-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYcKbqOk3OX68SPzX7YqoXp44OpzLX7AuHjzIFhj/e7IQpNjYDMX9dLlrHkLqDHt YoBflJbbPH3xIcxlDwwN5g== 0000950135-97-001487.txt : 19970401 0000950135-97-001487.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950135-97-001487 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BACOU USA INC CENTRAL INDEX KEY: 0001006027 STANDARD INDUSTRIAL CLASSIFICATION: OPHTHALMIC GOODS [3851] IRS NUMBER: 050470688 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28040 FILM NUMBER: 97568817 BUSINESS ADDRESS: STREET 1: 10 THURBER BLVD CITY: SMITHFIELD STATE: RI ZIP: 02917 BUSINESS PHONE: 4012330333 MAIL ADDRESS: STREET 1: 10 THURBER CITY: SMITHFIELD STATE: RI ZIP: 02917 10-K 1 BACOU USA INC. 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) (X) Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended: DECEMBER 31, 1996 ( ) Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to . COMMISSION FILE NUMBER 0-28040 BACOU USA, INC. (Exact name of registrant as specified in its charter) DELAWARE 05-0470688 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 10 THURBER BOULEVARD, SMITHFIELD, RI 02917-1896 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (401) 233-0333 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant computed on the basis of $15 5/8 per share (the closing price of such stock on March 7, 1997 on the Nasdaq National Market): $73,431,250. As of March 7, 1997, there were 17,312,200 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement for the 1997 Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission on or before April 30, 1997) is incorporated by reference in Part III hereof. ================================================================================ 2 TABLE OF CONTENTS
DESCRIPTION PAGE NUMBER -------- ----------- PART I Item 1 Business........................................................... 2 Item 2 Properties......................................................... 9 Item 3 Legal Proceedings.................................................. 10 Item 4 Submission of Matters to a Vote of Security Holders................ 10 PART II Item 5 Market for the Registrant's Common Stock and Related Stockholder Matters............................................................ 11 Item 6 Selected Financial Data............................................ 11 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................. 12 Item 8 Financial Statements and Supplementary Data........................ 19 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................................... 35 PART III Item 10 Directors and Executive Officers of the Registrant................. 35 Item 11 Executive Compensation............................................. 35 Item 12 Security Ownership of Certain Beneficial Owners and Management..... 35 Item 13 Certain Relationships and Related Transactions..................... 35 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.... 35 Signatures........................................................................ 41
1 3 PART I ITEM 1. BUSINESS GENERAL Bacou USA, Inc. (the "Company" or "Bacou") designs, manufactures and sells personal protective equipment, including non-prescription protective eyewear, frames for prescription eyewear, respirators, vision screening equipment and laser protective eyewear. The Company is one of the leading competitors in the United States protective eyewear market. The Company's products, which are marketed under the brand names UVEX(R), Titmus(R) and Pro-Tech(R), are sold principally to industrial safety distributors and optical laboratories. The Company conducts all of its operations through three subsidiaries: Uvex Safety, Inc. ("Uvex Safety"), Titmus Optical, Inc. ("Titmus") and Pro-Tech Respirators, Inc. ("Pro-Tech"). RECENT DEVELOPMENTS In March 1996 the Company completed an initial public offering of its common stock. Proceeds from the sale of 3,450,000 shares, totaling $47.3 million net of expenses of issuance, were used primarily to repay outstanding bank indebtedness. The Company is pursuing a business strategy which includes acquisitions as an important element. In late 1996, the Company reached an agreement in principle to purchase Survivair, Inc. and the InterSpiro Group of Companies which manufacture and distribute respiratory protective equipment. The Company expects the Survivair transaction to be closed during the second quarter of 1997 but does not expect Interspiro transaction to be consummated. In connection with the Survivair acquisition the Company borrowed $8.0 million under a term credit facility on March 22, 1997, which the Company believes will be the only borrowings required for this transaction. PRODUCTS Non-Prescription Protective Eyewear The Company offers a wide range of non-prescription protective eyewear products including both spectacles and goggles, as well as replacement lenses. Although most of the Company's products of this type are reusable, the products' useful lives vary according to the environment in which they are used. For example, eyewear requires frequent replacement when used in construction environments with dirt and extreme temperature conditions whereas eyewear used indoors by supervisory personnel is likely to be replaced less frequently. Most of the Company's non-prescription protective eyewear products are available in different colors with a variety of application-specific lenses, frames and sideshields. Some of the Company's well-known Uvex Safety brands of spectacles include uvex astrospec 3000(TM), flashback(R), patriot(R), cricket(R), ultraspec(TM) and uvex spoggle(R). Additionally, the Company offers a separate line of non-prescription safety spectacles under such Titmus brand names as Micron+(R), SC9000(TM), and Challenger. For spectacles, the Company offers dual lens products and single lens "shield" style products. Spectacle lenses are available in clear, as well as tinted for outdoor use. In addition to spectacles for general protective use, the Company offers uvex SCT(R) (Spectrum Control Technology), task-specific lenses for various work environments such as welding, semiconductor manufacturing and other environments where it is necessary to control the spectrum of light or absorb radiation. The Company also produces a full line of impact, splash and welding goggles. Goggles are typically used in work environments where greater coverage than that generally afforded by spectacles is required. Such protection is required in environments where extreme temperature, dust, mist or chemical splash is present. Brand names in the goggle category include the uvex stealth(TM), the uvex futura(TM), the uvex classic(TM) and the uvex climazone(TM) which is designed for use in extremely cold temperatures. All Uvex Safety brand non-prescription protective eyewear products are offered with proprietary coatings designed to provide superior lens protection and functionality. The standard coating, applied to all UVEX(R) 2 4 polycarbonate lenses, is the scratch resistant uvex ultradura(R) hard coating. The uvex 4C(R) anti-fog hard coating, which provides anti-fog, anti-static, anti-scratch and anti-UV protection, is available as an option on all UVEX(R) lenses. The Company's commitment to innovative design is reflected in the uvex astrospec 3000(TM) and the many variations which have extended that product line. The basic design of the uvex astrospec 3000(TM) includes a stylish shield-style single lens made from impact-resistant polycarbonate and a nylon frame with a face-flattering brow bar style, adjustable lens inclination, adjustable temple length and optional duoflex(R) temples. The frame design allows easy lens changes, making it possible to replace damaged lenses or install different lenses in response to the prevailing lighting conditions. The basic design has been enhanced through numerous product line extensions, including a variety of frame colors, specialized color schemes such as the red, white and blue patriot(R), versions to accept prescription lenses, versions which fit over glasses (OTG(R)), metal versions, regular and small sizes, custom bridge designs for distinct facial features, proprietary lens coating options, mirror lens coating options and lens tint and dye options within the proprietary uvex SCT(R) (Spectrum Control Technology), including welding and DVO(R) laser protective lens versions. Sales of the Astrospec family of eyewear products, including replacement lens for such products, as a percentage of consolidated net sales, was 49.5% for the fiscal year ended December 31, 1996, and 68.8% and 63.5% for the fiscal years ended July 31, 1995 and 1994. A decline in demand for the Astrospec family of products would adversely affect the Company's results of operations and financial condition. Frames for Prescription Protective Eyewear The Company manufactures and sells metal and plastic frames for prescription protective eyewear under the Titmus(R) brand name. The Company has several well-known lines of protective eyewear frames including the Exclusive collection, the Premiere collection, the Fashiongarde(R) collection and the Standard collection. Prescription protective eyewear must offer the spectrum of style and fit options required of non-protective prescription frames while providing additional safety features required of protective eyewear. The Company's line of frames for prescription protective eyewear includes forty-three frame styles, each of which is available in a variety of sizes and colors. Such varieties are comparable in complexity to the many sizes and dimensions required for non-protective prescription eyewear frames. Frames for prescription protective eyewear must also pass applicable safety standards and possess certain additional features such as protective side shields. All of the Company's metal frames for prescription protective eyewear are offered with a variety of special plated and color overlay treatments to ensure that the product users' style and fashion preferences are met. Respiratory Protection Under the Pro-Tech(R) brand name, the Company manufactures and sells air-purifying and supplied air respiratory products used to protect against the harmful effects of atmospheric contamination caused by dust, gases, fumes, mists and other substances. This product line includes dust and mist respirators, cartridge-equipped respirators, full-face respirators, powered air-purifying respirators and supplied air and self-contained breathing apparatus used in industrial environments. The Company's brands include the ProFit(TM) and the SideKick(TM). Other Products To capitalize on marketing and sales opportunities within the Company's existing distribution channels, the Company offers certain additional products, including welding helmets, laser protective eyewear and vision screening equipment. In June 1995, the Company introduced on a test basis a product line consisting of non-safety dress eyewear frames under the name Street Design(TM). The Company has positioned this product line to be sold at the point of purchase of prescription protective eyewear. The Company also intends to utilize this product line to participate in the growing market of private and government-supported managed vision care programs, including those programs sponsored by HMOs, PPOs, Medicaid/Medicare and the Veterans Administration. 3 5 The Company currently offers the Street Design(TM) product line in eighteen frame styles and various sizes and colors. Dependence Upon New Product Introductions The Company's future success will depend in part on its ability to enhance its existing products and to introduce new products. However, there can be no assurance of the Company's ability to do so. Innovative designs are often not successful and successful product designs can be displaced by subsequently introduced product designs. In addition, competitors often introduce imitations of the Company's successful products. As a result of these and other factors, there can be no assurance that the Company will successfully maintain its market position. BACKLOG The Company's backlog totaled approximately $2.1 million at December 31, 1996 and $2.5 million at December 31, 1995. MARKETING, SALES AND DISTRIBUTION Advertising and Promotions The Company advertises and markets its products through print advertising, direct mailings and promotions in trade journals and publications. Publications include those which are distributed to industrial safety directors and manufacturing directors in all market segments, such as Occupational Hazards, Occupational Health & Safety, Industrial Safety & Hygiene News, New Equipment Digest, and Industrial Maintenance and Plant Operations, as well as industry-specific publications. The Company also regularly exhibits its products at trade shows and conducts product promotions aimed directly at industrial purchasers including offers of free product or product at discounted prices in response to competitive pressures, market demand, production capacity, inventory levels and other considerations. Sales Force The Company's sales force is divided into two specialized groups organized along geographic lines, each of which targets a separate distribution network. The larger group, consisting of distributor account managers, is responsible for sales to industrial distributors. The smaller group is responsible for sales to optical laboratories and optical retail chains. One sales representative handles the sales of vision screening equipment through a network of distributors. MANUFACTURING OPERATIONS Non-Prescription Protective Eyewear The Company uses a highly automated injection molding process to manufacture the frames and lenses of its non-prescription protective eyewear. Frame components are molded in nylon, propionate and polyvinlychloride ("PVC") and the lenses are molded from polycarbonate resin pellets. Although polycarbonate is highly impact-resistant, it is prone to scratch easily unless treated with an effective coating. Technologically advanced coatings are also capable of providing other desirable characteristics to enhance functionality. These coatings are applied using a highly integrated, automated process of material handling, application and curing. In the molding and coating process, automation, robotics and well-designed production flow are combined to achieve a fast-moving process with minimal material handling. Manufacturing and assembling operations are linked by a work-in-process inventory management system. Parts are moved from this system to a highly automated, integrated assembly and packaging system for the Company's high volume astrospec products. The Company maintains a high degree of vertical integration allowing it to manufacture, assemble and package over 90% of its non-prescription protective eyewear. Much of the equipment used in the manufacture of these products has been specially designed and adapted for the Company. 4 6 Frames for Prescription Eyewear The Company manufactures frames for both metal and plastic prescription eyewear. The manufacturing process used in the production of metal frames for prescription eyewear includes cutting, bending, shaping, brazing, plating and colorizing of the metal raw material. Metal frames constitute approximately 80% of the frames for prescription eyewear sold annually by the Company. The Company uses a computer numeric controlled pantographing process and injection molding to manufacture its prescription eyewear plastic frames. The Company recently completed the construction of a new facility for the manufacture of frames for prescription eyewear. Respiratory Protection Equipment The component parts of the Company's respiratory protection equipment include respirator bodies, cartridge holders and filters. Respirator bodies and cartridge holders are produced by injection molding vendors. Parts and filter media are assembled and packaged by the Company using machinery and equipment specifically designed for such tasks. ISO and CE Certification The Company's Smithfield, Rhode Island and Petersburg, Virginia manufacturing facilities have achieved ISO 9001 registration. Additionally, certain Titmus(R) and Pro-Tech(R) brand name products have received CE certification for specific products which are offered in European markets. CE approval indicates that an independent reviewer has certified that the product is in compliance with product specific directives and harmonized standards advanced by the European Community. The Company is considering a broader program of CE certification for its products in order to obtain possible marketing advantages from inferences of high quality derived from such certification and to eliminate any marketing advantage that may exist for competitors' products bearing the CE mark. RAW MATERIALS The Company's non-prescription protective eyewear products utilize polycarbonate resin pellets, nylon, PVC and propionate as the predominant raw materials in the manufacturing process. The Company uses domestic and imported alloy wire, cellulose acetate sheet stock, propionate, polycarbonate resin pellets, gold in small quantities, and colorization foils in the production of its frames for prescription eyewear. Additionally, the Company utilizes silicon rubber, PVC and polypropylene in its respirator bodies and cartridges and activated carbon and treated paper in its manufactured filters. Although single sources of supply are used for many raw materials, all of the Company's raw materials are readily available from multiple sources except polycarbonate resin. Although available from a limited number of sources, the Company historically has satisfied all of its polycarbonate requirements through purchases from General Electric Plastics, a division of General Electric Company. Pursuant to an agreement between the parties, the Company intends to continue this relationship with General Electric Plastics in calendar 1997. The Company regularly seeks additional suppliers who may be able to provide ready alternate sources of supply for its raw materials needs. The loss of any single source of supply, any disruption in such source's business or failure by it to meet the Company's needs on a timely basis could cause shortages in raw materials and could have a material adverse effect on the Company's results of operations. There can be no assurance that precautions taken by the Company will be adequate or that alternative sources of supply can be located or developed in a timely manner. PRINCIPAL CUSTOMERS The Company had no individual customer that accounted for 10% or more of consolidated net sales in 1996. Sales to W.W. Grainger and its subsidiaries and to United American Sales accounted for 12% and 10%, respectively, of the Company's net sales during the fiscal year ended July 31, 1995. The loss of these or other principal customers could have a material adverse effect on the Company's operations and financial condition. 5 7 COMPETITION The personal protective equipment industry is highly fragmented, with industry participants ranging in size from small companies focusing on single types of personal protective equipment, to a few large multinational corporations which manufacture and supply many types of personal protective equipment. The Company believes that participants in the personal protective equipment industry compete primarily on the basis of product characteristics (such as design, style, fashion and functional performance), brand name recognition, service and, to a lesser extent, price. The Company enjoys certain economies of scale which are not available to smaller competitors. Nonetheless, other large competitors may enjoy similar economies of scale and may possess greater financial or other resources than the Company. Further, the smaller competitors in the industry may be able to recognize and capitalize on trends in their niche markets more quickly than the Company. To maintain its market position, the Company must be competitive in the area of brand image, distribution, design, style, customer service, quality and price. Individual competitors have advantages and strengths in different sectors of the industry, in different products and in different areas, including manufacturing and distribution systems, geographic market presence, customer service and support, breadth of applications, delivery time and price. There can be no assurance that the Company will be able to compete successfully against current and future competitors or that the competitive pressures faced by the Company will not adversely affect its financial condition or operations. INTELLECTUAL PROPERTY It is the Company's policy to protect its intellectual property through a range of measures, including trademarks, patents and confidentiality agreements. Whenever possible, these rights are protected through the filing of applications for and registrations of trademarks and patents. The Company owns the trademark UVEX(R) for use in connection with protective eyewear and other safety products in all countries in North, Central and South America. Uvex Winter Optik GmbH ("Uvex Germany") has the right to use the UVEX(R) name in connection with sports products throughout the world and personal protective equipment products in countries outside of North, Central and South America. Pursuant to its agreement with Uvex Germany, the Company may sell personal protective equipment, including the astrospec family of products, under the UVEX(R) brand name only in North, Central and South America. The agreement also prohibits the Company from selling sports products, such as sunglasses or protective eyewear for sport activities, under the UVEX(R) brand name regardless of geographic area. The Company also relies upon unpatented trade secrets for the protection of certain intellectual property rights. The Company protects its trade secrets by requiring certain of its employees, consultants and other suppliers, customers, agents and advisors to execute confidentiality agreements upon the commencement of employment or other relationships with the Company. These agreements provide that all confidential information developed by or made known to the individual or entity during the course of the relationship with the Company is to be kept confidential and not disclosed to third parties except in certain circumstances. There can be no assurance, however, that these agreements will provide meaningful protection for the Company's proprietary information or adequate remedies in the event of the unauthorized use or disclosure of such information. In addition, no assurance can be given that others will not independently develop substantially equivalent proprietary information and technologies, otherwise gain access to the Company's trade secrets or disclose such technology or that the Company can meaningfully protect its rights to unpatented trade secrets. Further, there can be no assurance that infringement or invalidity claims will not be asserted against the Company in the future. The costs of defending such claims, or an unfavorable determination with respect to litigation based on such claims, could have a material adverse effect on the Company's business and financial condition. ENVIRONMENTAL MATTERS The Company is subject to federal, state and local environmental laws, regulations and ordinances that (i) govern activities or operations that may have adverse environmental effects (such as emissions to air, 6 8 discharges to water, and the generation, handling, storage and disposal of solid and hazardous wastes) or (ii) impose liability for the costs of cleanup or other remediation of contaminated property, including damages from spills, disposals or other releases of hazardous substances or wastes, in certain circumstances without regard to fault. The Company's manufacturing operations routinely involve the handling of chemicals and wastes, some of which are or may become regulated as hazardous substances. The Company has not incurred, and does not expect to incur, any significant expenditures or liabilities for environmental matters. As a result, the Company believes its obligations to comply with environmental regulations will not have a material adverse effect on its business or financial condition. EMPLOYEES At December 31, 1996, the Company employed 572 people on a full-time basis. Except for approximately 247 employees at Titmus, none of the Company's employees are represented by a labor union. Titmus is a party to a union contract with the United Steelworkers of America (AFL-CIO-CLC) which expires on September 13, 1997. The Company considers its relationship with its employees to be good and the Company has not experienced any work stoppages. GOVERNMENT REGULATION AND INDUSTRIAL STANDARDS Government regulation mandating the use of personal protective equipment for certain job classifications and work site environments is the most significant factor in the creation of demand for personal protective equipment. OSHA generally regulates the workplace environments in which personal protective equipment must be worn and specifies the standards which such equipment must meet. The United States Mine Safety and Health Administration regulates respirators and personal protective equipment used in the mining industry. Additionally, the Company's products which are sold in Canada are subject to regulation by certain Canadian governmental agencies. The Company believes it has complied in all material respects with the regulations and standards of these agencies, and any non-material non-compliance with such regulations and standards in the past have not had a material effect on its business. The primary users of the Company's personal protective equipment products are industrial workers in the United States. As a result, decreases in general employment levels of industrial workers may have an adverse effect on the Company's sales. The Company's sales may also be adversely affected by changes in safety regulations covering industrial workers in the United States and in the level of enforcement of such regulations. Changes in regulations could reduce the need for and the utility of certain products manufactured by the Company. The United States and Canadian regulatory agencies each mandate that the Company's products meet performance standards established by private groups, such as the American National Standards Institute ("ANSI") and the Canadian Standards Association ("CSA"), respectively. The Company's eyewear products are subject to the latest series of applicable standards, which currently include ANSI Industrial Standard Z87.1-1989 and CSA Z94.3-1992. These standards require that protective eyewear be tested for optical performance, high velocity impact, high mass impact and other integral product performance features. The Company maintains and operates on-site testing labs at its Smithfield, Rhode Island and Petersburg, Virginia facilities which are equipped to perform necessary tests. OSHA specifies that respiratory protective equipment must meet application-specific performance standards which are set by NIOSH. In order to achieve NIOSH approval, the Company maintains and operates an on-site lab at its Buchanan, Michigan facility which is equipped to conduct all necessary tests under the NIOSH standards, including gas testing and particulate testing. 7 9 SEGMENT INFORMATION For purposes of segment reporting, the Company considers its operations to be within a single industry. MANAGEMENT The names, positions, ages and business experiences during the past five years of the executive officers of the Company as of March 1, 1997 are set forth below:
NAME POSITION WITH THE COMPANY AGE - ------------------------------ ---------------------------------------------- --- Walter Stepan................. Vice Chairman, President and Chief Executive 58 Officer; Chairman, President and Chief Executive Officer of Uvex Safety, Chairman of Titmus, Chairman and Chief Executive Officer of Pro Tech Philip B. Barr, Jr............ Executive Vice President, Chief Financial 45 Officer, Treasurer and Secretary Jeffrey T. Brown.............. Corporate Controller and Chief Accounting 37 Officer Raymond R. Baker.............. Vice President -- Manufacturing of Uvex Safety 49 Thomas J. Goeltz.............. Senior Vice President -- Sales of Titmus 53 Philip M. Johnson............. Vice President -- Research & Development, 47 Coatings and Quality Assurance of Uvex Safety Michael Mancuso............... President and Chief Executive Officer of 44 Titmus Richard J. Masters............ Vice President -- Marketing of Titmus 54 Harry D. Neff, II............. Vice President -- Sales of Uvex Safety; 50 President and Chief Operating Officer of Pro-Tech Richard F. Sustello........... Vice President -- Marketing/Diversification of 40 Uvex Safety Steven P. Tolisano............ Vice President -- Finance and Chief Financial 47 Officer of Uvex Safety
Officers are elected annually by the Board of Directors of the respective entity and serve at the discretion of the Board. Mr. Stepan has been Vice Chairman of the Board, President and Chief Executive Officer of the Company since July 1995. Mr. Stepan has been President and Chief Executive Officer of Uvex Safety and its predecessors since 1988 and Chairman since June 1996. Mr. Stepan has been Chairman of the Board of Titmus since September 1995 and Chairman of the Board and Chief Executive Officer of Pro-Tech since March 1995. From 1966 until his employment by the predecessor of Uvex Safety, Mr. Stepan was employed by Uvex Winter Optik GmbH or entities under its common control (together "Uvex Germany") in various executive, sales and marketing capacities, including Vice President of Marketing and Sales and President and Chief Executive Officer of a retail optical chain affiliated with Uvex Germany. Mr. Stepan is also a director of Bacou S.A., Bacou Far East Ltd., Uvex Winter Optical, Inc. and Uvex Sports, Inc. Uvex Winter Optical, Inc. and Uvex Sports, Inc. are affiliates of Uvex Germany. Mr. Barr has been the Executive Vice President of the Company since October 1996 and has been Vice President and Chief Financial Officer of the Company since joining the Company in August 1995. From 1985 to 1995, Mr. Barr was a Partner of Edwards & Angell, the Company's general counsel. Mr. Brown has been Corporate Controller and Chief Accounting Officer of the Company since joining the Company in August 1995. Prior to joining the Company, Mr. Brown was a Senior Manager of KPMG Peat Marwick LLP, the Company's independent accountants. Mr. Brown was employed by KPMG Peat Marwick LLP from June 1982 to August 1995. Mr. Baker has been Vice President -- Manufacturing of Uvex Safety and its predecessors since 1991 and was Director of Manufacturing from 1989 to 1991. Prior to 1989, Mr. Baker was employed for 16 years by 8 10 Martin-Copeland Co., a manufacturer of high fashion opthalmic frames, where he served in various manufacturing capacities including Director of Engineering. Mr. Goeltz has been Senior Vice President -- Sales of Titmus since January 1997. Prior to January 1997, Mr. Goeltz was Vice President -- Sales and Marketing of Titmus since 1989. Mr. Goeltz has held various sales and marketing positions at Titmus since 1976. Mr. Johnson has been Vice President -- Research & Development, Coatings and Quality Assurance of Uvex Safety and its predecessors since August 1992. Mr. Johnson has been employed by Uvex Safety and its predecessors since November 1989. Prior to 1989, Mr. Johnson was employed in various capacities at Gentex Optics, Inc., a manufacturer of coatings for polycarbonate optical lenses, for 18 years, the last ten of which he served as general manager. Mr. Mancuso has been President and Chief Executive Officer of Titmus since January 1997. Prior to joining Titmus, Mr. Mancuso was an independent consultant to the Company since November 1, 1996. From May 1995 to November 1996, Mr. Mancuso was Vice President and General Manager of CP Clare Corp. From 1994 to May 1995, Mr. Mancuso was Vice President and General Manager of Imax Inc. Prior to 1994, Mr. Mancuso was President of Coto Wabash Corp. from 1992 to 1994. Mr. Masters joined Titmus in 1994 and has been Vice President -- Marketing of Titmus since December 1996. From 1991 to 1994, Mr. Masters was Vice President of Sales and Marketing of Swank Optical. Mr. Neff has been a Vice President of Uvex Safety and its predecessors since 1992 and has been President and Chief Operating Officer of Pro-Tech since March 1995. From 1990 to 1992, Mr. Neff was Director of Sales/Marketing of a predecessor to Uvex Safety. Prior to 1990, Mr. Neff spent 19 years in various sales and marketing positions at the Safety Products Division of American Optical Corporation, a manufacturer of personal protective equipment, including service as National Sales Manager. Mr. Sustello has been Vice President -- Marketing/Diversification of Uvex Safety since 1994. From 1993 to 1994, Mr. Sustello was Director of Marketing at Miller Equipment Company, a manufacturer of fall protection devices. From 1979 to 1993, Mr. Sustello held various positions with Willson Safety Products, a manufacturer of personal protective equipment. Mr. Tolisano has been Vice President -- Finance of Uvex Safety and its predecessors since 1988 and Chief Financial Officer since 1993. He joined a predecessor of Uvex Safety as Controller in 1980. ITEM 2. PROPERTIES The following table sets forth the location of the facilities which the Company owns or leases, the square footage and the principal function of each such facility.
APPROXIMATE LOCATION SQUARE FOOTAGE FUNCTION - ------------------------------ -------------- ------------------------------------------------ Smithfield, Rhode Island(1) 127,000 Corporate headquarters; manufacturing, assembly, warehousing and distribution facility for uvex(R) brand products Buchanan, Michigan(2) 26,000 Manufacturing, assembly, warehousing and distribution facility for Pro-Tech(R) brand products Petersburg, Virginia 130,000 Manufacturing, assembly, warehousing and distribution facility for Titmus(R) brand products Smithfield, Rhode Island 32,000 Warehousing facility for uvex(R) brand products Shafer, Minnesota 700 Regional sales office and administrative operations
(1) The lease for this facility has been collaterally assigned to secure the Company's indebtedness under a credit facility with Citizens Savings Bank. (2) During the fourth quarter of 1996 the Company elected to relocate the operations of ProTech from its present site in Buchanan, Michigan. The Buchanan property shown above is presently held for sale and the Company expects to dispose of the property during 1997. 9 11 ITEM 3. LEGAL PROCEEDINGS Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 10 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock trades on the NASDAQ National Market tier of the NASDAQ Stock Market under the symbol BACU. The authorized capital stock of the Company consists of 25,000,000 shares of Common Stock, $.001 par value per share, and 5,000,000 shares of Preferred Stock, $.001 par value per share. For information regarding the U.S. market, high and low quarterly sales prices and dividends, see Note 12 to the consolidated financial statements included in Item 8 herein. As of March 7, 1997 the closing price for the Company's common stock was $15 5/8 per share and there were approximately 31 holders of record. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial data of the Company and its predecessor business for the periods indicated. Effective August 1, 1995, the Company elected to change its fiscal year end from July 31 to December 31. Selected financial data for each of the years ended July 31, 1992, 1993, 1994 and 1995, the five months ended December 31, 1995, and the year ended December 31, 1996 was derived from financial statements of the Company and its predecessor business which were audited by KPMG Peat Marwick LLP, independent certified public accountants, whose report with respect to the fiscal years ended July 31, 1994 and 1995, the five months ended December 31, 1995, and the year ended December 31, 1996 appears elsewhere herein. The selected financial data should be read in conjunction with the Consolidated Financial Statements and related notes thereto, Management's Discussion and Analysis of Financial Condition and Results of Operations and other financial information included elsewhere herein.
THE COMPANY PREDECESSOR BUSINESS ------------------------------------------------------------- ------------------------ FIVE MONTHS YEAR ENDED AUGUST 1 YEAR ENDED ENDED JULY 31, APRIL 16 TO APRIL YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------- TO JULY 31, 15, JULY 31, 1996 1995(1) 1995(2) 1994 1993 1993 1992 ------------ ------------ ------- ------- ----------- ----------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF INCOME DATA: Net sales................... $109,268 $ 36,827 $71,988 $53,927 $13,732 $23,523 $ 25,108 Cost of sales............... 47,355 18,525 31,016 22,186 7,097 11,261 13,500 -------- -------- ------- ------- ------- ------- ------- Gross profit................ 61,913 18,302 40,972 31,741 6,635 12,262 11,608 Operating expenses: Selling................... 17,074 5,891 9,781 8,719 1,665 3,962 3,927 General and administrative.......... 9,176 2,609 4,080 3,206 859 1,690 2,166 Amortization of intangibles............. 4,039 1,515 2,506 1,467 428 -- -- -------- -------- ------- ------- ------- ------- ------- Total operating expenses......... 30,289 10,015 16,367 13,392 2,952 5,652 6,093 -------- -------- ------- ------- ------- ------- ------- Operating income............ 31,624 8,287 24,605 18,349 3,683 6,610 5,515 Other expense (income), net....................... 45 1,054 1,287 333 116 (70) 255 -------- -------- ------- ------- ------- ------- ------- Income before income taxes and minority interest..... 31,579 7,233 23,318 18,016 3,567 6,680 5,260 Minority interest share of income.................... -- -- 1,920 6,164 1,257 -- -- Income taxes(3)............. 12,202 2,917 8,343 4,371 664 2,719 391 -------- -------- ------- ------- ------- ------- ------- Net income.................. $ 19,377 $ 4,316 $13,055 $ 7,481 $ 1,646 $ 3,961 $ 4,869 ======== ======== ======= ======= ======= ======= ======= Net income per common and common equivalent share(4)(5)............... $ 1.18 $ 0.31 $ 0.94 $ 0.57 $ 0.12 Weighted average common and common equivalent shares.................... 16,436 13,860 13,860 13,167 13,167
11 13
THE COMPANY PREDECESSOR BUSINESS FIVE MONTHS AUGUST 1 YEAR ENDED ENDED YEAR ENDED APRIL 16 TO APRIL YEAR ENDED DECEMBER 31, DECEMBER 31, JULY 31, TO JULY 31, 15, JULY 31, 1996 1995(1) 1995(2) 1994 1993 1993 1992 -------- -------- ------- ------- ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) BALANCE SHEET DATA (AT END OF PERIOD): Working capital............. $ 40,153 $ 4,406 $11,838 $13,856 $ 8,601 $ 6,709 Total assets................ 125,109 104,469 76,526 51,173 38,715 13,982 Total debt.................. -- 49,000 27,800 9,170 11,420 -- Stockholders' equity........ 112,407 45,698 41,382 28,327 19,646 11,069
- --------------- (1) Includes the operating results of Titmus Optical, Inc. from September 29, 1995. (2) Includes the operating results of Pro-Tech Respirators, Inc. from March 31, 1995. Amounts also reflect the acquisition of a one-third minority interest in the business of Uvex Safety, Inc. effective October 31, 1994. (3) Income tax expense was reduced by approximately $767 during the fiscal year that ended July 31, 1992 as a result of net operating loss carry forwards that were utilized during that period. (4) Computed using the weighted average number of shares of common stock and common stock equivalents outstanding during the period. (5) There were no cash dividends declared or paid by the Company during any of the periods presented. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the Company's financial condition and results of operations should be read in conjunction with the Company's consolidated financial statements and notes thereto, as well as the selected financial data, all appearing elsewhere herein. FACTORS THAT MAY AFFECT FUTURE PERFORMANCE Statements contained in this discussion or elsewhere herein that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that a number of important factors could cause actual outcomes to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, continued demand for current product lines, the success of new product introductions, continued availability and favorable pricing of raw materials, the effect of any work stoppages, the success of the Company's acquisition strategy, competitive pressures, general economic conditions, and regulatory matters. The Company cannot assure that it will be able to anticipate or respond timely to changes in any of the factors listed above, which could adversely affect the operating results in one or more fiscal periods. Results of operations in any past period should not be considered indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of the Company's common stock. BACKGROUND Effective August 1, 1995 the Company changed its fiscal year end from July 31 to December 31. The following discussion compares operating results for the fiscal year ended December 31, 1996 and the fiscal years ended July 31, 1995 and 1994. A separate discussion has also been included that compares operating results for the transition period, August 1, 1995 to December 31, 1995, with the comparable five-month period in 1994. The Company acquired the business of Pro-Tech Respirators, Inc. effective March 31, 1995 for approximately $6.8 million, and the Company acquired all of the outstanding capital stock of Titmus Optical, Inc. effective September 29, 1995 for approximately $27.3 million (collectively, the "Acquisitions"). Operating results of Pro-Tech and Titmus have been included in the consolidated financial statements of the 12 14 Company for periods subsequent to their respective acquisition dates. The Company also acquired a one-third interest in the business of Uvex Safety (the "Minority Interest Acquisition") effective October 31, 1994. In March 1996 the Company completed an initial public offering of its common stock. Proceeds from the sale of 3,450,000 shares, totalling $47.3 million net of expenses of issuance, were used primarily to repay outstanding bank indebtedness. RESULTS OF OPERATIONS The following table presents selected operating data of the Company and such amounts as percentages of net sales for the periods indicated (in thousands, except percentages).
YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED 1996 JULY 31, 1995 JULY 31, 1994 ---------------- --------------- --------------- Net sales................................. $109,268 100.0% $71,988 100.0% $53,927 100.0% Cost of sales............................. 47,355 43.3 31,016 43.1 22,186 41.1 -------- ----- ------- ----- ------- ----- Gross profit.............................. 61,913 56.7 40,972 56.9 31,741 58.9 -------- ----- ------- ----- ------- ----- Operating expenses: Selling................................... 17,074 15.6 9,781 13.6 8,719 16.2 General and administrative................ 9,176 8.4 4,080 5.6 3,206 6.0 Amortization of intangibles............... 4,039 3.7 2,506 3.5 1,467 2.7 -------- ----- ------- ----- ------- ----- Total operating expenses.................. 30,289 27.7 16,367 22.7 13,392 24.9 -------- ----- ------- ----- ------- ----- Operating income.......................... 31,624 29.0 24,605 34.2 18,349 34.0 Other expense, net........................ 45 0.1 1,287 1.8 333 0.6 -------- ----- ------- ----- ------- ----- Income before income taxes and minority interest................................ 31,579 28.9 23,318 32.4 18,016 33.4 Minority interest share of income......... -- -- 1,920 2.7 6,164 11.4 Income taxes.............................. 12,202 11.2 8,343 11.6 4,371 8.1 -------- ----- ------- ----- ------- ----- Net income................................ $ 19,377 17.7% $13,055 18.1% $ 7,481 13.9% ======== ===== ======= ===== ======= =====
Fiscal Year Ended December 31, 1996 Compared to Fiscal Year Ended July 31, 1995 Net Sales. Net sales increased 51.8% from $72.0 million for the year ended July 31, 1995 to $109.3 million for the year ended December 31, 1996. This increase was primarily the result of inclusion of the operations of Titmus. Sales of non-prescription eyewear, including sales of products introduced late in the second quarter of 1996, also contributed to increased sales during 1996. Net sales were reduced by the effect of the discontinuation of original equipment manufacture (OEM) sales of ski goggles and sales of a certain respiratory product line. Export sales, including export sales of Titmus, increased by 89% from the 1995 period to the 1996 period. Export sales represented 7.3% of net sales in the 1996 period and 5.8% of net sales in the 1995 period. In connection with the acquisition of Titmus from Carl Zeiss, Inc., the Company agreed to utilize the seller's laboratory services for the continued production of completed prescription eyewear, including corrective lenses, for approximately one year following the closing. During the fourth quarter of 1996, concurrent with the expiration of this arrangement, the Company withdrew from the business of selling completed prescription eyewear. During the nine months ended September 30, 1996, the Company's net sales included sales of completed prescription eyewear (frames and corrective lenses) totaling approximately $3.0 million. Cost of Sales. Cost of sales increased 52.7% from $31.0 million for the year ended July 31, 1995 to $47.4 million for the year ended December 31, 1996. The increase was primarily attributable to increased sales volume resulting from the acquisition of Titmus, which was partially offset by reduced costs associated with the discontinuation of ski goggle and respiratory products discussed above. Gross Profit. Gross profit increased 51.1% from $41.0 million for the year ended July 31, 1995 to $61.9 million for the year ended December 31, 1996. As a percentage of net sales, gross profit was 56.7% in 1996 and 56.9% in 1995. Excluding the effect of purchase accounting adjustments, gross profit as a percentage of net 13 15 sales would have been 59.3% in the 1995 period. The Company's consolidated gross margin declined from the 1995 period to the 1996 period as a result of including the operations of Titmus, which have lower gross margins than the combined gross margin of the Company's other subsidiaries. The decrease in consolidated gross margin resulting from the acquisition of Titmus was offset in part by labor and other cost reductions at other subsidiaries. Selling Expenses. Selling expenses increased 74.6% from $9.8 million for the year ended July 31, 1995 to $17.1 million for the year ended December 31, 1996. The increase resulted primarily from inclusion of the operations of Titmus. General and Administrative Expenses. General and administrative expenses increased from $4.1 million for the year ended July 31, 1995 to $9.2 million for the year ended December 31, 1996. The increase resulted primarily from inclusion of the operations of Titmus and to a lesser extent from additional administrative costs which became necessary as a result of Bacou USA, Inc. becoming a public reporting company. Amortization of Intangibles. Amortization of intangibles increased 61.2% from $2.5 million for the year ended July 31, 1995 to $4.0 million for the year ended December 31, 1996. This increase was due primarily to amortization of intangible assets recorded in connection with the Acquisitions. Operating Income. As a result of the foregoing, the Company's operating income increased 28.5% from $24.6 million for the year ended July 31, 1995 to $31.6 million for the year ended December 31, 1996. Other Expense, Net. Other expense, net was $1.3 million for the year ended July 31, 1995 and $0.05 million for the year ended December 31, 1996. The 1995 period included net interest expense which totaled $1.5 million. Indebtedness of the Company was repaid in full by April 1996, primarily from proceeds of the Company's initial public offering, and therefore net interest expense during the 1996 period was reduced to $0.4 million. Minority Interest Share of Income. The minority interest share of income represented the income attributable to the holder of the one-third minority interest in Uvex Safety. Subsequent to October 31, 1994, the Company has owned the entire business of Uvex Safety. As a result, no minority interest share of income has been recorded for any periods after October 31, 1994. Income Taxes. The Company's effective income tax rate approximated 39.0% during both periods, and was higher than the federal statutory rate due primarily to state and local income taxes. Net Income. As a result of the foregoing, the Company's net income increased by 48.4% from $13.1 million for the year ended July 31, 1995 to $19.4 million for the year ended December 31, 1996. Fiscal Year Ended July 31, 1995 Compared to Fiscal Year Ended July 31, 1994 Net Sales. Net sales increased 33.5% from $53.9 million in fiscal 1994 to $72.0 million in fiscal 1995, principally as a result of increases in the volume of units shipped. Net sales increased by $1.5 million from 1994 to 1995 as a result of the acquisition of Pro-Tech. Sales volume grew primarily due to increased customer demand for the astrospec family of eyewear products and the ongoing introduction of several product variations within the astrospec family product line. Net sales of the astrospec family of products accounted for 84.4% of the growth in net sales from 1994 to 1995. Export sales represented 5.8% of net sales in 1995 and 4.4% of net sales in 1994. Cost of Sales. Cost of sales increased 39.8% from $22.2 million in 1994 to $31.0 million in 1995. The increase was primarily attributable to increased sales volume. Increases in manufacturing wages during these periods were offset by workforce reductions resulting from automation. In addition, costs of polycarbonate resin, the primary raw material for manufacturing non-prescription protective eyewear lenses, increased in the second half of fiscal 1995. Gross Profit. Gross profit increased 29.1% from $31.7 million in 1994 to $41.0 million in 1995. As a percentage of net sales, gross profit was 58.9% in 1994 and 56.9% in 1995. In connection with the Minority Interest Acquisition and the Company's acquisition of Pro-Tech, acquired inventories were adjusted to fair values. Gross profit was reduced by approximately $1.7 million in 1995 as a result of adjustments to acquired 14 16 inventories that were sold and charged to cost of sales. Excluding the effect of these purchase accounting adjustments, gross profit as a percentage of net sales would have been 59.3% in 1995. Selling Expenses. Selling expenses increased 12.2% from $8.7 million in 1994 to $9.8 million in 1995. The increase was attributable to increases in the Company's advertising and promotion budget, as well as additional compensation and shipping expenses resulting from greater sales volume during the 1995 period. General and Administrative Expenses. General and administrative expenses increased 27.3% from $3.2 million in 1994 to $4.1 million in 1995. The increase was primarily due to increased compensation as a result of bonuses based upon the profitability of the Company. Amortization of Intangibles. Amortization of intangibles increased 70.8% from $1.5 million in 1994 to $2.5 million in 1995. The increase was due to amortization of intangible assets recorded in connection with the Minority Interest Acquisition and the acquisition of Pro-Tech. Operating Income. As a result of the foregoing, the Company's operating income increased 34.1% from $18.3 million in 1994 to $24.6 million in 1995. Other Expense, Net. Other expense, net, primarily interest expense, was $0.3 million in 1994 and $1.3 million in 1995. Net interest expense totaled $0.3 million in 1994 and $1.5 million in 1995. Increases in net interest expense were the result of increased borrowings to finance acquisitions during these periods. Minority Interest Share of Income. As discussed above, no minority interest share of income was recorded for periods subsequent to October 31, 1994. Income Taxes. The Company's effective income tax rate was 36.9% in 1994 and 39.0% in 1995. The effective rates were higher than the federal statutory rate due primarily to state and local income taxes, offset partially in 1994 as a result of benefits derived from purchase accounting adjustments. Net Income. Net income increased 74.5% from $7.5 million in 1994 to $13.1 million in 1995. The increase was primarily attributable to the Minority Interest Acquisition as well as changes in operating results discussed above. Five Months Ended December 31, 1995 Compared to Five Months Ended December 31, 1994 The following table presents selected operating data of the Company and such amounts as percentages of net sales for the periods indicated (in thousands, except percentages).
FIVE MONTHS ENDED DECEMBER 31, --------------------------------------- 1995 1994 ----------------- ----------------- Net sales............................................... $36,827 100.0% $27,859 100.0% Cost of sales........................................... 18,525 50.3 12,693 45.6 ------- ----- ------- ----- Gross profit............................................ 18,302 49.7 15,166 54.4 Operating expenses: Selling............................................... 5,891 16.0 3,808 13.7 General and administrative............................ 2,609 7.1 1,709 6.1 Amortization of intangibles........................... 1,515 4.1 828 3.0 ------- ----- ------- ----- Total operating expenses...................... 10,015 27.2 6,345 22.8 ------- ----- ------- ----- Operating income........................................ 8,287 22.5 8,821 31.6 Other expense, net...................................... 1,054 2.9 211 0.7 ------- ----- ------- ----- Income before income taxes and minority interest........ 7,233 19.6 8,610 30.9 Minority interest share of income....................... -- -- 1,920 6.9 Income taxes............................................ 2,917 7.9 2,609 9.4 ------- ----- ------- ----- Net income.............................................. $ 4,316 11.7% $ 4,081 14.6% ======= ===== ======= =====
Net Sales. Net sales increased 32.2% from $27.9 million for the five months ended December 31, 1994 to $36.8 million for the five months ended December 31, 1995. This increase was primarily the result of 15 17 inclusion of the operations of Pro-Tech and Titmus for five months and three months, respectively, and to a lesser extent increased sales of the astrospec family of products. Export sales represented 6.8% of net sales in the 1995 period and 4.5% of net sales in the 1994 period. During the 1995 period, the Company discontinued OEM sales of ski goggles and sales of a certain respiratory product line. Such product lines were discontinued to allow the Company to concentrate its managerial and financial resources on more profitable personal protective equipment product lines. Excluding sales of the discontinued product lines, net sales increased 40.1% from $25.7 million for the 1994 period to $36.0 million for the 1995 period. Net sales of the discontinued product lines, totaling $4.6 million during fiscal 1995, were substantially eliminated during the 1996 calendar year. Cost of Sales. Cost of sales increased 45.9% from $12.7 million for the five months ended December 31, 1994 to $18.5 million for the five months ended December 31, 1995. The increase was primarily attributable to acquisition related adjustments (see "Gross Profit" below), increased sales volume and, to a lesser extent, higher raw material costs. The increase in raw material costs was the result of price increases for polycarbonate resin, the primary raw material for manufacturing non-prescription protective eyewear lenses. Gross Profit. Gross profit increased 20.7% from $15.2 million for the five months ended December 31, 1994 to $18.3 million for the five months ended December 31, 1995. As a percentage of net sales, gross profit was 54.4% in 1994 and 49.7% in 1995. In connection with the Minority Interest Acquisition and the acquisition of Titmus, acquired inventories were adjusted to fair values. Gross profit was reduced by approximately $1.1 million in the 1994 period and by approximately $2.5 million in the 1995 period as a result of adjusted inventories that were sold and charged to cost of sales. Excluding the effect of these purchase accounting adjustments, gross profit as a percentage of net sales would have been 58.2% in 1994 and 56.4% in 1995. Selling Expenses. Selling expenses increased 54.7% from $3.8 million for the five months ended December 31, 1994 to $5.9 million for the five months ended December 31, 1995. The increase resulted primarily from the Acquisitions. General and Administrative Expenses. General and administrative expenses increased 52.7% from $1.7 million for the five months ended December 31, 1994 to $2.6 million for the five months ended December 31, 1995. The increase resulted primarily from the Acquisitions and to a lesser extent from the addition of employees at Bacou USA, Inc. Amortization of Intangibles. Amortization of intangibles increased 83.0% from $0.8 million for the five months ended December 31, 1994 to $1.5 million for the five months ended December 31, 1995. This increase is due to amortization of intangible assets recorded in connection with the Minority Interest Acquisition and the Acquisitions. Operating Income. As a result of the foregoing, the Company's operating income decreased 6.1% from $8.8 million for the five months ended December 31, 1994 to $8.3 million for the five months ended December 31, 1995. Excluding the effect of purchase accounting adjustments for inventory (see "Gross Profit" above), operating income would have been $9.9 million for the 1994 period and $10.7 million for the 1995 period. Other Expense, Net. Other expense, net was $0.2 million and $1.1 million for the five months ended December 31, 1994 and 1995, respectively. These amounts included net interest expense which totaled $0.3 million and $1.1 million, respectively. The increase resulted from additional borrowings to finance the Minority Interest Acquisition and the Acquisitions. Minority Interest Share of Income. As discussed above, no minority interest share of income was recorded for periods subsequent to October 31, 1994. Income Taxes. The Company's effective income tax rate was 39.0% and 40.3% for the five months ended December 31, 1994 and 1995, respectively. The effective rates were higher than the federal statutory rate due primarily to state and local income taxes. Net Income. As a result of the foregoing, the Company's net income increased by 5.8% from $4.1 million for the five months ended December 31, 1994 to $4.3 million for the five months ended December 31, 1995. 16 18 EFFECTS OF INFLATION Inflation during recent years has been modest and has not had a material impact upon the results of the Company's operations. LIQUIDITY AND CAPITAL RESOURCES Gross cash flow (net income plus non-cash items) increased $8.1 million from $19.9 million during the fiscal year ended July 31, 1995 to $28.0 million during the fiscal year ended December 31, 1996. Net cash provided by operating activities (gross cash flow adjusted by working capital changes) increased from $20.4 million during 1995 to $32.4 million during 1996. As of December 31, 1996, the Company had cash and cash equivalents equal to $21.0 million, invested primarily in auction variable rate municipal securities and government money market funds. Cash used in investing activities decreased from $41.2 million for the year ended July 31, 1995 to $10.9 million for the year ended December 31, 1996. The 1995 period includes payments for the acquisition of the one-third interest in Uvex Safety and the acquisition of Pro-Tech, including direct costs of acquisition but net of cash acquired, totaling approximately $36.5 million. Capital expenditures totaled $4.6 million in the 1995 period and $10.7 million in the 1996 period. Increased capital spending in the 1996 period is a result of the construction of a new manufacturing facility for Titmus, at a cost of approximately $6.0 million. Cash used in investing activities during the five months ended December 31, 1995 totaled $28.0 million and included net cash used for the acquisition of Titmus equal to $26.2 million. At December 31, 1996 the Company had commitments outstanding for the purchase of machinery and equipment totaling approximately $1.2 million. The Company anticipates its capital spending in 1997 (excluding acquisitions) will approximate $5.0 - 7.0 million. The Company had aggregate indebtedness of $49.0 million at December 31, 1995, of which $45.0 million was indebtedness to a foreign commercial bank and $4.0 million was indebtedness to a domestic commercial bank. Such indebtedness was incurred in connection with the Acquisitions and the Minority Interest Acquisition. During the first quarter of 1996, indebtedness to the domestic commercial bank was repaid from cash provided by operations. During April 1996 the Company completed an initial public offering of its common stock. Proceeds from the sale of 3,450,000 shares, net of underwriting discounts and expenses of issuance, totaled $47.3 million and were used to repay total indebtedness to the foreign commercial bank. To supplement cash flow provided by operating activities, the Company maintains a $3.0 million revolving credit facility which is available for use by a wholly-owned subsidiary for its general working capital purposes. The revolving credit facility is subject to annual renewal and presently expires May 31, 1997; however, management believes the Company will be able to renew this facility for satisfactory periods after that date. The Company also has $8.0 million available under a term credit facility with a domestic commercial bank which can be used for general corporate and other working capital requirements of a wholly-owned subsidiary. No amounts were outstanding under either facility as of December 31, 1996; however, as described below, the Company borrowed $8.0 million in March 1997. Both credit facilities require the Company to maintain a ratio of tangible net worth to total liabilities of not less than 1.0 to 1.0. The Company believes that its cash flow provided by operating activities and unused borrowing capacity will be sufficient to fund capital expenditures and to fund the Company's operating needs during 1997. The Company is pursuing a business strategy which includes acquisitions as an important element. In late 1996, the Company reached an agreement in principle to purchase Survivair, Inc. and the InterSpiro group of companies which manufacture and distribute respiratory protective equipment.. The Company expects the Survivair the transaction to be closed during the second quarter of 1997 but does not expect the Interspiro transaction to be consummated. In connection with the Survivair acquisition the Company borrowed $8.0 million under a term credit facility on March 22, 1997, which the Company believes will be the only borrowings required for this transaction. However, The Company may be required to negotiate additional borrowing facilities and additional indebtedness may be incurred in order to fund this acquisition and other new investments, if any, resulting from its acquisition strategy. 17 19 SEASONALITY The Company's business has been subject to slight seasonal variations which the Company has attributed to fluctuations in industrial activity and with annual weather patterns. Historically, net sales from October through December have been somewhat lower than other periods due to anticipated lower demand in the more inclement winter months, resulting in planned inventory reductions by major distributors. In addition to seasonality, the Company's business has been variable period to period due to other factors, including promotional activity undertaken by the Company in response to competitive pressures, market demand, production capacity, inventory levels and other considerations. 18 20 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS
PAGE ----- Independent Auditors' Report......................................................... 20 Consolidated Balance Sheets.......................................................... 21 Consolidated Statements of Income.................................................... 22 Consolidated Statements of Stockholders' Equity...................................... 23 Consolidated Statements of Cash Flows................................................ 24 Notes to Consolidated Financial Statements........................................... 25-34
19 21 INDEPENDENT AUDITORS' REPORT We have audited the accompanying consolidated balance sheets of Bacou USA, Inc. and subsidiaries as of December 31, 1996 and 1995 and the related consolidated statements of income, stockholders' equity and cash flows for the fiscal year ended December 31, 1996, for the five months ended December 31, 1995, and for the fiscal years ended July 31, 1995 and 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bacou USA, Inc. and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for the fiscal year ended December 31, 1996, for the five months ended December 31, 1995, and for the fiscal years ended July 31, 1995 and 1994 in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Providence, Rhode Island February 14, 1997 20 22 BACOU USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ----------------------------- 1996 1995 ------------ ------------ ASSETS Current assets: Cash and cash equivalents..................................... $ 21,033,261 $ 1,210,247 Trade accounts receivable, net................................ 10,500,190 10,803,126 Inventories................................................... 17,483,418 18,205,258 Prepaid expenses.............................................. 992,174 1,383,206 Recoverable income taxes...................................... -- 442,872 Deferred income taxes......................................... 762,000 762,194 ------------ ------------ Total current assets.................................. 50,771,043 32,806,903 ------------ ------------ Property and equipment, net..................................... 27,069,129 20,235,652 Intangible assets, net.......................................... 47,268,964 51,426,859 ------------ ------------ Total assets.......................................... $125,109,136 $104,469,414 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt........................ $ -- $ 20,000,000 Accounts payable.............................................. 4,015,904 3,590,939 Accrued compensation and benefits............................. 3,162,699 1,934,794 Other accrued expenses........................................ 1,786,473 2,874,986 Income taxes payable.......................................... 1,652,808 -- ------------ ------------ Total current liabilities............................. 10,617,884 28,400,719 ------------ ------------ Long-term debt, excluding current installments.................. -- 29,000,000 Deferred income taxes........................................... 2,084,000 1,370,494 ------------ ------------ Total liabilities..................................... 12,701,884 58,771,213 ------------ ------------ Stockholders' equity: Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding........................... -- -- Common stock, $.001 par value, 25,000,000 shares authorized, 17,312,200 shares in 1996 and 13,860,000 shares in 1995 issued and outstanding............................................ 17,312 13,860 Additional paid-in capital.................................... 66,514,906 19,186,140 Retained earnings............................................. 45,875,034 26,498,201 ------------ ------------ Total stockholders' equity............................ 112,407,252 45,698,201 ------------ ------------ Total liabilities and stockholders' equity............ $125,109,136 $104,469,414 ============ ============
See accompanying notes to consolidated financial statements. 21 23 BACOU USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
FIVE MONTHS ENDED YEAR ENDED DECEMBER YEARS ENDED JULY 31, DECEMBER 31, 31, --------------------------- 1996 1995 1995 1994 ------------ ----------- ----------- ----------- Net sales............................ $109,267,664 $36,827,039 $71,987,838 $53,926,887 Cost of sales........................ 47,354,612 18,524,750 31,016,389 22,185,591 ------------- ------------ ------------ ------------ Gross profit............... 61,913,052 18,302,289 40,971,449 31,741,296 ------------- ------------ ------------ ------------ Operating expenses: Selling............................ 17,074,478 5,891,489 9,781,321 8,719,313 General and administrative......... 9,175,637 2,609,536 4,079,836 3,206,355 Amortization of intangible assets.......................... 4,039,351 1,514,552 2,505,585 1,466,957 ------------- ------------ ------------ ------------ Total operating expenses... 30,289,466 10,015,577 16,366,742 13,392,625 ------------- ------------ ------------ ------------ Operating income..................... 31,623,586 8,286,712 24,604,707 18,348,671 ------------- ------------ ------------ ------------ Other expenses (income): Interest expense: Bacou, S.A. .................... -- 409,155 883,724 -- Other........................... 895,629 771,052 820,888 410,703 ------------- ------------ ------------ ------------ 895,629 1,180,207 1,704,612 410,703 Interest income.................... (522,258) (86,963) (238,047) (123,182) Other.............................. (328,548) (39,672) (179,761) 45,155 ------------- ------------ ------------ ------------ Total other expense, net... 44,823 1,053,572 1,286,804 332,676 ------------- ------------ ------------ ------------ Income before income taxes and minority interest.................. 31,578,763 7,233,140 23,317,903 18,015,995 Minority interest share of income.... -- -- 1,920,020 6,163,939 ------------- ------------ ------------ ------------ Income before income taxes........... 31,578,763 7,233,140 21,397,883 11,852,056 Income taxes......................... 12,201,930 2,916,684 8,343,000 4,371,000 ------------- ------------ ------------ ------------ Net income......................... $ 19,376,833 $ 4,316,456 $13,054,883 $ 7,481,056 ============= ============ ============ ============ Net income per common and common equivalent share................... $ 1.18 $ 0.31 $ 0.94 $ 0.57 ============= ============ ============ ============ Weighted average common and common equivalent shares.................. 16,436,125 13,860,000 13,860,000 13,167,000 ============= ============ ============ ============
See accompanying notes to consolidated financial statements. 22 24 BACOU USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
ADDITIONAL TOTAL COMMON PAID-IN RETAINED STOCKHOLDERS' STOCK CAPITAL EARNINGS EQUITY ------- ----------- ----------- ------------ Balances at July 31, 1993............... $ 1,386 $17,998,614 $ 1,645,806 $ 19,645,806 Stock dividend.......................... 11,781 (11,781) -- -- Common stock subscribed................. 693 1,199,307 -- 1,200,000 Net income.............................. -- -- 7,481,056 7,481,056 ------- ----------- ----------- ------------ Balances at July 31, 1994............... 13,860 19,186,140 9,126,862 28,326,862 Net income.............................. -- -- 13,054,883 13,054,883 ------- ----------- ----------- ------------ Balances at July 31, 1995............... 13,860 19,186,140 22,181,745 41,381,745 Net income.............................. -- -- 4,316,456 4,316,456 ------- ----------- ----------- ------------ Balances at December 31, 1995........... 13,860 19,186,140 26,498,201 45,698,201 Proceeds from issuance of 3,450,000 shares of common stock, net of expenses of issuance.............................. 3,450 47,294,483 -- 47,297,933 Stock options exercised................. 2 34,283 -- 34,285 Net income.............................. -- -- 19,376,833 19,376,833 ------- ----------- ----------- ------------ Balances at December 31, 1996........... $17,312 $66,514,906 $45,875,034 $112,407,252 ======= =========== =========== ============
See accompanying notes to consolidated financial statements. 23 25 BACOU USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FIVE MONTHS YEAR ENDED ENDED YEARS ENDED JULY 31, DECEMBER 31, DECEMBER 31, --------------------------- 1996 1995 1995 1994 ------------ ------------ ------------ ----------- Cash flows from operating activities: Net income.................................... $ 19,376,833 $ 4,316,456 $ 13,054,883 $ 7,481,056 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............... 7,511,522 2,645,090 4,373,345 2,703,387 Deferred income taxes....................... 713,700 (140,126) 574,651 317,000 Loss (gain) on sale or write down of assets.................................... 362,627 -- (66,583) 218,816 Minority share of income.................... -- -- 1,920,020 6,163,939 Change in assets and liabilities, net of effects of acquired companies: Trade accounts receivable................. 302,936 1,279,249 1,077,403 (3,356,855) Inventories............................... 721,840 1,512,487 (1,273,816) (1,343,713) Prepaid expenses.......................... 391,032 (756,863) (71,416) 693,602 Accounts payable.......................... 424,965 (819,519) 231,456 489,768 Accrued expenses.......................... 476,986 (1,941,394) 19,109 1,690,966 Income taxes.............................. 2,095,680 (1,447,310) 555,808 346,000 ------------ ------------ ------------ ----------- Net cash provided by operating activities........................... 32,378,121 4,648,070 20,394,860 15,403,966 ------------ ------------ ------------ ----------- Cash flows from investing activities: Capital expenditures.......................... (10,668,275) (1,822,281) (4,634,224) (4,688,629) Acquisition of businesses, including direct costs of acquisition, net of cash acquired.................................... (219,050) (26,156,395) (36,533,672) -- ------------ ------------ ------------ ----------- Net cash used in investing activities........................... (10,887,325) (27,978,676) (41,167,896) (4,688,629) ------------ ------------ ------------ ----------- Cash flows from financing activities: Repayment of long-term debt................... (49,000,000) (18,800,000) (17,370,000) (2,250,000) Proceeds from long-term debt.................. -- 40,000,000 36,000,000 -- Proceeds from issuance of common stock, net of expenses.................................... 47,332,218 -- 1,200,000 -- Distributions to Uvex Distribution, Inc....... -- -- (3,175,884) (3,228,657) ------------ ------------ ------------ ----------- Net cash provided by (used in) financing activities................. (1,667,782) 21,200,000 16,654,116 (5,478,657) ------------ ------------ ------------ ----------- Net increase (decrease) in cash and cash equivalents................................... 19,823,014 (2,130,606) (4,118,920) 5,236,680 Cash and cash equivalents at beginning of period........................................ 1,210,247 3,340,853 7,459,773 2,223,093 ------------ ------------ ------------ ----------- Cash and cash equivalents at end of period...... $ 21,033,261 $ 1,210,247 $ 3,340,853 $ 7,459,773 ============ ============ ============ =========== Supplemental disclosures of cash flow information: Cash paid during the period for interest...... $ 916,938 $ 1,158,898 $ 1,704,612 $ 410,703 ============ ============ ============ =========== Cash paid during the period for income taxes....................................... $ 9,427,330 $ 4,520,000 $ 7,303,000 $ 3,708,000 ============ ============ ============ ===========
See accompanying notes to consolidated financial statements. 24 26 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Nature of Business and Principles of Consolidation The accompanying consolidated financial statements include the accounts of Bacou USA, Inc. (Bacou) and its wholly owned subsidiaries (together the Company), including its operating subsidiaries Uvex Safety, Inc. (Uvex Safety), Titmus Optical, Inc. (Titmus, acquired effective September 29, 1995), and Pro-Tech Respirators, Inc. (Pro-Tech, acquired effective March 31, 1995). Bacou S.A., a company domiciled in Valence, France, owns a controlling interest (approximately 73% at December 31, 1996) in Bacou. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior period balances have been reclassified to conform to the 1996 presentation. The business of Uvex Safety was conducted by Uvex Distribution, Inc. (the Predecessor Business) until April 15, 1993. On April 15, 1993, the Company acquired a two-thirds interest in such business. On October 31, 1994, the Company acquired the remaining one-third interest and became the sole owner of the business. The Company manufactures and distributes personal protective products, including non-prescription protective eyewear, frames for prescription eyewear and respiratory protection equipment. For purposes of segment reporting, the Company considers its operations to be within a single industry. The Company relies on single sources for the supply of several raw materials, including polycarbonate resin, the primary raw material for production of the Company's non-prescription lenses. The loss of any such source, any disruption in such source's business or failure by it to meet the Company's needs on a timely basis could cause shortages in raw materials and could have a material adverse affect on the Company's results of operations. The Company has 247 employees (representing approximately 43% of total employees) that are covered under a collective bargaining agreement that expires September 13, 1997. (b) Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents at December 31, 1996 included auction rate variable municipal securities and government money market funds. (c) Revenue and Trade Receivables The Company recognizes revenue upon shipment of merchandise to its customers. The Company's sales are primarily domestic (export sales represented 7.3% of net sales in 1996), with customers located throughout the United States. Pursuant to an agreement with the previous owner of the Predecessor Business, the Company may sell personal protective equipment under the uvex(TM) brand name only in North, Central and South America. The agreement also prohibits the Company from selling sports products such as sunglasses or protective eyewear for sports activities under the uvex(TM) brand name regardless of geographic area. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company estimates an allowance for doubtful accounts based on the credit worthiness of its customers as well as general economic conditions. Consequently, an adverse change in those factors could affect the Company's estimate. The allowance for doubtful accounts was $791,531 at December 31, 1996 and $656,745 at December 31, 1995. There were no sales to any individual customer during the year ended December 31, 1996 that represented 10% or more of consolidated sales. The Company had sales to two customers that individually totaled approximately $8,800,000 and $7,300,000 during the year ended July 31, 1995, or 12% and 10% of total sales during that period. 25 27 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (d) Inventories Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). Inventories include the cost of raw materials, direct labor and manufacturing overhead. (e) Property and Equipment Property and equipment is stated at cost, except for property and equipment acquired in connection with purchase business combinations, which is recorded at fair value on the acquisition date. Assets to be disposed of are reported at the lower of carrying amount or estimated fair value less costs to sell. Depreciation is provided over the estimated useful lives of the respective assets using the straight-line method. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the asset. (f) Intangible Assets Intangible assets consist principally of customer relationships, acquired technology, and goodwill. Goodwill represents the excess of purchase price over fair value of net assets acquired in connection with purchase business combinations. Intangible assets are amortized using the straight-line method over the estimated periods benefited. The Company evaluates impairment of intangible assets annually, or more frequently if events or changes in circumstances indicate that carrying amounts may no longer be recoverable. Recoverability of intangible assets is determined based upon the excess of carrying amounts over expected future cash flows (undiscounted) of the underlying business or product line. The assessment of the recoverability of intangible assets will be impacted if estimated future cash flows are not achieved. (g) Income Taxes The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (h) Foreign Currency The Company periodically enters into forward foreign exchange contracts in connection with raw material purchases denominated in foreign currencies. Other than these contracts, the Company has no other involvement with derivative financial instruments. Transaction gains and losses on these contracts are included in determining operating income. The Company had no open currency contracts at December 31, 1996. Gains and losses recorded during 1996, 1995 and 1994 were not material. (i) Employee Benefit Plans The Company sponsors various defined contribution plans that cover substantially all employees. Titmus sponsors a defined benefit pension plan for bargaining employees, which is funded in accordance with the requirements of the Employee Retirement Income Security Act, and has assets that consist principally of bank mutual funds. Pursuant to certain stock incentive plans, the Company has granted stock options to key employees and to non-employee directors. The Company accounts for stock option grants using the intrinsic value based method. 26 28 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (j) Financial Instruments Financial instruments of the Company at December 31, 1996 consist of cash, accounts receivable and accounts payable. The carrying amounts of these financial instruments approximate their fair value. (k) Use of Estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (l) Change in Fiscal Year Effective August 1, 1995, the Company elected to change its fiscal year end from July 31 to December 31. The consolidated results of operations and cash flows for the five months ended December 31, 1995 are not necessarily indicative of results that would be expected for a full year. (m) Net Income per Common and Common Equivalent Share Net income per common and common equivalent share is calculated using the weighted average number of common shares outstanding during the period, and the net additional number of shares which would be issuable upon the exercise of stock options, assuming the Company used the proceeds received upon exercise of the options to purchase shares at market value (treasury stock method). Stock options are assumed to be exercised at the beginning of the period or, if later, the date of grant. In April 1996 the Company completed a public offering of its common stock. Proceeds from the sale of 3,450,000 shares were used to repay outstanding bank indebtedness. Assuming the aforementioned sale of common stock and repayment of debt occurred effective January 1, 1996, supplementary net income per common and common equivalent share for the year ended December 31, 1996 would have been $1.15 based upon 17,342,303 weighted average common and common equivalent shares. (2) ACQUISITIONS In late 1996, the Company reached an agreement in principle to purchase Survivair, Inc. of Santa Ana, California, which manufactures and distributes respiratory protective equipment including industrial respirators and self-contained breathing apparatus for the industrial and fire markets. The Company expects the transaction to be closed during the second quarter of 1997. In connection with this negotiation the Company borrowed $8.0 million under a lease credit facility on March 27, 1997. (3) INVENTORIES Inventories consist of the following at December 31:
1996 1995 ----------- ----------- Raw materials and supplies................................ $ 6,005,983 $ 7,655,184 Work-in-process........................................... 2,092,083 2,824,696 Finished goods............................................ 9,385,352 7,725,378 ----------- ----------- $17,483,418 $18,205,258 =========== ===========
27 29 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (4) PROPERTY AND EQUIPMENT Property and equipment consists of the following at December 31:
ESTIMATED USEFUL LIVES (YEARS) 1996 1995 ------------- ----------- ----------- Machinery and equipment..................... 5-10 $16,827,422 $14,666,121 Dies and molds.............................. 5 6,517,980 5,279,603 Building and leasehold improvements......... 10-40 7,040,658 1,113,886 Furniture and fixtures...................... 10 987,616 726,965 Computer equipment.......................... 5 1,597,189 1,284,054 Vehicles.................................... 3 170,020 170,020 Deposits on machinery and equipment......... 1,123,721 720,427 ----------- ----------- 34,264,606 23,961,076 Less accumulated depreciation and amortization.............................. 7,195,477 3,725,424 ----------- ----------- $27,069,129 $20,235,652 =========== ===========
During the fourth quarter of 1996 the Company elected to relocate the operations of Pro-Tech from its present site in Buchanan, Michigan. Included above are certain assets relating to the operations of Pro-Tech (primarily real estate) which are held for disposal. Impairment losses totaling $360,000 were recorded in 1996, and have been included in general and administrative expenses, when the carrying amount of such assets was adjusted to estimated fair value (approximately $200,000). Disposal of these assets is expected to occur during 1997. Depreciation and amortization of property and equipment totaled $3,472,171, $1,799,054 and $1,236,430 during the fiscal years ended December 31, 1996, July 31, 1995 and 1994, respectively, and $1,130,538 during the five months ended December 31, 1995. (5) INTANGIBLE ASSETS Intangible assets include the following at December 31:
ESTIMATED USEFUL LIVES (YEARS) 1996 1995 ---------------- ----------- ----------- Customer relationships.................... 10-20 $19,523,000 $19,523,000 Acquired technology....................... 9-17 10,002,000 10,002,000 Goodwill.................................. 20 26,344,418 26,462,962 Favorable lease........................... 1 -- 600,000 ----------- ----------- 55,869,418 56,587,962 Less accumulated amortization............. 8,600,454 5,161,103 ----------- ----------- $47,268,964 $51,426,859 =========== ===========
Amounts for identifiable intangible assets shown above were all determined by independent valuation at the respective acquisition dates. 28 30 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (6) INCOME TAXES Income tax expense consists of the following:
CURRENT DEFERRED TOTAL ----------- -------- ----------- Fiscal year ended December 31, 1996: Federal..................................... $10,104,770 $603,900 $10,708,670 State....................................... 1,383,460 109,800 1,493,260 ----------- -------- ----------- $11,488,230 $713,700 $12,201,930 =========== ======== =========== Five months ended December 31, 1995: Federal..................................... $ 2,300,000 $ 82,298 $ 2,382,298 State....................................... 515,000 19,386 534,386 ----------- -------- ----------- $ 2,815,000 $101,684 $ 2,916,684 =========== ======== =========== Fiscal year ended July 31, 1995: Federal..................................... $ 6,839,000 $338,000 $ 7,177,000 State....................................... 1,034,000 132,000 1,166,000 ----------- -------- ----------- $ 7,873,000 $470,000 $ 8,343,000 =========== ======== =========== Fiscal year ended July 31, 1994: Federal..................................... $ 3,564,000 $139,000 $ 3,703,000 State....................................... 631,000 37,000 668,000 ----------- -------- ----------- $ 4,195,000 $176,000 $ 4,371,000 =========== ======== ===========
Actual income tax expense differs from the expected income tax expense (computed by applying the statutory U.S. Federal corporate income tax rate to income before income taxes) as follows:
YEAR ENDED JULY 31 YEAR ENDED FIVE MONTHS ENDED ------------------------- DECEMBER 31, 1996 DECEMBER 31, 1995 1995 1994 ----------------- ----------------- ---------- ---------- Computed expected tax expense.... $11,052,567 $ 2,531,599 $7,489,259 $4,039,180 State income taxes, net of federal income tax benefit..... 970,618 347,351 757,773 440,129 Other............................ 178,745 37,734 95,968 (108,309) ----------- ---------- ---------- ---------- $12,201,930 $ 2,916,684 $8,343,000 $4,371,000 =========== ========== ========== ========== Effective rate................... 38.6% 40.3% 39.0% 36.9% =========== ========== ========== ==========
29 31 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The tax effects of temporary differences that generate deferred tax assets and liabilities at December 31 are presented below:
1996 1995 ----------- ---------- Deferred tax assets: Accounts receivable, principally due to allowance for doubtful accounts................................. $ 218,500 $ 167,800 Additional costs inventoried for tax purposes............ 428,400 287,700 Pension related expenses................................. 276,900 276,080 Unrealized loss on write-down of inventory............... 204,300 150,000 Other.................................................... 370,900 202,700 ----------- ---------- Total gross deferred tax assets.................. 1,499,000 1,084,280 Less valuation allowance......................... -- -- Net deferred tax assets.......................... 1,499,000 1,084,280 ----------- ---------- Deferred tax liabilities: Excess of tax over financial statement depreciation...... 2,647,200 1,513,600 Other.................................................... 173,800 178,980 ----------- ---------- Total deferred tax liabilities................... 2,821,000 1,692,580 ----------- ---------- Net deferred tax liability....................... $(1,322,000) $ (608,300) =========== ==========
(7) LONG-TERM DEBT As of December 31, 1996, the Company had unused credit commitments totaling $3.0 million under a revolving line of credit and $8.0 million under a term credit facility. The revolving line of credit is subject to annual renewal and presently expires May 31, 1997. Borrowings under both credit arrangements are available at the prime rate with an option to convert to LIBOR plus 1.0%, are subject to maintenance of a minimum tangible net worth, and are secured by substantially all assets of a subsidiary. As discussed in Note 2, the Company borrowed $8.0 million under the term credit facility in March 1997. The Company had aggregate indebtedness of $49.0 million at December 31, 1995, of which $45.0 million was indebtedness to Banque Nationale de Paris, Ltd. (BNP) and $4.0 million was indebtedness to a domestic commercial bank. Aggregate indebtedness to BNP consisted of three individual loan agreements. Each loan agreement provided for an annual interest rate equal to the lower of either LIBOR or PIBOR, in either case plus 0.5%, and was subject to an annual engagement commission in an amount equal to 0.2% of the outstanding principal amount. Indebtedness to the domestic commercial bank consisted of borrowings under a term loan facility at an annual interest rate equal to the lower of the prime rate or LIBOR plus 1.0%. Indebtedness to both BNP and the domestic commercial bank were repaid in full during 1996. 30 32 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (8) COMMITMENTS AND CONTINGENCIES The Company leases its corporate offices and Rhode Island manufacturing facility under an operating lease agreement with an initial lease term extending through July 31, 2003. The lease may be renewed for an additional five years if not terminated by the Company during the initial lease term and for successive five year terms, subject to future termination. The Company is required to pay all expenses relating to insurance, taxes, maintenance and utilities. The Company also leases warehouse space and equipment under non-cancelable operating leases. Minimum future rentals under non-cancelable operating leases, by year, are as follows:
YEAR ENDING DECEMBER 31, --------------------------------------------------------- 1997.................................................. $ 881,423 1998.................................................. 739,306 1999.................................................. 564,583 2000.................................................. 560,331 2001.................................................. 549,581 Thereafter............................................ 682,941 ---------- $3,978,165 ==========
Rent expense for the year ended December 31, 1996 and the years ended July 31, 1995 and 1994 totaled approximately $1,015,000, $635,000 and $365,000, respectively. Rent expense for the five months ended December 31, 1995 totaled approximately $363,000. Outstanding commitments as of December 31, 1996 for the purchase of machinery and equipment were approximately $1,200,000. The Company had outstanding letters of credit of approximately $680,000 at December 31, 1996, which were necessary in order to secure business with certain foreign vendors. The Company is currently involved in litigation incidental to its business, which the Company believes is without merit or is adequately covered by insurance. In the opinion of management, the ultimate resolution of such litigation will not have a significant effect on the Company's financial position, results of operations or cash flows. (9) RELATED PARTY TRANSACTIONS As disclosed in note 1, Bacou, S.A. owns a controlling interest in the Company. The Company has periodically had indebtedness outstanding with Bacou, S.A. Interest paid to Bacou, S.A. during the year ended July 31, 1995 and the five months ended December 31, 1995 totaled $883,724 and $409,155, respectively. No such indebtedness was outstanding and no interest was paid to Bacou, S.A. during the year ended December 31, 1996. Obligations outstanding in 1995 and the first quarter of 1996 under certain loan agreements with BNP were guaranteed by Bacou, S.A. The Company purchases certain inventory items from wholly owned subsidiaries of Bacou, S.A. Total purchases for the years ended December 31, 1996, July 31, 1995 and July 31, 1994 were $625,000, $1,592,000 and $1,014,000, respectively. Purchases for the five months ended December 31, 1995 totaled $563,000. The Company and Bacou S.A. are cooperating in structuring the transaction discussed in Note 2. (10) EMPLOYEE BENEFIT PLANS (a) Defined Contribution Plans The Company sponsors various 401(k) plans for all eligible employees. Employer contribution expense amounted to approximately $212,000, $91,000 and $87,000 for the years ended December 31, 1996, July 31, 31 33 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 1995 and July 31, 1994, respectively. Employer contribution expense totaled approximately $211,000 for the five months ended December 31, 1995. (b) Defined Benefit Plans Titmus sponsors a defined benefit pension plan covering bargaining employees. Benefits are based on years of service times a predetermined monthly amount. Titmus' policy is generally to fund the minimum required contribution subject to any full funding limitation. The assumptions used to develop the projected benefit obligation were a discount rate of 7.75% (both 1996 and 1995), and a long-term rate of return on assets of 8.5% (1996) and 7.75% (1995). The following table sets forth the funded status of the plan as of December 31, 1996 and October 31, 1995 (the date of the 1995 actuarial valuation).
1996 1995 ----------- ----------- Projected benefit obligation.............................. $(1,238,952) $(1,109,264) Plan assets at fair value................................. 664,151 470,109 Unrecognized gain......................................... (13,519) -- ----------- ----------- Accrued pension cost...................................... $ (588,320) $ (639,155) =========== ===========
The amount of the accumulated and vested benefit obligations approximate the projected benefit obligation. Periodic pension cost during the year ended December 31, 1996 consists of the following: Service cost.............................................. $ 47,854 Interest cost............................................. 87,717 Actual return on assets................................... (62,189) Net amortization and deferral............................. 16,226 -------- Periodic pension cost..................................... $ 89,608 ========
(c) Stock Option Plans Effective February 26, 1996 the Company adopted the Bacou USA, Inc. 1996 Stock Incentive Plan (the "Employee Plan"). The Employee Plan provides for stock-based incentive awards to be granted to key employees, including incentive stock options, non-qualified stock options, restricted stock, stock appreciation rights and stock unit awards. In the aggregate, 900,000 shares of common stock have been reserved for issuance under the Employee Plan. Options granted under the Employee Plan during 1996 generally vest 20% on the 120th day following grant, and 20% on each of the first, second, third and fourth anniversary dates from the date of grant. On May 23, 1996 the Board of Directors approved and adopted the Bacou USA, Inc. 1996 Non-Employee Director Stock Option Plan (the "Director Plan"). Initially, the Director Plan provided that on July 1 of each year, each eligible director would automatically be granted an option to purchase 2,000 shares of the Company's common stock. As a result, options to purchase 8,000 shares were granted on July 1, 1996. On February 24, 1997, the Director Plan was amended to permit the Board of Directors to grant options at their discretion. On that date, the Board of Directors granted options to purchase 92,000 shares under the Plan. The option exercise prices were equal to the fair market value of the common stock on the dates of grant and options vested immediately (except for options granted July 1, 1996 which vested on August 1, 1996). The Director Plan and the options granted thereunder are subject to shareholder approval. 32 34 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Stock option activity during 1996 is as follows:
NUMBER OF SHARES EXERCISE PRICE --------- -------------- Granted................................................. 405,000 $15.00 - 17.75 Exercised............................................... (2,200) 15.00 Canceled................................................ (14,100) 15.00 ------- Balance outstanding at December 31, 1996................ 388,700 15.00 - 17.75 ======= Balance exercisable at December 31, 1996................ 80,300 15.00 - 17.75 =======
The Company accounts for stock option grants using the intrinsic value method and, accordingly, no compensation cost has been recognized for its stock options in the financial statements. Had the Company determined compensation cost based on the fair value at the grant date, the Company's net income, and net income per common and common equivalent share, would have been reduced to $18,760,833 and $1.14 for the year ended December 31, 1996. The per share weighted-average fair value of stock options granted during 1996 was $7.64 on the date of grant using the Black Scholes option pricing model with the following weighted-average assumptions: expected dividend yield 0.0%, risk-free interest rate of 6.10%, expected volatility of 0.50 and an expected life of 6 years. The Company's historical volatility from March 27, 1996 (the date of its initial public offering) through February 25, 1997 was approximately 0.36. (11) STOCK SPLIT In connection with the Company's initial public offering of shares of common stock, preferred stock was authorized, the number of authorized shares of common stock was increased from 1,000 to 25,000,000 shares and the par value of such shares was stated as $.001. On February 26, 1996, the Company effected a 13,860-for-1 split of its issued and outstanding common stock. All share and per share data presented in the accompanying consolidated financial statements have been restated to reflect the increased number of authorized and outstanding shares of common stock. 33 35 BACOU USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (12) QUARTERLY FINANCIAL DATA (UNAUDITED) Following is a summary of quarterly operating results and share data. Because of seasonal fluctuations between quarters, the Company has presented 1995 quarterly information for the calendar year. Quarterly information shown below does not vary from amounts reported on any Form 10-Q previously filed by the Company. There were no dividends paid or declared during 1996 and 1995, and the Company anticipates that it will continue to retain earnings for use in its business and not pay cash dividends for the foreseeable future. The fourth quarter of 1995 includes a charge equal to approximately $1.5 million, net of tax, relating to the acquisition of Titmus.
QUARTER ----------------------------------------------------------- FIRST SECOND THIRD FOURTH FULL YEAR ----------- ----------- ----------- ----------- ------------ 1996 Net sales.............. $26,287,840 $28,806,454 $29,319,047 $24,854,323 $109,267,664 Gross profit........... 14,563,101 16,581,071 16,883,390 13,885,490 61,913,052 Income before income taxes................ 6,731,314 9,213,895 9,189,053 6,444,501 31,578,763 Net income............. 4,106,227 5,648,582 5,655,533 3,966,491 19,376,833 Per common share: Income............... $ 0.30 $ 0.33 $ 0.33 $ 0.22 $ 1.18 Market price High.............. 19 1/2 18 7/8 17 19 1/2 Low............... 15 16 1/2 15 1/2 15 Weighted average shares outstanding.......... 13,860,000 17,189,363 17,354,265 17,342,315 16,436,125 1995 Net sales.............. $17,405,809 $20,812,456 $20,191,269 $22,546,211 $ 80,955,745 Gross profit........... 10,029,956 12,311,774 12,452,062 9,283,309 44,077,101 Income before income taxes................ 5,745,980 7,166,006 7,550,024 1,384,501 21,846,511 Net income............. 3,505,048 4,371,932 4,604,864 747,845 13,229,689 Per common share: Income............... $ 0.25 $ 0.32 $ 0.33 $ 0.06 $ 0.96 Weighted average shares outstanding.......... 13,860,000 13,860,000 13,860,000 13,860,000 13,860,000
34 36 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT "Election of Directors", "Compensation of Directors and Officers," and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's proxy statement for the Company's 1997 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission on or before April 30, 1997 are hereby incorporated by reference. ITEM 11. EXECUTIVE COMPENSATION "Compensation of Directors and Officers" in the Company's proxy statement for the Company's 1997 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission on or before April 30, 1997 is hereby incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT "Introduction" and "Security Ownership of Certain Beneficial Owners and Management" in the Company's proxy statement for the Company's 1997 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission on or before April 30, 1997 are hereby incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS "Certain Transactions" in the Company's proxy statement for the Company's 1997 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission on or before April 30, 1997 is hereby incorporated by reference. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. List of Financial Statements The following financial statements are included in Item 8 herein: Independent Auditors' Report on Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (a) 2. Financial Statement Schedules Schedule II Valuation and Qualifying Accounts All other schedules are omitted, since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statement, and notes thereto. Independent Auditors' Report on Financial Statement Schedule (a) 3. Exhibits 35 37
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ----------- ------------------------------------------------------------------------------ 2(a) -- Purchase Agreement dated October 31, 1994 by and between Uvex Distribution, Inc., and Uvex Safety (incorporated by reference to Exhibit 2(a) of the Company's Registration Statement filed on Form S-1 (Commission File No. 333-00470) (the "Company's Registration Statement")) 2(b) -- Stock Purchase Agreement dated as of September 29, 1995 by and between Carl Zeiss, Inc., the Company and TOI Acquisition, Inc. (incorporated by reference to Exhibit 2(b) of the Company's Registration Statement) 2(c) -- Asset Purchase Agreement dated March 31, 1995 by and among Pro-Tech Respirators, Inc., the Company and William Moon, individually and as Trustee of the Pro-Tech Respirators, Inc., Employee Stock Ownership Plan (incorporated by reference to Exhibit 2(c) of the Company's Registration Statement) 3(a) -- Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(a) of the Company's Registration Statement) 3(b) -- By-Laws (incorporated by reference to Exhibit 3(b) of the Company's Registration Statement) 4(a) -- Loan Agreement dated September 28, 1995 by and between Citizens Savings Bank and Uvex Safety (incorporated by reference to Exhibit 4(a) of the Company's Registration Statement) 4(b) -- Revolving Credit Agreement by and between Uvex Safety, LLC and Citizens Trust Company (as assigned to Uvex Safety) dated March 7, 1994, as amended by Assumption and Modification Agreement dated October 31, 1994, as further amended by First Modification Agreement dated December 13, 1994, as further amended by Second Modification to Credit Agreement, Revolving Credit Note, Security Agreement and Collateral Assignment of Leasehold dated March 30, 1995, as further amended by Third Modification to Credit Agreement and to Security Agreement dated September 28, 1995, and as further amended by Loan Modification Agreement dated December 27, 1995 (incorporated by reference to Exhibit 4(e) of the Company's Registration Statement) 4(c) -- Loan Agreement dated September 28, 1995 by and between Uvex Safety and Citizens Savings Bank (incorporated by reference to Exhibit 4(e) to Amendment No. 1 to the Company's Registration Statement) 4(d) -- Letter of Amendment dated February 26, 1996 by and between Uvex Safety and Citizens Savings Bank (incorporated by reference to Exhibit 4(f) to Amendment No. 1 to the Company's Registration Statement) 4(e) -- Loan Modification Agreement dated January 15, 1997 between Uvex Safety, Inc. and Citizens Trust Company 4(f) -- First Amendment to Loan Agreement dated March 26, 1996 between Citizens Savings Bank and Uvex Safety (incorporated by reference to Exhibit 10.4(g) of the Company's Form 10-Q filed May 14, 1996) 10(a)* -- Employment Agreement dated August 1, 1992 by and between Walter Stepan and Uvex Safety (incorporated by reference to Exhibit 10(a) of the Company's Registration Statement) 10(b)* -- Employment Agreement dated May 8, 1995 by and between the Company and Philip B. Barr (incorporated by reference to Exhibit 10(b) of the Company's Registration Statement) 10(b)(1)* -- First Amendment to Employment Agreement dated June 30, 1995 by and between the Company and Philip B. Barr (incorporated by reference to Exhibit 10(x) to Amendment No. 1 to the Company's Registration Statement) 10(b)(2)* -- Second Amendment to Employment Agreement dated December 31, 1995 by and between the Company and Philip B. Barr (incorporated by reference to Exhibit 10(y) of Amendment No. 1 to the Company's Registration Statement)
36 38
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ----------- ------------------------------------------------------------------------------ 10(c)* -- Employment Agreement dated January 1, 1996 by and between Uvex Safety and Harry D. Neff (incorporated by reference to Exhibit 10(c) of the Company's Registration Statement) 10(d)* -- Employment Agreement dated January 1, 1996 by and between Uvex Safety and Raymond R. Baker (incorporated by reference to Exhibit 10(d) of the Company's Registration Statement) 10(e)* -- Employment Agreement dated January 1, 1996 by and between Uvex Safety and Steven P. Tolisano (incorporated by reference to Exhibit 10(e) of the Company's Registration Statement) 10(f)* -- Officer Incentive Agreement by and between Harry D. Neff and Pro-Tech (incorporated by reference to Exhibit 10(f) of the Company's Registration Statement) 10(g)* -- Employment Agreement dated as of January 1, 1996 by and between the Company and Walter Stepan (incorporated by reference to Exhibit 10(w) of the Company's Registration Statement) 10(h)(1)* -- Employment Agreement dated October 1, 1996, between Titmus Optical, Inc. and Edward E. Greene 10(h)(2)* -- First Amendment to Employment Agreement dated December 18, 1996 between Titmus Optical, Inc. and Edward E. Greene 10(h)(3)* -- Employment Termination Agreement and Release dated December 19, 1996 between Titmus Optical, Inc. and Edward E. Greene 10(i)* -- Employment Agreement dated December 31, 1996 between Titmus Optical, Inc. and Michael Mancuso 10(j)* -- Employment Agreement dated December 19, 1996 between Titmus Optical, Inc. and Richard J. Masters 10(k)(1)* -- Employment Agreement dated October 1, 1995 by and between Titmus Optical, Inc. and Thomas J. Goeltz 10(k)(2) -- First Amendment to Employment Agreement dated December 18, 1996 between Titmus Optical, Inc. and Thomas Goeltz 10(l)* -- Employment Agreement dated January 1, 1996 by and between Uvex Safety and Philip M. Johnson 10(m)* -- Employment Agreement dated January 1, 1996 by and between Uvex Safety and Richard Sustello 10(n) -- The Company's 1996 Stock Option Plan (incorporated by reference to Exhibit 10(g) of the Company's Registration Statement) 10(o) -- Registration Rights Agreement dated July 31, 1994 by and between Walter Stepan and the Company (incorporated by reference to Exhibit 10(h)(i) of the Company's Registration Statement) 10(p) -- Form of Registration Rights Agreement dated February , 1996 among the Principal Stockholder Figa, S.A., Walter Stepan, Heidemarie Stepan, Bettina Stepan, Axel Stepan and the Company (incorporated by reference to Exhibit 10(i) to Amendment No. 1 of the Company's Registration Statement) 10(q) -- Corporate Opportunities Agreement dated as of January 1, 1996 between the Principal Stockholder and the Company (incorporated by reference to Exhibit 10(j) of the Company's Registration Statement) 10(r) -- Amended and Restated Agreement of Transfer, Trademarks, Know-How and Related Matters dated November 2, 1995 by and among Uvex Winter Optik GmbH, Uvex Arbeitsschutz GmbH & Co., KG, Uvex Winter Optical, Inc. and Uvex Safety (incorporated by reference to Exhibit 10(k) of the Company's Registration Statement)
37 39
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ----------- ------------------------------------------------------------------------------ 10(s) -- License Agreement dated June 1, 1986 between Uvex Winter Optik GmbH and Uvex Winter Optical, Inc., as amended by a First Amendment dated October 31, 1994 (incorporated by reference to Exhibit 10(l) of the Company's Registration Statement) 10(t) -- License Agreement dated July 1, 1992 between Uvex Winter Optik GmbH and Uvex Winter Optical, Inc., as amended by a First Amendment dated October 31, 1994 (incorporated by reference to Exhibit 10(m) of the Company's Registration Statement) 10(u) -- Cooperation Agreement among Uvex Safety, Laservision GmbH, Uvex Winter Optik GmbH and Rupp & Hubrach KG dated March 18, 1991 (incorporated by reference to Exhibit 10(n) of the Company's Registration Statement) 10(v) -- Lease Agreement between Uvex Winter Optical, Inc. and Uvex Safety, LLC dated April 15, 1993, as amended by a First Amendment to Lease Agreement dated as of July 31, 1994, as further amended by a Second Amendment to Lease Agreement dated as of October 31, 1994, and as further amended by a Third Amendment to Lease Agreement dated July 14, 1995 (incorporated by reference to Exhibit 10(o) of the Company's Registration Statement) 10(w) -- Sales Agreement dated February 3, 1997 by and between Uvex Safety and General Electric Company 10(x) -- 1996 Non-Employee Director Stock Option Plan dated August 1, 1996 10(y)* -- Bonus Plan for Executives of Titmus Optical, Inc. and Uvex Safety, Inc. for 1996 and 1997 (incorporated by reference to Exhibit 10(f) of the Company's Form 10-Q filed November 14, 1996) 11 -- Statement Re: Computation of Per Share Earnings 21 -- Subsidiaries of the Company 23 -- Accountants' Consent 27 -- Financial Data Schedule
- --------------- * Management contract or compensatory plan or arrangement (b) Reports on Form 8-K None. 38 40 ITEM 14(a) 2. FINANCIAL STATEMENT SCHEDULES FINANCIAL STATEMENT SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS ------------------------------------------ BALANCE BALANCE AT CHARGED TO CHARGED TO AT BEGINNING OF COST AND OTHER END OF DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS(1) PERIOD - -------------------------------- ------------ ---------- ---------- ------------- -------- Bad debt allowance Year ended July 31, 1994........ $ 28,000 $245,260 -- $ 11,260 $262,000 Year ended July 31, 1995........ 262,000 114,865 $ 50,000(2) 31,865 395,000 Five months ended December 31, 1995.......................... 395,000 158,671 222,585(3) 119,511 656,745 Year ended December 31, 1996.... 656,745 290,761 -- 155,975 791,531
- --------------- (1) Deductions consist of uncollectible accounts charged-off during the period, net of recoveries. (2) Represents the beginning bad debt allowance of Pro-Tech. (3) Represents the beginning bad debt allowance of Titmus. All other schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable or not material and therefore have been omitted. 39 41 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Bacou USA, Inc. and Subsidiaries Under date of February 14, 1997, we reported on the consolidated balance sheets of Bacou USA, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for the fiscal year ended December 31, 1996, for the five months ended December 31, 1995, and for the fiscal years ended July 31, 1995 and 1994, as contained in the annual report on Form 10-K for the year 1996. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule listed in Item 14(a)2. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG PEAT MARWICK LLP Providence, Rhode Island February 14, 1997 40 42 SIGNATURES Pursuant to the requirements of Section 13 or 15(a) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Smithfield, State of Rhode Island, on this 27th day of March, 1997. BACOU USA, INC. /s/ PHILIP B. BARR By: ................................ PHILIP B. BARR EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 27, 1997.
SIGNATURE TITLE - ------------------------------------------ ------------------------------------------ /s/ WALTER STEPAN Vice Chairman, President, Chief Executive ........................................ Officer, Director WALTER STEPAN /s/ PHILIP B. BARR Executive Vice President, Chief Financial ........................................ Officer, Treasurer and Secretary, Director PHILIP B. BARR /s/ JEFFREY T. BROWN Corporate Controller and Chief Accounting ........................................ Officer JEFFREY T. BROWN /s/ PHILIPPE BACOU Chairman of the Board, Director ........................................ PHILIPPE BACOU /s/ CHRISTOPHE BACOU Director ........................................ CHRISTOPHE BACOU /s/ KARL F. ERICSON Director ........................................ KARL F. ERICSON /s/ HERBERT A. WERTHEIM Director ........................................ HERBERT A. WERTHEIM
41 EX-4.(E) 2 LOAN MODIFICATION AGREEMENT 1 EXHIBIT 4(e) [LOGO] CITIZENS BANK LOAN MODIFICATION AGREEMENT ___________________________________________________________________________ CITIZENS TRUST COMPANY, as lender (the "Bank"), and UVEX Safety, Inc. as borrower (the "Borrower"), are parties to a certain Revolving Loan Agreement dated March 7, 1994 (the "Loan Agreement"), and/or a _________ Note dated __________, 19__ (the "Note"), and the following security documents, if any, a security agreement and assignment of leasehold interest, all dated March 7, 1994 (the "Security Documents"). 1. For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Bank and the Borrower hereby agree to modify the Loan Agreement and/or the Note and the Security Documents, all to the extent applicable, to reflect the following modifications (which are checked off and completed if applicable): INTEREST RATE: [ ] Interest shall accrue at such rate per annum calculated daily as shall equal _______ % greater than the fluctuating rate of interest designated by Bank from time to time as its "Prime Rate" of interest, such interest rate to change as and when the Prime Rate changes, but in no event shall the interest rate exceed that allowable under applicable law. Interest shall be computed on the basis of a three hundred sixty (360) day year counting the actual number of days elapsed. [ ] Interest shall accrue at a rate of _______% per annum. Interest shall be computed on the basis of a three hundred sixty (360) day year counting the actual number of days elapsed. PAYMENT TERMS: COMMENCING WITH PAYMENT DUE ______________, 19__: [ ] Principal and interest payments of $_________ per month until the earlier of the final payment date or the date the Loan Agreement/Note is paid in full. [ ] Principal payments of $________ per month plus interest until the earlier of the final payment date or the date the Loan Agreement/Note is paid in full. [ ] Final payment date (if modified): __________________________. OTHER: [X] Revolving Line of Credit continues at a level of Three Million Dollars ($3,000,000.00); maturity date is hereby extended to May 31, 1997; all other terms and conditions remain in full force and effect. PAYMENT EXTENSION/WAIVER: [ ] _________________________ principal payment(s) under the Loan Agreement/Note, now due or to become due, are extended to the date the Loan Agreement/Note matures. Principal payments shall recommence on __________, 19__. Interest shall be paid monthly during the extension period and the final payment date of the Loan Agreement/Note shall not be changed unless noted below. [ ] Final payment date (if modified): ____________________________. 2 2. The Borrower hereby warrants that all of the representations and warranties contained in the Loan Agreement, if any, are true and correct as of the date hereof (except for Borrower's representation with respect to its financial condition, which is accurately reflected on Borrower's most recent financial statements provided to the Bank) and that no Event of Default has occurred and is continuing under the Loan Agreement and/or the Note or the Security Documents or would constitute such an Event of Default but for the requirement that notice be given or time elapse or both. 3. Each of the Loan Agreement and/or the Note and the Security Documents are hereby amended to be consistent with the terms and provisions of this Loan Modification Agreement. All references in the Loan Agreement and/or the Note and the Security Documents to each of the others shall be deemed to refer to such document(s) as amended by this Loan Modification Agreement. 4. Except as modified and amended hereby, the Loan Agreement and/or the Note and the Security Documents remain in full force and effect and are in all other respects hereby ratified and confirmed. Executed under seal this 15th day of January, 1997. UVEX Safety, Inc. By: /s/ W. Stepan ---------------------- W. Stepan, President CITIZENS TRUST COMPANY By: /s/ J. Bruce Hallworth ------------------------- J. Bruce Hallworth Title: Senior Vice President REAFFIRMATION OF GUARANTOR(S) The undersigned, jointly and severally if more than one (collectively the "Guarantor"), has entered into a Guaranty or Guaranties in favor of the Bank dated as of September 28, 1995 (collectively the "Guaranty") wherein the Guarantor has guaranteed the Borrower's obligations under the loan documents described above. In order to induce the Bank to enter into the Loan Modification Agreement set forth above, the Guarantor, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, hereby (a) consents to the execution of this Loan Modification Agreement by the Borrower, and (b) agrees and confirms that the Guaranty remains in full force and effect with respect to the Loan Agreement and/or the Note and the Security Documents, as amended above. Executed under seal this 15th day of January, 1997. BACOU USA, INC. By: /s/ W. Stepan -------------------- W. Stepan, President EX-10.(T) 3 EMPLOYMENT AGREEMENT FOR RICHARD J. MASTERS 1 Exhibit 10.j EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT made as of this 19th day of December, 1996, by and between Richard J. Masters of Chesterfield, Virginia ("Executive") and Titmus Optical, Inc., a corporation organized under the law of Delaware (the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Company wishes to secure the services of Executive as its Vice President-Marketing, for the period provided in this Agreement; and WHEREAS, Executive is willing to enter into this Agreement for such period and on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and Executive hereby agree as follows: 1. EMPLOYMENT. During the period of employment set forth in Section 2 of this Agreement, the Company shall employ Executive, and Executive shall serve as Vice President-Marketing of the Company. Executive agrees to faithfully perform the duties assigned to him to the best of his ability and, except for vacations and periods of temporary illness, to devote his full time and attention to the Company's business. Ancillary employment such as writing, teaching or lecturing as well as the acceptance of honorific titles may be undertaken by the Executive only with the approval of the Chief Executive Officer of the Company (the "CEO"). Executive also agrees that he will not engage in any other business activities without the prior approval of the CEO. Executive may only serve as an officer, director, trustee or committee member, or in any similar position, of a reasonable number (maximum two) trade associations and religious, charitable, educational, civic or other non-business organizations, subject to the approval of the CEO. 2. PERIOD OF EMPLOYMENT. The Executive's employment under this Agreement shall initially cover the period January 1, 1997 to December 31, 1998 (the "Initial Term"). On December 31, 1998, and at the end of each two-year period thereafter, the period of employment shall be automatically extended, without further action by either party, for a two (2) year period (each a "Renewal Term") unless at least six months prior to the end of any such Initial Term or Renewal Term either party shall have served written notice on the other of its intention that the period of employment shall expire at the end of such term. If either party notifies the other party that it shall not extend the period of employment, the Company may, at its option, decide that the Executive shall take a leave-of-absence for part or the total of the six months remaining time of his employment, continuing to receive all compensation as if actively working. If either party chooses not to renew this Agreement, such employment shall terminate on December 31 of the then current year. 2 3. TERMINATION. The period of employment shall be terminated upon the first to occur of the following: (i) The expiration of the period of employment pursuant to Section 2 of this Agreement. (ii) The Executive's death. (iii) The Executive becoming permanently disabled. Permanent disability shall mean physical or mental incapacity of a nature which prevents Executive from performing his duties under this Agreement for a period of more than six months in any twelve month period. (iv) The Executive's employment being terminated by the Company for cause. Termination for cause shall mean termination by action of the Board of Directors of the Company because of the willful failure of Executive to perform his duties and obligations under this Agreement or fails to execute in a reasonable and responsible manner the policies of the Company or gross negligence in the performance of his duties under this Agreement or the commission by Executive of a felony. 4. Compensation and Benefits. ------------------------- (a) During the Employment Period, the Executive shall receive regular compensation (the "Base Salary") at the initial rate per annum of ____________________________ Dollars ($__________) per annum for the period January 1, 1997 through December 31, 1997. The Base Salary shall be payable in arrears less the usual payroll deductions at the same times and in the same manner as salaries paid to other employees. The Executive shall participate in any wage increases applicable generally to the Company's salaried employees. The Base Salary prevailing at any time shall be reviewed annually for a possible increase in each year beginning in 1998. (b) In addition to the Base Salary, the Executive shall be entitled to receive annual incentive compensation payments ("Incentive Compensation"). The bonus for the period January 1, 1997 through December 31, 1997 shall be determined pursuant to the Company's Bonus Plan adopted by the Compensation Committee of Bacou USA, Inc., a copy of which is attached to this Agreement and for subsequent periods pursuant to the then applicable Bonus Plan adopted by Bacou USA, Inc. applicable to Vice Presidents of the Company. (c) Incentive Compensation shall be paid by the Company for the prior fiscal year within ten (10) days after a decision is made by the Board of Directors of the Company as to the amount of such Incentive Compensation, but in any event no later than the earlier of the annual meeting of the Board of Directors of the Company or March 31. (d) The Executive shall be entitled to participate in any stock option plan which Bacou USA, Inc. may adopt for the Company. -2- 3 (e) The Executive shall be entitled to participate in all savings, thrift, retirement or pension, short term and long term disability, health and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday, vacation, and other fringe benefit programs generally available to senior executives of the Company in accordance with and subject to the terms and conditions of such programs. (f) In addition, the Executive shall be entitled to receive the following benefits: (i) The Executive will receive a taxable car allowance of Ten Thousand Dollars ($10,000) per annum. Oil changes and gasoline expenses shall be paid by the Company. All other costs relating to the operation and maintenance of the automobile will be borne by the Executive. The Executive will pay all taxes on the fringe benefit component of these payments. (ii) The Executive shall be entitled to vacation pursuant to the Company's Executive Vacation Policy. For 1997, the Executive shall be entitled to fifteen (15) working days of vacation. Vacation days will be taken at a time convenient for both the Executive and the Company. To the extent the Executive does not take all vacation days the remaining days will be carried forward for an unlimited period or be paid to the Executive at the level of his Base Salary valid for the fiscal year in which vacation days are not taken. (iii) When traveling on Company business, the Executive will be provided coach-class airfare on domestic trips; business class airfare will be provided on international trips. (iv) The Executive is authorized to incur reasonable expenses in connection with and for the promotion of the business of the Company, including expenses for meals and lodging, entertainment, and similar items as required from time to time by the Executive's duties. The Company shall reimburse the Executive for all such expenses upon the presentation of an account therefor, together with appropriate supporting documentation. 5. LIMITATIONS ON AUTHORITY. Except as otherwise provided herein, approval by the CEO must be obtained prior to the Executive taking any of the following actions on behalf of the Company or any of its affiliates: (a) Acquisition or disposition of real property or any rights deriving therefrom, or changing title in any such real property. (b) Making unplanned capital expenditures or any commitment therefore; (c) Borrowing or guaranteeing any borrowings from or on behalf of any party, or altering the terms of any loan agreements for such borrowings except for any such loans or borrowings as shall be agreed upon by the Board of Directors of the Company; (d) Hiring or terminating salaried personnel; -3- 4 (e) Granting retirement benefits or other non-earned income to any individual which is not available to all employees; (f) Modification of the pension plan or other benefit plan, e.g., health insurance; (g) Acquiring the assets or shares of another company or partnership; (h) Acquiring or disposing of the assets or shares of the Company or any of its affiliates; (i) Entering into or terminating agreements of any kind or nature with a monthly financial obligation in excess of U.S. $3,000 for more than six (6) months; (j) Making basic changes in the administration, organization, production, and distribution of the Company or any of its affiliates, as well as closing or curtailing the functions of the Company or any of its affiliates; (k) Filing any lawsuit; (l) Entering into any transaction on behalf of the Company or its affiliates which is not in the usual course of its business; (m) Adoption or modification of the annual budget. Notwithstanding the foregoing, approval is not required for any action provided for in the applicable annual budget or annual plan of the Company and its affiliates. In addition, should the CEO be unavailable, if an emergency arises which requires the Executive to take immediate action in which approval as set forth in this Section would otherwise be required, the Executive is no longer bound by the limitations described above and is authorized to make a decision in the best interests of the Company. The Executive will immediately inform the CEO and President in writing concerning any such decisions made by him. 6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of the Company and its affiliates is of a confidential nature. During the period of the Executive's employment with the Company, the Executive may have received and/or may secure confidential information concerning the Company or any of the Company's affiliates or subsidiaries which, if known to competitors thereof, would damage the Company or its said affiliates or subsidiaries. The Executive agrees that during and after the term of this Agreement he will not (except as authorized by the Company or in the proper performance of his duties or except as ordered by a court or other body of competent jurisdiction or as otherwise required by law), directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party, any secret, proprietary or confidential information or knowledge obtained by him during the term hereof concerning such confidential matters of the Company or its subsidiaries or affiliates, including, but not limited to, information pertaining to trade secrets, systems, manuals, -4- 5 confidential reports, methods, processes, designs, equipment lists, operating procedures, equipment and methods used and preferred by the Company's customers. Upon termination of this Agreement, the Executive shall promptly deliver to the Company all materials of a secret or confidential nature relating to the business of the Company or any of its subsidiaries or affiliates which are, directly or indirectly, in the possession or under the control of the Executive. The provisions of this paragraph shall continue to apply after the Executive ceases to be employed by the Company for a period of three (3) years except in respect of any information or knowledge disclosed to the public, other than through an unauthorized disclosure by the Executive. 7. TRADE SECRETS. The Executive covenants that he shall, while employed by the Company, assign, transfer, and set over to the Company or its designee all right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, trademarks, trademark applications, copyrights, copyright registrations, discoveries and/or other developments (hereinafter "Inventions") which he may, thereafter, alone or in conjunction with others, during or outside normal working hours, conceive, make, acquire or suggest at any time which relate to the products, processes, work, research, or other activities of the Company or any of its subsidiaries or affiliates. Any and all Inventions which are of a proprietary nature and which the Executive may conceive, may acquire or suggest, either alone or in conjunction with others, during his employment with the Company (whether during or outside normal working hours) relating to or in any way pertaining to or connected with the Company's business, shall be the sole and exclusive property of the Company or its designee and the Executive, whenever requested to do so by the Company, shall, without further compensation or consideration properly execute any and all applications, assignments or other documents which the Company or its designee shall deem necessary in order to apply for and obtain Letters Patent of the United States and/or comparable rights afforded by foreign countries for the Inventions, or in order to assign and convey to the Company or its designee the sole and exclusive right, title and interest in and to the Inventions. This obligation shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by the Executive during the term of his employment by the Company, and shall be binding upon his assigns, executors, administrators, and other legal representatives. 8. NON-COMPETITION. (a) During the term of this Agreement or any renewal thereof and, at the Company's option for a period of up to one year thereafter, should the Executive's contract be terminated or not be renewed, the Executive agrees that he will not within the geographical area of the United States, engage, either directly or indirectly, individually or as an owner, partner, joint venturer, employee, officer, director, stockholder, consultant, independent contractor or lender of or to any corporation, holding company or other business entity which is in a business similar to that of the Company or any of its affiliates. In the event that the Company chooses to exercise its option to prevent the Executive from competing with the Company following termination or non-renewal of his employment, the Company shall notify the Executive in writing within two (2) weeks following his last day of employment or within two (2) weeks of notice by the Company of its decision that the Executive shall take a leave-of-absence, in either case specifying the period of up to one year following termination, resignation, or non-renewal of employment during which such competitive activity shall be prohibited. In the event the Company exercises its option, the Company shall continue to pay Executive his Base Salary at the time of -5- 6 termination, resignation or non-renewal for the period during which the Executive is prohibited from competition with the Company. Notwithstanding the foregoing, the Executive (as hereinbefore described in Section 2(d)) may own five (5%) percent of the securities of any business in competition with the business of the Company or any of its affiliates, which securities are regularly traded on a public exchange, provided that any such ownership shall not result in the Executive becoming a record or beneficial owner at any time of more than five (5%) percent of equity securities of said business entity. (b) The Executive shall not during the term of his Employment under this Agreement or any renewal thereof, and for a period of one (1) year thereafter, employ, retain or arrange to have any other person or entity employ or retain any person who was employed by the Company or any of its affiliated companies having an annual compensation of at least U.S. $50,000 per annum during the term of this Agreement or any renewal thereof. (c) If any provision of this Section is held to be unenforceable because of the scope, duration or area of its applicability or otherwise, the legal entity making that determination will have the power to modify the scope, duration or area, or all of them, and the provision will then apply in its modified form. 9. PROPERTY. All letters, memoranda, documents, business notes (including all copies thereof) and other information contained on any other computer media including computer disks and hard drives of the Executive in any manner relating to the duties of Executive under this agreement are the property of the Company. 10. NOTICES. Any notice to be given to Executive by the Company under this Agreement shall be deemed to have been given by the Company and received by Executive if and when it is hand delivered to Executive, or it is sent by registered or certified mail to Executive at his home address or transmitted by facsimile transmission ("FAX"). Any notice to be given to the Company by Executive under this Agreement shall be deemed to have been given by Executive and received by the Company if and when it is hand delivered by Executive to the CEO or his designee, it is sent by registered or certified mail, addressed to the CEO of the Company by FAX confirmed in writing mailed to the CEO of the Company. 11. FULL AND COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements. This Agreement may be modified only by a written instrument executed by both parties. 12. CONSTRUCTION. This Agreement shall be construed under the laws of the Commonwealth of Virginia. 13. ARBITRATION. Notwithstanding the fact that the parties shall be entitled to equitable relief in order to enforce certain provisions hereunder (e.g., temporary restraining orders or injunctive relief), any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the "Commercial Arbitration -6- 7 Rules" of the American Arbitration Association in effect on the date of this Agreement, except as varied below. The site of any such arbitration shall be Providence, Rhode Island and any award shall be deemed to be a Providence, Rhode Island award. There shall be a single arbitrator who shall be admitted to practice law in Rhode Island, with no less than ten (10) years experience in the handling of commercial or corporate matters or disputes. The arbitrator shall render a written decision stating his reasons therefor, and shall render an award within six (6) months of the request for arbitration, and such award shall be final and binding upon both parties. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow. The substantive law to be applied to any case determined pursuant to this Section 13 is that of State of Rhode Island. The expense of arbitration shall be borne by the respective parties except to the extent that the arbitrators shall determine that the entire expense shall be borne by a single party. IN WITNESS WHEREOF, the Company and the Executive have duly executed this Agreement as of the day and year first written above. TITMUS OPTICAL, INC. By: /s/ Walter Stepan ------------------------------------ Walter Stepan, Chairman EXECUTIVE: /s/ Richard J. Masters - --------------------------------------- -7- EX-10.(S) 4 EMPLOYMENT AGREEMENT FOR MICHAEL MANCUSO 1 EXHIBIT 10(i) EMPLOYMENT AGREEMENT THIS AGREEMENT ("Agreement") made as of this 31st day of December, 1996, by and among Michael Mancuso of North Kingstown, Rhode Island ("Executive"), Titmus Optical, Inc., a corporation organized under the laws of Delaware ("Titmus") and Bacou USA, Inc., a corporation organized under the laws of Delaware ("Bacou"). W I T N E S S E T H : WHEREAS, Executive and Bacou are parties to that certain Consulting Agreement dated November 1, 1996 (the "Consulting Agreement"); and WHEREAS, Titmus wishes to secure the services of Executive as its President and CEO for the period provided in this Agreement; and WHEREAS, Titmus is a wholly-owned subsidiary of Bacou; and WHEREAS, Bacou is willing to release Executive from the Consulting Agreement subject to his acceptance of this Agreement; and WHEREAS, Executive is willing to enter into this Agreement for such period and on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Titmus and Executive hereby agree as follows: 1. Employment. During the period of employment set forth in Section 2 of this Agreement, Titmus shall employ Executive, and Executive shall serve as President and CEO of Titmus; provided, however, that Bacou shall have the right to direct Executive to serve as an officer of Bacou or any of its affiliates pursuant to the provisions of Section 14 hereof. Executive agrees to faithfully perform the duties assigned to him to the best of his ability and, except for vacations and periods of temporary illness, to devote his full time and attention to the business of Titmus. Ancillary employment such as writing, teaching or lecturing as well as the acceptance of honorific titles may be undertaken by the Executive only with the approval of the Chief Executive Officer of Bacou (the "CEO"). Executive also agrees that he will not engage in any other business activities without the prior approval of the CEO. Executive may only serve as an officer, director, trustee or committee member, or in any similar position, of a reasonable number (maximum two) of trade associations and religious, charitable, educational, civic or other non-business organizations, subject to the approval of the CEO. The Executive represents and warrants to Titmus that he is now under no contract or agreement except his non-competition agreement with CP Clare Corp. nor will he execute any contract or agreement that will in any manner interfere, conflict with or prevent him from performing his duties under the terms and 2 conditions of this Agreement, recognizing that his performance hereunder will require the devotion of his full time and attention during and beyond regular business hours during the Term, including extensive travel. 2. Period of Employment. The Executive's employment under this Agreement shall initially cover the period January 1, 1997 to December 31, 1998 (the "Initial Term"). On December 31, 1998, and at the end of each year thereafter, the period of employment shall be automatically extended, without further action by either party, for successive one-year periods (each a "Renewal Term") subject to the right of either party to terminate this Agreement upon six months' written Notice prior to the end of the Initial Term or any Renewal Term. If either party notifies the other party that it shall not extend the period of employment, Titmus may, at its option, decide that the Executive shall take a leave-of-absence for part or all of the remaining time of his employment, continuing to receive all compensation and benefits as if actively working. 3. Termination. The period of employment shall be terminated upon the first to occur of the following: (i) The expiration of the period of employment pursuant to Section 2 of this Agreement. (ii) The Executive's death. (iii) The Executive becoming permanently disabled. Permanent disability shall mean physical or mental incapacity of a nature which prevents Executive from performing his duties under this Agreement for a period of more than six months in any twelve month period. (iv) The Executive's employment being terminated by Titmus for cause. Termination for cause shall mean termination by action of the Board of Directors of Titmus because of the willful failure of Executive to perform his duties and obligations under this Agreement or fails to execute in a reasonable and responsible manner the policies of Titmus or gross negligence in the performance of his duties under this Agreement or the commission by Executive of a felony. 4. Compensation and Benefits. (a) During the Employment Period, the Executive shall receive regular compensation (the "Base Salary") at the initial rate per annum of One Hundred Eighty Thousand Dollars ($180,000.00) per annum for the period January 1, 1997 through December 31, 1998. The Base Salary shall be payable in arrears less the usual payroll deductions at the same times and in the same manner as salaries paid to other employees. The Executive shall participate in any wage increases applicable generally to salaried employees of Titmus. The Base Salary prevailing at any time shall be reviewed annually for a possible increase beginning in 1998. 2 3 (b) In addition to the Base Salary, the Executive shall be entitled to receive annual incentive compensation payments ("Incentive Compensation") at such times and in such amounts as may be determined in the discretion of the Board of Directors of Titmus. If Executive remains employed as the President and CEO of Titmus through December 31, 1997, then his Incentive Compensation for the period January 1, 1997 through December 31, 1997 shall be determined pursuant to the Bonus Plan for 1997 as adopted by the Compensation Committee of Bacou USA, Inc., a copy of which is attached hereto as Exhibit A; provided, however, that the maximum bonus level of 50 percent of Base Salary provided by criteria 1-3 of such Plan shall be achieved for 1997 if the Operating Profit of Bacou reaches 20 percent of Net Sales for 1997. (c) Incentive Compensation shall be paid by Titmus for the prior fiscal year within ten (10) days after a decision is made by the Board of Directors of Titmus as to the amount of such Incentive Compensation, but in any event no later than the earlier of the annual meeting of the Board of Directors of Titmus or March 31. (d) The Executive shall be entitled to participate in any stock option plan which Titmus USA, Inc. may adopt for Titmus at levels to be determined by the Board of Directors of Titmus in their sole discretion. (e) The Executive shall be entitled to participate in all savings, thrift, retirement or pension, short term and long term disability, health and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday, vacation, and other fringe benefit programs generally available to senior executives of Titmus in accordance with and subject to the terms and conditions of such programs. (f) In addition, the Executive shall be entitled to receive the following benefits: (i) The Executive will receive a taxable car allowance of Ten Thousand Dollars ($10,000) per annum. Oil changes and gasoline expenses shall be paid by Titmus. All other costs relating to the operation and maintenance of the automobile will be borne by the Executive. The Executive will pay all taxes on the fringe benefit component of these payments. (ii) The Executive shall be entitled to vacation pursuant to Titmus' Executive Vacation Policy. For 1997, the Executive shall be entitled to fifteen (15) working days of vacation. Vacation days will be taken at a time convenient for both the Executive and Titmus. To the extent the Executive does not take all vacation days the remaining days will be carried forward for an unlimited period or be paid to the Executive at the level of his Base Salary valid for the fiscal year in which vacation days are not taken. (iii) When traveling on Titmus business, the Executive will be provided coach-class airfare on domestic trips; business class airfare will be provided on international trips. 3 4 (iv) The Executive is authorized to incur reasonable expenses in connection with and for the promotion of the business of Titmus, including expenses for meals and lodging, entertainment, and similar items as required from time to time by the Executive's duties. Titmus shall reimburse the Executive for all such expenses upon the presentation of an account therefor, together with appropriate supporting documentation. 5. Limitations on Authority. Pursuant to the Bylaws of Titmus, the Executive and the Chairman of the Board of Directors or his designee shall constitute the Executive Committee of the Board. Except as otherwise provided herein, approval by the Chairman of the Board of Directors or his designee must be obtained prior to the Executive taking any of the following actions on behalf of Bacou or any of its affiliates: (a) Acquisition or disposition of real property or any rights deriving therefrom, or changing title in any such real property. (b) Making unplanned capital expenditures or any commitment therefore in an amount greater than $5,000 for any individual expenditure and $50,000 in the aggregate in any fiscal year; (c) Borrowing or guaranteeing any borrowings from or on behalf of any party, or altering the terms of any loan agreements for such borrowings except for any such loans or borrowings as shall be agreed upon by the Board; (d) Hiring or terminating executive personnel with annual salary in excess of $50,000; (e) Granting retirement benefits or other non-earned income to any individual which is not available to all employees; (f) Modification of the pension plan or other benefit plan, e.g., health insurance; (g) Acquiring the assets or shares of another company or partnership; (h) Acquiring or disposing of the assets or shares of Titmus or any of its affiliates; (i) Entering into or terminating agreements of any kind or nature with a monthly financial obligation in excess of U.S. $5,000 for more than six (6) months; (j) Making basic changes in the administration, organization, production, and distribution of Titmus or any of its affiliates, as well as closing or curtailing the functions of Titmus or any of its affiliates; 4 5 (k) Filing any lawsuit; (l) Making cash or non-cash corporate contributions above the annually budgeted amount; (m) When there is a large volume of sales, the making of decisions requiring both extraordinary risks and extraordinary expenditures; (n) Entering into any transaction on behalf of Titmus or its affiliates which is not in the usual course of its business; (o) Adoption or modification of the annual budget. Notwithstanding the foregoing, approval is not required for any action provided for in the applicable annual budget or annual plan of Titmus and its affiliates. In addition, should the Chairman of Titmus and his designee be unavailable, if an emergency arises which requires the Executive to take immediate action in which approval as set forth in this Section would otherwise be required, the Executive is no longer bound by the limitations described above and is authorized to make a decision in the best interests of Titmus. The Executive will immediately inform the Chairman of the Board of Titmus of any such decisions made by him. 6. Non-Disclosure of Information. It is understood that the business of Titmus and its affiliates is of a confidential nature. During the period of the Executive's employment with Titmus, the Executive may have received and/or may secure confidential information concerning Titmus or any of Titmus' affiliates or subsidiaries which, if known to competitors thereof, would damage Titmus or its said affiliates or subsidiaries. The Executive agrees that during and after the term of this Agreement he will not (except as authorized by Titmus or in the proper performance of his duties or except as ordered by a court or other body of competent jurisdiction or as otherwise required by law), directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party, any secret, proprietary or confidential information or knowledge obtained by him during the term hereof concerning such confidential matters of Titmus or its subsidiaries or affiliates, including, but not limited to, information pertaining to trade secrets, systems, manuals, confidential reports, methods, processes, designs, equipment lists, operating procedures, equipment and methods used and preferred by Titmus' customers. Upon termination of this Agreement, the Executive shall promptly deliver to Titmus all materials of a secret or confidential nature relating to the business of Titmus or any of its subsidiaries or affiliates which are, directly or indirectly, in the possession or under the control of the Executive. The provisions of this paragraph shall continue to apply after the Executive ceases to be employed by Titmus for a period of three (3) years except in respect of any information or knowledge disclosed to the public, other than through an unauthorized disclosure by the Executive. 7. Trade Secrets. The Executive covenants that he shall, while employed by Titmus, assign, transfer, and set over to Titmus or its designee all right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, 5 6 trademarks, trademark applications, copyrights, copyright registrations, discoveries and/or other developments (hereinafter "Inventions") which he may, thereafter, alone or in conjunction with others, during or outside normal working hours, conceive, make, acquire or suggest at any time which relate to the products, processes, work, research, or other activities of Titmus or any of its subsidiaries or affiliates. Any and all Inventions which are of a proprietary nature and which the Executive may conceive, may acquire or suggest, either alone or in conjunction with others, during his employment with Titmus (whether during or outside normal working hours) relating to or in any way pertaining to or connected with Titmus' business, shall be the sole and exclusive property of Titmus or its designee and the Executive, whenever requested to do so by Titmus, shall, without further compensation or consideration properly execute any and all applications, assignments or other documents which Titmus or its designee shall deem necessary in order to apply for and obtain Letters Patent of the United States and/or comparable rights afforded by foreign countries for the Inventions, or in order to assign and convey to Titmus or its designee the sole and exclusive right, title and interest in and to the Inventions. This obligation shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by the Executive during the term of his employment by Titmus, and shall be binding upon his assigns, executors, administrators, and other legal representatives. 8. Non-Competition. (a) During the term of this Agreement or any renewal thereof and, at Titmus' option for a period of up to one year thereafter, should the Executive's contract be terminated or not be renewed, the Executive agrees that he will not within the geographical area of the United States, engage, either directly or indirectly, individually or as an owner, partner, joint venturer, employee, officer, director, stockholder, consultant, independent contractor or lender of or to any corporation, holding Titmus or other business entity which is in a business similar to that of Titmus or any of its affiliates. In the event that Titmus chooses to exercise its option to prevent the Executive from competing with Titmus following termination or non-renewal of his employment, Titmus shall notify the Executive in writing within two (2) weeks following his last day of employment or within two (2) weeks of notice by Titmus of its decision that the Executive shall take a leave-of-absence, in either case specifying the period of up to one year following termination, resignation, or non-renewal of employment during which such competitive activity shall be prohibited. In the event Titmus exercises its option, Titmus shall continue to pay Executive his Base Salary at the time of termination, resignation or non-renewal for the period during which the Executive is prohibited from competition with Titmus. Notwithstanding the foregoing, the Executive (as hereinbefore described in Section 2(d)) may own five (5%) percent of the securities of any business in competition with the business of Titmus or any of its affiliates, which securities are regularly traded on a public exchange, provided that any such ownership shall not result in the Executive becoming a record or beneficial owner at any time of more than five (5%) percent of equity securities of said business entity. (b) The Executive shall not during the term of his Employment under this Agreement or any renewal thereof, and for a period of one (1) year thereafter, employ, retain or arrange to have any other person or entity employ or retain any person who was employed by Titmus or any of its affiliated companies having an annual compensation of at least U.S. $50,000 per annum during the term of this Agreement or any renewal thereof. 6 7 (c) If any provision of this Section is held to be unenforceable because of the scope, duration or area of its applicability or otherwise, the legal entity making that determination will have the power to modify the scope, duration or area, or all of them, and the provision will then apply in its modified form. 9. Property. All letters, memoranda, documents, business notes (including all copies thereof) and other information contained on any other computer media including computer disks and hard drives of the Executive in any manner relating to the duties of Executive under this agreement are the property of Titmus. 10. Notices. Any notices or other communications required to be given pursuant to this Agreement shall be in writing and shall be deemed given: (i) upon delivery, if by hand; (ii) three (3) business days after mailing, if sent by registered or certified mail, postage prepaid, return receipt requested; (iii) one (1) business day after mailing, if sent via overnight courier; or (iv) upon transmission, if sent by telex or facsimile except that if such notice or other communication is received by telex or facsimile after 5:00 p.m. on a business day at the place of receipt, it shall be effective as of the following business day. All notices and other communications hereunder shall be given as follows: (a) If to the Company, to it at: Bacou USA, Inc. 100 Thurber Boulevard Smithfield, RI 02917 Attention: President Telephone No.: (401) 232-1200 Telecopier No.: (401) 232-2230 with a copy to Edwards & Angell 2700 Hospital Trust Tower Providence, Rhode Island 02903 Attention: Susan A. Keller, Esq. Telephone No.: (401) 274-9200 Telecopier No.: (401) 276-6611 [Remainder of this page is intentionally left blank] 7 8 (b) If to the Executive, to him at: 21 Coriander Lane North Kingstown, RI 02852 Telephone No.: (401) 884-0321 Telecopier No.: (401) 886-6044 with a copy to: Dean G. Robinson, Esq. Suite 305 - Summit West 300 Centerville Road Warwick, Rhode Island 02886 Telephone No.: (401) 738-6500 Telecopier No.: (401) 732-0139 Any person may change the address for receiving notice by written notice given to the other persons above in the manner provided above. 11. Full and Complete Agreement; Amendment. This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements. This Agreement may be modified only by a written instrument executed by both parties. 12. Construction. This Agreement shall be construed under the laws of the State of Rhode Island. 13. Arbitration. Notwithstanding the fact that the parties shall be entitled to equitable relief in order to enforce certain provisions hereunder (e.g., temporary restraining orders or injunctive relief), any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the "Commercial Arbitration Rules" of the American Arbitration Association in effect on the date of this Agreement, except as varied below. The site of any such arbitration shall be Providence, Rhode Island and any award shall be deemed to be a Providence, Rhode Island award. There shall be a single arbitrator who shall be admitted to practice law in Rhode Island, with no less than ten (10) years experience in the handling of commercial or corporate matters or disputes. The arbitrator shall render a written decision stating his reasons therefor, and shall render an award within six (6) months of the request for arbitration, and such award shall be final and binding upon both parties. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow. The substantive law to be applied to any case determined pursuant to this Section 13 is that of State of Rhode Island. The expense of arbitration shall be borne by the respective parties except to the extent that the arbitrators shall determine that the entire expense shall be borne by a single party. 8 9 14. Binding Nature. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns. Effective on or after January 1, 1998, Titmus and its assignees shall have the right to assign this Agreement to Bacou or any of its affiliates in connection with a new position for Executive during the remaining term of this Agreement. In the event of such an assignment, Executive hereby agrees to resign his then current offices and positions and to accept such title and job as may be associated with the new position. Except for the revision of the applicable Company name and Executive's title and job description, the terms and conditions of this Agreement will remain in full force and effect for any such new position. IN WITNESS WHEREOF, Bacou, Titmus and the Executive have duly executed this Agreement as of the day and year first written above. BACOU USA, INC. TITMUS OPTICAL, INC. By: /s/ Philip B. Barr By: /s/ W. Stepan ---------------------------------------- ------------------------------ Philip B. Barr, Executive Vice President Walter Stepan, Chairman and Chief Financial Officer EXECUTIVE: /s/ Michael Mancuso - --------------------------------------- Michael Mancuso 9 EX-11 5 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 Bacou USA, Inc. Statement Re: Computation of Per Share Earnings Year Ended December 31, 1996 (1)
Primary: Weighted average shares outstanding 16,406,022 Net effect of dilutive stock options based on the treasury stock method using the average market price 30,103 ----------- Total 16,436,125 =========== Net income $19,376,833 =========== Per share amount $ 1.18 =========== Fully Diluted: Weighted average shares outstanding 16,406,879 Net effect of dilutive stock options based on the treasury stock method using the greater of average or period end market price 30,103 ----------- Total 16,436,982 =========== Net income $19,376,833 =========== Per share amount $ 1.18 ===========
(1) The Company had no common stock equivalents or other potentially dilutive securities for any period prior to 1996 and therefore has only presented a computation of per share earnings for the year ended December 31, 1996. EX-21 6 SUBSIDARIES OF THE COMPANY 1 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY SUBSIDIARY STATE OF INCORPORATION ---------- ---------------------- (1) Uvex Safety, Inc. Rhode Island (2) Titmus Optical, Inc. Delaware (3) Pro-Tech Respirators, Inc. Rhode Island (4) Bacou USA Finance, Inc. Minnesota (5) Bacou Foreign Sales Corporation U.S. Virgin Islands EX-23 7 ACCOUNTANTS CONSENT 1 EXHIBIT 23 ACCOUNTANTS' CONSENT The Board of Directors and Stockholders Bacou USA, Inc. and Subsidiaries We consent to incorporation by reference in the registration statement (333-09251) on Form S-8 of Bacou USA, Inc. of our reports dated February 14, 1997, relating to the consolidated balance sheets of Bacou USA, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for the fiscal year ended December 31, 1996, for the five months ended December 31, 1995, and for the fiscal years ended July 31, 1995 and 1994, and the related schedule, which reports appear in the December 31, 1996 annual report on Form 10-K of Bacou USA, Inc. KPMG PEAT MARWICK LLP Providence, Rhode Island March 26, 1997 EX-10.(H)(1) 8 EMPLOYMENT AGREEMENT FOR EDWARD E. GREEN 1 EXHIBIT 10(h)(1) EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT, made this 1st day of October, 1995, by and between EDWARD E. GREENE ("Executive") and Titmus Optical, Inc., a corporation organized under the law of Delaware (the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, Executive is now President of the Company; WHEREAS, the Company wishes to secure the services of Executive as its President and Chief Executive Officer for the period provided in this Agreement; and WHEREAS, Executive is willing to enter into this Agreement for such period and on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and Executive hereby agree as follows: 1. EMPLOYMENT. During the period of employment set forth in Section 2 of this Agreement, the Company shall employ Executive, and Executive shall serve as President of the Company. Executive agrees, subject to his election from time to time as such, to serve as a director of the Company. Executive agrees to faithfully perform the duties assigned to him to the best of his ability and, except for vacations and periods of temporary illness, to devote his full time and attention to the Company's business. Ancillary employment such as writing, teaching or lecturing as well as the acceptance of honorific titles may be undertaken by the Executive only with the approval of the Chairman of the Board of Directors of the Company. Executive also agrees that he will not engage in any other business activities without the prior approval of the Chairman of the Board of Directors. Executive may only serve on a reasonable number (maximum four) of boards of directors and as an officer, director, trustee or committee member, or in any similar position, of a reasonable number of trade associations and religious, charitable, educational, civic or other non-business organizations. 2. PERIOD OF EMPLOYMENT. The Executive's employment under this Agreement shall initially cover the period October 1, 1995 to December 31, 1997. On January 1, 1998, and at the end of each two year period thereafter, the period of employment shall be automatically extended, without further action by either party, for a two year period beginning on January 1st unless six months prior to any such January 1st either party shall have served written notice on the other of its intention that the period of employment shall expire on December 31, 1997 or December 31st of the second year of any two-year period. If the Company notifies Executive that it shall not extend the period of employment, the Company may, at its option, decide that the Executive shall take a leave-of-absence for part or the total of the six months remaining time of his employment, continuing to receive all compensation as if actively working. 2 3. TERMINATION. The period of employment shall be terminated upon the first to occur of the following: (i) The expiration of the period of employment pursuant to Section 2 of this Agreement. (ii) The Executive's death. (iii) The Executive becoming permanently disabled. Permanent disability shall mean physical or mental incapacity of a nature which prevents Executive from performing his duties under this Agreement for a period of more than six months in any twelve month period. (iv) The Executive's employment being terminated by the Company for cause. Termination for cause shall mean termination by action of the Board of Directors of the Company because of the willful failure of Executive to perform his duties and obligations under this Agreement or fails to execute in a reasonable and responsible manner the policies of the Company or gross negligence in the performance of his duties under this Agreement or the commission by Executive of a felony. (v) The Executive or the Company has served written notice 6 months in advance to the other party of its intention to terminate Executive's employment on any December 31st of any year following the one in which Executive has completed his 61st birthday. (vi) The Executive notifies the Company that he is terminating his employment. 4. Compensation and Benefits. ------------------------- (a) During the Employment Period, the Executive shall receive regular compensation (the "Base Salary") at the initial rate per annum of One Hundred Eighty Thousand Dollars ($180,000) per annum for the period October 1, 1995 through December 31, 1996. The Base Salary shall be payable in arrears less the usual payroll deductions at the same times and in the same manner as salaries paid to other employees. The Base Salary prevailing at any time shall be reviewed annually on January 1 of each year beginning in 1997. (b) In addition to the Base Salary, the Executive shall be entitled to receive annual incentive compensation payments ("Incentive Compensation"). The bonus for the period October 1, 1995 through December 31, 1995 shall be fixed at Twenty Thousand Dollars ($20,000). The bonus for the period January 1, 1996 through December 31, 1996 shall be determined pursuant to a plan to be communicated to Executive by December 31, 1995 which shall provide a bonus opportunity determined on the basis of continuous improvement in the 2 3 profitability of the Company and ranging from fifteen percent (15%) to fifty percent (50%) of Base Salary. The parameters for the bonus calculation shall always be valid for the term of this Agreement. Incentive Compensation shall be paid by the Company for the prior fiscal year within ten (10) days after a decision is made by the Board as to the amount of such Incentive Compensation, but in any event no later than the earlier of the annual meeting of the Board or March 31. (d) The Executive shall be entitled to participate in any stock option plan which the Bacou USA, Inc. may adopt. (e) The Executive shall be entitled to participate in all savings, thrift, retirement or pension, short term and long term disability, health and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday, vacation, and other fringe benefit programs generally available to senior executives of the Company in accordance with and subject to the terms and conditions of such programs. (f) In addition, the Executive shall be entitled to receive the following benefits: (i) The Executive will receive a taxable car allowance of Ten Thousand Dollars ($10,000) per annum. Oil changes and gasoline expenses shall be paid by the Company. All other costs relating to the operation and maintenance of the automobile will be borne by the Executive. The Executive will pay all taxes on the fringe benefit component of these payments. (ii) The Executive will receive eighteen (18) days of vacation per annum. Vacation days will be taken at a time convenient for both the Executive and the Company. To the extent the Executive does not take all vacation days the remaining days will be carried forward for an unlimited period or be paid to the Executive at the level of his Base Salary valid for the fiscal year in which vacation days are not taken. (iii) When traveling on Company business, the Executive will be provided coach-class airfare on domestic trips; business class airfare will be provided on international trips. (iv) The Executive is authorized to incur reasonable expenses in connection with and for the promotion of the business of the Company, including expenses for meals and lodging, entertainment, and similar items as required from time to time by the Executive's duties. The Company shall reimburse the Executive for all such expenses upon the presentation of an account therefor, together with appropriate supporting documentation. 5. LIMITATIONS ON AUTHORITY. Pursuant to the Bylaws of the Company, the Executive and the Chairman of the Board of Directors or his designee shall constitute the Executive Committee of the Board. Except as otherwise provided herein, approval by the Chairman of the Board of Directors or his designee must be obtained prior to the Executive taking any of the following actions on behalf of the Company or any of its affiliates: 3 4 (a) Acquisition or disposition of real property or any rights deriving therefrom, or changing title in any such real property. (b) Making unplanned capital expenditures or any commitment therefore; (c) Borrowing or guaranteeing any borrowings from or on behalf of any party, or altering the terms of any loan agreements for such borrowings except for any such loans or borrowings as shall be agreed upon by the Board; (d) Hiring or terminating executive personnel with annual salary in excess of $50,000; (e) Granting retirement benefits or other non-earned income to any individual which is not available to all employees; (f) Modification of the pension plan or other benefit plan, e.g., health insurance; (g) Acquiring the assets or shares of another company or partnership; (h) Acquiring or disposing of the assets or shares of the Company or any of its affiliates; (i) Entering into or terminating agreements of any kind or nature with a monthly financial obligation in excess of U.S.$5,000 for more than six (6) months; (j) Making basic changes in the administration, organization, production, and distribution of the Company or any of its affiliates, as well as closing or curtailing the functions of the Company or any of its affiliates; (k) Filing any lawsuit; (l) Making cash or non-cash corporate contributions above the annually budgeted amount; (m) When there is a large volume of sales, the making of decisions requiring both extraordinary risks and extraordinary expenditures; (n) Entering into any transaction on behalf of the Company or its affiliates which is not in the usual course of its business; (o) Adoption or modification of the annual budget. 4 5 Notwithstanding the foregoing, approval is not required for any action provided for in the applicable annual budget or annual plan of the Company and its affiliates. In addition, should the Chairman of the Company and his designed be unavailable, if an emergency arises which requires the Executive to take immediate action in which approval as set forth in this Section would otherwise be required, the Executive is no longer bound by the limitations described above and is authorized to make a decision in the best interests of the Company. The Executive will immediately inform the Chairman of the Board of the Company of any such decisions made by him. 6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of the Company and its affiliates is of a confidential nature. During the period of the Executive's employment with the Company, the Executive may have received and/or may secure confidential information concerning the Company or any of the Company's affiliates or subsidiaries which, if known to competitors thereof, would damage the Company or its said affiliates or subsidiaries. The Executive agrees that during and after the term of this Agreement he will not (except as authorized by the Company or in the proper performance of his duties or except as ordered by a court or other body of competent jurisdiction or as otherwise required by law), directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party, any secret, proprietary or confidential information or knowledge obtained by him during the term hereof concerning such confidential matters of the Company or its subsidiaries or affiliates, including, but not limited to, information pertaining to trade secrets, systems, manuals, confidential reports, methods, processes, designs, equipment lists, operating procedures, equipment and methods used and preferred by the Company's customers. Upon termination of this Agreement, the Executive shall promptly deliver to the Company all materials of a secret or confidential nature relating to the business of the Company or any of its subsidiaries or affiliates which are, directly or indirectly, in the possession or under the control of the Executive. The provisions of this paragraph shall continue to apply after the Executive ceases to be employed by the Company for a period of three (3) years except in respect of any information or knowledge disclosed to the public, other than through an unauthorized disclosure by the Executive. 7. TRADE SECRETS. The Executive covenants that he shall, while employed by the Company, assign, transfer, and set over to the Company or its designee all right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, trademarks, trademark applications, copyrights, copyright registrations, discoveries and/or other developments (hereinafter "Inventions") which he may, thereafter, alone or in conjunction with others, during or outside normal working hours, conceive, make, acquire or suggest at any time which relate to the products, processes, work, research, or other activities of the Company or any of its subsidiaries or affiliates. Any and all Inventions which are of a proprietary nature and which the Executive may conceive, may acquire or suggest, either alone or in conjunction with others, during his employment with the Company (whether during or outside normal working hours) relating to or in any way pertaining to or connected with the Company's business, shall be the sole and exclusive property of the Company or its designee and the Executive, whenever requested to do so by the Company, shall, without further compensation or consideration properly execute any and all applications, assignments or other documents which the Company or its designee shall deem necessary in order to apply for and obtain Letters Patent of the United 5 6 States and/or comparable rights afforded by foreign countries for the Inventions, or in order to assign and convey to the Company or its designee the sole and exclusive right, title and interest in and to the Inventions. This obligation shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by the Executive during the term of his employment by the Company, and shall be binding upon his assigns, executors, administrators, and other legal representatives. 8. NON-COMPETITION. (a) During the term of this Agreement or any renewal thereof, and for a period of one year thereafter, should the Executive's contract not be renewed, the Executive agrees that he will not within the geographical area of the United States, engage, either directly or indirectly, individually or as an owner, partner, joint venturer, employee, officer, director, stockholder, consultant, independent contractor or lender of or to any corporation, holding company or other business entity which is in a business similar to that of the Company or any of its affiliates. Notwithstanding the foregoing, the Executive (as hereinbefore described in Section 2(d)) may own five (5%) percent of the securities of any business in competition with the business of the Company or any of its affiliates, which securities are regularly traded on a public exchange, provided that any such ownership shall not result in the Executive becoming a record or beneficial owner at any time of more than five (5%) percent of equity securities of said business entity. (b) The Executive shall not during the term of his Employment under this Agreement or any renewal thereof, and for a period of one (1) year thereafter, employ, retain or arrange to have any other person or entity employ or retain any person who was employed by the Company or any of its affiliated companies having a salary of at least U.S. $50,000 per annum during the term of this Agreement or any renewal thereof. (c) If any provision of this Section is held to be unenforceable because of the scope, duration or area of its applicability or otherwise, the legal entity making that determination will have the power to modify the scope, duration or area, or all of them, and the provision will then apply in its modified form. 9. PROPERTY. All letters, memoranda, documents, business notes (including all copies thereof) and other information contained on any other computer media including computer disks and hard drives of the Executive in any manner relating to the duties of Executive under this agreement are the property of the Company. 10. NOTICES. Any notice to be given to Executive by the Company under this Agreement shall be deemed to have been given by the Company and received by Executive if and when it is hand delivered to Executive, or it is sent by registered or certified mail to Executive at his home address or transmitted by facsimile transmission ("FAX"). Any notice to be given to the Company by Executive under this Agreement shall be deemed to have been given by Executive and received by the Company if and when it is hand delivered by Executive to the Chairman or his designee, it is sent by registered or certified mail, addressed to the Board of Directors of the Company c/o Bacou USA, Attention: President or transmitted by FAX confirmed in writing mailed to the Board of Directors of the Company c/o Bacou USA, Inc., Attention: President. 6 7 11. FULL AND COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements. This Agreement may be modified only by a written instrument executed by both parties. 12. CONSTRUCTION. This Agreement shall be construed under the laws of the Commonwealth of Virginia. 13. ARBITRATION. Notwithstanding the fact that the parties shall be entitled to equitable relief in order to enforce certain provisions hereunder (e.g., temporary restraining orders or injunctive relief), any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the "Commercial Arbitration Rules" of the American Arbitration Association in effect on the date of this Agreement, except as varied below. The situs of any such arbitration shall be Richmond, Virginia and any award shall be deemed to be a Richmond, Virginia award. There shall be a single arbitrator who shall be admitted to practice law in Virginia, with no less than ten (10) years experience in the handling of commercial or corporate matters or disputes. The arbitrator shall render a written decision stating his reasons therefor, and shall render an award within six (6) months of the request for arbitration, and such award shall be final and binding upon both parties. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow. The substantive law to be applied to any case determined pursuant to this Section 13 is that of the Commonwealth of Virginia. The expense of arbitration shall be borne by the respective parties except to the extent that the arbitrators shall determine that the entire expense shall be borne by a single party. IN WITNESS WHEREOF, the Company and the Executive have duly executed this Agreement as of the day and year first written above. TITMUS OPTICAL, INC. By: /s/ Walter Stepan ----------------------- Walter Stepan Chairman EXECUTIVE: /s/ Edward E. Greene --------------------------- Edward E. Greene 7 EX-10.(H)(2) 9 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT TITMUS OPT 1 EXHIBIT 10(h)(2) FIRST AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------------- THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") made as of the 18th day of December, 1996, by and between TITMUS OPTICAL, INC., a Delaware corporation ("Company") and EDWARD E. GREENE (the "Executive"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Company and Executive are parties to that certain Employment Agreement dated as of October 1, 1995 (the "Agreement"); and WHEREAS, effective December 31, 1996, as a result of the resignation of the Executive, he will no longer be President or a Director of the Company; and WHEREAS, as a result of the change in Executive's position with the Company, the Company and Employee desire to reflect the current understanding of the parties; and WHEREAS, Company and Executive intend to amend the Agreement in certain respects set forth herein. NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Effective December 31, 1996, the Agreement is hereby amended to delete all references to Executive's role as President and the duties associated therewith and Executive shall serve in the capacity as an employee of the Company from January 1, 1997 to the Termination Date (as hereinafter defined). Effective immediately, Section 5 of the Agreement is hereby deleted and Executive shall not take any action on behalf of the Company without the prior consent of Walter Stepan or, in his absence, Michael Mancuso. 2. Executive's period of employment in Section 2 of the Agreement shall be amended by deleting it in its entirety and replacing it with the following: "The Executive's employment under this Agreement shall cover the period from the date hereof until the earlier of (i) such date as the Company shall specify in a notice delivered to Executive or (ii) February 28, 1997 (the "Termination Date")." 3. Simultaneously herewith, Executive agrees to execute and deliver to Company, the Employment Termination Agreement and Release, the form of which is attached hereto as EXHIBIT A. 4. As of the Termination Date, the Company agrees to pay to Executive a bonus (the "Bonus") equal to the amount to which Executive would otherwise be entitled for fiscal year 2 1996; provided, however, the Bonus shall be payable only, if in the sole discretion of Walter Stepan, the Executive has cooperated from the date hereof through the Termination Date in a manner that has resulted in a smooth transition for the new President of the Company. 5. On the Termination Date, Executive agrees to execute and deliver to the Company a certificate in the form attached hereto as EXHIBIT B. 6. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. IN WITNESS WHEREOF, the Company and Executive have caused this Amendment to be executed, all as of the day and year first above written. TITMUS OPTICAL, INC. By: /s/ Walter Stepan -------------------------------- Walter Stepan, Chairman /s/ Edward E. Greene -------------------------------- Edward E. Greene -2- EX-10.(H)(3) 10 EMPLOYMENT TERMINATION AGREEMENT FOR TITMUS OPTIC 1 EXHIBIT 4(h)(3) EMPLOYMENT TERMINATION AGREEMENT AND RELEASE -------------------------------------------- TITMUS OPTICAL, INC. (the "Company") and EDWARD E. GREENE ("Greene") hereby agree as follows: 1. The Company accepts Greene's voluntary resignation as an officer and director of the Company effective December 31, 1996. 2. The Company accepts Greene's voluntary resignation as the President and as a Director of the Company effective as of the close of business on December 31, 1996. 3. Greene's employment with the Company shall be terminated on the earlier of (i) receipt by Greene of a notice (the "Termination Notice") from the Company stating the date of termination or (ii) February 28, 1997 (the "Termination Date"). 4. The Company shall continue to provide its current medical and dental coverage for Greene until the Termination Date. Following that date, the Company will respect Greene's rights, if any, to continued medical coverage at his own expense under the Consolidated Omnibus Budget Reconciliation Act (COBRA). 5. The execution of this Agreement shall not be construed as an admission of a violation of any statute or law or breach of any duty or obligation by either the Company or Greene. 6. This Agreement is confidential and shall not be made public by either the Company or Greene except as required by law or if necessary in order to enforce this Agreement. 7. Greene acknowledges that the accommodations made to Greene with respect to his continued employment until the Termination Date and payment provided for in paragraph 3 of this Agreement are greater than any to which he may have otherwise been entitled under any existing Company separation, benefit or compensation policy. In consideration of the foregoing, Greene hereby releases and forever discharges the Company, its present and former officers, employees, agents, partners, subsidiaries, successors and assigns from any and all liabilities, causes of action, debts, claims and demands both in law and in equity known or unknown, fixed or contingent, which he may have or claim to have based upon or in any way related to employment or termination of employment with the Company and hereby covenants not to file a lawsuit or charge to assert such claims. This includes but is not limited to claims arising under federal, state or local laws prohibiting employment discrimination, including specifically the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), or claims growing out of any legal restrictions on the Company's right to terminate its employees. 8. In consideration of the foregoing, from the date hereof forward Greene will not directly or indirectly, (without the Company's prior written consent) use for himself or use for, or disclose to, any party other than the Company, any secrets or confidential information or data regarding the business of the Company or any secret or confidential information or data regarding the costs, uses, -1- 2 methods, applications, customers, agents, trade accounts or suppliers and pertinent information respecting transactions (and prospective transactions relating thereto) of products or services purchased, made, produced, or sold by the Company, or regarding any secret or confidential process, system or other method at any time used, developed or investigated by the Company during Greene's employment by the Company. For purposes of this Agreement, "Confidential Information" means information, not generally known, and proprietary to the Company about the Company's processes and products, including information relating to research, development, financing, manufacture, purchasing, accounting, marketing, advertising, merchandising and selling. In addition, confidential information includes any information disclosed to Greene or obtained by Greene, during the period of his employment which he had a reasonable basis to believe was confidential information, or which was treated at any time and in any manner as confidential information by any employee of the Company. Greene hereby acknowledges receipt of that certain letter from Walter Stepan to Lothar Hartmann of Carl Zeiss, Inc. ("Zeiss") concerning the obligation of Zeiss not to solicit Company salaried employees for employment by Zeiss or its affiliates and not to employ Company salaried employees other than Greene, in both cases for a five-year period. Greene hereby agrees to abide by said letter agreement and not encourage employees of Company to terminate their employment with Company or seek employment with Zeiss or any other company. 9. As soon as practicable following the Termination Notice and in any event prior to the Termination Date, Greene shall promptly return all Company property and deliver to the Company all memoranda, notes, records, plans and other documents (including all copies thereof) made or compiled by, delivered to, or otherwise acquired by Greene concerning costs, uses, methods, designs, applications, suppliers, agents, refiners, or purchasers of products made or sold by the Company. 10. In the event of any violation of the provisions of this Agreement, the Company shall be entitled, in addition to any other rights or remedies which it may have, to maintain an action for damages and permanent injunctive relief and in addition shall be entitled to preliminary injunctive relief, it being agreed that the substantial irreparable damages which the Company would sustain by any such violation are impossible to ascertain in advance. Greene will pay all attorneys' fees required to enforce compliance with the terms of this Agreement, to obtain injunctive relief or damages or to otherwise protect the Company's rights and interests as described in this Agreement. 11. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted. 12. Greene understands that various State and Federal laws prohibit employment discrimination based on age, sex, race, color, national origin, religion, handicap or veteran status. These laws are enforced through the Equal Employment Opportunity Commission (EEOC), Department of Labor and state human rights agencies. Greene acknowledges that he has been advised by the Company to discuss this Agreement with his attorney and has been encouraged to take this Employment Termination Agreement and Release home for up to twenty-one days so that he can thoroughly review and understand the effect of this release before acting on it. -2- 3 13. Greene has carefully read and fully understands all of the provisions of this Termination Agreement and Release which sets forth the entire understanding between him and the Company. This Agreement may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. Greene acknowledges that he has not relied upon any representation or statement, written or oral, not set forth in this document. 14. Greene may revoke his agreement to the terms hereof at any time during the seven-day period immediately following the date of his signature below ("revocation period") by delivering written notice of his revocation to the Company. This Agreement shall become effective upon the expiration of the revocation period. TITMUS OPTICAL, INC. By: /s/ Walter Stepan /s/ Edward E. Greene -------------------------- -------------------------- Walter Stepan, Chairman Edward E. Greene Dated: 12-19-96 Dated: 12-19-96 ------------------------ -------------------- -3- 4 EXHIBIT B --------- CERTIFICATE OF EDWARD E. GREENE ------------------------------- I, Edward E. Greene, do hereby certify, as of the date hereof, as to the following: 1. I have received payment of $_________________, which represents payment in full of a bonus for fiscal year 1996 and is in consideration of my execution and delivery of that certain Termination Agreement and Release (the "Termination and Release"), a copy of which is attached hereto. 2. I do hereby reaffirm all representations and agreements set forth in the Termination and Release and acknowledge all terms thereof. -------------------------------- DATED: ______________, 199_. Edward E. Greene 5 EXHIBIT A EMPLOYMENT TERMINATION AGREEMENT AND RELEASE -------------------------------------------- TITMUS OPTICAL, INC. (the "Company") and EDWARD E. GREENE ("Greene") hereby agree as follows: 1. The Company accepts Greene's voluntary resignation as an officer and director of the Company effective December 31, 1996. 2. The Company accepts Greene's voluntary resignation as the President and as a Director of the Company effective as of the close of business on December 31, 1996. 3. Greene's employment with the Company shall be terminated on the earlier of (i) receipt by Greene of a notice (the "Termination Notice") from the Company stating the date of termination or (ii) February 28, 1997 (the "Termination Date"). 4. The Company shall continue to provide its current medical and dental coverage for Greene until the Termination Date. Following that date, the Company will respect Greene's rights, if any, to continued medical coverage at his own expense under the Consolidated Omnibus Budget Reconciliation Act (COBRA). 5. The execution of this Agreement shall not be construed as an admission of a violation of any statute or law or breach of any duty or obligation by either the Company or Greene. 6. This Agreement is confidential and shall not be made public by either the Company or Greene except as required by law or if necessary in order to enforce this Agreement. 7. Greene acknowledges that the accommodations made to Greene with respect to his continued employment until the Termination Date and payment provided for in paragraph 3 of this Agreement are greater than any to which he may have otherwise been entitled under any existing Company separation, benefit or compensation policy. In consideration of the foregoing, Greene hereby releases and forever discharges the Company, its present and former officers, employees, agents, partners, subsidiaries, successors and assigns from any and all liabilities, causes of action, debts, claims and demands both in law and in equity known or unknown, fixed or contingent, which he may have or claim to have based upon or in any way related to employment or termination of employment with the Company and hereby covenants not to file a lawsuit or charge to assert such claims. This includes but is not limited to claims arising under federal, state or local laws prohibiting employment discrimination, including specifically the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), or claims growing out of any legal restrictions on the Company's right to terminate its employees. 8. In consideration of the foregoing, from the date hereof forward Greene will not directly or indirectly, (without the Company's prior written consent) use for himself or use for, or disclose to, any party other than the Company, any secrets or confidential information or data regarding the business of the Company or any secret or confidential information or data regarding the costs, uses, -1- 6 methods, applications, customers, agents, trade accounts or suppliers and pertinent information respecting transactions (and prospective transactions relating thereto) of products or services purchased, made, produced, or sold by the Company, or regarding any secret or confidential process, system or other method at any time used, developed or investigated by the Company during Greene's employment by the Company. For purposes of this Agreement, "Confidential Information" means information, not generally known, and proprietary to the Company about the Company's processes and products, including information relating to research, development, financing, manufacture, purchasing, accounting, marketing, advertising, merchandising and selling. In addition, confidential information includes any information disclosed to Greene or obtained by Greene, during the period of his employment which he had a reasonable basis to believe was confidential information, or which was treated at any time and in any manner as confidential information by any employee of the Company. Greene hereby acknowledges receipt of that certain letter from Walter Stepan to Lothar Hartmann of Carl Zeiss, Inc. ("Zeiss") concerning the obligation of Zeiss not to solicit Company salaried employees for employment by Zeiss or its affiliates and not to employ Company salaried employees other than Greene, in both cases for a five-year period. Greene hereby agrees to abide by said letter agreement and not encourage employees of Company to terminate their employment with Company or seek employment with Zeiss or any other company. 9. As soon as practicable following the Termination Notice and in any event prior to the Termination Date, Greene shall promptly return all Company property and deliver to the Company all memoranda, notes, records, plans and other documents (including all copies thereof) made or compiled by, delivered to, or otherwise acquired by Greene concerning costs, uses, methods, designs, applications, suppliers, agents, refiners, or purchasers of products made or sold by the Company. 10. In the event of any violation of the provisions of this Agreement, the Company shall be entitled, in addition to any other rights or remedies which it may have, to maintain an action for damages and permanent injunctive relief and in addition shall be entitled to preliminary injunctive relief, it being agreed that the substantial irreparable damages which the Company would sustain by any such violation are impossible to ascertain in advance. Greene will pay all attorneys' fees required to enforce compliance with the terms of this Agreement, to obtain injunctive relief or damages or to otherwise protect the Company's rights and interests as described in this Agreement. 11. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted. 12. Greene understands that various State and Federal laws prohibit employment discrimination based on age, sex, race, color, national origin, religion, handicap or veteran status. These laws are enforced through the Equal Employment Opportunity Commission (EEOC), Department of Labor and state human rights agencies. Greene acknowledges that he has been advised by the Company to discuss this Agreement with his attorney and has been encouraged to take this Employment Termination Agreement and Release home for up to twenty-one days so that he can thoroughly review and understand the effect of this release before acting on it. -2- 7 13. Greene has carefully read and fully understands all of the provisions of this Termination Agreement and Release which sets forth the entire understanding between him and the Company. This Agreement may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. Greene acknowledges that he has not relied upon any representation or statement, written or oral, not set forth in this document. 14. Greene may revoke his agreement to the terms hereof at any time during the seven-day period immediately following the date of his signature below ("revocation period") by delivering written notice of his revocation to the Company. This Agreement shall become effective upon the expiration of the revocation period. TITMUS OPTICAL, INC. By: /s/ Walter Stepan /s/ Edward E. Greene ------------------------------ ----------------------------- Walter Stepan, Chairman Edward E. Greene Dated: December 19, 1996 Dated: December 19, 1996 --------------------------- ---------------------- -3- EX-10.(K)(2) 11 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT TITMUS OPT 1 Exhibit 10.K(2) ---- FIRST AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------------- THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") made as of the 18th day of December, 1996, by and between TITMUS OPTICAL, INC., a Delaware corporation ("Company") and THOMAS J. GOELTZ (the "Executive"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Company and Executive are parties to that certain Employment Agreement dated as of October 1, 1995 (the "Agreement"); and WHEREAS, effective January 1, 1997, executive shall be promoted to Senior Vice President - Sales of the Company; and WHEREAS, as a result of the change in Executive's position with the Company, the Company and Employee desire to reflect the current understanding of the parties; and WHEREAS, Company and Executive intend to amend the Agreement in certain respects set forth herein. NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Effective January 1, 1997, the Agreement is hereby amended to reflect the promotion of Executive and therefore all references to Vice President Sales and Marketing shall be deleted and replaced with the title "Senior Vice President-Sales." 2. Executive's period of employment in Section 2 of the Agreement shall be amended by deleting it in its entirety and replacing it with the following: "The Executive's employment under this Agreement shall cover the period from January 1, 1997 to December 31, 1999 (the "Amended Term"). On January 1, 2000 and at the end of each two-year period thererafter, the period of employment shall be automatically extended, without further action by either party, for a two-year period (each a "Renewal Term"), unless at least six months prior to the last day of the Amended Term or any Renewal Term either party shall have served written notice on the other of its intention that the period of employment shall expire at the conclusion of such Amended Term or Renewal Term." 3. The Base Salary of the Executive in Section 4 of the Agreement is hereby amended by deleting the phrase "One Hundred Twenty Thousand Dollars" and the number "$120,000" and replacing them with the phrase "One Hundered Thirty Five Thousand Dollars" and the number "$135,000," respectively. 2 4. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. IN WITNESS WHEREOF, the Company and Executive have caused this Amendment to be executed, all as of the day and year first above written. TITMUS OPTICAL, INC. By: /s/ Walter Stepan ------------------------------ Walter Stepan, Chairman EXECUTIVE: /s/ Thomas Goeltz ------------------------------- -2- EX-10.(X) 12 1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 1 Exhibit 10(x) BACOU USA, INC. 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN 1. PURPOSE. This Non-Qualified Stock Option Plan, to be known as the 1996 Non- Employee Director Stock Option Plan (hereinafter, this "Plan"), is intended to promote the interests of Bacou USA, Inc. (hereinafter, the "Company") by providing an inducement to obtain and retain the services of qualified persons who are not employees or officers of the Company to serve as members of its Board of Directors (the "Board"). 2. AVAILABLE SHARES. The total number of shares of Common Stock, par value $0.001 per share, of the Company (the "Common Stock") for which options may be granted under this Plan shall not exceed 100,000 shares, subject to adjustment in accordance with paragraph 10 of this Plan. Shares subject to this Plan are authorized but unissued shares or shares that were once issued and subsequently reacquired by the Company. If any options granted under this Plan are surrendered before exercise or lapse without exercise, in whole or in part, the shares reserved therefor shall continue to be available under this Plan. 3. ADMINISTRATION. This Plan shall be administered by the Board or by a committee appointed by the Board (the "Committee"). In the event the Board fails to appoint or refrains from appointing a Committee, the Board shall have all power and authority to administer this Plan. In such event, the word "Committee" wherever used herein shall be deemed to mean the Board. The Committee shall, subject to the provisions of the Plan, have the power to construe this Plan, to determine all questions hereunder, and to adopt and amend such rules and regulations for the administration of this Plan as it may deem desirable. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to this Plan or any option granted under it. 4. AUTOMATIC GRANT OF OPTIONS. Effective as of July 1, 1996, the Company automatically shall grant options to purchase 2,000 shares of Common Stock to each person who is then serving as a member of the Board and who is not an employee of the Company ("Non-Employee Director). Effective as of February 17, 1997, the Committee shall grant options to each Non-Employee Director in such amounts as the Committee, in its sole discretion, shall determine from time to time. This Plan is subject to approval by a majority of the Company's stockholders given by written consent or by voting on such a matter at the first meeting of the stockholders of the Company on or after May 23, 1996. Any options granted pursuant to this Plan prior to such stockholder approval by the Company are valid but subject to that condition. 5. OPTION PRICE. The purchase price of the Common Stock covered by an option granted pursuant to this Plan shall be 100% of the fair market value of such shares when the option is granted. The option price will be subject to adjustment in accordance with the provisions of paragraph 10 of this Plan. For purposes of this Plan, if, at the time an option is granted under 2 the Plan, the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the date such option is granted and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the Nasdaq Stock Market, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the Nasdaq Stock market. If the shares of Common Stock are not traded either over-the-counter or on a national securities exchange at the time that an option is granted under this Plan, "fair market value" shall be deemed to be the fair value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 6. PERIOD OF OPTION. Unless sooner terminated in accordance with the provisions of paragraph 8 of this Plan, an option granted hereunder shall expire on the date which is ten (10) years after the date of grant of the option. 7. (a) VESTING AND EXERCISE OF OPTIONS. Options granted under this Plan shall immediately vest in the optionee and thus become exercisable, subject to stockholder approval described in paragraph 4 of this Plan; provided, however, that options granted in 1996 shall vest on August 1, 1996. (b) NON-TRANSFERABILITY OF OPTIONS. Any option granted pursuant to this Plan shall not be assignable or transferable other than by will or the laws of descent and distribution or pursuant to a domestic relations order and shall be exercisable during the optionee's lifetime only by him or her. 8. TERMINATION OF OPTION RIGHTS. (a) CESSATION OF BOARD MEMBERSHIP. In the event an optionee ceases to be a member of the Board for any reason other than death, permanent disability or as a result of subparagraph (c) hereof, any option or portion thereof which has not been exercised at that time may be exercised by the optionee within 90 days of the date the optionee ceased to be a member of the Board; and all options shall terminate after such 90 days have expired. (b) DEATH OR DISABILITY. In the event that an optionee ceases to be a member of the Board by reason of his or her death or permanent disability, any option granted to such optionee which remains unexercised at that time shall be exercisable by the optionee (or by the optionee's personal representative, heir or legatee, in the event of death) within twelve (12) months of the death or permanent disability and all such options shall terminate after such twelve months have expired. (c) ACTIONS OF THE DIRECTOR. The Committee may, in its sole discretion, in cases involving a serious breach of conduct by an optionee or activity of an optionee in -2- 3 competition with the business of the Company or any of its affiliates or subsidiaries, cancel any option, whether or not vested, in whole or in part. Such cancellation shall be effective as of the date specified by the Committee. Without limitation, activities which shall constitute a serious breach of conduct include: (i) the disclosure or misuse of confidential information or trade secrets; (ii) activities in violation of the Company's policies, including, without limitation, the Company's insider trading policy; (iii) the violation or breach of any material provision in any employment contract or agreement between the optionee and the Company or any of its affiliates or subsidiaries; (iv) engaging in conduct relating to the optionee's employment with the Company or any of its affiliates or subsidiaries for which either criminal or civil penalties may be sought; or (v) engaging in activities which adversely affects or which are inimical, contrary or harmful to the interests of the Company or any of its affiliates or subsidiaries or their respective business operations. The determination of whether an optionee has engaged in a serious breach of conduct or activity in competition with the business of the Company or any of its affiliates or subsidiaries shall be determined by the Committee in good faith and in its sole discretion. 9. EXERCISE OF OPTION. (a) METHOD OF EXERCISE. Subject to the terms and conditions of this Plan and the option agreements, an option granted hereunder shall be exercisable in whole or in part by giving written notice to the Company by mail or in person addressed to Bacou USA, Inc., at its principal executive offices, stating the number of shares with respect to which the option is being exercised, accompanied by payment in full for such shares. Payment may be (a) in United States dollars in cash or by check, (b) in whole or in part in shares of the Common Stock of the Company already owned by the person or persons exercising the option or shares subject to the option being exercised (subject to such restrictions and guidelines as the Board may adopt from time to time), valued at fair market value determined in accordance with the provisions of paragraph 5, or (c) consistent with applicable law, through the delivery of an assignment to the Company of a sufficient amount of the proceeds from the sale of the Common Stock acquired upon exercise of the option and an authorization to the broker or selling agent to pay that amount to the Company, which sale shall be at the participant's direction at the time of exercise. There shall be no such exercise at any one time as to fewer than one hundred (100) shares or all of the remaining shares then purchasable by the person or persons exercising the option, if fewer than one hundred (100) shares. The Company's transfer agent shall, on behalf of the Company, prepare a certificate or certificates representing such shares acquired pursuant to exercise of the option, shall register the optionee as the owner of such shares on the books of the Company and shall cause the fully executed certificate(s) representing such shares to be delivered to the optionee as soon as practicable after payment of the option price in full. The holder of an option shall not have any rights of a stockholder with respect to the shares covered by the option, except to the extent that one or more certificates for such shares shall be delivered to him or her upon the due exercise of the option. (b) WITHHOLDING. At the time the option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the optionee shall make adequate provision for the foreign, federal and state tax withholding obligations of the Company, if any, which arise in connection with the option, including, without limitation, obligations arising upon (i) the exercise, in whole or in part, of the option, (ii) the transfer, in whole or in part, of any shares of Common Stock acquired on exercise of the option, (iii) the operation of any law or regulation providing for -3- 4 the imputation of interest, or (iv) the lapsing of any restriction with respect to any shares of Common Stock acquired on exercise of the option. 10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION AND OTHER EVENTS. Upon the occurrence of any of the following events, an optionee's rights with respect to options granted to him or her hereunder shall be adjusted as hereinafter provided: (a) STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares subsequent to May 23, 1996 or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock subsequent to May 23, 1996, the number of shares of Common Stock deliverable upon the exercise of options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend. (b) RECAPITALIZATION ADJUSTMENTS. In the event of a reorganization, recapitalization, or any other change in the corporate structure of the Company, to the extent permitted by Rule 16b-3 under the Securities Exchange Act of 1934, adjustments in the number and kind of shares authorized and covered by this Plan, and in the option price of outstanding options under this Plan necessary to maintain the proportionate interest of the optionee and preserve, without exceeding, the value of such option, shall be made. Notwithstanding the foregoing, no such adjustment shall be made which would, within the meaning of any applicable provisions of the Internal Revenue Code of 1986, as amended, constitute a modification, extension or renewal of any option or a grant of additional benefits to the holder of an option. (c) ISSUANCES OF SECURITIES. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to options. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. (d) ADJUSTMENTS. Upon the happening of any of the foregoing events, the class and aggregate number of shares set forth in paragraph 2 of this Plan that are subject to options which previously have been or subsequently may be granted under this Plan shall also be appropriately adjusted to reflect such events. The Board shall determine the specific adjustments to be made under this paragraph 10 and its determination shall be conclusive. 11. CHANGE OF CONTROL. In the event of a change of control, the option shall be nonforfeitable and exercisable in full except to the extent previously exercised, forfeited or terminated. The Board may, in its sole discretion, arrange with the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), for the Acquiring Corporation to assume the Company's rights and obligations under any outstanding Option Agreement or substitute an option for the Acquiring Company's stock for the option. Any option shall terminate and cease to be outstanding effective -4- 5 as of the date of the change of control to the extent that the option is neither assumed or substituted for by the Acquiring Corporation nor exercised as of the date of the change of control. 12. RIGHTS AS A STOCKHOLDER. The optionee shall have no rights as a stockholder with respect to any shares of Common Stock covered by the option until the date of issuance of a certificate or certificates for the shares for which the option has been exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued, except as provided in paragraph 10 above. 13. RESTRICTIONS ON ISSUANCE OF SHARES. (a) COMPLIANCE WITH LAWS. Notwithstanding the provisions of paragraphs 4 and 9 of this Plan, the Company shall have no obligation to deliver any certificate or certificates upon exercise of an option until one of the following conditions shall be satisfied: (i) The issuance of shares with respect to which the option has been exercised is at the time of the issue of such shares effectively registered under applicable Federal and state securities laws as now in force or hereafter amended; or (ii) Counsel for the Company shall have given an opinion that the issuance of such shares is exempt from registration under Federal and state securities laws as now in force or hereafter amended; and the Company has complied with all applicable laws and regulations with respect thereto, including, without limitation, all regulations required by any stock exchange upon which the Company's outstanding Common Stock is then listed. (b) REPRESENTATIONS AND WARRANTIES. As a condition to exercise of the option, the optionee shall satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto, as requested by the Corporation. 14. LEGEND ON CERTIFICATES. The certificates representing shares issued pursuant to the exercise of an option granted hereunder shall carry such appropriate legend, and such written instructions shall be given to the Company's transfer agent, as may be deemed necessary or advisable by counsel to the Company in order to comply with the requirements of the Securities Act of 1933 or any state securities laws. 15. REPRESENTATION OF OPTIONEE. If requested by the Company, the optionee shall deliver to the Company written representations and warranties upon exercise of the option that are necessary to show compliance with Federal and state securities laws, including representations and warranties to the effect that a purchase of shares under the option is made for investment and not with a view to their distribution (as that term is used in the Securities Act of 1933). 16. DISPOSITION. The optionee shall dispose of the shares of Common Stock acquired on exercise of the option only in accordance with the provisions of this Plan and any applicable corporate policy concerning trading in shares of the Corporation. -5- 6 17. TERMINATION AND AMENDMENT OF PLAN. Options may no longer be granted under this Plan after May 23, 2006, and this Plan shall terminate when all options granted or to be granted hereunder are no longer outstanding. The Board may at any time terminate this Plan or make such modification or amendment thereof as it deems advisable; PROVIDED, HOWEVER, that the Board may not, without approval by the affirmative vote of the holders of a majority of the shares of Common Stock present in person or by proxy and voting on such matter at a meeting, (a) increase the maximum number of shares for which options may be granted under this Plan (except by adjustment pursuant to Section 10), (b) materially modify the requirements as to eligibility to participate in this Plan, (c) materially increase benefits accruing to option holders under this Plan or (d) amend this Plan in any manner which would cause Rule 16b-3 under the Securities Exchange Act (or any successor or amended provision thereof) to become inapplicable to this Plan; and PROVIDED FURTHER that the provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended provision thereof under the Securities Exchange Act of 1934) including without limitation, provisions as to eligibility, amount, price and timing of awards, may not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. Termination or any modification or amendment of this Plan shall not, without consent of a participant, affect his or her rights under an option previously granted to him or her. 18. WITHHOLDING OF INCOME TAXES. Upon the exercise of an option, the Company, in accordance with Section 3402(a) of the Internal Revenue Code, may require the optionee to pay withholding taxes in respect of amounts considered to be compensation includable in the optionee's gross income. 19. COMPLIANCE WITH REGULATIONS. It is the Company's intent that the Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of 1934 (or any successor or amended provision thereof) and any applicable Securities and Exchange Commission interpretations thereof. If any provision of this Plan is deemed not to be in compliance with Rule 16b-3, the provision shall be null and void. 20. GOVERNING LAW. The validity and construction of this Plan and the instruments evidencing options shall be governed by the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. 21. DEFINITION OF "EMPLOYEE" AND "OFFICER". For purposes of paragraph 4 of this Plan, service as Chairman or Vice Chairman of the Board, if no additional compensation is paid to the individual with respect to such service other than reimbursement of expenses approved by the Board, shall be deemed not to constitute service as an employee or officer of the Company. -6- 7 Date Approved by Board of Directors of the Company: May 27, 1996 -7- EX-10.(L) 13 EMPLOYMENT AGREEMENT FOR PHILIP M. JOHNSON 1 Exhibit 10(l) EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT made as of this 1st day of January, 1996, by and between Philip M. Johnson ("Executive") and Uvex Safety, Inc., a corporation organized under the law of Rhode Island (the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, Executive is now Vice President R & D, Coating and Quality Assurance of the Company; WHEREAS, the Company wishes to secure the services of Executive as its Vice President R & D, Coating and Quality Assurance for the period provided in this Agreement; and WHEREAS, Executive is willing to enter into this Agreement for such period and on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and Executive hereby agree as follows: 1. EMPLOYMENT. During the period of employment set forth in Section 2 of this Agreement, the Company shall employ Executive, and Executive shall serve as its Vice President R & D, Coating and Quality Assurance of the Company. Executive agrees to faithfully perform the duties assigned to him to the best of his ability and, except for vacations and periods of temporary illness, to devote his full time and attention to the Company's business. Ancillary employment such as writing, teaching or lecturing as well as the acceptance of honorific titles may be undertaken by the Executive only with the approval of the Chief Executive Officer of the Company (the "CEO"). Executive also agrees that he will not engage in any other business activities without the prior approval of the CEO. Executive may only serve as an officer, director, trustee or committee member, or in any similar position, of a reasonable number (maximum two) trade associations and religious, charitable, educational, civic or other non-business organizations, subject to the approval of the CEO. 2. PERIOD OF EMPLOYMENT. The Executive's employment under this Agreement shall initially cover the period January 1, 1996 to December 31, 1998. On January 1, 1999, and at the end of each three year period thereafter, the period of employment shall be automatically extended, without further action by either party, for a three year period beginning on January 1st unless six months prior to any such January 1st either party shall have served written notice on the other of its intention that the period of employment shall expire on December 31, 1998 or December 31st of the third year of any three-year period. If either party notifies the other party that it shall not extend the period of employment, the Company may, at its option, decide that the Executive shall take a leave-of-absence for part or 2 the total of the six months remaining time of his employment, continuing to receive all compensation as if actively working. If either party chooses not to renew this Agreement, such employment shall terminate on December 31 of the then current year. 3. TERMINATION. The period of employment shall be terminated upon the first to occur of the following: (i) The expiration of the period of employment pursuant to Section 2 of this Agreement. (ii) The Executive's death. (iii) The Executive becoming permanently disabled. Permanent disability shall mean physical or mental incapacity of a nature which prevents Executive from performing his duties under this Agreement for a period of more than six months in any twelve month period. (iv) The Executive's employment being terminated by the Company for cause. Termination for cause shall mean termination by action of the Board of Directors of the Company because of the willful failure of Executive to perform his duties and obligations under this Agreement or fails to execute in a reasonable and responsible manner the policies of the Company or gross negligence in the performance of his duties under this Agreement or the commission by Executive of a felony. 4. COMPENSATION AND BENEFITS. ------------------------- (a) During the Employment Period, the Executive shall receive regular compensation (the "Base Salary") at the initial rate per annum of One Hundred Thousand Dollars ($100,000.00) per annum for the period January 1, 1996 through December 31, 1996. The Base Salary shall be payable in arrears less the usual payroll deductions at the same times and in the same manner as salaries paid to other employees. The Executive shall participate in any wage increases applicable generally to the Company's salaried employees. The Base Salary prevailing at any time shall be reviewed annually for a possible increase on January 1 of each year beginning in 1997. (b) In addition to the Base Salary, the Executive shall be entitled to receive annual incentive compensation payments ("Incentive Compensation"). The bonus for the period January 1, 1996 through December 31, 1996 shall be determined pursuant the Company's 1996 Incentive Compensation Plan adopted by the Compensation Committee of Bacou USA, Inc., the basis for which shall be communicated to the Executive prior to the commencement of the year to which it relates, except in the case of 1996, which shall be communicated by June 30, 1996. (c) Incentive Compensation shall be paid by the Company for the prior fiscal year within ten (10) days after a decision is made by the Board of Directors of the Company as to the amount 2 3 of such Incentive Compensation, but in any event no later than the earlier of the annual meeting of the Board of Directors of the Company or March 31. (d) The Executive shall be entitled to participate in any stock option plan which Bacou USA, Inc. may adopt for the Company. (e) The Executive shall be entitled to participate in all savings, thrift, retirement or pension, short term and long term disability, health and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday, vacation, and other fringe benefit programs generally available to senior executives of the Company in accordance with and subject to the terms and conditions of such programs. (f) In addition, the Executive shall be entitled to receive the following benefits: (i) The Executive will continue to have the use of a Company car, subject to the Company's Executive Automobile Policy. (ii) The Executive shall be entitled to vacation pursuant to the Company's Executive Vacation Policy. For 1996, the Executive shall be entitled to fifteen (15) working days of vacation. Vacation days will be taken at a time convenient for both the Executive and the Company. To the extent the Executive does not take all vacation days the remaining days will be carried forward for an unlimited period or be paid to the Executive at the level of his Base Salary valid for the fiscal year in which vacation days are not taken. (iii) When traveling on Company business, the Executive will be provided coach-class airfare on domestic trips; business class airfare will be provided on international trips. (iv) The Executive is authorized to incur reasonable expenses in connection with and for the promotion of the business of the Company, including expenses for meals and lodging, entertainment, and similar items as required from time to time by the Executive's duties. The Company shall reimburse the Executive for all such expenses upon the presentation of an account therefor, together with appropriate supporting documentation. 5. LIMITATIONS ON AUTHORITY. Except as otherwise provided herein, approval by the CEO must be obtained prior to the Executive taking any of the following actions on behalf of the Company or any of its affiliates: (a) Acquisition or disposition of real property or any rights deriving therefrom, or changing title in any such real property. (b) Making unplanned capital expenditures or any commitment therefore; (c) Borrowing or guaranteeing any borrowings from or on behalf of any party, or altering the terms of any loan agreements for such borrowings except for 3 4 any such loans or borrowings as shall be agreed upon by the Board of Directors of the Company; (d) Hiring or terminating salaried personnel; (e) Granting retirement benefits or other non-earned income to any individual which is not available to all employees; (f) Modification of the pension plan or other benefit plan, e.g., health insurance; (g) Acquiring the assets or shares of another company or partnership; (h) Acquiring or disposing of the assets or shares of the Company or any of its affiliates; (i) Entering into or terminating agreements of any kind or nature with a monthly financial obligation in excess of U.S. $3,000 for more than six (6) months; (j) Making basic changes in the administration, organization, production, and distribution of the Company or any of its affiliates, as well as closing or curtailing the functions of the Company or any of its affiliates; (k) Filing any lawsuit; (l) Entering into any transaction on behalf of the Company or its affiliates which is not in the usual course of its business; (m) Adoption or modification of the annual budget. Notwithstanding the foregoing, approval is not required for any action provided for in the applicable annual budget or annual plan of the Company and its affiliates. In addition, should the CEO be unavailable, if an emergency arises which requires the Executive to take immediate action in which approval as set forth in this Section would otherwise be required, the Executive is no longer bound by the limitations described above and is authorized to make a decision in the best interests of the Company. The Executive will immediately inform the CEO of any such decisions made by him. 6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of the Company and its affiliates is of a confidential nature. During the period of the Executive's employment with the Company, the Executive may have received and/or may secure confidential information concerning the Company or any of the Company's affiliates or subsidiaries which, if known to competitors thereof, would damage the Company or its said affiliates or subsidiaries. The Executive agrees that during and after the term of this Agreement he will not (except as 4 5 authorized by the Company or in the proper performance of his duties or except as ordered by a court or other body of competent jurisdiction or as otherwise required by law), directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party, any secret, proprietary or confidential information or knowledge obtained by him during the term hereof concerning such confidential matters of the Company or its subsidiaries or affiliates, including, but not limited to, information pertaining to trade secrets, systems, manuals, confidential reports, methods, processes, designs, equipment lists, operating procedures, equipment and methods used and preferred by the Company's customers. Upon termination of this Agreement, the Executive shall promptly deliver to the Company all materials of a secret or confidential nature relating to the business of the Company or any of its subsidiaries or affiliates which are, directly or indirectly, in the possession or under the control of the Executive. The provisions of this paragraph shall continue to apply after the Executive ceases to be employed by the Company for a period of three (3) years except in respect of any information or knowledge disclosed to the public, other than through an unauthorized disclosure by the Executive. 7. TRADE SECRETS. The Executive covenants that he shall, while employed by the Company, assign, transfer, and set over to the Company or its designee all right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, trademarks, trademark applications, copyrights, copyright registrations, discoveries and/or other developments (hereinafter "Inventions") which he may, thereafter, alone or in conjunction with others, during or outside normal working hours, conceive, make, acquire or suggest at any time which relate to the products, processes, work, research, or other activities of the Company or any of its subsidiaries or affiliates. Any and all Inventions which are of a proprietary nature and which the Executive may conceive, may acquire or suggest, either alone or in conjunction with others, during his employment with the Company (whether during or outside normal working hours) relating to or in any way pertaining to or connected with the Company's business, shall be the sole and exclusive property of the Company or its designee and the Executive, whenever requested to do so by the Company, shall, without further compensation or consideration properly execute any and all applications, assignments or other documents which the Company or its designee shall deem necessary in order to apply for and obtain Letters Patent of the United States and/or comparable rights afforded by foreign countries for the Inventions, or in order to assign and convey to the Company or its designee the sole and exclusive right, title and interest in and to the Inventions. This obligation shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by the Executive during the term of his employment by the Company, and shall be binding upon his assigns, executors, administrators, and other legal representatives. 8. NON-COMPETITION. (a) During the term of this Agreement or any renewal thereof and, at the Company's option for a period of up to one year thereafter, should the Executive's contract be terminated or not be renewed, the Executive agrees that he will not within the geographical area of the United States, engage, either directly or indirectly, individually or as an owner, partner, joint venturer, employee, officer, director, stockholder, consultant, independent contractor or lender of or to any corporation, holding company or other business entity which is in a business similar to that of the Company or any of its affiliates. In the event that the Company chooses to exercise its option to prevent the Executive from competing with the Company 5 6 following termination or non-renewal of his employment, the Company shall notify the Executive in writing within two (2) weeks following his last day of employment or within two (2) weeks of notice by the Company of its decision that the Executive shall take a leave-of-absence, in either case specifying the period of up to one year following termination, resignation, or non-renewal of employment during which such competitive activity shall be prohibited. In the event the Company exercises its option, the Company shall continue to pay Executive his Base Salary at the time of termination, resignation or non-renewal for the period during which the Executive is prohibited from competition with the Company. Notwithstanding the foregoing, the Executive (as hereinbefore described in Section 2(d)) may own five (5%) percent of the securities of any business in competition with the business of the Company or any of its affiliates, which securities are regularly traded on a public exchange, provided that any such ownership shall not result in the Executive becoming a record or beneficial owner at any time of more than five (5%) percent of equity securities of said business entity. (b) The Executive shall not during the term of his Employment under this Agreement or any renewal thereof, and for a period of one (1) year thereafter, employ, retain or arrange to have any other person or entity employ or retain any person who was employed by the Company or any of its affiliated companies having an annual compensation of at least U.S. $50,000 per annum during the term of this Agreement or any renewal thereof. (c) If any provision of this Section is held to be unenforceable because of the scope, duration or area of its applicability or otherwise, the legal entity making that determination will have the power to modify the scope, duration or area, or all of them, and the provision will then apply in its modified form. 9. PROPERTY. All letters, memoranda, documents, business notes (including all copies thereof) and other information contained on any other computer media including computer disks and hard drives of the Executive in any manner relating to the duties of Executive under this agreement are the property of the Company. 10. NOTICES. Any notice to be given to Executive by the Company under this Agreement shall be deemed to have been given by the Company and received by Executive if and when it is hand delivered to Executive, or it is sent by registered or certified mail to Executive at his home address or transmitted by facsimile transmission ("FAX"). Any notice to be given to the Company by Executive under this Agreement shall be deemed to have been given by Executive and received by the Company if and when it is hand delivered by Executive to the CEO or his designee, it is sent by registered or certified mail, addressed to the CEO of the Company by FAX confirmed in writing mailed to the CEO of the Company. 11. FULL AND COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements. This Agreement may be modified only by a written instrument executed by both parties. 6 7 12. CONSTRUCTION. This Agreement shall be construed under the laws of the State of Rhode Island. 13. ARBITRATION. Notwithstanding the fact that the parties shall be entitled to equitable relief in order to enforce certain provisions hereunder (e.g., temporary restraining orders or injunctive relief), any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the "Commercial Arbitration Rules" of the American Arbitration Association in effect on the date of this Agreement, except as varied below. The site of any such arbitration shall be Providence, Rhode Island and any award shall be deemed to be a Providence, Rhode Island award. There shall be a single arbitrator who shall be admitted to practice law in Rhode Island, with no less than ten (10) years experience in the handling of commercial or corporate matters or disputes. The arbitrator shall render a written decision stating his reasons therefor, and shall render an award within six (6) months of the request for arbitration, and such award shall be final and binding upon both parties. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow. The substantive law to be applied to any case determined pursuant to this Section 13 is that of State of Rhode Island. The expense of arbitration shall be borne by the respective parties except to the extent that the arbitrators shall determine that the entire expense shall be borne by a single party. IN WITNESS WHEREOF, the Company and the Executive have duly executed this Agreement as of the day and year first written above. UVEX SAFETY, INC. By: /s/ W. Stepan ------------------------------------- Walter Stepan President and Chief Executive Officer EXECUTIVE: /s/ Philip M. Johnson - --------------------------------------- [Philip M. Johnson] EX-10.(M) 14 EMPLOYMENT AGREEMENT FOR RICHARD F. SUSTELLO 1 Exhibit 10(m) EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT made as of this 1st day of January, 1996, by and between Richard F. Sustello ("Executive") and Uvex Safety, Inc., a corporation organized under the law of Rhode Island (the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, Executive is now Vice President Marketing/Diversification of the Company; WHEREAS, the Company wishes to secure the services of Executive as its Vice President Marketing/Diversification for the period provided in this Agreement; and WHEREAS, Executive is willing to enter into this Agreement for such period and on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and Executive hereby agree as follows: 1. EMPLOYMENT. During the period of employment set forth in Section 2 of this Agreement, the Company shall employ Executive, and Executive shall serve as its Vice President Marketing/Diversification of the Company. Executive agrees to faithfully perform the duties assigned to him to the best of his ability and, except for vacations and periods of temporary illness, to devote his full time and attention to the Company's business. Ancillary employment such as writing, teaching or lecturing as well as the acceptance of honorific titles may be undertaken by the Executive only with the approval of the Chief Executive Officer of the Company (the "CEO"). Executive also agrees that he will not engage in any other business activities without the prior approval of the CEO. Executive may only serve as an officer, director, trustee or committee member, or in any similar position, of a reasonable number (maximum two) trade associations and religious, charitable, educational, civic or other non-business organizations, subject to the approval of the CEO. 2. PERIOD OF EMPLOYMENT. The Executive's employment under this Agreement shall initially cover the period January 1, 1996 to December 31, 1998. On January 1, 1999, and at the end of each three year period thereafter, the period of employment shall be automatically extended, without further action by either party, for a three year period beginning on January 1st unless six months prior to any such January 1st either party shall have served written notice on the other of its intention that the period of employment shall expire on December 31, 1998 or December 31st of the third year of any three-year period. If either party notifies the other party that it shall not extend the period of employment, the Company may, at its option, decide that the Executive shall take a leave-of-absence for part or 2 the total of the six months remaining time of his employment, continuing to receive all compensation as if actively working. If either party chooses not to renew this Agreement, such employment shall terminate on December 31 of the then current year. 3. TERMINATION. The period of employment shall be terminated upon the first to occur of the following: (i) The expiration of the period of employment pursuant to Section 2 of this Agreement. (ii) The Executive's death. (iii) The Executive becoming permanently disabled. Permanent disability shall mean physical or mental incapacity of a nature which prevents Executive from performing his duties under this Agreement for a period of more than six months in any twelve month period. (iv) The Executive's employment being terminated by the Company for cause. Termination for cause shall mean termination by action of the Board of Directors of the Company because of the willful failure of Executive to perform his duties and obligations under this Agreement or fails to execute in a reasonable and responsible manner the policies of the Company or gross negligence in the performance of his duties under this Agreement or the commission by Executive of a felony. 4. COMPENSATION AND BENEFITS. ------------------------- (a) During the Employment Period, the Executive shall receive regular compensation (the "Base Salary") at the initial rate per annum of One Hundred Thousand Dollars ($100,000.00) per annum for the period January 1, 1996 through December 31, 1996. The Base Salary shall be payable in arrears less the usual payroll deductions at the same times and in the same manner as salaries paid to other employees. The Executive shall participate in any wage increases applicable generally to the Company's salaried employees. The Base Salary prevailing at any time shall be reviewed annually for a possible increase on January 1 of each year beginning in 1997. (b) In addition to the Base Salary, the Executive shall be entitled to receive annual incentive compensation payments ("Incentive Compensation"). The bonus for the period January 1, 1996 through December 31, 1996 shall be determined pursuant the Company's 1996 Incentive Compensation Plan adopted by the Compensation Committee of Bacou USA, Inc., the basis for which shall be communicated to the Executive prior to the commencement of the year to which it relates, except in the case of 1996, which shall be communicated by June 30, 1996. (c) Incentive Compensation shall be paid by the Company for the prior fiscal year within ten (10) days after a decision is made by the Board of Directors of the Company as to the amount 2 3 of such Incentive Compensation, but in any event no later than the earlier of the annual meeting of the Board of Directors of the Company or March 31. (d) The Executive shall be entitled to participate in any stock option plan which Bacou USA, Inc. may adopt for the Company. (e) The Executive shall be entitled to participate in all savings, thrift, retirement or pension, short term and long term disability, health and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday, vacation, and other fringe benefit programs generally available to senior executives of the Company in accordance with and subject to the terms and conditions of such programs. (f) In addition, the Executive shall be entitled to receive the following benefits: (i) The Executive will continue to have the use of a Company car, subject to the Company's Executive Automobile Policy. (ii) The Executive shall be entitled to vacation pursuant to the Company's Executive Vacation Policy. For 1996, the Executive shall be entitled to fifteen (15) working days of vacation. Vacation days will be taken at a time convenient for both the Executive and the Company. To the extent the Executive does not take all vacation days the remaining days will be carried forward for an unlimited period or be paid to the Executive at the level of his Base Salary valid for the fiscal year in which vacation days are not taken. (iii) When traveling on Company business, the Executive will be provided coach-class airfare on domestic trips; business class airfare will be provided on international trips. (iv) The Executive is authorized to incur reasonable expenses in connection with and for the promotion of the business of the Company, including expenses for meals and lodging, entertainment, and similar items as required from time to time by the Executive's duties. The Company shall reimburse the Executive for all such expenses upon the presentation of an account therefor, together with appropriate supporting documentation. 5. LIMITATIONS ON AUTHORITY. Except as otherwise provided herein, approval by the CEO must be obtained prior to the Executive taking any of the following actions on behalf of the Company or any of its affiliates: (a) Acquisition or disposition of real property or any rights deriving therefrom, or changing title in any such real property. (b) Making unplanned capital expenditures or any commitment therefore; (c) Borrowing or guaranteeing any borrowings from or on behalf of any party, or altering the terms of any loan agreements for such borrowings except for 3 4 any such loans or borrowings as shall be agreed upon by the Board of Directors of the Company; (d) Hiring or terminating salaried personnel; (e) Granting retirement benefits or other non-earned income to any individual which is not available to all employees; (f) Modification of the pension plan or other benefit plan, e.g., health insurance; (g) Acquiring the assets or shares of another company or partnership; (h) Acquiring or disposing of the assets or shares of the Company or any of its affiliates; (i) Entering into or terminating agreements of any kind or nature with a monthly financial obligation in excess of U.S. $3,000 for more than six (6) months; (j) Making basic changes in the administration, organization, production, and distribution of the Company or any of its affiliates, as well as closing or curtailing the functions of the Company or any of its affiliates; (k) Filing any lawsuit; (l) Entering into any transaction on behalf of the Company or its affiliates which is not in the usual course of its business; (m) Adoption or modification of the annual budget. Notwithstanding the foregoing, approval is not required for any action provided for in the applicable annual budget or annual plan of the Company and its affiliates. In addition, should the CEO be unavailable, if an emergency arises which requires the Executive to take immediate action in which approval as set forth in this Section would otherwise be required, the Executive is no longer bound by the limitations described above and is authorized to make a decision in the best interests of the Company. The Executive will immediately inform the CEO of any such decisions made by him. 6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of the Company and its affiliates is of a confidential nature. During the period of the Executive's employment with the Company, the Executive may have received and/or may secure confidential information concerning the Company or any of the Company's affiliates or subsidiaries which, if known to competitors thereof, would damage the Company or its said affiliates or subsidiaries. The Executive agrees that during and after the term of this Agreement he will not (except as 4 5 authorized by the Company or in the proper performance of his duties or except as ordered by a court or other body of competent jurisdiction or as otherwise required by law), directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party, any secret, proprietary or confidential information or knowledge obtained by him during the term hereof concerning such confidential matters of the Company or its subsidiaries or affiliates, including, but not limited to, information pertaining to trade secrets, systems, manuals, confidential reports, methods, processes, designs, equipment lists, operating procedures, equipment and methods used and preferred by the Company's customers. Upon termination of this Agreement, the Executive shall promptly deliver to the Company all materials of a secret or confidential nature relating to the business of the Company or any of its subsidiaries or affiliates which are, directly or indirectly, in the possession or under the control of the Executive. The provisions of this paragraph shall continue to apply after the Executive ceases to be employed by the Company for a period of three (3) years except in respect of any information or knowledge disclosed to the public, other than through an unauthorized disclosure by the Executive. 7. TRADE SECRETS. The Executive covenants that he shall, while employed by the Company, assign, transfer, and set over to the Company or its designee all right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, trademarks, trademark applications, copyrights, copyright registrations, discoveries and/or other developments (hereinafter "Inventions") which he may, thereafter, alone or in conjunction with others, during or outside normal working hours, conceive, make, acquire or suggest at any time which relate to the products, processes, work, research, or other activities of the Company or any of its subsidiaries or affiliates. Any and all Inventions which are of a proprietary nature and which the Executive may conceive, may acquire or suggest, either alone or in conjunction with others, during his employment with the Company (whether during or outside normal working hours) relating to or in any way pertaining to or connected with the Company's business, shall be the sole and exclusive property of the Company or its designee and the Executive, whenever requested to do so by the Company, shall, without further compensation or consideration properly execute any and all applications, assignments or other documents which the Company or its designee shall deem necessary in order to apply for and obtain Letters Patent of the United States and/or comparable rights afforded by foreign countries for the Inventions, or in order to assign and convey to the Company or its designee the sole and exclusive right, title and interest in and to the Inventions. This obligation shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by the Executive during the term of his employment by the Company, and shall be binding upon his assigns, executors, administrators, and other legal representatives. 8. NON-COMPETITION. (a) During the term of this Agreement or any renewal thereof and, at the Company's option for a period of up to one year thereafter, should the Executive's contract be terminated or not be renewed, the Executive agrees that he will not within the geographical area of the United States, engage, either directly or indirectly, individually or as an owner, partner, joint venturer, employee, officer, director, stockholder, consultant, independent contractor or lender of or to any corporation, holding company or other business entity which is in a business similar to that of the Company or any of its affiliates. In the event that the Company chooses to exercise its option to prevent the Executive from competing with the Company 5 6 following termination or non-renewal of his employment, the Company shall notify the Executive in writing within two (2) weeks following his last day of employment or within two (2) weeks of notice by the Company of its decision that the Executive shall take a leave-of-absence, in either case specifying the period of up to one year following termination, resignation, or non-renewal of employment during which such competitive activity shall be prohibited. In the event the Company exercises its option, the Company shall continue to pay Executive his Base Salary at the time of termination, resignation or non-renewal for the period during which the Executive is prohibited from competition with the Company. Notwithstanding the foregoing, the Executive (as hereinbefore described in Section 2(d)) may own five (5%) percent of the securities of any business in competition with the business of the Company or any of its affiliates, which securities are regularly traded on a public exchange, provided that any such ownership shall not result in the Executive becoming a record or beneficial owner at any time of more than five (5%) percent of equity securities of said business entity. (b) The Executive shall not during the term of his Employment under this Agreement or any renewal thereof, and for a period of one (1) year thereafter, employ, retain or arrange to have any other person or entity employ or retain any person who was employed by the Company or any of its affiliated companies having an annual compensation of at least U.S. $50,000 per annum during the term of this Agreement or any renewal thereof. (c) If any provision of this Section is held to be unenforceable because of the scope, duration or area of its applicability or otherwise, the legal entity making that determination will have the power to modify the scope, duration or area, or all of them, and the provision will then apply in its modified form. 9. PROPERTY. All letters, memoranda, documents, business notes (including all copies thereof) and other information contained on any other computer media including computer disks and hard drives of the Executive in any manner relating to the duties of Executive under this agreement are the property of the Company. 10. NOTICES. Any notice to be given to Executive by the Company under this Agreement shall be deemed to have been given by the Company and received by Executive if and when it is hand delivered to Executive, or it is sent by registered or certified mail to Executive at his home address or transmitted by facsimile transmission ("FAX"). Any notice to be given to the Company by Executive under this Agreement shall be deemed to have been given by Executive and received by the Company if and when it is hand delivered by Executive to the CEO or his designee, it is sent by registered or certified mail, addressed to the CEO of the Company by FAX confirmed in writing mailed to the CEO of the Company. 11. FULL AND COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements. This Agreement may be modified only by a written instrument executed by both parties. 6 7 12. CONSTRUCTION. This Agreement shall be construed under the laws of the State of Rhode Island. 13. ARBITRATION. Notwithstanding the fact that the parties shall be entitled to equitable relief in order to enforce certain provisions hereunder (e.g., temporary restraining orders or injunctive relief), any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the "Commercial Arbitration Rules" of the American Arbitration Association in effect on the date of this Agreement, except as varied below. The site of any such arbitration shall be Providence, Rhode Island and any award shall be deemed to be a Providence, Rhode Island award. There shall be a single arbitrator who shall be admitted to practice law in Rhode Island, with no less than ten (10) years experience in the handling of commercial or corporate matters or disputes. The arbitrator shall render a written decision stating his reasons therefor, and shall render an award within six (6) months of the request for arbitration, and such award shall be final and binding upon both parties. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow. The substantive law to be applied to any case determined pursuant to this Section 13 is that of State of Rhode Island. The expense of arbitration shall be borne by the respective parties except to the extent that the arbitrators shall determine that the entire expense shall be borne by a single party. IN WITNESS WHEREOF, the Company and the Executive have duly executed this Agreement as of the day and year first written above. UVEX SAFETY, INC. By: /s/ W. Stepan ------------------------------------------- Walter Stepan President and Chief Executive Officer EXECUTIVE: /s/ Richard F. Sustello - --------------------------------------------- Richard F. Sustello EX-10.(K)(1) 15 EMPLOYMENT AGREEMENT FOR THOMAS J. GOELTZ 1 Exhibit 10(k)(1) EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT, made this 1st day of October, 1995, by and between Thomas J. Goeltz ("Executive") and Titmus Optical, Inc., a corporation organized under the law of Delaware (the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, Executive is now Vice President for Marketing and Sales of the Company; WHEREAS, the Company wishes to secure the services of Executive as its Vice President for Marketing and Sales for the period provided in this Agreement; and WHEREAS, Executive is willing to enter into this Agreement for such period and on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and Executive hereby agree as follows: 1. EMPLOYMENT. During the period of employment set forth in Section 2 of this Agreement, the Company shall employ Executive, and Executive shall serve as Vice President for Marketing and Sales of the Company. Executive agrees to faithfully perform the duties assigned to him to the best of his ability and, except for vacations and periods of temporary illness, to devote his full time and attention to the Company's business. Ancillary employment such as writing, teaching or lecturing as well as the acceptance of honorific titles may be undertaken by the Executive only with the approval of the Executive Committee, consisting of the Chairman of the Board of Directors and the President, of the Company. Executive also agrees that he will not engage in any other business activities without the prior approval of the Executive Committee. Executive may only serve on a reasonable number (maximum two) of boards of directors and as an officer, director, trustee or committee member, or in any similar position, of trade associations and religious, charitable, educational, civic or other non-business organizations. 2. PERIOD OF EMPLOYMENT. the Executive's employment under this Agreement shall initially cover the period October 1, 1995 to December 31, 1997. On January 1, 1998, and at the end of each two year period thereafter, the period of employment shall be automatically extended, without further action by either party, for a two year period beginning on January 1st unless six months prior to any such January 1st either party shall have served written notice on the other of its intention that the period of employment shall expire on December 31, 1997 or December 31st of the second year of any two-year period. 2 If the Company notifies Executive that it shall not extend the period of employment, the Company may, at its option, decide that the Executive shall take a leave-of-absence for part or the total of the six months remaining time of his employment, continuing to receive all compensation as if actively working. 3. TERMINATION. The period of employment shall be terminated upon the first to occur of the following: (i) The expiration of the period of employment pursuant to Section 2 of this Agreement. (ii) The Executive's death. (iii) The Executive becoming permanently disabled. Permanent disability shall mean physical or mental incapacity of a nature which prevents Executive from performing his duties under this Agreement for a period of more than six months in any twelve month period. (iv) The Executive's employment being terminated by the Company for cause. Termination for cause shall mean termination by action of the Board of Directors of the Company because of the willful failure of Executive to perform his duties and obligations under this Agreement or fails to execute in a reasonable and responsible manner the policies of the Company or gross negligence in the performance of his duties under this Agreement or the commission by Executive of a felony. 4. Compensation and Benefits. ------------------------- (a) During the Employment Period, the Executive shall receive regular compensation (the "Base Salary") at the initial rate per annum of One Hundred Twenty Thousand Dollars ($120,000.00) per annum for the period October 1, 1995 through December 31, 1996. The Base Salary shall be payable in arrears less the usual payroll deductions at the same times and in the same manner as salaries paid to other employees. The Executive shall participate in any wage increases applicable generally to the Company's salaried employees. The Base Salary prevailing at any time shall be reviewed annually for a possible increase on January 1 of each year beginning in 1997. (b) In addition to the Base Salary, the Executive shall be entitled to receive annual incentive compensation payments ("Incentive Compensation"). The bonus for the period October 1, 1995 through December 31, 1995 shall be fixed at Ten Thousand Dollars ($10,000). The bonus for the period January 1, 1996 through December 31, 1996 shall be determined pursuant to a plan to be communicated to Executive by December 31, 1995 which shall provide a bonus opportunity determined on the basis of continuous improvement in the profitability of the 2 3 Company and ranging from fifteen percent (15%) to fifty percent (50%) of Base Salary. The parameters for the bonus calculation shall always be valid for the term of this Agreement. Incentive Compensation shall be paid by the Company for the prior fiscal year within ten (10) days after a decision is made by the Board as to the amount of such Incentive Compensation, but in any event no later than the earlier of the annual meeting of the Board or March 31. (d) The Executive shall be entitled to participate in any stock option plan which the Bacou USA, Inc. may adopt for the Company. (e) The Executive shall be entitled to participate in all savings, thrift, retirement or pension, short term and long term disability, health and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday, vacation, and other fringe benefit programs generally available to senior executives of the Company in accordance with and subject to the terms and conditions of such programs. (f) In addition, the Executive shall be entitled to receive the following benefits: (i) The Executive will receive a taxable car allowance of Ten Thousand Dollars ($10,000) per annum. Oil changes and gasoline expenses shall be paid by the Company. All other costs relating to the operation and maintenance of the automobile will be borne by the Executive. The Executive will pay all taxes on the fringe benefit component of these payments. (ii) The Executive will receive eighteen (18) days of vacation per annum. Vacation days will be taken at a time convenient for both the Executive and the Company. To the extent the Executive does not take all vacation days the remaining days will be carried forward for an unlimited period or be paid to the Executive at the level of his Base Salary valid for the fiscal year in which vacation days are not taken. (iii) When traveling on Company business, the Executive will be provided coach-class airfare on domestic trips; business class airfare will be provided on international trips. (iv) The Executive is authorized to incur reasonable expenses in connection with and for the promotion of the business of the Company, including expenses for meals and lodging, entertainment, and similar items as required from time to time by the Executive's duties. The Company shall reimburse the Executive for all such expenses upon the presentation of an account therefor, together with appropriate supporting documentation. 5. LIMITATIONS ON AUTHORITY. Pursuant to the Bylaws of the Company, the President and the Chairman of the Board of Directors or his designee shall constitute the Executive Committee of the Board. Except as otherwise provided herein, approval by the Executive Committee must be obtained prior to the Executive taking any of the following actions on behalf of the Company or any of its affiliates: 3 4 (a) Acquisition or disposition of real property or any rights deriving therefrom, or changing title in any such real property. (b) Making unplanned capital expenditures or any commitment therefore; (c) Borrowing or guaranteeing any borrowings from or on behalf of any party, or altering the terms of any loan agreements for such borrowings except for any such loans or borrowings as shall be agreed upon by the Board; (d) Hiring or terminating executive personnel with annual salary in excess of $30,000; (e) Granting retirement benefits or other non-earned income to any individual which is not available to all employees; (f) Modification of the pension plan or other benefit plan, e.g., health insurance; (g) Acquiring the assets or shares of another company or partnership; (h) Acquiring or disposing of the assets or shares of the Company or any of its affiliates; (i) Entering into or terminating agreements of any kind or nature with a monthly financial obligation in excess of U.S. $3,000 for more than six (6) months; (j) Making basic changes in the administration, organization, production, and distribution of the Company or any of its affiliates, as well as closing or curtailing the functions of the Company or any of its affiliates; (k) Filing any lawsuit; (l) Entering into any transaction on behalf of the Company or its affiliates which is not in the usual course of its business; (m) Adoption or modification of the annual budget. Notwithstanding the foregoing, approval is not required for any action provided for in the applicable annual budget or annual plan of the Company and its affiliates. In addition, should the Executive Committee be unavailable, if an emergency arises which requires the Executive to take immediate action in which approval as set forth in this Section would otherwise be required, the Executive is no longer bound by the limitations described above and is authorized to make a decision in the best interests of the Company. The Executive will immediately inform the Executive Committee of any such decisions made by him. 4 5 6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of the Company and its affiliates is of a confidential nature. During the period of the Executive's employment with the Company, the Executive may have received and/or may secure confidential information concerning the Company or any of the Company's affiliates or subsidiaries which, if known to competitors thereof, would damage the Company or its said affiliates or subsidiaries. The Executive agrees that during and after the term of this Agreement he will not (except as authorized by the Company or in the proper performance of his duties or except as ordered by a court or other body of competent jurisdiction or as otherwise required by law), directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party, any secret, proprietary or confidential information or knowledge obtained by him during the term hereof concerning such confidential matters of the Company or its subsidiaries or affiliates, including, but not limited to, information pertaining to trade secrets, systems, manuals, confidential reports, methods, processes, designs, equipment lists, operating procedures, equipment and methods used and preferred by the Company's customers. Upon termination of this Agreement, the Executive shall promptly deliver to the Company all materials of a secret or confidential nature relating to the business of the Company or any of its subsidiaries or affiliates which are, directly or indirectly, in the possession or under the control of the Executive. The provisions of this paragraph shall continue to apply after the Executive ceases to be employed by the Company for a period of three (3) years except in respect of any information or knowledge disclosed to the public, other than through an unauthorized disclosure by the Executive. 7. TRADE SECRETS. The Executive covenants that he shall, while employed by the Company, assign, transfer, and set over to the Company or its designee all right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, trademarks, trademark applications, copyrights, copyright registrations, discoveries and/or other developments (hereinafter "Inventions") which he may, thereafter, alone or in conjunction with others, during or outside normal working hours, conceive, make, acquire or suggest at any time which relate to the products, processes, work, research, or other activities of the Company or any of its subsidiaries or affiliates. Any and all Inventions which are of a proprietary nature and which the Executive may conceive, may acquire or suggest, either alone or in conjunction with others, during his employment with the Company (whether during or outside normal working hours) relating to or in any way pertaining to or connected with the Company's business, shall be the sole and exclusive property of the Company or its designee and the Executive, whenever requested to do so by the Company, shall, without further compensation or consideration properly execute any and all applications, assignments or other documents which the Company or its designee shall deem necessary in order to apply for and obtain Letters Patent of the United States and/or comparable rights afforded by foreign countries for the Inventions, or in order to assign and convey to the Company or its designee the sole and exclusive right, title and interest in and to the Inventions. This obligation shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by the Executive during the term of his employment by the Company, and shall be binding upon his assigns, executors, administrators, and other legal representatives. 5 6 8. NON-COMPETITION. (a) During the term of this Agreement or any renewal thereof, and at the Company's option for a period of up to one year thereafter, should the Executive's contract not be renewed, the Executive agrees that he will not within the geographical area of the United States, engage, either directly or indirectly, individually or as an owner, partner, joint venturer, employee, officer, director, stockholder, consultant, independent contractor or lender of or to any corporation, holding company or other business entity which is in a business similar to that of the Company or any of its affiliates. Notwithstanding the foregoing, the Executive (as hereinbefore described in Section 2(d)) may own five (5%) percent of the securities of any business in competition with the business of the Company or any of its affiliates, which securities are regularly traded on a public exchange, provided that any such ownership shall not result in the Executive becoming a record or beneficial owner at any time of more than five (5%) percent of equity securities of said business entity. In the event that the Company chooses to exercise its option to prevent the Executive from competing with the Company following termination of his employment, the Company shall notify the Executive in writing within two (2) weeks following his last day of employment, specifying the period of up to one year during which such competitive activity shall be prohibited. In the event the Company exercises its option, the Company shall continue to pay Executive his then applicable Base Salary for the period during which the Executive is prohibited from competition with the Company. (b) The Executive shall not during the term of his Employment under this Agreement or any renewal thereof, and for a period of one (1) year thereafter, employ, retain or arrange to have any other person or entity employ or retain any person who was employed by the Company or any of its affiliated companies having a salary of at least U.S. $50,000 per annum during the term of this Agreement or any renewal thereof. (c) If any provision of this Section is held to be unenforceable because of the scope, duration or area of its applicability or otherwise, the legal entity making that determination will have the power to modify the scope, duration or area, or all of them, and the provision will then apply in its modified form. 9. PROPERTY. All letters, memoranda, documents, business notes (including all copies thereof) and other information contained on any other computer media including computer disks and hard drives of the Executive in any manner relating to the duties of Executive under this agreement are the property of the Company. 10. NOTICES. Any notice to be given to Executive by the Company under this Agreement shall be deemed to have been given by the Company and received by Executive if and when it is hand delivered to Executive, or it is sent by registered or certified mail to Executive at his home address or transmitted by facsimile transmission ("FAX"). Any notice to be given to the Company by Executive under this Agreement shall be deemed to have been given by Executive and received by the Company if and when it is hand delivered by Executive to the Chairman or his designee, it is sent by registered or certified mail, addressed to the Board of Directors of the Company c/o Bacou USA, Attention: President or transmitted by FAX confirmed in writing mailed to the Board of Directors of the Company c/o Bacou USA, Inc., Attention: President. 6 7 11. FULL AND COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements. This Agreement may be modified only by a written instrument executed by both parties. 12. CONSTRUCTION. This Agreement shall be construed under the laws of the Commonwealth of Virginia. 13. ARBITRATION. Notwithstanding the fact that the parties shall be entitled to equitable relief in order to enforce certain provisions hereunder (e.g., temporary restraining orders or injunctive relief), any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the "Commercial Arbitration Rules" of the American Arbitration Association in effect on the date of this Agreement, except as varied below. The site of any such arbitration shall be Richmond, Virginia and any award shall be deemed to be a Richmond, Virginia award. There shall be a single arbitrator who shall be admitted to practice law in Virginia, with no less than ten (10) years experience in the handling of commercial or corporate matters or disputes. The arbitrator shall render a written decision stating his reasons therefor, and shall render an award within six (6) months of the request for arbitration, and such award shall be final and binding upon both parties. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow. The substantive law to be applied to any case determined pursuant to this Section 13 is that of the Commonwealth of Virginia. The expense of arbitration shall be borne by the respective parties except to the extent that the arbitrators shall determine that the entire expense shall be borne by a single party. IN WITNESS WHEREOF, the Company and the Executive have duly executed this Agreement as of the day and year first written above. TITMUS OPTICAL, INC. TITMUS OPTICAL, INC. By: /s/ W. Stepan By: /s/ E. E. Greene -------------------------- --------------------------- Walter Stepan Edward E. Greene Chairman President EXECUTIVE: /s/ Thomas J. Goeltz ------------------------------ Thomas J. Goeltz 7 EX-27 16 FINANCIAL DATA SCHEDULE
5 0001006027 BACOU USA, INC. 1 U.S. DOLLARS 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 1 21,033,261 0 10,500,190 791,531 17,483,418 50,771,043 27,069,129 7,195,477 125,109,136 10,617,884 0 0 0 17,312 112,389,940 125,109,136 109,267,664 109,267,664 47,354,612 47,354,612 0 0 895,629 31,578,763 12,201,930 19,376,833 0 0 0 19,376,833 1.18 1.18
-----END PRIVACY-ENHANCED MESSAGE-----