<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
0-28040
-------------------------------
COMMISSION FILE NUMBER
-------------------------------
BACOU USA, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 05-0470688
--------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10 THURBER BOULEVARD, SMITHFIELD, RHODE ISLAND 02917-1896
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(401) 233-0333
-------------------------------------------------------------
(Registrant's telephone number, including area code)
------------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of November 14, 1997 was 17,614,200.
<PAGE> 2
BACOU USA, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
September 30, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income,
Three Months and Nine Months ended
September 30, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows,
Nine Months Ended September 30, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
2
<PAGE> 3
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,705,347 $ 21,033,261
Trade accounts receivable, net 18,867,617 10,500,190
Inventories 24,888,138 17,483,418
Prepaid expenses 3,654,706 992,174
Deferred income taxes 1,518,000 762,000
------------- -------------
Total current assets 51,633,808 50,771,043
------------- -------------
Property and equipment, net 33,982,092 27,069,129
Intangible assets, net 71,769,077 47,268,964
------------- -------------
Total assets $ 157,384,977 $ 125,109,136
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 8,400,000 $ --
Accounts payable 3,378,741 4,015,904
Accrued compensation and benefits 4,494,953 3,162,699
Other accrued expenses 4,256,237 1,786,473
Income taxes payable 521,122 1,652,808
------------- -------------
Total current liabilities 21,051,053 10,617,884
Deferred income taxes 7,175,000 2,084,000
------------- -------------
Total liabilities 28,226,053 12,701,884
------------- -------------
Common stock subject to a put option, 595,000
shares in 1997 9,730,000 --
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, 18,166,200 shares issued and
17,611,800 shares outstanding in 1997 (including
shares subject to a put option) and 17,312,200
shares issued and outstanding in 1996 17,571 17,312
Additional paid-in capital 70,744,648 66,514,906
Treasury stock, 554,400 shares in 1997, at cost (8,038,800) --
Retained earnings 56,705,505 45,875,034
------------- -------------
Total stockholders' equity 119,428,924 112,407,252
------------- -------------
Total liabilities and stockholders' equity $ 157,384,977 $ 125,109,136
============= =============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales..................................... $ 35,744,384 $ 29,319,047 $ 94,455,271 $ 84,413,341
Cost of sales................................. 17,941,199 12,435,657 45,184,603 36,385,779
------------ ------------ ------------ ------------
Gross profit.................................. 17,803,185 16,883,390 49,270,668 48,027,562
Operating expenses:
Selling...................................... 5,418,363 4,521,233 15,358,548 13,080,641
Research and development..................... 391,545 -- 488,588 --
Purchased in-process research and development 2,420,656 -- 3,720,656 --
General and administrative................... 3,015,664 2,335,241 7,642,991 6,325,456
Amortization of intangible assets............ 1,092,692 1,041,039 2,912,546 3,143,249
------------ ------------ ------------ ------------
Total operating expenses...................... 12,338,920 7,897,513 30,123,329 22,549,346
------------ ------------ ------------ ------------
Operating income.............................. 5,464,265 8,985,877 19,147,339 25,478,216
Other expense (income):
Interest expense............................. 13,815 6,476 117,676 818,072
Interest income.............................. (8,027) (155,282) (388,555) (257,539)
Other........................................ 86,079 (54,370) (210,392) (216,579)
------------ ------------ ------------ ------------
Total other expense (income).................. 91,867 (203,176) (481,271) 343,954
------------ ------------ ------------ ------------
Income before income taxes.................... 5,372,398 9,189,053 19,628,610 25,134,262
Income taxes.................................. 2,918,942 3,533,520 8,798,139 9,723,920
------------ ------------ ------------ ------------
Net income.................................... $ 2,453,456 $ 5,655,533 $ 10,830,471 $ 15,410,342
============ ============ ============ ============
Net income per common and common
equivalent share............................. $ 0.14 $ 0.33 $ 0.62 $ 0.96
============ ============ ============ ============
Weighted average common and common
equivalent shares............................ 17,352,674 17,354,265 17,328,809 16,134,847
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,830,471 $ 15,410,342
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,333,662 5,850,406
Purchased in-process research and development 3,720,656 --
Deferred income taxes (18,208) 552,699
Change in assets and liabilities, net of effects of
acquired companies:
Trade accounts receivable (2,712,506) (3,417,758)
Inventories 760,639 2,192,483
Prepaid expenses and other current assets (1,355,675) (30,147)
Accounts payable (2,254,591) 167,229
Accrued expenses 642,281 (27,764)
Income taxes (1,212,125) 2,419,220
------------ ------------
Net cash provided by operating activities 14,734,604 23,116,710
------------ ------------
Cash flows from investing activities:
Capital expenditures (3,517,425) (7,360,650)
Acquisition of businesses, including direct costs
of acquisition, net of cash acquired (27,921,377) (33,089)
------------ ------------
Net cash used in investing activities (31,438,802) (7,393,739)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 8,000,000 --
Repayment of long-term debt (8,000,000) (49,000,000)
Advances from notes payable, net 6,355,084 --
Proceeds from issuance of common stock, net of
expenses 60,000 47,330,933
Treasury stock acquired (8,038,800) --
------------ ------------
Net cash used in financing activities (1,623,716) (1,669,067)
------------ ------------
Net increase (decrease) in cash and cash equivalents (18,327,914) 14,053,904
Cash and cash equivalents at beginning of period 21,033,261 1,210,247
------------ ------------
Cash and cash equivalents at end of period $ 2,705,347 $ 15,264,151
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 117,676 $ 839,381
============ ============
Cash paid during the period for income taxes $ 9,731,506 $ 6,769,280
============ ============
Fair value of common stock issued in connection with
the acquisition of a business $ 13,900,000 --
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements ("financial
statements") include the accounts of Bacou USA, Inc. and its wholly-owned
subsidiaries (together the "Company"). The Company designs, manufactures and
sells personal protective equipment, including non-prescription safety
eyewear, frames for prescription eyewear, supplied air and air purifying
respirators, gas monitors, equipment for testing breathing apparatus, vision
screening equipment and laser safety eyewear.
The financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission for interim financial
information, including the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, certain information and footnote disclosures
normally required in complete financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. In the
opinion of management these financial statements include all adjustments
necessary for a fair presentation of the results of operations for the interim
periods presented. Results of operations for interim periods may not be
indicative of results expected for a full year.
2. ACQUISITIONS
On May 30, 1997 the Company completed its acquisition of Comasec Holdings, Inc.
(Comasec) and its wholly-owned subsidiary Survivair, Inc. (Survivair), a
manufacturer of respiratory protection products. The acquisition was effected
through merger and redemption transactions which have been accounted for as a
purchase of all of the outstanding common stock of Comasec for $27.4 million
in cash, subject to certain closing adjustments.
On September 30, 1997 the Company completed its acquisition of Biosystems, Inc.
(Biosystems), a manufacturer of gas monitors and equipment for testing
breathing apparatus. The Company acquired all of the outstanding common stock
of Biosystems for an initial price of approximately $13.5 million, subject to
certain closing adjustments, and payable in common stock of the Company. On
September 30, 1997 the Company issued 850,000 shares of its common stock,
having a fair value on that date of approximately $13.9 million, in connection
with the acquisition of Biosystems. These shares will be held in escrow until a
final determination of all closing adjustments is made. Shares equal to 70
percent of the total shares issued in connection with the acquisition of
Biosystems are subject to a put option. The put option is exercisable at any
time within 24 months following the closing date at a price equal to
approximately $16 3/8 per share. In addition to the initial price, the Company
may be obligated to pay additional amounts if the operating results of
Biosystems in the year 2000 exceed certain defined thresholds. Additional
payments, if any, are payable in common shares of the Company, except that the
sellers may elect to receive up to $12.0 million in cash.
In accordance with generally accepted accounting principles, the cash paid and
fair value of common stock issued to effect these acquisitions has been
allocated to the fair value of assets purchased and liabilities assumed. In each
case, the excess of acquisition price over fair value of net assets acquired has
been recorded as goodwill and is being amortized over 40 years. Amounts recorded
as goodwill are subject to change based on the resolution of various
outstanding closing adjustments and in the case of Biosystems, as a result of
additional payments that may be made if operating results in the year 2000
exceed defined thresholds. The fair value of purchased in-process research and
development was $1.3 million for Survivair and $2.4 million for Biosystems and
has been charged to operating expenses at the respective dates of acquisition.
The purchase price for these acquisitions has been allocated approximately as
shown in the following table.
6
<PAGE> 7
<TABLE>
<CAPTION>
Survivair Biosystems Combined
--------- ---------- --------
<S> <C> <C> <C>
Working capital $4,000,000 $1,000,000 $5,000,000
Property and equipment $6,100,000 $700,000 $6,800,000
Identifiable intangible assets $4,300,000 $3,300,000 $7,600,000
Purchased in-process research and development $1,300,000 $2,400,000 $3,700,000
Goodwill $11,700,000 $6,500,000 $18,200,000
</TABLE>
The acquisitions have been accounted for as purchases and, accordingly,
operating results of the acquired companies have been included in the
accompanying financial statements of the Company beginning with the respective
acquisition dates. The following table presents pro forma results of operations
of the Company as if these acquisitions had occurred as of January 1, 1996 (in
thousands). The pro forma operating results include results of operations for
the indicated periods with adjusted depreciation on property and equipment,
increased amortization of intangible assets, assumed interest expense on the
cash purchase price, and increased weighted shares outstanding for shares issued
in connection with the acquisitions. Non-recurring charges resulting from the
acquisitions have been excluded from the pro forma results. The pro forma
information given does not purport to be indicative of the results that actually
would have been obtained if the operations were combined during the periods
presented and is not intended to be a projection of future results or trends.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
---- ----
<S> <C> <C>
Net sales $119,651 $117,903
Net income $ 16,871 $ 15,939
Net income per common and common
equivalent share $ 0.93 $ 0.94
Weighted average common and common
equivalent shares outstanding 18,179 16,985
</TABLE>
3. Trade Accounts Receivable
An allowance for doubtful accounts is deducted from trade accounts receivable in
the accompanying financial statements. The allowance for doubtful accounts was
$956,683 at September 30, 1997 and $791,531 at December 31, 1996.
4. Inventories
Inventories consist of the following:
September 30, December 31,
1997 1996
------------- ------------
Raw material and supplies .......... $ 9,699,120 $ 6,005,983
Work-in-process .................... 4,037,485 2,092,083
Finished goods ..................... 11,151,533 9,385,352
----------- -----------
$24,888,138 $17,483,418
=========== ===========
5. Property, Equipment And Intangible Assets
Depreciation of property and equipment 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. Accumulated depreciation and amortization totaled
$10,516,892 at September 30, 1997 and $7,195,477 at December 31, 1996.
Intangible assets are amortized using the straight-line method over the
estimated periods benefited. Accumulated amortization totaled $11,512,349 at
September 30, 1997 and $8,600,454 at December 31, 1996.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FACTORS THAT MAY AFFECT FUTURE PERFORMANCE
Statements contained in this Form 10-Q 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. In addition, when used
in this Form 10-Q, words such as "believes," "anticipates," "expects," and
similar expressions are intended to identify forward-looking statements. 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 quarters. 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.
ACQUISITIONS
The Company acquired all of the outstanding capital stock of Comasec on May 30,
1997. The assets of Comasec consisted primarily of its wholly-owned subsidiary
Survivair, a manufacturer of respiratory protection products. The acquisition
was effected through merger and redemption transactions which have been
accounted for as a purchase of all of the outstanding common stock of Comasec
for $27.4 million in cash, subject to certain closing adjustments. Operating
results of Survivair have been included in the financial statements of the
Company beginning June 1, 1997.
The Company also acquired all of the capital stock of Biosystems, a manufacturer
of gas monitors and equipment for testing breathing apparatus, on September 30,
1997. The initial acquisition price was approximately $13.5 million payable in
common stock of the Company and is subject to certain closing adjustments. The
initial acquisition price may be increased if the operating results of
Biosystems in the year 2000 exceed certain defined thresholds. Except for the
non-recurring charge for purchased in-process research and development which
were recorded on September 30, 1997, operating results of Biosystems will be
included in the financial statements of the Company beginning October 1, 1997.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
The following table presents certain items from the Company's consolidated
condensed statements of income, and such amounts as percentages of net sales,
for the periods indicated (in thousands, except percentages).
8
<PAGE> 9
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------
1997 1996
---- ----
<S> <C> <C> <C> <C>
Net sales $35,744 100.0% $29,319 100.0%
Cost of sales 17,941 50.2 12,436 42.4
------- ----- ------- -----
Gross profit 17,803 49.8 16,883 57.6
------- ----- ------- -----
Operating expenses:
Selling 5,418 15.1 4,521 15.4
Research and development 391 1.1 -- --
Purchased in-process research and
development 2,421 6.8 -- --
General and administrative 3,016 8.4 2,335 8.0
Amortization of intangible assets 1,093 3.1 1,041 3.5
------- ----- ------- -----
Total operating expenses 12,339 34.5 7,897 26.9
------- ----- ------- -----
Operating income 5,464 15.3 8,986 30.7
Other expense (income), net 92 0.3 (203) (0.7)
------- ----- ------- -----
Income before income taxes 5,372 15.0 9,189 31.4
Income taxes 2,919 8.2 3,533 12.1
------- ----- ------- -----
Net income $ 2,453 6.8% $ 5,656 19.3%
======= ===== ======= =====
</TABLE>
Net Sales. Net sales increased 21.9% from $29.3 million for the three
months ended September 30, 1996 to $35.7 million for the three months ended
September 30, 1997. Net sales for the 1997 period included sales for Survivair
of $6.4 million, accounting for the increase in total sales for the quarter.
Excluding sales of discontinued product lines, net sales increased by 25.3% from
$28.4 million in the 1996 period to $35.6 million in the 1997 period.
Export sales represented 11.5% of net sales in the 1997 period and 6.5% of
net sales in the 1996 period, increasing by 115.0% from 1996 to 1997. Export
sales for the 1997 period included export sales for Survivair of $1.2 million.
Cost of Sales. Cost of sales increased 44.3% from $12.4 million for the
three months ended September 30, 1996 to $17.9 million for the three months
ended September 30, 1997 primarily as a result of the acquisition of Survivair.
Gross Profit. Gross profit increased 5.4% from $16.9 million for the three
months ended September 30, 1996 to $17.8 million for the three months ended
September 30, 1997. As a percentage of sales, gross profit was 49.8% in the 1997
period and 57.6% in the 1996 period. The Company's gross margin declined from
the 1996 period to the 1997 period primarily due to the acquisition of
Survivair. The gross margin of Survivair is lower than the combined gross margin
of the Company's other subsidiaries. In addition, acquisition-related charges
reduced gross profit by approximately $775,000 during the third quarter of 1997.
Excluding these charges, gross margin for the 1997 period would have been 52.0%.
Acquisition-related charges relating to Biosystems will reduce gross profit for
the fourth quarter of 1997 by approximately $400,000.
Operating Expenses. The acquisition of Biosystems has been accounted
for as a purchase and accordingly, the purchase price has been allocated to the
fair value of assets purchased and liabilities assumed. This allocation
included the fair value of in-process research and development equal to $2.4
million. Accordingly, a non-recurring charge for purchased in-process research
and development of Biosystems, in the amount of $2.4 million, was recorded in
the 1997 period. Operating expenses, excluding the non-recurring charge and
excluding amortization expense, increased from $6.9 million for the three
months ended September 30, 1996 to $8.8 million for the three months ended
September 30, 1997, primarily as a result of the acquisition of Survivair.
Amortization of intangible assets for the 1997 period was essentially unchanged
compared with the 1996 period, however, is expected to increase by
approximately $400,000 on an annual basis as a result of the Biosystems
acquisition.
Operating Income. As a result of the foregoing, the Company's operating
income declined from $9.0 million for the three months ended September 30, 1996
to $5.5 million for the three months ended September 30, 1997.
Income Taxes. The Company's effective income tax rate was 54.3% in the 1997
period and 38.5% in the 1996 period. The effective rate was higher than the
federal statutory rate of 35.0% due to state and local income taxes and, in the
1997 period, because a tax benefit cannot be recorded for the non-recurring
charge equal to $2.4 million for the purchase of in-process research and
development of Biosystems.
9
<PAGE> 10
Net Income. As a result of the foregoing, the Company's net income totaled
$2.5 million in the 1997 period and $5.7 million in the 1996 period. Excluding
the effect of non-recurring acquisition-related adjustments, the Company's net
income would have been $5.4 million in the 1997 period compared with $5.7
million in the 1996 period.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996
The following table presents certain items from the Company's consolidated
condensed statements of income, and such amounts as percentages of net sales,
for the periods indicated (in thousands, except percentages).
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1997 1996
---- ----
<S> <C> <C> <C> <C>
Net sales $ 94,455 100.0% $ 84,413 100.0%
Cost of sales 45,185 47.8 36,386 43.1
-------- -------- -------- --------
Gross profit 49,270 52.2 48,027 56.9
-------- -------- -------- --------
Operating expenses:
Selling 15,359 16.3 13,081 15.5
Research and development 488 0.5 -- --
Purchased in-process
research and development 3,721 3.9 -- --
General and administrative 7,643 8.1 6,325 7.5
Amortization of intangible
assets 2,912 3.1 3,143 3.7
-------- -------- -------- --------
Total operating expenses 30,123 31.9 22,549 26.7
-------- -------- -------- --------
Operating income 19,147 20.3 25,478 30.2
Other expense (income), net (481) (0.5) 344 0.4
-------- -------- -------- --------
Income before income taxes 19,628 20.8 25,134 29.8
Income taxes 8,798 9.3 9,724 11.5
-------- -------- -------- --------
Net income $ 10,830 11.5% $ 15,410 18.3%
======== ======== ======== ========
</TABLE>
Net Sales. Net sales increased 11.9% from $84.4 million for the nine months
ended September 30, 1996 to $94.4 million for the nine months ended September
30, 1997. Net sales for the 1997 period include sales for Survivair of $8.8
million. There were no sales for Survivair included for the 1996 period.
Excluding sales of discontinued product lines, net sales increased by 16.2% from
$80.9 million in the 1996 period to $94.1 million in the 1997 period.
Export sales represented 11.0% of net sales in the 1997 period and 7.0% of net
sales in the 1996 period, increasing by 75.7% from 1996 to 1997.
Cost of Sales. Cost of sales increased 24.2% from $36.4 million for the nine
months ended September 30, 1996 to $45.2 million for the nine months ended
September 30, 1997. The increase was primarily attributable to the acquisition
of Survivair as well as higher production costs at Titmus Optical, Inc. (Titmus)
during the first quarter of 1997.
Gross Profit. Gross profit increased from $48.0 million for the nine months
ended September 30, 1996 to $49.3 million for the nine months ended September
30, 1997. As a percentage of net sales, gross profit was 52.2% for the 1997
period and 56.9% for the 1996 period. The Company's gross margin declined from
the 1996 period to the 1997 period as a result of lower gross margins at
Survivair, acquisition - related charges at Survivair totaling approximately
$1.3 million, and higher production costs during the first quarter of 1997 at
Titmus. Excluding the acquisition-related charge, the Company's gross margin for
the 1997 period would have been 53.6%.
10
<PAGE> 11
Operating Expenses. The Company has recorded during the 1997 period
non-recurring charges equal to $3.7 million in the aggregate for purchased
in-process research and development of Survivair and Biosystems. Operating
expenses, excluding non-recurring charges and amortization expense, increased
from $19.4 million for the nine months ended September 30, 1996 to $23.5 million
for the nine months ended September 30, 1997. This increase was primarily the
result of the acquisition of Survivair as well as additional advertising and
marketing costs in the 1997 period.
Operating Income. As a result of the foregoing, the Company's operating income
declined from $25.5 million for the nine months ended September 30, 1996 to
$19.1 million for the nine months ended September 30, 1997.
Other Expense (Income). Other expense (income) was $0.3 million and $(0.5)
million for the nine months ended September 30, 1996 and 1997, respectively.
The Company had outstanding indebtedness totaling $49.0 million at January 1,
1996. This indebtedness was fully repaid by April 1996, primarily with proceeds
from the Company's initial public offering. The Company has had lower levels of
debt outstanding during the 1997 period, and the change in other expense
(income) is primarily due to a decline in net interest expense from 1996 to
1997.
Income Taxes. The Company's effective income tax rate was 44.8% during the 1997
period and 38.7% during the 1996 period. The effective rate was higher than the
federal statutory rate due to state and local taxes and, in the 1997 period,
because a tax benefit cannot be recorded for non-recurring charges equal to $3.7
million for the purchase of in-process research and development of Survivair and
Biosystems.
Net Income. As a result of the foregoing, the Company's net income declined from
$15.4 million for the nine months ended September 30, 1996 to $10.8 million for
the nine months ended September 30, 1997. Excluding the effect of non-recurring
acquisition-related adjustments, the Company's net income would have been $15.4
million in both the i997 and 1996 periods.
LIQUIDITY AND CAPITAL RESOURCES
Gross cash flow (net income plus non-cash items) totaled $20.9 million
during the 1997 period and $21.8 million during the 1996 period. Earnings before
interest, taxes, depreciation and amortization (EBITDA) and before non-recurring
acquisition-related charges totaled $30.5 million during the 1997 period and
$31.3 million during the 1996 period.
Excluding trade accounts receivable acquired in connection with the
Survivair and Biosystems acquisitions, the Company's trade accounts receivable
increased from $10.5 million at December 31, 1996 to $13.9 million at September
30, 1997. This increase resulted primarily from sales volume during the third
quarter of 1997 that exceeded sales volume during the fourth quarter of 1996.
Inventories increased from $17.5 million at December 31, 1996 to $24.9 million
at September 30, 1997 entirely as a result of the acquisitions of Survivair and
Biosystems.
Cash used in investing activities totaled $31.4 million in the 1997 period
compared with $7.4 million in the 1996 period. The 1997 period includes $27.9
million expended for the acquisition of businesses, principally in connection
with the Survivair acquisition. Capital expenditures totaled $3.5 million in the
1997 period and $7.4 million in the 1996 period.
The acquisition of Survivair was financed principally from available cash
balances. The Company borrowed $8.0 million in connection with the acquisition
of Survivair under a term note. This borrowing was repaid in full during the
second quarter of 1997, in part from proceeds from a revolving line of credit.
Effective May 21, 1997 the Company closed on a $28.0 million Revolving Line
of Credit (the "Revolving Facility") with Citizens Bank of Rhode Island
("Citizens"). The Revolving Facility is available to fund future acquisitions
and for other general corporate purposes. Principal outstanding under the
Revolving Facility is due in full on April 30, 1998 and bears interest at the
rate per annum equal to LIBOR plus 0.7%. The Revolving Facility is subject to
annual renewal and is also subject to various covenants including a covenant to
maintain a ratio of liabilities to tangible net worth of not more than 1.0:1.0.
Principal outstanding totaled $7.2 million at September 30, 1997. Biosystems
maintained a line of credit facility which was terminated in October 1997 and
all outstanding principal ($1.2 million at September 30, 1997) was repaid
through advances under the Revolving Facility.
11
<PAGE> 12
The Company also maintains a $3.0 million revolving line of credit which is
available for use by a wholly-owned subsidiary for its general working capital
purposes. Significant terms and conditions relating to this facility are
consistent with terms and conditions of the Revolving Facility. There were no
principal amounts outstanding under this facility at September 30, 1997.
During the third quarter of 1997 the Company purchased 554,000 unregistered
shares in a privately negotiated transaction from a non-affiliated corporate
investor at a purchase price of $14.50 per share, or a total of $8,038,800.
These shares were held in treasury at September 30, 1997; however, in October
1997 the Board of Directors voted to retire and cancel these shares. Effective
September 30, 1997 the Board of Directors also authorized an open market buyback
program to purchase up to 300,000 shares of the Company's common stock. As of
November 14, 1997 no shares had been purchased under this program.
In connection with the Biosystems acquisition, the Company provided selling
shareholders with a put option covering 70 percent of the shares (currently
estimated to be 595,000 shares) issued in connection with that acquisition. The
put options may be exercised within 24 months following the acquisition date at
a price approximately equal to $16 3/8 per share. If the put options were
exercised in full, the Company would be obligated to repurchase shares at a
value totaling approximately $9,730,000.
The Company believes that cash flow from operations together with available
borrowing capacity are sufficient to fund working capital requirements, debt
service requirements, and capital expenditures for the foreseeable future. The
Company pursues a business strategy which includes acquisitions as an important
element. The Company may incur additional indebtedness, may be required to
negotiate additional credit facilities, or may issue additional common stock in
order to fund investments, if any, resulting from its acquisition strategy.
SEASONALITY
The Company's business has been subject to slight seasonal variations which the
Company has attributed to fluctuations in industrial activity and 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 and 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.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 128, "Earnings Per Share,"
(Statement 128) was issued in February 1997. Statement 128 requires dual
presentation of basic earnings per share and diluted earnings per share, and
supersedes previously issued accounting principles concerning determination and
disclosure of earnings per share. The Company is required to adopt the
provisions of Statement 128 for the year ended December 31, 1997; however, these
provisions may not be adopted for interim financial statements issued prior to
December 31, 1997. The Company does not believe Statement 128 will have a
significant impact on the determination of its 1997 earnings per share when the
related provisions are adopted.
Statement of Financial Accounting Standard No. 131, "Disclosures about Segments
of an Enterprise and Related Information," (Statement 131) was issued in June
1997. Statement 131 requires disclosure of financial and descriptive information
about reportable operating segments, and supersedes previously issued accounting
principles concerning segment reporting. The Company is required to adopt the
provisions of Statement 131 for periods beginning after December 15, 1997
(calendar year 1998 for the Company). Statement 131 will, at most, require
certain additional disclosure in the Company's financial statements.
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
Exhibit 4(a) Employment Agreement dated May 30, 1997 between Survivair, Inc. and Jack Bell
Exhibit 4(b) Employment Agreement dated May 30, 1997 between Survivair, Inc. and Robert
Hitchcock
Exhibit 4(c) Employment Agreement dated May 30, 1997 between Survivair, Inc. and Stephen E.
Wiser
Exhibit 4(d) Employment Agreement dated October 1, 1997 between Biosystems, Inc. and Jack Burt
Exhibit 4(e) Employment Agreement dated October 1 1997 between Biosystems, Inc. and Joseph
Burt
Exhibit 4(f) Employment Agreement dated October 1, 1997 between Biosystems, Inc. and Jeffrey M.
Whynall
Exhibit 4(g) First Amendment to Employment Agreement with Walter Stepan
Exhibit 4(h) Third Amendment to Employment Agreement with Philip B. Barr
Exhibit 11 Statement Re: Computation of Per Share Earnings
Exhibit 27 Financial Data Scbedule
</TABLE>
(b) The registrant filed one report on Form 8-K during the quarterly period
ended September 30, 1997. The report, dated May 30, 1997, was filed for the
purpose of amending a previously filed Form 8-K relating to the acquisition
of Comasec and its wholly-owned subsidiary Survivair, and provided
financial statements of the businesses acquired and related pro-forma
financial information.
SIGNATURES
Pursuant to the requirements 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.
Dated: November 14, 1997
BACOU USA, INC.
(Registrant)
/s/ Philip B. Barr, Jr. /s/Jeffrey T. Brown
------------------------------- ----------------------------
Philip B. Barr, Jr., Jeffrey T. Brown
Executive Vice President and Corporate Controller and
Chief Financial Officer Chief Accounting Officer
13
<PAGE> 1
EXHIBIT 4(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 30th day of May 1997, by and between Jack
Bell of 610 Carnation, Corona Del Mar, CA 92625 ("Executive") and Survivair,
Inc., a corporation organized under the laws of Connecticut (the "Company").
W I T N E S S E T H :
WHEREAS, Bacou USA, Inc. has entered into an agreement to purchase the
company and desires to clarify the terms and conditions which Executive shall
continue to be employed by the company; and
WHEREAS, Company wishes to secure the services of Executive as 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,
Company and Executive hereby agree as follows:
1. EMPLOYMENT. During the period of employment set forth in Section 2
of this Agreement, Company shall employ Executive, and Executive shall serve as
President and Chief Executive Officer of 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 business of Company. 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 USA, Inc. or his designee ("Chairman"). Executive also agrees
that he will not engage in any other business activities without the prior
approval of the Chairman. 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
Chairman. The Executive represents and warrants to Company that he is now under
no contract or agreement 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 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 (as hereinafter
defined), including extensive travel.
2. PERIOD OF EMPLOYMENT. This Agreement shall become effective upon
the closing of the transaction in which Bacou USA, Inc. become the direct or
indirect owner of the Company and its terms shall be retroactively applicable to
the first day of the Initial Term, as defined herein. 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") unless at least six months prior to the end of any Term either
party shall have served written notice on the other of its election to allow
this Agreement to terminate at the end of such Term. The Initial Term and any
Renewal Terms are hereinafter sometimes collectively referred to as the "Term."
<PAGE> 2
If either party notifies the other party that it shall not extend the
period of employment, Company 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 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 Company for cause.
Termination for cause shall mean termination by action of the Board
of Directors of Company because of the willful failure of Executive
to perform his duties and obligations under this Agreement or
failure to execute in a reasonable and responsible manner the
policies of 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) The Executive shall receive regular compensation (the "Base
Salary") at the initial rate per annum of One Hundred Fifty-Five Thousand
Dollars ($155,000.00) per annum for the Initial Term. 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 of the Company. The
Executive shall participate in any wage increases applicable generally to
salaried employees of Company. The Base Salary prevailing at any time shall be
reviewed annually for a possible increase beginning in January 1998.
(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 pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year. Executive acknowledges that, by agreeing to participate in the
Bonus Plan for subsidiaries of Bacou USA, Inc. he thereby waives any rights to
participate in any other incentive compensation plan of the Company.
(c) Incentive Compensation shall be paid by Company for the prior
fiscal year within ten (10) days after a decision is made by the Board of
Directors of 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 Company or March 31.
(d) The Executive shall be entitled to participate in any stock
option plan which Bacou USA, Inc. may adopt for Company at levels to be
determined by the Board of Directors of Company in
-2-
<PAGE> 3
their sole discretion. In connection with the execution of this Agreement and
subject to the execution of the Stock Option Agreement attached hereto as
Exhibit A, Executive shall be granted options to purchase 15,000 shares of
common stock of Bacou at a per share price equal to the closing price on the
trading day immediately preceding the date on which he executes this Agreement.
(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 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 shall have the use of a company car, subject to
the Automobile Policy of Bacou USA, Inc.
(ii) The Executive shall be entitled to vacation pursuant to
the Bacou USA, Inc. Executive Vacation Policy. Vacation days will be taken at a
time convenient for both the Executive and 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 Company, including
expenses for meals and lodging (regular hotel room, no suites), entertainment,
and similar items as required from time to time by the Executive's duties.
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 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 or the Executive Vice President of Bacou must
be obtained prior to the Executive taking any of the following actions on behalf
of the Company:
(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 of Directors of Company;
-3-
<PAGE> 4
(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 any qualified 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 selling any fixed asset of the Company below book value;
(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 except purchase orders for
materials required for the manufacture of products for sale in
the ordinary course of business;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its
affiliates, as well as closing or curtailing the functions of
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 Company 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 approved and applicable annual budget or annual plan of
Company. In addition, should the Chairman or Executive Vice President 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 Company. The
Executive will immediately inform the Chairman and the Executive Vice President
of Bacou USA, Inc. of any such decisions made by him.
6. NON-DISCLOSURE OF INFORMATION. It is understood that the business
of Company and its affiliates is of a confidential nature. During the period of
the Executive's employment with Company, the Executive may have received and/or
may secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
-4-
<PAGE> 5
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
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 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 Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
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 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 Company, assign, transfer, and set over to 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 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 Company (whether during or
outside normal working hours) relating to or in any way pertaining to or
connected with Company's business, shall be the sole and exclusive property of
Company or its designee and the Executive, whenever requested to do so by
Company, shall, without further compensation or consideration properly execute
any and all applications, assignments or other documents which 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 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 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 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 Company or any
of its affiliates. In the event that Company chooses to exercise its option to
prevent the Executive from competing with Company following termination or
non-renewal of his employment, 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 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
-5-
<PAGE> 6
termination, resignation, or non-renewal of employment during which such
competitive activity shall be prohibited. In the event Company exercises its
option, 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 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 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 (3) years
thereafter, employ, retain or arrange to have any other person or entity employ
or retain any person who was employed by 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 Company.
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..
10 Thurber Boulevard
Smithfield, RI 02917
Attention: President
Telephone No.: 401-233-0333
Telecopier No.: 401-232-2230
-6-
<PAGE> 7
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
(b) If to the Executive, to him at:
610 Carnation
Corona Del Mar, CA 92625
Telephone No.: 714-673-4323
with a copy to:
Telephone No.: ( )
Telecopier No.: ( )
Any party may change its address for receiving notice by written notice given to
the other names 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 California.
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
-7-
<PAGE> 8
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.
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.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
SURVIVAIR, INC.
By: /s/ Walter Stepan
--------------------------
Title: Chairman
EXECUTIVE:
/s/ Jack Bell
- ------------------------------
-8-
<PAGE> 1
EXHIBIT 4(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 30th day of May, 1997, by and between
Robert Hitchcock of 24971 Sausalito Street, Laguna Hills, CA 92653 ("Executive")
and Survivair, Inc., a corporation organized under the laws of Connecticut (the
"Company").
W I T N E S S E T H :
WHEREAS, Bacou USA, Inc. has entered into an agreement to purchase the
Company and desires to clarify the terms and conditions upon which Executive
shall continue to be employed by the Company; and
WHEREAS, Company wishes to secure the services of Executive as Vice
President - Marketing & 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,
Company and Executive hereby agree as follows:
1. EMPLOYMENT. During the period of employment set forth in Section 2
of this Agreement, Company shall employ Executive, and Executive shall serve as
Vice President - Marketing & Sales of 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 business of Company. 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 USA, Inc. or his designee ("Chairman"). Executive also agrees
that he will not engage in any other business activities without the prior
approval of the Chairman. 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
Chairman. The Executive represents and warrants to Company that he is now under
no contract or agreement 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 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 (as hereinafter
defined), including extensive travel.
2. PERIOD OF EMPLOYMENT. This Agreement shall become effective upon
the closing of the transaction in which Bacou USA, Inc. becomes the direct or
indirect owner of the Company and its terms shall be retroactively applicable to
the first day of the Initial Term, as defined herein. 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") unless at least six months
<PAGE> 2
prior to the end of any Term either party shall have served written notice on
the other of its election to allow this Agreement to terminate at the end of
such Term. The Initial Term and any Renewal Terms are hereinafter sometimes
collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company 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 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 Company for cause.
Termination for cause shall mean termination by action of the Board
of Directors of Company because of the willful failure of Executive
to perform his duties and obligations under this Agreement or
failure to execute in a reasonable and responsible manner the
policies of 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) The Executive shall receive regular compensation (the "Base
Salary") at the initial rate per annum of One Hundred Fifty-Three Thousand Five
Hundred Twenty-Eight Dollars ($153,528.00) per annum for the period January 1 to
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 of the Company. The Executive shall participate in any wage
increases applicable generally to salaried employees of Company. The Base Salary
prevailing at any time shall be reviewed annually for a possible increase
beginning in January 1998.
(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 pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year. Executive acknowledges that, by agreeing to participate in the
Bonus Plan for subsidiaries of Bacou USA, Inc., he thereby waives any rights to
participate in any other incentive compensation plan of the Company.
2
<PAGE> 3
(c) Incentive Compensation shall be paid by Company for the prior
fiscal year within ten (10) days after a decision is made by the Board of
Directors of 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 Company or March 31.
(d) The Executive shall be entitled to participate in any stock
option plan which Bacou may adopt for Company at levels to be determined by the
Board of Directors of Company in their sole discretion. In connection with the
execution of this Agreement and subject to the execution of the Stock Option
Agreement attached hereto as Exhibit A, Executive shall be granted options to
purchase 10,000 shares of common stock of Bacou at a per share price equal to
the closing price on the trading day immediately preceding the date on which he
executes this Agreement.
(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
executives of 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 shall have the use of a company car, subject
to the Automobile Policy of Bacou USA, Inc.
(ii) The Executive shall be entitled to vacation pursuant to
the Bacou USA, Inc. Executive Vacation Policy. Vacation days will be taken at a
time convenient for both the Executive and 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 Company, including
expenses for meals and lodging (regular hotel room, no suites), entertainment,
and similar items as required from time to time by the Executive's duties.
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 Chairman 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.
3
<PAGE> 4
(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 Company;
(d) Hiring or terminating executive personnel;
(e) Granting retirement benefits or other non-earned income to any
individual which is not available to all employees;
(f) Modification of any qualified 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 selling any fixed asset of the Company below book value;
(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 except purchase orders for
materials required for the manufacture of products for sale in
the ordinary course of business;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its
affiliates, as well as closing or curtailing the functions of
Company or any of its affiliates;
(k) Filing any lawsuit;
(l) Entering into any transaction on behalf of 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 approved and applicable annual budget or annual plan of
Company. In addition, should the Chairman 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 Company. The Executive will immediately inform the
Chairman and the Executive Vice President of Bacou USA, Inc. of any such
decisions made by him.
4
<PAGE> 5
6. NON-DISCLOSURE OF INFORMATION. It is understood that the business
of Company and its affiliates is of a confidential nature. During the period of
the Executive's employment with Company, the Executive may have received and/or
may secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
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
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 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 Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
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 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 Company, assign, transfer, and set over to 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 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 Company (whether during or
outside normal working hours) relating to or in any way pertaining to or
connected with Company's business, shall be the sole and exclusive property of
Company or its designee and the Executive, whenever requested to do so by
Company, shall, without further compensation or consideration properly execute
any and all applications, assignments or other documents which 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 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 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 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
5
<PAGE> 6
or to any corporation, holding Company or other business entity which is in a
business similar to that of Company or any of its affiliates. In the event that
Company chooses to exercise its option to prevent the Executive from competing
with Company following termination or non-renewal of his employment, 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 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 Company exercises its option, 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 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 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 (3) years
thereafter, employ, retain or arrange to have any other person or entity employ
or retain any person who was employed by 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 Company.
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:
6
<PAGE> 7
(a) If to the Company, to it at:
Survivair, Inc.
3001 S. Susan Street
Santa Ana, CA 02704
Attention: President
Telephone No.: 714-545-0410
Fax No.: 714-850-0299
with copies to:
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: President
Telephone No.: 401-232-1200
Fax No.: 401-232-2230
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
(b) If to the Executive, to him at:
24971 Sausalito Street
Laguna Hills, CA 92653
Telephone No.: 714-586-7296
with a copy to his attorney at:
Telephone No.: ( )
Telecopier No.: ( )
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
7
<PAGE> 8
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 California.
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.
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.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
SURVIVAIR, INC.
By: /s/ Walter Stepan
-------------------------------
Title: Chairman
EXECUTIVE:
/s/ Robert Hitchcock
- -----------------------------------
8
<PAGE> 1
EXHIBIT 4(c)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 30th day of May, 1997, by and between
Stephen E. Wiser of 26042 Buena Vista, Laguna Hills, CA 92653 ("Executive") and
Survivair, Inc., a corporation organized under the laws of Connecticut (the
"Company").
W I T N E S S E T H :
WHEREAS, Bacou USA, Inc. has entered into an agreement to purchase the
Company and desires to clarify the terms and conditions upon which Executive
shall continue to be employed by the Company; and
WHEREAS, Company wishes to secure the services of Executive as Vice
President - Finance 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,
Company and Executive hereby agree as follows:
1. EMPLOYMENT. During the period of employment set forth in Section 2
of this Agreement, Company shall employ Executive, and Executive shall serve as
Vice President - Finance of 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
business of Company. 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
USA, Inc. or his designee ("Chairman"). Executive also agrees that he will not
engage in any other business activities without the prior approval of the
Chairman. 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 Chairman. The
Executive represents and warrants to Company that he is now under no contract or
agreement 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 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 (as hereinafter defined),
including extensive travel.
2. PERIOD OF EMPLOYMENT. This Agreement shall become effective upon
the closing of the transaction in which Bacou USA, Inc. becomes the direct or
indirect owner of the Company and its terms shall be retroactively applicable to
the first day of the Initial Term, as defined herein. 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
<PAGE> 2
either party, for successive one-year periods (each a "Renewal Term") unless at
least six months prior to the end of any Term either party shall have served
written notice on the other of its election to allow this Agreement to terminate
at the end of such Term. The Initial Term and any Renewal Terms are hereinafter
sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company 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 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 Company for
cause. Termination for cause shall mean termination by action of the Board of
Directors of Company because of the willful failure of Executive to perform his
duties and obligations under this Agreement or failure to execute in a
reasonable and responsible manner the policies of 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) The Executive shall receive regular compensation (the "Base
Salary") at the initial rate per annum of One Hundred Thirteen Thousand Four
Hundred Forty-Eight Dollars ($113,448.00) per annum for the period January 1 to
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 of the Company. The Executive shall participate in any wage
increases applicable generally to salaried employees of Company. The Base Salary
prevailing at any time shall be reviewed annually for a possible increase
beginning in January 1998.
(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 pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year. Executive acknowledges that, by agreeing to participate in the
Bonus Plan for subsidiaries of Bacou USA, Inc., he thereby waives any rights to
participate in any other incentive compensation plan of the Company.
2
<PAGE> 3
(c) Incentive Compensation shall be paid by Company for the prior
fiscal year within ten (10) days after a decision is made by the Board of
Directors of 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 Company or March 31.
(d) The Executive shall be entitled to participate in any stock
option plan which Bacou may adopt for Company at levels to be determined by the
Board of Directors of Company in their sole discretion. In connection with the
execution of this Agreement and subject to the execution of the Stock Option
Agreement attached hereto as Exhibit A, Executive shall be granted options to
purchase 10,000 shares of common stock of Bacou at a per share price equal to
the closing price on the trading day immediately preceding the date on which he
executes this Agreement.
(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
executives of 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 shall have the use of a company car, subject
to the Automobile Policy of Bacou USA, Inc.
(ii) The Executive shall be entitled to vacation pursuant to
the Bacou USA, Inc. Executive Vacation Policy. Vacation days will be taken at a
time convenient for both the Executive and 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 Company, including
expenses for meals and lodging (regular hotel room, no suites), entertainment,
and similar items as required from time to time by the Executive's duties.
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 Chairman must be obtained prior to the Executive taking any of
the following actions on behalf of the Company or any of its affiliates:
3
<PAGE> 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 of Directors of Company;
(d) Hiring or terminating executive personnel;
(e) Granting retirement benefits or other non-earned income to any
individual which is not available to all employees;
(f) Modification of any qualified 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 selling any fixed asset of the Company below book value;
(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 except purchase orders for
materials required for the manufacture of products for sale in
the ordinary course of business;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its
affiliates, as well as closing or curtailing the functions of
Company or any of its affiliates;
(k) Filing any lawsuit;
(l) Entering into any transaction on behalf of 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 approved and applicable annual budget or annual plan of
Company. In addition, should the Chairman 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 Company. The Executive will immediately inform the
Chairman and the Executive Vice President of Bacou USA, Inc. of any such
decisions made by him.
4
<PAGE> 5
6. NON-DISCLOSURE OF INFORMATION. It is understood that the business
of Company and its affiliates is of a confidential nature. During the period of
the Executive's employment with Company, the Executive may have received and/or
may secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
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
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 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 Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
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 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 Company, assign, transfer, and set over to 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 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 Company (whether during or
outside normal working hours) relating to or in any way pertaining to or
connected with Company's business, shall be the sole and exclusive property of
Company or its designee and the Executive, whenever requested to do so by
Company, shall, without further compensation or consideration properly execute
any and all applications, assignments or other documents which 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 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 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 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
5
<PAGE> 6
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
Company or any of its affiliates. In the event that Company chooses to exercise
its option to prevent the Executive from competing with Company following
termination or non-renewal of his employment, 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 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 Company exercises
its option, 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 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 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 (3) years
thereafter, employ, retain or arrange to have any other person or entity employ
or retain any person who was employed by 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 Company.
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:
6
<PAGE> 7
(a) If to the Company, to it at:
Survivair, Inc.
3001 S. Susan Street
Santa Ana, CA 02704
Attention: President
Telephone No.: 714-545-0410
Fax No.: 714-850-0299
with copies to:
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: President
Telephone No.: 401-232-1200
Fax No.: 401-232-2230
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
(b) If to the Executive, to him at:
26042 Buena Vista
Laguna Hills, CA 92653
Telephone No.: 714-643-9692
with a copy to his attorney at:
Telephone No.: ( )
Telecopier No.: ( )
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
7
<PAGE> 8
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 California.
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.
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.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
SURVIVAIR, INC.
By: /s/ Walter Stepan
-------------------------------
Title: Chairman
EXECUTIVE:
/s/ Stephen E. Wiser
- -----------------------------------
8
<PAGE> 1
Exhibit 4(d)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 1st day of October, 1997, by and between
Jack Burt of 64 Cromwell Place, Old Saybrook, CT 06475 ("Executive") and
Biosystems, Inc., a corporation organized under the laws of Pennsylvania (the
"Company").
W I T N E S S E T H :
Bacou USA, Inc. has entered into an agreement to purchase the company and
desires to clarify the terms and conditions which Executive shall continue to be
employed by the company; and
WHEREAS, Company wishes to secure the services of Executive as 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,
Company and Executive hereby agree as follows:
1. EMPLOYMENT. During the period of employment set forth in Section 2 of
this Agreement, Company shall employ Executive, and Executive shall serve as
President and Chief Executive Officer of 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 business of Company. 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 written approval of the Chief
Executive Officer of Bacou USA, Inc. or the Executive Vice President in the
Chairman's absence. Executive also agrees that he will not engage in any other
business activities without the prior approval of the Chairman of the Company.
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 Chairman. The Executive represents
and warrants to Company that he is now under no contract or agreement 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 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 (as hereinafter defined), including extensive travel.
2. PERIOD OF EMPLOYMENT. This Agreement shall become effective upon the
closing of the transaction in which Bacou USA, Inc. become the direct or
indirect owner of the Company and its terms shall be retroactively applicable to
the first day of the Initial Term, as defined herein. The Executive's employment
under this Agreement shall initially cover the period October 1, 1997 to
<PAGE> 2
December 31, 2001 (the "Initial Term"). On December 31, 2001, 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") unless at least six months prior to the end of any Term either
party shall have served written notice on the other of its election to allow
this Agreement to terminate at the end of such Term. The Initial Term and any
Renewal Terms are hereinafter sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company 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 as if actively working;
provided, however, that the Company may not exercise such option prior to
December 31, 2000.
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 which entitles Executive to
receive benefits under the long-term disability plan provided for
Executive pursuant to Section 4(e) of this Agreement.
(iv) The Executive's employment being terminated by Company for cause.
Termination for cause shall mean termination by action of the Board
of Directors of Company because of any of the following: (A) the
willful failure of Executive, after written notice and reasonable
opportunity to cure, to perform his duties and obligations under this
Agreement or to execute in a reasonable and responsible manner the
policies of Company; (B) after written notice and reasonable
opportunity to cure, gross negligence in the performance of his
duties under this Agreement; or (C) the commission by Executive of a
felony.
4. COMPENSATION AND BENEFITS.
(a) From October 1, 1997 to December 31, 1997, Executive shall
receive a total salary of Thirty-Two Thousand Five Hundred Dollars ($32,000.00)
which shall be paid in arrears, in periodic installments at the same times and
in the same manner as salaries paid to other employees of the Company, less the
usual payroll deductions. Beginning January 1, 1998, the Executive shall receive
regular compensation ("Base Salary") at the initial rate per annum of Two
Hundred Thirty Thousand Dollars ($230,000.00) per annum for the Initial Term.
The Base Salary shall be paid in arrears, in periodic installments at the same
times and in the same manner as salaries paid to other employees of the Company
less the usual payroll deductions. The Executive shall participate in any wage
increases applicable generally to salaried employees of Company.
-2-
<PAGE> 3
The Base Salary prevailing at any time shall be reviewed annually for a possible
increase beginning in January 1999.
(b) For the period from October 1, 1997 to December 31, 1997,
Executive shall be entitled to receive a bonus in the amount of Forty-Two
Thousand Five Hundred Dollars ($42,500.00) which shall be paid by the Company on
January 12, 1998. Beginning January 1, 1998, 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 pursuant to the Bonus Plan for Executives of subsidiaries of Bacou
USA, Inc., as in effect for the applicable year; provided, however, that the
amount of Incentive Compensation for the fiscal year ending December 31, 2000
shall not exceed 35 percent of Executive's Base Salary for such year. Executive
acknowledges that, by agreeing to participate in the Bonus Plan for subsidiaries
of Bacou USA, Inc. he thereby waives any rights to participate in any other
incentive compensation plan of the Company.
(c) Incentive Compensation shall be paid by Company for the prior
fiscal year within ten (10) days after a decision is made by the Board of
Directors of 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 Company or March 31.
(d) The Executive shall be entitled to participate in any stock
option plan which Bacou USA, Inc. may adopt for Company at levels to be
determined by the Board of Directors of Company 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
Presidents of operating subsidiaries of Bacou USA, Inc. 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 shall have the use of a company car, subject
to the Automobile Policy of Bacou USA, Inc.
(ii) The Executive shall be entitled to vacation pursuant to
the Bacou USA, Inc. Executive Vacation Policy. Vacation days will be taken at a
time convenient for both the Executive and 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.
-3-
<PAGE> 4
(iv) The Executive is authorized to incur reasonable expenses
in connection with and for the promotion of the business of Company, including
expenses for meals and lodging (regular hotel room, no suites), entertainment,
and similar items as required from time to time by the Executive's duties.
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 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 or the Executive Vice President of Bacou must
be obtained prior to the Executive taking any of the following actions on behalf
of the Company:
(a) Acquisition or disposition of real property or any rights
deriving therefrom, or changing title in any such real
property.
(b) Making unbudgeted 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, guarantees or
borrowings (i) between the Company and Bacou USA, Inc. or its
subsidiaries pursuant to applicable policies and procedures
which shall allow Executive to advance funds under a line of
credit provided pursuant to Section 10.16(c) of that certain
Agreement and Plan of Merger dated as of September 30, 1997 by
and among, inter alia, Bacou USA, Inc., the Company and
Executive or (ii) as shall be authorized by the Board of
Directors of Company;
(d) Hiring or terminating 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 any qualified 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 selling any fixed asset of the Company below book value;
(i) Entering into or terminating agreements of any kind or nature
with a monthly financial obligation in excess of $5,000 for
more than six (6) months except purchase orders for materials
required for the manufacture of products for sale in the
ordinary course of business;
-4-
<PAGE> 5
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its
affiliates, as well as closing or curtailing the functions of
Company or any of its affiliates;
(k) Filing any lawsuit;
(l) Making cash or non-cash corporate contributions above the
annually budgeted amount;
(m) The making of decisions requiring both extraordinary risks and
extraordinary expenditures of more than $50,000;
(n) Entering into any transaction on behalf of Company 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 approved and applicable annual budget or annual plan of
Company. In addition, should the Chairman or Executive Vice President 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 and the Executive Vice President
of Bacou USA, Inc. of any such decisions made by him.
6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of
Company and its affiliates is of a confidential nature. During the period of the
Executive's employment with Company, the Executive may have received and/or may
have access to confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
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
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 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 Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
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
-5-
<PAGE> 6
by Company for a period of three (3) years except in respect of any information
or knowledge disclosed or otherwise generally available to the public, other
than through an unauthorized disclosure by the Executive.
7. TRADE SECRETS. The Executive covenants that he shall, while employed
by Company, assign, transfer, and set over to 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 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 Company (whether during or outside normal working
hours) relating to or in any way pertaining to or connected with Company's
business, shall be the sole and exclusive property of Company or its designee
and the Executive, whenever requested to do so by Company, shall, without
further compensation or consideration properly execute any and all applications,
assignments or other documents which 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 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 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 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 either the
Company or any respiratory protection business owned by Bacou USA, Inc. In the
event that Company chooses to exercise its option to prevent the Executive from
competing with Company following termination or non-renewal of his employment,
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 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 Company exercises its option, 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 Company. Notwithstanding the foregoing, the Executive may own
five (5%) percent of the securities of any business in competition with the
business of 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.
-6-
<PAGE> 7
(b) The Executive shall not during the term of his Employment under
this Agreement or any renewal thereof, and for a period of three (3) years
thereafter, employ, retain or arrange to have any other person or entity employ
or retain any person who was employed by 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 Company.
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..
10 Thurber Boulevard
Smithfield, RI 02917
Attention: President
Telephone No.: 401-233-0333
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
-7-
<PAGE> 8
(b) If to the Executive, to him at:
64 Cromwell Place
Old Saybrook, CT 06475
Telephone No. 860-388-9241
with a copy to:
Arnold R. Westerman, Esq.
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Telephone No.: (202-857-6243)
Telecopier No.: (202-857-6395)
Any party may change its address for receiving notice by written notice given to
the other names 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 Connecticut.
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 Hartford, Connecticut and any award shall be deemed to be a Hartford,
Connecticut award. There shall be a single arbitrator who shall be admitted to
practice law in Connecticut, with no less than ten (10) years experience in the
handling of commercial or corporate matters or disputes. If the parties do not
agree upon an arbitrator by mutual consent within thirty days after a party
requests arbitration, then each party shall name a person who meets the
eligibility requirements to serve as arbitrator and the two designees shall
appoint the arbitrator by mutual consent. 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 Connecticut. The
-8-
<PAGE> 9
expense of arbitration shall be borne by the respective parties except if the
arbitrator shall determine that either party had acted in bad faith, in which
case the entire expense shall be borne by the party who acted in bad faith.
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.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BIOSYSTEMS, INC.
By: /s/ Walter Stepan
-----------------------
Walter Stepan, Chairman
EXECUTIVE:
/s/ Jack Burt
-----------------------
Jack Burt
-9-
<PAGE> 1
Exhibit 4.(e)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 30th day of September, 1997 by and between
Joseph Burt ("Executive") and Biosystems, Inc., a corporation organized under
the laws of Pennsylvania (the "Company").
W I T N E S S E T H :
WHEREAS, Bacou USA, Inc. has entered into an agreement to purchase the
Company and desires to clarify the terms and conditions upon which Executive
shall continue to be employed by the Company; and
WHEREAS, Executive is now Vice President of Sales of the Company;
WHEREAS, the Company wishes to secure the services of Executive as its
Vice President of 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 of 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 Chief Executive Officer of Bacou USA, Inc. or his
designee ("Chairman"). Executive also agrees that he will not engage in any
other business activities without the prior approval of the Chairman. 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 Chairman. The Executive represents and warrants
to Company that he is now under no contract or agreement 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 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 (as hereinafter defined), including substantial travel.
2. PERIOD OF EMPLOYMENT. This Agreement shall become effective upon the
closing of the transaction in which Bacou USA, Inc. becomes the direct or
indirect owner of the Company and its terms shall be applicable to the first day
of the Initial Term, as defined herein. The Executive's employment under this
Agreement shall initially cover the period October 1, 1997 to
<PAGE> 2
December 31, 2000 (the "Initial Term"). On January 1, 2001, 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 (the
"Renewal Term") unless at least six months prior to the end of any Term either
party shall have served written notice on the other of its election to allow
this Agreement to terminate at the end of such Term. The Initial Term and any
Renewal Terms are hereinafter sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company 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 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 failure 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 of One Hundred and Sixty
Thousand Dollars ($160,000.00) per annum for the period January 1, 1997 through
December 31, 1998. The executive shall receive a salary of fifty thousand
dollars ($50,000.00) for the period October 1, 1997 through December 31, 1997
(the "Stub Period Salary"). The Base Salary and the Stub Period 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 1999.
-2-
<PAGE> 3
(b) In addition to the Base Salary, the Executive shall be entitled to
receive annual incentive compensation payments ("Incentive Compensation") at
such time and in such amounts as may be determined pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year; provided, however, that the percentage bonus for the Fiscal
Year ending December 31, 2000 shall not exceed thirty-five percent (35%) of
Executive's Base Salary for such year. Executive acknowledges that, by agreeing
to participate in the Bonus Plan for Executives of subsidiaries of Bacou USA,
Inc., he thereby waives any rights to participate in any other incentive
compensation plan of the Company. The Executive will not be eligible to receive
any Incentive Compensation for the period October 1, 1997 through December 31,
1997.
(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 at levels to be determined
by the board of directors of the Company in their sole discretion. In connection
with the execution of this Agreement and subject to the execution of the stock
option agreement attached hereto as Exhibit A, Executive shall be granted
options to purchase three thousand (3,000) shares of common stock of Bacou USA,
Inc. at a per share price equal to the closing price on September 30, 1997.
(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 have the use of a Company car, subject to
the Automobile Policy of Bacou USA, Inc..
(ii) The Executive shall be entitled to vacation pursuant to the
Company's Executive Vacation Policy. 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 with a duration of seven hours or greater if
requested by the Executive.
-3-
<PAGE> 4
(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, (regular hotel room, no suites) 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 Chairman 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;
(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;
-4-
<PAGE> 5
(m) Adoption or modification of the annual budget.
Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of the
Company. In addition, should the Chairman 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 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
-5-
<PAGE> 6
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 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
-6-
<PAGE> 7
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 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, is 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:
Biosystems, Inc.
651 South Main Street
Middletown, Connecticut 06457
Attention: President
Telephone Number 860-344-1079
Facsimile 860-344-1068
with copies to:
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, Rhode Island 02917
Attention: President
Telephone Number 401-232-1200
Facsimile Number 401-232-2230
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: Susan Keller, Esq.
Telephone Number 401-274-9200
Facsimile Number 401-276-6611
(b) If to Executive, to him at:
C/O Biosystems, Inc.
651 South Main Street
Middletown, Connecticut 06457
Telephone Number 860-344-1079
Facsimile Number 860-344-1068
-7-
<PAGE> 8
Any party may change its address for receiving notice by written notice given to
the other names 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 Connecticut.
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 Hartford, Connecticut and any award shall be deemed to be a Hartford,
Connecticut award. There shall be a single arbitrator who shall be admitted to
practice law in Connecticut, 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 Connecticut. 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.
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.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BIOSYSTEMS, INC.
By: /s/ John F. Burt, Jr.
-----------------------------------------
John F. Burt, Jr.
President and Chief Executive Officer
By: /s/ Walter Stepan
-----------------------------------------
Walter Stepan, Chairman
EXECUTIVE:
/s/ Joseph Burt
- ---------------------------------------------
Joseph Burt
-9-
<PAGE> 1
Exhibit 4.(f)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 30th day of September, 1997 by and between
Jeffrey M. Whynall ("Executive") and Biosystems, Inc., a corporation organized
under the laws of Pennsylvania (the "Company").
W I T N E S S E T H :
WHEREAS, Bacou USA, Inc. has entered into an agreement to purchase the
Company and desires to clarify the terms and conditions upon which Executive
shall continue to be employed by the Company; and
WHEREAS, Executive is now Director of Engineering of the Company;
WHEREAS, the Company wishes to secure the services of Executive as its
Vice President of Engineering 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 of Engineering 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 Bacou USA, Inc. or his designee ("Chairman"). Executive also agrees
that he will not engage in any other business activities without the prior
approval of the Chairman. 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
Chairman. The Executive represents and warrants to Company that he is now under
no contract or agreement 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 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 (as hereinafter
defined), including limited travel.
2. PERIOD OF EMPLOYMENT. This Agreement shall become effective upon the
closing of the transaction in which Bacou USA, Inc. becomes the direct or
indirect owner of the Company and its terms shall be applicable to the first day
of the Initial Term, as defined herein. The Executive's employment under this
Agreement shall initially cover the period October 1, 1997 to
<PAGE> 2
December 31, 2000 ("the "Initial Term"). On January 1, 2001, 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 (the
"Renewal Term") unless at least six months prior to the end of any Term either
party shall have served written notice on the other of its election to allow
this Agreement to terminate at the end of such Term. The Initial Term and any
Renewal Terms are here collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company 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 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 failure 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 of One Hundred and Twenty
Five Thousand Dollars ($125,000.00) per annum for the period October 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 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 1999.
(b) In addition to the Base Salary, the Executive shall be entitled to
receive annual
-2-
<PAGE> 3
incentive compensation payments ("Incentive Compensation") at such time and in
such amounts as may be determined pursuant to the Bonus Plan for Executives of
subsidiaries of Bacou USA, Inc., as in effect for the applicable year; provided,
however, that the percentage bonus for the Fiscal Year ending December 31, 2000
shall not exceed thirty-five percent (35%) of Executive's Base Salary for such
year. Executive acknowledges that, by agreeing to participate in the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., he thereby waives any rights
to participate in any other incentive compensation plan of the Company. The
Executive will not be eligible to receive any Incentive Compensation for the
period September 30, 1997 through December 31, 1997.
(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 at levels to be determined
by the board of directors of the Company in their sole discretion. In connection
with the execution of this Agreement and subject to the execution of the stock
option agreement attached hereto as Exhibit A, Executive shall be granted
options to purchase three thousand (3,000) shares of common stock of Bacou USA,
Inc. at a per share price equal to the closing price on September 30, 1997.
(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 have the use of a Company car, subject to
the Automobile Policy of Bacou USA, Inc..
(ii) The Executive shall be entitled to vacation pursuant to the
Company's Executive Vacation Policy. 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 with a duration of seven hours or greater if
requested by the Executive.
(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,
-3-
<PAGE> 4
(regular hotel room, no suites) 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 Chairman 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;
(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.
-4-
<PAGE> 5
Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of the
Company. In addition, should the Chairman 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 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-
<PAGE> 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, 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 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.
-6-
<PAGE> 7
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, is 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:
Biosystems, Inc.
651 South Main Street
Middletown, Connecticut 06457
Attention: President
Telephone Number 860-344-1079
Facsimile 860-344-1068
with copies to:
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, Rhode Island 02917
Attention: President
Telephone Number 401-232-1200
Facsimile Number 401-232-2230
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: Susan Keller, Esq.
Telephone Number 401-274-9200
Facsimile Number 401-276-6611
(b) If to Executive, to him at:
C/O Biosystems, Inc.
651 South Main Street
Middletown, Connecticut 06457
Telephone Number 860-344-1079
Facsimile Number 860-344-1068
-7-
<PAGE> 8
Any party may change its address for receiving notice by written notice given to
the other names 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 Connecticut.
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 Hartford, Connecticut and any award shall be deemed to be a Hartford,
Connecticut award. There shall be a single arbitrator who shall be admitted to
practice law in Connecticut, 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 Connecticut. 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.
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.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BIOSYSTEMS, INC.
By: /s/ John F. Burt, Jr.
-----------------------------------------
John F. Burt, Jr.
President and Chief Executive Officer
By: /s/ Walter Stepan
-----------------------------------------
Walter Stepan, Chairman
EXECUTIVE:
/s/ Jeffrey M. Whynall
- ---------------------------------------------
Jeffrey M. Whynall
-9-
<PAGE> 1
Exhibit 4(g)
[BACOU USA, INC. LETTERHEAD]
October 24, 1997
Walter Stepan
215 Old River Road
Lincoln, RI 02865
Re: First Amendment to Employment Agreement
Dear Walter:
Reference is made to that certain Employment Agreement between the Corporation
and you dated January 1, 1996 (the "Employment Agreement"). Once agreed and
accepted by you in the space provided below, Section 6(b) of the Employment
Agreement shall be amended to read as follows, effective for 1997 and future
years:
"In addition to the Base Salary, the Employee shall be entitled to receive
an annual incentive compensation payment ("Incentive Compensation") in an amount
calculated as follows:
2.75% of Adjusted EBIT up to $10,000,000
3.25% of Adjusted EBIT over $10,000,000, up to $20,000,000
3.75% of Adjusted EBIT over $20,000,000, up to $30,000,000
4.25% of Adjusted EBIT over $30,000,000
"For purposes of this Agreement, Adjusted EBIT shall mean Bacou's earnings
before interest and taxes, as reported in its consolidated financial statements
for the calendar year for which the computation is made, increased to eliminate
the effects of the following: (i) any accrual for the Employee's Incentive
Compensation; (ii) amortization expense; and (iii) any non-recurring charges
(including but not limited to the non-recurring effects of purchase accounting
treatment of acquisitions such as inventory step-ups and purchased research and
development).
"Incentive Compensation shall be paid by Bacou for any year by the earlier
of ninety (90) days following the last day of such year or ten (10) days after
the amount of such Incentive Compensation has been calculated."
<PAGE> 2
Walter Stepan
October 24, 1997
Page 2
All other terms of the Employment Agreement shall remain unchanged and, subject
to the amendment contained herein, the Employment Agreement shall remain in
full force and effect.
Very truly yours,
/s/ Philippe Bacou
-------------------------
Philippe Bacou, Chairman
Agreed and Accepted:
/s/ Walter Stepan
- -------------------------
Walter Stepan
<PAGE> 1
[LETTERHEAD OF BACOU USA, INC.]
Exhibit 4(h)
October 24, 1997
Philip B. Barr
8 Middlebrook Lane
Lincoln, RI 02865
Re: Third Amendment to Employment Agreement
Dear Phil:
Reference is made to that certain Employment Agreement between the Corporation
and you dated May 8, 1995, as amended by that certain First Amendment dated
June 30, 1995, and that certain Second Amendment dated December 31, 1995 (as
so amended, the "Employment Agreement"). Once agreed and accepted by you in the
space provided below, the Employment Agreement shall be amended by (i)
increasing the amount of annual Base Salary payable pursuant to Section 5(b)
thereof to $250,000 effective January 1, 1998, and (ii) effective for 1997 and
future years, changing Section 5(c) of the Employment Agreement to read as
follows:
"In addition to the Base Salary, the Employee shall be entitled to receive
an annual incentive compensation payment ("Incentive Compensation") in an
amount calculated as follows:
0.40% of Adjusted EBIT up to $10,000,000
0.45% of Adjusted EBIT over $10,000,000, up to $20,000,000
0.50% of Adjusted EBIT over $20,000,000, up to $30,000,000
0.55% of Adjusted EBIT over $30,000,000
"For purposes of this Agreement, Adjusted EBIT shall mean Bacou's earnings
before interest and taxes, as reported in its consolidated financial statements
for the calendar year for which the computation is made, increased to eliminate
the effects of the following: (i) amortization expense; and (ii) any
non-recurring charges (including but not limited to the non-recurring effects
of purchase accounting treatment of acquisitions such as inventory step-ups and
purchased research and development).
"Incentive Compensation shall be paid by Bacou for any year by the earlier
of ninety (90) days following the last day of such year or ten (10) days after
the amount of such Incentive Compensation has been calculated."
<PAGE> 2
Philip B. Barr
October 24, 1997
Page 2
All other terms of the Employment Agreement shall remain unchanged and, subject
to the amendment contained herein, the Employment Agreement shall remain in
full force and effect.
Very truly yours,
/s/ W. Stepan
-------------------
Walter Stepan
President and CEO
Agreed and Accepted:
/s/ Philip B. Barr
- ------------------
Philip B. Barr
<PAGE> 1
EXHIBIT 11
BACOU USA, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Primary:
Weighted average shares outstanding 17,318,069 17,310,897 17,314,183 16,103,963
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 34,605 43,386 14,626 30,874
----------- ----------- ----------- -----------
Total 17,352,674 17,354,265 17,328,809 16,134,837
=========== =========== =========== ===========
Net income $ 2,453,456 $ 5,655,533 $10,830,471 $15,410,342
=========== =========== =========== ===========
Per share amount $ 0.14 $ 0.33 $ 0.62 $ 0.96
=========== =========== =========== ===========
Fully Diluted:
Weighted average shares outstanding 17,320,143 17,312,200 17,317,514 16,105,106
Net effect of dilutive stock options
based on the treasury stock method
using the greater of average or period
end market price 81,559 43,535 72,678 30,848
----------- ----------- ----------- -----------
Total 17,401,702 17,355,735 17,390,192 16,135,954
=========== =========== =========== ===========
Net income $ 2,453,456 $ 5,655,533 $10,830,471 $15,410,342
=========== =========== =========== ===========
Per share amount $ 0.14 $ 0.33 $ 0.62 $ 0.96
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001006027
<NAME> BACOU USA, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,705,347
<SECURITIES> 0
<RECEIVABLES> 18,867,617
<ALLOWANCES> 956,683
<INVENTORY> 24,888,138
<CURRENT-ASSETS> 51,633,808
<PP&E> 33,982,092
<DEPRECIATION> 0
<TOTAL-ASSETS> 157,384,977
<CURRENT-LIABILITIES> 21,051,053
<BONDS> 0
0
0
<COMMON> 17,571
<OTHER-SE> 119,411,353
<TOTAL-LIABILITY-AND-EQUITY> 157,384,977
<SALES> 94,455,271
<TOTAL-REVENUES> 94,455,271
<CGS> 45,184,603
<TOTAL-COSTS> 45,184,603
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117,676
<INCOME-PRETAX> 19,628,610
<INCOME-TAX> 8,798,139
<INCOME-CONTINUING> 10,830,471
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,830,471
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
</TABLE>
