Document:

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                                                                   Exhibit 10.10

                             AC SAFETY HOLDING CORP.
                         2004 DEFERRED COMPENSATION PLAN

                            Dated as of April 7, 2004

         The AC Safety Holding Corp. 2004 Deferred Compensation Plan (the
"Plan") has been adopted by AC Safety Holding Corp., a corporation organized
under the laws of the state of Delaware, effective as of the Effective Date (as
hereinafter defined), for the benefit of its eligible employees. The Plan is a
nonqualified deferred compensation plan pursuant to which the employees of the
Company (as hereinafter defined) who are selected for participation in the Plan
may defer compensation. The Plan is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended.

                                    ARTICLE I

                                   DEFINITIONS

         The following words and phrases used in this Plan shall have the
respective meanings set forth below unless the context clearly indicates to the
contrary. Wherever appropriate herein, words used in the singular shall be
considered to include the plural, words used in the plural shall be considered
to include the singular, and the masculine gender shall be deemed to include the
feminine gender.

         Section 1.1 "Administrator" shall mean the Company acting through the
Board or any Person to whom it delegates its authority pursuant to Article V.

         Section 1.2 "Board" shall mean the Board of Directors of the Company.

         Section 1.3 "Bonus" shall mean that portion of the consideration
received by a Participant on the Closing Date as a "Transaction Bonus" that is
credited to such Participant's Deferred Compensation Account in accordance with
Section 2.2 of the Plan, pursuant to and determined in accordance with the
Participant's Subscription Agreement.

         Section 1.4 "Closing Date" shall mean the date on which the Proposed
Merger is consummated.

         Section 1.5 "Come Along Transaction" shall have the meaning given to
such term in the Stockholders' Agreement.

         Section 1.6 "Common Stock" shall mean shares of Company's common stock,
par value $0.01 per share.

         Section 1.7 "Company" shall mean AC Safety Holding Corp., a Delaware
corporation.

         Section 1.8 "Deferred Common Stock Unit" shall mean the right of a
Participant to receive one share of Common Stock as of the Distribution Date in
accordance with Article IV.

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         Section 1.9 "Deferred Compensation Account" of a Participant shall mean
the bookkeeping account established on behalf of the Participant in accordance
with Section 3.1.

         Section 1.10 "Deferred Preferred Stock Unit" shall mean the right of a
Participant to receive one share of Preferred Stock as of the Distribution Date
in accordance with Article IV.

         Section 1.11 "Distribution Date" shall mean the date on which the event
described in Section 4.1 shall occur.

         Section 1.12 "Effective Date" means the effective date of the Plan
which shall be the Closing Date.

         Section 1.13 "Exit Event" shall be deemed to have occurred (i) upon the
expiration of the period of time following the consummation of an Initial
Offering, as determined by the managing underwriters, during which the Bear
Group Holders (as such term is defined in the Stockholders' Agreement) or any
other stockholders of the Company are contractually prohibited from selling,
making any short sale of, granting any option for the purchase of, or otherwise
disposing of any Common Stock or Preferred Stock, or securities convertible into
shares of Common Stock or Preferred Stock, (ii) upon consummation of a
Realization Event (as defined in the Company's 2004 Stock Incentive Plan) or
(iii) upon any change of control (or similar event, however denominated) with
respect to the Company under and as defined in any indenture or agreement to
which the Company or any of its subsidiaries is a party with respect to
indebtedness for borrowed money in the excess of the aggregate principal amount
of $100,000,000.

         Section 1.14 "Fund" shall have the meaning set forth in Section 3.4.

         Section 1.15 "Initial Offering" shall mean the initial offering of
Common Stock or Preferred Stock or equity securities of any Person that owns in
excess of 75% of the outstanding voting securities of the Company pursuant to
(i) an offering registered under the Securities Act or (ii) an offering
consummated pursuant to Rule 144A under the Securities Act.

         Section 1.16 "Merger Agreement" shall mean the Agreement and Plan of
Merger dated as of March 10, 2004, by and among the Company, AC Safety
Acquisition Corp., a Delaware corporation, and Aearo Corporation, a Delaware
corporation, as it may be amended, supplemented or restated from time to time.

         Section 1.17 "Participant" shall mean any person included in the Plan
as provided in Article II.

         Section 1.18 "Person" shall be construed broadly and shall include,
without limitation, an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

         Section 1.19 "Plan" shall mean the AC Safety Holding Corp. 2004
Deferred Compensation Plan, as set forth in this document and as it may
hereafter be amended from time to time.

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         Section 1.20 "Preferred Stock" shall mean shares of the Company's
Series A Preferred Stock, par value $0.01 per share.

         Section 1.21 "Proposed Merger" shall mean that certain proposed merger
of AC Safety Acquisition Corp. into Aearo Corporation.

         Section 1.22 "Public Sale" shall have the meaning given to such term in
the Stockholders' Agreement.

         Section 1.23 "Stockholders' Agreement" shall mean the Stockholders'
Agreement dated as of the date hereof, by and among the Company and the holders
party thereto, as it may be amended, supplemented or restated from time to time.

         Section 1.24 "Subsidiary" shall mean with respect to any Person, any
other Person that, directly or indirectly through one or more intermediaries
Controls, is Controlled by, or is under common Control with, such Person. The
term "Control" means the possession, directly or indirectly, of the power to
cause or director the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

         Section 1.25 "Subscription Agreement" with respect to any Person shall
mean any Subscription Agreement (however denominated) dated as of the Closing
Date between such Person and the Company that contains a provision expressly
providing for a bonus credit under this Plan in an amount equal to the
Transaction Bonus set forth in such Subscription Agreement.

         Section 1.26 "Tag Along Transaction" shall have the meaning given to
such term in the Stockholders' Agreement.

         Section 1.27 "Termination of Employment" shall mean the time when the
employee-employer relationship between the Participant and the Company or any of
its Subsidiaries is terminated for any reason, with or without cause, including,
but not by way of limitation, a termination by resignation, discharge,
disability, death or retirement, but excluding transfers of such Participant's
employment among and between the Company and any Subsidiary of the Company.

                                   ARTICLE II

                                  PARTICIPATION

         Section 2.1 Participation. Unless otherwise determined by the
Administrator in its sole discretion, each employee of the Company who is a
party to a Subscription Agreement and is actively employed by the Company or any
of its Subsidiaries as of the Closing Date shall be eligible to participate in
the Plan.

         Section 2.2 Deferred Compensation Account. In accordance with the terms
set forth in the Subscription Agreement, on the Closing Date, each Participant's
Deferred Compensation Account shall be credited with such Participant's Bonus in
such amount as is set forth in such Participant's Subscription Agreement.

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                                  ARTICLE III

                                    ACCOUNTS

         Section 3.1 Deferred Compensation Accounts.

             (a) The Administrator shall establish and maintain for each
Participant a Deferred Compensation Account to which shall be (i) credited the
amounts determined under Section 3.1(b) and (ii) debited the amount of any
distributions under the Plan.

             (b) As of the Closing Date, each Participant's Deferred
Compensation Account shall be credited with the number of Deferred Common Stock
Units and Deferred Preferred Stock Units set forth in his Subscription
Agreement. Notwithstanding any other provision of this Plan, no amount shall be
credited to any Participant's Deferred Compensation Account prior to the Closing
Date.

         Section 3.2 Designation of Beneficiary. Each Participant shall have the
right to designate, revoke and redesignate beneficiaries hereunder and to direct
payment of the amount or distribution of the items credited to his Deferred
Compensation Account to such beneficiaries upon his death. Designation,
revocation and redesignation of beneficiaries shall be made on such form as
shall be designated by the Administrator and shall be effective upon delivery to
the Administrator.

         Section 3.3 Assignments Prohibited. No part of a Participant's Deferred
Compensation Account shall be liable for the debts, contracts or engagements of
any Participant, his beneficiaries or successors in interest, or be taken in
execution by levy, attachment or garnishment or by any other legal or equitable
proceeding, nor shall any such person have any rights to alienate, anticipate,
commute, pledge, encumber or assign any benefits or payments hereunder in any
manner whatsoever except to designate a beneficiary as provided herein.

         Section 3.4 Fund. The Administrator may, in its discretion, establish a
fund (the "Fund") to which the Company may contribute cash or other property,
including securities issued by the Company, to provide for the benefit payments
under this Plan; provided, however, that such Fund shall remain a general asset
of the Company subject to the rights of creditors of the Company in the event of
the Company's bankruptcy or insolvency as defined in any such Fund. The Company
shall designate a trustee to hold any such Fund in trust in accordance with the
terms of the applicable trust agreement. The Company's obligations under this
Plan may be satisfied with Fund assets distributed pursuant to the terms of the
trust, and any such distribution shall reduce the Company's obligations under
this Plan.

         Section 3.5 Dividend Equivalents.

             (a) As of the date the Company pays any dividend (other than cash
dividends) on shares of Common Stock or Preferred Stock, each Participant's
Deferred Compensation Account shall be credited with that number of Deferred
Common Stock Units or Deferred Preferred Stock Units, as applicable, equal to
the ratio of (i) the aggregate value of the dividend that would have been
payable on the respective units held by such Participant immediately prior to
such payment date had the shares of Common Stock or Preferred Stock represented
by the respective units been outstanding as of such payment date to (ii) the
fair market value of the shares of Common Stock or Preferred Stock, as
applicable, as such fair market value is determined as of that time in good
faith by the Administrator for purposes of this Plan. Any such determination by
the Administrator in good faith shall be final and binding on all persons.

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             (b) As promptly as practicable following the date the Company pays
any cash dividend on shares of Common Stock or Preferred Stock, the Company
shall pay to each Participant an amount in cash equal to the product of (i) the
number of Deferred Common Stock Units or Deferred Preferred Stock Units, as
applicable, in such Participant's Deferred Compensation Account at the time of
the record date for such dividend multiplied by (ii) the per share cash amount
of such dividend with respect to shares of Common Stock or Preferred Stock, as
the case may be.

         Section 3.6 Non-Consummation of Proposed Acquisition. Notwithstanding
any other provision of the Plan, in the event that the Proposed Merger Agreement
is terminated in accordance with its terms prior to the Closing Date, the Plan
will terminate as of the effective date of such termination, and in each such
case all Bonuses shall become void and of no effect as of the date of Plan
termination.

                                   ARTICLE IV

                                    BENEFITS

         Section 4.1 Time of Distribution.

             (a) Each Participant's Deferred Compensation Account shall be
distributed to the Participant (or his beneficiaries, as applicable), less any
amounts required to be withheld by applicable law, (i) upon (or as soon as
reasonably practicable following) the earlier to occur following the Closing
Date of (A) the Participant's Termination of Employment and (B) an Exit Event
and (ii) as set forth in Section 4.1(b) and Section 4.1(c) below.

             (b) Notwithstanding anything to the contrary contained herein, if a
Participant has the right to transfer shares of Common Stock and/or Preferred
Stock pursuant to the exercise of tag along rights or registration rights in
accordance with Section 2(a) or Section 4, respectively, of the Stockholders'
Agreement, then the Company will issue and distribute to the Participant the
following:

                           (i) with respect to the Common Stock, a number of
                  shares equal to the maximum number of shares of Common Stock
                  that the Participant is entitled to sell in such Tag Along
                  Transaction or Public Sale (after giving effect to the cutback
                  provisions contained in Section 4(a)(v) or Section 4(b)(ii),
                  as the case may be, of the Stockholders' Agreement), as
                  applicable; and/or

                           (ii) with respect to the Preferred Stock, a number of
                  shares equal to the maximum number of shares of Preferred
                  Stock that the Participant is entitled to sell in such Tag
                  Along Transaction or Public Sale (after giving effect to the
                  cutback provisions contained in Section 4(a)(v) or Section
                  4(b)(ii), as the case may be, of the Stockholders' Agreement),
                  as applicable.

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         In connection with distributions of Common Stock pursuant to this
Section 5.1(b), the Participant's Deferred Compensation Account will be
decreased by (A) decreasing the number of Deferred Common Stock Units held in
such account by the number of shares of Common Stock distributed pursuant to the
immediately preceding sentence and (B) decreasing the number of Deferred
Preferred Stock Units held in such account by the number of shares of Preferred
Stock distributed pursuant to the immediately preceding sentence.

             (c) Notwithstanding anything to the contrary contained herein, if a
Participant has the obligation to transfer shares of Common Stock and/or
Preferred Stock pursuant to the exercise of come along rights in accordance with
Section 2(b) of the Stockholders' Agreement, then the Company will issue and
distribute to the Participant the following:

                           (i) with respect to the Common Stock, a number of
                  shares equal to the maximum number of shares of Common Stock
                  that the Participant is required to sell in such Come Along
                  Transaction; and/or

                           (ii) with respect to the Preferred Stock, a number of
                  shares Preferred Stock equal to the maximum number of shares
                  of Preferred Stock that the Participant is required to sell in
                  such Come Along Transaction.

         In connection with distributions of Common Stock pursuant to this
Section 4.1(c), the Participant's Deferred Compensation Account will be
decreased by (A) decreasing the number of Deferred Common Stock Units held in
such account by the number of shares of Common Stock distributed pursuant to
Section 4.1(c)(i) above and (B) decreasing the number of Deferred Preferred
Stock Units held in such account by the number of shares of Preferred Stock
distributed pursuant Section 4.1(c)(ii) above.

         Section 4.2 Form of Distribution. With respect to Deferred Common Stock
Units, all distributions from the Plan shall be made in the form of whole shares
of Common Stock with fractional shares credited to federal income taxes
withheld. With respect to Deferred Preferred Stock Units, all distributions from
the Plan shall be made in the form of whole shares of Preferred Stock with
fractional shares credited to federal income taxes withheld. Tax withholding
with respect to such distributions shall be pursuant to Section 6.4.

         Section 4.3 Stockholders' Agreement. Notwithstanding anything else
contained herein to the contrary, prior and as a condition to the distribution
of shares of Common Stock or Preferred Stock to a Participant hereunder, such
Participant shall execute an Adoption Agreement (as defined in the Stockholders'
Agreement) pursuant to which such Participant shall become a party to and be
bound by the Stockholders' Agreement and upon such execution such Participant
shall have all the rights and obligations of a Non-Bear Group Holder (as defined
in the Stockholders' Agreement) thereunder.

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                                   ARTICLE V

                            ADMINISTRATIVE PROVISIONS

         Section 5.1 Administrator's Duties and Powers.

             (a) The Board shall conduct the general administration of the Plan
in accordance with the Plan and shall have full discretionary power and
authority to carry out that function. Among its necessary powers and duties, are
the following:

                           (i) To delegate all or part of its function as
                  Administrator to others and to revoke any such delegation.

                           (ii) To determine questions of eligibility of
                  Participants and their entitlement to benefits.

                           (iii) To select and engage attorneys, accountants,
                  actuaries, trustees, appraisers, brokers, consultants,
                  administrators, physicians or other persons to render service
                  or advice with regard to any responsibility the Administrator
                  or the Board has under the Plan, or otherwise, to designate
                  such persons to carry out responsibilities, and (with the
                  Company, the Board and its officers, trustees and employees)
                  to rely upon the advice, opinions or valuations of any such
                  persons, to the extent permitted by law, being fully protected
                  in acting or relying thereon in good faith.

                           (iv) To interpret the Plan for purpose of the
                  administration and application of the Plan, in a manner not
                  inconsistent with the Plan or applicable law and to amend or
                  revoke any such interpretation.

                           (v) To adopt Rules of the Plan that are not
                  inconsistent with the Plan or applicable law and to amend or
                  revoke any such rules.

             (b) Every finding, decision, and determination made by the
Administrator shall, to the full extent permitted by law, be final and binding
upon all parties, except to the extent found by a court of competent
jurisdiction to be unreasonable.

         Section 5.2 Indemnification by the Company; Liability Insurance.

             (a) The Company shall pay or reimburse any of the Company's
officers, directors or employees who administer the Plan for all expenses
incurred by such persons in, and shall indemnify and hold them harmless from,
all claims, liability and costs (including reasonable attorneys' fees) arising
out of the good faith performance of their Plan functions.

             (b) The Company may obtain and provide for any such person, at the
Company's expense, liability insurance against liabilities imposed on him by
law.

         Section 5.3 Limitations Upon Powers. The Plan shall be uniformly and
consistently administered, interpreted and applied with regard to all
Participants in similar circumstances. The Plan shall be administered,
interpreted and applied fairly and equitably in accordance with the specified
purposes of the Plan.

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         Section 5.4 Recordkeeping.

             (a) The Administrator shall maintain suitable records as follows:
(i) records of each Participant's individual Deferred Compensation Accounts,
(ii) records which show the operations of the Plan, and (iii) records of its
deliberations and decisions.

             (b) The Administrator may appoint a secretary to keep the record of
proceedings, to transmit its decisions, instructions, consents or directions to
any interested party, to execute and file, on behalf of the Administrator, such
documents, reports or other matters as may be necessary or appropriate under
applicable law to perform ministerial acts.

             (c) The Administrator shall not be required to maintain any records
or accounts which duplicate any records or accounts maintained by the Company.

         Section 5.5 Service of Process. The Secretary of the Company is hereby
designated as agent of the Plan for the service of legal process.

         Section 5.6 Service in More than One Capacity. Any person or group of
persons may serve in more than one capacity with respect to the Plan.

         Section 5.7 Statement to Participants. The Administrator shall from
time to time in its discretion furnish to each Participant a statement setting
forth the value of his Deferred Compensation Accounts and such other information
as the Administrator shall deem advisable to furnish.

         Section 5.8 Corporate Changes. If the Company at any time (a) increases
or decreases the number of shares of its Common Stock or Preferred Stock then
outstanding proportionately to all holders of such shares, whether by stock
dividend, stock split, consolidation of shares, or (b) otherwise effectuates any
change in the capitalization of the Company (whether by way of merger,
consolidation, reorganization or recapitalization or otherwise), then all
Deferred Common Stock Units and/or Deferred Preferred Stock Units theretofore
credited shall be equitably adjusted with respect to the number of shares of
such Common Stock or Preferred Stock, as applicable, represented thereby (or
exchanged for a right to receive another class or kind of securities which shall
continue to be subject to the terms and provisions of this Plan, mutatis
mutandis) in such manner as shall be determined in good faith by the
Administrator in its sole discretion.

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

         Section 6.1 Amendment of Plan. Except as may otherwise be prohibited by
applicable law, the Plan may be wholly or partially amended by the Administrator
from time to time including retroactive amendments; provided, however, that no
amendment shall decrease the interest any Participant or any other person
entitled to payment under the Plan has in the Participant's Deferred
Compensation Accounts without such Participant's written approval.

         Section 6.2 Errors and Misstatements. In the event of any misstatement
or omission of fact by a Participant to the Administrator or any clerical error
resulting in payment of benefits in an incorrect amount, the Administrator shall
promptly cause the amount of future payments to be corrected upon discovery of
the facts and shall pay the Participant or any other Person entitled to payment
under the Plan any underpayment in cash in a lump sum or to recoup any
overpayment from future payments to the Participant or any other Person entitled
to payment under the Plan in such amounts as the Administrator shall direct or
to proceed against the Participant or any other Person entitled to payment under
the Plan for recovery of any such overpayment.

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         Section 6.3 Governing Law. This Plan shall be construed, administered
and governed in all respects under and by applicable federal laws and, where
state law is applicable, the laws of the State of Delaware.

         Section 6.4 Tax Withholding. During the time a Participant is employed
with the Company or any Subsidiary, the Company (or Subsidiary, as applicable)
shall deduct from such Participant's wages any amounts required to be withheld
by the Company (or Subsidiary, as applicable) with respect to the accrual of a
Participant's benefits hereunder. Further, there shall be deducted from each
payment of a Participant's benefits under the Plan any taxes required to be
withheld by the Company or any Subsidiary in respect of such payment. The
Company (or Subsidiary, as applicable) shall have the right to reduce any
payment by an amount sufficient to pay said taxes. In lieu of a deduction, the
Committee may permit the Participant to pay or reimburse the Company (or
Subsidiary, as applicable) for said taxes.

         Section 6.5 Limitation on Rights of Employees. The Plan is strictly a
voluntary undertaking on the part of the Company and shall not constitute a
contract of employment between the Company (or Subsidiary, as applicable) and
any Participant. Nothing contained in the Plan shall give any Participant the
right to be retained in the service of the Company (or Subsidiary, as
applicable) or to interfere with or restrict the right of the Company (or
Subsidiary, as applicable), which is hereby expressly reserved, to discharge or
retire any Participant, except as provided by law, at any time without notice
and with or without cause. Inclusion under the Plan will not give any
Participant any right or claim to any benefit hereunder except to the extent
such right has specifically become fixed under the terms of the Plan. The
doctrine of substantial performance shall have no application to Participants or
any other persons entitled to payments under the Plan.

         Section 6.6 Payment on Behalf of Minors. In the event any amount
becomes payable under the Plan to a minor or a person who, in the sole judgment
of the Administrator is considered by reason of physical or mental condition to
be unable to give a valid receipt therefor, the Administrator may direct that
such payment be made to any person found by the administrator in its sole
judgment, to have assumed the care of such minor or other person. Any payment
made pursuant to such determination shall constitute a full release and
discharge of the Company, the Board, the Administrator, and their officers,
directors and employees.

         Section 6.7 References. Unless the context clearly indicates to the
contrary, a reference to a statute, regulation or document shall be construed as
referring to any subsequently enacted, adopted or executed statute, regulation
or document.

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         Section 6.8 Termination of the Plan. While the Plan is intended as a
permanent program, the Board shall have the right at any time to declare the
Plan terminated completely as to the Company or as to any division, facility or
other operational unit thereof. In the event of any termination, the
Administrator shall continue to maintain Participants' Deferred Compensation
Accounts (in accordance with the terms of the Plan) and payment of such Deferred
Compensation Accounts shall be made in accordance with Article IV; provided that
the Board may, in its sole discretion, elect to accelerate the distribution date
for Plan benefits to the date of such termination.

         Section 6.9 Effect Upon Other Plans. Except to the extent provided
herein, nothing in this Plan shall be construed to affect the provisions of any
other plan maintained by the Company.

         Section 6.10 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.

         Section 6.11 Enforcement. In the event the Company or any Participant
institutes litigation to enforce or protect its rights under the Plan, the party
prevailing in any such litigation shall be paid by the non-prevailing party, in
addition to all other relief, all reasonable attorneys' fees, out-of-pocket
costs and disbursements relating to such litigation.

                                      *****

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         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed effective as of the date first above written.

                                           AC SAFETY HOLDING CORP.

                                           By: /s/ Douglas R. Korn
                                               --------------------------------
                                                Name:  Douglas R. Korn
                                                Title:  President<PAGE>

                                                                  Exhibit 10.11

                                                                 EXECUTION COPY
                                                                 --------------

                                   ARTICLE I

                               PURPOSE OF THE PLAN

         The purpose of the AC SAFETY HOLDING CORP. 2004 STOCK INCENTIVE PLAN
(the "Plan") is (a) to further the growth and success of AC Safety Holding
Corp., a Delaware corporation (the "Company"), and its Subsidiaries (as defined
herein) by enabling directors and employees of, or consultants to, the Company
or any of its Subsidiaries to acquire Shares (as defined herein), thereby
increasing their personal interest in such growth and success, and (b) to
provide a means of rewarding outstanding performance by such persons to the
Company and/or its Subsidiaries. Options granted under the Plan (the "Options")
shall be nonqualified stock options ("NSOs"). In this Plan, the terms "Parent"
and "Subsidiary" mean "Parent Corporation" and "Subsidiary Corporation,"
respectively, as such terms are defined in Sections 424(e) and (f) of the
Internal Revenue Code of 1986, as amended (the "Code"). Unless the context
otherwise requires, any NSO is referred to in this Plan as an "Option."

                                   ARTICLE II

                                   DEFINITIONS

         As used in the Plan, the following terms shall have the meanings set
forth below:

         "Affiliate" means with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with, such Person and/or one or more
Affiliates thereof. The term "Control" includes, without limitation, the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

         "Award" means the grant or issuance by the Company of Options and/or
Restricted Stock, respectively.

         "Board" has the meaning set forth in Section 3.1 hereof.

         "Capital Stock" means any and all shares, interests, participation or
other equivalents (however designated) of corporate stock of a Person and, in
the case of the Company, shall include all Common Stock and Preferred Stock.

         "Cause" means, with respect to termination of the employment of any
Recipient by the Company: (i) if such Recipient is at the time of termination a
party to an employment or retention agreement with the Company which defines
such term, the meaning given therein, and (ii) in all other cases, that in the
Board's good faith determination such termination is based on such Recipient's
(A) continuing failure, for more than 10 days after the Company's notice to the
Recipient thereof, by the Recipient to perform such duties as are reasonably
requested by the Board as documented in writing to the Recipient; (B) failure to
observe material policies generally applicable to directors, employees and/or
consultants of the Company unless such failure is capable of being cured and is
cured within 10 days of such Recipient's receiving notice of such failure; (C)
the commission by the Recipient of any act of fraud, theft or financial
dishonesty with respect to the Company or any criminal act involving moral
turpitude or any felony; (D) violation of the provisions of any employment,
consulting, non-competition or confidentiality agreement with the Company or any
of its Affiliates unless such violation is capable of being cured and is cured
within 10 days of such Recipient receiving notice of such violation; (E) chronic
absenteeism by the Recipient; or (F) abuse of alcohol or another controlled
substance by the Recipient.

<PAGE>

         "Closing Date" means April 7, 2004.

         "Code" has the meaning set forth in Article I hereof.

         "Co-Investment Rights Agreement" means the Co-Investment Rights
Agreement between the Investor, Aearo Corporation and Vestar Capital Partners
IV, L.P. ("Vestar") dated as of the Closing Date.

         "Committee" has the meaning set forth in Section 3.1 hereof.

         "Common Stock" means the common stock of the Company, par value $0.01
per share.

         "Company" has the meaning set forth in Article I hereof.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Good Reason" means, with respect to the termination of employment by
any Recipient: (i) if such Recipient is at the time of termination a party to an
employment or retention agreement with the Company or any subsidiary thereof
which defines such term, the meaning given therein, and (ii) in all other cases,
the taking of any action by the Recipient's employer (whether the Company or a
subsidiary thereof) which (A) materially decreases such Recipient's total annual
salary and target bonus or (B) materially adversely affects such Recipient's
participation in, or reduces such Recipient's benefits originally provided to
such Recipient under the benefit plans of such employer, except, in each of (A)
and (B), to the extent that such action applies to (x) the employees of such
employer that hold titles or responsibilities similar to such Recipient or (y)
the employees of such employer generally.

         "Investor" means, collectively, Bear Stearns Merchant Banking Partners
II, L.P., Bear Stearns Merchant Banking Investors II, L.P., Bear Stearns
MB-PSERS II, L.P., The BSC Employee Fund V, L.P., The BSC Employee Fund VI,
L.P., and each of their respective Affiliates, including, without limitation,
any investment funds managed or controlled by Bear Stearns Merchant Capital II,
L.P.

         "Investor Investment" means direct or indirect investments in Shares,
Preferred Stock or other securities of the Company made by the Investor on or
after the Closing Date.

         "Investor IRR" means the pretax compounded annual internal rate of
return calculated on a quarterly basis realized to the Investor on the Investor
Investment, based on the aggregate amount invested by the Investor for all
Investor Investments and the aggregate amount received by the Investor for all
Investor Investments, assuming all Investor Investments were purchased by one
Person and were held continuously by such Person. The Investor IRR shall be
determined based on the actual time of each Investor Investment and actual cash
received by the Investor in respect of all Investor Investments and including,
as a return on such investment, any cash dividends, cash distributions or cash
interest made by the Company or any Subsidiary in respect of such investment
during such period, but excluding any other amounts payable that are not
directly attributable to an Investor Investment.

                                       2
<PAGE>

         "Notice" has the meaning set forth in Section 8.2 hereof.

         "NSOs" has the meaning set forth in Article I hereof.

         "Option" has the meaning set forth in Article I hereof.

         "Option Agreement" has the meaning set forth in Section 5.2(a) hereof.

         "Option Price" has the meaning set forth in Section 6.1 hereof.

         "Option Shares" has the meaning set forth in Section 8.2(b) hereof.

         "Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, a corporation, an association, a joint
stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

         "Permitted Transferee" means, with respect to a Recipient, such
Recipient's child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, a trust in which these persons have more than fifty percent of
the beneficial interest, a foundation in which these persons (or the Recipient)
control the management of assets, and any other entity in which these persons
(or the Recipient) own more than fifty percent of the voting interests. Any
transfer to a Permitted Transferee shall be solely as a gift for estate planning
purposes and without consideration (other than nominal consideration or in
exchange for an interest in a qualified transferee). In considering any proposed
transfer, the Board may request such information, and require such
representations and assurances, as it deems advisable to ensure the consistency
of the transfer to such Permitted Transferee with the foregoing restrictions and
any other applicable legal and regulatory requirements.

          "Plan" has the meaning set forth in Article I hereof.

         "Preferred Stock" means Series A Preferred Stock of the Company, par
value $0.01 per share.

         "Public Offering" means the closing of a public offering of Common
Stock or Preferred Stock pursuant to a registration statement declared effective
under the Securities Act, except that a Public Offering shall not include an
offering made in connection with an employee benefit plan or made primarily to
employees or consultants of the Company.

                                       3
<PAGE>

         "Realization Event" means, with respect to the Company, (i) the sale of
all or substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis, (ii) the consummation of any transaction or series of
transactions in which the Investor sells at least 50% of the shares of Common
Stock and 50% of the shares of Preferred Stock acquired by the Investor on the
Closing Date (excluding any shares transferred among Affiliates of the Investor
or transferred in connection with the transactions contemplated by the
Co-Investment Rights Agreement) or (iii) the liquidation, dissolution or winding
up of the Company.

         "Recipient" has the meaning set forth in Section 5.1(a) hereof.

         "Reorganization" has the meaning set forth in Section 9.1 hereof.

         "Reserved Shares" means, at any time, an aggregate of 633,923 Shares,
of which (i) 348,658 shall be reserved for the issuance of Shares upon the
exercise of Options designated as Tranche A Options, (ii) 158,481 shall be
reserved for the issuance of Shares upon the exercise of Options designated as
Tranche B Options, (iii) 79,240 shall be reserved for the issuance of Shares
upon the exercise of Options designated as Tranche C Options and (iv) 47,544
shall be made available for grant and reserved for issuance as Restricted Stock.

         "Restricted Stock" means Shares designated as Restricted Stock by the
Board.

         "Restricted Stock Purchase Price" has the meaning set forth in Section
6.2 hereof.

         "Restricted Stock Agreement" has the meaning set forth in Section
5.2(b) hereof.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Shares" means shares of Common Stock.

         "Stockholders' Agreement" means the Stockholders' Agreement dated as of
the Closing Date, among the Company and the holders party thereto, as it is
amended, supplemented or restated from time to time.

         "Subsidiary" means any corporation or other entity of which the Company
owns securities or interests having a majority, directly or indirectly, of the
ordinary voting power in electing the board of directors or managers thereof.

         "Termination Date" means the tenth anniversary of the Closing Date.

         "Termination of Relationship" means, with respect to each Recipient,
(a) if the Recipient is an employee of the Company or any Subsidiary, the
termination of the Recipient's employment with the Company and its Subsidiaries
for any reason; (b) if the Recipient is a consultant to the Company or any
Subsidiary, the termination of the Recipient's consulting relationship with the
Company and its Subsidiaries for any reason; and (c) if the Recipient is a
director of the Company or any Subsidiary, the termination of the Recipient's
service as a director of the Company and its Subsidiaries for any reason.

         "Vested Awards" means Vested Options and Vested Restricted Stock.

                                       4
<PAGE>

         "Vested Options" means Options that have vested in accordance with the
applicable Option Agreement.

         "Vested Restricted Stock" means Restricted Stock that has vested in
accordance with the applicable Restricted Stock Agreement.

         "Voting Securities" means, at any time, shares of any class of Capital
Stock of the Company which are then entitled to vote generally in the election
of directors or on any other matter.

Article III

             ADMINISTRATION OF THE PLAN; SHARES SUBJECT TO THE PLAN

3.1      Committee.

         The Plan shall be administered by the Board of Directors of the Company
(the "Board") or the Compensation Committee (the "Committee") appointed from
time to time by the Board. The term "Committee" shall, for all purposes of the
Plan other than this Article III, be deemed to refer to the Board if the Board
is administering the Plan. Notwithstanding anything stated herein, all Awards
shall be determined by the Committee based on the recommendation of the Chief
Executive Officer of the Company.

3.2      Procedures.

         The Committee shall adopt such rules and regulations as it shall deem
appropriate concerning the holding of meetings and the administration of the
Plan. The entire Committee shall constitute a quorum and the actions of the
entire Committee present at a meeting, or actions approved in writing by the
entire Committee, shall be the actions of the Committee.

3.3      Interpretation.

         Except as may otherwise be expressly reserved to the Board as provided
herein, and with respect to any Award, except as may otherwise be provided in an
Option Agreement or Restricted Stock Agreement, as applicable, evidencing such
Award, the Committee shall have all powers with respect to the administration of
the Plan, including the interpretation of the provisions of the Plan, any Option
Agreement or Restricted Stock Agreement (including, without limitation, whether
any particular termination of employment is for Cause or without Good Reason),
and all decisions of the Board or the Committee, as the case may be, shall be
made in good faith and shall be conclusive and binding on all participants in
the Plan. In making any determination or in taking or not taking any action
under this Plan, the Committee or the Board, as the case may be, may obtain and
may rely upon the advice of experts, including employees of and professional
advisors to the Company. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or employees of the
Company. No director, officer or agent of the Company or any Subsidiary will be
liable for any action, omission or decision under this Plan taken, made or
omitted in good faith.

                                       5
<PAGE>

3.4      Number of Shares.

         Subject to the provisions of Article IX (relating to adjustments upon
changes in capital structure and other corporate transactions), the aggregate
number of Shares with respect to which Awards may be granted under the Plan
shall not exceed the Reserved Shares. If and to the extent Awards granted under
the Plan terminate, are reduced in number, expire or are canceled without having
been fully exercised or issued, new Awards may be granted under the Plan with
respect to the Shares covered by the unexercised and non-issued portion of such
terminated, expired or canceled Awards.

3.5      Reservation of Shares for Options.

         The number of Shares reserved for issuance upon the exercise of Options
granted under the Plan shall at no time be less than the maximum number of
Shares which may be purchased at any time pursuant to outstanding Options.

                                   ARTICLE IV

                                   ELIGIBILITY

4.1      General.

         Awards may be granted under the Plan only to persons who are employees
or directors of, or certain advisors or consultants to, the Company or any of
its Subsidiaries on the date of the grant. All Options granted under the Plan
shall be NSOs. An advisor or consultant may be granted an Award under the Plan
only if such person's participation in this Plan would not adversely affect (a)
the Company's eligibility to rely on the Rule 701 from registration under the
Securities Act for the offering of shares issuable under this Plan by the
Company or (b) the Company's compliance with any other applicable laws.

                                   ARTICLE V

                                 GRANT OF AWARDS

5.1      General.

         Subject to Section 5.6, Awards may be granted under the Plan at any
time and from time to time on or prior to the Termination Date. Subject to the
provisions of the Plan, the Committee, based on the recommendation of the Chief
Executive Officer, shall have the authority to determine:

         (a) The persons (from among the class of persons eligible to receive
Awards under the Plan) to whom Awards shall be granted (the "Recipients");

         (b) The time or times at which Awards shall be granted; and

         (c) The number of Shares of Restricted Stock that may be granted or the
number of Shares for which an Option may be exercisable.

                                       6
<PAGE>

5.2      Agreements.

         (a) Each Option granted under the Plan shall be designated as an NSO
and shall be subject to the terms and conditions applicable to NSOs set forth in
the Plan. Each Option shall specify the number of Shares for which such Option
shall be exercisable and the exercise price for such Shares. In addition, each
Option shall be evidenced by a written agreement (an "Option Agreement") that
shall be executed by the Company and the Recipient, a form of which is attached
hereto as Exhibit A. Each Option Agreement shall set forth the material terms
and conditions of each Option consistent with the express limitations of this
Plan, as determined by the Board.

         (b) Each grant and issuance of Restricted Stock under this Plan shall
be evidenced by a written agreement(a "Restricted Stock Agreement") that shall
be executed by the Company and the Recipient, a form of which is attached hereto
as Exhibit B. Each Restricted Stock Agreement shall set forth the material terms
and conditions of such Restricted Stock Award consistent with the express
limitations of this Plan, as determined by the Committee. In addition, each
Restricted Stock Agreement shall specify the number of Shares for which it is
designated and the purchase price of such Shares.

5.3      Vesting.

         The Committee, based on the recommendation of the Chief Executive
Officer of the Company, shall determine whether and to what extent any Awards
are subject to vesting based upon the Recipient's continued service to, or the
performance of duties for, the Company and its Subsidiaries.

5.4      No Evidence of Employment or Service.

         Nothing contained in the Plan, any Option Agreement or any Restricted
Stock Agreement shall confer upon any Recipient any right with respect to the
continuation of his or her employment by or service with the Company or any of
its Subsidiaries or interfere in any way with the right of the Company or any
such Subsidiary, in its sole discretion (subject to the terms of any separate
agreement to the contrary), at any time to terminate such employment or service
or to increase or decrease the compensation of the Recipient from the rate in
existence at the time of the grant of an Award.

5.5      Date of Grant.

         The date of grant of an Award under this Plan shall be the date set
forth in the applicable Option Agreement or Restricted Stock Agreement, as the
case may be.

5.6      Shares.

         The total number of Shares granted in connection with any Award shall
not exceed, in the aggregate, the Reserved Shares. No fractional Shares shall be
issued or delivered under this Plan and in lieu of such issuance, the Recipient
shall receive the fair market value of such fractional shares as determined by
the Board in good faith.

                                       7
<PAGE>

                                   ARTICLE VI

                                   AWARD PRICE

6.1      Option Price.

         The price at which each Share may be purchased in accordance with any
Option Award (the "Option Price") shall be determined by the Committee based on
the recommendation of the Chief Executive Officer of the Company and set forth
in the applicable Option Agreement.

6.2      Restricted Stock Purchase Price.

         The price at which each Share may be purchased in accordance with any
Restricted Stock Award (the "Restricted Stock Purchase Price") shall be
determined by the Committee based on the recommendation of the Chief Executive
Officer of the Company and set forth in the applicable Restricted Stock
Agreement.

                                  ARTICLE VII

                         AUTOMATIC TERMINATION OF AWARDS

         Each Award granted under the Plan shall automatically terminate and
shall become null and void and be of no further force or effect upon such date
or dates set forth in the applicable Option Agreement or Restricted Stock
Agreement, consistent with the terms of this Plan. Any Shares that are not
acquired by a Recipient as a result of (i) an Option expiring or terminating
without being fully exercised or (ii) Restricted Stock being repurchased by the
Company, shall be available for grant or issuance, as applicable, by the
Committee to another eligible Recipient.

                                  ARTICLE VIII

                                AWARD PROCEDURES

8.1      Payment.

         The (i) the exercise price of an Option granted pursuant to an Option
Award or (ii) purchase price (if any) for any Shares of Restricted Stock to be
delivered pursuant to a Restricted Stock Award, shall be paid in cash (by wire
transfer of immediately available funds to a bank account held by the Company
designated by the Committee or a personal or certified check payable to the
Company); provided that at the time an Award is granted or issued, as
applicable, under this Plan, the Committee may, in its sole discretion, specify
one or more of the following other forms of payment which may be used by a
Recipient (but only to the extent permitted by applicable law):

         (a) by cancellation of indebtedness of the Company to the Recipient;

         (b) by surrender of shares of Common Stock which either (i) have been
owned by the Recipient for more than six months and have been paid for within
the meaning of Rule 144 promulgated by the Securities and Exchange Commission
under the Securities Act (and, if such shares of Common Stock were purchased
from the Company or any Subsidiary thereof by means of a promissory note, such
note has been fully paid with respect to such shares); or (ii) were obtained by
the Recipient in the public market (but, subject in any case, to the applicable
limitations of Rule 16b-3);

                                       8
<PAGE>

         (c) by waiver of compensation due or accrued to the Recipient for
services rendered to the Company or any of its Subsidiaries;

         (d) in the case of Option Awards, if the Common Stock is a class of
securities then listed or admitted to trading on any national securities
exchange or traded on any national market system (including, but not limited to,
The Nasdaq National Market), in compliance with any cashless exercise program
authorized by the Board or the Committee for use in connection with the Plan at
the time of such exercise (but, subject in any case, to the applicable
limitations of Rule 16b-3);

         (e) in the case of Restricted Stock Awards, subject to such procedures
as the Board or the Committee may adopt, with a third party (including, without
limitation, the Company) who provides financing for the purposes of (or who
otherwise facilitates) the purchase of Restricted Stock Awards; or

         (f) a combination of the methods set forth in clauses (a) through (e).

8.2      Notice of Exercise of Options.

         An Option Recipient (or other person, as provided in Section 10.2) may
exercise an Option (for the Shares represented thereby) granted under the Plan
in whole or in part (but for the purchase of whole Shares only), as provided in
the Option Agreement evidencing his or her Option, by delivering a written
notice (the "Notice") to the Secretary of the Company. The Notice shall state:

         (a) That the Option Recipient elects to exercise the Option;

         (b) The number of Shares with respect to which the Option is being
exercised (the "Option Shares");

         (c) The method of payment for the Option Shares (which method must be
available to the Option Recipient under the terms of his or her Option
Agreement);

         (d) The date upon which the Option Recipient desires to consummate the
purchase (which date must be prior to the termination of such Option);

         (e) A copy of any election filed or intended to be filed by the Option
Recipient with respect to such Option Shares pursuant to Section 83(b) of the
Code; and

         (f) Any additional provisions consistent with the Plan as the Committee
may from time to time require.

                                       9
<PAGE>

         The exercise date of an Option shall be the date on which the Company
receives the Notice from the Option Recipient and full payment for the Option
Shares and all related tax withholding amounts. Such Notice shall also contain,
to the extent such Option Recipient is not then a party to the
Stockholders'Agreement, an Adoption Agreement pursuant to the Stockholders'
Agreement, in form and substance satisfactory to the Board pursuant to which the
Option Recipient agrees to become a party to and to be bound by the
Stockholders' Agreement.

8.3      Issuance of Certificates.

         (a) Option Recipients. The Company shall issue stock certificates in
the name of the Option Recipient (or such other person exercising the Option in
accordance with the provisions of Section 10.2), for the Shares purchased upon
exercise of an Option as soon as practicable after receipt of the Notice and
payment of the aggregate Option Price and all related tax withholding amounts
for such Shares; provided that the Company shall not issue any fractional Shares
upon the exercise of any Options and in lieu of issuing such fractional Shares,
shall pay the Option Recipient the fair market value thereof as determined by
the Board in good faith. Neither the Option Recipient nor any person exercising
an Option in accordance with the provisions of Section 10.2 shall have any
privileges as a stockholder of the Company with respect to any Shares subject to
an Option granted under the Plan until the date of issuance of stock
certificates pursuant to this Section 8.3(a).

         (b) Restricted Stock Recipients.

                  (i) Except as otherwise provided in this Section 8.3(b), (x)
         each Restricted Stock Recipient shall be issued a stock certificate in
         respect of such Shares of Restricted Stock; and (y) such certificate
         shall be registered in the name of the Recipient, and shall bear an
         appropriate legend referring to the terms, conditions, and restrictions
         applicable to such Award.

                  (ii) The Company may require that the stock certificates
         evidencing Restricted Stock Awards be held in the custody of the
         Company until the restrictions thereon shall have lapsed, and that, as
         a condition of any Restricted Stock Award, the Restricted Stock
         Recipient shall have delivered a stock power, endorsed in blank,
         relating to the Shares covered by such Award.

                  (iii) As a condition to each issuance of Restricted Stock
         under this Plan, the applicable Recipient shall execute an Adoption
         Agreement pursuant to the Stockholders' Agreement pursuant to which
         such Recipient agrees to become party to and be bound by the
         Stockholders' Agreement.

                                       10
<PAGE>

                                   ARTICLE IX

                                   ADJUSTMENTS

9.1      Changes in Capital Structure.

         If the Common Stock is changed by reason of a stock split, reverse
stock split, or stock combination, stock dividend or distribution, or converted
into or exchanged for other securities as a result of a merger, consolidation or
reorganization (a "Reorganization"), the Board shall, and, if cash dividends are
declared or paid on Common Stock, the Board may, make such equitable adjustments
in the number and class of shares of stock available under the Plan as shall be
necessary to preserve to a Recipient rights substantially proportionate to his
rights existing immediately prior to such transaction or event (but subject to
the limitations and restrictions on such rights), including, without limitation,
(i) the aggregate number of Shares reserved for issuance under the Plan, (ii)
the kind, number and Option Price (not to be less than the par value of the
Common Stock) of Shares subject to outstanding Options granted under the Plan,
and (iii) the kind, number and purchase price of Shares issuable pursuant to
Restricted Stock Awards under the Plan. Such other substitutions or adjustments
shall be made as may be equitably determined by the Board in good faith.

9.2      Special Rules.

         The following rules shall apply in connection with Section 9.1 above:

         (a) No adjustment shall be made for cash dividends (except as described
in Section 9.1) or the issuance to stockholders of rights to subscribe for
additional Shares, or other securities; and

         (b) Any adjustments referred to in Section 9.1 shall be made by the
Board, and shall, absent manifest error, be conclusive and binding on all
Persons holding any Awards granted under the Plan.

9.3      Right to Cash Out Vested Awards and Terminate Plan upon a Realization
         Event.

         Immediately prior to a Realization Event, the Company may, but is not
obligated to, purchase any outstanding Vested Awards for an amount equal to (a)
in the case of an Option, (i) the amount per share received in respect of the
Shares sold in such transaction constituting the Realization Event less (ii) the
Option Price thereof and (b) in the case of Restricted Stock, the amount per
share received in respect of the Shares sold in such transaction constituting
the Realization Event. In the event the Company exercises its option under this
Section 9.3, this Plan will terminate upon the consummation of such Realization
Event.

                                   ARTICLE X

                        RESTRICTIONS ON AWARDS AND SHARES

10.1     Compliance With Securities Laws.

         No Awards shall be granted or issued, as applicable, under the Plan,
and no Shares shall be issued and delivered under the Plan, unless and until the
Company and/or the Recipient shall have complied with all applicable Federal or
state registration, listing and/or qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.

         The Committee in its discretion may, as a condition to the exercise of
any Option or as a condition to the issuance of any Restricted Stock, require
each Recipient (a) to represent in writing that the Shares received upon
exercise of an Option and/or the issuance of Restricted Stock, as applicable,
are being acquired for investment and not with a view to distribution and (b) to
make such other representations and warranties as are deemed reasonably
appropriate by the Company. Stock certificates representing Shares acquired upon
the exercise of, or in connection with, any Award, that have not been registered
under the Securities Act shall, if required by the Committee, bear the legends
as may be required by the Stockholders' Agreement, the Option Agreement, or the
Restricted Stock Agreement evidencing a particular Award. Without in any way
limiting the provisions set forth above, no Recipient shall make any disposition
of all or any portion of Shares acquired or to be acquired pursuant to an Award,
except in compliance with all applicable federal and state securities laws and
the provisions of the Stockholders' Agreement.

                                       11
<PAGE>

10.2     Nonassignability of Award Rights.

         (a) No Options granted under this Plan shall be assignable or otherwise
transferable by the Recipient, except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Committee may provide in the
Option Agreement evidencing an Option that the Option may, upon approval by the
Board, be transferred solely for estate planning purposes to a Permitted
Transferee. An Option may be exercised during the lifetime of the respective
Recipient, only by such Recipient. If a Recipient dies, his or her Options shall
thereafter be exercisable during the period specified in such Recipient's Option
Agreement by his or her executors or administrators to the full extent (but only
to such extent) to which such Options were exercisable by the Recipient at the
time of his or her death.

         (b) All Shares acquired upon the exercise of Options and all Restricted
Stock issued hereunder shall be subject to the restrictions on transfer set
forth in the Stockholders' Agreement.

10.3     Subject to Stockholders' Agreement.

         All Recipients shall be subject to the Stockholders' Agreement for so
long as it is in full force and effect. Prior to the grant or issuance of any
Shares under this Plan to any Person who is not already a party to the
Stockholders' Agreement, the Company shall obtain an executed Adoption Agreement
in form and substance reasonably satisfactory to the Board, pursuant to which
the Recipient agrees to become party to and be bound by the Stockholders'
Agreement.

10.4     Effective Date.

         This Plan shall become effective on the Closing Date.

                                   ARTICLE XI

                             TERMINATION OF THE PLAN

         No Awards may be granted after the Termination Date. Any Award
outstanding as of the Termination Date may extend beyond such date (pursuant to
the terms and conditions of the applicable Option Agreement and/or Restrictive
Stock Agreement) and the Plan will govern all Awards granted prior to the
Termination Date.

                                       12
<PAGE>

                                  ARTICLE XII

                                AMENDMENT OF PLAN

         The Plan may be modified or amended in any respect by the Committee
with the prior approval of the Board; provided, however, that the approval of
the holders of a majority of the votes that may be cast by all of the holders of
shares of Common Stock of the Company entitled to vote (voting together as a
single class, with each such holder entitled to cast one vote per share held by
such holder) shall be obtained prior to any such amendment becoming effective if
such approval is required by law or listing agency rule or is necessary to
comply with regulations promulgated by the Securities and Exchange Commission
under Section 16(b) of the Exchange Act or as deemed necessary or advisable by
the Board. Notwithstanding the foregoing, the Plan may not be modified or
amended with respect to any existing Option Agreement or Restricted Stock
Agreement, if such change would adversely affect the rights of the applicable
Recipient without the consent of such Recipient.

                                  ARTICLE XIII

                                    CAPTIONS

         The use of captions in this Plan is for convenience. The captions are
not intended to provide substantive rights.

                                  ARTICLE XIV

                                WITHHOLDING TAXES

         Upon any exercise, vesting, or payment of any Award under the Plan, the
Committee, in its sole discretion, shall have the right to:

         (a) require the Recipient (or personal representative or beneficiary,
as the case may be) to pay or provide for payment of the amount of any taxes
which the Company may be required to withhold with respect to such Award event
or payment;

         (b) deduct from any amount payable to the Recipient (or personal
representative or beneficiary, as the case may be) in cash or equivalent (in
respect of an Award or otherwise) the amount of any taxes which the Company may
be required to withhold with respect to such Award event or payment; or

         (c) reduce the number of Shares to be delivered by (or otherwise
reacquire shares held by the Recipient for at least 6 months) the appropriate
number of Shares, valued at their then fair market value (as determined by the
Committee in good faith), to satisfy the minimum withholding obligation.

         The Committee may, in its sole discretion (subject to Section 10.1),
grant (either at the time of grant of the Award or thereafter) to the
Participant the right to elect, pursuant to such rules and subject to such
conditions as the Committee may establish, to have the Company utilize the
withholding offset under clause (c) above. In no event will the value of shares
withheld under (c) above exceed the minimum amount of required withholding under
applicable law.

                                       13
<PAGE>

                                   ARTICLE XV

                                OTHER PROVISIONS

         Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Committee.

                                  ARTICLE XVI

                                NUMBER AND GENDER

         With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine gender,
and vice versa, as the context requires.

                                  ARTICLE XVII

                                  GOVERNING LAW

         All questions concerning the construction, interpretation and validity
of this Plan and the instruments evidencing the Awards granted hereunder shall
be governed by and construed and enforced in accordance with the domestic laws
of the State of Delaware, without giving effect to any choice or conflict of law
provision or rule (whether in the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware. In furtherance of the foregoing, the internal law of the
State of Delaware will control the interpretation and construction of this Plan,
even if under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.

                                 ARTICLE XVIII

                                  MISCELLANEOUS

         Awards payable under this Plan will be payable in shares of Common
Stock or from the general assets of the Company, and (except as provided in
Article III) no special or separate reserve, fund or deposit will be made to
assure payment of such Awards. No grantee, beneficiary or other person will have
any right, title or interest in any fund or in any specific asset (including
shares of Common Stock) of the Company by reason of any Award hereunder. Neither
the provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan will create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any grantee, beneficiary or other person.
To the extent that a grantee, beneficiary or other person acquires a right to
receive payment pursuant to any Award hereunder, such right will be no greater
than the right of any unsecured general creditor of the Company.

         The Stockholders' Agreement provides for additional restrictions and
limitations with respect to the Common Stock (including additional restrictions
and limitations on the voting or transfer of Common Stock). To the extent that
such restrictions are greater than those set forth in this Plan or any Award
Agreement, such restrictions and limitations shall apply to any shares acquired
pursuant to the exercise of Options or otherwise issued or delivered pursuant to
an Award and are incorporated herein by this reference.

                                       14
<PAGE>

         The Restated Certificate of Incorporation and Bylaws of the Company, as
either of them may lawfully be amended, supplemented or restated from time to
time, may provide for additional restrictions and limitations with respect to
the Common Stock (including additional restrictions and limitations on the
voting or transfer of Common Stock) or priorities, rights and preferences as to
securities and interests prior in rights to the Common Stock. To the extent that
these restrictions and limitations are greater than those set forth in this Plan
or any Award Agreement, such restrictions and limitations shall apply to any
shares of Common Stock acquired pursuant to the exercise of Awards and are
incorporated herein by this reference.

                                   * * * * * *

         As adopted by the Board of Directors of AC Safety Holding Corp. on
April 7, 2004.

                                       15

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