiality  agreements upon the commencement of employment or other
relationships with the Company.  There can be no assurance,  however, that these
agreements  will provide  meaningful  protection  for the Company's  proprietary
information  or  adequate  remedies  in the  event  of the  unauthorized  use or
disclosure of such  information.  The Company also relies upon unpatented  trade
secrets for the protection of certain intellectual property rights.

         No assurance  can be given that others will not  independently  develop
substantially  equivalent  proprietary  information and technologies,  otherwise
gain access to the Company's  trade secrets or disclose such  technology or that
the Company can  meaningfully  protect its rights to unpatented  trade  secrets.
Further,  there can be no assurance that  infringement or invalidity claims will
not be asserted  against the Company in the future.  The costs of defending such
claims, or an unfavorable determination with respect to litigation based on such
claims,  could have a material  adverse  effect on the  Company's  business  and
financial condition.

ENVIRONMENTAL MATTERS

         The Company is subject to Federal,  state and local environmental laws,
regulations  and ordinances  that (i) govern  activities or operations  that may
have adverse  environmental  effects  (such as emissions to air,  discharges  to
water, and the generation, handling, storage and disposal of solid and hazardous
wastes) or (ii) impose liability for the costs of clean-up or other  remediation
of  contaminated  property,  including  damages from spills,  disposals or other
releases of hazardous  substances or wastes,  in certain  circumstances  without
regard to fault. The Company's  manufacturing  operations  routinely involve the
handling of chemicals and wastes,  some of which are or may become  regulated as
hazardous  substances.   The  Company  endeavors  to  maintain  compliance  with
applicable  environmental  laws, but from time to time the Company's  operations
may result in  noncompliance  or liability  for clean-up  pursuant to such laws.
Based on  information  reviewed by and  available  to the  Company,  the Company
believes it is in compliance with applicable  environmental laws in all material
respects.  The  Company  does  not  believe  it will  incur  material  costs  in
connection  with  any  compliance  or  potential   liability  under   applicable
environmental  laws,  and believes  that any such costs will not have a material
adverse effect on its business or financial condition.

COMPETITION

         The  personal  and  highway  safety  products   industries  are  highly
competitive  industries with  participants  ranging in size from small companies
focusing  on single  types of  safety  products,  to a few  large  multinational
corporations  which  manufacture and supply many types of safety  products.  The
Company's main competitors vary by region and product. The Company believes that
participants  in the personal and highway  safety  products  industries  compete
primarily on the basis of price,  product  characteristics  (such as  functional
performance,  design and style), brand name recognition and service. The Company
enjoys  certain  economies  of  scale,   which  are  not  available  to  smaller
competitors.  Nonetheless,  other large competitors may enjoy similar or greater
economies of scale and may possess greater financial or other resources than the
Company.  In  addition,  to maintain  its market  position,  the Company must be
competitive in the area of brand image,  distribution,  design,  style, customer
service, quality and price.



                                       7
<PAGE>

GOVERNMENT REGULATION, INDUSTRIAL STANDARDS AND FEDERAL SPENDING

         Government  regulation  mandating the use of personal safety  equipment
for  certain  job  classifications  and  work  site  environments  is  the  most
significant factor in the creation of demand for personal safety equipment. OSHA
generally  regulates  the  workplace   environments  in  which  personal  safety
equipment  must be worn and specifies the standards  which such  equipment  must
meet.  The Company  believes it has complied in all material  respects  with the
regulations and standards of these agencies,  and any  non-compliance  with such
regulations  and standards in the past has not had a material  adverse effect on
its business.

         The  primary  users  of the  Company's  personal  safety  products  are
industrial  workers  in the United  States.  As a result,  decreases  in general
employment of industrial workers or in construction  related activities may have
an  adverse  effect on the  Company's  sales.  The  Company's  sales may also be
adversely affected by changes in safety regulations  covering industrial workers
in the  United  States  and in the  level of  enforcement  of such  regulations.
Changes in  regulations  could  reduce  the need for and the  utility of certain
products manufactured by the Company.

         The United  States and Canadian  regulatory  agencies each mandate that
the Company's products meet performance standards established by private groups,
such as the  American  National  Standards  Institute  (ANSI)  and the  Canadian
Standards  Association (CSA),  respectively.  The Company's eyewear products are
subject to the latest series of applicable  standards,  which currently  include
ANSI Industrial Standard Z87.1-1989 and CSA Z94.3-1992.  These standards require
that protective eyewear be tested for optical performance, high velocity impact,
high mass impact and other integral product  performance  features.  The Company
maintains  and  operates  on-site  testing  labs at its  facilities,  which  are
equipped to perform necessary tests.

         The Company's  future  success and growth  depends in part on continued
public expenditure on highway infrastructure. Federal funding, authorized by the
Transportation  Equity Act for the 21st Century (TEA-21),  which was signed into
law in 1998,  is focused on  improving  the  nation's  existing  roads.  Highway
improvement requires the purchase of safety products to reduce construction site
hazards for motorists as well as for  construction  workers.  TEA-21  authorized
$218  billion  from 1998 to 2003 - a 43  percent  increase  in  federal  highway
funding over the previous  six years under the $155 billion  Intermodal  Surface
Transportation Efficiency Act (ISTEA). In addition, TEA-21 has increased federal
funding for highway safety programs by approximately  $110 million over previous
years,  for a total  expenditure  of $550 million per year,  representing  a 25%
increase in safety  program  funding over earlier ISTEA  levels.  In fiscal year
2001,  the US Department of  Transportation  distributed  TEA-21 funds  totaling
$33.4 billion.  The transportation  appropriations  subcommittee's 2002 spending
bill contains $32.7 billion for the federal-aid highway program.

RISK FACTORS

         In  addition  to the  other  information  contained  in this  document,
investors should carefully consider the following risks.

         THE COMPANY HAS SIGNIFICANT INDEBTEDNESS AND IS HIGHLY LEVERAGED, WHICH
         MAY LIMIT ITS  ABILITY  TO BORROW  ADDITIONAL  FUNDS OR  CAPITALIZE  ON
         ACQUISITION OR OTHER BUSINESS OPPORTUNITIES.

         As of  December  31,  2001,  the  Company  had  total  indebtedness  of
approximately $216 million, consisting of $101 million of indebtedness under its
bank credit  facility  (the Credit  Facility)  and $115 million of 9 1/2% SenioR
Subordinated  Notes due 2005 (the Notes).  As of December 31, 2001,  the Company
had  a  stockholders'  deficit  of  approximately  $76  million.  The  Company's
significant   indebtedness   and  resulting   leverage   could  have   important
consequences, including the following:

          o    the Company's ability to obtain additional financing, for working
               capital,  capital expenditures,  acquisitions,  general corporate
               purposes or other purposes may be impaired;

          o    the Company's  ability to direct the use of its excess cash flow,
               a substantial  portion of which must be paid to lenders under the
               Credit Facility, limiting the Company's financial flexibility;



                                       8
<PAGE>

          o    a substantial  portion of the Company's cash flow from operations
               must be dedicated to the payment of principal and interest on its
               indebtedness, thereby reducing the funds available to the Company
               for other purposes;

          o    certain of the Company's  borrowings  are and will continue to be
               at variable  rates of interest,  which exposes the Company to the
               risk of higher interest rates;

          o    the indebtedness  outstanding under the Company's Credit Facility
               is secured by substantially all of the assets of the Company;

          o    the Company may be  substantially  more leveraged than certain of
               its  competitors,  which may place the  Company at a  competitive
               disadvantage; and

          o    the  Company's  substantial  degree of  leverage  may  hinder its
               ability to adjust rapidly to changing market conditions and could
               make it more  vulnerable  in the event of a  downturn  in general
               economic conditions or its business.

         The Company's ability to make scheduled payments of principal of, or to
pay  interest  or  liquidated  damages,  if  any,  on,  or  to  refinance,   its
indebtedness  will depend on its future  financial  and  operating  performance,
which,  in turn, is subject to  prevailing  economic  conditions  and to certain
financial,  business  and other  factors  that are  beyond its  control.  If the
Company's  cash flow and capital  resources  are  insufficient  to fund its debt
service  obligations,  the  Company  may be forced  to  reduce or delay  planned
expansion  and capital  expenditures,  sell  assets,  obtain  additional  equity
capital or  restructure  its debt.  There can be no assurance that the Company's
operating results, cash flow and capital resources will be sufficient to service
its  indebtedness  in the future.  In the absence of such operating  results and
resources,  the Company could face substantial  liquidity  problems and might be
required to dispose of material  assets or  operations  to meet its debt service
and other  obligations,  and there can be no  assurance as to the timing of such
sales or the amount of proceeds  which the Company could realize  therefrom.  In
2004, a significant  portion of the Company's  outstanding  long-term  debt will
mature, including the Credit Facility. The Company can provide no assurance that
it will be able to refinance its indebtedness on commercially  reasonable terms,
if at all.

         The Company's  Credit  Facility and the  Indenture  governing the Notes
contain a number of significant covenants that, among other things, restrict the
ability of the  Company to dispose  of assets,  incur  additional  indebtedness,
repay other indebtedness or amend other debt instruments,  pay dividends, create
liens on assets,  enter into investments or  acquisitions,  engage in mergers or
consolidations,  make capital  expenditures,  or engage in certain  transactions
with subsidiaries and affiliates and otherwise  restrict  corporate  activities.
The  Company is required to comply  with  specified  financial  ratios and tests
under the Credit  Facility.  The Company's  ability to comply with the covenants
contained  in the Credit  Facility and the  Indenture  may be affected by events
beyond its  control,  including  prevailing  economic,  financial  and  industry
conditions.  The breach of any of such covenants or restrictions could result in
a default  under the Credit  Facility,  which  would  permit the senior  lenders
thereunder  to declare all amounts  borrowed  thereunder  to be due and payable,
together  with  accrued  and  unpaid  interest.  If the senior  lenders  were to
accelerate  the maturity of the Credit  Facility,  the holders of the  Company's
Notes would be able to accelerate the maturity of the Notes.

         During 2001, the Company violated certain financial covenants contained
in the Credit Facility. Although the lenders under the Credit Facility agreed to
forbear from exercising their rights and remedies relating to the aforementioned
defaults  under the  Credit  Facility  during  2001,  the  Company  had to incur
substantial additional interest and other costs relating to the Credit Facility,
was restricted in its access to a portion of its revolving  credit  facility and
was required to execute a series of amendments to the Credit Facility.  On March
29, 2002, the Company and the lenders under the Credit  Facility  entered into a
fifth amendment to the Credit  Facility.  Pursuant to the fifth amendment to the
Credit  Facility,  the lenders  under the Credit  Facility have agreed to extend
their forbearance relating to the aforementioned defaults through April 12, 2002
and, subject to certain conditions,  including a $13.0 million investment in the
Company by its  stockholders  and their  affiliates no later than April 12, 2002
and the  application  of not less than  $12.0  million of the  proceeds  of such
investment  to  repay  the  acquisition   facility,  to  permanently  waive  the

                                       9
<PAGE>

aforementioned  defaults  under the Credit  Facility and to reset the  financial
covenants and effect other amendments to the Credit Facility.  While the Company
believes it will be able to satisfy the new  requirements of the Credit Facility
through 2003, no assurance can be provided in this regard. Please read "Item 7 -
Management  Discussion  and  Analysis  of  Financial  Condition  and  Results of
Operations  -  Liquidity  and  Capital  Resources"  for  additional  information
concerning the Credit Facility and the fifth amendment.

         THE MARKETS IN WHICH THE COMPANY COMPETES ARE HIGHLY COMPETITIVE.

         The  personal  and  highway  safety  products   industries  are  highly
competitive.  The Company believes that participants in these industries compete
primarily  on  the  basis  of  product   characteristics   (such  as  functional
performance,  design and style), price, brand name recognition and service. Some
of the Company's competitors have greater financial and other resources than the
Company,  and the  Company's  cash  flows  from  operations  could be  adversely
affected by competitors' new product innovations and pricing changes made by the
Company in response to competition from existing or new competitors.  Individual
competitors  may have  advantages  and  strengths  in  different  sectors of the
industry, in different products and in different areas, including  manufacturing
and  distribution  systems,  geographic  market  presence,  customer service and
support, breadth of product,  delivery time and price. There can be no assurance
that the Company will be able compete  successfully  against  current and future
competitors  or that the  competitive  pressures  faced by the Company  will not
adversely affect its financial condition or operations.

         THE  COMPANY'S   RESULTS  OF  OPERATIONS   ARE  DEPENDENT  ON  EXISTING
         REGULATIONS AND FEDERAL SPENDING ON PRODUCTS THE COMPANY SELLS.

         The Company's net sales may be adversely  affected by changes in safety
regulations  covering industrial workers in the U.S. and Canada and in the level
of enforcement of such regulations.  Certain changes in regulations could reduce
the utility of certain  products  manufactured  by the  Company,  requiring  the
Company to reengineer such products and thereby creating  opportunities  for its
competitors.   In  addition,   road  and  highway   marking   requirements   and
specifications  for  products  approved  for  use on  highways  are  subject  to
comprehensive regulation by various governmental authorities.  The Company sells
a  significant  portion of its  highway  safety  products in the U.S. to various
governmental  agencies through fixed price contracts awarded by competitive bids
submitted  to  state  and  local  agencies.  Many of these  governmental  agency
contracts  are  awarded on an annual  basis.  Accordingly,  notwithstanding  the
Company's  long-standing  relationship with various governmental  agencies,  the
Company  may lose its  contracts  with such  agencies  to lower  bidders  in the
competitive  bid process.  Moreover,  the terms and conditions of such sales and
the government  contract process are subject to extensive  regulation by various
federal, state and local authorities in the U.S. and Canada.

         The Company sells glass traffic beads to the U.S.  federal  government,
state governments,  local and municipal government agencies,  and the provincial
and local  governments of Canada.  The Company also sells glass traffic beads to
independent  highway line stripers who contract with state, local and provincial
governments.  Approximately  49% of the Company's glass traffic beads' sales are
to  government  agencies,  and any  reduction  in the  spending  patterns of the
government  agencies could adversely  affect revenue from sales of the Company's
products.

         THE COMPANY IS DEPENDENT ON CERTAIN KEY PERSONNEL.

         The operations of the Company depend  significantly upon the efforts of
certain members of senior  management,  particularly those listed under "Item 10
-- Directors and Executive Officers." The extended loss of the services of these

                                       10
<PAGE>

or other  officers  could  have a material  adverse  effect  upon the  Company's
business, results of operations and financial condition.

         THE COMPANY IS CONTROLLED BY CERTAIN INVESTORS, WHOSE INTERESTS MAY NOT
BE ALIGNED WITH OTHER INVESTORS.

         The  Jordan  Investors  and  the  Summit  Investors  own,  directly  or
indirectly,  approximately 73% of the outstanding shares of the capital stock of
the Company.  In connection with the fifth  amendment,  the Jordan Investors and
the Summit  Investors  have  committed to purchase up to $13.0  million of units
consisting of secured senior subordinated notes and warrants.  The terms of this
investment must be satisfactory to the lenders under the Credit Facility. Please
read "Item 7 - Management  Discussion  and Analysis of Financial  Condition  and
Results  of  Operations  -  Liquidity  and  Capital  Resources"  for  additional
information  regarding this investment.  These notes, which will be secured on a
second lien basis,  could  create  conflicts  with the holders of the  Company's
other indebtedness,  particularly in the event of the Company's bankruptcy. As a
practical matter, the Jordan Investors and the Summit Investors have substantial
influence  in  connection  with the  election of the board of  directors  of the
Company  and,  in general,  in the  determination  of the  outcome of  corporate
transactions  or other  matters  submitted  to the  stockholders  for  approval,
including the election of directors, any merger, consolidation or sale of all or
substantially all of the Company's assets, which could prevent or cause a change
in control of the Company.  In addition,  the Company's  Stockholders  Agreement
sets forth certain rights and  obligations  of the Company and its  stockholders
with respect to, among other things, the election of directors,  restrictions on
transfer,  co-sale rights,  right to joint sales,  forced sales and registration
rights.  Several of these  provisions could prevent or cause a change of control
of the Company.

         As described  above, the Jordan Investors and the Summit Investors have
committed to infuse  additional  capital into the Company in connection with the
fifth  amendment  to the Credit  Facility.  The Company can provide no assurance
that the Jordan  Investors,  the Summit  Investors  or other third  parties will
provide additional capital to the Company should similar  circumstances arise in
the future.

         THE COMPANY MAY BE THE SUBJECT OF PRODUCT LIABILITY CLAIMS.

         The  Company  faces an  inherent  business  risk of exposure to product
liability  claims arising from the potential  failure of its products to prevent
the types of  personal  injury  or death  against  which  they are  intended  to
protect.  Although the Company has not experienced any material uninsured losses
due to product  liability  claims,  there can be no  assurance  that it will not
experience such losses in the future. In the event any of the Company's products
prove to be  defective,  the Company may be required to recall or redesign  such
products. In the past, the Company has had warranty claims requiring the Company
to replace defective  products and repair work. The Company maintains  insurance
against  product  liability  claims,  but  there can be no  assurance  that such
insurance  coverage  will be  adequate  for  liabilities  actually  incurred.  A
successful  claim brought  against the Company in excess of available  insurance
coverage,  or any claim or product recall that results in significant expense or
adverse publicity  against the Company,  would have a material adverse effect on
the Company's business, operating results and financial condition.

         THE COMPANY  MAY NOT BE ABLE TO  ADEQUATELY  PROTECT  ITS  INTELLECTUAL
         PROPERTY  RIGHTS OR AVOID  INFRINGEMENT  ON THE  PROPRIETARY  RIGHTS OF
         THIRD PARTIES.

         The Company's  success  depends,  in part, on its ability to obtain and
enforce patents, maintain trade secret protection and operate without infringing
on the  proprietary  rights of third parties.  While the Company has been issued
patents and has  registered  trademarks  with  respect to many of its  products,
there can be no assurance that competitors of the Company will not independently
develop  similar or superior  products  or  technologies,  duplicate  any of the
Company's  designs,  trademarks,  processes  or other  intellectual  property or
design  around any  processes  or designs on which the Company has or may obtain
patents or trademark protection.  In addition, it is possible that third parties
may have or acquire  licenses for other  technology  or designs that the Company
may use or desire to use, so that the Company may need to acquire  licenses  to,
or to contest the  validity  of, such patents or  trademarks  of third  parties.
There can be no assurance  that any such license would be made  available to the
Company on acceptable terms, if at all, or that the Company would prevail in any
such contest. In addition to patent and trademark  protection,  the Company also

                                       11
<PAGE>

protects  trade secrets,  know-how and other  confidential  information  against
unauthorized  use by others or,  disclosure  by persons who have access to them,
such as employees of the Company, through contractual arrangements. There can be
no assurance that these  agreements will provide  meaningful  protection for the
Company's trade secrets,  know-how or other proprietary information in the event
of any unauthorized use,  misappropriation  or disclosure of such trade secrets,
know-how or other proprietary information.  If the company is unable to maintain
the  proprietary  nature of its  technologies,  the Company  could be materially
adversely affected.

EMPLOYEES

         As of December 31, 2001,  the Company had a workforce of 895  employees
as compared to 976 employees as of December 31, 2000.  The Company has 15 hourly
employees in Canada  represented by a union pursuant to a collective  bargaining
agreement and 14 hourly employees in California  represented by a union pursuant
to a collective bargaining agreement. Both agreements expire in November 2002.

ITEM 2.    PROPERTIES

         In addition to its executive  offices in  Chesterfield,  Missouri,  the
Company operates 15 major facilities in the United States, Canada and the United
Kingdom with a total area  (including  the executive  offices) of  approximately
740,000 square feet, of which the Company currently owns  approximately  585,000
square feet and leases  approximately  155,000  square  feet.  These  facilities
include:
<TABLE>
<CAPTION>
          Location                  User/ Subsidiary               Primary Use            Square       Owned/            Lease
                                                                                            Feet        Leased         Expiration
-----------------------------    -----------------------    --------------------------    ----------   ----------     -------------
<S>                              <C>                        <C>                            <C>         <C>             <C>
Corporate Headquarters
                                                            Corporate and
Chesterfield, Missouri           Corporate                  Administration                   15,000     Leased          9/14/02

Personal Safety Products
                                                            Manufacturing and
Belmont, Michigan                Jackson                    Distribution                    148,100      Owned            --
                                                            Manufacturing and
Tonawonda, New York              Allsafe                    Distribution                    100,000      Owned            --
                                                            Manufacturing and
Sparks, Nevada                   Silencio                   Distribution                     20,000     Leased          5/15/06
                                                            Manufacturing and
Hudson, Ohio                     Crystaloid                 Distribution                     36,770      Owned            --
                                 Jackson Products           Manufacturing and
Birmingham, U.K.                 Europe                     Distribution                     20,000     Leased          12/31/06

Highway Safety Products
                                                            Manufacturing and
Fenton, Missouri                 SMC                        Distribution                     84,414     Leased          12/31/05
                                                            Manufacturing and
Fenton, Missouri                 Flex-O-Lite                Distribution                     20,400     Leased          3/31/03
Idabel, Oklahoma                 Flex-O-Lite                Manufacturing                    24,000      Owned            --
                                                            Manufacturing and
Muscatine, Iowa                  Flex-O-Lite                Distribution                     31,903      Owned            --
                                                            Manufacturing and
Paris, Texas                     Flex-O-Lite                Distribution                     91,363      Owned            --
                                                            Manufacturing and
St. Thomas, Ontario, Canada      Flex-O-Lite                Distribution                     21,244      Owned            --
Belmont, Ontario, Canada         Flex-O-Lite                Distribution                     10,000     Leased          Monthly
                                                            Manufacturing and
Los Angeles, California          TMT-Pathway                Distribution                     25,242      Owned            --
                                                            Manufacturing and
Salem, Oregon                    TMT-Pathway                Distribution                     76,254      Owned            --
                                                            Manufacturing and
Salem, Oregon                    TMT-Pathway                Distribution                     30,598      Owned            --

</TABLE>

         The Company  believes that its  facilities are adequate for its current
production   requirements  and  the  Company's  expected  requirements  for  the
foreseeable  future.  However,  the Company may shift  operations among existing
facilities in order to maximize production efficiency.

         In the third quarter of 2002, the Company's corporate headquarters will
be relocated from Chesterfield, Missouri to O'Fallon, Missouri. The new facility
is a 12,500 square foot facility and is expected to be leased through August 30,
2007. The Company  believes this  relocation will result in  approximately  $0.1
million of annual savings.

ITEM 3.    LEGAL PROCEEDINGS

         From time to time, the Company is involved in litigation  incidental to
its  business.  The  Company  is not aware of any  pending or  threatened  legal
proceeding  which would reasonably be expected to have a material adverse effect
on the Company's results of operations or financial condition.

                                       12
<PAGE>

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year ended December 31, 2001.

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Market. The only authorized,  issued and outstanding classes of capital
stock of the  Company are the  Company's  Class A common  stock,  Class B common
stock and Class C common stock.  There is no established  trading market for the
Company's  common stock.  As of March 15, 2002,  43,172 shares of Class A common
stock were issued and  outstanding,  15,647  shares of Class B common stock were
issued and  outstanding and 2,849 shares of Class C common stock were issued and
outstanding. As of such date, the Class A common stock, Class B common stock and
Class C common stock was held of record by 23, 4 and 10 holders, respectively.

         Dividends.  The Company has not declared or paid any cash  dividends on
its common stock since its formation in August 1995.  The payment by the Company
of cash  dividends,  if any, in the future  rests within the  discretion  of the
board of directors of the Company,  and will depend among other things, upon the
Company's earnings,  its capital  requirements and its financial  condition,  as
well as  other  relevant  factors.  The  Company  has no  plans  to pay any cash
dividends  on the common  stock in the  foreseeable  future.  In  addition,  the
Company's  ability to pay cash  dividends is restricted by the Company's  Credit
Facility and the Indenture  governing  the Company's 9 1/2% Senior  Subordinated
Notes due 2005.

     Recent  Sales of  Unregistered  Securities.  The  Company  has not sold any
unregistered securities in the last three years.

ITEM 6.    SELECTED FINANCIAL DATA

         The following table sets forth the summary historical financial data of
the Company for the fiscal years ending  December  31, 1997  through  2001.  The
summary  information  set forth  below  should be read in  conjunction  with the
historical financial statements and the related notes thereto included elsewhere
in this document.
<TABLE>
<CAPTION>

                                                                          YEAR ENDED DECEMBER 31,
                                            -------------------------------------------------------------------------------
                                                2001           2000             1999              1998             1997
                                                ----           ----             ----              ----             ----
                                                                           (IN THOUSANDS)
Statement of Operations Data:
<S>                                          <C>              <C>              <C>              <C>              <C>
   Net sales ..............................  $ 200,198        $ 221,176        $ 213,208        $ 165,232        $ 123,417
   Cost of sales ..........................    147,050          153,883          145,120          111,325           87,466
   Restructuring charges ..................      3,805             --               --               --               --
   Selling, general & administrative
      Expenses ............................     35,131           36,328           35,261           27,566           15,205
   Asset sales ............................       --               --               --                576              335
   Amortization of intangibles ............     15,008           17,733           15,023            9,654           16,378
   Impairment of intangibles ..............      2,138             --               --               --               --
   Operating (loss) income ................     (2,934)          13,232           17,804           16,111            4,033
   Other expenses:
   Interest expense .......................    (19,709)         (20,744)         (19,347)         (15,803)         (12,050)
   Amortization of deferred financing costs     (1,500)          (1,500)          (1,501)          (1,271)          (1,261)
   Transaction related expenses ...........     (1,211)            --               --               --               --
   Other ..................................       (852)          (1,069)            (880)            (643)            (401)

   Loss before income tax provision and
      extraordinary item ..................    (26,206)         (10,081)          (3,924)          (1,606)          (9,679)
   Income tax expense (benefit) ...........     (6,053)          (3,287)          (1,172)             224              684
   Loss before extraordinary item .........    (20,153)          (6,794)          (2,752)          (1,830)         (10,363)
   Extraordinary item:
      Loss due to early extinguishment of
      debt ................................       --               --               --             (7,558)            --
   Net loss ...............................  $ (20,153)       $  (6,794)       $  (2,752)       $  (9,338)       $ (10,363)



                                       13
<PAGE>

Other Data:
   EBITDA(1) ..............................  $  28,617        $  40,007        $  39,542        $  31,111        $  24,660
   Depreciation and amortization ..........     25,542           27,779           23,239           15,793           20,292
   Capital expenditures, net ..............      3,904            5,862            5,836            6,670            3,246
   Ratio of earnings to fixed charges (2) .       --               --               --               --               --
   Cash  provided by operating activities .      1,096           12,496           15,144           15,417           10,313
   Cash used in investing activities ......     (3,904)          (5,862)         (45,764)         (54,267)          (5,890)
   Cash provided by (used in) financing
      activities ..........................      2,778           (6,490)          30,537           38,654           (3,900)
Balance Sheet Data:
   Cash ...................................  $     358        $     388        $     244        $     327        $     523
   Total assets ...........................    165,958          183,724          196,393          171,239          125,047
   Redeemable preferred stock and
      long-term debt, including current
      portion .............................    215,555          214,651          221,027          190,389          133,452
   Total stockholders' deficit ............    (75,982)         (58,147)         (51,188)         (47,712)         (31,277)

</TABLE>

(1)      EBITDA  represents  net  loss  plus  interest,   taxes,   depreciation,
         amortization,  certain non-cash  charges and or non-recurring  charges.
         EBITDA is not  included  herein as  operating  data and  should  not be
         construed as a substitute for operating income or a better indicator of
         liquidity  than  cash  flow  from  operating   activities,   which  are
         determined in accordance with generally accepted accounting  principles
         (GAAP). The Company has included EBITDA because the Company understands
         that it is one  measure  used by certain  investors  to  determine  the
         Company's  operating  cash flow and  historical  ability to service its
         indebtedness  and because certain  financial ratios are calculated on a
         similar basis.  EBITDA has not been reduced by management and directors
         fees of approximately  $0.9 million,  both of which are subordinated to
         the Company's  obligations under its financing  agreements,  nor has it
         been  increased for the $0.4 million gain on sale of the Company's Salt
         Lake City, Utah facility.  EBITDA for the year ended December 31, 2001,
         excludes  non-recurring  transaction expenses and restructuring charges
         including:  $2.2 million for payment of stock  appreciation  rights and
         stock options, $1.1 million of acquisition incentives, $1.2 million for
         elimination of certain  product  lines,  $2.8 million  associated  with
         restructuring  activities  in the  United  States  and  Europe and $0.4
         million  of other  non-recurring  charges.  EBITDA  for the year  ended
         December  31,  2000,  excludes  a  non-recurring  pre-tax  loss of $0.5
         million due to the closure of the Company's facility in Salt Lake City,
         Utah.

(2)      In the computation of the ratio to fixed charges,  earnings  consist of
         income before taxes and extraordinary  loss, plus fixed charges.  Fixed
         charges consist of interest expense on indebtedness,  plus that portion
         of lease rental expense representative of the interest factor. Earnings
         were insufficient to cover fixed charges by approximately $26.2 million
         for 2001;  $10.1 million for 2000,  $3.9 million for 1999, $1.6 million
         for 1998 and $9.7 million for 1997.

ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

         The Company is a leading  designer,  manufacturer  and  distributor  of
safety products serving a variety of niche applications  within the personal and
highway safety markets,  principally throughout North America and in Europe. The
Company  markets its products under  established,  well-known  brand names to an
extensive  network of  distributors,  wholesalers,  contractors  and  government
agencies.  The Company currently has two reportable business segments:  Personal
Safety Products (PSP) and Highway Safety Products (HSP).

         The  following  discussion  and  analysis  of the  Company's  financial
condition  and  results of  operations  should be read in  conjunction  with the
"Selected Financial Data" above and the consolidated financial statements of the
Company, including the notes thereto, appearing elsewhere in this report.

                                       14
<PAGE>

<TABLE>
<CAPTION>
RESULTS OF OPERATIONS

                                                                  YEAR ENDED DECEMBER 31,
                                                          -----------------------------------
NET SALES                                                    2001         2000         1999
                                                             ----         ----         ----
<S>                                                        <C>         <C>          <C>
   PSP................................................     $87,839     $102,899     $107,067
   HSP................................................     112,359      118,277      106,141
                                                           -------      -------      -------
   TOTAL..............................................    $200,198     $221,176     $213,208

GROSS MARGIN
   PSP................................................     $29,163      $37,270      $39,141
   HSP................................................      23,985       30,023       28,947
                                                            ------       ------       ------
   TOTAL..............................................     $53,148      $67,293      $68,088

SELLING, GENERAL AND ADMINISTRATIVE
   PSP................................................     $18,402      $21,658      $22,930
   HSP................................................       9,394        9,811        8,090
   Reconciliation to consolidated totals (Corporate) .       7,335        4,859        4,241
                                                             -----        -----        -----
   TOTAL..............................................     $35,131      $36,328      $35,261

OPERATING (LOSS) INCOME
   PSP................................................      $2,741       $6,505       $7,377
   HSP................................................       6,479       11,586       14,668
   Reconciliation to consolidated totals (Corporate) .    (12,154)      (4,859)      (4,241)
                                                          --------      -------      -------
   TOTAL..............................................    $(2,934)      $13,232      $17,804

INCOME TAX
   Benefit............................................      $6,053       $3,287       $1,172
</TABLE>


YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

         Net Sales.  Net sales  decreased  9.5% to $200.2  million  from  $221.2
million in 2000. The decrease is  attributable  to existing  economic  slowdowns
that preceded and then intensified  following the September 11th attack. PSP net
sales in 2001 decreased  14.6% to $87.8 million from $102.9 million in 2000. The
decrease in PSP's net sales was largely the result of decreased  demand for high
margin  welding  safety  products  and to a lesser  degree for  hearing  related
products.  HSP net sales in 2001  decreased  5.0% to $112.4  million from $118.3
million in 2000.  Reduced  paint  pricing,  loss of a  significant  customer and
decreased  demand for higher priced durable  coatings were  contributors  to the
decrease in HSP net sales.

         Gross  Margin.  The 21.1%  decrease in gross margin to $53.1 million in
2001 from $67.3 million in 2000 resulted from the decrease in net sales and cost
reduction  initiatives offset in part by the significant increase in natural gas
prices as compared to the prior year period. During 2001, head count was reduced
8.3% to 895 from 976 at December 31, 2000. Other cost savings included  facility
integration,  improved procurement and process  improvements.  Gross margin as a
percentage  of sales  decreased  to 26.7% in 2001 from 30.4% in 2000.  PSP gross
margin  decreased  21.7% to $29.2 million in 2001 from $37.3 million in 2000 due
to lower sales volume, lost overhead  absorption,  planned inventory  reductions
and cost  reductions.  HSP gross margin decreased 20.0% to $24.0 million in 2001
from $30.0 million in 2000. HSP gross margin as a percentage of sales  decreased
to 21.4% in 2001 from 25.4% in 2000.  The  decrease  resulted in part from lower
pricing on certain  paint  products  as a result of  intense  competitive  price
pressures coupled with increased natural gas costs.  Natural gas costs accounted
for approximately $2.2 million of the increase.

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative  expenses  decreased  3.3% to $35.1  million  in 2001 from  $36.3
million  in 2000 due to  decreased  sales  volume and cost  reduction  programs.
Additionally, selling, general and administrative expenses in 2001 included $3.3
million of non-recurring  transaction-related  expenses  recorded in conjunction
with the  Company's  corporate  restructuring.  The Company also  incurred  $2.2
million of expense  related  to payment of stock  appreciation  rights and stock

                                       15
<PAGE>

options and $1.1  million of  incentive  expenses  associated  with the Purchase
Agreement in 2001. Excluding the non-recurring  transaction-related  expenses of
$3.3  million,  selling,  general and  administrative  expenses  decreased  $4.5
million, or 12.4%, from the prior year and decreased to 15.9% in 2001 from 16.5%
in 2000 as a percentage of sales.

         Operating (Loss) Income.  Consolidated  operating (loss) income in 2001
decreased  to ($2.9  million)  from  $13.2  million in 2000 due  principally  to
decreased  sales volume,  lost overhead  absorption,  decreased  paint  pricing,
combined with  non-recurring  transactions  related  expenses and  restructuring
charges (totaling $7.7 million) and $2.2 million of increased natural gas costs.

         Income Tax  Benefit.  Income  tax  benefit  in 2001  increased  to $6.1
million from $3.3 million in 2000 due to the increased  net loss.  In 2000,  the
Company had taxable  income and reduced the  valuation  allowance as a result of
utilizing net operating loss (NOL)  carryforwards.  During 2001, due to economic
slowdowns,  the spike in  natural  gas prices and other  one-time  cash  charges
including  transaction  related expenses associated with the Purchase Agreement,
legal and consulting  fees  associated  with the fifth  amendment,  domestic and
European  restructuring,  the Company  incurred  significant  operating  losses.
Management  believes  the Company will have future  taxable  income and that the
benefits  associated  with the Company's net deferred tax assets are more likely
than not to be realized.

         Restructuring  charge.  Due to reduced  demand  from and lower  capital
spending by the Company's customers, the Company entered a restructuring program
during  2001 to  prioritize  its  initiatives  around  high-growth  areas of its
business, focus on profit contribution, reduce expenses, and improve efficiency.
This  restructuring  program  included a workforce  reduction,  consolidation of
excess  facilities,  elimination of certain product lines and  restructuring  of
certain  business  functions.  During the first quarter of 2001, in  conjunction
with the Company's corporate restructuring, the Company recorded $1.2 million of
restructuring  charges  related to the  elimination  of certain  product  lines.
During the second half of 2001, the Company  recorded a restructuring  charge in
the amount of $2.6  million  related  to the  consolidation  of certain  support
functions  between PSP  divisions as well as the merger of European  operations,
which  resulted  in the  closing of  facilities  in Germany and France and their
consolidation in the United Kingdom.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

         Net Sales.  Net sales in 2000  increased  3.7% to $221.2  million  from
$213.2  million in 1999.  Increased  Highway  Safety sales by  TMT-Pathway  were
offset by the continuing  effect of the European  currency  devaluation  and the
slowing economy in North America. PSP net sales in 2000 decreased 3.9% to $102.9
million from $107.1 million in 1999. The sales decrease was primarily the result
of devalued European  currencies,  the sales decline in the Company's Crystaloid
division and the  divestiture  of the Company's Aden  Ophthalmic  Products (AOP)
prescription  frame  business  during  the  fourth  quarter of 1999 all of which
accounted for $4.9 million of decreased  sales.  HSP net sales in 2000 increased
11.4% to  $118.3  million  from  $106.1  million  in 1999  primarily  due to the
TMT-Pathway acquisition.

         Gross Margin. Gross margin decreased 1.2% to $67.3 million in 2000 from
$68.1  million  in 1999 due to  increased  sales,  which  were  offset by higher
natural gas and freight costs.  Gross margin as a percentage of sales  decreased
to 30.4% in 2000 from 31.9% in 1999.  PSP gross margin  decreased  4.6% to $37.3
million in 2000 from $39.1  million in 1999 due to the  decrease  in sales.  PSP
gross margin as percentage of sales remained  consistent  from year to year. HSP
gross margin  increased 3.8% to $30.0 million in 2000 from $28.9 million in 1999
primarily due to the TMT-Pathway  acquisition.  Margin growth from higher margin
coatings sales were offset by higher natural gas and freight costs, resulting in
a decrease in HSP gross  margin as a  percentage  of sales to 25.4% in 2000 from
27.2% in 1999.

         Selling,    General   and   Administrative.    Selling,   general   and
administrative  expenses increased 2.8% $36.3 million in 2000 from $35.3 million
in 1999  largely  due to the  TMT-Pathway  acquisition.  On a pro  forma  basis,
selling, general and administrative expenses remained flat from year to year.

         Operating  Income.  Consolidated  operating income in 2000 decreased to
$13.2 million from $17.8 million in 1999 primarily as a result of a full year of
amortization associated with the TMT-Pathway  acquisition,  the sales decline in
the Company's  Crystaloid  division,  the  divestiture  of the AOP  prescription
safety frame business and higher natural gas and freight costs.

                                       16
<PAGE>

         Income Tax  Benefit.  Income  tax  benefit  in 2000  increased  to $3.3
million from $1.2 million in 1999 due to the  elimination  of the $10.1  million
tax valuation allowance.  The elimination in the valuation allowance during 2000
resulted from the utilization of NOLs in 2000 and  anticipating  the realization
of the benefit of all deferred tax assets in the future.  The elimination of the
allowance resulted in a 2000 tax benefit of $4.2 million with the remaining $5.9
million  recorded as a  reduction  of  goodwill.  The amount  reducing  goodwill
represents  the  portion  of  the  valuation   allowance  recorded  in  purchase
accounting.

LIQUIDITY AND CAPITAL RESOURCES

         Cash Flow Data. Cash provided by operating activities in 2001, 2000 and
1999 was $1.1  million,  $12.5  million  and $15.1  million,  respectively.  The
decrease in 2001 from 2000 was largely due to the increased net loss offset by a
decrease in inventory levels over the prior year. The decrease in 2000 from 1999
stems primarily from an increase in inventory levels. Changes in working capital
resulted in sources  (uses) of cash of $1.7  million,  ($4.9  million) and ($3.6
million) in 2001, 2000 and 1999, respectively.

         Cash  used in  investing  activities  in  2001,  2000 and 1999 was $3.9
million, $5.9 million and $45.8 million, respectively. The decrease in 2001 over
2000  is due to  lower  capital  expenditures.  The  higher  use of cash in 1999
includes $39.9 million  expended for the  TMT-Pathway  acquisition.  Net capital
expenditures  in 2001,  2000 and 1999 were $3.9  million,  $5.9 million and $5.8
million, respectively.

         Net cash provided by (used in) financing  activities in 2001,  2000 and
1999 was $2.8  million,  ($6.5  million) and $30.5  million,  respectively.  The
increase in 2001 stems from net  borrowings  under the  Company's  existing debt
structure  resulting from weaker  operating cash flows coupled with $2.2 million
of  additional  paid in  capital  related to the  payment of stock  appreciation
rights  and stock  options.  The  decrease  in 2000 from 1999 is a result of the
absence of incremental debt to fund acquisition  activity. In 1999, the proceeds
were provided by the issuance of long-term debt and used  principally to finance
the TMT-Pathway acquisition.

         Credit  Facility.  During  1998,  the  Company  entered  into a  credit
agreement (as amended,  the Credit  Facility)  with a group of banks (the Credit
Facility  Lenders),  which  provided  for two lines of  credit in the  aggregate
amount of $125.0  million.  The lines consist of an acquisition  facility in the
principal  amount of up to $95.0 million and a revolving  credit facility in the
principal amount of up to $30.0 million. The Credit Facility was amended on June
19, 1998 to include Swing Line Loans,  which allowed the Company to borrow up to
$3.0 million from the Swing Line Bank (Fleet  National  Bank) so long as all the
sum of the outstanding  swing line loans,  revolving credit loans and letters of
credit  outstanding  did not exceed  the total  commitment  under the  revolving
credit facility of $30.0 million.  A second amendment to the Credit Facility was
entered  into on May 17, 1999 to  increase  the  acquisition  facility to $105.0
million and permit the Company's  acquisition of TMT-Pathway.  The Company could
not borrow under the  acquisition  facility  beyond April 30, 2001 at which time
the commitment of the Credit Facility Lenders to advance  additional funds under
the acquisition facility was scheduled to expire and the principal amount of the
acquisition  facility  became  due in  quarterly  installments  having  a  final
maturity of March 31,  2004.  The Credit  Facility  contains  several  financial
covenants  based on operating  results for the previous  four  quarters.  Due to
operating   losses   generated  by  decreased  sales  volume  and  gross  margin
percentages  and  historically  high natural gas costs  incurred in the previous
four  quarters,  the  Company  was  not in  compliance  with  certain  financial
covenants under the Credit  Facility as of June 30, 2001,  September 30, 2001 or
December  31, 2001.  A third  amendment to the Credit  Facility was entered into
effective July 1, 2001,  pursuant to which the Credit Facility Lenders agreed to
forbear from exercising their rights and remedies relating to the aforementioned
defaults under the Credit Facility  through  September 30, 2001, the usage under
the revolving  credit  facility was limited to $24.0 million and the  applicable
margin  for base rate and LIBOR  based  loans  was  increased  to 2.0% and 3.0%,
respectively.  A fourth  amendment  to the Credit  Facility  was entered into on
October 1, 2001,  pursuant to which the Credit Facility Lenders agreed to extend
their  forbearance  through March 31, 2002 and make other  modifications  to the
Credit Facility,  including  increasing the applicable  margin for base rate and
LIBOR based  loans to 3.0% and 4.0%,  respectively,  and for certain  loans to a
fixed rate of 15% per annum, imposing additional  limitations on usage under the
revolving credit facility,  and adding additional financial covenants pertaining
to minimum levels of EBITDA and maximum levels of capital expenditures.

         A fifth  amendment to the Credit Facility was entered into on March 29,
2002,  pursuant to which the Credit Facility Lenders have agreed to extend their

                                       17
<PAGE>

forbearance relating to the aforementioned  defaults through April 12, 2002 and,
subject to certain  conditions,  including  a $13.0  million  investment  in the
Company by its  stockholders  and their  affiliates no later than April 12, 2002
and the  application  of not less than  $12.0  million of the  proceeds  of such
investment  to  repay  the  acquisition   facility,  to  permanently  waive  the
aforementioned  defaults under the Credit Facility which occurred in fiscal 2001
and certain other  technical  defaults and to reset the financial  covenants and
effect other  amendments to the Credit  Facility  (described  below).  Until the
effectiveness of the fifth amendment  (anticipated to occur on or prior to April
12,  2002),  the  usage on the  revolving  credit  facility  is  capped at $21.0
million.  The  fifth  amendment  authorizes  the  Company  to sell  and  certain
stockholders  and their  affiliates,  including  Summit Capital II, L.P. and the
Jordan Company LLC, have committed to purchase $13.0 million of units consisting
of secured senior subordinated notes (the Secured Senior Subordinated Notes) and
warrants for shares of common stock of the Company.  The terms and conditions of
the  Secured  Senior  Subordinated  Notes  must be  satisfactory  to the  Credit
Facility Lenders, and must include the following terms:

          o    a maturity date of December 31, 2004;

          o    an  interest  rate of 15% per  annum,  of  which  (i) 10% will be
               payable  in cash  semi-annually  in  arrears  and (ii) 5% will be
               payable in-kind compounded semi-annually;

          o    subordination in right of payment to the Credit Facility Lenders;

          o    subordinated  second lien  security  interests in the  collateral
               securing the obligations under the Credit Facility;

          o    no repayment or redemption  prior to the repayment in full of all
               obligations; and

          o    no financial or other covenants which are more  restrictive  than
               the Credit Facility.

         Subject to the investment in the Company by its  stockholders and their
affiliates  (described  above) and the use of $12.0  million of the  proceeds of
such  investment to repay the  acquisition  facility,  the fifth amendment will,
among other things,  reset the amortization on the acquisition  facility,  reset
the financial covenants and establish maximum capital expenditure amounts,  each
of which are described in the tables below:

         Amortization on the acquisition facility shall be reset as follows:

                 QUARTER ENDING                            AMOUNT
                 --------------                            ------
                 03/31/02...............................   $1.25 million
                 06/30/02...............................   $1.25 million
                 09/30/02...............................   $1.25 million
                 12/31/02...............................   $1.25 million
                 03/31/03...............................   $2.5 million
                 06/30/03...............................   $2.5 million
                 09/30/03...............................   $2.5 million
                 12/31/03...............................   $2.5 million
                 03/31/04...............................   $3.0 million
                 Maturity Date (06/30/04)...............   Remaining Balance

          The  following  financial  covenants  were  established  in the  fifth
          amendment:

               EBITDA to Total Interest Expense. The Company will not permit the
               ratio of the EBITDA (as  defined in the Credit  Facility)  of the
               Company and its restricted  subsidiaries  to  Consolidated  Total
               Interest  Expense  (as  defined in the Credit  Facility)  for any
               period of four  consecutive  fiscal  quarters  ending  during any
               period described in the table set forth below to be less than the
               ratio set forth opposite such period in such table:



                                       18
<PAGE>

                                         PERIOD ENDED RATIO
                       03/31/02..............................   1.45:1.00
                       06/30/02..............................   1.55:1.00
                       09/30/02..............................   1.60:1.00
                       12/31/02..............................   1.70:1.00
                       03/31/03..............................   1.75:1.00
                       06/30/03 .............................   1.85:1.00
                       09/30/03..............................   1.95:1.00
                       12/31/03 and at the
                       end of each quarter
                       thereafter............................   2.00:1.00

               Leverage  Ratio.  The Company will not permit the Leverage  Ratio
               (as defined in the Credit  Facility)  as of the end of any fiscal
               quarter ending during any period described in the table set forth
               below to exceed the ratio set forth  opposite such period in such
               table:

                        PERIOD ENDED                            RATIO
                        ------------                            -----
                        03/31/02.............................   7.55:1.00
                        06/30/02.............................   7.45:1.00
                        09/30/02.............................   6.85:1.00
                        12/31/02.............................   6.25:1.00
                        03/31/03.............................   6.15:1.00
                        06/30/03.............................   6.00:1.00
                        09/30/03.............................   5.75:1.00
                        12/31/03 and at the
                        end of each quarter
                        thereafter...........................   5.50:1.00

               Consolidated  Operating  Cash  Flow to Total  Debt  Service.  The
               Company  will  not,  for any  period of four  consecutive  fiscal
               quarters  ending  during  any period  described  in the table set
               forth below, permit the ratio of (i) Consolidated  Operating Cash
               Flow (as defined in the Credit  Facility) for such period to (ii)
               the sum of (a)  Consolidated  Total  Interest  Expense  for  such
               period and (b) all required payments of principal  (including the
               principal  component of capitalized lease payments) in respect of
               indebtedness due and payable by the Company and/or its restricted
               subsidiaries  during  such  period  to be less than the ratio set
               forth opposite such period in such table:

                        PERIOD ENDED                            RATIO
                        -------------                           -----
                        03/31/02.............................   0.80:1
                        06/30/02.............................   0.90:1
                        09/30/02.............................   1.00:1
                        12/31/02 and at the
                        end of each quarter
                        thereafter ..........................   1.05:1

               Minimum EBITDA. The Company will not permit EBITDA for any period
               ending on the dates set forth  below,  to be less than the amount
               set forth opposite such date in such table:

                        PERIOD ENDED                            AMOUNT
                        ------------                            ------
                        01/01/02 - 03/31/02..................   $5.3 million
                        01/01/02 - 04/30/02..................   $8.5 million
                        01/01/02 - 05/31/02..................   $12.4 million
                        01/01/02 - 06/30/02..................   $16.55 million
                        01/01/02 - 07/31/02..................   $20.225 million


                                       19
<PAGE>

                        01/01/02 - 08/31/02..................   $24.075 million
                        01/01/02 - 09/30/02..................   $27.7 million
                        01/01/02 - 10/31/02..................   $30.275 million
                        01/01/02 - 11/30/02..................   $31.8 million
                        01/01/02 - 12/31/02..................   $32.825 million
                        04/01/02 - 03/31/03..................   $33.0 million
                        07/01/02 - 06/30/03..................   $33.5 million
                        10/01/02 - 09/30/03..................   $34.0 million
                        01/01/03 - 12/31/03..................   $34.4 million
                        04/01/03 - 03/31/04..................   $34.7 million

               Maximum Capital Expenditures. The Company will not permit capital
               expenditures  for any fiscal  year to be greater  than the amount
               set forth opposite such year in the table below.

                        PERIOD ENDED                            AMOUNT
                        ------------                            ------
                        01/01/02 - 03/31/02..................   $2.0 million
                        01/01/02 - 06/30/02..................   $4.0 million
                        01/01/02 - 09/30/02..................   $5.0 million
                        01/01/02 - 12/31/02..................   $5.9 million
                        01/01/03 - 03/31/03..................   $2.6 million
                        01/01/03 - 06/30/03..................   $5.1 million
                        01/01/03 - 09/30/03..................   $6.4 million
                        01/01/03 - 12/31/03..................   $7.6 million

         The Credit Facility,  as amended,  allows the total commitment of $30.0
million  under the  revolving  credit  facility to be available  for  borrowing,
subject to usage caps of $22.5  million  during the periods of December 15, 2002
through  January 31, 2003 and December 15, 2003  through  January 31, 2004.  The
amount  of  borrowings  as of March  29,  2002  are  unchanged  from the  fourth
amendment and bear interest,  at the option of the Company,  at a rate per annum
equal to (i) the Base Rate (as  defined  in the Credit  Facility)  plus 3.00% or
(ii) the LIBOR Rate (as defined in the Credit Facility) plus 4.00%. Further, the
Company owes a commitment  fee of 0.50% on the unused  portion of the  revolving
credit facility  commitment.  Pursuant to the fifth amendment,  the Company will
not be  permitted to request  LIBOR Rate Loans  having an interest  period which
exceeds one month until the issuance of the Secured Senior  Subordinated  Notes.
The fifth  amendment  requires  all Base Rate and LIBOR  Rate Loan  interest  to
continue  to be paid on the last day of the  calendar  month or on the  drawdown
date,  which ever is  earlier.  The  average  interest  rate on all  outstanding
borrowings  under the Credit  Facility was 6.8% at December 31, 2001. The Credit
Facility,  as amended,  adds a new  prepayment  requirement  that  requires  the
Company to repay to the Credit  Facility  Lenders an amount  equal to the Excess
Cash Flow Payment (as defined in the Credit Facility). This amount is payable 90
days after the end of each fiscal year and is used to repay the principal on the
acquisition  facility in inverse  order of maturity  and upon payment in full of
the acquisition facility, to reduce the revolving credit facility.  Finally, the
fifth amendment  extends the final maturity of the acquisition  facility and the
revolving  facility to June 30, 2004.  In  connection  with the execution of the
fifth  amendment,  the  Company  paid  the  Credit  Facility  Lenders  a fee  of
approximately $0.5 million.

     Available  Credit  Capacity.  As of December 31, 2001,  the Company had the
following amounts outstanding under the Credit Facility

                AMOUNTS OUTSTANDING -- CREDIT FACILITY

                (IN THOUSANDS)                        AMOUNT
                ---------------------------------------------
                Acquisition Facility                 $84,200
                Revolving Credit Facility             16,600
                Letters of Credit                      1,800
                ---------------------------------------------
                Total Amount Outstanding            $102,600
                =============================================


                                       20
<PAGE>

         As of April 30, 2001, the commitment of the Credit Facility  Lenders to
make  additional  advances  under  the  acquisition   facility  had  expired  in
accordance  with its original terms and, as a result of the fourth  amendment to
the Credit Facility, the Company's borrowing capacity under the revolving credit
facility was limited to an amount that varied periodically from $26.0 million to
$19.0 million.  As of December 31, 2001, the usage cap was $20.0 million and the
Company  had  available  borrowing  capacity  of $1.6  million  under the Credit
Facility.  As a result  of the  fifth  amendment  to the  Credit  Facility,  the
Company's total borrowing  capacity under the revolving  credit facility will be
increased to $30.0 million,  subject to the periodic usage caps described above.
In  addition,  after giving pro forma effect to the  scheduled  amortization  to
occur on March  29,  2002 and the  application  of the  proceeds  from the $13.0
million investment described above, the amount outstanding under the acquisition
facility will be approximately $71.0 million.

         Liquidity. Giving effect to the fifth amendment to the Credit Facility,
the Company  believes  that  current and  projected  cash flows from  operations
together  with  available  borrowing  capacity  under the  Credit  Facility  are
sufficient to fund working capital  requirements,  debt service requirements and
planned capital  expenditures  through 2003. The Company's beliefs regarding its
liquidity  through 2003 will be affected by, among other things,  demand for the
Company's products, the Company's ability to compete with industry participants,
the impact of future laws and governmental  regulations and general economic and
capital markets conditions.  The Company's current and projected cash flows from
operations   will  not  be  sufficient  to  fund  the  Company's   debt  service
requirements  in 2004 and 2005.  Accordingly,  the  Company  expects  to have to
refinance a  significant  portion of it  indebtedness  in 2004.  The Company can
provide no  assurance  that it will be able to  refinance  its  indebtedness  on
commercially reasonable terms.

ASSIGNMENT AND AGENCY ACCOUNT AGREEMENT

         On October 31, 2001, the Company  entered into an Assignment and Agency
Account  Agreement  with Fleet  National  Bank as agent for the Credit  Facility
Lenders.  Under this agreement,  the Company pledged and assigned as collateral,
for the benefit of the Credit Facility Lenders,  a security interest in and lien
on, to and under all of the depository,  disbursement  investment and other bank
accounts now or hereafter  maintained  by the Company (the DDAs),  together with
all cash, cash  equivalents,  checks and other property of any nature  deposited
into such DDAs and all proceeds thereon. In addition,  under this agreement, the
Company has agreed to deposit all cash  receipts,  checks and cash proceeds from
its  operations  into such DDAs  maintained by the Credit  Facility  Lenders and
other  DDAs  approved  by  the  Credit  Facility  Lenders.  In the  case  of the
occurrence  and  continuation  of an Event of Default  (as defined in the Credit
Facility), the Credit Facility Lenders are authorized to terminate the Company's
access to the DDAs and the contents thereof, and the Credit Facility Lenders are
permitted  to  withdraw  any and all sums  from  the  DDAs in  order to  satisfy
obligations which have become due and payable under the Credit Facility.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

         The  following   table  sets  forth  the  Company's   obligations   and
commitments to make future payments under its debt, lease and supply  agreements
as of December 31, 2001:
<TABLE>
<CAPTION>

                                                                     PAYMENTS DUE BY YEAR
----------------------------------------    --------------------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                         TOTAL        2002           2003           2004          2005          AFTER 2005
(in thousands)
----------------------------------------   ------------   -----------   -----------     ----------    ---------         ----------
<S>           <C>                              <C>            <C>           <C>           <C>            <C>          <C>
Long-Term Debt(1) ......................       $215,555       $11,875       $11,875       $191,805       $ --         $       --
Operating Leases(2) ....................          5,045         1,206         1,021            946          916                956
Other Long-Term Obligations(3) .........          4,222         4,222          --             --           --                 --
----------------------------------------       --------       -------       -------       --------       ------       ------------
Total Contractual Cash Obligations .....       $224,822       $17,703       $12,896       $192,751       $  916       $        956
========================================       ========       =======       =======       ========       ======       ============
</TABLE>

                                       21
<PAGE>

(1)      For a description of the Company's  long-term  debt,  please read "Item
         7A.-- Quantitative and Qualitative Disclosures about Market Risk."
(2)      Amounts include the minimum lease payment  obligations  associated with
         the Company's operating leases described under "Item 2. -- Properties."
(3)      Amounts include the minimum payment obligation of the Company under its
         natural gas  contract  described  under "Item  7A.--  Quantitative  and
         Qualitative Disclosures about Market Risk."

         The  following   table  sets  forth  the  Company's   obligations   and
commitments to make future payments under its debt, lease and supply  agreements
as of December  31,  2001,  giving  effect to the fifth  amendment to the Credit
Facility  and the revised  amortization  schedule for the  acquisition  facility
resulting therefrom:
<TABLE>
<CAPTION>

                                                                      PAYMENTS DUE BY YEAR
----------------------------------------   ----------------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                     TOTAL           2002            2003          2004         2005       AFTER 2005
(in thousands)
----------------------------------------   ----------    ----------     -----------   ----------    --------     ------------

<S>           <C>                            <C>          <C>          <C>              <C>           <C>        <C>
Long-Term Debt(1) ......................     $215,555     $  5,000     $     10,000     $ 200,555     $ --       $       --
Operating Leases(2) ....................        5,045        1,206            1,021           946        916              956
Other Long-Term Obligations(3) .........        4,222        4,222              --           --         --               --
----------------------------------------     --------     --------     -------------     --------     ------     ------------
Total Contractual Cash Obligations .....     $224,822     $ 10,428     $      11,021    $ 201,501     $  916     $        956
========================================     ========     ========     =============     ========     ======     ============
</TABLE>

(1)      For a description of the Company's  long-term  debt,  please read "Item
         7A.-- Quantitative and Qualitative Disclosures about Market Risk."
(2)      Amounts include the minimum lease payment  obligations  associated with
         the Company's operating leases described under "Item 2. -- Properties."
(3)      Amounts include the minimum payment obligation of the Company under its
         natural gas  contract  described  under "Item  7A.--  Quantitative  and
         Qualitative Disclosures about Market Risk."

CAPITAL SPENDING

         The   Company's   2002  budget   includes   $5.4  million  for  capital
expenditures.  These capital expenditures include molding machines, mold repairs
and/or replacements,  facility startup, furnaces and screening, dust collection,
new products  and  information  technologies  and will be funded with cash flows
from  operations.  The  Company's  capital  budget is  subject  to  revision  as
opportunities arise or circumstances  change. Funds approved to be spent for the
aforementioned items by the Company in 2002 are as follows:

CAPITAL BUDGET FOR 2002
                                                                   ESTIMATED
        SEGMENT OR CATEGORY                                         CAPITAL
        (IN THOUSANDS)                                             SPENDING
        --------------------------------------------------------------------
        Personal Safety Products                                     $3,000
        Highway Safety Products                                       2,200
        Information Technology and Other                                200
        --------------------------------------------------------------------
        Total Capital Expenditures                                   $5,400
        ====================================================================

EURO CONVERSION

         On January 1,  1999,  eleven of the  fifteen  member  countries  of the
European  union  established  fixed  conversion  rates  between  their  existing
sovereign  currencies and the Euro. The  participating  countries have agreed to
adopt the Euro as their common legal  currency as of that date while  continuing
to utilize their local currency through January 1, 2002.

         The Company has assessed the  potential  impact to the Company that may
result from the Euro conversion.  In addition to tax accounting  considerations,
the  Company  has  upgraded  its  current   software   package  to   accommodate
Euro-denominated  transactions  and  is in  the  process  of  implementing  this

                                       22
<PAGE>

software. The Company will continue to assess the impact of the Euro conversion,
however  management does not believe that the introduction of the Euro will have
a material  adverse  effect on the Company's  financial  condition or results of
operation.

CRITICAL ACCOUNTING POLICIES

         In response to the Securities and Exchange  Commission's  (SEC) Release
number  33-8040  -  "Cautionary  Advice  Regarding   Disclosure  About  Critical
Accounting  Policies,"  the  Company  has  identified  its  critical  accounting
policies.  In the ordinary course of business,  the Company has made a number of
estimates  and  assumptions,  relating to the reporting of results of operations
and  financial  position  in the  preparation  of its  financial  statements  in
conformity with accounting principles generally accepted in the United States of
America.  Actual results could differ  significantly  from those estimated under
different  assumptions and conditions.  The Company considers certain accounting
policies that involve complex judgment and uncertainties including those related
to valuation of accounts receivable, inventories, long lived assets and deferred
taxes, to be critical accounting policies.

         Allowance   for   Doubtful   Accounts.   The  Company   evaluates   the
collectibility of its trade accounts receivable based on a number of factors. In
circumstances where the Company is aware of the customer's inability to meet its
financial  obligations,  a  specific  reserve  for bad  debts is  estimated  and
recorded  which reduces the  recognized  receivable to the estimated  amount the
Company believes will ultimately be collected.  In addition to specific customer
identification  of potential bad debts,  bad debt charges are recorded  based on
the  Company's  recent past loss history and an overall  assessment  of past due
trade account receivable amounts outstanding.

         Reserve for Obsolescence. The Company adjusts the value of its obsolete
and unmarketable  inventory to the estimated market value based upon assumptions
for future demand and market  conditions.  If actual demand or market conditions
are less favorable  than those  projected by  management,  additional  inventory
write-downs may be required.

         Valuation of Long-Lived  Assets and  Intangible  Assets.  The Company's
long-lived  assets  include  property,  plant and equipment.  Recoverability  of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If such
assets are  considered  to be  impaired,  the  impairment  to be  recognized  is
measured by the amount by which the  carrying  amount of the assets  exceeds the
fair value of the assets.  Fair value is generally  estimated  using  discounted
cash flows.

         The  Company's  intangible  assets  include  patents,  customer  lists,
technology-related agreements, and goodwill and are amortized on a straight-line
basis over periods ranging from 2-15 years.  The Company  periodically  assesses
the  recoverability of its intangible assets based on the expected  undiscounted
cash flows over the remaining life of the related  assets.  In conjunction  with
the Company's 2001 assessment of its long-lived assets, $2.1 million of goodwill
was deemed impaired and was written off in the fourth quarter of 2001. After the
completion  of  the  European  restructuring  in the  fourth  quarter  (and  the
consolidation of the respective  operations to the United  Kingdom),  management
determined   that  certain  events  have  occurred  which  have  diminished  the
infrastructure   and  severely   impaired  the  goodwill   associated  with  the
acquisition  of  Jackson   Products  Europe   (formerly  Lansec  Holding  GmbH).
Additionally,  the sum of  expected  undiscounted  cash  flows is less  than the
carrying amount of the goodwill.

         The  Company  may have to  record  additional  impairment  charges  not
previously  recognized  as they will continue to analyze  their  long-lived  and
intangible assets for impairment on a periodic basis.

         Deferred Tax Assets. The Company  periodically  assesses the need for a
valuation  allowance to reduce the carrying  value of its deferred tax assets to
an  amount  that is  more  likely  than  not to be  realized.  The  Company  has
considered  future taxable income analyses and feasible tax planning  strategies
in assessing the need for the valuation allowance.  Should the Company determine
that it  would  not be able to  recognize  all or part of its net  deferred  tax
assets in the future,  an adjustment  to the carrying  value of the deferred tax
assets  would be charged to income in the period  which such  determination  was
made.

                                       23
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

         In July 2001, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards (SFAS) No. 141, Business  Combinations,  and
Statement No. 142, Goodwill And Other Intangible Assets.  Statement 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  or  completed  after  June 30,  2001.  Statement  141 also  specifies
criteria  that  intangible   assets  acquired  in  a  purchase  method  business
combination be recognized  and reported apart from goodwill.  Statement 142 will
require that  goodwill and  intangible  assets with  indefinite  useful lives no
longer be amortized,  but instead  tested for  impairment  at least  annually in
accordance with the provisions of Statement 142. Statement 142 will also require
that  intangible  assets with  definite  useful  lives be  amortized  over their
respective  estimated  useful  lives to their  estimated  residual  values,  and
reviewed for  impairment in  accordance  with SFAS No. 121,  Accounting  for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
Company is required to adopt the  provisions of Statement 141  immediately,  and
Statement 142 effective January 1, 2002.

         Statement 141 requires that upon adoption of Statement 142, the Company
evaluate its existing  intangible  assets and  goodwill,  and make any necessary
reclassifications  in order to conform with the new  criteria in Statement  141.
Upon  adoption of  Statement  142,  the Company will be required to reassess the
useful lives and residual values of all recorded intangible assets, and make any
necessary amortization period adjustments by March 31, 2002. In addition, to the
extent an intangible  asset is  identified as having an indefinite  useful life,
the Company  will be required to test the  intangible  asset for  impairment  in
accordance  with the provisions of Statement  142. Any  impairment  loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle.

         As of December  31,  2001,  the Company  had  unamortized  identifiable
intangible  assets in the  amount of  approximately  $42.4  million,  which were
subject to the  transition  provisions of Statements  141 and 142.  Amortization
expense related to identifiable intangible assets was $15.0 million for the year
ended December 31, 2001. The Company is evaluating the impact of the adoption of
these  standards  and has not yet  determined  the  effect  of  adoption  on its
financial  position  and  results of  operations.  Management  does not  believe
adoption of these standards will have a material adverse effect on the Company's
financial statements.

         In June 2001, the Financial  Accounting Standards Board issued SFAS No.
143,  "Accounting for Asset  Retirement  Obligations."  This standard applies to
legal obligations  associated with the retirement of tangible long-lived assets.
Management  does not believe  adoption of these  standards  will have a material
adverse effect on the Company's financial statements.

         In August 2001, the Financial  Accounting  Standards  Board issued SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which
addresses the  impairment or disposal of long-lived  assets and the reporting of
discontinued  operations.  The  Company  is in  the  process  of  reviewing  the
provisions  of this  statement,  which must be adopted by 2002,  to evaluate its
impact on the financial statements. Management does not believe adoption of this
standard  will  have  a  material  adverse  effect  on the  Company's  financial
statements.

SEASONALITY

         The  Company  experiences  seasonal  fluctuations  in its net sales and
profitability, with generally lower net sales and profitability in the first and
fourth quarters and increased working capital  requirements in the first half of
its fiscal year. The seasonality of net sales and profitability is primarily due
to the winter slowdown of highway construction and maintenance projects.

INFLATION

         The  impact  of  inflation  on the  Company's  operations  has not been
significant  to date.  However,  there can be no  assurance  that a high rate of
inflation  in the  future  would not have an  adverse  effect  on the  Company's
operating results.

                                       24
<PAGE>

LITIGATION

         The  company is  involved in certain  legal  actions  from time to time
related  to  the  normal  conduct  of its  business.  Management  believes  that
liabilities,  if any,  resulting from litigation will not materially  affect the
consolidated financial position or results of operations of the company.

FORWARD LOOKING STATEMENTS

         This report contains  forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.  All  statements  other  than
statements  of  historical  fact  included  in this  report are  forward-looking
statements.   Such   forward-looking   statements   are  identified  by  use  of
forward-looking  words  such as  "anticipate,"  "believe,"  "plan,"  "estimate,"
"expect,"  and  "intent"  and other  similar  expressions.  Although the Company
believes that the expectations  reflected in its forward-looking  statements are
reasonable, the Company can give no assurance that these expectations will prove
correct.  These  forward-looking  statements are subject to various assumptions,
risks and  uncertainties.  Specific  factors  could cause our actual  results to
differ materially from those contained in any forward-looking  statement.  These
factors include, but are not limited to:

          o    demand for the Company's products;

          o    acceptance of new products developed or acquired by the Company;

          o    the  Company's  ability to compete for market share with industry
               participants;

          o    the  impact  of  current   and  future   laws  and   governmental
               regulations affecting the Company and its product offerings;

          o    the  Company's  ability  to  protect  its  intellectual  property
               rights;

          o    general  economic  and  capital  markets  conditions,   including
               fluctuations in interest rates;

          o    the Company's ability to make and integrate business acquisitions
               on economically acceptable terms;

          o    the  impact  of  seasonality   and  inflation  on  the  Company's
               business;

          o    costs and other effects of legal and administrative  proceedings,
               settlements,  investigations and claims,  including environmental
               liabilities that may not covered by insurance or indemnity;

          o    adverse labor relations;

          o    the impact of raw materials and energy cost increases; and

          o    the effect on the Company's  results of operations  and financial
               condition  associated with implementing  various accounting rules
               and regulations.

         When considering the Company's  forward-looking  statements,  investors
should also keep in mind the risk factors described in "Item 1. -- Business-Risk
Factors." These risk factors could cause the Company's  actual results to differ
materially from those contained in any  forward-looking  statement.  The Company
does not  assume  any  duty to  update  its  forward-looking  statements  unless
applicable securities laws require it to do so.



                                       25
<PAGE>

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         In general, the Company's results of operations are affected by changes
in exchange rates. Subject to market conditions, the Company prices its products
in Europe and Canada in local currency.  While many of the Company's selling and
distribution costs are also denominated in these currencies,  a large portion of
the  Company's  product  costs  are U.S.  Dollar  denominated.  As a  result,  a
fluctuation  in the value of the U.S.  Dollar  relative to other  currencies can
have a positive or negative  effect on the  profitability  of the Company.  As a
result of the acquisition of Jackson Products Europe,  the Company's  operations
are also affected by changes in exchange rates relative to the British Pound and
the Euro.  A  fluctuation  in the value of these  currencies  relative  to other
currencies can have a positive or negative  impact on the  profitability  of the
Company.  These  exchange  rate  fluctuations  increased  profitability  by $0.3
million for the year ended December 31, 2001.  During 2001, the Company  entered
into a one-year contract for the purchase of natural gas to minimize the impacts
of fluctuating  natural gas prices.  Under this contract,  the Company purchases
natural gas at a fixed price and fixed  quantity.  As the Company's  natural gas
usage is greater  than the  quantities  delivered  under this  contract  and the
natural gas  delivered is used over a reasonable  period in the normal course of
business, the contract is considered a normal sales contract and SFAS 133 is not
applicable.

         The  Company's  market  risk  exposure  primarily  relates to  possible
fluctuations in interest rates. The Company's  outstanding  long-term debt as of
December 31, 2001 was as follows:

<TABLE>
<CAPTION>
                                PRINCIPAL      NOTIONAL    PAY RATE       RECEIVE     MATURITY DATE   FAIR VALUE
                                 AMOUNT         AMOUNT                      RATE
                                 ------         ------                      ----
                                                                (in thousands)
Fixed Rate Debt:
<S>                      <C>      <C>           <C>         <C>             <C>      <C>                 <C>
Senior Subordinated Notes(1)      $114,701       --          9.50%           --      April 15, 2005      $59,800

Variable Rate Debt:
Acquisition Facility                84,222       --                 (2)      --       June 30, 2004       84,222
Revolving Credit Facility            4,169       --           8.5%  (3)      --       June 30, 2004        4,169
Cost of Funds                        5,463       --          15.0%           --            (4)             5,463
</TABLE>


(1)  On April 16, 1998, the Company offered $115.0 million  aggregate  principal
     amount of 9 1/2% Senior  Subordinated Notes (the Notes) due April 15, 2005.
     The  Notes  bear  interest  at  the  rate  of  9  1/2%  per  annum  payable
     semi-annually  in  arrears on April 15 and  October  15 of each  year.  The
     payment of principal, premium, interest and liquidated damages on the Notes
     are  unconditionally  guaranteed,  jointly and severally,  by the Company's
     domestic subsidiaries.

(2)  The borrowings under the acquisition facility bear interest at the rate per
     annum  equal to the LIBOR rate (as  defined in the credit  agreement)  plus
     4.0%.  In order to protect  against  interest  rate risk,  the  Company has
     entered  into LIBOR  contracts  in the past.  As of  December  31, 2001 the
     following LIBOR contracts existed: $39,500 outstanding at 6.38% due January
     23, 2002;  $38,000 at 6.94% due March 20, 2002, $6,723 at 6.44% due January
     15,  2002  and  $7,000  at 5.94%  due  January  16,  2002.  As a result  of
     restrictions  in the  Company's  financing  agreements,  the Company is not
     currently a party to any LIBOR contracts.  Subject to the investment in the
     Company by its  stockholders  and their  affiliates  (described above under
     "Item 7 - Management  Discussion  and Analysis of Financial  Condition  and
     Results of  Operations - Liquidity and Capital  Resources")  and the use of
     the proceeds of such  investment  to repay the  acquisition  facility,  the
     fifth amendment will permit the Company to enter into LIBOR contracts.

(3)  The  borrowings  under the revolving  credit  facility bear interest at the
     rate per annum equal to the LIBOR rate (as defined in the credit agreement)
     plus 4.0%.

(4)  Cost of Funds--The borrowings under the revolving credit facility equal the
     amount of the interest  payment on the Notes.  Per the fourth  amendment to
     the  Credit  Facility,  this  amount  will  remain  outstanding  until  all
     revolving credit facility loans have been repaid. Subject to the investment
     in the Company by its stockholders  and their  affiliates  (described above
     under "Item 7 - Management  Discussion and Analysis of Financial  Condition
     and Results of Operations - Liquidity and Capital  Resources")  and the use
     of the proceeds of such investment to repay the acquisition  facility,  the
     fifth amendment will eliminate this requirement.



                                       26
<PAGE>

         The fixed rate portion of the  Company's  long-term  debt does not bear
significant  interest rate risk. The Company's variable rate debt is affected by
interest rate changes to the extent the Company's  debt bears  interest based on
LIBOR-based  formulas.  Since LIBOR rates fluctuate daily and the Company's debt
is not matched with an interest  rate cap  agreement,  the Company is exposed to
interest rate  fluctuations.  If market  interest rates had been 1% higher,  the
Company's interest expense would have been increased by $1.0 million for each of
the years ended December 31, 2001 and 2000.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The  financial  statements  and  financial  statement  schedule  of the
Company are set forth at pages F-1 through F-40  inclusive,  found at the end of
this report, and are incorporated herein by reference.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         None

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS

         The following sets forth information concerning the Company's executive
officers  and  directors  and the  positions  they held as of December 31, 2001.
Information is also provided for a former  executive  officer of the Company who
retired on December 28, 2001.

<TABLE>
<CAPTION>
NAME                          AGE       POSITION WITH COMPANY
<S>                            <C>      <C>
Executive Officers
Christopher T. Paule ...       38       Chief Executive Officer, President and Chief Operating Officer
John L. Garavaglia, III        55       Senior Vice President - Highway Safety Group
F.H. Joe Gay ...........       45       Vice President of Human Resources
Mark A. Kolmer .........       40       Vice President Finance and Secretary
Timothy A. Esposito ....       41       Vice President - Personal Safety Group

Directors
George B. Kelly ........       52       Chairman
Gary L. Rosenthal ......       52       Director
Gregory L. Elliott .....       36       Director
John W. Jordan II ......       55       Director
David W. Zalaznick .....       48       Director
A. Richard Caputo, Jr ..       36       Director, Vice President and Assistant Secretary
Jonathon F. Boucher ....       45       Director

Former Executive Officer
Lincoln M. Kennedy .....       65       Senior Vice President and Executive Officer
</TABLE>

         Set forth below is a brief  description  of the business  experience of
each  executive  officer and director of the Company  listed above.  The term of
office  for  each  director   will  last  until  the  next  annual   meeting  of
stockholders.  Messrs.  Kelly,  Rosenthal  and  Elliott  serve  as  the  current
designees of the Summit  Investors  and Messrs.  Jordan,  Zalaznick,  Caputo and
Boucher  serve as the  current  designees  of the  Jordan  Investors  under  the
Company's   Stockholders   Agreement.   Please  read  "Item  11.  --   Executive
Compensation  --  Employment/Non-Interference   Agreements"  for  terms  of  the
executive officers.

EXECUTIVE OFFICERS

     Christopher  T. Paule.  Mr.  Paule  began  serving as the  Company's  Chief
Executive  Officer in February  2001 and as the  Company's  President  and Chief
Operating  Officer in January 2000. From August 1995 to December 1999, Mr. Paule

                                       27
<PAGE>

served as the Company's Vice President,  Chief Financial  Officer and Secretary.
Mr. Paule was appointed Vice  President-Finance  to the Company in January 1994.
From 1988 to 1994,  he held  various  financial  and  operating  positions  with
Thermadyne.

         John L. Garavaglia,  III. Mr.  Garavaglia has served as the Senior Vice
President of the Highway Safety Group since January 2001. From 1996 to 2000, Mr.
Garavaglia served as the Company's Vice President Operations. From 1994 to 1996,
he served as Vice President of Manufacturing at Diagraph  Corporation.  Prior to
1994, Mr. Garavaglia served in several manufacturing positions including Product
Manager,  Plant Manager and Director of Manufacturing  with Bussmann division of
Cooper Industries.

     F.H. Joe Gay. Mr. Gay has served as the Vice  President of Human  Resources
since  January  1999.  From 1997 to 1999,  Mr. Gay served as  Director  of Human
Resources for Foamex International. Prior to 1997, Mr. Gay served as Director of
Human Resources for Crain Industries.

     Mark A. Kolmer.  Mr. Kolmer began serving as the Company's  Vice  President
Finance and Secretary in January  2000.  From March 1996 to December  1999,  Mr.
Kolmer served as Controller of  Flex-O-Lite,  Inc. and as Corporate  Controller.
From 1990 to 1995,  he served  as  Controller  of  Thermadyne's  Coyne  Cylinder
Company subsidiary and various other financial positions with Thermadyne.

     Timothy A.  Esposito.  Mr.  Esposito  began serving as the  Company's  Vice
President  of the  Personal  Safety  Group in December  2001.  Mr.  Esposito was
appointed the Company's  Vice  President of Sales and Marketing for the Personal
Safety Group in July 2000. In 1999, Mr.  Esposito was promoted to Vice President
of Sales and Marketing  for Jackson and in 1998 served as the Vice  President of
Sales.  From 1988 to 1999,  Mr.  Esposito  served in various sales and operating
positions with the Company.

DIRECTORS

     George B.  Kelly.  Mr.  Kelly has  served as  Chairman  of the Board of the
Company since February 2001. Mr. Kelly is Chairman of Summit Capital Group,  LLC
and Doane Pet Care  Enterprises,  Inc. He is also a director  of FS  Strategies,
Travis  International,  Switch  &  Data  Facilities  Company,  Inc.  and  Susser
Holdings, as well as other privately held companies.

     Gary L.  Rosenthal.  Mr.  Rosenthal has served as a Director of the Company
since  February  2001.  Mr.  Rosenthal  is  co-founder  and  President of Heaney
Rosenthal Inc., a private  investment  company founded in 1994. In addition,  he
served as Chairman of the Board and Chief Executive Officer of AXIA Incorporated
from July 1998 through  September 2000. Mr.  Rosenthal also serves as a Director
of Texas Petrochemical Holdings,  Inc., Oil States International,  Inc., Dresser
Inc. and Pioneer Companies Inc.

     Gregory L.  Elliott.  Mr.  Elliott  has served as a Director of the Company
since February  2001.  Mr. Elliott is a Partner with Summit Capital Group,  LLC,
which he joined in June 2000.  Prior to joining Summit Capital Group,  Inc., Mr.
Elliott was employed by the Sterling Group, L.P., a Houston based private equity
firm from September 1994 to June 2000.

     John W. Jordan II. Mr. Jordan has served as a Director of the Company since
August 1995.  Mr. Jordan is a managing  director of The Jordan  Company,  LLC, a
private merchant banking firm, which he co-founded in 1982. Mr. Jordan is also a
director of Jordan Industries,  Inc., Jordan  Telecommunication  Products, Inc.,
AmeriKing,  Inc., Carmike Cinemas,  Inc., Rockshox,  Inc., GFSI Holdings,  Inc.,
GFSI, Inc., Motors and Gears, Inc. and Apparel Ventures,  Inc., as well as other
privately held companies.

     David W. Zalaznick.  Mr.  Zalaznick has served as a Director of the Company
since August 1995. Mr.  Zalaznick is a managing  director of The Jordan Company,
LLC,  which he  co-founded  with Mr.  Jordan in 1982.  Mr.  Zalaznick  is also a
director of Jordan Industries,  Inc., Jordan  Telecommuication  Products,  Inc.,
Carmike Cinemas, Inc., AmeriKing,  Inc., Marisa Christina,  Inc., Great American
Cookie Company,  GFSI Holdings,  Inc.,  GFSI,  Inc.  Motors and Gears,  Inc. and
Apparel Ventures, Inc. as well as other privately held companies.

                                       28
<PAGE>

     A. Richard  Caputo,  Jr. Mr. Caputo has served as a Director of the Company
since  August  1995.  Mr.  Caputo  has been a  managing  director  of The Jordan
Company, LLC, since 1990. Mr. Caputo is also a director of AmeriKing, Inc., GFSI
Holdings, Inc. and GFSI, Inc., as well as other privately held companies.

     Jonathan F.  Boucher.  Mr.  Boucher has served as a Director of the Company
since  August  1995.  Mr.  Boucher  has been a managing  director  of The Jordan
Company,  LLC since 1983. Mr.  Boucher is also a director of Jordan  Industries,
Inc., Jordan Telecommunication Products, Inc. and Motors and Gears, Inc. as well
as other privately held companies.

FORMER EXECUTIVE OFFICER

     Lincoln M. Kennedy. Mr. Kennedy retired from the Company effective December
28, 2001. From July 2001 to his retirement,  Mr. Kennedy served as the Company's
Executive Vice  President.  Mr. Kennedy was appointed the Company's  Senior Vice
President and Chief Operating  Officer of the Personal Safety Group in May 1999.
Mr. Kennedy was appointed President of American Allsafe in 1981.

ITEM 11.   EXECUTIVE COMPENSATION

         The following  table sets forth  information  concerning  the aggregate
compensation paid and accrued to the Company's Chief Executive Officer, the next
four most highly paid  executive  officers and one  additional  individual,  who
would have been included in this table but for the fact that such individual did
not serve as an executive  officer of the Company as of December  31, 2001,  for
services  rendered  to the Company  during each of the three most recent  fiscal
years.
<TABLE>
<CAPTION>

                                                SUMMARY COMPENSATION TABLE

                                                                                      LONG-TERM COMPENSATION
                                                                                  ------------------------------
                                                                                             AWARDS
                                                                                  ------------------------------
                                                                                  RESTRICTED
                                                        ANNUAL                       STOCK          SECURITIES           ALL OTHER
                                         FISCAL      COMPENSATION                  AWARDS(S)        UNDERLYING         COMPENSATION
NAME AND POSITION                         YEAR          SALARY         BONUS          ($)             OPTIONS               (1)
-----------------                         ----          ------         -----          ---             -------               ---
<S>                  <C>                  <C>           <C>           <C>            <C>               <C>               <C>
Executive Officers
Christopher T. Paule (2)................  2001          213,462         --            --                680               368,378
Chief Executive Officer and President     2000          201,362         --            --                --                 10,286
                                          1999          207,323        80,000         --                --                 10,098

John L. Garavaglia, III (3).............  2001          155,385         --            --                585                55,607
Senior Vice President - Highway Safety    2000          140,907         --            --                --                 10,663
Group
                                          1999          135,597         --            --                --                 10,192

F.H. Joe Gay (4)........................  2001         126,625         --            --                525                49,879
Vice President of Human Resources         2000          122,105         --            --                --                    357
                                          1999           96,058         --            --                --                 61,832

 Mark A. Kolmer (5).....................  2001          122,596         --            --                565                51,000
Vice President Finance and Secretary      2000          109,134         --            --                --                  6,000
                                          1999           92,722         --            --                --                  5,500

Timothy A. Esposito (6).................  2001          123,077         --            --                560                36,000
Vice President - Personal Safety Group    2000          106,635         --            --                --                  6,000
                                          1999           95,040         --            --                --                  6,000
Former Executive Officer
Lincoln M. Kennedy (7)..................  2001          204,000         --            --                --                 36,000
Executive Vice President                  2000          205,385         --            --                --                  5,750
                                          1999          192,915         --            --                --                 56,716
</TABLE>

----------

(1)      Other  annual  compensation  consists  of  non-recurring  bonuses,  car
         allowances,  tax reimbursements for relocation compensation and defined
         contribution  payments  paid by the  Company.  The bonuses were made in
         connection  with the  transactions  contemplated  by the February  2001
         purchase agreement. All of the after tax proceeds of these bonuses were
         reinvested  by each  recipient in the Company's  common stock.  For Mr.
         Paule,  the amount  indicated  also includes a cash payment of $307,558
         made pursuant to a stock appreciation right agreement,  of which all of
         the after tax proceeds were  reinvested in the Company's  common stock.

                                       29
<PAGE>

         Please read "--Aggregated  Option/SAR Exercises in the Last Fiscal Year
         and Fiscal Year End Option/SAR Values."
(2)      Mr. Paule began serving as the  Company's  Chief  Executive  Officer in
         February 2001. Other compensation in 2001 represents a bonus related to
         the February 2001 purchase agreement and a car allowance.

(3)      Mr. Garavaglia began serving  as the  Company's Senior Vice President -
         Highway Safety  Group in  September 1996.  Other  compensation  in 2001
         represents a bonus related to the  February 2001 purchase agreement and
         a car allowance.

(4)      Mr.  Gay was began  serving as Vice  President  of Human  Resources  in
         January 1999. Other  compensation in 2001 represents a bonus related to
         the February 2001 purchase agreement and a car allowance.

(5)      Mr.  Kolmer began  serving as Vice  President  Finance and Secretary in
         January 2000. Other  compensation in 2001 represents a bonus related to
         the February 2001 purchase agreement and a car allowance.

(6)      Mr.  Esposito  began  serving as the  Company's  Vice  President of the
         Personal  Safety Group in December 2001. He served as Vice President of
         Sales and  Marketing,  Personal  Safety  Group  from July 2001  through
         December 2001. Other compensation in 2001 represents a bonus related to
         the February 2001 purchase agreement and a car allowance.

(7)      Mr.  Kennedy was  employed by the Company  from April 22, 1998  through
         December 28, 2001. Other compensation in 2001 represent a bonus related
         to the February 2001 purchase agreement and a car allowance.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

         The following table provides certain  information  regarding the number
of stock options to purchase shares of the Company's common stock granted to the
executive officers listed above during the year ended December 31, 2001.
<TABLE>
<CAPTION>

                                                                                                          POTENTIAL
                                                                                                         REALIZABLE
                                                                                                          VALUE AT
                                                                                                          ASSUMED
                                                                                                        ANNUAL RATE
                                                     PERCENTAGE                                           OF STOCK
                                  NUMBER OF           OF TOTAL                                              PRICE
                            SECURITIES UNDERLYING     OPTIONS           PER SHARE                       APPRECIATION
                                   OPTIONS           GRANTED IN        EXERCISE OR     EXPIRATION        FOR OPTION
           NAME                  GRANTED(1)         FISCAL 2001         BASE PRICE        DATE            TERM (2)
           ----                  ----------         -----------         ----------        ----
                                                                                                        ------- ------
                                                                                                          5%     10%
                                                                                                        ------- ------
<S>                                  <C>               <C>         <C>                 <C>               <C>     <C>
Christopher T. Paule                 680               18.58%      $     1,071.33      August 20, 2011   --      --
John L. Garavaglia, III              585               15.98             1,071.33      August 20, 2011   --      --
F.H. Joe Gay                         525               14.34             1,071.33      August 20, 2011   --      --
Mark A. Kolmer                       565               15.44             1,071.33      August 20, 2011   --      --
Timothy A. Esposito                  560               15.30             1,071.33      August 20, 2011   --      --
Lincoln M. Kennedy                   --                  --                --              --            --      --
</TABLE>
---------------

     (1)  All options were granted on February 20, 2001 under the Company's 2001
          Option Plan at an exercise  price of $1,071.33 per share.  All options
          vest over a five-year  period and may be exercised  only if the holder
          is an employee of the Company.

     (2)  Since the common  stock of the Company is not traded on any  exchange,
          the indicated values are not determinable.



                                       30
<PAGE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION

         The following table provides certain information regarding the exercise
of stock  options to purchase  shares of the  Company's  common stock during the
year ended December 31, 2001, by the executive officers listed above.
<TABLE>
<CAPTION>

                            NUMBER OF          NUMBER OF SECURITIES               VALUE OF UNEXERCISED
                             SHARES           UNDERLYING UNEXERCISED              IN-THE-MONEY OPTIONS
                           ACQUIRED ON              OPTIONS AT                          AT FISCAL
          NAME              EXERCISE              FISCAL YEAR END                      YEAR END(2)
                                           EXERCISABLE      UNEXERCISABLE     EXERCISABLE      UNEXERCISABLE

<S>                          <C>              <C>               <C>              <C>                <C>
Christopher T. Paule(1)       --               526               680              --                --
John L. Garavaglia, III       --               250               585              --                --
F.H. Joe Gay                  --              --                 525              --                --
Mark A. Kolmer                --              --                 565              --                --
Timothy A. Esposito           --               150               560              --                --
Lincoln M. Kennedy            --              --                --                --                --
</TABLE>
---------------

(1)  In 1998, the Company entered into a stock appreciation right agreement with
     Mr. Paule  providing for an aggregate  payment of up to 3% of the Company's
     equity value upon a sale of the Company  above a specified  threshold.  Mr.
     Paule's stock appreciation right agreement was triggered in connection with
     the February 2001 corporate  reorganization  of the Company.  In accordance
     with the  agreement,  the  Company  made a cash  payment of $307,558 to Mr.
     Paule in February 2001.

(2)  Since the common  stock of the Company is not traded on any  exchange,  the
     indicated values are not determinable.

EMPLOYMENT/NON-INTERFERENCE AGREEMENTS

Executive Officers

         Paule Employment Agreement. On February 2, 2001, Mr. Paule entered into
an amended and restated employment agreement with the Company which provides for
Mr. Paule's employment as President, Chief Executive Officer and Chief Operating
Officer of the Company.  The initial term of the employment agreement terminates
on December 31, 2003, at which time the term will be automatically  extended for
successive  one-year periods until either party gives notice of its intention to
not renew 180 days prior to the end of the then  current  term.  The  employment
agreement can also be terminated  at any time by the Company.  Mr.  Paule's base
salary  (which is  increased  annually  based on a CPI formula) was $200,000 for
1999 and 2000, and was increased to $250,000,  effective January 1, 2001, and he
may be awarded a bonus, at the sole discretion of the Board, of up to 60% of his
annual salary.  During 2001, due to the impact of the economic conditions on the
Company's financial performance, Mr. Paule voluntary reduced his base salary 20%
to $200,000  effective  March 12, 2001.  On November 4, 2001,  Mr.  Paule's base
salary was increased to $225,000. Under the employment agreement, if Mr. Paule's
employment is terminated  for reasons other than voluntary  termination,  cause,
disability  or death,  he will be paid a severance  payment of varying  amounts,
depending  on the  reason  for  termination,  up to the full  amount of his base
compensation  through the term of the agreement.  If Mr.  Paule's  employment is
terminated  voluntarily or for reasons of Cause,  no severance  payment is made.
Under the terms of the agreement,  Mr. Paule may not compete with the Company in
the same market for 24 months following the termination of his employment.

         Garavaglia Employment  Agreement.  Mr. Garavaglia has an employment and
non-interference  agreement with the Company which provides for Mr. Garavaglia's
employment as the Senior Vice President of the Highway Safety Group. The initial
term of the  employment  agreement  terminates on September 1, 2002,  subject to
automatic  renewal for an additional  one-year  period unless either party gives
notice  of its  intention  to not  renew  90 days  prior  to the end of the then
current term. The employment agreement can also be terminated at any time by the
Company.  Mr. Garavaglia's base salary was $160,000 for 2001, excluding a 90-day
period  during which he  voluntarily  agreed to a 10% pay  reduction.  He may be
awarded a bonus,  at the sole  discretion  of the  Board.  Under the  employment
agreement,  if Mr. Garavaglia's  employment is terminated for reasons other than
voluntary termination,  cause,  disability or death, he will be paid a severance
payment of varying amounts,  depending on the reason for termination,  up to the

                                       31
<PAGE>

full amount of his base compensation  through the term of the agreement.  If Mr.
Garavaglia's  employment is terminated  voluntarily  or for reasons of Cause (as
defined in the employment  agreement),  no severance  payment is made. Under the
terms of the agreement,  Mr.  Garavaglia may not compete with the Company in the
same market for 24 months following the termination of his employment.

         Gay   Employment   Agreement.   Mr.   Gay   has   an   employment   and
non-interference  agreement  with  the  Company  which  provides  for Mr.  Gay's
employment  as Vice  President  of  Human  Resources.  The  initial  term of the
employment  agreement  terminates  on  September  1, 2002,  subject to automatic
renewal for an  additional  one-year  period unless either party gives notice of
its  intention to not renew 90 days prior to the end of the then  current  term.
The employment  agreement can also be terminated at any time by the Company. Mr.
Gay's base salary was $130,000 for 2001,  excluding a 90-day period during which
he voluntarily agreed to a 10% pay reduction.  He may be awarded a bonus, at the
sole  discretion  of the Board.  Under the  employment  agreement,  if Mr. Gay's
employment is terminated  for reasons other than voluntary  termination,  cause,
disability  or death,  he will be paid a severance  payment of varying  amounts,
depending  on the  reason  for  termination,  up to the full  amount of his base
compensation  through the term of the  agreement.  If Mr.  Gay's  employment  is
terminated  voluntarily  or for reasons of Cause (as  defined in the  employment
agreement),  no severance payment is made. Under the terms of the agreement, Mr.
Gay may not compete with the Company in the same market for 24 months  following
the termination of his employment.

         Kolmer  Employment   Agreement.   Mr.  Kolmer  has  an  employment  and
non-interference  agreement  with the Company  which  provides for Mr.  Kolmer's
employment  as Vice  President  Finance.  The  initial  term  of the  employment
agreement  terminates on September 1, 2002,  subject to automatic renewal for an
additional  one-year period unless either party gives notice of its intention to
not renew 90 days  prior to the end of the then  current  term.  The  employment
agreement can also be terminated at any time by the Company.  Mr.  Kolmer's base
salary  was  $125,000  for  2001,  excluding  a 90-day  period  during  which he
voluntarily  agreed to a 10% pay  reduction.  He may be awarded a bonus,  at the
sole discretion of the Board.  Under the employment  agreement,  if Mr. Kolmer's
employment is terminated  for reasons other than voluntary  termination,  cause,
disability  or death,  he will be paid a severance  payment of varying  amounts,
depending  on the  reason  for  termination,  up to the full  amount of his base
compensation  through the term of the agreement.  If Mr. Kolmer's  employment is
terminated  voluntarily  or for reasons of Cause (as  defined in the  employment
agreement),  no severance payment is made. Under the terms of the agreement, Mr.
Kolmer  may not  compete  with the  Company  in the same  market  for 24  months
following the termination of his employment.

         Esposito  Employment  Agreement.  Mr.  Esposito has an  employment  and
non-interference  agreement with the Company which  provides for Mr.  Esposito's
employment as the Vice President of Sales and Marketing,  Personal Safety Group.
In December  2001,  Mr.  Esposito was promoted to Vice President of the Personal
Safety Group.  The initial term of the employment  agreement  terminates on July
31, 2003, subject to automatic renewal for an additional  one-year period unless
either party gives notice of its intention to not renew 90 days prior to the end
of the then current term. The employment agreement can also be terminated at any
time by the Company. Mr. Esposito's base salary was $130,000 for 2001, excluding
a 90-day period during which he voluntarily  agreed to a 10% pay  reduction.  He
may be  awarded  a  bonus,  at the  sole  discretion  of the  Board.  Under  the
employment  agreement,  if Mr.  Esposito's  employment is terminated for reasons
other than voluntary termination,  cause, disability or death, he will be paid a
severance  payment of varying amounts,  depending on the reason for termination,
up to  the  full  amount  of his  base  compensation  through  the  term  of the
agreement. If Mr. Esposito's employment is terminated voluntarily or for reasons
of Cause (as defined in the employment agreement), no severance payment is made.
Under the terms of the agreement,  Mr. Esposito may not compete with the Company
in the same market for 24 months following the termination of his employment.

Former Executive Officer

     Kennedy   Employment   Agreement.   Mr.   Kennedy  had  an  employment  and
non-interference  agreement  with the Company which  provided for Mr.  Kennedy's
employment as President of Allsafe.  In 1999, Mr. Kennedy was promoted to Senior
Vice  President  and Chief  Operating  Officer of the Personal  Safety Group and
Executive  Vice  President  of the  Company  in 2001.  The  initial  term of the
employment  agreement  terminated  on May 6,  2001,  at which  time the term was
automatically  extended  for a one-year  period.  Mr.  Kennedy  retired from the
Company effective  December 28, 2001. Mr. Kennedy's base salary was $208,000 for
2001.

                                       32
<PAGE>

INCENTIVE COMPENSATION PLANS

         The  Company  has  adopted  incentive  compensation  plans  for its key
management  employees,  which provide for annual cash bonuses payable if certain
EBITDA,  cash flow and individual  performance targets are met. No payments were
made to the Company's  executive  officers  listed above during 2001 pursuant to
these plans.

STOCK OPTION PLANS

         In connection with the Company's acquisition of Jackson Products,  Inc.
(its predecessor  entity),  the Company adopted a nonqualified stock option plan
(the 1995 Option Plan) for its officers and key employees. Under the 1995 Option
Plan,  eligible  participants may receive incentive and nonqualified  options to
purchase  shares of the Company's  Class C common  stock.  Under the 1995 Option
Plan,  options to purchase up to 3,198.04 shares of the Company's Class C common
stock may be granted to eligible participants. Generally, these shares vest over
a five-year period and may be exercised only if the holder is an employee of the
Company.  As of March 15, 2002, 965.79 shares of the Class C Common Stock of the
Company have vested and are subject to exercise  under the 1995 Option Plan.  Up
to 110.0  shares  will vest in June 2002 at which  time all  outstanding  shares
under  the  1995  Option  Plan  will be  fully  vested.  All  options  currently
outstanding under the 1995 Option Plan have an exercise price of $100 per share.
All options  expire on the earlier of (i) 10 years from the date of grant;  (ii)
90 days  from  the  employee's  termination  date;  or (iii)  one year  from the
employee's termination due to death or disability.

         In February 2001, the Company adopted a new stock option plan (the 2001
Option  Plan) for its officers  and key  employees.  Under the 2001 Option Plan,
eligible participants may receive incentive and nonqualified options to purchase
shares  of the  Company's  Class C common  stock.  Under the 2001  Option  Plan,
options to purchase up to 5,831.35 shares of the Company's C common stock may be
granted to eligible participants.  Generally, these shares vest over a five-year
period and may be exercised only if the holder is an employee of the Company. As
of March 15, 2002,  options have been granted for 3,660.00 shares of the Class C
common stock of the Company  under the 2001 Option Plan.  Up to 1,464.00  shares
will vest in 2003 and up to 732.00 shares will vest in each year ended  February
1, 2004, 2005, and 2006. All options currently outstanding under the 2001 Option
Plan have an exercise  price of $1,071.33 per share.  All options  expire on the
earlier of (i) 10 years and six months from the date of grant; (ii) 90 days from
the  employee's  termination  date;  or  (iii)  one  year  from  the  employee's
termination due to death or disability.

ITEM 12.   SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The table below sets forth certain  information,  as of March 15, 2002,
regarding  beneficial  ownership of the voting  common stock of the Company held
by: (i) each  director of the Company,  (ii) each  current and former  executive
officer of the Company named in the table above captioned "Management--Executive
Compensation--Summary  Compensation Table", (iii) all directors and each current
and  former  executive  officer of the  Company as a group and (iv) each  person
known by the  Company  to own  beneficially  more than 5% of its  voting  common
stock.  The  Company  believes  that each  individual  or entity  named has sole
investment  and voting  power  with  respect  to shares of voting  common  stock
indicated as beneficially owned by them, except as otherwise noted.

                                                            AMOUNT OF BENEFICIAL
                                                                 OWNERSHIP(1)
                                                          ----------------------
                                                          NUMBER OF   PERCENTAGE
                                                            SHARES      OWNED
DIRECTORS AND EXECUTIVE OFFICERS:
George B. Kelly (2).........................................17,888       38.9 %
John W. Jordan II (3)(4).................................... 2,414        5.2
David W. Zalaznick(4)....................................... 2,414        5.2
Jonathan F. Boucher(4)...................................... 2,069        4.5
Christopher T. Paule (5).................................... 2,067        4.4
A. Richard Caputo, Jr. (4)..................................   757        1.6
John L. Garavaglia (6)......................................   691        1.5
Mark A. Kolmer (7)..........................................   321          *
Timothy A. Esposito (8).....................................   235          *



                                       33
<PAGE>
                                                            AMOUNT OF BENEFICIAL
                                                                 OWNERSHIP(1)
                                                          ----------------------
                                                          NUMBER OF   PERCENTAGE
                                                            SHARES      OWNED

F.H. Joe Gay (7)............................................   116          *
Gary L. Rosenthal (9).......................................   111          *
Gregory L. Elliott (10).....................................    --          *
Lincoln M. Kennedy (11).....................................    --          *
All directors and executive officers as a group (13 persons)
(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)............................
                                                            29,083       61.9 %

OTHER PRINCIPAL STOCKHOLDERS:
Summit Capital Group, LLC (11)..............................17,888       38.9 %
Massachusetts Mutual Life Insurance Company (12)............ 6,863       14.9
JZ Equity Partners PLC (13)................................. 6,438       13.9
Northwestern Mutual Life Insurance Company (14)............. 4,290        9.3
Leucadia Investors, Inc. (15)............................... 3,785        8.2
THK Private Equities (16)................................... 2,865        6.2
--------------

*........Indicates  beneficial  ownership  of less  than 1% of  shares of common
stock.

(1)  Calculated  pursuant to Rule 13d-3(d)  under the Exchange  Act.  Under Rule
     13d-3(d),  shares not outstanding  which are subject to options,  warrants,
     rights or  conversion  privileges  exercisable  within  60 days are  deemed
     outstanding  for the  purpose of  calculating  the  number  and  percentage
     beneficially  owned by such  person,  but not  deemed  outstanding  for the
     purpose of  calculating  the  percentage  beneficially  owned by each other
     person  listed.  As of March 15, 2002,  there were 46,022  shares of voting
     common stock of the Company issued and outstanding.

(2)  This  figure  includes  13,825  shares  (30.0%)  owned of  record by Summit
     Capital II,  L.P.,  1,198 shares  (2.6%) owned of record by Summit  Capital
     Parallel, L.P. (Summit Parallel) and 2,865 shares (6.2%) owned of record by
     Summit  Capital   Co-Investment,   II-A.  L.P.  (Summit  Co-Investment  and
     collectively with Summit Parallel,  the Summit Entities),  for which Summit
     Capital  Group,  LLC, as (i) the general  partner of Summit Capital GP, II,
     L.P. which is the general partner of Summit Capital Group II, L.P. and (ii)
     the general partner of each of the Summit  Entities,  holds sole investment
     and voting  power.  Mr.  Kelly,  as a Managing  Director of Summit  Capital
     Group,  LLC, may be deemed to be the beneficial  owner of such shares.  Mr.
     Kelly disclaims beneficial  ownership of such shares,  except to the extent
     of his pecuniary interest therein. Mr. Kelly's address is 600 Travis, Suite
     6110, Houston, Texas 77002.

(3)  All shares are held by the John W. Jordan II Revocable  Trust, of which Mr.
     Jordan is the trustee.

(4)  Messrs.  Jordan,  Zalaznick,  Caputo and  Boucher are  affiliated  with The
     Jordan  Company,  whose  address is 767 Fifth  Avenue,  New York,  New York
     10153.

(5)  Includes  immediately  exercisable options to purchase 526 shares of common
     stock.  Mr. Paule's address is 2997 Clarkson Road,  Chesterfield,  Missouri
     63017.

(6)  Includes  immediately  exercisable options to purchase 250 shares of common
     stock.  Mr.  Garavaglia's  address  is 2997  Clarkson  Road,  Chesterfield,
     Missouri 63017.

(7)  The  address of Messrs.  Kolmer,  Gay and  Kennedy is 2997  Clarkson  Road,
     Chesterfield, Missouri 63017.

(8)  Includes  immediately  exercisable options to purchase 150 shares of common
     stock. Mr. Esposito's address is 2997 Clarkson Road, Chesterfield, Missouri
     63017.

                                       34
<PAGE>

(9)  Includes  42 shares  held of record held by The  Rosenthal  1989 Trust,  of
     which Mr.  Rosenthal  serves as trustees.  Mr.  Rosenthal's  address is c/o
     Summit Capital Group, LLC, 600 Travis, Suite 6110, Houston, Texas 77002.

(10) Mr. Elliott's address is 600 Travis, Suite 6110, Houston, Texas 77002.

(11) This  figure  includes  13,825  shares  (30.0%)  owned of  record by Summit
     Capital II, L.P.,  1,198 shares  (2.6%) owned of record by Summit  Parallel
     and 2,865 shares (6.2%) owned of record by Summit1Co-Investment,  for which
     Summit Capital Group,  LLC, as (i) the general partner of Summit Capital GP
     II, L.P.  which is the general  partner of Summit Capital II, L.P. and (ii)
     the general partner of each of the Summit  Entities,  holds sole investment
     and voting power.  The address of Summit Capital Group,  LLC is 600 Travis,
     Suite 6110, Houston, Texas 77002.

(12) Includes 225 shares of common stock and immediately exercisable warrants to
     purchase  1036 shares of common stock held by  MassMutual  Corporate  Value
     Partners  Limited,  113 shares of common stock and immediately  exercisable
     warrants  to  purchase  520  shares  of  common  stock  held by  MassMutual
     Participation  Investors  and 226  shares of common  stock and  immediately
     exercisable  warrants  to  purchase  1042  shares of common  stock  held by
     MassMutual   Corporate   Investors,   each  of  which  are   affiliates  of
     Massachusetts Mutual Life Insurance Company, and 660 shares of common stock
     and  immediately  exercisable  warrants to purchase  3,040 shares of common
     stock held by Massachusetts  Mutual Life Insurance Company.  The address of
     Massachusetts   Mutual  Life  Insurance   Company  is  1295  State  Street,
     Springfield, Massachusetts 01111.

(13) Includes 1,152 shares of common stock and immediately  exercisable warrants
     to purchase  5,286  shares of common  stock.  JZ Equity  Partners  PLC is a
     publicly traded U.K. investment trust advised by an affiliate of The Jordan
     Company. See "Certain  Relationships and Related Transactions." The address
     of JZ Equity  Partners PLC is c/o  Jordan/Zalaznick  Capital  Company,  767
     Fifth Avenue, New York, New York 10153.

(14) Includes 766 shares of common stock and immediately exercisable warrants to
     purchase 3,524 shares of common stock.  The address of Northwestern  Mutual
     Life Insurance Company is 720 East Wisconsin Avenue, 18th Floor, Milwaukee,
     Wisconsin 53203.

(15) The address of Leucadia Investors, Inc. is 315 Park Avenue South, New York,
     New York 10010.

(16) The address of THK Private  Equities is 1730 So. El Camino Real, Suite 400,
     San Mateo, California 94402.

STOCKHOLDERS AGREEMENT

         In  February  2001,  the  Company  and  its   stockholders   adopted  a
stockholders  agreement  (Stockholders   Agreement)  which  replaced  all  other
stockholders agreements among the Company and its stockholders. The Stockholders
Agreement sets forth for certain  rights and  obligations of the Company and its
stockholders  with respect to, among other  things,  the election of  directors,
restrictions on transfer,  co-sale rights, right to join sales, forced sales and
registration rights.  Pursuant to the Stockholders  Agreement,  the stockholders
have agreed to vote their  shares for the  election of four members of the board
of  directors  designated  by  affiliates  of The Jordan  Company  and JZ Equity
Partners PLC (the Jordan  Investors)  and three  directors  designated by Summit
Capital II, LP, Summit Capital  Parallel,  LP and Summit  Capital  Co-Investment
II-A, LP (the Summit Investors).

         The stockholders may only transfer shares of Common Stock in accordance
with the Stockholders Agreement. The Company and the current stockholders have a
right of first  offer to  purchase  all or any  portion  of any shares of Common
Stock to be transferred by any current  stockholder,  subject to certain limited
exceptions,  on the same  terms  put  forth  for such  transfer  by the  selling
stockholder.  The Stockholders  Agreement provides for preferences on the rights
of  first  offer  such  that  the  Management   Investors  (as  defined  in  the
Stockholders  Agreement)  have the first  right to  purchase  shares sold by any
other Management Investor, the Jordan Investors have the first right to purchase
shares sold by any other  Jordan  Investors  and the Summit  Investors  have the

                                       35
<PAGE>

first  right  to  purchase  shares  sold  by any  other  Summit  Investors.  The
stockholders  also have a right of first refusal to purchase any new  securities
issued by the Company.

         The Stockholders  Agreement provides that on or after January 31, 2005,
either a majority of the Jordan Investors or the Summit Investors may initiate a
sale of the Company.  Upon the  initiation  of a sale,  a nationally  recognized
investment bank will be selected to consummate the sale. Designees of a majority
of the board of directors  appointed by the Jordan  Investors  and a majority of
the board of directors  appointed by the Summit  investors  shall  negotiate the
terms of any such sale.

         Pursuant to the Stockholders Agreement, the Institutional Investors (as
defined  in the New  Stockholders  Agreement)  and  Summit  Investors  have been
granted  demand and  piggyback  registration  rights by the  Company.  All other
Current  Holders (as defined in the  Stockholders  Agreement)  have been granted
piggyback  registration rights. The Company is required to bear all registration
expenses in  connection  with each  demand and  piggyback  registration  and has
agreed to  indemnify  the holders of demand and  piggyback  registration  rights
against, and provide contribution with respect to, certain liabilities under the
Securities Act in connection with the demand and piggyback registrations.

         In connection  with the fifth  amendment to the Credit Facility and the
sale of $13.0  million of units  consisting  of secured  subordinated  notes and
warrants to certain of the Company's Stockholders and their affiliates,  certain
provisions of the Stockholders  Agreement will be amended.  These revisions will
ensure that the procedures  implemented for the sale of units do not violate the
right of first  refusal  provisions in the  Stockholders  Agreement and that the
notes,  warrants and common stock issuable upon exercise of the warrants will be
subject to the Stockholders Agreement.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS

         TJC  Management  Agreement.  In  connection  with  its  acquisition  by
management  investors  and the Jordan  Investors  in August  1995,  the  Company
entered into an agreement (the TJC Management Agreement) with The Jordan Company
Management Corporation (TJMC), an affiliate of The Jordan Company. Under the TJC
Management Agreement, the Company retains TJMC to render services to the Company
relating to its  financial  and business  affairs,  its  relationships  with its
lenders and stockholders,  and the operation and expansion of its business.  The
TJC Management  Agreement will expire in 2005, but is automatically  renewed for
successive  one-year  terms,  unless  either party  provides  written  notice of
termination 60 days prior to the scheduled  renewal date. In connection with the
Company's  offering in 1998 of 9 1/2% Senior  Subordinated  Notes due 2005,  the
Company  and  TJMC  agreed  to  amend  the  TJC  Management  Agreement.  The TJC
Management Agreement, as amended,  provides for an annual consulting fee payable
on a quarterly  basis equal to at least  $600,000  but in no event  greater than
2.5% of the Company's  EBITDA (as defined in the TJC Management  Agreement).  In
addition,  the TJC Management  Agreement  provides for payment to TJMC of (i) an
investment  banking and  sponsorship  fee of up to 2% of the  purchase  price of
certain  acquisitions  or sales  involving  the  Company  and  (ii) a  financial
consulting fee of up to 1% of any debt,  equity or other  financing  arranged by
the Company with the  assistance  of TJMC.  Such fees are subject to approval by
the Company's board of directors.

     In February 2001,  TJMC entered into an assignment of proceeds and security
agreement  which  provides that 50% of all payments due under the TJC Management
Agreement  will be paid to Summit  Capital Group LLC  (Summit).  Pursuant to the
terms  of the  Credit  Facility,  payment  of  fees to TJMC  and  Summit  is not
permitted in the event of a payment or financial  covenant  default with respect
to the Company's  outstanding 9 1/2% Senior  Subordinated Notes due 2005. Due to
operating  losses,  generated by decreased  sales volume and  historically  high
natural gas costs incurred in the previous four quarters, the Company was not in
compliance  with  certain  ratios  under the Credit  Facility as of December 31,
2001.  These amounts are included in other expense and will be paid when legally
permitted under the Credit  Facility.  As such, the Company expensed but did not
pay $938,000 in fees related to the TJC Management Agreement during fiscal 2001.
For the years ended December 31, 2000,  and 1999, the Company  expensed and paid
$984,000  and  $880,000,  respectively,  in fees  related to the TJC  Management
Agreement.

                                       36
<PAGE>

         Directors Fees. In February 2002, the Company paid Gary Rosenthal,  one
of its directors,  $75,000 as directors fees in 2001. No other director received
compensation from the Company for services rendered during 2001.

         Credit  Facility.  As  described  above  under  "Item  7  -  Management
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Liquidity and Capital  Resources,"  certain  stockholders  and their  affiliates
(including  affiliates of Summit  Capital II, L.P. and The Jordan  Company) have
committed to invest $13.0  million in the Company in  connection  with the fifth
amendment to the Credit  Facility.  SCG Management,  L.P. and The Jordan Company
Management  Corporation,  affiliates  of Summit  Capital II, L.P. and The Jordan
Company,  will  receive an  aggregate  fee of $375,000 in  connection  with this
investment.   The  Company  expects  to  receive  a  fairness  opinion  from  an
independent advisor in connection with this investment.

         The Company  believes  that the  transactions  referred to above are no
less favorable than  transactions  which would have been obtained from unrelated
third parties.

INDEBTEDNESS OF MANAGEMENT - EXECUTIVE OFFICERS

      In 1995,  the Company  made loans to certain  employees to be used for the
purchase of the  Company's  common  stock.  As of January 31, 2001,  stockholder
loans to executive officers in the aggregate amount of $43,000 were outstanding.
The following table indicates information relating to this indebtedness for each
executive officer listed below.

                           Amount Outstanding
                           (including accrued
                            interest) as of
              Name        January 31, 2001(1)   Maturity Date    Interest Rate
              ----        ----------------      -------------    -------------
Christopher T. Paule           $   37,054       March 31, 2006         7%
John L. Garavaglia, III           --                  --               7%
Timothy A. Esposito               --                  --               7%
Mark A. Kolmer                      8,469       March 31, 2006         7%
F.H. Joe Gay                      --                  --               7%

      In February 2001, all outstanding  loans to the executive  officers listed
above  were  repaid  except  for the loans to  Messrs.  Paule and  Kolmer in the
principal  amounts of $35,000 and $8,000,  respectively.  In February  2001, the
Company made  additional  loans to certain  executive  officers in the aggregate
amount of $438,250.  The following table indicates  information relating to this
indebtedness for each executive officer listed below.

                           Amount Outstanding
                           (including accrued
                            interest) as of
              Name        December 31, 2001(1)  Maturity Date    Interest Rate
              ----        -----------------     -------------    -------------
Christopher T. Paule            $  168,356      March 31, 2006         7%
John L. Garavaglia, III            111,706      March 31, 2006         7%
Timothy A. Esposito                 53,193      March 31, 2006         7%
Mark A. Kolmer                      79,790      March 31, 2006         7%
F.H. Joe Gay                        53,193      March 31, 2006         7%
--------------
(1)      The  amount  indicated  combined  with  the  amounts  indicated  in the
         sentence  preceding this table represents the largest  aggregate amount
         of indebtedness outstanding during the year ended December 31, 2001 for
         each executive officer listed.

DIRECTOR'S INDEMNIFICATION

         The Company  has  entered  into  indemnification  agreements  with each
member of its board of  directors  whereby the  Company  has agreed,  subject to
certain   exceptions,   to  indemnify  and  hold  harmless  each  director  from
liabilities  incurred as a result of such  person's  status as a director of the
Company.

                                       37
<PAGE>

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 10-K

         (1)      Financial Statements

         Reference  is made to the Index to  Consolidated  Financial  Statements
appearing in Item 8, which is incorporated herein by reference.

         (2)      Financial Statements Schedule

         All schedules for which provision is made in the applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are not applicable and therefore have been omitted, or the
information  has been included in the  consolidated  financial  statements or is
considered immaterial.

         (3)      Exhibits

         A list of the exhibits  included as part of this Form 10-K is set forth
below.

<TABLE>
<CAPTION>
  Exhibit
  Number                                           Description                                           Reference
  ------                                           -----------                                           ---------
<C>          <C>                                                                                         <C>
1.1          Purchase Agreement, dated as of April 16, 1998, by and among Jackson Products, Inc.            (a)
             (the Company), Jefferies & Company, Inc. and Goldman, Sachs & Co.

2.1          Stock Purchase Agreement, dated as of March 30, 1998, by and among Jackson Acquisition,        (a)
             Inc., NCH Corporation, American Allsafe Company and Silencio/Safety Direct, Inc.++
2.2          Stock Purchase Agreement, dated as of March 31, 1998, by and among Crystaloid                  (a)
             Technologies, Inc., the Management Sellers party thereto, Dahl Partners Incorporated
             and Crystaloid Electronics Company++
2.3(a)       Stock Purchase Agreement, dated as of June 5, 1998 by and among American Allsafe               (b)
             Company, the sellers party thereto and Kedman Company++
2.3(b)       First Amendment to Stock Purchase Agreement, dated as of June 18, 1998 by and among            (b)
             American Allsafe Company, the sellers party thereto and Kedman Company
2.3(c)       Second Amendment to Stock Purchase Agreement, dated as of July 22, 1998 by and among           (b)
             American Allsafe Company, the sellers party thereto and Kedman Company
2.3(d)       Third Amendment to Stock Purchase Agreement, dated as of July 22, 1998 by and among            (b)
             American Allsafe Company, the sellers party thereto and Kedman Company
2.4          Real Property Purchase Agreement, dated as of June 12, 1998 by and among American              (b)
             Allsafe Company and certain stockholders of Kedman Company
2.5(a)       Asset Purchase Agreement, dated as of April 20, 1999 by and among TMT-Pathway, L.L.C.          (c)
             and Morton International, Inc.++
2.5(b)       First Amendment to Asset Purchase Agreement, dated as of May 17, 1999 by and among             (c)
             TMT-Pathway, L.L.C. and Morton International, Inc.
2.6(a)       Stock Purchase Agreement dated as of December 29, 2000 by and among Jackson Products,          (f)
             Inc. SCG Acquisition LLC and the selling stockholders signatory thereto++
2.6(b)       First Amendment to Stock Purchase Agreement, dated as of February 1, 2001, by and among        (*)
             the Company and the selling stockholders signatory thereto
3.1          Third Amended and Restated Certificate of Incorporation of the Company                         (g)
3.2          Amended and Restated Bylaws of the Company                                                     (g)
4.1          Indenture, dated as of April 22, 1998, between the Company and State Street Bank and           (a)
             Trust Company, as Trustee
4.2          Supplemental Indenture, dated as of April 24, 1998, between the Company and State              (a)
             Street Bank and Trust Company, as Trustee
4.3          Form of Global Note                                                                            (a)
4.4          Stockholders Agreement, dated as of February 2, 2001, by and among the Company and its         (g)
             stockholders
4.5(a)       Jackson Products, Inc. 1995 Management Stock Option Plan, dated as of August 16, 1995+         (a)

                                       38
<PAGE>

4.5(b)       First Amendment to 1995 management Stock Option Plan, dated as of June 1, 1997+                (a)
4.5(c)       Form of Stock Option Agreement+                                                                (a)
4.6          Jordan Investors Subscription Agreement, dated as of August 16, 1995, by and among the         (a)
             Company and certain stockholders named therein
4.7(a)       Jackson Products, Inc. 2001 Non-Qualified Stock Option Plan+                                   (g)
4.7(b)       Form of 2001 Non-Qualified Stock Option Agreement+                                             (g)
4.8          Advisor Subscription Agreement, dated as of August 16, 1995, between the Company and           (a)
             Safety Partners, L.P.
4.9          Amended and Restated Management Subscription Agreement, dated as of February 2, 2001,          (g)
             by and among the Company and the stockholders party thereto+
4.10         Form of Non-Recourse Promissory Note between the Company and certain of its stockholders       (a)
4.11         Form of Stock Pledge Agreement between the Company and certain of its stockholders             (a)
4.12(a)      Securities Purchase Agreement, dated as of August 16, 1995, by and among the Company           (a)
             and certain stockholders named therein
4.12(b)      First Amendment to Securities Purchase Agreement, dated as of July 1, 1996, by and             (a)
             among the Company and certain stockholders named therein
4.13         Form of Warrant                                                                                (a)
10.1(a)      Credit Agreement, dated as of April 22, 1998, by and among the Company, BankBoston,            (a)
             N.A., as Agent, Mercantile Bank National Association, as Co-agent, the other lenders
             party thereto, and BancBoston Securities, Inc., as Syndication Agent and Arranger
10.1(b)      Amendment No. 1 to Credit Agreement, dated as of June 19, 1998, by and among the               (d)
             Company, BankBoston, N.A., as Agent and the other lenders party thereto
10.1(c)      Amendment No. 2 to Credit Agreement, dated as of May 17, 1999, by and among the                (e)
             Company, BankBoston, N.A., as Agent and the other lenders party thereto
10.1(d)      Amendment No. 3 to Credit Agreement, dated as of July 1, 2001, by and among the                (h)
             Company, BankBoston, N.A., as Agent and the other lenders party thereto.
10.1(e)      Amendment No. 4 to Credit Agreement, dated as of October 1, 2001, by and among the             (i)
             Company, Fleet National Bank, as Agent, and the other lenders party thereto
10.1(f)      Amendment No. 5 to Credit Agreement, dated as of March 29, 2002, by and among the               *
             Company, Fleet National Bank, as agent, and the other lenders party thereto
10.2         Revolving Note in the aggregate principal amount of $19,500,000                                (a)
10.3         Revolving Note in the aggregate principal amount of $10,500,000                                (a)
10.4         Acquisition Note in the aggregate principal amount of $61,750, 000                             (a)
10.5         Acquisition Note in the aggregate principal amount of $33,250,000                              (a)
10.6         Assignment and Agency Account Agreement, dated as of October 31, 2001, by and among the        (i)
             Company, certain of its subsidiaries and Fleet National Bank, as Agent under the Credit
             Agreement, as amended
10.7(a)      Guaranty, dated as of April 22, 1998, by and among Flex-O-Lite, Inc., OSD Envizion,            (a)
             Inc., Crystaloid Technologies, Inc., Jackson Acquisition, Inc., American Allsafe
             Company, Silencio/Safety Direct, Inc. and BankBoston, N.A., as Agent
10.7(b)      Guaranty, dated as of May 17, 1999,  by and between TMT-Pathway, L.L.C. and BankBoston,        (e)
             N.A., as Agent
10.8(a)      Stock Pledge Agreement, dated as of April 22, 1998, by and between the Company and             (a)
             BankBoston, N.A., as Agent
10.8(b)      Pledge Agreement, dated as of May 17, 1999, by and between the Company and BankBoston,         (e)
             N.A., as Agent
10.9         Stock Pledge Agreement (Subsidiaries), dated as of April 22, 1998, by and between              (a)
             Flex-O-Lite, Inc. and BankBoston, N.A., as Agent
10.10        Stock Pledge Agreement (Subsidiaries), dated as of April 22, 1998, by and between              (a)
             Jackson Acquisition, Inc. and BankBoston, N.A., as Agent
10.11        Security Agreement, dated as of April 22, 1998, by and between the Company and                 (a)
             BankBoston, N.A., as Agent

                                       39
<PAGE>

10.12(a)     Security Agreement (Subsidiaries), dated as of April 22, 1998 by and among Flex-O-Lite,        (a)
             Inc., OSD Envizion, Inc., Crystaloid Technologies, Inc., Jackson Acquisition, Inc.,
             American Allsafe Company, Silencio/Safety Direct, Inc. and BankBoston, N.A., as Agent
10.12(b)     Security Agreement (Subsidiaries), dated as of May 17, 1999, by and between                    (e)
             TMT-Pathway, L.L.C. and BankBoston, N.A., as Agent
10.13        Patent Collateral Assignment and Security Agreement, dated as of April 22, 1998, by and        (a)
             between the Company and BankBoston, N.A., as Agent
10.14        Patent Collateral Assignment and Security Agreement, dated as of April 22, 1998, by and        (a)
             between Flex-O-Lite, Inc. and BankBoston, N.A., as Agent
10.15        Patent Collateral Assignment and Security Agreement, dated as of April 22, 1998, by and        (a)
             between OSD Envizion, Inc. and BankBoston, N.A., as Agent
10.16        Patent Collateral Assignment and Security Agreement, dated as of April 22, 1998, by and        (a)
             between American Allsafe Company and BankBoston, N.A., as Agent
10.17        Patent Collateral Assignment and Security Agreement, dated as of April 22, 1998, by and        (a)
             between Silencio/Safety Direct, Inc. and BankBoston, N.A., as Agent
10.18        Patent Collateral Assignment and Security Agreement, dated as of April 22, 1998, by and        (a)
             between Crystaloid Technologies, Inc. and BankBoston, N.A., as Agent
10.19        Trademark Collateral Security and Pledge Agreement, dated as of April 22, 1998, by and         (a)
             between the Company and BankBoston, N.A., as Agent
10.20        Trademark Collateral Security and Pledge Agreement, dated as of April 22, 1998, by and         (a)
             between Flex-O-Lite, Inc. and BankBoston, N.A., as Agent
10.21        Trademark Collateral Security and Pledge Agreement, dated as of April 22, 1998, by and         (a)
             between OSD Envizion, Inc. and BankBoston, N.A., as Agent
10.22        Trademark Collateral Security and Pledge Agreement, dated as of April 22, 1998, by and         (a)
             between American Allsafe Company and BankBoston, N.A., as Agent
10.23        Trademark Collateral Security and Pledge Agreement, dated as of April 22, 1998, by and         (a)
             between Silencio/Safety Direct, Inc. and BankBoston, N.A., as Agent
10.24(a)     Trademark Collateral Security and Pledge Agreement, dated as of April 22, 1998, by and         (a)
             between Crystaloid Technologies, Inc. and BankBoston, N.A., as Agent
10.24(b)     Trademark Collateral Security and Pledge Agreement, dated as of May 17, 1999, by and           (e)
             between TMT-Pathway, L.L.C. and BankBoston, N.A., as Agent
10.25        Form of Indemnification Agreement between the Company and its directors+                       (a)
10.26        Second Amended and Restated TJC Management Consulting Agreement, dated as of April 22,         (e)
             1998, by and between the Company and TJC Management Corporation
10.27        Assignment of Proceeds and Security Agreement, dated as of February 2, 2001, between           (g)
             TJC Management Corporation and Summit Capital Group LLC
10.28        Amended and Restated Employment Agreement, dated as of February 2, 2001, between the           (g)
             Company and Christopher T. Paule+
10.29(a)     Stock Appreciation Rights Agreement, dated as of April 22, 1998, between the Company           (a)
             and Christopher T. Paule+
10.29(b)     Stock Appreciation Rights Termination Agreement, dated as of February 2, 2001, between         (*)
             the Company and Christopher T. Paule+
10.30        Employment and Non-Interference Agreement, dated as of May 6, 1998, by and between             (a)
             American Allsafe Company and Lincoln M. Kennedy+
10.31        Employment and Non-Interference Agreement, dated as of May 6, 1998 by and between the          (*)
             Company and Lincoln M. Kennedy+
10.32        Employment and Non-Interference Agreement, dated as of September 1, 2000 by and between        (g)
             the Company and F. H. Joe Gay+
10.33        Employment and Non-Interference Agreement, dated as of September 1, 2000 by and between        (g)
             the Company and Mark A. Kolmer+
10.34        Employment and Non-Interference Agreement, dated as of September 1, 2000 by and between        (g)
             the Company and John L. Garavaglia, III+
10.35        Amended and Restated Intercompany Management Consulting Agreement, dated as of October         (e)
             21, 1996, by and among the Company and its subsidiaries


                                       40
<PAGE>

21.1         List of Subsidiaries of the Company                                                             *
25.1         Statement on Form T-1 of eligibility of the Trustee under the Trust Indenture Act              (a)
</TABLE>
         ---------------

*        Filed herewith.

+        Indicates management contract or compensation plan or arrangement.

++       The  schedules  and  exhibits  to this  agreement  have not been  filed
         pursuant to Item  601(b)(2)  of  Regulation  S-K.  Such  schedules  and
         exhibits will be filed supplementary upon the request of the Securities
         and Exchange Commission.

(a)      Incorporated by reference to the exhibits to the Registration Statement
         on Form S-4 of the  Company  filed  with the  Securities  and  Exchange
         Commission  on September  14, 1998 and all  amendments  or  supplements
         thereto.

(b)      Incorporated by reference to the exhibits to the Current Report on Form
         8-K of the Company filed with the Securities and Exchange Commission on
         August 6, 1998.

(c)      Incorporated by reference to the exhibits to the Current Report on Form
         8-K of the Company filed with the Securities and Exchange Commission on
         May 21, 1999.

(d)      Incorporated  by reference to the exhibits to the Annual Report on Form
         10-K of the Company filed with the Securities  and Exchange  Commission
         on March 26, 1999.

(e)      Incorporated  by reference to the exhibits to the Annual Report on Form
         10-K of the Company filed with the Securities  and Exchange  Commission
         on March 16, 2000.

(f)      Incorporated by reference to the exhibits to the Current Report on Form
         8-K of the Company filed with the Securities and Exchange Commission on
         January 16, 2001.

(g)      Incorporated  by reference to the exhibits to the Annual Report on Form
         10-K of the Company filed with the Securities  and Exchange  Commission
         on April 2, 2001.

(h)      Incorporated  by reference to the exhibits to the  Quarterly  Report on
         Form  10-Q of the  Company  filed  with  the  Securities  and  Exchange
         Commission on August 14, 2001.

(i)      Incorporated  by reference to the exhibits to the  Quarterly  Report on
         Form  10-Q of the  Company  filed  with  the  Securities  and  Exchange
         Commission on November 14 , 2001.


                                       41
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereto duly authorized.

                                      JACKSON PRODUCTS, INC.



                                      /s/ Christopher T. Paule
                                      -----------------------------
                                      Christopher T. Paule
                                      Chief Executive Officer, President and
                                      Chief Operating Officer

                                      Date:    April 1, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

    SIGNATURE                           TITLE                           DATE
-----------------            --------------------------------      -------------

/s/ George B. Kelly
---------------------------
George B. Kelly              Chairman of the Board                 April 1, 2002


/s/ Christopher T. Paule     Chief Executive Officer,              April 1, 2002
---------------------------  President and Chief Operating
Christopher T. Paule         Officer (principal executive
                             officer)

/s/ Mark A. Kolmer           Vice President Finance and            April 1, 2002
---------------------------  Secretary (principal financial
Mark A. Kolmer               and accounting officer)

/s/ Gary L. Rosenthal
---------------------------
Gary L. Rosenthal            Director                              April 1, 2002

/s/ Gregory L. Elliott
---------------------------
Gregory L. Elliott           Director                              April 1, 2002

/s/ John W. Jordan II
---------------------------
John W. Jordan II            Director                              April 1, 2002

/s/ David W. Zalaznick
---------------------------
David W. Zalaznick           Director                              April 1, 2002

/s/ A. Richard Caputo, Jr.
---------------------------
A. Richard Caputo, Jr.       Director                              April 1, 2002

/s/ Jonathan F. Boucher
---------------------------
Jonathan F. Boucher          Director                              April 1, 2002




<PAGE>








                     JACKSON PRODUCTS, INC. AND SUBSIDIARIES

                        Consolidated Financial Statements

                           December 31, 2001 and 2000

                   (With Independent Auditors' Report Thereon)




<PAGE>


                                               INDEPENDENT AUDITORS' REPORT



The Board of Directors
Jackson Products, Inc.:


We  have  audited  the  accompanying  consolidated  balance  sheets  of  Jackson
Products,  Inc. and subsidiaries (the Company) as of December 31, 2001 and 2000,
and the related consolidated  statements of operations,  stockholders'  deficit,
and cash flows for each of the years in the three-year period ended December 31,
2001. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Jackson Products,
Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 2001, in conformity  with  accounting  principles  generally
accepted in the United States of America.







St. Louis, Missouri
March 8, 2002, except for note 7
     which is as of March 29, 2002


<PAGE>

<TABLE>
<CAPTION>
                                     JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                           Consolidated Balance Sheets
                                           December 31, 2001 and 2000

                          Assets                                                          2001            2000
                                                                                        --------        --------
                                                                                        (In thousands, except
                                                                                              share data)
Current assets:
<S>                                                                                    <C>                   <C>
    Cash .......................................................................       $     358             388
    Accounts receivable, net of allowance for doubtful
      accounts of $1,072 and $1,275 at
      December 31, 2001 and 2000, respectively .................................          26,882          24,875
    Inventories ................................................................          34,848          38,025
    Deferred tax assets ........................................................           2,206           3,391
    Prepaid expenses ...........................................................           1,582           1,369
                                                                                       ---------        --------
             Total current assets ..............................................          65,876          68,048
                                                                                       ---------        --------
Property, plant, and equipment, net ............................................          37,880          42,114
Intangibles ....................................................................          42,432          59,772
Deferred financing costs .......................................................           3,440           4,751
Deferred tax assets ............................................................          16,330           9,039
                                                                                       ---------        --------
                                                                                       $ 165,958         183,724
                                                                                       =========        ========
           Liabilities and Stockholders' Deficit
Current liabilities:
    Accounts payable ...........................................................       $  13,653          14,504
    Other accrued liabilities ..................................................           5,926           5,546
    Accrued interest ...........................................................           2,326           2,723
    Accrued income taxes .......................................................             407             374
    Current portion of long-term debt ..........................................          11,875           8,907
                                                                                       ---------        --------
             Total current liabilities .........................................          34,187          32,054
                                                                                       ---------        --------
Long-term debt .................................................................         203,680         205,744
Other noncurrent liabilities ...................................................           4,073           4,073
Stockholders' deficit:
    Class A common stock, $0.01 par value. Authorized 100,000 shares authorized;
      43,172 shares issued and outstanding at December 31, 2001 and 38,350
      issued and outstanding
      at December 31, 2000 .....................................................            --              --
    Class B common stock, $0.01 par value. Authorized 45,000
      shares; issued and outstanding 15,647 shares at
      December 31, 2001 ........................................................            --              --
    Class C common stock, $0.01 par value. Authorized 15,000
      shares authorized; 2,849 shares issued and outstanding at
      December 31, 2001 and 8,526 issued and outstanding at
      December 31, 2000 ........................................................            --              --
    Additional paid-in capital .................................................           5,173           2,952
    Accumulated other comprehensive loss .......................................            (515)           (844)
    Loans due on common stock purchases ........................................            (561)           (329)
    Accumulated deficit ........................................................         (80,079)        (59,926)
                                                                                       ---------        --------
             Total stockholders' deficit .......................................         (75,982)        (58,147)
                                                                                       ---------        --------
                                                                                       $ 165,958         183,724
                                                                                       =========        ========

                          See accompanying notes to consolidated financial statements.
</TABLE>

                                                        F2

<PAGE>
<TABLE>
<CAPTION>
                            JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                             Consolidated Statements of Operations
                         Years ended December 31, 2001, 2000, and 1999

                                                         2001            2000            1999
                                                      ---------        --------        --------
                                                                        (In thousands)
<S>                                                   <C>               <C>             <C>
Net sales .....................................       $ 200,198         221,176         213,208
Operating expenses:
     Cost of sales ............................         147,050         153,883         145,120
     Restructuring charges ....................           3,805            --              --
     Selling, general, and administrative .....          35,131          36,328          35,261
     Amortization of intangibles ..............          15,008          17,733          15,023
     Impairment of intangibles  ...............           2,138            --              --
                                                      ---------        --------        --------
                 Total operating expenses .....         203,132         207,944         195,404
                                                      ---------        --------        --------
                 Operating (loss) income ......          (2,934)         13,232          17,804
Other:
     Interest expense .........................         (19,709)        (20,744)        (19,347)
     Amortization of deferred financing costs .          (1,500)         (1,500)         (1,501)
     Transaction related expenses .............          (1,211)           --              --
     Other ....................................            (852)         (1,069)           (880)
                                                      ---------        --------        --------
                 Loss before income tax benefit         (26,206)        (10,081)         (3,924)
Income tax benefit ............................          (6,053)         (3,287)         (1,172)
                                                      ---------        --------        --------
                 Net loss .....................       $ (20,153)         (6,794)         (2,752)
                                                      =========        ========        ========

                  See accompanying notes to consolidated financial statements.

</TABLE>

                                               F3

<PAGE>
<TABLE>
<CAPTION>
                                              JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                          Consolidated Statements of Stockholders' Deficit
                                           Years ended December 31, 2001, 2000, and 1999

                                                                                 Accumulated
                                        Class A     Class B  Class C  Additional   other       Due on
                                        common      common   common    paid-in   comprehensive common      Accumulated
                                         stock       stock    stock    capital     income       stock        deficit        Total

<S>                                       <C>          <C>     <C>      <C>           <C>       <C>         <C>            <C>
Balance at December 31, 1998 ...      $   --          --       --       2,952         59        (343)       (50,380)       (47,712)
Comprehensive loss:
   Net loss ....................          --          --       --        --         --          --           (2,752)        (2,752)
   Cumulative translation
     adjustment ................          --          --       --        --         (738)       --             --             (738)
                                                                                                                           -------
Comprehensive loss .............          --          --       --        --         --          --             --           (3,490)
Payment of loans on
   common stock ................          --          --       --        --         --            14           --               14
                                       -------        --       --       -----       ----        ----        -------        -------
Balance at December 31, 1999 ...          --          --       --       2,952       (679)       (329)       (53,132)       (51,188)
Comprehensive loss:
   Net loss ....................          --          --       --        --         --          --           (6,794)        (6,794)
   Cumulative translation
     adjustment ................          --          --       --        --         (165)       --             --             (165)
                                                                                                                           -------
Comprehensive loss .............          --          --       --        --         --          --             --           (6,959)
                                       -------        --       --       -----       ----        ----        -------        -------
Balance at December 31, 2000 ...          --          --       --       2,952       (844)       (329)       (59,926)       (58,147)
Comprehensive loss:
   Net loss ....................          --          --       --        --         --          --          (20,153)       (20,153)
   Cumulative translation
     adjustment ................          --          --       --        --          329        --             --              329
                                                                                                                           -------
Comprehensive loss .............       (19,824)
   Payment of stock appreciation
     rights and buyout of options         --          --       --       2,221       --          --             --            2,221
   Purchase of common
     stock, net of loan
     payments ..................          --          --       --        --         --          (232)          --             (232)
                                       -------        --       --       -----       ----        ----        -------        -------
Balance at December 31, 2001 ...      $   --          --       --       5,173       (515)       (561)       (80,079)       (75,982)
                                       =======        ==       ==       =====       ====        ====        =======        =======

                                    See accompanying notes to consolidated financial statements.

</TABLE>

                                                                 F4

<PAGE>
<TABLE>
<CAPTION>
                                 JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                  Consolidated Statements of Cash Flows
                              Years ended December 31, 2001, 2000, and 1999

                                                                   2001            2000           1999
                                                                 --------        --------       --------
                                                                              (In thousands)
<S>                                                              <C>              <C>            <C>
Cash flows from operating activities:
    Loss before extraordinary item .......................       $(20,153)        (6,794)        (2,752)
    Adjustments to reconcile loss
        before extraordinary item to net cash
        provided by operating activities:
           Depreciation ..................................          6,896          8,546          6,715
           Deferred income taxes .........................         (6,105)        (3,750)        (1,823)
           Amortization of deferred financing costs,
              intangibles, and debt discount .............         16,623         19,347         16,639
           Impairment of intangibles .....................          2,138           --             --
           Changes in operating assets and
              liabilities, net of effects of acquisitions:
                 Accounts receivable .....................         (2,007)           718            353
                 Inventories .............................          3,177         (3,564)         3,142
                 Accounts payable ........................           (851)         1,629         (5,794)
                 Other accrued liabilities ...............            380         (1,291)           (42)
                 Accrued interest ........................           (397)          (592)          (344)
                 Accrued taxes ...........................             33            (86)          (615)
                 Other, net ..............................          1,362         (1,667)          (335)
                                                                 --------        -------        -------
                    Net cash provided by
                       operating activities ..............          1,096         12,496         15,144
                                                                 --------        -------        -------
Cash flows from investing activities:
    Acquisition of businesses including transaction
        costs, net of cash acquired ......................           --             --          (39,928)
    Capital expenditures .................................         (3,904)        (5,862)        (5,836)
                                                                 --------        -------        -------
                    Net cash used in investing
                       activities ........................         (3,904)        (5,862)       (45,764)
                                                                 --------        -------        -------
Cash flows from financing activities:
    Proceeds from issuance of long-term debt .............           --             --           35,700
    Prinipal payment on long-term debt ...................        (10,778)        (6,500)          --
    Purchase of common stock, net of loan
                                                                     (232)          --               14
    Payment of SAR's and buyout of options ...............          2,221           --             --
    Net borrowings on revolving working
        capital facility .................................         11,567             10         (5,177)
                                                                 --------        -------        -------
                    Net cash (used in) provided by
                       financing activities ..............          2,778         (6,490)        30,537
                                                                 --------        -------        -------
                    Increase (decrease) in cash ..........            (30)           144            (83)
Cash, beginning of year ..................................            388            244            327
                                                                 --------        -------        -------
Cash, end of year ........................................       $    358            388            244
                                                                 ========        =======        =======

                      See accompanying notes to consolidated financial statements.

</TABLE>

                                                    F5

<PAGE>

(1)  THE COMPANY

     Jackson Acquisition Corp., a Delaware  corporation,  was formed on July 27,
     1995 for the purpose of acquiring  all of the  outstanding  common stock of
     Jackson Holding Company, a Delaware corporation (Holding),  which owned all
     of the  outstanding  common stock of Jackson  Products,  Inc. On August 16,
     1995, Jackson  Acquisition Corp.  purchased all of the outstanding stock of
     Holding for $129,000.  Immediately  following this stock purchase,  Jackson
     Acquisition Corp. and Jackson Products, Inc. were merged into Holding, with
     Holding  surviving the merger.  Following  the merger,  Holding was renamed
     Jackson Products, Inc. and is referred to in this document as the Company.

     The Company  directly or  indirectly  owns 100% of the  outstanding  common
     stock of American Allsafe Company (Allsafe);  Silencio Safety Direct,  Inc.
     (Silencio);  Crystaloid  Technologies Inc.  (Crystaloid);  Jackson Products
     Europe GmbH (Jackson  Products  Europe)  (formerly  Lansec  Holding  GmbH);
     TMT-Pathway,  L.L.C. (TMT-Pathway);  Flex-O-Lite,  Inc. (Flex-O-Lite Inc.);
     and Flex-O-Lite,  Ltd.  (Flex-O-Lite Ltd). During 1999, former subsidiaries
     of the Company,  OSD Envision,  Inc. (OSD) and Kedman Company (Kedman) were
     merged into the Company and Allsafe, respectively.

     On February 2, 2001, the closing of the transactions contemplated under the
     Stock  Purchase  Agreement,  (the Purchase  Agreement),  dated December 29,
     2000,  between the  Company,  SCG  Acquisition  LLC, an affiliate of Summit
     Capital Group,  LLC (SCG),  and the then  stockholders  of the Company (the
     Stockholders), as amended February 1, 2001, occurred. Pursuant to the terms
     of the Purchase Agreement, the Stockholders sold 50% of the common stock of
     the Company (the Common Stock) to affiliates of SCG. In  consideration  for
     the stock purchased pursuant to the Purchase Agreement, at the closing, SCG
     paid the  Stockholders  an  aggregate  of $41,500,  less  certain  fees and
     expenses.  The  transaction  was  approved by the board of directors of the
     Company and SCG.

     The Company is a leading  designer,  manufacturer and distributor of safety
     products  serving a variety of niche  applications  within the personal and
     highway safety markets,  principally  throughout  North America and Europe.
     The Company markets its products under established,  well-known brand names
     to  an  extensive  network  of  thousands  of  distributors,   wholesalers,
     contractors  and  government  agencies.   The  Company  currently  has  two
     reportable  business  segments:  Personal Safety Products (PSP) and Highway
     Safety Products (HSP). The personal safety segment  (operating  through the
     Company, Allsafe, Silencio,  Crystaloid and Jackson Products Europe) offers
     products  designed to provide  eye and face  protection,  head  protection,
     hearing  protection and other personal  safety.  The highway safety segment
     (operating  through  TMT-Pathway,  Flex-O-Lite  Inc. and  Flex-O-Lite  Ltd)
     offers  reflective  glass beads,  traffic  safety and work zone  protection
     equipment, traffic markings, and traffic markings application equipment.

(2)  ACQUISITIONS

     On May  17,  1999,  the  Company,  through  its  wholly  owned  subsidiary,
     TMT-Pathway,  acquired the assets of Morton Traffic Markings, a division of
     Morton International,  Inc. for $36,295 (the TMT-Pathway Acquisition),  net
     of  a  $1,696  purchase  price  adjustment.  TMT-Pathway  manufactures  and
     distributes traffic coatings and specialized coating applications equipment
     for the highway safety market.  Intangible  assets in the amount of $22,630
     were recorded in connection  with the  acquisition  and are being amortized
     over three to five years.

                                       F6
<PAGE>

     The TMT-Pathway  Acquisition was accounted for using the purchase method of
     accounting.  Accordingly, total purchase cost for this transaction has been
     allocated  to the  assets  and  liabilities  of the  company  based  on the
     respective fair value.  The results of operations of the acquired  business
     has been  included  in the  consolidated  financial  statements  since  the
     acquisition date.

(3)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          PRINCIPLES OF CONSOLIDATION

          The  consolidated  financial  statements  include the  accounts of the
          Company  and its  subsidiaries,  all of which  are  wholly-owned.  All
          material  intercompany  balances and transactions have been eliminated
          in   consolidation.   Certain  2000  and  1999   balances   have  been
          reclassified to conform to 2001 presentation.

          USE OF ESTIMATES

          Management  of  the  Company  has  made  a  number  of  estimates  and
          assumptions  relating to the reporting of assets and  liabilities  and
          the  reported  amounts of  revenues  and  expenses  to  prepare  these
          consolidated   financial  statements  in  conformity  with  accounting
          principles generally accepted in the United States of America.  Actual
          results could differ from those estimates.

          CONSOLIDATED STATEMENTS OF CASH FLOWS

          For purposes of the consolidated statements of cash flows, the Company
          considers  all  highly  liquid  investments   purchased  with  initial
          maturities  of three months or less to be cash  equivalents.  Interest
          paid for the years ended  December  31, 2001,  2000,  and 1999 totaled
          $19,938, $21,240 and $18,889,  respectively.  Taxes paid for the years
          ended December 31, 2001, 2000, and 1999 totaled $165, $475 and $1,384,
          respectively.

          REVENUE AND ACCOUNTS RECEIVABLE

          The Company  recognizes revenue from product sales based upon shipment
          of products  pursuant to customer  purchase orders,  assuming that the
          price to the customer is fixed or determinable and that collectibility
          of the  resulting  receivable  is  reasonably  assured.  The  terms of
          shipment are  generally FOB shipping  point and no customer  rights of
          return exist.  The Company's sales are primarily North American,  with
          customers  generally located throughout the United States,  Canada and
          Europe.

          Financial   instruments  that  potentially   subject  the  Company  to
          concentrations of credit risk consist primarily of trade  receivables.
          The Company performs  ongoing credit  evaluations of its customers and
          generally  does not require  collateral.  For the years ended December
          31, 2001,  2000 and 1999, the Company had no customers whose purchases
          exceeded 10% of net sales,  nor did any customers  account  receivable
          balance  exceed 10% of total  accounts  receivable  as of December 31,
          2001, 2000 and 1999.

                                       F7
<PAGE>

          INVENTORIES

          Inventories  are  stated  at the  lower  of  cost or  market.  Cost is
          determined using the first-in,  first-out (FIFO) method or the average
          cost  method.  Elements of cost in  inventory  include raw  materials,
          direct labor, and manufacturing overhead.

          PROPERTY, PLANT, AND EQUIPMENT

          Property,  plant,  and  equipment  acquired  through the  purchases of
          businesses  are  recorded  at fair  value.  Subsequent  additions  and
          improvements  to property,  plant,  and equipment are  capitalized  at
          cost.

          Depreciation is calculated using the straight-line method. The average
          estimated lives utilized in calculating  depreciation  are as follows:
          buildings and improvements, 7 - 40 years; and machinery and equipment,
          2 - 18 years. Leasehold improvements,  which are included in buildings
          and improvements,  are depreciated over the shorter of the term of the
          respective lease or the life of the respective improvement.

          INTANGIBLE ASSETS

          The excess of cost over the net tangible assets  acquired  consists of
          patents, customer lists,  technology-related  agreements, and goodwill
          and is amortized on a straight-line  basis over periods ranging from 2
          - 15 years. The Company  periodically  assesses the  recoverability of
          its intangible  assets based on the expected  undiscounted  cash flows
          over the remaining life of the related assets.

          IMPAIRMENT OF LONG-LIVED  ASSETS AND LONG-LIVED  ASSETS TO BE DISPOSED
          OF

          Recoverability  of  assets  to be  held  and  used  is  measured  by a
          comparison of the carrying  amount of an asset to future  undiscounted
          net cash flows  expected to be generated by the asset.  If such assets
          are  considered  to be impaired,  the  impairment  to be recognized is
          measured  by the  amount by which the  carrying  amount of the  assets
          exceeds  the  fair  value  of the  assets.  Fair  value  is  estimated
          utilizing  discounted future cash flows.  Assets to be disposed of are
          reported at the lower of the carrying  amount or fair value less costs
          to dispose.

          DEFERRED FINANCING COSTS

          Deferred  financing  costs,  consisting  of fees  and  other  expenses
          associated with the debt financing, are amortized over the term of the
          related debt using the effective  interest method.  In connection with
          the refinancing, as discussed in note 7, the Company recorded deferred
          financing fees totaling $8,300.

          RELATED-PARTY TRANSACTIONS

          TJC  Management  Agreement.  In  connection  with its  acquisition  by
          management  investors and investors affiliated with The Jordan Company
          in  August  1995,  the  Company  entered  into an  agreement  (the TJC
          Management  Agreement) with The Jordan Company Management  Corporation
          (TJMC),  an affiliate of The Jordan Company.  Under the TJC Management

                                       F8
<PAGE>

          Agreement,  the Company retains TJMC to render services to the Company
          relating to its financial and business affairs, its relationships with
          its lenders and  stockholders,  and the operation and expansion of its
          business.  The TJC  Management  Agreement  will expire in 2005, but is
          automatically  renewed for successive  one-year  terms,  unless either
          party  provides  written  notice of  termination  60 days prior to the
          scheduled  renewal date. In connection with the Company's  offering of
          Notes (as  defined in Note 7 below)  due 2005,  the  Company  and TJMC
          agreed  to amend  the TJC  Management  Agreement.  The TJC  Management
          Agreement,  as amended,  provides for an annual consulting fee payable
          on a quarterly  basis  equal to at least $600 but in no event  greater
          than 2.5% of the  Company's  EBITDA (as defined in the TJC  Management
          Agreement).  In addition,  the TJC Management  Agreement  provides for
          payment to TJMC of (i) an investment banking and sponsorship fee of up
          to 2% of the purchase price of certain acquisitions or sales involving
          the  Company and (ii) a  financial  consulting  fee of up to 1% of any
          debt,  equity or other  financing  arranged  by the  Company  with the
          assistance of TJMC. Such fees are subject to approval by the Company's
          board of directors.

          In February  2001,  TJMC  entered into an  assignment  of proceeds and
          security  agreement  which provides that 50% of all payments due under
          the TJC Management  Agreement will be paid to Summit Capital Group LLC
          (Summit).  Pursuant  to the  terms of the  1998  Credit  Facility  (as
          defined  below in Note 7),  payment  of fees to TJMC and Summit is not
          permitted in the event of a payment or financial covenant default with
          respect to the Company's  outstanding  Notes. Due to operating losses,
          generated by decreased sales volume and historically  high natural gas
          costs incurred in the previous four  quarters,  the Company was not in
          compliance  with  certain  ratios  under  the  Credit  Facility  as of
          December 31, 2001. As such, the Company  expensed but did not pay $938
          in fees related to the TJC  Management  Agreement  during fiscal 2001.
          These  amounts  are  included  in other  expense and will be paid when
          legally  permitted  under the  Credit  Facility.  For the years  ended
          December 31, 2000,  and 1999,  the Company  expensed and paid $984 and
          $880, respectively, in fees related to the TJC Management Agreement.

          Directors Fees. In February 2002, the Company paid Gary Rosenthal, one
          of its  directors,  $75 as directors  fees in 2001. No other  director
          received  compensation  from the Company for services  rendered during
          2001.

          Credit Facility.  Certain stockholders and their affiliates (including
          affiliates  of Summit  Capital II, L.P. and The Jordan  Company)  have
          committed  to invest  $13,000 in the  Company in  connection  with the
          fifth amendment to the Credit Facility.  SCG Management,  L.P. and The
          Jordan Company  Management  Corporation,  affiliates of Summit Capital
          II, L.P. and The Jordan Company, will receive an aggregate fee of $375
          in connection with this  investment.  The Company expects to receive a
          fairness  opinion from an independent  advisor in connection with this
          investment.

          Indebtedness  of  Management.  In connection  with the August 1995 JPI
          Acquisition,  the Company loaned certain  employees $427, of which $43
          and  $329  was   outstanding   as  of  December  31,  2001  and  2000,
          respectively. In connection with the February 2001 Purchase Agreement,
          the  Company  loaned  certain   employees   $518,  of  which  $518  is
          outstanding as of December 31, 2001. All of the loans are due upon the
          earlier of March 31, 2006,  or within 90 days after a borrower  ceases
          to be an employee of the Company.  The loans relate to the purchase of

                                       F9
<PAGE>

          common  stock of the  Company,  are  collateralized  by the  pledge of
          common  shares  of the  Company,  may be  prepaid  in  part or in full
          without  notice  or  penalty,   and  are  represented  by  nonrecourse
          promissory  notes  which bear  interest at a rate per annum of 7%. The
          loans have been  recorded as an increase in  stockholders'  deficit in
          the consolidated financial statements.

          FINANCIAL INSTRUMENTS

          The fair  market  value of those  long-term  obligations,  which carry
          variable rates,  approximates  carrying value since the interest rates
          are  periodically  adjusted for changes in market interest rates.  The
          fair market value of the Company's  Notes (as defined in Note 7 below)
          is  estimated  based on quoted  market  prices for the same or similar
          issues  with the  same  remaining  maturities  and  overall  financial
          condition.  As of December  31,  2001 and 2000,  the fair value of the
          Notes were  $59,800 and $98,900  compared  to the  carrying  values of
          $114,701 and $114,586, respectively.

          The fair market values of the Company's  other  financial  instruments
          included in the consolidated  balance sheets  approximate the carrying
          values of the financial instruments.

          INCOME TAXES

          The Company  accounts for income  taxes under the asset and  liability
          method.   Accordingly,   deferred  tax  assets  and   liabilities  are
          recognized for the future tax consequences attributable to differences
          between the financial  statement  carrying  amounts of existing assets
          and  liabilities  and their  respective  tax bases.  The provision for
          income taxes includes Federal and state income taxes currently payable
          and those  deferred  because  of  temporary  differences  between  the
          financial statements and tax basis of assets and liabilities.

          COMPREHENSIVE INCOME

          The Company's  comprehensive loss is impacted only by foreign currency
          translation adjustments, which resulted in additional income (loss) of
          $329,  ($165) and ($738) for the years ended  December 31, 2001,  2000
          and 1999, respectively.

          RECENT ACCOUNTING PRONOUNCEMENTS

          In  July  2001,  the  Financial   Accounting  Standards  Board  issued
          Statement of Financial  Accounting  Standards (SFAS) No. 141, Business
          Combinations,  and  Statement No. 142,  Goodwill And Other  Intangible
          Assets.  Statement 141 requires that the purchase method of accounting
          be used for all business  combinations  initiated  or completed  after
          June 30, 2001.  Statement 141 also specifies  criteria that intangible
          assets  acquired  in  a  purchase   method  business   combination  be
          recognized  and  reported  apart  from  goodwill.  Statement  142 will
          require that goodwill and  intangible  assets with  indefinite  useful
          lives no longer be  amortized,  but instead  tested for  impairment at
          least  annually in accordance  with the  provisions of Statement  142.
          Statement 142 will also require that  intangible  assets with definite
          useful lives be amortized over their respective estimated useful lives
          to their  estimated  residual  values,  and reviewed for impairment in
          accordance  with  SFAS  No.  121,  Accounting  for the  Impairment  of

                                       F10
<PAGE>

          Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed  Of. The
          Company  is  required  to  adopt  the   provisions  of  Statement  141
          immediately, and Statement 142 effective January 1, 2002.

          Statement  141  requires  that upon  adoption of  Statement  142,  the
          Company evaluate its existing intangible assets and goodwill, and make
          any  necessary  reclassifications  in  order to  conform  with the new
          criteria in Statement 141. Upon adoption of Statement 142, the Company
          will be required to reassess the useful  lives and residual  values of
          all recorded  intangible assets,  and make any necessary  amortization
          period  adjustments  by March 31, 2002. In addition,  to the extent an
          intangible  asset is identified  as having an indefinite  useful life,
          the  Company  will  be  required  to test  the  intangible  asset  for
          impairment in  accordance  with the  provisions of Statement  142. Any
          impairment  loss  will be  measured  as of the  date of  adoption  and
          recognized  as  the  cumulative  effect  of  a  change  in  accounting
          principle.

          As of December  31,  2001,  the Company had  unamortized  identifiable
          intangible assets in the amount of approximately  $42,400,  which were
          subject  to the  transition  provisions  of  Statements  141 and  142.
          Amortization  expense  related to identifiable  intangible  assets was
          $15,000  for  the  year  ended  December  31,  2001.  The  Company  is
          evaluating  the impact of the adoption of these  standards and has not
          yet  determined  the effect of adoption on its financial  position and
          results of operations.  Management does not believe  adoption of these
          standards  will  have a  material  adverse  effect  on  the  Company's
          financial statements.

          In June 2001, the Financial Accounting Standards Board issued SFAS No.
          143,  "Accounting  for Asset  Retirement  Obligations."  This standard
          applies  to  legal  obligations  associated  with  the  retirement  of
          tangible  long-lived  assets.  Management does not believe adoption of
          these  standards will have a material  adverse effect on the Company's
          financial statements.

          In August 2001, the Financial  Accounting  Standards Board issued SFAS
          No. 144,  "Accounting  for the  Impairment  or Disposal of  Long-Lived
          Assets,"  which  addresses  the  impairment  or disposal of long-lived
          assets and the reporting of discontinued operations. The Company is in
          the process of reviewing the provisions of this statement,  which must
          be  adopted  by  2002,   to  evaluate  its  impact  on  the  financial
          statements. Management does not believe adoption of this standard will
          have a material adverse effect on the Company's financial statements.

(4)  INVENTORIES

          Inventories consist of the following:

                                                 2001        2000
                                             ----------   ----------

                Raw materials                 $  10,518      11,990
                Work in process                   6,920       6,330
                Finished goods                   17,410      19,705
                                              ---------    --------
                                              $  34,848      38,025
                                              =========    ========


                                       F11
<PAGE>

(5)  PROPERTY, PLANT, AND EQUIPMENT

     Property, plant, and equipment consist of the following:

                                             2001          2000
                                           --------     --------
        Land ........................       $ 2,973        3,525
        Buildings and improvements ..        14,141       16,107
        Machinery and equipment .....        49,558       46,869
                                            -------       ------
                                             66,672       66,501
        Less accumulated depreciation        28,792       24,387
                                            -------       ------
                                            $37,880       42,114
                                            =======       ======


     Depreciation expense totaled $6,896,  $8,546 and $6,715 for the years ended
     December 31, 2001, 2000, and 1999, respectively.

(6)  INTANGIBLES

     Intangibles consist of the following:

                                                     2001        2000
                                                  ----------   ---------
        Goodwill ...............................  $103,943      108,753
        Customer lists and unpatented technology    15,362       15,362
        Patents and other ......................    14,198       14,198
                                                  --------      -------
                                                   133,503      138,313
        Less accumulated amortization ..........    91,071       78,541
                                                  --------      -------
                                                  $ 42,432       59,772
                                                  ========      =======


     During the  fourth  quarter  of fiscal  2001,  the  Company  recognized  an
     impairment  loss as certain events have occurred which have  diminished the
     infrastructure   and  severely  impaired   Goodwill   associated  with  the
     acquisition of Jackson Products Europe.  Additionally,  the sum of expected
     undiscounted  cash flows is less than the carrying  amount of the Goodwill.
     As such,  the Company has  recorded  an  impairment  loss of $2,138 for the
     remaining unamortized Goodwill at Jackson Products Europe.

                                       F12
<PAGE>

(7)  LONG-TERM DEBT

     Long-term obligations consist of the following:

                                                     2001             2000
                                                  ---------       ---------
       Acquisition facility ...................   $  84,222          95,000
        Revolving working capital facility           16,632           5,065
        9.50% senior subordinated notes ..          115,000         115,000
        Unamortized debt discount ........            (299)           (414)
                                                   --------        --------
                                                    215,555         214,651
        Less current maturities ...............      11,875           8,907
                                                   --------        --------
                                                  $ 203,680         205,744
                                                   =========        ========


          CREDIT AGREEMENT

          During 1998, the Company entered into a credit  agreement (as amended,
          the  Credit  Facility)  with a group of  banks  (the  Credit  Facility
          Lenders),  which  provided  for two lines of  credit in the  aggregate
          amount of $125,000.  The lines consist of an  acquisition  facility in
          the principal  amount of up to $95,000 and a revolving credit facility
          in the  principal  amount of up to $30,000.  The Credit  Facility  was
          amended on June 19, 1998 to include  Swing Line Loans,  which  allowed
          the  Company to borrow up to $3,000  from the Swing  Line Bank  (Fleet
          National  Bank) so long as all the sum of the  outstanding  swing line
          loans,  revolving  credit loans and letters of credit  outstanding did
          not exceed the total commitment under the revolving credit facility of
          $30,000. A second amendment to the Credit Facility was entered into on
          May 17,  1999 to increase  the  acquisition  facility to $105,000  and
          permit the Company's acquisition of TMT-Pathway. The Company could not
          borrow under the  acquisition  facility beyond April 30, 2001 at which
          time  the  commitment  of  the  Credit  Facility  Lenders  to  advance
          additional  funds under the  acquisition  facility  was  scheduled  to
          expire and the principal amount of the acquisition facility became due
          in quarterly  installments  having a final maturity of March 31, 2004.
          The Credit  Facility  contains  several  financial  covenants based on
          operating  results for the previous  four  quarters.  Due to operating
          losses   generated  by   decreased   sales  volume  and  gross  margin
          percentages  and  historically  high natural gas costs incurred in the
          previous four quarters, the Company was not in compliance with certain
          financial  covenants  under the Credit  Facility as of June 30,  2001,
          September  30, 2001 or December  31,  2001.  A third  amendment to the
          Credit  Facility was entered into effective July 1, 2001,  pursuant to
          which the Credit  Facility  Lenders agreed to forbear from  exercising
          their  rights and  remedies  relating to the  aforementioned  defaults
          under the Credit Facility through  September 30, 2001, the usage under
          the  revolving   credit  facility  was  limited  to  $24,000  and  the
          applicable margin for base rate and LIBOR based loans was increased to
          2.0% and 3.0%, respectively. A fourth amendment to the Credit Facility
          was  entered  into on October 1,  2001,  pursuant  to which the Credit
          Facility Lenders agreed to extend their forbearance  through March 31,
          2002 and make other  modifications to the Credit  Facility,  including
          increasing the  applicable  margin for base rate and LIBOR based loans

                                       F13
<PAGE>

          to 3.0% and 4.0%, respectively,  and for certain loans to a fixed rate
          of 15% per annum,  imposing additional  limitations on usage under the
          revolving credit facility,  and adding additional  financial covenants
          pertaining to minimum  levels of EBITDA and maximum  levels of capital
          expenditures.

          A fifth amendment to the Credit Facility was entered into on March 29,
          2002,  pursuant to which the Credit  Facility  Lenders  have agreed to
          extend  their  forbearance  relating  to the  aforementioned  defaults
          through April 12, 2002 and, subject to certain conditions, including a
          $13,000  investment  in the  Company  by its  stockholders  and  their
          affiliates  no later than April 12,  2002 and the  application  of not
          less than  $12,000 of the  proceeds  of such  investment  to repay the
          acquisition facility, to permanently waive the aforementioned defaults
          under the Credit  Facility  which  occurred in fiscal 2001 and certain
          other  technical  defaults and to reset the  financial  covenants  and
          effect other  amendments  to the Credit  Facility  (described  below).
          Until the  effectiveness of the fifth amendment  (anticipated to occur
          on or prior to April  12,  2002),  the usage on the  revolving  credit
          facility  is capped at $21,000.  The fifth  amendment  authorizes  the
          Company  to  sell  and  certain  stockholders  and  their  affiliates,
          including  Summit  Capital II, L.P. and the Jordan  Company LLC,  have
          committed to purchase  $13,000 of units  consisting of secured  senior
          subordinated  notes  (the  Secured  Senior   Subordinated  Notes)  and
          warrants  for  shares of common  stock of the  Company.  The terms and
          conditions  of  the  Secured   Senior   Subordinated   Notes  must  be
          satisfactory  to the Credit  Facility  Lenders,  and must  include the
          following terms:

               o    a maturity date of December 31, 2004;

               o    an interest rate of 15% per annum,  of which (i) 10% will be
                    payable in cash semi-annually in arrears and (ii) 5% will be
                    payable in-kind compounded semi-annually;

               o    subordination  in right of payment  to the  Credit  Facility
                    Lenders;

               o    subordinated   second  lien   security   interests   in  the
                    collateral   securing  the  obligations   under  the  Credit
                    Facility;

               o    no repayment or redemption prior to the repayment in full of
                    all obligations; and

               o    no financial or other covenants  which are more  restrictive
                    than the Credit Facility.

          Subject to the investment in the Company by its stockholders and their
          affiliates (described above) and the use of $12,000 of the proceeds of
          such investment to repay the acquisition facility, the fifth amendment
          will,  among other things,  reset the  amortization on the acquisition
          facility,  reset the financial covenants and establish maximum capital
          expenditure amounts, each of which are described in the tables below:



                                       F14
<PAGE>

          Amortization on the acquisition facility shall be reset as follows:



               QUARTER ENDING                                AMOUNT
               --------------                                ------
               03/31/02.........................             $1,250
               06/30/02.........................             $1,250
               09/30/02.........................             $1,250
               12/31/02.........................             $1,250
               03/31/03.........................             $2,500
               06/30/03.........................             $2,500
               09/30/03.........................             $2,500
               12/31/03.........................             $2,500
               03/31/04.........................             $3,000
               Maturity Date (06/30/04).........  Remaining Balance


          The  following  financial  covenants  were  established  in the  fifth
          amendment:



          EBITDA TO TOTAL INTEREST EXPENSE

          The Company will not permit the ratio of the EBITDA (as defined in the
          Credit  Facility) of the Company and its  restricted  subsidiaries  to
          Consolidated   Total  Interest  Expense  (as  defined  in  the  Credit
          Facility) for any period of four  consecutive  fiscal  quarters ending
          during any period  described  in the table set forth  below to be less
          than the ratio set forth opposite such period in such table:


                                       F15
<PAGE>


               PERIOD ENDED                             RATIO
               ------------                             -----
               03/31/02..............................   1.45:1.00
               06/30/02..............................   1.55:1.00
               09/30/02..............................   1.60:1.00
               12/31/02..............................   1.70:1.00
               03/31/03..............................   1.75:1.00
               06/30/03 .............................   1.85:1.00
               09/30/03..............................   1.95:1.00
               12/31/03  and  at  the  end  of  each
               quarter thereafter....................   2.00:1.00


          LEVERAGE RATIO

          The  Company  will not permit the  Leverage  Ratio (as  defined in the
          Credit Facility) as of the end of any fiscal quarter ending during any
          period  described in the table set forth below to exceed the ratio set
          forth opposite such period in such table:



               PERIOD ENDED                             RATIO
               ------------                             -----
               03/31/02.............................   7.55:1.00
               06/30/02.............................   7.45:1.00
               09/30/02.............................   6.85:1.00
               12/31/02.............................   6.25:1.00
               03/31/03.............................   6.15:1.00
               06/30/03.............................   6.00:1.00
               09/30/03.............................   5.75:1.00
               12/31/03  and  at  the  end  of  each
               quarter thereafter...................   5.50:1.00

                                       F16
<PAGE>

          CONSOLIDATED OPERATING CASH FLOW TO TOTAL DEBT SERVICE

          The  Company  will  not,  for any  period of four  consecutive  fiscal
          quarters  ending  during any period  described  in the table set forth
          below,  permit the ratio of (i)  Consolidated  Operating Cash Flow (as
          defined in the Credit Facility) for such period to (ii) the sum of (a)
          Consolidated  Total  Interest  Expense  for  such  period  and (b) all
          required payments of principal  (including the principal  component of
          capitalized lease payments) in respect of indebtedness due and payable
          by the Company and/or its restricted  subsidiaries  during such period
          to be less  than the  ratio set  forth  opposite  such  period in such
          table:


               PERIOD ENDED                            RATIO
               ------------                            -----
               03/31/02.............................   0.80:1
               06/30/02.............................   0.90:1
               09/30/02.............................   1.00:1
               12/31/02  and  at  the  end  of  each
               quarter thereafter ..................   1.05:1


          MINIMUM EBITDA

          The Company will not permit  EBITDA for any period ending on the dates
          set forth below,  to be less than the amount set forth  opposite  such
          date in such table:



               PERIOD ENDED                              AMOUNT
               ------------                              ------
               01/01/02 - 03/31/02..................     $5,300
               01/01/02 - 04/30/02..................     $8,500
               01/01/02 - 05/31/02..................    $12,400
               01/01/02 - 06/30/02..................    $16,550
               01/01/02 - 07/31/02..................    $20,225

                                       F17
<PAGE>

               01/01/02 - 08/31/02..................    $24,075
               01/01/02 - 09/30/02..................    $27,700
               01/01/02 - 10/31/02..................    $30,275
               01/01/02 - 11/30/02..................    $31,800
               01/01/02 - 12/31/02..................    $32,825
               04/01/02 - 03/31/03..................    $33,000
               07/01/02 - 06/30/03..................    $33,500
               10/01/02 - 09/30/03..................    $34,000
               01/01/03 - 12/31/03..................    $34,400
               04/01/03 - 03/31/04..................    $34,700


          MAXIMUM CAPITAL EXPENDITURES

          The Company will not permit capital  expenditures  for any fiscal year
          to be  greater  than the amount  set forth  opposite  such year in the
          table below.



               PERIOD ENDED                             AMOUNT
               ------------                             ------
               01/01/02 - 03/31/02..................    $2,000
               01/01/02 - 06/30/02..................    $4,000
               01/01/02 - 09/30/02..................    $5,000
               01/01/02 - 12/31/02..................    $5,900
               01/01/03 - 03/31/03..................    $2,600
               01/01/03 - 06/30/03..................    $5,100
               01/01/03 - 09/30/03..................    $6,400
               01/01/03 - 12/31/03..................    $7,600


                                       F18
<PAGE>

          The  Credit  Facility,  as  amended,  allows the total  commitment  of
          $30,000  under the  revolving  credit  facility  to be  available  for
          borrowing,  subject  to usage caps of  $22,500  during the  periods of
          December  15, 2002  through  January 31,  2003 and  December  15, 2003
          through  January 31, 2004.  The amount of  borrowings  as of March 29,
          2002 are unchanged from the fourth amendment and bear interest, at the
          option of the Company,  at a rate per annum equal to (i) the Base Rate
          (as defined in the Credit  Facility) plus 3.00% or (ii) the LIBOR Rate
          (as defined in the Credit Facility) plus 4.00%.  Further,  the Company
          owes a commitment  fee of 0.50% on the unused portion of the revolving
          credit  facility  commitment.  Pursuant  to the fifth  amendment,  the
          Company will not be  permitted  to request  LIBOR Rate Loans having an
          interest  period  which  exceeds one month  until the  issuance of the
          Secured Senior  Subordinated  Notes. The fifth amendment  requires all
          Base Rate and LIBOR Rate Loan  interest  to continue to be paid on the
          last day of the calendar month or on the drawdown date,  which ever is
          earlier. The average interest rate on all outstanding borrowings under
          the Credit  Facility  was 6.8% and 8.9% at December 31, 2001 and 2000,
          respectively.  The Credit Facility,  as amended, adds a new prepayment
          requirement  that requires the Company to repay to the Credit Facility
          Lenders an amount equal to the Excess Cash Flow Payment (as defined in
          the Credit Facility).  This amount is payable 90 days after the end of
          each fiscal year and is used to repay the principal on the acquisition
          facility in inverse  order of maturity and upon payment in full of the
          acquisition   facility,  to  reduce  the  revolving  credit  facility.
          Finally,  the  fifth  amendment  extends  the  final  maturity  of the
          acquisition  facility and the revolving  facility to June 30, 2004. In
          connection with the execution of the fifth amendment, the Company paid
          the Credit Facility Lenders a fee of approximately $500.

          AVAILABLE CREDIT CAPACITY

          As of  December  31,  2001,  the  Company  had the  following  amounts
          outstanding under the Credit Facility

               AMOUNTS OUTSTANDING -- CREDIT FACILITY
                                                  AMOUNT
               -----------------------------------------
               Acquisition Facility ....       $ 84,222
               Revolving Credit Facility         16,632
               Letters of Credit .......          1,760
                                                --------
               Total Amount Outstanding        $102,614
                                                ========


          As of April 30, 2001, the commitment of the Credit Facility Lenders to
          make additional advances under the acquisition facility had expired in
          accordance  with its  original  terms  and,  as a result of the fourth
          amendment to the Credit  Facility,  the Company's  borrowing  capacity
          under the  revolving  credit  facility  was  limited to an amount that
          varied  periodically from $26,000 to $19,000. As of December 31, 2001,
          the usage cap was  $20,000 and the  Company  had  available  borrowing
          capacity of $1,608 under the Credit Facility. As a result of the fifth
          amendment  to the  Credit  Facility,  the  Company's  total  borrowing
          capacity  under the  revolving  credit  facility  will be increased to
          $30,000, subject to the periodic usage caps described above.

                                       F19
<PAGE>

          ASSIGNMENT AND AGENCY ACCOUNT AGREEMENT

          On October 31, 2001, the Company entered into an Assignment and Agency
          Account  Agreement  with Fleet  National  Bank as agent for the Credit
          Facility  Lenders.  Under this  agreement,  the  Company  pledged  and
          assigned  as  collateral,  for  the  benefit  of the  Credit  Facility
          Lenders,  a security  interest in and lien on, to and under all of the
          depository, disbursement and investment and other bank accounts now or
          hereafter  maintained  by the Company  (the DDAs),  together  with all
          cash,  cash  equivalents,  checks  and other  property  of any  nature
          deposited into such DDAs and all proceeds thereon. In addition,  under
          this  agreement,  the Company has agreed to deposit all cash receipts,
          checks and cash  proceeds from its  operations  into such DDAs. In the
          case of the occurrence  and  continuation  of an Event of Default,  as
          defined  in the  Credit  Facility,  the Credit  Facility  Lenders  are
          authorized  to  terminate  the  Company's  access  to the DDAs and the
          contents  thereof,  and the Credit  Facility  Lenders are permitted to
          withdraw  any  and  all  sums  from  the  DDAs  in  order  to  satisfy
          obligations  which  have  become  due and  payable  under  the  Credit
          Facility. In addition, under this agreement, the Company has agreed to
          deposit  all  cash  receipts,   checks  and  cash  proceeds  from  its
          operations into DDAs maintained by the Credit Facility Lenders.

          SENIOR SUBORDINATED NOTES

          On April 16, 1998, the Company offered  $115,000  aggregate  principal
          amount of Senior  Subordinated  Notes (the  Notes) due April 15,  2005
          (the  Offering).  The Notes  bear  interest  at the rate of 9 1/2% per
          annum, payable  semi-annually in arrears on April 15 and October 15 of
          each year,  commencing  October 15, 1998.  The payments of  principal,
          premium,   interest   and   liquidated   damages   on  the  Notes  are
          unconditionally  guaranteed,  jointly and severally,  by the Company's
          domestic subsidiaries (Guarantors).



(8)  STOCKHOLDERS' DEFICIT (shares and share prices are not in thousands)

     On July 1, 1996, the Company  amended its Certificate of  Incorporation  to
     reflect  the  100-to-1  reverse  stock split of all  authorized  and issued
     common and preferred  stock.  Following  this stock split,  the  authorized
     capital stock of the Company  consisted of 100,000 shares of Class A common
     stock,  45,000  shares of Class B common  stock,  15,000  shares of Class C
     common stock  (collectively the Common Stock), and 2,000 shares of Series A
     Cumulative 13.25% Exchangeable Preferred Stock (the Preferred Stock).

     In connection with the financing for the August 1995 JPI  Acquisition,  the
     Company  issued,  on a  post-stock  split basis,  40,000  shares of Class A
     common stock,  10,000  shares of Class C common stock,  and 1,700 shares of
     Preferred Stock. On April 22, 1998, in connection with the Acquisitions and
     the refinancing,  the Company repurchased all of the outstanding  Preferred
     Stock at $23,998.

                                       F20
<PAGE>

          COMMON STOCK

          Dividends are payable equally on shares of all classes of common stock
          in amounts as and when declared by the  Company's  board of directors,
          subject to  legally  available  funds and  restrictions  contained  in
          certain  agreements.  Holders of Class A and Class C common  stock are
          entitled to one vote per share on all matters  submitted  to a vote of
          stockholders.  The holders of Class B common stock are not entitled to
          vote on any matters submitted to a vote of stockholders.

          Upon the sale of shares of Class B common  stock  pursuant to a public
          equity offering,  each share of Class B common stock will be converted
          into one share of Class A common stock. In addition,  holders of Class
          B common  stock may, at their  option,  convert  each share of Class B
          common stock into Class A common stock at any time, subject to certain
          conditions.  Upon the sale of Common Stock pursuant to a public equity
          offering of Class B common  stock,  each share of Class C common stock
          will be converted into one share of Class A common stock.

          The Company's Certification of Incorporation,  as amended and restated
          on February 2, 2001, authorizes the Company to issue 162,000 shares of
          capital stock consisting of the following:

          i.)  100,000 shares of Class A common stock, par value $.01 per share

          ii.) 45,000 shares of Class B common stock, par value $.01 per share

          iii.) 15,000 shares of Class C common stock, par value $.01 per share

          iv.) 2,000 shares of serial preferred stock, par value $.01 per share

          In  connection  with the  transactions  contemplated  by the  Purchase
          Agreement,  Summit purchased 23,090 shares, or approximately  50.0% of
          the Company's  outstanding Class A (voting) common stock and 15,647 of
          newly issued shares of Class B  (non-voting)  common stock.  Following
          the transactions  contemplated by the Purchase Agreement,  Summit owns
          approximately  62.6% of the  Company  outstanding  capital  stock on a
          undiluted basis.

          WARRANTS

          In 1998, the Company issued, on a post-stock split basis,  warrants to
          purchase  34,482.76  shares of common stock at an exercise price of $1
          per share.  These warrants may be exercised at any time prior to their
          expiration  date of August 15,  2005.  The  proceeds  from the sale of
          these  warrants  ($1 per  warrant)  have been  recorded as  additional
          paid-in capital in the Company's consolidated financial statements. No
          warrants have been exercised since their issuance.  In connection with
          acquisitions and the  refinancing,  the Company  repurchased  6,761.53
          warrants  from an  institutional  investor.  In  connection  with  the
          Purchase Agreement,  the Company  repurchased  13,272.58 warrants from
          institutional investors.

                                       F21
<PAGE>

          STOCK OPTION PLAN

          In connection with the Company's acquisition of Jackson Products, Inc.
          (its  predecessor  entity),  the Company adopted a nonqualified  stock
          option plan (the 1995 Option Plan) for its officers and key employees.
          Under  the  1995  Option  Plan,  eligible   participants  may  receive
          incentive and nonqualified options to purchase shares of the Company's
          Class C common stock.  Under the 1995 Option Plan, options to purchase
          up to 3,198.04  shares of the  Company's  Class C common  stock may be
          granted to eligible participants.  Generally, these shares vest over a
          five-year  period  and  may be  exercised  only  if the  holder  is an
          employee of the Company.  As of March 15, 2002,  965.79  shares of the
          Class C Common  Stock of the  Company  have  vested and are subject to
          exercise  under the 1995 Option Plan.  Up to 110.0 shares will vest in
          June 2002 at which time all  outstanding  shares under the 1995 Option
          Plan will be fully vested. All options currently outstanding under the
          1995 Option Plan have an exercise price of $0.1 per share. All options
          expire on the earlier of (i) 10 years from the date of grant;  (ii) 90
          days from the employee's  termination date; or (iii) one year from the
          employee's termination due to death or disability.

          In February  2001,  the Company  adopted a new stock  option plan (the
          2001 Option Plan) for its officers and key  employees.  Under the 2001
          Option  Plan,   eligible   participants  may  receive   incentive  and
          nonqualified  options  to  purchase  shares of the  Company's  Class C
          common  stock.  Under the 2001 Option Plan,  options to purchase up to
          5,831.35  shares of the  Company's  C common  stock may be  granted to
          eligible participants.  Generally,  these shares vest over a five-year
          period and may be  exercised  only if the holder is an employee of the
          Company.  As of March 15, 2002, options have been granted for 3,660.00
          shares  of the  Class C common  stock of the  Company  under  the 2001
          Option Plan. Up to 1,464.00  shares will vest in 2003 and up to 732.00
          shares will vest as of February 1, 2004,  2005,  and 2006. All options
          currently  outstanding  under the 2001  Option  Plan have an  exercise
          price of $1.1 per share.  All options  expire on the earlier of (i) 10
          years and six  months  from the date of  grant;  (ii) 90 days from the
          employee's  termination  date;  or (iii) one year from the  employee's
          termination due to death or disability.

          Information  regarding stock options awarded under the Option Plan and
          the 2001 Option Plan is as follows:

<TABLE>
<CAPTION>
                                                   2001                            2000                            1999
                                          ----------------------------   -----------------------------   ---------------------------
                                            SHARES        ESTIMATED         SHARES        ESTIMATED         SHARES        ESTIMATED
                                           AVG. PRICE                       AVG. PRICE                      AVG. PRICE
                                          -----------   --------------   -------------   -------------   -------------   -----------

<S>                                          <C>         <C>                <C>         <C>              <C>          <C>
                Beginning of year .          2,862.99    $     100.00       2,862.99    $   100.00       3,198.04     $   100.00
                Granted ...........          3,660.00        1,071.33        --            --             --             --
                Exercised .........          1,510.55          100.00        --            --             --             --
                Canceled ..........            105.00          100.00        --            --             (335.05)        100.00
                                             --------       ---------       --------       -------       --------        -------

                End of year .......          4,907.44    $     824.42       2,862.99    $   100.00       2,862.99     $   100.00
                                             ========       =========       ========       =======       ========        =======

                Exercisable at
                    end of year ...            965.79    $     100.00       2,563.01    $   100.00       1,990.41     $   100.00

                Weighted average
                    fair value of
                    options granted          3,660.00    $     550.60        --         N/A               --          N/A

</TABLE>

                                       F22
<PAGE>

          Summary  information  regarding stock options  outstanding at December
          31, 2001 is presented below:
<TABLE>
<CAPTION>

                                                                         OPTIONS OUTSTANDING
                                         -------------------------------------------------------------------------------------
                    EXERCISE PRICES         NUMBER OUTSTANDING AT            WEIGHTED-AVERAGE             WEIGHTED AVERAGE
                                              DECEMBER 31, 2001            REMAINING CONTRACTUAL           EXERCISE PRICE
                                                                                   LIFE
<S>             <C>                                          <C>                        <C>         <C>
                $             100.00                         1,307.44                   4.5 years   $                  100.00
                            1,071.33                         3,660.00                   9.7 years                    1,071.33
                                         -----------------------------    ------------------------     -----------------------

                                                             4,967.44                   8.3 years   $                  836.80
                                         =============================    ========================     =======================
</TABLE>



<TABLE>
<CAPTION>
                                                     EXERCISABLE OPTIONS OUTSTANDING
                                         --------------------------------------------------------
                    EXERCISE PRICES         NUMBER EXERCISABLE AT            WEIGHTED AVERAGE
                                              DECEMBER 31, 2001               EXERCISE PRICE
<S>             <C>                      <C>                            <C>
                $             100.00                         1,197.44   $                 100.00
                            1,071.33                 --                 $           --
                                         -----------------------------     ----------------------

                                                             1,197.44   $                 100.00
                                         =============================     ======================
</TABLE>





          The Company has elected to continue to measure compensation cost using
          the intrinsic  value method as  prescribed  by  Accounting  Principles
          Board (APB)  Opinion No. 25 and has recorded no  compensation  expense
          relative to the issuance of its stock options as all options have been
          issued  at the  current  market  price at the date of  grant.  Had the
          Company  applied  the  principles  of SFAS  No.  123,  Accounting  for
          Stock-Based  Compensation,  additional compensation expense would have
          been  recorded  of  approximately  $187,000  for year  ending 2001 and
          $54,000 for the years ending, 2000 and 1999.

          The weighted average fair value of options granted is estimated on the
          date of grant using the  Black-Scholes  options pricing model with the
          following  assumptions  for  2001:  risk free  interest  rate of 6.5%;
          expected  dividend yield of 0%; expected life of 10 years and expected
          volatility of 0%.


                                       F23
<PAGE>

(9)  INCOME TAXES

     Income tax (benefit) expense is comprised of the following:

                            2001           2000         1999
                           -------        -------       ------
         Current:
             Federal       $  --             224           128
             State .          --             185           243
             Foreign            52            54           280
                           --------        -------      -------
                                52           463           651

         Deferred ..        (6,105)       (3,750)       (1,823)
                           --------        -------      -------
                           $(6,053)       (3,287)       (1,172)
                           =====-==        =======      =======


     Reconciliation between the statutory income tax provision and effective tax
     provision is summarized  below for the years ended December 31, 2001, 2000,
     and 1999:

<TABLE>
<CAPTION>
                                                                  2001           2000           1999
                                                              ----------      --------     ---------
<S>                                                              <C>            <C>           <C>
                Statutory rate (34%) .....................       $(8,910)       (3,394)       (1,334)
                Amortization of goodwill and other .......         1,744         4,229         3,253
                State income tax (refunds) ...............          (507)          122           160
                Change in valuation allowance ............         1,620        (4,244)       (3,251)
                                                                 -------        ------        ------
                Income tax (benefit) expense                     $(6,053)       (3,287)       (1,172)
                                                                 ========       =======       =======
</TABLE>

                                       F24
<PAGE>

     The tax effects of significant temporary differences, representing deferred
     tax assets and the deferred tax liability, as of December 31, 2001 and 2000
     are as follows:

<TABLE>
<CAPTION>
                                                                                 2001          2000
                                                                               --------      ---------
        Deferred tax assets:
<S>                                                                             <C>               <C>
                Net operating loss carryforwards -- U.S. ................       $ 11,594          6,518
                Net operating loss carryforwards -- Foreign .............          3,119          1,499
                Receivables .............................................            285            341
                Accrued liabilities .....................................          1,400          1,238
                Postretirement benefits .................................            690            690
                Inventory ...............................................            875          1,047
                Intangibles .............................................          6,988          5,773
                AMT Credits .............................................            152             76
                                                                                --------        -------
                                                                                  25,103         17,182
        Valuation allowance .........................................             (3,119)        (1,499)
                                                                                --------        -------
              Deferred tax assets, net of valuation allowance                     21,984         15,683

        Deferred tax liability:
               Property, plant, and equipment ..........................          (3,449)        (3,253)
                                                                                --------        -------
               Net deferred tax assets .......................                  $ 18,535         12,430
                                                                                ========        =======
</TABLE>


     The Company  establishes  valuation  allowances and continually reviews the
     adequacy  of the  allowance,  recognizing  benefits  only  as  reassessment
     indicates  that it is more likely than not that  benefits will be realized.
     The  ultimate  realization  of deferred  tax assets is  dependent  upon the
     generation of future taxable income.  Management considers projected future
     taxable income and tax planning strategies in assessing the adequacy of the
     valuation allowance.

     The  elimination  of the  valuation  allowance  associated  with  U.S.  net
     operating  loss (NOL)  carryforwards  during 2000 was a result of utilizing
     NOL's  carryforwards in 2000 and anticipating  realizing the benefit of all
     deferred  tax  assets  in the  future.The  reduction  of the tax  valuation
     allowance  resulted  in a 2000 tax  benefit  of $4,244  with the  remaining
     balance  of  $5,851  reducing   goodwill.   The  amount  reducing  goodwill
     represents  the  portion of the  valuation  allowance  recorded in purchase
     accounting.  At December 31, 2001,  the Company had net deferred tax assets
     of  $18,535.  Based upon the level of taxable  income and  projections  for
     future taxable income,  management  believes it is more likely than not the
     Company will  realize the benefit of the U.S.  net deferred tax assets.  At
     December  31,  2001,  the Company had NOL  carryforwards  of  approximately
     $33,000 for U.S.  federal income tax purposes which begin to expire in 2009
     to the extent not utilized.  Approximately $16,920 of the NOL is restricted
     in availability to offset taxable income subject to an annual limitation of
     approximately $2,250 under the Internal Revenue Code. The remaining balance
     of approximately $16,080 is available without restriction.

                                       F25
<PAGE>

     At December 31, 2001, the Company had NOL  carryforwards  of  approximately
     $8,208 for foreign  income tax  purposes  which do not expire.  The Company
     established a valuation allowance for the entire amount of the deferred tax
     asset  resulting from the foreign NOLs because  management does not believe
     it is more likely than not that the benefit will be realized.

(10) RETIREMENT BENEFIT PLANS

     Retirement  benefits are provided to  substantially  all employees  under a
     discretionary profit sharing and contributory retirement plan under section
     401(k)  of the  Internal  Revenue  Code.  The  Company  did  not  make  any
     discretionary profit sharing  contributions to the plan for the years ended
     December 31, 2001, 2000 and 1999.

     The  Company  provides  postretirement  health  care and other  benefits to
     certain qualifying retirees. As of January 1, 1998, the Company amended the
     plan to restrict new participants. The Company does not fund retiree health
     care benefits in advance and has the right to modify these  benefits in the
     future.  Net  periodic  postretirement  benefit  cost (NPPBC) for the years
     ended December 31, 2001, 2000, and 1999 includes the following components:

                                            2001       2000       1999
                                          ------      -----      ------

               Service cost ........       $  47         50         58
               Interest cost .......          61         61         57
               Amortizations of gain        (101)       (93)       (91)
                                           -----       ----       ----
                             NPPBC .       $   7         18         24
                                           =====       ====       ====


     The Plan's status as of December 31 is as follows:

<TABLE>
<CAPTION>
                                                                      2001       2000
                                                                   -------    --------
               Actuarial present value of benefit obligation:
<S>                                                                 <C>             <C>
               Fully eligible active participants ...........       $   57          46
               Other active participants ....................          740         600
               Retirees .....................................          123         100
               Unrecognized net gain ........................        1,353       1,552
               Unrecognized prior service cost ..............           18          19
                                                                    ------       -----
               Accrued benefit obligation .......................   $2,291       2,317
                                                                    ======       =====

</TABLE>

     The benefit  obligation  was  determined by application of the terms of the
     Plan,  together with relevant  actuarial  assumptions for active employees.
     Health care cost trends are  projected at annual rates ranging from 7.0% in
     2000  down to 5.5%  in 2004  and  thereafter.  The  effect  of a 1%  annual
     increase in these  assumed  rates would  increase the  accumulated  pension
     benefit  obligation  (APBO) at December 31, 2001 by approximately  $170 and
     the service and interest  cost  components of the NPPBC for the years ended

                                       F26
<PAGE>

     December 31, 2001 and 2000 by approximately  $21. The assumed discount rate
     used in  determining  the APBO was  7.25%.  The APBO is  included  in other
     noncurrent  liabilities on the consolidated balance sheets. See footnote 17
     for subsequent event disclosure.

(11) SEGMENT REPORTING

     The Company has two reportable segments,  which include the Personal Safety
     Products  segment (PSP) and the Highway Safety Products  segment (HSP). The
     PSP segment offers  products  designed to provide eye and face  protection,
     head  protection,  hearing  protection and other personal  safety.  Primary
     customers  for  these  products  are  found in the  welding,  construction,
     janitorial, healthcare, sporting, and food service sectors. The HSP segment
     offers  reflective  glass beads,  traffic  safety and work zone  protection
     equipment,  traffic markings,  and traffic markings application  equipment.
     Primary  customers  for these  products  consist  of local  and  government
     agencies, private contract stripers, and highway safety distributors.

     The Company  evaluates  segment  performance based upon a measure of profit
     represented by earnings before interest, taxes, depreciation, amortization,
     and  certain  noncash  charges  and/or   nonrecurring   charges   (EBITDA).
     Accounting  policies  for  reportable  segments  are  consistent  with  the
     policies described in note 3 to the consolidated financial statements.

     Presented below is a summary of financial data for the Company's reportable
     segments. EBITDA is not included herein as operating data and should not be
     construed as a substitute  for  operating  income or a better  indicator of
     liquidity than cash flow from operating activities, which are determined in
     accordance  with  accounting  principles  generally  accepted in the United
     States of  America.  The Company has  included  EBITDA  because the Company
     understands  that it is one measure used by certain  investors to determine
     the Company's  operating  cash flow and  historical  ability to service its
     indebtedness  and because  certain  financial  ratios are  calculated  on a
     similar  basis.  EBITDA has not been reduced by  management  and  directors
     fees, both of which are subordinated to the Company's obligations under the
     Notes.  Information  presented below for total assets exclude  intercompany
     receivables and investments in wholly owned subsidiaries.



     NET SALES TO EXTERNAL CUSTOMERS BY BUSINESS SEGMENT

                                        2001          2000              1999
                                 -------------   --------------   --------------
        PSP                     $     108,199         128,000          132,726
        HSP                           113,154         119,117          106,367
        Eliminations-PSP              (20,360)        (25,101)         (25,659)
        Eliminations-HSP                 (795)           (840)            (226)
                                 -------------   --------------   --------------
                    Total     $       200,198         221,176          213,208
                                 =============   ==============   ==============

                                       F27
<PAGE>



     OPERATING (LOSS) INCOME BUSINESS SEGMENT

                                                 2001        2000      1999
                                              ---------   --------   ---------
        PSP                                    $  2,741     6,505      7,377
        HSP                                       6,479    11,586     14,668
        Reconciliation to consolidated totals
        (Corporate)                             (12,154)   (4,859)    (4,241)
                                               ---------   -------   ---------
                                               $ (2,934)   13,232     17,804
                                               =========   =======   =========



     EBITDA BY BUSINESS  SEGMENT AND  RECONCILIATION  TO LOSS BEFORE  INCOME TAX
     BENEFIT

                                                   2001       2000       1999
                                                ---------   --------   --------
        PSP                                     $  14,558     21,183    20,595
        HSP                                        17,573     23,164    23,067
        Reconciliation to consolidated totals
          (Corporate)                              (3,514)    (4,340)   (4,120)
                                                  -------    --------  --------
                    Consolidated totals            28,617     40,007    39,542
        Depreciation and amortization              25,542     27,779    23,239
        Other                                       1,255      1,565       880
        Interest Expense                           19,709     20,744    19,347
        Transaction related/restructuring expenses  8,317       --         --
                                                   ------    -------   -------
        Loss before income tax benefit           $(26,206)   (10,081)   (3,924)
                                                 =========   ========  ========



     DEPRECIATION BY BUSINESS SEGMENT

                                                    2001       2000      1999
                                                  ------     -------   -------
        PSP                                       $  3,990    5,256      4,211
        HSP                                          2,581    2,952      2,210
        Reconciliation to consolidated totals
          (Corporate)                                  325      338        294
                                                 ---------   ------     ------
                    Consolidated totals           $  6,896    8,546      6,715
                                                 =========   =======    ======



                                       F28
<PAGE>




     CAPITAL EXPENDITURES BY BUSINESS SEGMENT

                                                  2001       2000      1999
                                               ---------   -------    ------
        PSP                                    $  2,192      3,225     4,195
        HSP                                       1,626      2,437     1,473
        Reconciliation to consolidated totals
            (Corporate)                              86        200       168
                                               --------    -------    ------
                      Consolidated totals     $   3,904      5,862     5,836
                                               ========    =======    ======

     TOTAL ASSETS BY BUSINESS SEGMENT

                                                    2001       2000
                                                ----------   ---------

        PSP                                     $   65,488     80,637
        HSP                                         82,615     89,627
        Reconciliation to consolidated totals
            (Corporate)                             17,855     13,460
                                                 ---------   --------
                      Consolidated totals       $  165,958    183,724
                                                 =========   ========



     NET SALES BY PRINCIPAL GEOGRAPHIC AREA

                                                 2001       2000       1999
                                               --------   --------   ---------
        United States                         $ 208,163    234,164     225,220
        All other                                13,190     12,953      13,873
                                               --------    -------     -------
                                                221,353    247,117     239,093
        Eliminations                            (21,155)   (25,941)    (25,885)
                                               ---------   --------   ---------
                    Total                     $  200,198   221,176     213,208
                                               =========   ========    ========


      TOTAL ASSETS BY PRINCIPAL GEOGRAPHIC AREA

                                                2001         2000
                                              ---------    ---------
        United States                         $ 158,633     174,353
        All other                                 7,325       9,371
                                               --------    ---------
                    Total                   $   165,958     183,724
                                               ========    =========

                                       F29
<PAGE>


(12) COMMITMENTS AND CONTINGENCIES

     The Company is involved in certain  legal actions from time to time related
     to  the  normal   conduct  of  its  business.   Management   believes  that
     liabilities,  if any,  resulting from litigation will not materially affect
     the  consolidated  financial  position  or  results  of  operations  of the
     Company.

     Future minimum lease  payments  under all operating  leases with initial or
     remaining  noncancelable  lease terms in excess of one year at December 31,
     2001 are as follows:

                2002                    $   1,206
                2003                        1,021
                2004                          946
                2005                          916
                2006 and thereafter     $     956


     Rent expense for the years ended December 31, 2001,  2000, and 1999 totaled
     $1,617, $1,501, and $1,977, respectively.

     To minimize the impacts of  fluctuating  natural gas prices,  during fiscal
     2001, the Company entered into a one-year  contract to purchase natural gas
     at a fixed price and fixed  quantity.  The  contract is  effective  through
     September 2002. As the Company's  historical and anticipated future natural
     gas usage is greater than the quantities  delivered under this contract and
     the natural gas  delivered is used over a  reasonable  period in the normal
     course of business, the contract is considered a normal purchases and sales
     contract, as defined within the Statement of Financial Accounting Standards
     No. 133  "Accounting  for Derivative  Instruments  and Hedging  Activities"
     (SFAS 133.)  Accordingly,  this contract is not subject to the requirements
     of SFAS 133.

(13) SCG TRANSACTION

     In  consideration  for  the  stock  purchased   pursuant  to  the  Purchase
     Agreement,  at the  closing,  SCG paid the  Stockholders  an  aggregate  of
     $41,500 less certain fees and expenses. The transaction was approved by the
     boards of directors of the Company and SCG and closed on February 2, 2001.

     In conjunction  with the execution of the Purchase  Agreement,  the Company
     incurred  approximately  $4,512 of costs,  which have been reflected in the
     results of operations for the fiscal year ended December 31, 2001. Included
     in these costs were the termination of existing stock  appreciation  rights
     and the buy-out of certain stock  options for an aggregate  cost of $2,221.
     These  costs were paid as part of the  proceeds of the  Purchase  Agreement
     and,  accordingly,  are reflected as a capital contribution to the Company.
     The Company also  incurred  $1,080 of  incentives  to certain  officers and
     employees  a portion of which were  reinvested  in the Company in whole and
     had professional fees and other transaction costs of approximately $1,211.

                                       F30
<PAGE>

(14) RESTRUCTURING CHARGES

     During fiscal 2001, the Company  recorded  restructuring  charges of $3,805
     related to the restructuring plan approved by the Company to prioritize its
     initiatives  around  high-growth  areas of its  business,  focus on  profit
     contribution,  reduce expenses, and improve efficiency.  This restructuring
     program included a workforce reduction, consolidation of excess facilities,
     exiting/rationalization  of  certain  product  lines and  restructuring  of
     certain business  functions.  This restructuring took place in three phases
     during fiscal 2001.

     During  the  first  quarter  of  fiscal  2001,   in  connection   with  the
     restructuring  plan, the Company recorded a restructuring  charge of $1,200
     for costs  associated  with  exiting  certain  product  lines.  The Company
     streamlined  their  product  offering  by  eliminating   certain  lines  of
     spectacles,  as well as the power air purified  respirator products and the
     Company's  golf/rain line. The $1,200 of discontinued  products  identified
     were all disposed of during the second and third quarters of 2001.

     The remaining  $2,605 of  restructuring  charges recorded  primarily in the
     fourth quarter of fiscal 2001  consisted of (i) $1,381 of costs  associated
     with domestic  consolidation  of two facilities  within the PSP segment and
     (ii) $1,224 of costs  associated  with the  consolidation  of the Company's
     European  PSP  operations  into one common  facility  located in the United
     Kingdom.     The    domestic     restructuring    costs    consisted    of:
     exiting/rationalization  of product lines ($618),  lease  termination costs
     ($327),  professional  fees ($228) and severance  ($208).  All of the costs
     related to the domestic  restructuring were incurred and paid in the second
     half   of   2001.   The   European   consolidation   costs   consisted   of
     exiting/rationalization  of product lines ($494),  professional fees ($392)
     and severance ($338). As of December 31, 2001,  approximately $304 of costs
     associated with the European  restructuring have been accrued but not paid.
     Management  anticipates  paying these  amounts  during the first quarter of
     fiscal 2002.

(15) CLOSURE OF FACILITY

     On August 16,  2000,  the  Company  announced  the closing of its Salt Lake
     City,  Utah  facility.  Certain  product  lines were moved to the Company's
     manufacturing   location  in  Belmont,   Michigan.   This   strategic  move
     capitalizes  on  manufacturing  synergies  between  the Salt  Lake City and
     Belmont facilities.  The move was completed by the end of 2000. The Company
     recorded a pre-tax loss of $496 in the third quarter  ending  September 30,
     2000,  to cover the expected  cash and noncash  costs of the  closure.  The
     charge includes employee termination expenses, discontinuance of leases and
     closure costs.

(16) SALE OF ASSETS

     During 2001,  the Company sold the land and buildings  associated  with the
     Salt Lake City, Utah facility for approximately $1,500, which resulted in a
     net realized gain of approximately $403.

     During  1999,  the  Company  sold  Aden  Ophthalmic   Product's  (AOP)  for
     approximately  $1,200,  which  approximated  the  cost of  inventory  sold,
     severance costs, and other disposal expenses.

(17) SUBSEQUENT EVENTS

     The Company's postretirement medical plan subject to FAS 106 was amended on
     March 1,  2002.  As of June 1, 2002,  no  additional  participants  will be

                                       F31
<PAGE>

     allowed  to  enroll  or will be  eligible  for  participation  in the  post
     retirement medical insurance plan. Accordingly, the Company will reduce the
     liability  for the  post  retirement  medical  plan and  record a  one-time
     curtailment gain of approximately $800 in the first quarter of fiscal 2002.

     See footnote 7 for detailed discussion of the fifth amendment to the Credit
     Agreement executed on March 29, 2002.

(18) CONDENSED CONSOLIDATING FINANCIAL INFORMATION

     Financial information regarding the Guarantors for the years ended December
     31, 2001,  2000, and 1999 is presented below for purposes of complying with
     the reporting  requirements  of the Guarantor  Subsidiaries.  The financial
     information  regarding the Guarantors is being presented  through condensed
     consolidating  financial  schedules  since  the  guarantees  are  full  and
     unconditional  and are joint and several.  Guarantor  financial  statements
     have not been  presented  because  management  does not  believe  that such
     financial statements are material to investors. Flex-O-Lite was acquired by
     the Company's predecessor in 1994. OSD was incorporated in October 1996 and
     acquired by the Company in 1996. In 1999,  OSD was merged into the Company.
     Allsafe was incorporated in March 1998 and acquired by the Company in 1998.
     Kedman was  incorporated by its predecessors in September 1961 and acquired
     by the Company in 1998. In 1999, Kedman was merged into Allsafe. Crystaloid
     was  incorporated  in  March  1998 and  acquired  by the  Company  in 1998.
     Silencio was  incorporated by its  predecessors in May 1996 and acquired by
     the Company in 1998. Morton Traffic Markings was acquired by the Company in
     May 1999 through  TMT-Pathway,  LLC, a limited  liability company formed by
     the Company in 1999.



                                       F32
<PAGE>
<TABLE>
<CAPTION>
                                         JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                 Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                              Condensed Consolidating Balance Sheet
                                                                      December 31, 2001
                                           ------------------------------------------------------------------------------
                                                                                 Non
                                                 Parent         Guarantor      guarantor
                 Assets                          company       subsidiaries    subsidiary     Eliminations   Consolidated
                                                --------         --------        --------       --------       --------

<S>                                               <C>             <C>             <C>              <C>           <C>
Current assets:
    Cash ...............................       $    --              --              358            --               358
    Accounts receivable, net ...........           5,367          20,416          1,099            --            26,882
    Inventories ........................           9,430          24,196          1,358            (136)         34,848
    Deferred tax assets ................           2,206            --             --              --             2,206
    Prepaid expenses ...................             818             334            430            --             1,582
                                               ---------        --------        -------        --------        --------
             Total current assets ......          17,821          44,946          3,245            (136)         65,876
    Property, plant, and equipment, net           11,753          25,879            248            --            37,880
    Intangibles ........................           6,303          36,129           --              --            42,432
    Note receivable from subsidiaries ..          84,613            --             --           (84,613)           --
    Deferred financing costs ...........           3,440            --             --              --             3,440
    Investment in subsidiaries .........           7,791            --             --            (7,791)           --
    Deferred tax assets ................          16,330            --             --              --            16,330
                                               ---------        --------        -------        --------        --------
                                               $ 148,051         106,954          3,493         (92,540)        165,958
                                               =========        ========        =======        ========        ========
 Liabilities and Stockholders' Deficit
Current liabilities:
    Notes payable to Parent ............       $    --            81,036          3,577         (84,613)           --
    Accounts payable ...................           3,277           9,691            685            --            13,653
    Other accrued liabilities ..........           2,787           2,740            399            --             5,926
    Accrued interest ...................           2,326            --             --              --             2,326
    Accrued income taxes ...............             407            --             --              --               407
    Current portion of long-term debt ..          11,875            --             --              --            11,875
                                               ---------        --------        -------        --------        --------
             Total current liabilities .          20,672          93,467          4,661         (84,613)         34,187
Long-term debt .........................         203,680            --             --              --           203,680
Other noncurrent liabilities ...........           4,073            --             --              --             4,073
Due to Parent ..........................          (7,445)         (4,307)         5,334           6,418            --
Stockholders' deficit:
    Common stock .......................            --                 1           --                (1)           --
    Additional paid-in capital .........           5,173          34,499           --           (34,499)          5,173
    Accumulated other comprehensive loss            --              (176)          (339)           --              (515)
    Loans due on common stock purchases             (561)           --             --              --              (561)
    Accumulated deficit ................         (77,541)        (16,530)        (6,163)         20,155         (80,079)
                                               ---------        --------        -------        --------        --------
             Total stockholders' deficit         (72,929)         17,794         (6,502)        (14,345)        (75,982)
                                               ---------        --------        -------        --------        --------
                                               $ 148,051         106,954          3,493         (92,540)        165,958
                                               =========        ========        =======        ========        ========

</TABLE>

                                                            F33

<PAGE>
<TABLE>
<CAPTION>
                                          JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                  Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                            Condensed Consolidating Schedule of Operations
                                                                     Year ended December 31, 2001
                                           --------------------------------------------------------------------------------
                                                                                    Non
                                                    Parent         Guarantor      guarantor
                                                   company       subsidiaries    subsidiary    Eliminations    Consolidated
                                                   --------         --------      --------       --------        --------
<S>                                                  <C>            <C>             <C>           <C>             <C>
Net sales ..................................       $ 63,064         152,691          5,598        (21,155)        200,198
Operating expenses:
    Cost of sales ..........................         47,951         116,970          3,483        (21,354)        147,050
    Restructuring charges ..................          2,581            --            1,224           --             3,805
    Selling, general, and administrative ...         14,160          17,800          3,171           --            35,131
    Amortization of intangibles ............          3,849          11,159           --             --            15,008
    Impairment of intangibles ..............           --              --            2,138           --             2,138
                                                   --------        --------        -------        -------        --------
             Total operating expenses ......         68,541         145,929         10,016        (21,354)        203,132
                                                   --------        --------        -------        -------        --------
             Operating income (loss) .......         (5,477)          6,762         (4,418)           199          (2,934)
Other:
    Interest expense .......................        (13,901)         (5,808)          --             --           (19,709)
    Amortization of deferred financing costs         (1,500)           --             --             --            (1,500)
    Transaction related expenses ...........         (1,211)           --             --             --            (1,211)
    Other ..................................         10,226         (11,013)           (65)          --              (852)
                                                   --------        --------        -------        -------        --------
             Loss before income tax
                (benefit) expense and equity
                in earnings (loss) of
                subsidiaries ...............        (11,863)        (10,059)        (4,483)           199         (26,206)
Income tax (benefit) expense ...............         (6,102)             49           --             --            (6,053)
Equity in (loss) earnings of subsidiaries ..        (12,353)           --             --           12,353            --
                                                   --------        --------        -------        -------        --------
             Net (loss) income .............       $(18,114)        (10,108)        (4,483)        12,552         (20,153)
                                                   ========        ========        =======        =======        ========

</TABLE>

                                                             F34

<PAGE>
<TABLE>
<CAPTION>
                                      JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                              Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                          Condensed Consolidating Schedule of Cash Flows
                                                                   Year ended December 31, 2001
                                           -----------------------------------------------------------------------
                                                                              Non
                                              Parent        Guarantor      guarantor
                                              company      subsidiaries    subsidiary  Eliminations   Consolidated
                                             --------        --------       --------     --------       --------
<S>                                            <C>             <C>          <C>           <C>              <C>
Cash flows from operating activities:
    Net cash (used in) provided by
      operating activities ............       $(15,115)        5,289        (1,432)       12,354         1,096
                                              --------        ------        ------        ------       -------
Cash flows from investing activities:
    Capital expenditures ..............         (2,192)       (1,626)          (86)         --          (3,904)
                                              --------        ------        ------        ------       -------
             Net cash used in investing
                activities ............         (2,192)       (1,626)          (86)         --          (3,904)
                                              --------        ------        ------        ------       -------
Cash flows from financing activities:
    Prinipal payment on long-term debt         (10,778)         --            --            --         (10,778)
    Purchase of common stock, net of
      loan payments ...................           (232)         --            --            --            (232)
    Payment of SAR's and buyout of
      options .........................          2,221          --            --            --           2,221
    Net borrowing on revolving working
      capital facility ................         11,567          --            --            --          11,567
                                              --------        ------        ------        ------       -------
             Net cash used in financing
                activities ............          2,778          --            --            --           2,778
                                              --------        ------        ------        ------       -------
             Net (decrease) increase
                in cash ...............        (14,529)        3,663        (1,518)       12,354           (30)
                                                              ======        ======        ======       =======
Cash, beginning of year ...............                                                                    388
                                                                                                       -------
Cash, end of year .....................                                                               $    358
                                                                                                       =======

</TABLE>

                                                        F35

<PAGE>
<TABLE>
<CAPTION>
                                           JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                   Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                                Condensed Consolidating Balance Sheet
                                                                          December 31, 2000
                                           ---------------------------------------------------------------------------------
                                                                                  Non
                                                 Parent        Guarantor       guarantor
                 Assets                         company       subsidiaries     subsidiary      Eliminations     Consolidated
                                                --------        --------        --------         --------         --------
<S>                                               <C>             <C>              <C>              <C>           <C>
Current assets:
    Cash ...............................       $    --              --               388            --               388
    Accounts receivable, net ...........           3,862          19,737           1,276            --            24,875
    Inventories ........................          11,403          25,430           1,526            (334)         38,025
    Deferred tax assets ................           3,391            --              --              --             3,391
    Prepaid expenses ...................             740             557              72            --             1,369
                                               ---------        --------        --------        --------        --------
             Total current assets ......          19,396          45,724           3,262            (334)         68,048
    Property, plant, and equipment, net           11,937          29,962             215            --            42,114
    Intangibles ........................           7,299          50,335           2,138            --            59,772
    Note receivable from subsidiaries ..          84,613           9,229            --           (93,842)           --
    Deferred financing costs ...........           4,751            --              --              --             4,751
    Investment in subsidiaries .........          20,144            --              --           (20,144)           --
    Deferred tax assets ................           9,039            --              --              --             9,039
                                               ---------        --------        --------        --------        --------
                                               $ 157,179         135,250           5,615        (114,320)        183,724
                                               =========        ========        ========        ========        ========
 Liabilities and Stockholders' Deficit
Current liabilities:
    Notes payable to Parent ............       $    --            90,265           3,577         (93,842)           --
    Accounts payable ...................           3,714          10,454             336            --            14,504
    Other accrued liabilities ..........           2,205           3,107             234            --             5,546
    Accrued interest ...................           2,723            --              --              --             2,723
    Accrued income taxes ...............             374            --              --              --               374
    Current portion of long-term debt ..           8,907            --              --              --             8,907
                                               ---------        --------        --------        --------        --------
             Total current liabilities .          17,923         103,826           4,147         (93,842)         32,054
Long-term debt .........................         205,744            --              --              --           205,744
Other noncurrent liabilities ...........           4,073            --              --              --             4,073
Due to Parent ..........................         (15,083)          4,818           6,085           4,180            --
Stockholders' deficit:
    Common stock .......................            --                 1            --                (1)           --
    Additional paid-in capital .........           2,951          34,499            --           (34,498)          2,952
    Accumulated other comprehensive loss            --              (145)           (699)           --              (844)
    Loans due on common stock purchases             (329)           --              --              --              (329)
    Accumulated deficit ................         (58,100)         (7,749)         (3,918)          9,841         (59,926)
                                               ---------        --------        --------        --------        --------
             Total stockholders' deficit         (55,478)         26,606          (4,617)        (24,658)        (58,147)
                                               ---------        --------        --------        --------        --------
                                               $ 157,179         135,250           5,615        (114,320)        183,724
                                               =========        ========        ========        ========        ========

</TABLE>

                                                             F36

<PAGE>
<TABLE>
<CAPTION>
                                          JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                  Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                           Condensed Consolidating Schedule of Operations
                                                                    Year ended December 31, 2000
                                           --------------------------------------------------------------------------------
                                                                                   Non
                                                    Parent        Guarantor     guarantor
                                                    company      subsidiaries   subsidiary    Eliminations    Consolidated
                                                   --------        --------      --------       --------        --------
<S>                                                <C>              <C>             <C>          <C>             <C>
Net sales ..................................       $ 66,432         174,470         6,215        (25,941)        221,176
Operating expenses:
    Cost of sales ..........................         48,646         127,242         4,117        (26,122)        153,883
    Selling, general, and administrative ...         11,332          21,403         3,593           --            36,328
    Amortization of intangibles ............          3,552          14,003           178           --            17,733
                                                   --------        --------        ------        -------        --------
             Total operating expenses ......         63,530         162,648         7,888        (26,122)        207,944
                                                   --------        --------        ------        -------        --------
             Operating income (loss) .......          2,902          11,822        (1,673)           181          13,232
Other:
    Interest expense .......................        (14,262)         (6,482)         --             --           (20,744)
    Amortization of deferred financing costs         (1,500)           --            --             --            (1,500)
    Other ..................................         10,761         (11,830)         --             --            (1,069)
                                                   --------        --------        ------        -------        --------
             Income (loss) before income
                tax (benefit) expense and
                equity in earnings (loss)
                of subsidiaries ............         (2,099)         (6,490)       (1,673)           181         (10,081)
Income tax (benefit) expense ...............         (3,344)             54             3           --            (3,287)
Equity in (loss) earnings of subsidiaries ..         (8,220)           --            --            8,220            --
                                                   --------        --------        ------        -------        --------
             Net (loss) income .............       $ (6,975)         (6,544)       (1,676)         8,401          (6,794)
                                                   ========        ========        ======        =======        ========

</TABLE>

                                                             F37

<PAGE>
<TABLE>
<CAPTION>
                                      JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                              Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                            Condensed Consolidating Schedule of Cash Flows
                                                                     Year ended December 31, 2000
                                           ------------------------------------------------------------------------
                                                                              Non
                                               Parent        Guarantor     guarantor
                                               company     subsidiaries    subsidiary  Eliminations   Consolidated
                                              --------       --------      ---------     --------       --------
<S>                                           <C>              <C>           <C>           <C>           <C>
Cash flows from operating activities:
    Net cash (used in) provided by
      operating activities ............       $ (8,975)        14,841        (1,588)       8,218         12,496
                                              --------        -------        ------        -----        -------
Cash flows from investing activities:
    Capital expenditures ..............         (2,245)        (3,540)          (77)        --           (5,862)
                                              --------        -------        ------        -----        -------
             Net cash used in investing
                activities ............         (2,245)        (3,540)          (77)        --           (5,862)
                                              --------        -------        ------        -----        -------
Cash flows from financing activities:
    Prinipal payment on long-term debt          (6,500)          --            --           --           (6,500)
    Net borrowing on revolving working
      capital facility ................             10           --            --           --               10
                                              --------        -------        ------        -----        -------
             Net cash used in financing
                activities ............         (6,490)          --            --           --           (6,490)
                                              --------        -------        ------        -----        -------
             Net (decrease) increase
                in cash ...............       $(17,710)        11,301        (1,665)       8,218            144
                                                              =======        ======        =====        =======
Cash, beginning of year ...............                                                                     244
                                                                                                        -------
Cash, end of year .....................                                                                $    388
                                                                                                        =======


</TABLE>

                                                         F38

<PAGE>
<TABLE>
<CAPTION>
                                          JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                  Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                            Condensed Consolidating Schedule of Operations
                                                                     Year ended December 31, 1999
                                           --------------------------------------------------------------------------------
                                                                                    Non
                                                    Parent       Guarantor       guarantor
                                                   company      subsidiaries     subsidiary   Eliminations   Consolidated
                                                   --------        --------       --------      --------        --------
<S>                                                <C>              <C>             <C>          <C>             <C>
Net sales ..................................       $ 54,339         177,364         7,390        (25,885)        213,208
Operating expenses:
    Cost of sales ..........................         39,111         127,101         4,620        (25,712)        145,120
    Selling, general, and administrative ...         11,084          20,335         3,842           --            35,261
    Amortization of intangibles ............          1,101          13,755           167           --            15,023
                                                   --------        --------        ------        -------        --------
             Total operating expenses ......         51,296         161,191         8,629        (25,712)        195,404
                                                   --------        --------        ------        -------        --------
             Operating income (loss) .......          3,043          16,173        (1,239)          (173)         17,804
Other:
    Interest expense .......................        (13,990)         (5,357)         --             --           (19,347)
    Amortization of deferred financing costs         (1,501)           --            --             --            (1,501)
    Other ..................................         12,484         (13,364)         --             --              (880)
                                                   --------        --------        ------        -------        --------
             Income (loss) before income
                tax (benefit) expense and
                equity in earnings (loss)
                of subsidiaries ............             36          (2,548)       (1,239)          (173)         (3,924)
Income tax (benefit) expense ...............         (1,452)            295           (15)          --            (1,172)
Equity in (loss) earnings of subsidiaries ..         (4,067)           --            --            4,067            --
                                                   --------        --------        ------        -------        --------
             Net (loss) income .............       $ (2,579)         (2,843)       (1,224)         3,894          (2,752)
                                                   ========        ========        ======        =======        ========

</TABLE>

                                                             F39

<PAGE>
<TABLE>
<CAPTION>
                                          JACKSON PRODUCTS, INC. AND SUBSIDIARIES
                                  Notes to Consolidated Financial Statements -(continued)


(18) Condensed Consolidating Financial Information (con't)



                                                            Condensed Consolidating Schedule of Cash Flows
                                                                     Year ended December 31, 1999
                                           -------------------------------------------------------------------------------
                                                                                     Non
                                                     Parent        Guarantor      guarantor
                                                    company       subsidiaries    subsidiary   Eliminations  Consolidated
                                                    --------        --------      --------      --------      --------
<S>                                                 <C>              <C>           <C>            <C>           <C>
Cash flows from operating activities:
    Net cash (used in) provided by
      operating activities ..................       $ (1,394)        14,314        (1,843)        4,067         15,144
                                                    --------        -------        ------         -----        -------
Cash flows from investing activities:
    Acquisition of business, including
      transaction costs, net of cash acquired        (39,928)          --            --            --          (39,928)
    Capital expenditures ....................         (1,793)        (3,848)         (195)         --           (5,836)
                                                    --------        -------        ------         -----        -------
             Net cash used in investing
                activities ..................        (41,721)        (3,848)         (195)         --          (45,764)
                                                    --------        -------        ------         -----        -------
Cash flows from financing activities:
    Proceeds from issuance of long-term debt          35,700           --            --            --           35,700
    Payment of loans on common stock ........             14           --            --            --               14
    Payment of long-term debt ...............         (5,177)          --            --            --           (5,177)
                                                    --------        -------        ------         -----        -------
             Net cash used in financing
                activities ..................         30,537           --            --            --           30,537
             Net (decrease) increase
                in cash .....................       $(12,578)        10,466        (2,038)        4,067            (83)
                                                                    =======        ======         =====        =======
Cash, beginning of year .....................                                                                      327
                                                                                                               -------
Cash, end of year ...........................                                                                 $    244
                                                                                                               =======

</TABLE>

                                                            F40



<PAGE>


                             JACKSON PRODUCTS, INC.

                   FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

     THIS FIRST AMENDMENT TO STOCK PURCHASE  AGREEMENT,  dated as of February 1,
2001 (this "Amendment"), is made by and among Jackson Products, Inc., a Delaware
corporation (the "Company"),  SCG Acquisition LLC, a Delaware limited  liability
company (the "Buyer"),  John W. Jordan II, as Sellers  Representative and not in
his individual capacity,  and the option holders and stockholders of the Company
(collectively, the "Stockholders").

     WHEREAS,  a Stock Purchase  Agreement was entered into on December 29, 2000
(the "Purchase  Agreement"),  by and among the Company, the Buyer and certain of
the Stockholders of the Company signatory thereto (each an "Original Seller" and
collectively, the "Original Sellers");

     WHEREAS,  the parties desire that each Stockholder  listed on the signature
page hereto under the heading  Additional  Sellers (each an "Additional  Seller"
and collectively,  the "Additional Sellers") become a party to, be bound by, and
to comply with the provisions of the Purchase  Agreement as a Seller  thereunder
(as such  term is  defined  and used  therein)  in the  same  manner  as if each
Additional Seller were an original signatory to the Purchase Agreement.

     NOW,   THEREFORE,   in   consideration   of  the  mutual   agreements   and
understandings set forth herein, the parties hereto mutually agree as follows:

     1. Each  Additional  Seller agrees that by the execution of this Amendment,
such Additional  Seller shall be deemed to have executed the Purchase  Agreement
and hereby agrees to comply with the  provisions of the Purchase  Agreement as a
Seller  thereunder (as such term is defined and used therein) in the same manner
as if  each  Additional  Seller  were  an  original  signatory  to the  Purchase
Agreement;  provided,  however,  that  the  provisions  of  Section  9.16 of the
Purchase  Agreement shall not be applicable to the Institutional  Investors (but
not  including  JZEP)  for the  purposes  of  this  Section  1 and  the  Sellers
Representative   shall  not  have  any   obligations   or   liabilities  to  the
Institutional Investors.

     2. The  definition  of "Warrant  Proceeds"  in Section 1.1 of the  Purchase
Agreement is hereby deleted in its entirety.

     3.  Section  2.7(b) of the  Purchase  Agreement  is hereby  deleted  in its
entirety and replaced with the following:

               "(b) Each  Stockholder  who is a holder of Warrants  shall assign
          such  Warrants  to the Buyer to the extent  requested  by the  Sellers
          Representative  and in  connection  with  such  assignment  each  such
          Stockholder  shall deliver to the Company  their warrant  certificates
          representing  such Warrants  together with instructions to assign such
          Warrants  to the Buyer.  The  Company  shall  issue and deliver to the
          Sellers Representative  replacement warrant certificates  representing

                                       A1
<PAGE>

          the Warrants not assigned to the Buyer, and the Sellers Representative
          shall promptly cause such warrant  certificates to be delivered to the
          appropriate  Stockholder.  The  Company  shall,  at the  option of the
          Buyer, (i) issue to the Buyer a new warrant  certificate  representing
          the  Warrants so  assigned  or (ii) permit the Buyer to exercise  such
          assigned Warrants and issue the appropriate  number of shares of Class
          A Common  Stock  and/or  Class B  Common  Stock  in lieu  thereof.  In
          connection therewith, each Stockholder who is a holder of Warrants and
          who has  assigned  Warrants  to the Buyer  agrees to pay the  exercise
          price of such Warrants at the Closing,  with such exercise  price paid
          by an  equivalent  reduction  in the sale  proceeds  paid to each such
          Stockholder.  The Company acknowledges that the full exercise price of
          the transferred Warrants has been paid."

     4. With respect to the representations and warranties contained in Sections
3.4 and 3.5 of the Purchase Agreement, such representations and warranties shall
be  modified  by  adding  the  words  ";provided,  that,  with  respect  to  the
Institutional  Investors  (as  defined in the  Stockholders  Agreement,  but not
including JZEP), the foregoing  representations  and warranties shall be made to
their knowledge" at the end of each such section.

     5.  Section 3.6 of the Purchase  Agreement is hereby  amended by adding the
following sentence at the end of such section:

          "The  representations  and  warranties  contained  in this Section 3.6
          shall  not  be   deemed  to  have  been  made  by  the   Institutional
          Investors(other than JZEP) and the Institutional Investors (other than
          JZEP) shall have no  obligations  or  liabilities  with respect to any
          breach of any of the  representations  or warranties set forth in such
          section."

     6. Section 5.10 of the Purchase Agreement is hereby amended by deleting the
word "Second" and inserting the word "Third."

     7.  Section 7.2 of the Purchase  Agreement is hereby  amended by adding the
words  "(in  case of a breach by the  Sellers,  among the  Sellers  in  breach)"
immediately  following after the word  "severally" in the first sentence of such
section.

     8. Section 7.2 of the Purchase  Agreement is hereby further  amended by (i)
deleting the words "Seller Indemnifying Party's" and substituting  therefore the
word  "Seller's"  and (ii)  deleting the words "Seller  Indemnifying  Party" and
substituting therefore the word "Seller", each in the proviso to such section.

     9.  Section 7.2 of the  Purchase  Agreement  is hereby  further  amended by
adding the following sentence at the end of such section:

          "Notwithstanding the provisions of Sections 3.4, 3.5 and this 7.2, the
          Institutional  Investors  (other than JZEP) shall  indemnify the Buyer
          for any  breaches of Sections  3.4 and 3.5 if any Seller  Indemnifying
          Party is determined to be liable for such breach;  provided,  however,
          that the  Institutional  Investors  (other  than  JZEP)  shall  not be
          required to indemnify the Buyer in an amount greater than its pro rata
          share of such liability."

     10. Schedule II of the Purchase Agreement is hereby amended and restated in
its entirety as set forth on Exhibit A attached hereto.



                                       A2
<PAGE>

     11.  Exhibit A of the Purchase  Agreement is hereby amended and restated in
its entirety as set forth on Exhibit B attached hereto.

     12. Except as herein amended,  the Purchase  Agreement shall remain in full
force and effect and is ratified in all respects. On and after the effectiveness
of this Amendment, each reference in the Purchase Agreement to "this Agreement,"
"hereunder,"  "hereof,"  "herein" or words of like import, and each reference to
the  Purchase  Agreement  in any  other  agreements,  documents  or  instruments
executed and delivered pursuant to the Purchase  Agreement,  shall mean and be a
reference to the Purchase Agreement, as amended by this Amendment.

     13. This  Amendment  may be executed in two or more  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.



                                       A3
<PAGE>


     IN WITNESS  WHEREOF,  the parties hereto have caused this  instrument to be
duly executed as of the date first above written.


            COMPANY:


                             JACKSON PRODUCTS, INC.



                             By:
                                ------------------------------------------------
                                  Name:
                                  Title:




                             SELLERS REPRESENTATIVE:



                             By:
                                ------------------------------------------------
                                  Name:  John W. Jordan II
                                  Title:    Sellers Representative




             BUYER:

                             SCG ACQUISITION LLC



                             By:
                                ------------------------------------------------
                                  Name:  George B. Kelly
                                  Title:    Authorized Person









                                       A4
<PAGE>

                             ORIGINAL SELLERS:


                             LEUCADIA INVESTORS, INC.


                             By:------------------------------------------------
                                  Name:
                                   Title:


                             JOHN W. JORDAN, II REVOCABLE TRUST


                             By:------------------------------------------------
                                   Name:    John W. Jordan II
                                   Title:   Trustee


                             -------------------------------------
                             David W. Zalaznick


                             -------------------------------------
                             Jonathan F. Boucher


                             -------------------------------------
                             John R. Lowden


                             -------------------------------------
                             Adam E. Max


                             -------------------------------------
                             John M. Camp III


                             JOHN M. CAMP III PROFIT SHARING PLAN     DTD 1/1/88


                             By:------------------------------------------------
                                   Name:    John M. Camp III
                                   Title:   Trustee


                                       A5
<PAGE>

                             -------------------------------------
                             A. Richard Caputo, Jr.


                             JAMES E. JORDAN, JR. PROFIT SHARING  PLAN AND TRUST


                             By:------------------------------------------------
                                  Name:     James E. Jordan, Jr.
                                  Title:    Trustee


                             --------------------------------------
                             Paul R. Rodzevik


                             JZ EQUITY PARTNERS PLC


                             By:------------------------------------------------
                                  Name:
                                  Title:


                             SAFETY PARTNERS, L.P.

                             By: Jefferies & Company, Inc., its General Partner


                             By:------------------------------------------------
                                  Name:
                                  Title:








                                       A6
<PAGE>

                             ADDITIONAL SELLERS:




                             Ronald C. Boeger




                             John L. Bortle




                             John M. Pappas




                             James B. Taylor




                             Robert H. Elkin




                             Allan A. Huning




                             Darold G. Oltjenbruns







                             MASSACHUSETTS MUTUAL LIFE
                             INSURANCE COMPANY

                             By:      David L. Babson & Company Inc., its
                             Investment Adviser


                             By:
                                ------------------------------------------------
              Name:
             Title:


                             MASSMUTUAL PARTICIPATION INVESTORS



                             By:
                                ------------------------------------------------
                                  Name:
                                  Title:


                             MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED

                             By:      David L. Babson & Company Inc., under
                             delegated authority from Massachusetts
                             Mutual Life Insurance Company, its
                             Investment Manager


                             By:
                                ------------------------------------------------
                                  Name:
                                  Title:


                             MASSMUTUAL CORPORATE INVESTORS


                             By:
                                ------------------------------------------------
                                  Name:
                                  Title:







                             THE NORTHWESTERN MUTUAL LIFE
                             INSURANCE COMPANY


                             By:
                                ------------------------------------------------
                                  Name:
                                  Title:





                                       A7



<PAGE>
                 STOCK APPRECIATION RIGHTS TERMINATION AGREEMENT



     THIS  AGREEMENT is executed as of the February 2, 2001 between  Christopher
T. Paule ("Employee") and JACKSON PRODUCTS, INC. ("Jackson" or the "Company"), a
Delaware corporation.

     WHEREAS, Jackson is a party to that certain Stock Purchase Agreement, dated
as of December 29, 2000, as amended,  (the  "Purchase  Agreement"),  pursuant to
which that certain Stock  Appreciation  Rights Agreement (the "SAR  Agreement"),
dated as of April 22,  1998,  between  the Company  and the  Employee,  shall be
terminated; and

     WHEREAS,  it is a  condition  to the  receipt by  Employee  of the  amounts
contemplated  by  Section  2.2(iii)  of the  Purchase  Agreement  that  the  SAR
Agreement be terminated;

     NOW,  THEREFORE,  in consideration  of the foregoing,  the parties agree as
follows  (capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Purchase Agreement).

     1. Termination. The SAR Agreement is hereby terminated, effective as of the
date hereof and shall be of no further  force or effect.  Employee  acknowledges
that the  payment  set forth in  Section 2  constitutes  full  payment  and full
performance in respect of Jackson's obligations under the SAR Agreement.

     2. Payment in Respect of SAR  Agreement.  Upon the Closing,  Employee shall
receive the cash  payments  contemplated  by Section  2.2(iii)  of the  Purchase
Agreement  in the  amount of  $307,557.77  (the  "Payment")  in  respect  of the
termination of the SAR Agreement

     3. Representations of Employee.  Employee hereby represents and warrants to
Jackson as follows:  Employee is the owner, free and clear of any and all liens,
of all rights with respect to the SAR Agreement.  The SAR Agreement  constitutes
all of the stock  appreciation  rights granted to Employee by Jackson.  Employee
has duly and validly  executed and  delivered  this  Agreement.  This  Agreement
constitutes  the legal,  valid and binding  obligation of Employee,  enforceable
against   Employee  in  accordance  with  the  terms  herein,   except  as  such
enforceability may be limited by applicable bankruptcy,  insolvency, moratorium,
reorganization  or  similar  laws in effect  which  affect  the  enforcement  of
creditors' rights generally and by equitable principles

     4. Release.  In consideration of the promises  contained  herein,  Employee
hereby irrevocably and unconditionally releases,  acquits and forever discharges
for himself and his heirs,  executors,  administrators,  successors and assigns,
the Company,  the Jordan  Company LLC,  Summit  Capital  Group and each of their
respective stockholders,  partners, members, predecessors,  successors, assigns,
agents, directors, officers, employees,  representatives,  attorneys, divisions,
subsidiaries,   affiliates  (and  stockholders,   members,   partners,   agents,
directors, officers, employees,  representatives and attorneys of such persons),
and all persons acting by, through, under or in concert with any of them, or any
of them, from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements,  controversies, damages, actions, causes of action, suits,

                                       P1
<PAGE>

rights,  demands,  costs, losses, debts and expenses (including  attorneys' fees
and costs  actually  and  costs  actually  incurred)  of any  nature  whatsoever
relating to the SAR Agreement or the termination  thereof.  Notwithstanding  the
foregoing,  the release by Employee in this  Section 4 shall not limit the right
of the Employee to seek to enforce the provisions of this Agreement.

     5. Benefit.  This Agreement shall be binding upon, and inure to the benefit
of, the respective legal representatives,  successors and assigns of the parties
hereto.

     6.   Counterparts.   This   Agreement  may  be  executed  in  two  or  more
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

     7. Actions Necessary to Complete  Transaction.  Each party hereby agrees to
execute and  deliver all such other  documents  or  instruments  and to take any
action as may be  reasonably  required in order to effectuate  the  transactions
contemplated by this Agreement.

     8. Captions.  The captions herein are included for convenience or reference
only,  are not a part of the Agreement and shall be ignored in the  construction
and interpretation hereof.

     9. Prior Agreement.  This Agreement supersedes all prior agreements between
the parties with respect to the subject  matter  hereof,  including the terms of
the SAR  Agreement,  and no  agreements or  representations,  oral or otherwise,
express or implied,  with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.



                                       P2
<PAGE>



     IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement on the
date first above written.

                               JACKSON PRODUCTS, INC.



                               By:_________________________
                                    Name:
                                    Title:



                               --------------------------
                               Christopher T. Paule




<PAGE>
                    EMPLOYMENT AND NON-INTERFERENCE AGREEMENT

     This  Employment and  Non-Interference  Agreement,  dated as of May 6, 1998
(this  "Agreement"),  by and between  Lincoln M. Kennedy (the  "Executive")  and
American  Allsafe  Company,  a  Delaware  corporation  (the  "Company"),  and  a
wholly-owned  subsidiary of Jackson Products,  Inc., a Delaware corporation (the
"Parent").

                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS,  the Company wishes to obtain the future services of the Executive
for the Company; and

     WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and

     WHEREAS,  the Company  wishes to secure the  Executive's  non-interference,
upon the terms and conditions herein set forth;

     NOW,  THEREFORE,  in  consideration  of the mutual  promises and  covenants
contained herein,  and intending to be legally bound hereby,  the parties hereto
agree as follows:

     1. Nature of Employment

     Subject to Section 3, the Company hereby employs  Executive,  and Executive
agrees to accept such  employment,  during the Term of Employment (as defined in
Section 3(a)),  as President and Chief  Operating  Officer of the Company and to
undertake  such duties and  responsibilities  as may be  reasonably  assigned to
Executive  from time to time by the Board of  Directors  of the  Company  or the
appropriately authorized and designated officers of the Company or the Parent.

     2. Extent of Employment

     (a)  During  the  Term of  Employment,  the  Executive  shall  perform  his
obligations hereunder faithfully and to the best of his ability at the principal
executive  offices of the Company as directed by Robert H. Elkin,  Chairman  and
Chief Executive  Officer of the Parent,  and under the direction of the Board of
Directors of the Company while  reporting to Mr.  Elkin,  and shall abide by the
rules,  customs and usages from time to time  established  by each of the Parent
and the Company.

     (b) During the Term of  Employment,  the Executive  shall devote all of his
business  time,  energy  and  skill  as  may be  reasonably  necessary  for  the
performance of his duties,  responsibilities  and obligations  hereunder (except
for vacation  periods and  reasonable  periods of illness or other  incapacity),
consistent with past practices and norms in similar positions.



                                       L1
<PAGE>

     (c)  Nothing  contained  herein  shall  require  Executive  to  follow  any
directive  or to  perform  any act which  would  violate  any laws,  ordinances,
regulations or rules of any  governmental,  regulatory or  administrative  body,
agent or authority,  any court or judicial authority,  or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive shall
act in good faith in accordance with all Regulations.

     3. Term of Employment; Termination

     (a) The "Term of  Employment"  shall  commence on the date hereof and shall
continue for a term of three years (the  "Initial  Term"),  subject to automatic
renewal  for  additional  periods  of one (1) year after the  Initial  Term (the
"Additional  Terms")  unless at least  ninety  (90) days prior to the  scheduled
expiration date of the Initial Term or subsequent  Additional  Term,  either the
Executive or the Company notifies the other of its decision not to renew. Should
the  Executive's  employment  by the Company be earlier  terminated  pursuant to
Section  3(b)  or by the  Executive  pursuant  to  Section  3(c),  the  Term  of
Employment shall end on the date of such earlier termination.

     (b)  Subject to the  payments  contemplated  by Section  3(e),  the Term of
Employment may be terminated at any time by the Company:

          (i)  upon the death of Executive;

          (ii) in the event  that  because  of  physical  or  mental  disability
               Executive   is  unable  to   perform,   and  does  not   perform,
               substantially all of his duties hereunder for a continuous period
               of  ninety  (90)  days,   or  as   certified  in  writing  by  an
               experienced,    recognized   physician   specializing   in   such
               disabilities,  which physician shall be reasonably  acceptable to
               the Company and the Executive;

          (iii) for Cause (as defined in Section 3(d));
------------

          (iv) upon  the  continuous  poor or  unacceptable  performance  of the
               Executive's  duties to the Company,  in the sole  judgment of the
               Board of Directors of the Company, which has remained uncured for
               a period of  thirty  (30) days  after  delivery  of notice by the
               Company to the Executive of such dissatisfaction with Executive's
               performance; or

          (v)  for any other reason or no reason,  it being  understood  that no
               reason is required.

          Executive  acknowledges that no  representations or promises have been
     made concerning the grounds for termination or the future  operation of the
     Company's  business,  and that nothing contained herein or otherwise stated
     by or on behalf of the Company  modifies or amends the right of the Company
     to terminate  Executive  at any time,  with or without  Cause.  Termination
     shall become effective upon the delivery by the Company to the Executive of
     notice specifying such termination and the reasons therefor (i.e.,  Section
     3(b)(i)-(v)),  subject  to  the  requirements  for  advance  notice  and an

                                       L2
<PAGE>

     opportunity  to cure  provided  in  this  Agreement,  if and to the  extent
     applicable.

     (c)  Subject to the  payments  contemplated  by Section  3(e),  the Term of
Employment may be terminated at any time by the Executive:

          (i)  upon the death of Executive;

          (ii) in the event  that  because  of  physical  or  mental  disability
               Executive   is  unable  to   perform,   and  does  not   perform,
               substantially all of his duties hereunder for a continuous period
               of  ninety  (90)  days,   or  as   certified  in  writing  by  an
               experienced,    recognized   physician   specializing   in   such
               disabilities,  which physician shall be reasonably  acceptable to
               the Company and the Executive;

          (iii)as a result of a material  reduction  in  Executive's  authority,
               perquisites,  salary,  position or  responsibilities  (other than
               such a  reduction  which  affects  all of  the  Company's  senior
               executives on a substantially  equal or  proportionate  basis) or
               the  Company's  willful,  material  violation of its  obligations
               under this Agreement,  in each case, after thirty (30) days prior
               written  notice to the Company and its Board of Directors and the
               Company's failure thereafter to cure such reduction or violation;
               or

          (iv) voluntarily  or for any reason  not  referred  to in clauses  (i)
               through (iii), or no reason, in each case, after ninety (90) days
               prior written notice to the Company.

     (d) For the purposes of this Section 3:
---------

     "Cause" shall mean any of the following:  (i) Executive's commission of any
crime  or  criminal  offense  involving  the  unlawful  theft or  conversion  of
substantial  monies or other property or any other felony (other than a criminal
offense arising solely under a statutory  provision  imposing criminal liability
on the  Executive on a per se basis due to the offices  held by the  Executive),
including fraud or embezzlement; (ii) Executive's breach of any of his fiduciary
duties   to  the   Company   or  its   stockholders   or  making  of  a  willful
misrepresentation or omission which breach,  misrepresentation or omission would
reasonably be expected to materially adversely affect the business,  properties,
assets,  condition  (financial  or  other)  or  prospects  of the  Parent or the
Company; (iii) Executive's willful, continual and material neglect or failure to
discharge his duties,  responsibilities or obligations  prescribed by Sections 1
and 2 (other than  arising  solely due to physical or mental  disability);  (iv)
Executive's habitual drunkenness or substance abuse which materially  interferes
with  Executive's   ability  to  discharge  his  duties,   responsibilities   or
obligations prescribed by Sections 1 and 2; (v) Executive's willful and material
breach of any  non-competition  or  confidentiality  agreement with the Company,
including  without  limitation,  those  set  forth in  Sections  7 and 8 of this
Agreement;   and   (vi)   Executive's   gross   neglect   of  his   duties   and
responsibilities, as determined by the Company.

     (e) In the event Executive's  employment is terminated  pursuant to Section
3(b)(i), 3(b)(ii), 3(b)(v), 3(c)(i), 3(c)(ii) or 3(c)(iii), the Company will pay

                                       L3
<PAGE>

to  Executive  (or his estate or  representative)  the full  amounts to which he
would be entitled under Section 4(a) and customary  benefits for the period from
the date of termination to the first  anniversary  of such  termination.  In the
event Executive's  employment is terminated  pursuant to Section  3(b)(iv),  the
Company  will pay to  Executive  the full  amounts to which he would be entitled
under  Section  4(a) and  customary  benefits  for the  period  from the date of
termination  until thirty (30) days after the date of such  termination.  In the
event  Executive's  employment  is terminated  pursuant to Section  3(b)(iii) or
3(c)(iv),  there will be no amounts owing by the Company to the Executive  under
Section 4 or any other provision of this  Agreement,  from and after the date of
termination.  If the Company  makes any payments  required by this Section 3(e),
such payments will constitute  severance and liquidated damages, and the Company
will not be  obligated  to pay any  further  amounts  to  Executive  under  this
Agreement  or  otherwise  be  liable  to  Executive  in   connection   with  his
termination.

     (f) All  determinations  pursuant to this Section 3 (other than pursuant to
Section 3(b)(ii) or 3(c)(ii)) shall be made by the Company's Board of Directors,
in its sole discretion, whose decision shall be final, conclusive and binding.

     (g)  Termination of the Term of Employment  will not terminate the parties'
respective  obligations  under  Sections  7,  8, 10  through  20,  or any  other
provisions not associated specifically with the Term of Employment.

     (h) In the event the Term of Employment  is  terminated  and the Company is
obligated  to make  payments  pursuant to Section  3(e),  Executive  will not be
obligated to seek or obtain alternative  employment;  provided,  however,  if he
nevertheless  thereafter  obtains  alternative  employment,  then  if and to the
extent Executive  obtains such  employment,  the Company's  payment  obligations
under Section 3(e),  including its obligation to provide insurance coverage,  if
any,  will  be  mitigated  and  reduced  by  and to the  extent  of  Executive's
compensation  under  such  alternative  employment  during  the period for which
payments  are owed by the Company  pursuant to Section  3(e).  Moreover,  in the
event that, after the Restricted  Period pursuant to Section 8(a),  Executive is
employed  by or engaged in a  Competitive  Business as  contemplated  by Section
8(a)(i),  then the Company will thereupon cease and will be no longer  obligated
to make any payments otherwise required under Section 3(e).

     (i) In the event the Term of Employment  is  terminated  and the Company is
obligated to make payments pursuant to Section 3(e), Executive hereby waives any
and all claims against the Company,  the Parent and their  respective  officers,
directors,  employees,  agents, or representatives,  stockholders and affiliates
relating to his employment during the term hereof and this Agreement.

     4. Compensation.
------------

     (a) During the Term of Employment,  the Company shall pay  compensation  to
Executive as base  compensation  for his  services  hereunder a base salary at a
rate of $153,300 per annum.  Such amounts may be adjusted upward annually at the
discretion of the Company based upon an annual review of Executive's performance
by the Company beginning on May 1, 1999.

                                       L4
<PAGE>

     (b) An  annual  bonus  compensation  based on  Executive's  performance  as
determined  and  approved by the Board of  Directors.  Such bonus will be at the
full discretion of the Board of Directors, and may not be paid at all. Executive
acknowledges  that no bonus has been  agreed upon or  promised.  If the Board of
Directors decides to pay a bonus, it is to be paid within thirty (30) days after
the issuance of audited financial statements for the Company.

     (c)  During  the Term of  Employment,  Executive  shall  receive  a monthly
automobile  allowance  of $475  (before the effect of federal  and state  income
taxes and FICA).

     5. Reimbursement of Expenses

     During the Term of Employment,  the Company shall  reimburse  Executive for
documented  travel,  entertainment  and other  expenses  reasonably  incurred by
Executive in connection  with the  performance  of his duties  hereunder and, in
each case, in accordance with the rules,  customs and usages  promulgated by the
Company from time to time in effect.

     6. Benefits

     During  the  Term  of  Employment,  the  Executive  shall  be  entitled  to
perquisites,  paid vacations and benefits (including health, short and long term
disability,  pension and life insurance benefits  consistent with past practice,
or as increased from time to time)  established  from time to time, by the Board
of  Directors  for  executives  of the  Company,  subject  to the  policies  and
procedures in effect regarding participation in such benefits.

     7. Confidential Information

     (a) Executive  acknowledges that his employment  hereunder gives him access
to  Confidential  Information  relating  to  the  Companies'  Business  and  its
customers  which must  remain  confidential.  Executive  acknowledges  that this
information is valuable, special, and a unique asset of the Companies' Business,
and that it has been and will be  developed  by the  Companies  at  considerable
effort and expense,  and if it were to be known and used by others  engaged in a
Competitive  Business,  it would be harmful and  detrimental to the interests of
the Companies.  In consideration of the foregoing and this Agreement,  Executive
hereby  agrees and  covenants  that,  during  and after the Term of  Employment,
Executive will not,  directly or indirectly in one or a series of  transactions,
disclose to any person,  or use or  otherwise  exploit for the  Executive's  own
benefit or for the benefit of anyone other than the Companies,  any Confidential
Information  (as defined in Section 9),  whether  prepared by  Executive or not;
provided,  however,  that  any  Confidential  Information  may be  disclosed  to


                                       L5
<PAGE>

officers,  representatives,  employees  and agents of the  Companies who need to
know such  Confidential  Information in order to perform the services or conduct
the  operations  required  or expected  of them in the  Business  (as defined in
Section 9).  Executive  shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Companies,  except as required
in  his  normal  course  of  employment  by the  Company.  Executive  shall  use
commercially  reasonable  efforts to cause all  persons or  entities to whom any
Confidential  Information  shall be  disclosed  by him  hereunder to observe the
terms and  conditions  set forth herein as though each such person or entity was
bound hereby.  Executive shall have no obligation hereunder to keep confidential
any Confidential  Information if and to the extent  disclosure of any thereof is
specifically required by law; provided, however, that in the event disclosure is
required by  applicable  law, the Executive  shall  provide the  Companies  with
prompt notice of such requirement,  prior to making any disclosure,  so that the
Companies  may seek an  appropriate  protective  order.  At the  request  of the
Companies,  Executive agrees to deliver to the Companies, at any time during the
Term of Employment,  or thereafter,  all Confidential  Information  which he may
possess or control.  Executive agrees that all  Confidential  Information of the
Companies (whether now or hereafter existing)  conceived,  discovered or made by
him during the Term of Employment exclusively belongs to the Company (and not to
Executive).  Executive will promptly disclose such  Confidential  Information to
the Companies and perform all actions  reasonably  requested by the Companies to
establish and confirm such exclusive ownership.

     (b) The  terms of this  Section 7 shall  survive  the  termination  of this
Agreement regardless of who terminates this Agreement, or the reasons therefor.

     8. Non-Interference

     (a)  Executive  acknowledges  that the services to be provided give him the
opportunity  to have special  knowledge of the  Companies  and its  Confidential
Information and the  capabilities of individuals  employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company.  In consideration of this Agreement,  Executive covenants
and agrees that:

          (i)  From the date hereof through the date that is 24 months after the
               termination of the Term of Employment (the "Restricted  Period"),
               Executive will not,  without the express written  approval of the
               Board  of  Directors  of the  Company,  anywhere  in the  Market,
               directly or indirectly, in one or a series of transactions,  own,
               manage,  operate,  control,  invest or acquire an interest in, or
               otherwise  engage or  participate  in,  whether as a  proprietor,
               partner, stockholder,  lender, director, officer, employee, joint
               venturer,    investor,   lessor,   supplier,   customer,   agent,
               representative  or  other  participant,  in  any  business  which
               competes, directly or indirectly, with the Business in the Market
               ("Competitive  Business")  without  regard  to  (A)  whether  the
               Competitive  Business  has its  office,  manufacturing  or  other
               business facilities within or without the Market, (B) whether any
               of the activities of the Executive referred to above occur or are
               performed  within  or  without  the  Market  or (C)  whether  the
               Executive resides, or reports to an office, within or without the
               Market;  provided,  however, that (x) the Executive may, anywhere
               in the  Market,  directly  or  indirectly,  in one or a series of
               transactions,  own,  invest or acquire an  interest  in up to one
               percent (1%) of the capital stock of a corporation  whose capital
               stock is  traded  publicly,  or that  (y)  Executive  may  accept
               employment with a successor company to the Company.

          (ii) During the  Restricted  Period (which shall not be reduced by any
               period of  violation  of this  Agreement  by  Executive or period
               which  is  required   for   litigation   to  enforce  the  rights
               hereunder),  Executive will not without the express prior written

                                       L6
<PAGE>

               approval of the Board of Directors of the Company (A) directly or
               indirectly, in one or a series of transactions,  recruit, solicit
               or  otherwise  induce  or  influence  any  proprietor,   partner,
               stockholder,  lender, director,  officer,  employee, sales agent,
               joint venturer,  investor,  lessor,  supplier,  customer,  agent,
               representative   or  any  other   person  which  has  a  business
               relationship  with the  Companies or had a business  relationship
               with the Companies  within the 24 month period preceding the date
               of the incident in  question,  to  discontinue,  reduce or modify
               such  employment,   agency  or  business  relationship  with  the
               Companies,  or  (B)  employ  or  seek  to  employ  or  cause  any
               Competitive  Business  to employ or seek to employ  any person or
               agent who is then (or was at any time  within 24 months  prior to
               the date the  Executive or the  Competitive  Business  employs or
               seeks  to  employ  such  person)  employed  or  retained  by  the
               Companies.  Notwithstanding  the foregoing,  nothing herein shall
               prevent the Executive from  providing a letter of  recommendation
               to an employee with respect to a future employment opportunity.

          (iii)The  scope  and  term  of  this  Section  8  would  not  preclude
               Executive  from  earning a living  with an  entity  that is not a
               Competitive Business.

     (b) In the event that  Executive  breaches his  obligations in any material
respect under Section 7 or this Section 8, the Company,  in addition to pursuing
all available  remedies under this Agreement,  at law or otherwise,  and without
limiting its right to pursue the same shall cease all payments to the  Executive
under this Agreement or any other agreement.

     (c) The  terms of this  Section 8 shall  survive  the  termination  of this
Agreement regardless of who terminates this Agreement, or the reasons therefor.

     9. Definitions

     "Business"  means any business  conducted,  or engaged in, by the Companies
prior to the date hereof or at any time during the Term of Employment.

     "Cause" is defined in Section 3(c).

     "Companies"  means  Parent  and  its  successors  or any of its  direct  or
indirect subsidiaries (including the Company), now or hereafter existing.

     "Company" is defined in the introduction. --------

     "Competitive Business" is defined in Section 8(a)(i).

     "Confidential  Information" means any confidential  information  including,
without  limitation,  any study, data,  calculations,  software storage media or
other  compilation  of  information,  patent,  patent  application,   copyright,
trademark,  trade name, service mark,  service name,  "know-how," trade secrets,
customer lists,  details of client or consultant  contracts,  pricing  policies,
operational  methods,   marketing  plans  or  strategies,   product  development
techniques or plans,  business  acquisition plans or any portion or phase of any

                                       L7
<PAGE>

scientific  or technical  information,  ideas,  discoveries,  designs,  computer
programs (including source of object codes),  processes,  procedures,  formulas,
improvements  or other  proprietary or  intellectual  property of the Companies,
whether or not in written or tangible form, and whether or not  registered,  and
including all files, records,  manuals,  books,  catalogues,  memoranda,  notes,
summaries,  plans, reports,  records,  documents and other evidence thereof. The
term  "Confidential  Information"  does  not  include,  and  there  shall  be no
obligation  hereunder  with  respect  to,  information  that  becomes  generally
available to the public other than as a result of a disclosure  by the Executive
not permissible hereunder.

     "Executive" means Lincoln M. Kennedy or his estate, if deceased.
----------

     "Market"  means any county in the United States of America and each similar
jurisdiction  in any other  country in which the  Business  was  conducted by or
engaged in by the Companies  prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted  or engaged in, by the  Companies at any time
during the Term of Employment.

     "Parent" is defined in the introduction.
-------

     "Regulations" is defined in Section 2(c).

     "Restricted Period" is defined in Section 8(a)(i).

     "Term of Employment" is defined in Section 3(a).

     10. Notice

     Any notice, request, demand or other communication required or permitted to
be given  under  this  Agreement  shall be given  in  writing  and if  delivered
personally,  or sent by certified or registered mail, return receipt  requested,
as  follows  (or to such other  addressee  or address as shall be set forth in a
notice given in the same manner):

         If to Executive:           Lincoln M. Kennedy
                                            84 Timberlane Drive
                                            Williamsville, New York 14221
                                            Facsimile: (716) 689-7729

         If to Company:             American Allsafe Company
                                            c/o Jackson Products, Inc.
                                            2997 Clarkson Road
                                            Chesterfield, Missouri 63017
                                            Attention: Christopher T. Paule
                                            Facsimile: (314) 207-2800


                                       L8
<PAGE>


                                            with a copy to:
                                            Mayer, Brown & Platt
                                            1675 Broadway, Suite 1900
                                            New York, New York  10019
                                            Attention:  James B. Carlson
                                            Facsimile:  (212) 262-1910

     Any such  notices  shall  be  deemed  to be  given  on the date  personally
delivered or such return receipt is issued.

     11. Previous Agreements; Executive's Representation

     (a) Executive hereby cancels, voids and renders without force or effect any
previous  employment  or severance  agreement by and between  Executive  and the
Company.

     (b) Executive  hereby warrants and represents to the Company that Executive
has carefully  reviewed this  Agreement and has consulted  with such advisors as
Executive  considers  appropriate in connection with this Agreement,  and is not
subject  to  any  covenants,  agreements  or  restrictions,   including  without
limitation any covenants,  agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.

     12. Other Matters

     Executive  agrees and  acknowledges  that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders,  directors, officers, affiliates,  representatives,
agents or lenders will have any  obligations  or  liabilities in respect of this
Agreement and the subject matter hereof,  except as may be expressly provided by
applicable law.

     13. Validity

     If, for any reason,  any provision hereof shall be determined to be invalid
or  unenforceable,  the validity and effect of the other provisions hereof shall
not be affected thereby.

     14. Severability

     Whenever possible,  each provision of this Agreement will be interpreted in
such  manner as to be  effective  and valid  under  applicable  law,  but if any
provision of this Agreement is held to be invalid,  illegal or  unenforceable in
any  respect  under  any  applicable  law  or  rule  in any  jurisdiction,  such
invalidity,  illegality or unenforceability  will not affect any other provision
or any other  jurisdiction,  but this Agreement will be reformed,  construed and
enforced  in such  jurisdiction  as if such  invalid,  illegal or  unenforceable
provision had never been  contained  herein.  If any court  determines  that any
provision  of  Section 8 or any other  provision  hereof  is  unenforceable  and

                                       L9
<PAGE>

therefore acts to reduce the scope or duration of such provision,  the provision
in its reduced form shall then be enforceable.

     15. Waiver of Breach; Specific Performance

     The waiver by the Company or Executive of a breach of any provision of this
Agreement  by the other party shall not operate or be  construed  as a waiver of
any other  breach of such other  party.  Each of the  parties  (and third  party
beneficiaries)  to this  Agreement  will be entitled  to enforce its  respective
rights under this  Agreement  and to exercise  all other rights  existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate  remedy for any breach of the  provisions  of  Sections 7 and 8 of this
Agreement  and that any party (and third  party  beneficiaries)  may in its sole
discretion  apply to any court of law or equity of  competent  jurisdiction  for
specific performance and/or injunctive relief,  including temporary  restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.

     16. Assignment; Third Parties

     Neither  the  Executive  nor the  Company  may  assign,  transfer,  pledge,
hypothecate,  encumber or otherwise  dispose of this  Agreement or any of his or
its  respective  rights or  obligations  hereunder,  without  the prior  written
consent  of the  other.  The  parties  agree  and  acknowledge  that each of the
Companies  and the  stockholders  and lenders  therein are  intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.

     17. Amendment; Entire Agreement

     This  Agreement  may not be  changed  orally  but only by an  agreement  in
writing agreed to by the party against whom  enforcement of any waiver,  change,
modification,  extension  or discharge is sought.  This  Agreement  embodies the
entire  agreement  and  understanding  of the  parties  hereto in respect of the
subject  matter  of this  Agreement,  and  supersedes  and  replaces  all  prior
Agreements, understandings and commitments with respect to such subject matter.

     18. Litigation

     THIS  AGREEMENT  SHALL BE GOVERNED BY,  CONSTRUED,  APPLIED AND ENFORCED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF  MISSOURI,  EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF MISSOURI, AND NO
DEFENSE,  COUNTERCLAIM  OR RIGHT OF SET-OFF  GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR  JURISDICTION,  OR ARISING OUT OF THE ENACTMENT,  MODIFICATION OR
REPEAL OF ANY LAW, REGULATION,  ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE  INTERPOSED  IN ANY ACTION  HEREON.  EXECUTIVE AND THE COMPANY AGREE THAT ANY
ACTION  OR  PROCEEDING  TO  ENFORCE  OR  ARISING  OUT OF THIS  AGREEMENT  MAY BE
COMMENCED IN THE COURTS OF THE STATE OF MISSOURI OR THE UNITED  STATES  DISTRICT

                                       L10
<PAGE>

COURTS  IN ST.  LOUIS,  MISSOURI.  EXECUTIVE  AND THE  COMPANY  CONSENT  TO SUCH
JURISDICTION,  AGREE  THAT  VENUE  WILL BE PROPER IN SUCH  COURTS  AND WAIVE ANY
OBJECTIONS  BASED  UPON FORUM NON  CONVENIENS.  THE CHOICE OF FORUM SET FORTH IN
THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE  ENFORCEMENT OF ANY JUDGMENT
OBTAINED  IN SUCH  FORUM OR THE TAKING OF ANY ACTION  UNDER  THIS  AGREEMENT  TO
ENFORCE SAME IN ANY OTHER JURISDICTION.

     19. Further Action

     Executive  and the Company agree to perform any further acts and to execute
and deliver any documents  which may be  reasonable to carry out the  provisions
hereof.

     20. Counterparts

     This  Agreement  may be  executed in  counterparts,  each of which shall be
deemed an original,  but all of which together shall constitute one and the same
instrument.




                                       L11
<PAGE>



     IN WITNESS  WHEREOF,  the parties hereto have set their hands as of the day
and year first written above.

                                   EXECUTIVE:



                                        Name: Lincoln M. Kennedy



                                        AMERICAN ALLSAFE COMPANY


                                        By
                                               ---------------------------------
                                                 Name: Christopher T. Paule
                                                 Title:   Vice President