Exhibit 10.4


 


EMPLOYMENT AGREEMENT


 


THIS AGREEMENT is made and entered into as of the 20th
day of May, 2005, by and between Morning Pride Manufacturing L.L.C., a Delaware
limited liability company (“Employer”), and
William Grilliot (“Employee”).


 


THIS AGREEMENT will become effective only upon the
closing of the transactions contemplated by that certain Purchase and Sale
Agreement dated May 20, 2005 by and among NSP Holdings L.L.C., Norcross
Safety Products L.L.C. and Safety Products Holdings, Inc.;


 


WHEREAS, Employer is engaged in the manufacture, sale
and service of turnout gear and other ancillary firefighter protective clothing
(the “Business”);


 


WHEREAS, Employer and Employee previously entered into
an Employment Agreement dated as of July 1, 1998; and


 


WHEREAS, Employer and Employee now wish to revise the
terms and conditions of Employee’s employment.


 


NOW, THEREFORE, in consideration of the premises and
promises contained herein, the parties agree as follows:


 


1.                                      Employment.  Employer shall continue to employ Employee,
and Employee shall continue in employment with Employer, as President of
Employer to perform such duties and services of an executive and administrative
character as shall be assigned to him from time to time by the Chief Executive
Officer of Employer (the “CEO”),
including managerial functions in the areas of planning, new products,
marketing and production.  The initial
term of this Agreement shall be for three (3) years from the date hereof
and shall renew automatically for successive one-year terms unless Employer
delivers to Employee written notice of its intention not to renew at least one
hundred and eighty (180) days before the end of the then current term.


 


2.                                      Performance.  Employee agrees to devote his best efforts,
energies and skills on a full time basis during normal working hours to
performance of his duties hereunder (except for vacations and reasonable
periods of illness or incapacity).


 


3.                                      Base
Salary.  For all duties to be
performed by Employee hereunder, Employee shall receive an annual base salary
(the “Base Salary”) of One Hundred Seventy-Seven
Thousand Five Hundred Dollars ($177,500), payable by Employer in equal weekly
installments (prorated for any partial calendar year).  The Base Salary shall be subject to periodic adjustment,
as determined by Employer’s Board of Managers, in its sole discretion.  In no event, however, shall Base Salary be
decreased below Base Salary as of the date hereof.


 


4.                                      Bonus.  In addition to his Base Salary, Employee
shall be entitled to receive an annual bonus (the “Bonus”)
for each full fiscal year of his employment hereunder.  The Bonus, which shall be determined in the
sole discretion of Employer shall have a target level of forty


 





















 


percent (40%) of
Employee’s Base Salary.  The Bonus shall
be based on targeted EBITDA and Working Capital or other such financial
criteria as may be determined by the Board, within 30 days after the budget for
Norcross Safety Products L.L.C. has been determined.  Targets for annual criteria will be subject
to approval by the Board.


 


5.                                      Equity.   Employee shall be entitled to a grant
of [non-qualified stock options] [restricted stock] under the [Norcross Safety
Products L.L.C. Management Equity Program (the “Equity Program”)] on            ,
2005, equal to [  ] percent of the Norcross Safety Products L.L.C.’s
fully diluted equity [at an exercise price of $      
per share].  The Equity shall be subject
to all the terms and conditions of the Equity Program and such terms and
conditions, including vesting, as set forth in the applicable award agreement.


 


6.                                      Vacation
and Leave.  Employee shall be
entitled to fifteen (15) business days annual paid vacation, which may be taken
at such times as are consistent with good business practices.  Employee shall be entitled to carryover
unused vacations days from one year until the end of the first quarter of the
next year.  Any vacation time which is
carried over but not used by the end of the following year’s second quarter
shall be forfeited.


 


7.                                      Employee
Benefits.  Employee shall be
entitled to receive the employee benefits set forth on Exhibit A to
this Agreement, which benefits shall be substantially similar to those received
by employees of Morning Pride Manufacturing, LLC immediately prior to the
execution of this Agreement.  In
addition, Employer shall provide Employee with a monthly automobile allowance
of $700.00 (the “Allowance”).  The Allowance shall be used to pay for all
Employee’s automobile expenses (including car or lease payments, licensing,
repair, maintenance, gasoline, insurance, tires and parking garage fees) in
connection with Employee’s fulfillment of his duties under this Agreement.  Employer further agrees that following
termination of Employee’s employment hereunder (so long as such termination is
not for cause (as defined hereafter)), it shall provide Employee with the
computer system (consisting of the CPU, monitor, attached (non-networked)
printer and other relevant peripherals) he was using immediately prior to such
termination.  Employee shall also receive
all software applications and files contained on such computer other than those
software applications and files related to the Business.


 


8.                                      New
Developments; Confidentiality.


 


8.1.                              All
of Employee’s designs, programs, methods, inventions, improvements,
modifications, applications, discoveries and writings related to:  (a) the Business; (b) the subject of
Employee’s work for Employer; (c) products, projects or business of
Employer of which Employee had knowledge, whether acquired in the course of
Employee’s work or otherwise; or (d) any business of Employer during
Employee’s employment shall be herein referred to as “New
Developments”.  Employee
acknowledges that all such New Developments and the results of all work
performed are the exclusive property of Employer and, to the extent permissible
under applicable law, hereby assigns all right, title and interest in and to
such New Developments to Employer.  Employee
will cooperate with Employer in the procurement and defense of any patent,
trademark or copyright protection in respect of any New Developments


 


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8.2.                              Employee
acknowledges that certain of the information, observations and data relating to
Employer and its Affiliates, or their business, products or services, which he
possesses or has obtained knowledge of or will possess or obtain knowledge of
as an employee or equityholder of the Employer and/or its Affiliates is and
will be the confidential and proprietary property of Employer and its Affiliates
(“Confidential Information”). 
Employee agrees that he shall not, directly or indirectly, use for his
own purposes or use for or disclose to any third party any of such Confidential
Information without the prior written consent of Employer, unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public other than as a result of Employee’s acts or
failures to act, or (ii) Employee is required by order of a court of
competent jurisdiction (by subpoena or similar process) to disclose any
Confidential Information (provided that in such case, Employee shall promptly
inform Employer of such order, shall cooperate with Employer at Employer’s
expense in attempting to obtain a protective order or to otherwise restrict
such disclosure, and shall only disclose Confidential Information to the
minimum extent necessary to comply with any such court order).


 


For purposes of hereof, the term “Affiliate” means any
an individual, partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture, or other organization,
whether or not incorporated, that directly or indirectly controls, is
controlled by, or is under common control with Employer.


 


9.                                      Covenants
Not to Compete or Solicit.


 


9.1.                              So
long as Employee is employed by Employer and for a period of eighteen (18) months
thereafter, Employee shall not, directly or indirectly, by or for himself or as
the agent of another or through others as his agent:


 


(a)                                  manufacture,
distribute, sell or service anywhere on the planet Earth (the “Territory”) products or processes in existence or under
development, which are similar to or in competition with those of Employer;


 


(b)                                 own,
manage, operate, be compensated by, participate in, render advice to, have any
right to or interest in any other business directly or indirectly engaged in
the design, production, sale or distribution of products competitive with those
of Employer or affiliates of Employer anywhere in the Territory;


 


(c)                                  divulge,
communicate, use or disclose any nonpublic information concerning Employer, its
personnel, business and affairs;


 


(d)                                 interfere
with the business relationships or disparage the good name or reputation of
Employer; or


 


(e)                                  make
any public statements or publish or participate in the publication of any
accounts or stories relating to Employee’s employment with Employer or the
termination thereof.


 


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9.2.                              So
long as Employee is employed by Employer and for a period of eighteen (18)
months thereafter, Employee shall not (except in connection with the rendering
of services hereunder), directly or indirectly, by or for himself, or as the
agent of another, or through other as his agent:


 


(a)                                  solicit
or accept any business from customers or suppliers of Employer, or request,
induce or advise customers or suppliers of Employer to withdraw, curtail or
cancel their business with Employer;


 


(b)                                 solicit
for employment or employ or become employed by any past, present or future
employee of Employer (other than Mary Grilliot or any of Employee’s children),
or request, induce or advise any employee to leave the employ of Employer; or


 


(c)                                  use
or disclose the names and/or addresses of any customer, supplier or employee of
Employer to any person for any purposes whatsoever.


 


9.3.                              If
Employee violates the provisions of this Section 9, Employer shall not, as
a result of the time involved in obtaining relief, be deprived of the benefit
of the full period of the restrictive covenant.


 


9.4.                              Employee
agrees that, if he shall violate any of the provisions of this Section 9,
Employer shall be entitled to an accounting and repayment of all profits,
compensation, commission, remuneration or other benefits that Employee,
directly or indirectly, may realize arising from or related to any such
violation.  These remedies shall be in
addition to, and not in limitation of, any injunctive relief or other rights to
which Employer may be entitled


 


9.5.                              The
parties agree and acknowledge that the duration, scope and geographic areas
applicable to the covenant not to compete described in this Section 9 are
fair, reasonable and necessary, that adequate compensation has been received by
Employee for such obligations, and that these obligations do not prevent
Employee from earning a livelihood.  If,
however, for any reason any court determines that the restrictions in this Section 9
are not reasonable, that consideration is inadequate or that Employee has been
prevented from earning a livelihood, such restrictions shall be interpreted,
modified or rewritten to include as much of the duration, scope and geographic
area identified in this Section as will render such restrictions valid and
enforceable.


 


10.                               Remedies.  Employee acknowledges that he has carefully
read and considered the terms of this Agreement and knows them to be essential
to induce Employer to enter into this Agreement and that any breach of the
provisions contained herein will result in serious and irreparable injury to
Employer.  Employee further acknowledges
that Employer’s business interests protected hereby are substantial and
legitimate.  Therefore, in the event of a
breach of any such provisions, Employer shall be entitled to equitable relief
against Employee by way of injunction (in addition to, but not in substitution
for, any and all other relief to which Employer may be entitled at law or in
equity) to restrain Employee from such breach and to compel


 


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compliance by
Employee with his obligations hereunder. 
Employer shall also be entitled to seek a protective order to ensure the
continued confidentiality of its trade secrets and proprietary information.  Employee hereby waives any requirement of
proof that such breach will cause serious or irreparable injury to Employer, or
that there is an adequate remedy at law. 
In any proceeding, either at law or in equity, between the parties
hereto, it is hereby agreed that Employee shall not raise as a defense (i) that
any information relating to the Business is not confidential, (ii) that
the period of time or geographical area in which Employee is prohibited from
competition is unfair, unnecessary or unreasonable, or (iii) that this
Agreement is in restraint of trade.  Further,
the existence of any claim or cause of action of Employee against Employer or
any of its Affiliates, whether or not predicated on the terms of this
Agreement, shall not constitute a defense to the enforcement of Employee’s
obligations under this Agreement.  Employee
shall pay or reimburse Employer for all costs and expenses, including court
costs and reasonable attorneys’ fees incurred or paid by Employer in protecting
or enforcing its rights and remedies hereunder.


 


11.                               Termination.


 


11.1.                        Death.  In the event of the death of Employee during
the term hereof, Employee’s employment under this Agreement shall terminate as
of the end of the month in which Employee dies.  In addition to any benefits under any
insurance, retirement or other plan of Employer for Employee, Employer shall
pay within thirty (30) days of the date of death to Employee’s legal
representatives the sum of (i) any unpaid Base Salary through the date of
termination, (ii) accrued and unpaid vacation pay, and (iii) any
unreimbursed expenses incurred by Employee on Employer’s behalf.  Items (i) through (iii) are
hereinafter referred to as the “Termination Payments”.


 


11.2.                        Disability.  If, during the term of this Agreement,
Employee comes under such illness, physical or mental disability or other
incapacity that the Board of Managers of Employer determines that he is unable
to perform his duties under this Agreement for a period in excess of sixty (60)
substantially consecutive days or nonconsecutive periods aggregating more than
120 days within any six-month period, exclusive of Saturdays, Sundays, holiday
or days on which Employee was on vacation, Employer may terminate Employee’s
employment under this Agreement by giving notice to Employee of its intention
to terminate due to disability and such employment shall terminate as of the
end of the month following the month in which such notice was given.  In the event of such termination, Employer
shall pay the Termination Payments to Employee within thirty (30) days of such
termination.


 


11.3.                        Termination by Employer Without Cause or
Resignation by Employee with Good Reason.  Employer may terminate Employee’s employment
under this Agreement without cause in accordance with Employer’s policies and
procedures.  In the event of such
termination without cause or resignation by Employee with Good Reason (as
defined below), Employer shall, for the period of eighteen months following
such termination or resignation, pay Employee the Employee’s Base Salary as of
such termination date, and Employee shall be bound by Section 9 hereof.


 


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For purposes hereof, the
term “Good Reason” means Employee’s
resignation as a direct result of (i) a substantial diminution of his
responsibilities, duties or authorities, as compared to his responsibilities,
duties and authorities prior to such diminution (which may include a requested
relocation of Employee by Employer); (ii) a reduction of his perquisites,
including the office facilities and support staff provided to him prior to such
reduction; (iii) a relocation of the Business to an area more than fifty
(50) miles from its current location; or (iv) a material breach of this
Agreement by Employer, which diminution, reduction, relocation or breach is not
cured within thirty (30) days after written notice by Employee to Employer.  The burden of proof as to whether any such
event constitutes Good Reason for purposes of this Section 11 shall be on
Employee.


 


11.4.                        Resignation Without Good Reason.  Employee shall have the right to terminate
his employment under this Agreement at any time upon thirty (30) days’ prior
written notice to Employer.  If such
resignation is without Good Reason, Employer shall pay the Termination Payments
to Employee within thirty (30) days of such termination.  Employee shall be bound by the covenant not
to compete contained in Section 9 hereof.


 


11.5.                        Termination for Cause.  Notwithstanding any other provision hereof.  Employer may terminate Employee’s employment
under this Agreement without prior notice at any time for cause.  The termination shall be evidenced by written
notice thereof to Employee, specifying the cause for termination.  Such termination may only occur upon a
determination by the Board of Managers of Employer that in its good faith and
judgment, cause exists for termination of Employee’s employment.  For purposes hereof, the term “cause” shall include, without limitation, commission of a
material act of dishonesty, fraud or deceit; embezzlement or misappropriation
of Employer funds; conviction of a felony involving moral turpitude; habitual
or willful neglect of duties; breach of any fiduciary duties to Employer or its
Affiliates involving personal profit; a breach of any material representations
of this Agreement or any other agreement with the Employer or its Affiliates;
and a material violation of any other duty imposed by Employer’s Board of
Managers or by law, to Employer, its Affiliates or any of their shareholders.  The term “cause”
shall also include the failure of Employee for any reason, after receipt by
Employee of written notice thereof from Employer, to correct, cease or
otherwise alter any insubordination, failure to comply with instructions, or
other action or omission to act that in the opinion of Employer may adversely
affect its business or operations.  The
burden of proof as to whether any act or omission constitutes cause for
purposes of this Section 11.5 shall be on Employer.  In the event of such termination, Employer
shall pay the Termination Payments to Employee within thirty (30) days of such
termination. Employee shall be bound by the covenant not to compete contained
in Section 9 hereof.


 


11.6.                        Effect of Termination.  Upon a termination of employment under this
Agreement, all obligations of Employer and rights of Employee under this Agreement
shall cease, except as otherwise provided herein.  Notwithstanding anything to the contrary
contained herein, the provisions of Sections 8 through 10 shall survive any
termination of employment under this Agreement and shall remain in full force
and effect.


 


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12.                               Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof, shall be settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.  The arbitration shall be conducted in Dayton,
Ohio, and the decision of the arbitrator(s) shall be conclusive and binding
upon the parties hereto.  Employer shall
pay on a current basis all legal expenses (including reasonable attorneys’
fees) incurred by Employee in connection with such arbitration and the entering
and enforcement of such award.


 


13.                               Notice.  All notices, requests, consents, demands and
other communications hereunder must be in writing and shall be personally
delivered, sent by overnight carrier (such as Express Mail, Federal Express,
etc.) with a delivery receipt obtained or sent by facsimile transmission with
confirming copy sent by overnight carrier and a delivery receipt obtained and
addressed to the intended recipient as follows:


 


To
Employee:


 


William
Grilliot


6577
Rangeline Road


West
Milton, Ohio 45383


 


With a
copy to:


 


Schottenstein,
Zox & Dunn


41
South High Street, Suite 2600


Columbus,
Ohio 43215


Fax:  (614) 462-2700


Attn:  John C. McDonald and Robert R. Ouellette


 


To
Employer:


 


Morning
Pride Manufacturing L.L.C.


1136
Second Street


P.O. Box
7208


Rock
Island, Illinois 61204-7208


Facsimile:
 (309) 786-6923


 


or at such other address
as either party may provide to the other in writing for the stated purpose of
receiving notices.  Notice given as
aforesaid shall be sufficient service thereof and shall be deemed given upon
receipt or refusal of delivery.


 


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14.                               Successors
and Assigns.  If Employer shall
at any time be merged or consolidated into or with any other corporation, or if
substantially all of the assets of the company are transferred to another
corporation or party, the provisions of this Agreement shall be binding upon
and inure to the benefit of the entity or successors resulting from such merger
or consolidation or to which such assets shall be transferred; and this
provision shall apply in such event


 


14.1.                        To the
extent applicable, this Agreement shall be binding on and inure to the benefit
of the successors and assigns, devises, heirs, next of kin, executors and
administrators of Employee


 


14.2.                        Except as
provided in this Section, neither party hereto may transfer or assign its
rights or interests under this Agreement without the other party’s prior
written consent.


 


15.                               Applicable
Law.  This Agreement shall be
governed by and construed in accordance with the internal substantive laws of
the State of Illinois.


 


16.                               Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


17.                               Entire
Agreement.  This Agreement
contains the entire agreement of the parties in regard to the subject matter
hereof supersedes all prior discussions, agreements and understandings of every
kind between the parties and may be changed only by a written document signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.  The
waiver of any breach of any provision of this Agreement shall be effective only
in the specific instance and for the specific purpose for which given and shall
not operate or be construed as a waiver of any subsequent breach hereof.


 


18.                               Severability.  If any provision of this Agreement shall be
prohibited by or invalid under applicable law, or otherwise determined to be
unenforceable, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.


 


19.                               Attorneys’
Fees.  Each party shall be
responsible for paying its own attorneys’ fees in respect of the preparation
and negotiation of this Agreement.


 


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


 


 


	
  EMPLOYEE:

  	
  EMPLOYER:

  
	
   

  	
  Morning Pride
  Manufacturing L.L.C.

  
	
   

  	
   

  
	
  /s/ William
  Grilliot

  	
   

  	
  /s/ Robert A.
  Peterson

  	
   

  
	
  William Grilliot

  	
  Robert A.
  Peterson

  
	
   

  	
  Title: Chief
  Executive Officer

  
				



 


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Exhibit A


 


Employee Benefits


 


1.                                       Normal
Morning Pride Manufacturing, L.L.C. benefits as defined in the Company Rules &
Regulations.


 


2.                                       Phoenix
Home Life Policies on Employee.


 


3.                                       University
of Dayton Ticket and Seating Program.