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