Document:

Exhibit 10.12

 

SAMPLE FORM

 

EDGE PETROLEUM CORPORATION

INCENTIVE PLAN

 

DIRECTOR’S RESTRICTED STOCK AWARD AGREEMENT

 

THIS AGREEMENT
(“Agreement”) is made as of the 1st day of June 2004 (the “Date of
Grant”), by and between Edge Petroleum Corporation, a Delaware corporation (the
“Company”), and
                            (the “Grantee”).

 

The Company
has adopted the Edge Petroleum Corporation Incentive Plan, as amended and
restated (the ”Plan”), a copy of which is appended to this Agreement as Exhibit A
and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries.  Capitalized terms used
and not otherwise defined herein shall have the meaning ascribed thereto in the
Plan.  This Agreement documents the
award made to the Grantee as approved by the Board pursuant to
Section 9(b) of the Plan.

 

The Company
and Grantee therefore agree as follows:

 

1.                                       Grant of Restricted Stock.  Effective as of the Date of Grant, pursuant
to Section 9(b) of the Plan, the Company has awarded to the Grantee a
total of
              
shares of Common Stock, subject to the conditions and restrictions set forth
below and in the Plan (the “Restricted Stock”).

 

2.                                       Restrictions; Forfeiture.  The shares of Restricted Stock granted hereunder to
the Grantee may not be sold, assigned, transferred, pledged or otherwise
encumbered from the Date of Grant until the date that the Grantee obtains a
vested right to the shares (and the restrictions thereon terminate) in
accordance with the provisions of this Section 2.  (The period of time between the Date of
Grant and the date that the Grantee obtains a vested right to shares of
Restricted Stock shall be referred to herein as the “Restricted Period” as to
those shares of stock.)  In the event
that any day on which the Grantee would otherwise obtain a vested right to
additional shares of Restricted Stock is a Saturday, Sunday or holiday, the
Grantee shall instead obtain that vested right on the first business day immediately
following such date. If the Grantee resigns as a Director of the Company prior
to all shares of Restricted Stock having become vested pursuant to the
provisions of this Section 2, the Grantee shall forfeit all right to those
unvested shares of Restricted Stock unless the Board determines, in its
discretion, to (a) allow any unvested shares of Restricted Stock to continue to
vest in accordance with the dates indicated below or (b) accelerate the vesting
of any such unvested shares. Subject to the foregoing, the Grantee shall have a
vested right to the number of shares of Restricted Stock indicated below as of
the dates set forth below, notwithstanding if Grantee ceases to serve as a
Director of the Company (including by reason of death or disability) prior to
any such date:

 

	
  Date

  	
   

  	
  Number of
  Shares

  First Vested

  	
   

  
	
  2005

  	
   

  	
  000

  	
   

  
	
  2006

  	
   

  	
  000

  	
   

  
	
  2007

  	
   

  	
  000

  	
   

  

 

1

 

3.                                       Code Section 83(b) Election.  The Grantee shall have the right to make an
election, under Code Section 83(b), to include an amount in income in
respect of Restricted Stock.

 

4.                                       Sale of Restricted Stock.  Grantee agrees that Grantee shall not sell
the Restricted Stock and that the Company shall not be obligated to deliver any
shares of Common Stock if counsel to the Company determines that such sale or
delivery would violate any applicable law or any rule or regulation of any
governmental authority or any rule or regulation of, or agreement of the
Company with, any securities exchange or association upon which the Common
Stock is listed or quoted.  The Company
shall in no event be obligated to take any affirmative action in order to cause
the delivery of shares of Common Stock to comply with any such law, rule,
regulation or agreement.

 

5.                                       Escrow of Shares.  Shares of Restricted Stock shall be registered in the name of the
Grantee and deposited with the Secretary of the Company, together with a stock
power endorsed by the Grantee in blank. 
Any certificate shall bear a legend as provided by the Company,
conspicuously referring to the terms, conditions and restrictions described in
the Plan and in this Agreement.  Upon
termination of the Restricted Periods with respect to shares of Restricted
Stock, a certificate representing such shares shall be delivered upon written
request to the Grantee as promptly as practicable following such termination.

 

6.                                       Withholding for Taxes.  Grantee acknowledges and agrees that the
Company may, at its option, deduct from the shares of Common Stock otherwise
payable or deliverable upon expiration of the Restricted Period a number of
shares of Common Stock (valued at their Fair Market Value on the date of
exercise) that is equal to the amount of all federal, state and local taxes
required to be withheld by the Company, if any, upon such exercise, as
determined by the Committee.

 

7.                                       Beneficiary Designations.  The Grantee shall file with the Secretary of the
Company on the form annexed hereto as Exhibit B or such other form as
may be prescribed by the Company, a designation of one or more beneficiaries
(each, a “Beneficiary”) to whom shares otherwise due the Grantee shall be
distributed in the event of the death of the Grantee.  The Grantee shall have the right to change the Beneficiary or
Beneficiaries from time to time; provided, however, that any
change shall not become effective until received in writing by the Secretary of
the Company.  If any designated
Beneficiary survives the Grantee but dies before receiving all of the Grantee’s
benefits hereunder, any remaining benefits due the Grantee shall be distributed
to the deceased Beneficiary’s estate. 
If there is no effective Beneficiary designation on file at the time of
the Grantee’s death, or if the designated Beneficiary or Beneficiaries have all
predeceased such Grantee, the payment of any remaining benefits shall be made
to the Grantee’s estate.

 

8.                                       Nonalienation of Benefits.  Except as contemplated by Section 7
above, and

 

2

 

other than pursuant to a
qualified domestic relations order, no right or benefit under this Agreement
shall be subject to transfer, anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, whether voluntary, involuntary or by operation
of law, and any attempt to transfer, anticipate, alienate, sell, assign,
pledge, encumber or charge the same shall be void.  No right or benefit hereunder shall in any manner be liable for
or subject to any debts, contracts, liabilities or torts of the person entitled
to such benefits.  If the Grantee or the
Grantee’s Beneficiary hereunder shall become bankrupt or attempt to transfer,
anticipate, alienate, assign, sell, pledge, encumber or charge any right or
benefit hereunder, other than as contemplated by Section 7 above or other
than pursuant to a qualified domestic relations order, or if any creditor shall
attempt to subject the same to a writ of garnishment, attachment, execution,
sequestration or any other form of process or involuntary lien or seizure, then
such right or benefit shall cease and terminate.

 

9.                                       Prerequisites to Benefits.  Neither the Grantee, nor any person claiming through
the Grantee, shall have any right or interest in Restricted Stock awarded
hereunder, unless and until all the terms, conditions and provisions of this
Agreement and the Plan which affect the Grantee or such other person shall have
been complied with as specified herein.

 

10.                                 Rights as a Stockholder.  Subject to the limitations and restrictions contained
herein, the Grantee (or Beneficiary) shall have all rights as a stockholder
with respect to the shares of Restricted Stock once such shares have been
registered in the Grantee’s name or issued for the benefit of Grantee
hereunder.

 

11.                                 Adjustments.  As provided in Section 15 of the Plan, certain adjustments
may be made to the Restricted Stock upon the occurrence of events or
circumstances described in Section 15 of the Plan.

 

12.                                 Notice. 
Unless the Company notifies the Grantee in writing of a different
procedure, any notice or other communication to the Company with respect to
this Agreement shall be in writing and shall be:

 

(a)                                  delivered
personally to the following address:

 

Edge Petroleum Corporation

1301 Travis, Suite 2000

Houston, Texas  77002

or

 

3

 

(b)                                 sent
by first class mail, postage prepaid and addressed as follows:

 

Edge Petroleum Corporation

c/o Corporate Secretary

1301 Travis, Suite 2000

Houston, Texas 77002

 

Any notice or other
communication to the Grantee with respect to this Agreement shall be in writing
and shall be delivered personally, or shall be sent by first class mail,
postage prepaid, to Grantee’s address as listed in the records of the Company
on the Grant Date, unless the Company has received written notification from
the Grantee of a change of address.

 

13.                                 Amendment. Without the consent of the
Grantee, this Agreement may be amended or supplemented (i) to cure any
ambiguity or to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein, or (ii) to add to
the covenants and agreements of the Company for the benefit of Grantee or
surrender any right or power reserved to or conferred upon the Company in this
Agreement, subject, however, to any required approval of the
Company’s stockholders and, provided, in each case, that such changes or
corrections shall not adversely affect the rights of Grantee with respect to
the Award evidenced hereby without the Grantee’s consent, or (iii) to make such
other changes as the Company, upon advice of counsel, determines are necessary
or advisable because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation, including any
applicable federal or state securities laws.

 

14.                                 Grantee Service.  Nothing contained in this Agreement, and no action of the Company
or the Committee with respect hereto, shall confer or be construed to confer on
the Grantee any right to continue in the service of the Company as a Director.

 

15.                                 Governing
Law.  This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of
Delaware.

 

16.                                 Construction.  References
in this Agreement to “this Agreement” and the words “herein,” “hereof,”
“hereunder” and similar terms include all Exhibits and Schedules appended
hereto, including the Plan.  This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant
to the Plan. The headings of the Sections of this Agreement have been included
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.

 

4

 

17.                                 Duplicate Originals. 
The Company and the Grantee may sign any number of copies of
this Agreement.  Each signed copy shall
be an original, but all of them together represent the same agreement.

 

18.                                 Entire Agreement.  Grantee and the Company hereby declare and represent that no
promise or agreement not herein expressed has been made and that this Agreement
contains the entire agreement between the parties hereto with respect to the
Option and replaces and makes null and void any prior agreements, oral or
written, between Grantee and the Company regarding the Restricted Stock award.

 

19.                                 Grantee Acceptance.  Grantee shall signify acceptance of the
terms and conditions of this Agreement by signing in the space provided at the
end hereof and returning a signed copy to the Company.

 

 

	
   

  	
  EDGE
  PETROLEUM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  John W.
  Elias

  
	
   

  	
   

  	
  Chairman, President
  & CEO

  
	
   

  	
   

  
	
   

  	
  ACCEPTED

  
	
   

  	
   

  
	
   

  	
   

  

 

5

 

	
   

  	
  Exhibit B to
  Restricted Stock Award

  
	
   

  	
  Award dated
  as of June 1, 2004

  

 

 

EDGE PETROLEUM
CORPORATION INCENTIVE PLAN

 

Designation of
Beneficiary

 

	
  I,                                                                   
  (the “Grantee”), hereby declare that upon my death 

  
	
   

  	
   

  
	
   

  	
   (the “Primary Beneficiary”) of

  
	
  Name

  	
   

  
	
   

  	
  ,

  
	
  Street Address

  	
  City

  	
  State

  	
  Zip Code

  
	
   

  	
   

  	
   

  	
   

  
	
  who is my

  	
   

  	
  , shall be
  entitled to the

  
	
   

  	
  Relationship to Grantee

  	
   

  
	
   

  	
   

  	
   

  
	
  Restricted
  Stock and all other rights accorded the Grantee by the above-referenced
  agreement (the “Agreement”).  In the
  event my Primary Beneficiary predeceases me or dies within 120 hours after my
  death, then I hereby declare

  
	
   

  
	
   

  	
    (“Secondary Beneficiary”) of

  	
   

  
	
  Name

  	
   

  	
  Street Address

  
	
   

  	
  ,

  
	
  City

  	
  State

  	
  Zip Code

  
	
   

  	
   

  	
   

  
	
  who is my

  	
   

  	
  , shall be
  entitled to the Restricted Stock and all other

  
	
   

  	
  Relationship to Grantee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  rights
  accorded the Grantee by the Agreement.

  	
   

  	
   

  	
   

  	
   

  	
   

  
																		

 

It is
understood that this Designation of Beneficiary is made pursuant to the
Agreement and is subject to the conditions stated herein, including the
Beneficiary’s survival of the Grantee’s death.    If any such condition is not satisfied, such rights shall
devolve according to the Grantee’s will or the laws of descent and
distribution.

 

It is further
understood that all prior designations of beneficiary under the Agreement are
hereby revoked and that this Designation of Beneficiary may only be revoked in
writing, signed by the Grantee, and filed with the Company prior to the
Grantee’s death.  As used herein
“Primary Beneficiary’ and “Secondary Beneficiary” shall both refer, as
applicable, to the term “Beneficiary” as used in the Agreement.

 

 

	
   

  	
   

  	
   

  
	
  Date

  	
   

  

 

6Exhibit
10.1

 

CLASS E UNIT PURCHASE
AGREEMENT

 

THIS CLASS E UNIT
PURCHASE AGREEMENT (this “Agreement”), dated as of April 16, 2004
(the “Effective Date”), is entered into between NSP Holdings L.L.C., a
Delaware limited liability company (the “LLC”), and Robert A. Peterson
(“Executive”).

 

The LLC and Executive
desire to enter into this agreement relating to Executive’s purchase of certain
securities of the LLC.

 

The parties hereto agree
as follows:

 

1.                                       Purchase
of Class E Units.

 

(a)                                  On
the date hereof, Executive shall make a capital contribution to the LLC in the
amount of $514.29 (the “Class E Capital Contribution”) in exchange for,
and the LLC shall issue to Executive 514.2857 Class E Units of the LLC.  Except as otherwise specified in the LLC
Agreement, Executive shall make his Class E Capital Contribution to the LLC by
delivery to the LLC of a certified check or cashier’s check, or by wire
transfer of immediately available funds to an account designated by the LLC, in
an aggregate amount equal to the Class E Capital Contribution.  The Executive Units issued to Executive
hereunder are subject to vesting pursuant to Section 2 of this
Agreement.

 

(b)                                 Within
30 days after the date hereof, Executive shall make an effective election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue
Code (the “Code”) and the regulations promulgated thereunder with
respect to the Executive Units being acquired hereunder.

 

(c)                                  In
connection with the purchase and sale of the Executive Units hereunder, Executive
represents and warrants to the LLC that:

 

(i)                                     The
Executive Units owned by Executive and subject to this Agreement are being
acquired for Executive’s own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act, or any applicable
state securities laws, and the Executive Units will not be disposed of in
contravention of the Securities Act or any applicable state securities laws.

 

(ii)                                  Executive
is an executive officer of the LLC and/or one or more of its Subsidiaries, and
Executive is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Executive Units.

 

(iii)                               Executive
is an “accredited investor” as defined under Regulation D promulgated under the
Securities Act.

 

(iv)                              Executive
is able to bear the economic risk of the investment in the Executive Units for
an indefinite period of time because the Executive Units have not been
registered under the Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.

 

 

(v)                                 Executive
has had an opportunity to ask questions and receive answers concerning the
terms and conditions of the restrictions being placed on the Executive Units
and has had full access to such other information concerning the LLC and its
Subsidiaries as Executive has requested.

 

(vi)                              Executive
has been given the opportunity to consult with independent legal counsel
regarding his rights and obligations under this Agreement, fully understands
the terms and conditions contained herein and intends for such terms to be
binding and enforceable upon Executive.

 

(vii)                           This
Agreement constitutes the legal, valid and binding obligation of Executive,
enforceable against Executive in accordance with its terms, and the execution,
delivery and performance of this Agreement by Executive does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which Executive is a party or any judgment, order or decree to
which Executive is subject.

 

(viii)                        Executive
has been given the opportunity to consult with an independent tax advisor
regarding the income tax consequences of acquiring and holding the Executive
Units and is not relying upon any tax advice provided by the LLC or Kirkland
& Ellis LLP, including any advice relating the fair market value of the
Executive Units.

 

(ix)                                Executive
is a resident of the State of Illinois.

 

(d)                                 As
an inducement to the LLC to enter into this Agreement, and as a condition
thereto, Executive acknowledges and agrees that none of the execution and
delivery of this Agreement, the issuance of the Executive Units to Executive,
or Executive’s status as a holder of Executive Units shall

 

(i)                                     entitle
Executive to remain in the employment of the LLC and its Subsidiaries or affect
the right of the LLC or its Subsidiaries to terminate Executive’s employment at
any time and for any reason; or

 

(ii)                                  impose
upon the LLC any duty or obligation to disclose to Executive, or create in
Executive any right to be advised of, any material information regarding the
LLC and its Subsidiaries at any time.

 

2.                                       Vesting.

 

(a)                                  Except
as otherwise provided in this Section 2 below and subject to Section 3
below, the Class E Units shall become immediately vested as to 12.50% of the
original number of Class E Units acquired by Executive pursuant to Section 1(a)
and as to an additional 6.25% of the original number of Class E Units acquired
by Executive to Section 1(a) at the end of each calendar quarter
(with the calendar quarter ending June 30, 2004 being the next vesting
date), if (but only if), as of each such date, Executive is still employed by
the LLC or any of its Subsidiaries.

 

(b)                                 If,
prior to the date on which all Class E Units acquired by Executive pursuant to Section 1(a)
have become vested pursuant to Section 2(a) hereof, Executive
ceases to

 

2

 

be employed by LLC
or its Subsidiaries on any date other than the last day of any calendar
quarter, the cumulative percentage of unvested Class E Units to become vested
with respect to the calendar quarter during which such termination occurs shall
be equal to (i) 6.25% multiplied by (ii) the quotient determined by dividing
the number of days elapsed during such quarterly period prior to such
termination by the total number of days of calendar quarter.  Subject to Section 2(c), all
vesting with respect to any remaining Unvested Units shall immediately and
forever cease.

 

(c)                                  Notwithstanding
anything to be contrary herein, immediately prior to the occurrence of a
Liquidity Event, all Class E Units acquired by Executive pursuant to Section 1(a)
which have not yet become vested shall become vested at the time of such
occurrence.  In addition, if Executive’s
employment with the LLC and its Subsidiaries is terminated by the LLC and its
Subsidiaries without Cause and such termination is not in connection with a
Liquidity Event, then, for purposes of this Section 2 (with it
being understood that if Executive is terminated without Cause in connection
with the Liquidity Event, the vesting rules of the immediately foregoing
sentence apply), Executive shall be entitled to an additional six calendar
quarters of vesting with respect to his Class E Units, with such additional
vesting to be given immediate effect on the date of termination of Executive’s
employment (i.e., if, on the date of termination, Executive is vested with
respect to 25% of his Class E Units and Executive is terminated without Cause
prior to (but not in connection with) a Liquidity Event, Executive shall be
deemed vested as of the date of termination with respect to 62.5% of his Class
E Units).  Subject to Section 3
below, Class E Units acquired by Executive pursuant to Section 1(a)
which are considered vested, or have become vested pursuant to this Section 2
are referred to herein as “Vested Units,” and all other Class E Units
acquired by Executive are referred to herein as “Unvested Units.”  Subject to the accelerated vesting provision
set forth in this Section 3(c) with respect to a termination
without Cause, in the event that Executive’s employment with the LLC or any of
its Subsidiaries is terminated for any reason (including Executive’s
resignation), all vesting with respect to the Unvested Units shall immediately
and forever cease and Executive will forfeit completely any and all interest in
the Unvested Units without any further action on the part of the LLC or
Executive.

 

3.                                       Forfeiture.  If (i) Executive’s employment with the LLC
and its Subsidiaries is terminated for Cause, (ii) a sale of equity securities
to a Person that is not a unitholder of the LLC or an Affiliate of a unitholder
of the LLC is consummated on or prior to June 30, 2004 in a transaction
that does not constitute a Liquidity Event or (iii) Executive breaches any of
the provisions of Sections 8.1 or 8.2 of the LLC Agreement
(whether during the term of Executive’s employment with the LLC and its
Subsidiaries or during the two year period following termination of Executive’s
employment specified in Sections 8.1 and 8.2), Executive and each
holder of Executive Units will forfeit completely all interest in the Executive
Units (including Vested Units), and the holder(s) of such Executive Units will
receive no consideration from the LLC or any of its Subsidiaries on account of
such forfeiture.  In addition, if
Executive’s employment with the LLC and its Subsidiaries is terminated for any
other reason, Executive and each holder of Executive Units will forfeit
completely all interest in the Unvested Units (after giving effect to the
accelerated vesting rules in Section 2(c) above), and the holder(s)
of such Unvested Units will receive no consideration from the LLC or any of its
Subsidiaries on account of such forfeiture. 
Forfeited Executive Units will revert automatically back to the LLC
without

 

3

 

any further action
on the part of the LLC or Executive. 
The terms of this Section 3 shall continue with respect to
each Class E Unit following any Transfer thereof.

 

4.                                       Repurchase
Option.

 

(a)                                  Right
of Repurchase.  Subject to Section 3
hereof, in the event that Executive’s employment with the LLC and its
Subsidiaries is terminated for any reason other than for Cause (the “Termination”),
the Vested Units shall be subject to repurchase by the LLC.  The rights of the LLC pursuant to this Section 4
is referred to herein as the “Repurchase Option”.

 

(b)                                 Purchase
Price.  The purchase price for all
Vested Units in connection with the Termination shall be equal to the Fair
Market Value thereof..

 

(c)                                  Repurchase
by the LLC.  The LLC shall be
entitled to exercise the Repurchase Option for all or any portion of the Vested
Units (the “Available Securities”) by delivering written notice (the “Repurchase
Notice”) to Executive within 150 days after the Termination Date.  The LLC Repurchase Notice shall set forth
the number of Vested Units to be acquired from Executive, the aggregate
consideration to be paid for such shares, and the time and place for the
closing of the transaction.

 

(d)                                 Repurchase
Closing. The closing of the purchase of the Vested Units pursuant to the
Repurchase Option shall take place on the date designated by the LLC in the LLC
Repurchase Notice, which date shall be a business day not more than 60 days nor
less than five days after the delivery of such notice.  Subject to Section 4(e), the LLC
shall pay for the Vested Units to be purchased pursuant to the Repurchase
Option by delivery of a cashier’s or certified check or wire transfer of
funds.  The LLC shall be entitled to (x)
receive from the transferor thereof representations and warranties regarding
good title to such securities, free and clear of any liens or encumbrances,
authorization and/or capacity to sell such securities and that the agreement
containing such representations and warranties is a valid and binding
agreement, enforceable against such transferor in accordance with its terms,
without violation of any agreement, contract or other provision to which such
transferor is party and (y) require that signatures be guaranteed by a national
bank or reputable securities broker. 
Upon delivery of the LLC Repurchase Notice, the Vested Units to be
repurchased shall automatically represent solely the right to receive the applicable
repurchase price and such Vested Units shall no longer be deemed to be
outstanding.  The Vested Units to be
repurchased by the LLC shall first be satisfied to the extent possible from the
Vested Units held by Executive at the time of delivery of the Repurchase
Notice.  If the number of Vested Units
then held by Executive is less than the amount of Vested Units the LLC has
elected to purchase, the LLC shall purchase the remaining Vested Units elected
to be purchased from the other holder(s) of Vested Units, pro rata according to
the number of shares held by such other holder(s) at the time of delivery of
such Repurchase Notice (determined as close as practicable to the nearest whole
units).  The number of Vested Units to
be repurchased hereunder shall be allocated among Executive and the other
holders of Vested Units (if any) pro rata according to the number of Vested
Units to be purchased from such persons.

 

(e)                                  Certain
Restrictions.  Notwithstanding
anything to the contrary contained in this Agreement, all repurchases of Vested
Units by the LLC shall be subject to applicable

 

4

 

restrictions
contained in the Delaware Limited Liability Company Act and in the LLC’s and
its Subsidiaries debt and equity financing agreements (including any restricted
payment covenant prohibiting direct or indirect distributions to the LLC in
order to effectuate such repurchase) (each such restriction, a “Restrictive
Covenant”).  If any such Restrictive
Covenants prohibit the repurchase of Vested Units hereunder which the LLC is
otherwise entitled or required to make, the time periods provided in this Section 4
with respect to the LLC’s repurchase shall be suspended, and the LLC may make
such repurchases as soon as it is permitted to do so under such restrictions; provided,
however, that the LLC must consummate such repurchases under Section 4
(whether in cash, subordinated note or combination thereof) within 270 days
after the Termination Date.  In
addition, if any such restrictions prohibit the repurchase of Vested Units
hereunder with a cashier’s or certified check or wire transfer of funds, then
to the extent permitted under the Restrictive Covenants, the LLC may make such
repurchases with a two-year subordinated note bearing interest (payable at
maturity) at a simple rate per annum equal to 10% (a “Subordinated Note”).  Any Subordinated Note issued by the LLC
pursuant to this Section 4 shall be subject to any Restrictive
Covenants and any subordination provisions required by the LLC’s lenders and
shall be prepaid to the extent permitted by the LLC’s loan agreements and
related documents with the LLC and its subsidiaries’ senior and subordinated
lenders.

 

(f)                                    Termination
of Repurchase Option. The Repurchase Option set forth in this Section 4
shall continue with respect to each Vested Unit following any Transfer thereof,
provided that such Repurchase Option shall terminate effective
immediately upon consummation of a Sale of the Company.

 

5.                                       Restrictions
on Transfer.

 

(a)                                  LLC
Agreement. The Class E Units are subject to the restrictions on Transfer
set forth in the LLC Agreement. 
Executive, as a holder of Class E Units, shall be entitled to all
rights, options and benefits and subject to all obligations of a holder of
Class E Units.

 

(b)                                 Legend.
The certificates representing the Class E Units acquired by Executive hereunder
shall bear the following legends:

 

“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON APRIL 16, 2004
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER.  THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS, AND CERTAIN OTHER AGREEMENTS SET FORTH IN A CLASS E
UNIT PURCHASE AGREEMENT BETWEEN THE LLC AND ROBERT A. PETERSON DATED AS OF
APRIL 16, 2004, AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY

 

5

 

OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE LLC’S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE.”

 

(c)                                  Opinion
of Counsel. No holder of Executive Units may Transfer any Executive  Units (except pursuant to an effective
registration statement under the Securities Act) without first delivering to
the LLC an opinion of counsel (reasonably acceptable in form and substance to
the board of managers of the LLC) that neither registration nor qualification
under the Securities Act and applicable state securities laws is required in
connection with such Transfer.

 

(d)                                 Holdback
Agreement.  Each holder of Executive
Units agrees not to effect any public sale or distribution of any Executive
Units or any securities convertible into or exchangeable or exercisable for any
Executive  Units during the seven days
prior to and the 180 days after the effectiveness of any underwritten Public
Offering, except as part of such underwritten Public Offering, if otherwise
permitted by the LLC or if Investors are subject to any lesser restriction (in
which case such holders shall be subject only to such lesser restriction).

 

6.                                       Options
and UARs.  Reference is hereby made
to (i) that certain Option Agreement, dated October 2, 1998 (the “1998
Option Agreement”), between the LLC and Executive, pursuant to which
Executive was granted certain options to purchase Common Units of the LLC, (ii)
that certain Option Agreement, dated February 17, 2000 (the “2000
Option Agreement”), between the LLC and Executive, pursuant to which
Executive was granted certain options to purchase Common Units of the LLC and
(iii) that certain Unit Appreciation Rights Plan, dated February 17, 2000
(the “Unit Appreciation Rights Plan”), pursuant to which Executive was
issued certain Appreciation Rights (as such term is defined in the Unit
Appreciation Rights Plan).  The options
issued to Executive pursuant to the 1998 Option Agreement and the 2000 Option
Agreement and the Appreciation Rights issued to Executive pursuant to the Unit
Appreciation Rights Plan are collectively referred to in this Section 6
as the “Incentive Interests.” 
If, upon a Liquidity Event, the aggregate consideration to be paid to
Executive in respect of his Incentive Interests (determined after reduction for
any exercise price thereon) is less than $930,000 in the aggregate (the “Base
Value”), then the parties hereto agree that the LLC shall pay to Executive
an amount in cash equal to the Base Value less the gross amount paid in respect
of such Incentive Interests and, in exchange therefore, all such Incentive
Interests, and all of Executive’s right, title and interest therein, shall be
automatically deemed terminated, cancelled and of no further force or effect,
without any further action on the part of the LLC or Executive.  The amount payable (if any) to Executive
hereunder is stated in gross amount and shall be subject to all applicable
withholding taxes, other normal deductions and any other amounts required by
law to be withheld.

 

7.                                       Survival.
The provisions of this Agreement shall survive and continue in full force in
accordance with their terms notwithstanding any termination of Executive’s
employment with the LLC and its Subsidiaries.

 

8.                                       Definitions.

 

“Cause” has the
meaning given to such term in the LLC Agreement.

 

6

 

“Class E Units”
has the meaning given to such term in the LLC Agreement.

 

“Executive Units”
means the Class E Units acquired by Executive hereunder, which Units shall
continue to be Executive Units in the hands of any holder other than Executive
(except for the LLC), and except as otherwise provided herein, each such other
holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall also include securities of the LLC issued with respect to Executive
Units by way of a stock split, stock dividend, merger, consolidation or other
recapitalization.

 

“Fair Market Value”
has the meaning given to such term in the LLC Agreement.

 

“Freely Tradeable
Securities” has the meaning given to such term in the LLC Agreement.

 

“Liquidity Event”
means a Sale of the Company in which the aggregate consideration paid or
available for distribution in respect of the LLC’s Units in the form of cash
and/or Freely Tradeable Securities is not less than 66.67% of the aggregate
Fair Market Value of the LLC’s Units implied by such transaction.

 

“LLC Agreement”
means the Second Amended and Restated Limited Liability Company Agreement,
dated as of February 26, 2004, entered into by and among the members of
the LLC, as amended, restated, modified or waived from time to time in
accordance with its terms.

 

“Original Cost”
for each Class E Unit shall be equal to the amount of capital contributed with
respect to such Class E Unit (as proportionately adjusted for all subsequent
unit splits, unit dividends and other recapitalizations).

 

“Public Offering”
means any underwritten sale of the LLC’s common equity pursuant to an effective
registration statement under the Securities Act filed with the Securities and
Exchange Commission on Form S-l, S-2 or S-3 (or any successor form adopted by
the Securities and Exchange Commission); provided that the following
shall not be considered a Public Offering: (i) any issuance of common equity as
consideration for a merger or acquisition, and (ii) any issuance of common
equity or rights to acquire common equity to employees, officers, directors or
other service providers of the LLC or its Subsidiaries as part of an incentive
or compensation plan.

 

“Sale of the Company”
has the meaning given to such term in the LLC Agreement; provided that,
for the avoidance of doubt, the parties agree that a sale of the equity
interests of Norcross and its Subsidiaries by the LLC shall be deemed a Sale of
the Company.

 

“Securities Act”
means the Securities Act of 1933, or any similar federal law then in force as
amended from time to time.

 

“Securities Exchange
Act” means the Securities Exchange Act of 1934, or any similar federal law
then in force as amended from time to time.

 

7

 

“Subsidiary” means
any corporation of which the LLC owns securities having a majority of the
ordinary voting power in electing the board of directors or similar governing
body directly or through one or more subsidiaries.

 

“Transfer” means
any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation,
grant of a security interest or other direct or indirect disposition or
encumbrance of an interest whether with or without consideration, whether
voluntarily or involuntarily or by operation of law) or the acts thereof.  The terms “Transferee,” “Transferred,”
and other forms of the word “Transfer” shall have correlative meanings.

 

“Units” has the
meaning given to such term in the LLC Agreement.

 

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

 

	
  To the LLC:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NSP Holdings,
  L.L.C.

  	
   

  	
   

  
	
  2211 York Road,
  Suite 215

  	
   

  	
   

  
	
  Oak Brook,
  Illinois 60523-1887

  	
   

  	
   

  
	
  Attention:

  	
  Chief Executive
  Officer

  	
   

  	
   

  
	
  Telecopy:

  	
  (630) 572-8518

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  with copies (which
  shall not constitute notice) to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CIVC Partners

  	
   

  	
   

  
	
  231 South LaSalle
  Street

  	
   

  	
   

  
	
  Chicago, Illinois 60697

  	
   

  	
   

  
	
  Attention: Marcus
  Wedner

  	
   

  	
   

  
	
  Telecopy: (312)
  987-0763

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Kirkland & Ellis
  LLP

  	
   

  	
   

  
	
  200 East Randolph Drive

  	
   

  	
   

  
	
  Chicago, Illinois 60601

  	
   

  	
   

  
	
  Attention:

  	
  William S. Kirsch, P.C.

  	
   

  	
   

  
	
   

  	
  Jeffrey Seifman

  	
   

  	
   

  
	
  Telecopy:

  	
  (312) 861-2200

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  To Executive:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Robert A. Peterson

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
   

  	
   

  	
   

  	
   

  
							

 

8

 

or such other address or
to the attention of such other person as the recipient parry shall have
specified by prior written notice to the sending party. Any notice under this
Agreement shall be deemed to have been given when personally delivered, one
business day after sent by reputable overnight courier service, five days after
deposit in the U.S. mail or at such time as it is transmitted via facsimile,
with receipt confirmed.

 

10.                                 General
Provisions.

 

(a)                                  Expenses.  The LLC and Executive will each pay their
own costs and expenses incurred in connection with the negotiation and
execution of this Agreement and the agreements contemplated hereby.

 

(b)                                 Transfers
in Violation of Agreement.  Any
Transfer or attempted Transfer of any Executive Units in violation of any
provision of this Agreement shall be void, and the LLC shall not record such
Transfer on its books or treat any purported transferee of such Executive Units
as the owner of such Executive Units for any purpose.

 

(c)                                  Code
Section 280G Approval.  The
parties acknowledge that Executive’s right to acquire the Executive Units and
to receive the payments described in Section 6 hereof was approved
by persons holding more than 75% of the LLC’s voting power pursuant to an
approval process intended to satisfy the requirements of Treasury Regulation
Section 1.280G-1 Q&A 7.

 

(d)                                 Severability.  Whenever possible, each provision of this
Agreement shall 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 shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

(e)                                  Complete
Agreement. This Agreement, those documents expressly referred to herein and
other documents of even date herewith embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

 

(f)                                    Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and all of which taken together constitute one and the
same agreement.

 

(g)                                 Remedies.
Each of the parties to this Agreement shall be entitled to enforce his or its
rights under this Agreement specifically, to recover damages and costs
(including reasonable attorney’s fees) caused by any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages would not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of

 

9

 

competent
jurisdiction (without posting any bond or deposit) for specific performance
and/or other injunctive relief in order to enforce or prevent any violations of
the provisions of this Agreement.

 

(h)                                 Amendment
and Waiver.  The provisions of this
Agreement may be amended and waived only with the prior written consent of the
LLC and Executive.

 

(i)                                     Business
Days. If any time period for giving notice or taking action hereunder
expires on a day which is a Saturday, Sunday or legal holiday in the State of
Illinois, the time period shall be automatically extended to the business day
immediately following such Saturday, Sunday or holiday.

 

(j)                                     Assignment.  Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive and the LLC and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights
and obligations of Executive under this Agreement shall not be assignable
except as may relate to Executive Units in connection with a Transfer thereof
permitted hereunder and under the LLC Agreement.

 

(k)                                  Arbitration.
Except for suits seeking injunctive relief or specific performance, any dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Chicago, Illinois in accordance with the
rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. 
Each party shall bear its own expenses in any arbitration convened
pursuant to this Section 10(k) and shall split evenly the costs of
the arbitration.

 

(l)                                     Governing
Law.  The provisions of this
Agreement shall be construed in accordance with the internal laws, but not the
law of conflicts, of the State of Delaware.

 

*     *    
*     *

 

10

 

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

 

 

	
   

  	
  NSP HOLDINGS, L.L.C.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David F. Myers, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice President and Chief

  	
   

  
	
   

  	
   

  	
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Robert A. Peterson

  	
   

  
	
   

  	
  Robert A. Peterson

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