BACOU USA INC, 10-K, 1999-03-30

BACOU USA INC
10-K, 1999-03-30
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<PAGE> 1

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

[ ] 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)

<TABLE>
<S> <C>
DELAWARE 05-0470688
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

10 THURBER BOULEVARD, SMITHFIELD, RI 02917-1896
(Address of principal executive offices) (Zip Code)
</TABLE>

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 common stock of the registrant
held by non-affiliates of the registrant computed on the basis of $20.75 per
share (the closing price of such stock on March 8, 1999 on The New York Stock
Exchange): $103,933,949.

As of March 8, 1999, there were 17,621,465 shares of Common Stock
outstanding.
------------------------

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for the 1999 Annual Meeting of Stockholders (to be filed
with the Securities and Exchange Commission on or before April 30, 1999) is
incorporated by reference in Part III hereof.

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<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
DESCRIPTION PAGE NUMBER
----------- -----------
<S> <C> <C>
PART I
Item 1 Business......................................................................... 1
Item 2 Properties....................................................................... 10
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 12
Operations.......................................................................
Item 7A Quantitative and Qualitative Disclosures About Market Risk....................... 19
Item 8 Financial Statements and Supplementary Data...................................... 20
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial 38
Disclosure.......................................................................
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 38
Item 11 Executive Compensation........................................................... 38
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 38
Item 13 Certain Relationships and Related Transactions................................... 38
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.................. 38
Signatures ................................................................................. 42
</TABLE>

2
<PAGE> 3

PART I

ITEM 1. BUSINESS

GENERAL

Bacou USA, Inc. ("Bacou", "we", "our" or "us") designs, manufactures and
sells safety products that protect the sight, hearing and respiratory systems of
workers against occupational hazards, as well as related instrumentation
including gas monitors and test equipment for self-contained breathing
apparatus. Our safety products, which are marketed under the brand names
Biosystems, Howard Leight(R), Lase-R Shield(TM), Pro-Tech(R), Survivair(R) and
uVEX(R), are sold principally to industrial safety and fire service
distributors. We also design, manufacture and sell optical products under the
Titmus(R) brand name, including eyeglass frames and components which are sold
principally to optical laboratories, and vision screening equipment.

RECENT DEVELOPMENTS

On February 25, 1999, we announced we had entered into an agreement to
acquire Perfect Fit Glove Co., Inc. and certain affiliates and related assets
("Perfect Fit"), manufacturers and distributors of protective gloves and other
related products worldwide with fiscal year 1998 combined net sales of $47.3
million. Perfect Fit brings with it an experienced management team, a solid
history of favorable operating results, a broad line of products, a
well-respected brand name and an estimated third ranking market share for sales
of cut- and abrasion-resistant work gloves within the United States industrial
market for non-disposable gloves. We believe that Perfect Fit furthers our plan
to expand our range of protective equipment products within existing
distribution channels. As with our other safety products, the primary
distribution channel for Perfect Fit products is the industrial safety market in
which we share a significant number of common customers.

We are acquiring the assets of Perfect Fit for an approximate purchase
price of $37.8 million in cash plus the assumption of the sellers' balance sheet
liabilities, currently estimated at $16.0 million. We have agreed to pay an
additional earnout of up to $6.0 million to the extent actual consolidated cash
flow of the acquired business for 1999 exceeds certain specified targets. In
connection with the acquisition, we will enter into employment agreements with
four of the key executives of Perfect Fit. The acquisition will be accounted for
under the purchase method of accounting and is expected to close during the
second quarter of 1999. We intend to finance this acquisition by a loan from
Banque Nationale de Paris at an interest rate per annum of three-month LIBOR
plus approximately 0.5%.

Effective February 27, 1998, we acquired substantially all assets and
assumed substantially all liabilities of Howard Leight Industries ("Howard
Leight"), a manufacturer of hearing protection products (including disposable,
reusable and banded ear plugs, and ear muffs) for cash consideration of $125.9
million, $5.9 million of which represented the refinancing of Howard Leight
indebtedness.

SEGMENT INFORMATION

Bacou has two reportable segments, which include the safety products
segment and the optical frames and instruments segment. The safety products
segment consists of businesses operating within our Bacou USA Safety, Inc.
subsidiary ("Bacou Safety") and which sell products principally to industrial
and fire safety distributors. Products manufactured within this segment include
protective eyewear, hearing protection, respirators and gas monitors. The
optical frames and instruments segment consists of our Titmus Optical, Inc.
subsidiary ("Titmus"). Titmus manufactures eyeglass frames and components, which
are sold principally to optical laboratories, and vision screening equipment.
Eyeglass frames and components are purchased by optical laboratory customers who
fit complete frames with prescription lenses. Financial information relating to
our reportable segments and our international activities can be found in note 10
to the consolidated financial statements included with Item 8 herein.

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PRODUCTS -- SAFETY SEGMENT

Protective Eyewear

Bacou sells UVEX(R) brand non-prescription protective eyewear in a wide
variety of styles of spectacles and goggles. All Uvex products have
polycarbonate lenses, which provide an impact resistant barrier. The lenses are
protected by proprietary coatings, which provide superior resistance to
scratches and fogging. We also sell application specific protective eyewear,
including laser protective eyewear under the UVEX(R), LaserVision and Lase-R
Shield(TM) brands.

Hearing Protection

Bacou sells a full range of Howard Leight(R) brand hearing protection
products, which products reduce the risk of long-term hearing loss from exposure
to excessive noise levels. These products include disposable and reusable ear
plugs, corded ear plugs, banded ear plugs and ear muffs. Additionally, we sell
Howard Leight(R) brand ear plug dispensers for easy distribution of hearing
protection to workers.

Air Purifying Respirators and Supplied Air Respirators

Bacou sells a complete line of reusable half mask and full-face mask air
purifying respirators under the Survivair(R) and Pro-Tech(R) brand names, as
well as hazard specific cartridges and filters for removing various contaminants
from the air. We also sell Survivair(R) brand self-contained breathing apparatus
for industrial and fire protection applications, as well as air line
respirators. Supplied air respirators provide an independent source of
breathable air for workers in atmospheres immediately dangerous to their life or
health.

Gas Detectors and Test Equipment for Self-Contained Breathing Apparatus

Bacou sells Biosystems brand gas monitors and detectors, which sense and
report the levels of certain gases in the atmosphere of a work site and identify
hazardous conditions. We also sell PosiChek test-benches, which are computer
controlled, automatic test-systems used to dynamically evaluate the proper
performance of self-contained breathing apparatus.

PRODUCTS -- OPTICAL FRAMES AND INSTRUMENTS SEGMENT

Bacou sells Titmus(R) brand metal and plastic eyeglass frames and
components for prescription protective eyewear, which accommodate corrective
lenses and, when completed with lenses, meet the standards for protective
eyewear. We sell Titmus(R) brand occupational vision screening equipment, used
to determine whether an eye exam should be administered for prescribing
corrective lenses.

BACKLOG

Our backlog totaled approximately $6.6 million at December 31, 1998 and
$6.0 million at December 31, 1997.

MARKETING, SALES AND DISTRIBUTION

Bacou's safety products are sold principally through industrial safety
distributors. Additional channels of distribution differ by product line. Laser
protective eyewear products are sold in markets serving medicine, industry,
research laboratories and universities, and worldwide by laser manufacturers as
accessories with their products. Fire service distributors sell Survivair
self-contained breathing apparatus and Biosystems gas detectors and test
equipment for self-contained breathing apparatus. UVEX(R), Howard Leight(R), and
Pro-Tech(R) brand products are also marketed in the do-it-yourself retail
markets for home safety products. Howard Leight(R) products are also sold in the
shooting market. Optical laboratories and optical retailers are the main
channels for distribution of Titmus(R) brand eyeglass frames and components for
prescription protective eyewear. All of our products are marketed
internationally, with UVEX(R) brand products contractually limited to
distribution in North, South and Central America. The sale of our products to
purchasers in France is restricted under a corporate opportunities agreement
with Bacou S.A.

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MANUFACTURING OPERATIONS

Protective Eyewear

We use a highly automated injection molding process to manufacture the
frames and lenses of our UVEX(R) brand non-prescription protective eyewear.
Frame components are molded in nylon, propionate and polyvinylchloride, and the
lenses are molded from polycarbonate resin pellets. We use a highly automated,
integrated assembly and packaging system for certain of our high-volume
products.

Disposable and Reusable Ear Plugs and Ear Muffs

Bacou manufactures its ear plug products using proprietary, high volume
automated machinery and equipment which mold polyurethane foam and
polyvinylchloride into ear plugs. We use injection molding to produce head bands
for banded ear plug products and ear muff bodies. We assemble all such products,
except for one product line of completed ear muffs, which are manufactured by an
outside vendor.

Air Purifying Respirators and Supplied Air Respirators

Bacou manufactures respirator bodies, cartridge and filter bodies, and
certain other parts using injection and compression molding techniques. We
produce most of our metal regulator parts using computer assisted machining
operations. We assemble finished respirators using these manufactured parts and
components manufactured by outside vendors. Cartridges and filters for air
purifying respirators are filled using high-speed, automated folding, filling
and sealing machines.

Gas Detectors and Test Equipment for Self-Contained Breathing Apparatus

Our gas detection products and test equipment for self-contained breathing
apparatus are assembled using component parts manufactured by outside vendors.
Component parts are requisitioned using a just-in-time approach, and material
tracking is based on a work-in-process inventory management system and
electronically initiated inventory replenishment. We utilize work cells for
assembly of these products.

Eyeglass Frames and Components and Vision Screening Equipment

Bacou manufactures Titmus(R) brand eyeglass frames and components for
prescription protective eyewear in both metal and plastic. Metal products are
made from wire in a process that includes cutting, bending, shaping, soldering,
plating and colorizing. A computer controlled milling operation produces plastic
products. We assemble vision screeners using component parts manufactured by
outside vendors.

RAW MATERIALS

Although we rely primarily on single sources for the supply of several raw
materials, all of our raw materials are currently readily available. We
currently satisfy substantially all of our requirements for (i) polycarbonate
resin (the primary raw material used in the production of non-prescription
optical lenses), (ii) polyurethane pre-polymer (the primary raw material for
production of foam hearing protection products) and (iii) certain sensors (the
primary component of gas detection equipment) through single sources of supply.
We have agreed to enter into a supply agreement with Howard Leight Enterprises,
Inc. ("HLE") (a corporation which is owned by Howard S. Leight, a director of
Bacou, along with one current and two former employees of our Howard Leight
Industries division) pursuant to which we intend to purchase polyurethane
pre-polymer from HLE for a period of five years. HLE is only beginning to
produce polyurethane pre-polymer and, therefore, a supply agreement has not yet
been executed. The loss of any single source for supply of raw materials, any
disruption in such source's business or its failure to meet our needs on a
timely basis could cause shortages in raw materials and could have a material
adverse effect on our business, financial condition or results of operations.
Although we have plans in place to deal with such contingencies, there can be no
assurance that such precautions will be adequate or that alternative sources of
supply can be located or developed in a timely manner.

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PRINCIPAL CUSTOMERS

Bacou had no individual customers that accounted for 10% or more of
consolidated net sales in either 1996, 1997 or 1998. However, the loss of any of
its principal customers could have a material adverse effect on our operations
and financial condition.

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 several large multinational
corporations which manufacture and supply many types of personal protective
equipment. We believe 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 price.

The Uvex(R) astrospec family of eyewear products has enjoyed significant
success resulting in many competitive copies produced overseas, imported to the
United States and sold at lower prices than comparable UVEX(R) brand products.
Although we have taken steps to introduce new, lower-priced products to compete
in that market segment, astrospec copies may continue to enjoy success in the
marketplace against the astrospec family of eyewear products.

To maintain our market position, we 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 we will be able to compete successfully against current and
future competitors or that the competitive pressures we face will not adversely
affect our financial condition or operations.

INTELLECTUAL PROPERTY

Our policy is to protect our intellectual property through a range of
measures, including trademarks, patents and confidentiality agreements. We
protect these rights through the filing of applications for and registrations of
trademarks and patents whenever such filings would provide greater protection
than maintaining such information as trade secrets.

We have the right to use the trademark UVEX(R) in connection with
protective eyewear and other safety products in all countries in North, Central
and South America. Uvex Sports GmbH & Co. KG and Uvex Arbeitsschutz GmbH
(together with their affiliates, "Uvex Germany") have 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, Bacou may sell
personal protective equipment under the UVEX(R) brand name only in North,
Central and South America. The agreement also prohibits Bacou from selling
sports products, such as sunglasses or protective eyewear for sport activities,
under the UVEX(R) brand name regardless of geographic area.

We also own a number of other patents and trademarks as a result of the
acquisitions of Uvex, Survivair, Biosystems and Howard Leight. The Survivair
name is registered in the United States, Canada and Mexico and thirteen other
countries in Europe and South America. The Biosystems PosiChek product has
received patent protection in the United States. The "Leight" name and numerous
other product names associated with Howard Leight are registered in the United
States. Our Titmus subsidiary owns numerous trademarks under the Titmus(R) name
for many of its products in the United States and throughout the world.

Bacou also relies upon unpatented trade secrets for the protection of
certain intellectual property rights. We protect our trade secrets by requiring
certain of our employees, consultants and other suppliers, customers, agents and
advisors to execute confidentiality agreements upon the commencement of
employment or other relationships with us. These agreements provide that all
confidential information developed by or made known to the individual or entity
during the course of the Bacou relationship is to be kept confidential and not
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disclosed to third parties except in certain specified circumstances. There can
be no assurance, however, that these agreements will provide meaningful
protection for our 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
our trade secrets or disclose such technology or that we can meaningfully
protect our rights to unpatented trade secrets. Further, there can be no
assurance that infringement or invalidity claims will not be asserted against us
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 our business and financial condition.

ENVIRONMENTAL MATTERS

We are 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, 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. Our manufacturing operations routinely involve the handling of
chemicals and wastes, some of which are or may become regulated as hazardous
substances. We have not incurred, and do not expect to incur, any significant
expenditures or liabilities for environmental matters. As a result, we believe
that our obligations to comply with environmental regulations will not have a
material adverse effect on our business or financial condition.

EMPLOYEES

At December 31, 1998, Bacou employed 1,942 people on a full-time basis.
Approximately 245 employees comprise a bargaining unit represented by the United
Steelworkers of America (AFL-CIO-CLC) under a contract which expires on
September 13, 2000. We consider the relationship with our employees to be good
and we have 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 and continuation of demand for personal
protective equipment in the United States. The Occupational Safety and Health
Administration ("OSHA") generally regulates the workplace environments in the
United States in which personal protective equipment must be worn and specifies
the standards which such equipment must meet. Other United States governmental
agencies further regulate the use of personal protective equipment and issue
standards concerning the design and functionality of such equipment. We believe
we are in compliance in all material respects with the regulations and standards
of these agencies.

The United States and Canadian regulatory agencies each mandate that our
products meet performance standards established by private groups, such as the
American National Standards Institute ("ANSI") and the Canadian Standards
Association ("CSA"), respectively. Our 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. We maintain and operate
on-site testing labs at our Smithfield, Rhode Island and Petersburg, Virginia
facilities that are equipped to perform necessary tests. Our hearing protection
products are subject to ANSI Industrial Standard S12.6-1984 (R 1990). Our
facility in San Diego, California includes a certified audiometric testing lab
which exceeds standards and procedures outlined by regulatory requirements and
the Audiology Society of America.

OSHA specifies that respiratory protective equipment must meet
application-specific performance standards which are set by the National
Institute for Occupational Safety and Health. In addition, many respiratory
products require approval by the National Fire Protection Association. In order
to achieve

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regulatory approval, we maintain and operate an on-site lab at our Santa Ana,
California facility that is equipped to conduct most necessary tests.

EXECUTIVE OFFICERS

The names, positions, ages and business experiences during the past five
years of the executive officers of Bacou and its principal subsidiaries or
divisions, as of March 8, 1999 are set forth below:

<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY AGE
---- ------------------------- ---
<S> <C> <C>
Walter Stepan.................. Vice Chairman, President and Chief Executive Officer; 60
Chairman, President and Chief Executive Officer of Bacou
Safety; Chairman of Uvex Safety Manufacturing, Inc.;
Chairman of Titmus
Philip B. Barr................. Executive Vice President, Chief Operating Officer, Chief 47
Financial Officer and Secretary; Vice Chairman, Secretary
and Treasurer of Bacou Safety; Secretary and Treasurer of
Titmus
John J. Bell................... President of Survivair Division and Executive Vice President 53
of Bacou Safety
Alan H. Bennett................ President of Uvex Safety Division and Executive Vice 56
President of Bacou Safety; Chief Executive Officer of Uvex
Safety Manufacturing, Inc.
Bradford L. Brooks............. President and Chief Executive Officer of Titmus and 55
Executive Vice President of Bacou Safety
Jeffrey T. Brown............... Director of Financial Reporting , Chief Accounting Officer 39
and Treasurer
John F. Burt, Jr............... President of Biosystems division and Executive Vice 56
President of Bacou Safety
George R. Ebel................. President of Uvex Safety Manufacturing, Inc. 58
Adrien W. Hebert............... Vice President -- Finance and Corporate Controller 48
Thomas W. Klein................ President of Howard Leight division and Bacou International 50
Division; Executive Vice President of Bacou Safety
Winfield W. Major.............. General Counsel 51
Harry D. Neff, II.............. Senior Vice President -- Sales of Bacou Safety (with 52
responsibility for Uvex Safety and Howard Leight sales
force)
</TABLE>

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 Bacou since July 1995. Mr. Stepan served as President of
Uvex Safety and its predecessors from 1988 until February, 1999, and was Chief
Executive Officer from 1988 until December 1997 when Uvex Safety was merged into
Bacou Safety, of which Mr. Stepan is Chairman, President and Chief Executive
Officer. He has served as Chairman of Uvex Safety Manufacturing, Inc. since
December, 1997. Mr. Stepan has been Chairman of the Board of Titmus since
September 1995. 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 Bacou since October 1996.
He has been Vice President, Chief Financial Officer and Secretary of Bacou since
August 1995, was Treasurer of Bacou from August 1995 until May 1998, and has
served as Chief Operating Officer since February, 1999. He has served as Vice
Chairman of Bacou Safety since December 1997. He has served as Secretary and
Treasurer of Titmus since September 1995. From 1985 to 1995, Mr. Barr was a
Partner of Edwards & Angell, our primary outside counsel.

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Mr. Bell has been President of Survivair since 1992. He has served as
Executive Vice President of Bacou Safety since May, 1998. He joined Survivair in
1983 and served as Vice President of Operations from 1989 to 1992.

Mr. Bennett has been President of the Uvex Safety division and Executive
Vice President of Bacou Safety since February, 1999. Prior to that time, he
served as President of Safety Supply America/Figgie International Division.

Mr. Brooks has been President and Chief Executive Officer of Titmus since
March 1998. He has served as Executive Vice President of Bacou Safety since May,
1998. Mr. Brooks was Vice President and General Manager of the Automated Systems
Division of American Meter Company from 1995 to 1998 and President of Weschler
Instruments Company from 1993 to 1995.

Mr. Brown has been Director of Corporate Reporting and Treasurer since May
1998. He served as Corporate Controller from August 1995 until May 1998 and has
been Chief Accounting Officer of Bacou since August 1995. Prior to joining
Bacou, Mr. Brown was a Senior Manager of KPMG LLP, our independent accountants,
where he was employed from June 1982 to August 1995.

Mr. Burt founded Biosystems in 1981 and has served as President since that
date. He has served as Executive Vice President of Bacou Safety since May, 1998.

Mr. Ebel has been president of Uvex Safety Manufacturing, Inc. since
October 1998. Mr. Ebel was group president of MDC Industrial, a subsidiary of
McDonnell Douglas High Volume Plastic and Metal Industrial Products, from 1990
to 1998.

Mr. Hebert has served as Vice President of Finance and Corporate Controller
since May 1998. He was Manager of Corporate Development of Bacou from April 1997
to May 1998 and was a Financial Consultant to Bacou from December 1996 until
April 1997. Mr. Hebert was Vice President and Chief Financial Officer of Encon
Systems, Inc. from June 1991 until February 1996.

Mr. Klein has served as the President of the Howard Leight division since
July 1998 and briefly served as President of the Uvex Safety division from June
1998 to July 1998. He has served as Executive Vice President of Bacou Safety
since June, 1998. Prior to joining Bacou, Mr. Klein spent more than 20 years at
3M, where his latest position was Tape Group Director for Latin America and
Africa.

Mr. Major has served as General Counsel since June 1998. From 1994 to 1998
he was Counsel to the law firm of Edwards & Angell, our primary outside counsel.
Prior to that position, he served as General Counsel to Old Stone Corporation
from 1981 to 1993, serving as Executive Vice President from 1990 to 1993.

Mr. Neff has been Senior Vice President of Sales for Bacou Safety since
January 1998. He served as Senior Vice President -- Sales of Uvex Safety since
1997, and Vice President - Sales from 1992 until 1997.

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ITEM 2. DESCRIPTION OF PROPERTIES

The following table sets forth the location of the facilities that Bacou
owns or leases, the square footage and the principal function of each such
facility. All facilities are used for the safety segment other than the
Petersburg, Virginia facility, which is used for the optical frames and
instruments segment.

<TABLE>
<CAPTION>
APPROXIMATE OWNED OR
LOCATION SQUARE FOOTAGE LEASED FUNCTION
-------- -------------- -------- --------
<S> <C> <C> <C>
Smithfield, Rhode Island............ 127,000 Leased Corporate headquarters;
manufacturing, assembly, warehousing
and distribution facility for
protective eyewear
San Diego, California............... 100,000 Owned Manufacturing, assembly, warehousing
and distribution for hearing
protection products
Tijuana, Mexico..................... 49,000 Leased Manufacturing and assembly for
hearing protection products
Petersburg, Virginia................ 130,000 Owned Manufacturing, assembly, warehousing
and distribution facility for
eyeglass frames and components and
vision screening equipment
Santa Ana, California............... 93,000 Leased Manufacturing, assembly, warehousing
and distribution for respiratory
protection products
Middletown, Connecticut............. 45,000 Leased Assembly, warehousing and
distribution facility for gas
monitors
Smithfield, Rhode Island............ 32,000 Leased Warehousing facility
Bollington, Cheshire, U.K........... 20,000 Leased Sales office; warehousing and
distribution facility
Florence, Kentucky.................. 20,000 Leased Warehousing and distribution facility
Albuquerque, New Mexico............. 900 Leased Regional sales office
Shafer, Minnesota................... 700 Leased Regional sales office and
administrative operations
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

Our common stock trades on The New York Stock Exchange under the symbol
BAU. The authorized capital stock of Bacou 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 high and low sales prices of our common stock
and dividends for each quarterly period, see Note 11 to the consolidated
financial statements included in Item 8 herein. As of March 17, 1999, the
closing price for our common stock was $14 15/16 per share and there were
approximately 18 holders of record.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial data of Bacou for the
periods indicated.

Selected financial data for each of the years ended July 31, 1994 and 1995,
the five months ended December 31, 1995, and the years ended December 31, 1996,
1997, and 1998 were derived from financial statements of Bacou which were
audited by KPMG LLP, independent certified public accountants, whose report with
respect to the years ended December 31, 1996, 1997, and 1998 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>
FIVE MONTHS
YEAR ENDED ENDED YEAR ENDED
JULY 31, DECEMBER 31, DECEMBER 31,
----------------- ------------ ------------------------------
1994 1995(1) 1995(2) 1996 1997(3) 1998(4)
------- ------- ------------ -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $53,927 $71,988 $36,827 $109,268 $130,869 $219,581
Cost of sales....................... 22,186 31,016 18,525 47,355 64,467 105,856
------- ------- ------- -------- -------- --------
Gross profit........................ 31,741 40,972 18,302 61,913 66,402 113,725
Operating expenses:
Selling........................ 8,719 9,781 5,891 17,074 21,658 35,660
General and administrative..... 3,206 4,080 2,609 9,176 11,184 22,895
Research and development....... -- -- -- -- 1,110 4,000
Purchased in-process research
and development.............. -- -- -- -- 3,721 4,680
Amortization of intangibles
assets....................... 1,467 2,506 1,515 4,039 4,095 7,748
------- ------- ------- -------- -------- --------
Total operating
expenses................ 13,392 16,367 10,015 30,289 41,768 74,983
------- ------- ------- -------- -------- --------
Operating income.................... 18,349 24,605 8,287 31,624 24,634 38,742
Other expense (income), net......... 333 1,287 1,054 45 (376) 6,054
------- ------- ------- -------- -------- --------
Income before income taxes and
minority interest................. 18,016 23,318 7,233 31,579 25,010 32,688
Minority interest share of income... 6,164 1,920 -- -- -- --
Income taxes........................ 4,371 8,343 2,917 12,202 10,588 11,678
------- ------- ------- -------- -------- --------
Net income(5)....................... $ 7,481 $13,055 $ 4,316 $ 19,377 $ 14,422 $ 21,010
======= ======= ======= ======== ======== ========
Earnings per share:
Basic and diluted(5)(6)........ $ 0.57 $ 0.94 $ 0.31 $ 1.18 $ 0.83 $ 1.19
Weighted average shares outstanding:
Basic.......................... 13,167 13,860 13,860 16,406 17,383 17,601
Diluted........................ 13,167 13,860 13,860 16,436 17,411 17,723
</TABLE>

11
<PAGE> 12

- ---------------
(1) Includes the operating results of Pro-Tech from April 1, 1995. Amounts also
reflect the acquisition of a one-third minority interest in the business of
Uvex Safety effective October 31, 1994.

(2) Includes the operating results of Titmus from October 1, 1995.

(3) Includes the operating results of Survivair from June 1, 1997 and operating
results of Biosystems from September 30, 1997.

(4) Includes the operating results of Howard Leight from February 27, 1998.

(5) Excluding acquisition-related items and a severance charge recorded in 1998
in connection with the 1998 termination of the President and Chief Operating
Officer of Bacou Safety, and including the operating results of the acquired
companies as described above, Bacou's net income, and both basic and diluted
earnings per share, would have been as follows for each of the periods
presented (see Management's Discussion and Analysis of Financial Condition
and Results of Operations):

<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS YEAR ENDED
JULY 31, ENDED DECEMBER 31,
---------------- DECEMBER 31, ---------------------------
1994 1995 1995 1996 1997 1998
------ ------- ------------ ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net income................... $7,481 $14,096 $5,811 $19,377 $19,498 $25,793
Earnings per share:
Basic........................ $ 0.57 $ 1.02 $ 0.42 $ 1.18 $ 1.12 $ 1.46
Diluted...................... 0.57 1.02 0.42 1.18 1.12 1.46
</TABLE>

- ---------------
(6) Bacou neither declared nor paid any cash dividends during any of the periods
presented.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and notes thereto, as well as our selected financial data, all
appearing elsewhere herein. 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. In addition, words such as "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. We caution you that a number of important factors could cause our
actual results to differ materially from those expressed in any forward-looking
statements made by us, or on our behalf. Forward-looking statements involve a
number of risks and uncertainties including, but not limited to, the following:

- continued demand for our current product lines;

- the success of our new product introductions;

- the success of our acquisition strategy;

- continued availability and favorable pricing of raw materials;

- our ability and the ability of our key vendors to successfully respond
to year 2000 issues;

- competitive pressures;

- general economic conditions; and

- regulatory matters.

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<PAGE> 13

We cannot assure you that we will be able to anticipate or respond timely to
changes in any of the factors listed above, which could adversely affect our
operating results in one or more fiscal periods. Our operating results 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 our common stock.

BACKGROUND

Effect of Acquisitions

We are pursuing a business strategy that includes acquisitions as an
important element. As described more fully below, we completed six acquisitions
during the past three years, which significantly increased our product offerings
and size. Annual net sales volume has increased from $72.0 million (actual) for
the fiscal year ended July 31, 1995 to net sales on a pro forma basis equal to
$226.9 million for the year ended December 31, 1998.

Our gross margin and operating margin for the fiscal year ended July 31,
1995, were 56.9% and 34.2%, respectively. Historical margins attributable to the
operations of businesses acquired by us have generally been lower than margins
at our platform Uvex Safety business. In addition, intangible assets totaling
$146.1 million have been recorded subsequent to July 31, 1995, resulting in a
significant increase in amortization expense. Integration of acquired businesses
into our existing Uvex Safety business, and an increase in amortization expense,
have each resulted in a decline in our margins from the fiscal year ended July
31, 1995.

On February 25, 1999, we announced that we had entered into an agreement to
acquire Perfect Fit Glove Co., Inc. and certain affiliates and related assets
("Perfect Fit"), manufacturers and distributors of protective gloves and other
related products worldwide. Historical gross margins and operating margins of
Perfect Fit have been lower than the consolidated margins of Bacou. Although we
expect our gross, operating and net profit to increase as a result of our
acquisition of Perfect Fit, we expect that inclusion of the operating results of
this business will further reduce our consolidated margins in 1999. See
"--Liquidity and Capital Resources".

Effective February 27, 1998, we acquired substantially all assets and
assumed substantially all liabilities of Howard Leight, a manufacturer of
hearing protection products (including disposable, reusable and banded ear
plugs, and ear muffs) for cash consideration of $125.9 million, $5.9 million of
which represented the refinancing of Howard Leight indebtedness.

We acquired all of the outstanding capital stock of Comasec Holdings, Inc.
("Comasec") on May 30, 1997 for cash consideration of $27.4 million. The assets
of Comasec consisted primarily of its wholly owned subsidiary, Survivair, a
manufacturer of respiratory protection products. On September 30, 1997, we also
acquired all of the capital stock of Biosystems, a manufacturer of gas monitors
and equipment for testing self-contained breathing apparatus, in exchange for
826,514 shares of our common stock having a fair market value equal to $13.5
million. The initial acquisition price for Biosystems may be increased if the
operating results of this business in the year 2000 exceed certain defined
thresholds. Finally, we acquired Lase-R Shield for $1.0 million in June of 1997.

We acquired all of the outstanding capital stock of Titmus (effective
September 29, 1995) for approximately $27.3 million and substantially all of the
assets of Pro-Tech (effective March 31, 1995) for approximately $6.8 million.

Operating results for each of the above acquisitions have been included in
our consolidated financial statements beginning with the respective acquisition
dates.

Certain non-recurring costs, principally relating to the above
acquisitions, have been included in our 1997 and 1998 operating results. In
connection with the acquisition of Howard Leight and certain of the 1997
acquisitions, a portion of the acquisition price was allocated to the fair value
of purchased in-process research and development. These amounts, totaling $3.7
million in 1997 and $4.7 million in 1998, were charged to operating expenses in
full upon the date of acquisition. In connection with each of the acquisitions,
acquired inventories were adjusted to fair values, and these adjustments were
subsequently charged to cost of sales

13
<PAGE> 14

when the acquired inventories were sold. These amounts were equal to $2.1
million in 1997 and $1.0 million in 1998. We paid cash bonuses in the amount of
$0.6 million to certain senior executives of Howard Leight in connection with
that acquisition, which have been included with general and administrative
expenses. We also recorded acquisition-related charges during 1997 totaling
$150,000 that are included with general and administrative expenses. The
following discussion provides an analysis of our actual operating results, and
also analyzes our operating results excluding the effect of these
acquisition-related items.

RESULTS OF OPERATIONS

The following table presents selected operating data of Bacou and such
amounts as percentages of net sales for the periods indicated (in thousands,
except percentages).

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales.............................. $109,268 100.0% $130,869 100.0% $219,581 100.0%
Cost of sales (1)...................... 47,355 43.3 64,467 49.3 105,856 48.2
-------- ----- -------- ----- -------- -----
Gross profit........................... 61,913 56.7 66,402 50.7 113,725 51.8
Operating expenses:
Selling.............................. 17,074 15.6 21,658 16.6 35,660 16.2
General and administrative(2)........ 9,176 8.4 11,184 8.6 22,895 10.4
Research and development............. -- -- 1,110 0.8 4,000 1.8
Purchased in-process research and
development(3).................... -- -- 3,721 2.8 4,680 2.1
Amortization of intangible assets.... 4,039 3.7 4,095 3.1 7,748 3.6
-------- ----- -------- ----- -------- -----
Total operating expenses..... 30,289 27.7 41,768 31.9 74,983 34.1
-------- ----- -------- ----- -------- -----
Operating income....................... 31,624 29.0 24,634 18.8 38,742 17.7
Other expense (income), net............ 45 0.1 (376) (0.3) 6,054 2.8
-------- ----- -------- ----- -------- -----
Income before income taxes............. 31,579 28.9 25,010 19.1 32,688 14.9
Income taxes........................... 12,202 11.2 10,588 8.1 11,678 5.3
-------- ----- -------- ----- -------- -----
Net income............................. $ 19,377 17.7% $ 14,422 11.0% $ 21,010 9.6%
======== ===== ======== ===== ======== =====
</TABLE>

- ---------------

(1) Includes acquisition-related costs totaling $2,053,000 (1.6% of net sales)
for the year ended December 31, 1997, and $1,013,000 (0.5% of net sales) for
the year ended December 31, 1998.

(2) Includes acquisition-related charges totaling $150,000 (0.1% of net sales)
for the year ended December 31, 1997, and non-recurring charges for
termination benefits totaling $1,425,000 (0.6% of net sales) and
acquisition-related bonuses totaling $600,000 (0.3% of net sales) for the
year ended December 31, 1998.

(3) Amounts for all periods represent acquisition-related charges for acquired
in-process research and development.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Net Sales. Our net sales increased 67.8% from $130.9 million for the year
ended December 31, 1997 to $219.6 million for the year ended December 31, 1998.
Net sales in our safety segment increased 90.5% from $99.4 million in 1997 to
$189.4 million in 1998, principally the result of acquired businesses and new
product introductions, while net sales in our optical frames and instruments
segment declined by 4.0% from $31.5 million in 1997 to $30.2 million in 1998.
Export sales represented 11.5% of net sales in 1997 and 15.1% of net sales in
1998, and increased by 119.4% from 1997 to 1998 due principally to acquired
businesses.

Of the $90.0 million increase in net sales of safety products, $75.4
million was the result of acquired businesses. Operating results of Howard
Leight were included for ten months in 1998 and results of Survivair and
Biosystems were included for the full year in 1998, compared to the 1997 period,
which only included Survivair for seven months and Biosystems for three months.
The remaining growth in sales of safety products of 14.7% was principally the
result of new product introductions, including UVEX(R) lines of astrospec 3000

14
<PAGE> 15

protective eyewear with the colors and logos of National Football League teams,
Bandit and Bandido protective eyewear, the Survivair 7000 series air purifying
respirator line, and the Panther self-contained breathing apparatus.

Cost of Sales. Our cost of sales increased 64.2% from $64.5 million for
the year ended December 31, 1997, to $105.9 million for the year ended December
31, 1998, primarily as a result of higher sales volume.

Gross Profit. Our gross profit increased 71.3% from $66.4 million for the
year ended December 31, 1997, to $113.7 million for the year ended December 31,
1998. Excluding acquisition-related items, our gross margin was approximately
52.3% in both 1997 and 1998. Because of relatively higher margins attributable
to hearing protection products, our acquisition of the Howard Leight business
has improved our overall gross margin. This improvement however, was offset by
the effect of our acquisition of the Biosystems and Survivair businesses, due to
the lower margins attributable to respiratory and gas monitor products.

Operating Expenses. Our operating expenses increased 79.5% from $41.8
million for the year ended December 31, 1997 to $75.0 million for the year ended
December 31, 1998, primarily as a result of operating expenses attributable to
acquired businesses. In June 1998, we announced the termination of employment of
the president and chief operating officer of Bacou Safety. The 1998 period
includes a charge equal to $1.4 million for termination payments due to this
former officer. In addition, the 1998 period includes acquisition-related
charges for acquired in-process research and development totaling $4.7 million
and acquisition-related bonuses totaling $0.6 million. The 1997 period also
includes acquisition-related charges for acquired in-process research and
development totaling $3.7 million. Excluding these charges, operating expenses
as a percentage of net sales increased from 29.1% for the year ended December
31, 1997 to 31.1% for the year ended December 31, 1998. This increase was due
primarily to higher levels of spending for research and development at acquired
businesses and increased amortization expense. Amortization expense increased
89.2% from $4.1 million in 1997 to $7.7 million in 1998 as a result of additions
to intangible assets in connection with businesses we recently acquired.

Operating Income. Our operating income increased 57.3% from $24.6 million
for the year ended December 31, 1997 to $38.7 million for the year ended
December 31, 1998. Excluding acquisition-related items in both years and
excluding the 1998 termination benefits discussed above, our operating income
increased 52.0% from $30.6 million for the year ended December 31, 1997 to $46.5
million for the year ended December 31, 1998 and our operating margin declined
from 23.4% for the year ended December 31, 1997 to 21.2% for the year ended
December 31, 1998.

Other Expense (Income), Net. Other expense (income), net was ($376,000)
for the year ended December 31, 1997 and $6.1 million for the year ended
December 31, 1998. The 1998 period includes net interest expense totaling $6.2
million, whereas the 1997 period includes net interest income totaling
($216,000). The increase in net interest expense from 1997 to 1998 is due
principally to debt we incurred in connection with the acquisition of Howard
Leight. See "-- Liquidity and Capital Resources."

Income Taxes. Our effective income tax rate was 42.3% in 1997 and 35.7% in
1998. Our effective rate in both periods was higher than the federal statutory
rate of 35.0% due to state and local income taxes. In addition, our effective
rate in the 1997 period was higher because a tax benefit could not be recorded
for charges totaling $3.7 million and relating to acquired in-process research
and development.

Net Income. Our net income increased 45.7% from $14.4 million for the year
ended December 31, 1997 to $21.0 million for the year ended December 31, 1998.
Excluding acquisition-related items in both years and excluding the 1998
termination benefits discussed above, our net income increased 32.3% from $19.5
million in 1997 to $25.8 million in 1998.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net Sales. Our net sales increased 19.8% from $109.3 million for the year
ended December 31, 1996 to $130.9 million for the year ended December 31, 1997.
Net sales of our safety segment increased 28.1% from $77.6 million in 1996 to
$99.4 million in 1997, while net sales of our optical frames and instruments
segment

15
<PAGE> 16

declined from $31.7 million in 1996 to $31.5 million in 1997. Export sales
represented 7.3% of net sales in 1996 and 11.5% of net sales in 1997, and
increased by 90.0% from 1996 to 1997.

Net sales of safety products increased principally as a result of acquired
businesses, as the 1997 acquisitions of Biosystems and Survivair contributed
incremental sales totaling $21.5 million. During the fourth quarter of 1996 we
withdrew from the business of selling completed prescription eyewear, and as a
result, net sales of our optical frames and instruments segment declined from
the 1996 period to the 1997 period by approximately $3.1 million. Excluding the
effect of businesses acquired in 1997, and excluding sales in 1996 from
discontinued product lines, our net sales increased by 3.6%, principally as a
result of increased units shipped.

Cost of Sales. Our cost of sales increased 36.1% from $47.4 million for
the year ended December 31, 1996 to $64.5 million for the year ended December
31, 1997. The increase was primarily attributable to increased sales volume and
acquisition-related costs resulting from the 1997 acquisitions of Biosystems and
Survivair.

Gross Profit. Our gross profit increased 7.3% from $61.9 million for the
year ended December 31, 1996 to $66.4 million for the year ended December 31,
1997. Excluding the effect of acquisition-related items, our gross margin would
have been 52.3% in 1997 compared with 56.7% in 1996. Our gross margin declined
from 1996 to 1997 principally as a result of lower margins at acquired
businesses. During 1997 we also experienced a reduction in the average selling
price of many of our protective eyewear product lines as a response to lower
priced competitive products. Lower average selling prices resulted in a
reduction of the gross margin from 1996 to 1997 of about one percentage point.
We believe competitive pressures may limit our ability to increase prices to
previous levels. In addition to these factors, our gross margin during 1997 was
reduced as a result of higher costs to produce eyeglass frames and components.
These higher costs occurred primarily during the first quarter of 1997 and
resulted from disruption in production caused by relocation to a new facility
and, interruption in production and quality problems both associated with a
newly acquired plating line.

Operating Expenses. Our operating expenses increased 37.9% from $30.3
million for the year ended December 31, 1996 to $41.8 million for the year ended
December 31, 1997. Excluding acquisition-related charges for acquired in-process
research and development totaling $3.7 million, operating expenses increased
25.6% from $30.3 million for the year ended December 31, 1996 to $38.0 million
for the year ended December 31, 1997. This increase resulted principally from
operating expenses attributable to Biosystems and Survivair; each acquired by us
during 1997. In addition, selling expenses as a percentage of sales increased
from 15.6% in 1996 to 16.6% in 1997, principally as a result of expansion of our
international sales force, higher advertising and promotion costs, and somewhat
higher product development costs.

Operating Income. As a result of the foregoing, our operating income
decreased 22.1% from $31.6 million for the year ended December 31, 1996 to $24.6
million for the year ended December 31, 1997. Excluding acquisition-related
items, operating income decreased 3.4% from $31.6 million in 1996 to $30.5
million in 1997.

Other Expense (Income), Net. Other expense (income), net was $45,000 for
the year ended December 31, 1996 and ($376,000) for the year ended December 31,
1997. We had lower average levels of debt outstanding during the 1997 period,
and the change in other expense (income) is primarily due to a decline in net
interest expense from 1996 to 1997.

Income Taxes. Our effective income tax rate was 38.6% in 1996 and 42.3% in
1997. Our effective rate in both periods was higher than the federal statutory
rate due to state and local income taxes and, in the 1997 period, because a tax
benefit could not be recorded for charges totaling $3.7 million and relating to
acquired in-process research and development. Excluding the effect of these
charges, our effective income tax rate for 1997 would have been 37.1%.

Net Income. Primarily as a result of acquisition-related items, our net
income decreased 25.6% from $19.4 million for the year ended December 31, 1996
to $14.4 million for the year ended December 31, 1997. Excluding 1997
acquisition-related items, our net income increased from $19.4 million in 1996
to $19.5 million in 1997.
16
<PAGE> 17

EFFECTS OF INFLATION

Inflation during recent years has been modest and has not had a material
impact upon the results of our operations.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity historically has been derived from cash flow provided by
operations and, periodically, from bank borrowings utilized to finance
acquisitions of businesses. We utilize EBITDA (earnings before interest, taxes,
depreciation and amortization) as a measure of our cash flow provided by
operations. Our EBITDA (prior to the effect of non-recurring items) increased
54.7% from $39.2 million for the year ended December 31, 1997 to $60.6 million
for the year ended December 31, 1998. This increase was principally due to
inclusion of the operating results of acquired businesses.

We used cash equal to $6.5 million for working capital purposes during the
year ended December 31, 1998. Our net use of cash for working capital purposes
resulted principally from increases in accounts receivable and inventories. Our
accounts receivable balances were higher at December 31, 1998 than at December
31, 1997 principally as a result of sales volume during the fourth quarter of
1998 that was substantially higher than the comparable period in 1997. Inventory
levels increased from 1997 to 1998 principally due to planned increases in
response to higher order rates and due to initial stocking for new product
introductions.

We used cash equal to $135.5 million during the year ended December 31,
1998, and $35.4 million during the year ended December 31, 1997, for investing
activities. The year ended December 31, 1998, includes cash payments totaling
$120.0 million that we made in connection with the acquisition of Howard Leight.
We made cash payments for the acquisition of Survivair, totaling $27.4 million,
during the year ended December 31, 1997. Our capital expenditures totaled $14.4
million for the year ended December 31, 1998 and $6.8 million for the year ended
December 31, 1997.

In connection with our acquisition of Biosystems we provided former
shareholders of Biosystems put options covering 578,560 shares issued in
connection with that acquisition. The put options may be exercised at any time
through September 30, 1999, at a price equal to approximately $16.38 per share.
If the put options were exercised in full, we would be required to make cash
payments totaling approximately $9.5 million to repurchase these shares, and we
expect that such payment would be funded by bank borrowings.

In February 1998 we entered into an agreement with Banque Nationale de
Paris pursuant to which the bank made a term loan (the "BNP Loan") in the
principal amount of $110.0 million. The BNP Loan requires quarterly interest
payments at an effective annual rate equal to three-month LIBOR plus 0.5% and
requires principal repayments in equal quarterly installments over seven years.
We also maintain a $31.0 million revolving line of credit facility (the
"Revolving Facility") with Citizens Bank of Rhode Island. The Revolving Facility
is available to fund acquisitions and for other general corporate purposes,
bears interest at a rate per annum equal to three-month LIBOR plus 0.7% and is
due in full on May 31, 2000.

In connection with our acquisition of Howard Leight we borrowed a total of
$124.3 million, consisting of the $110.0 million BNP Loan and $14.3 million on
the Revolving Facility. We repaid principal during the year ended December 31,
1998, equal to $17.7 million. Principal repayments consisted of payments
totaling $11.8 million on the BNP Loan and $5.9 million of indebtedness we
assumed in connection with the acquisition of Howard Leight. At December 31,
1998, we had debt outstanding totaling $107.8 million consisting of $98.2
million on the BNP Loan and $9.6 million on the Revolving Facility.

We have entered into an agreement to acquire Perfect Fit for an approximate
purchase price of $37.8 million in cash plus the assumption of the sellers'
balance sheet liabilities, currently estimated at $16.0 million. We expect this
acquisition will close on or about April 1, 1999, and anticipate borrowing an
amount approximating the cash purchase price from Banque Nationale de Paris. We
expect the loan would be a seven-year term loan, with equal quarterly
installments of principal and with an effective annual interest rate equal to
three-month LIBOR plus approximately 0.5%.

17
<PAGE> 18

We are pursuing a business strategy that includes acquisitions as an
important element. As a result, we may incur additional indebtedness, may be
required to negotiate additional credit facilities, or may issue additional
common or preferred stock in order to fund potential future investments
resulting from our acquisition strategy. We believe we would have access to
sufficient capital to consummate future acquisitions in addition to the Perfect
Fit acquisition. Except for cash requirements to fund acquisitions, we believe
that our cash flow provided by operating activities together with unused
borrowing capacity will be sufficient to fund our working capital requirements,
debt service requirements and capital expenditures for the foreseeable future.

SEASONALITY

Our business has been subject to slight seasonal variations, which we have
attributed to fluctuations in industrial activity and annual weather patterns.
Historically, our sales from October through December have been somewhat lower
than other periods due to anticipated lower demand in the more inclement winter
months and planned inventory reductions by major distributors. In addition to
seasonality, our business has been variable period to period due to other
factors, including promotional activity undertaken by certain of our business
units in response to competitive pressures, market demand, production capacity,
inventory levels and other considerations.

YEAR 2000 COMPLIANCE

Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without consideration
of the impact of the upcoming change in century. If not corrected, many computer
applications could fail or create erroneous results at or before the year 2000.

We initiated a comprehensive project in June 1997 to address our year 2000
compliance. The project consists of four phases including:

- assessment phase -- identification of areas of non-compliance (based
upon a combination of our own analysis and direct communication with
vendors that developed and support our software) and evaluation of
risk;

- planning phase -- development of specific steps to correct
non-compliance, including a timetable;

- implementation phase -- execution of steps developed during the
planning phase, and

- testing phase -- conducting tests to validate year 2000 compliance.

The project considers both our primary information systems (software for
all financial systems, network software and equipment, personal computers and
incumbent software, etc.) and other applications dependent upon embedded
software (manufacturing equipment, telephone systems, security systems, etc.).

We have completed the assessment and planning phases of this project.
Results of the assessment phase initially identified applications, principally
at our Survivair and Uvex Safety divisions, which were not year 2000 compliant.
During 1997, we initiated a project to install and implement common software at
all of our business units and we signed a license agreement with J.D. Edwards &
Company for such software in September 1997. Full implementation of this
software was completed at our Survivair division on January 1, 1999, and we
expect that full implementation at our Uvex Safety division will be completed
during the second quarter of 1999. J.D. Edwards & Company has represented that
this software is year 2000 compliant and that its processes used to achieve year
2000 readiness are certified by the Information Technology Association of
America. We believe that implementation of this software at our Survivair
division has corrected its material year 2000 deficiencies, and further believe
that upon full implementation of this software at our Uvex Safety division we
will have corrected all of our remaining material year 2000 deficiencies, except
any that exist at Perfect Fit which we will address following consummation of
the acquisition.

We have incurred costs totaling approximately $2.7 million through December
31, 1998 for implementation of the software at our Survivair and Uvex Safety
business units, and we estimate the remaining costs necessary to complete full
implementation to be approximately $0.5 million. Except for the cost of
training,
18
<PAGE> 19

these costs will be capitalized and depreciated over the estimated useful life
of the software. The cost of training is estimated to be $0.3 million and will
be expensed as incurred.

Although there can be no assurance that we will successfully complete
implementation of the common software at our Uvex Safety business unit by dates
critical for year 2000 compliance, implementation is currently progressing in
accordance with timetables established by us. Although failure to complete
implementation on a timely basis may have material adverse financial and
operational impacts on us, we believe such failure is not reasonably likely. We
believe the possible effects of unsuccessful implementation of this software by
our Uvex Safety division would be temporary and may include the following for
that business:

- an inability to process transactions;

- an inability to order raw materials;

- an inability to timely process orders and billings, or

- an inability to deliver finished products to customers.

The implementation phase for other applications with embedded software is
ongoing and expected to be completed by the end of the second quarter of 1999.
The cost of modifying or correcting deficiencies in these applications is
currently estimated to be immaterial and such costs will principally be expensed
as incurred.

Our business is also dependent upon the systems of third parties. With the
exception of a few significant vendors, we believe that year 2000 deficiencies
in these systems would not represent a material financial or business risk to
us. With regard to these few vendors, we are assessing their year 2000 readiness
based upon direct communication with each such vendor.

We believe that the most reasonably likely worst case result relating to
year 2000 would be the failure of certain applications with embedded software,
or failure of third party systems on which our systems rely. Failure of
applications with embedded software could result in temporary disruption to an
aspect of our operations, such as disruption in operation of certain
manufacturing equipment. Failure of the information systems of a vendor could
result in the temporary interruption of supply of material or services required
by us. Although there can be no assurance that these failures would not have an
adverse effect on our business, we believe the effect of such failure would not
be material to our business. We have developed informal contingency plans
relating to any such failure, which include reliance upon redundant systems,
short-term reliance upon manual systems and reliance upon alternate vendors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk can result from fluctuations in interest rates, foreign
currency exchange rates, commodity prices or other market exposures.
Uncertainties that are either nonfinancial or nonquantifiable, such as
political, economic, tax, other regulatory or credit risks are not included in
the following assessment of our market risks.

We believe our only market risk exposure is the risk of adverse
fluctuations in interest rates. At December 31, 1998, we had debt outstanding
totaling $107.8 million consisting of $98.2 million on the BNP Loan and $9.6
million on the Revolving Facility. Interest rates on this debt are variable
based upon three-month LIBOR. Three-month LIBOR approximated 5.25% at December
31, 1998.

We have prepared sensitivity analyses of our interest rate exposure for
1999 to assess the impact of hypothetical changes in interest rates. Based upon
the results of these analyses, a 10% adverse change in interest rates from the
December 31, 1998 rate would result in a reduction of our 1999 after-tax
earnings of approximately $350,000 or $0.02 per share.

19
<PAGE> 20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ 21
Consolidated Balance Sheets................................. 22
Consolidated Statements of Income........................... 23
Consolidated Statements of Stockholders' Equity............. 24
Consolidated Statements of Cash Flows....................... 25
Notes to Consolidated Financial Statements.................. 26-37
</TABLE>

20
<PAGE> 21

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Bacou USA, Inc.:

We have audited the accompanying consolidated balance sheets of Bacou USA,
Inc. and subsidiaries as of December 31, 1997 and 1998 and the related
consolidated statements of income, stockholders' equity , and cash flows for
each of the years in the three-year period ended December 31, 1998. 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, 1997 and 1998 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.

KPMG LLP

Providence, Rhode Island
February 5, 1999

21
<PAGE> 22

BACOU USA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,277 $ 1,090
Trade accounts receivable, net............................ 16,099 27,110
Inventories............................................... 23,449 38,246
Other current assets...................................... 3,502 1,251
Deferred income taxes..................................... 1,426 2,138
-------- --------
Total current assets.............................. 45,753 69,835
Property and equipment, net................................. 35,880 53,998
Intangible assets, net...................................... 70,718 169,937
-------- --------
Total assets...................................... $152,351 $293,770
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt.................... $ -- $ 15,714
Accounts payable.......................................... 5,523 8,959
Accrued compensation and benefits......................... 2,939 8,234
Other accrued expenses.................................... 1,752 4,008
Income taxes payable...................................... 1,030 1,828
-------- --------
Total current liabilities......................... 11,244 38,743
Long-term debt.............................................. -- 92,050
Deferred income taxes....................................... 6,051 6,311
Other liabilities........................................... 2,704 2,754
-------- --------
Total liabilities................................. 19,999 139,858
-------- --------
Common stock subject to a put option........................ 9,450 9,450
-------- --------
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, 17,590,714 shares in 1997 and 17,610,465
shares in 1998 issued and outstanding (including shares
subject to a put option)............................... 17 17
Additional paid-in capital................................ 62,588 63,258
Retained earnings......................................... 60,297 81,187
-------- --------
Total stockholders' equity........................ 122,902 144,462
-------- --------
Total liabilities and stockholders' equity........ $152,351 $293,770
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
22
<PAGE> 23

BACOU USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Net sales................................................... $109,268 $130,869 $219,581
Cost of sales............................................... 47,355 64,467 105,856
-------- -------- --------
Gross profit................................................ 61,913 66,402 113,725
Operating expenses:
Selling................................................... 17,074 21,658 35,660
General and administrative................................ 9,176 11,184 22,895
Research and development.................................. -- 1,110 4,000
Purchased in-process research and development............. -- 3,721 4,680
Amortization of intangible assets......................... 4,039 4,095 7,748
-------- -------- --------
Total operating expenses.......................... 30,289 41,768 74,983
-------- -------- --------
Operating income............................................ 31,624 24,634 38,742
Other expenses (income):
Interest expense.......................................... 896 156 6,291
Interest income........................................... (522) (372) (112)
Other, net................................................ (329) (160) (125)
-------- -------- --------
Total other expense (income), net................. 45 (376) 6,054
-------- -------- --------
Income before income taxes.................................. 31,579 25,010 32,688
Income taxes................................................ 12,202 10,588 11,678
-------- -------- --------
Net income........................................ $ 19,377 $ 14,422 $ 21,010
======== ======== ========
Basic earnings per share.................................... $ 1.18 $ 0.83 $ 1.19
======== ======== ========
Diluted earnings per share.................................. $ 1.18 $ 0.83 $ 1.19
======== ======== ========
Weighted average shares outstanding:
Basic....................................................... 16,406 17,383 17,601
======== ======== ========
Diluted..................................................... 16,436 17,411 17,723
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
23
<PAGE> 24

BACOU USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN RETAINED STOCKHOLDERS'
SHARES STOCK CAPITAL EARNINGS EQUITY
------ ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995................. 13,860 $14 $19,186 $26,498 $ 45,698
Issuance of common stock, net of expenses of
issuance.................................... 3,450 3 47,295 --..... 47,298
Stock options exercised....................... 2 -- 34 -- 34
Net income.................................... -- -- -- 19,377 19,377
------ --- ------- ------- --------
Balances at December 31, 1996................. 17,312 17 66,515 45,875 112,407
Repurchase of shares; retirement of shares to
authorized and unissued..................... (554) (1) (8,038) -- (8,039)
Issuance of common stock, net of expenses of
issuance.................................... 827 1 4,012 -- 4,013
Stock options exercised....................... 6 -- 99 -- 99
Net income.................................... -- -- -- 14,422 14,422
------ --- ------- ------- --------
Balances at December 31, 1997................. 17,591 17 62,588 60,297 122,902
Repurchase of shares; retirement of shares to
authorized and unissued..................... (3) -- (46) -- (46)
Fair value of stock options granted pursuant
to a consulting agreement................... -- -- 337 -- 337
Stock options exercised....................... 22 -- 379 -- 379
Other......................................... -- -- -- (120) (120)
Net income.................................... -- -- -- 21,010 21,010
------ --- ------- ------- --------
Balances at December 31, 1998................. 17,610 $17 $63,258 $81,187 $144,462
====== === ======= ======= ========
</TABLE>

See accompanying notes to consolidated financial statements.
24
<PAGE> 25

BACOU USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $19,377 $14,422 $ 21,010
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 7,511 8,618 14,154
Deferred income taxes.................................. 714 (289) (176)
Purchased in-process research and development.......... -- 3,721 4,680
Loss on sale or write down of assets................... 363 160 --
Change in assets and liabilities, net of effects of
acquired companies:
Trade accounts receivable............................ 303 (98) (6,677)
Inventories.......................................... 722 2,185 (10,162)
Other current assets................................. 391 (1,114) 2,815
Accounts payable..................................... 425 (103) 1,949
Accrued expenses and other liabilities............... 477 (1,063) 4,745
Income taxes......................................... 2,095 (767) 797
------- ------- ---------
Net cash provided by operating activities......... 32,378 25,672 33,135
------- ------- ---------
Cash flows from investing activities:
Capital expenditures...................................... (10,668) (6,837) (14,386)
Acquisition of businesses, including direct costs of
acquisition, net of cash acquired...................... (219) (28,566) (121,094)
------- ------- ---------
Net cash used in investing activities............. (10,887) (35,403) (135,480)
------- ------- ---------
Cash flows from financing activities:
Repayment of long-term debt............................... (49,000) (8,000) (17,725)
Proceeds from long-term debt.............................. -- 8,000 110,000
Advances (repayments) under notes payable, net............ -- (2,085) 9,550
Repurchase of common stock................................ -- (8,039) (46)
Proceeds from issuance of common stock, net of expenses... 47,332 99 379
------- ------- ---------
Net cash provided by (used in) financing
activities...................................... (1,668) (10,025) 102,158
------- ------- ---------
Net increase (decrease) in cash and cash equivalents........ 19,823 (19,756) (187)
Cash and cash equivalents at beginning of year.............. 1,210 21,033 1,277
------- ------- ---------
Cash and cash equivalents at end of year.................... $21,033 $ 1,277 $ 1,090
======= ======= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.................... $ 917 $ 155 $ 5,796
======= ======= =========
Cash paid during the year for income taxes................ $ 9,427 $11,989 $ 11,308
======= ======= =========
Fair value of stock options granted pursuant to a
consulting agreement................................... $ -- $ -- $ 337
======= ======= =========
Fair value of common stock issued in connection with the
acquisition of a business.............................. $ -- $13,500 $ --
======= ======= =========
</TABLE>

See accompanying notes to consolidated financial statements.
25
<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 (collectively, the
Company). All significant intercompany transactions and balances have been
eliminated in consolidation.

The Company manufactures and distributes safety products, including
non-prescription protective eyewear, laser protective eyewear, supplied air and
air purifying respirators, gas monitors and equipment for testing self-contained
breathing apparatus. The Company also manufactures eyeglass frames and
components for prescription eyewear and vision screening equipment. The Company
relies on single sources for the supply of several raw materials. 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 effect on the Company's results of
operations. The Company has 245 employees (representing approximately 13% of
total employees) that are covered under a collective bargaining agreement that
expires September 13, 2000.

Bacou, S.A., a company domiciled in Valence, France, owns a controlling
interest (approximately 72% at December 31, 1998) in Bacou. The Company
purchases certain inventory items from wholly-owned subsidiaries of Bacou, S.A.
These purchases totaled $625,000 in 1996, $207,000 in 1997 and $24,000 in 1998.
Sales by the Company to Bacou, S.A. totaled $60,000 in 1996, $270,000 in 1997
and $967,000 in 1998.

(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.

The Company recognizes revenue upon shipment of merchandise to its
customers. The Company's sales are primarily domestic with customers located
throughout the United States. Pursuant to an agreement with the former owner of
the Uvex Safety business, the Company may sell personal protective equipment
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 sports activities under the uvex(R) 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 $945,000 at December
31, 1997 and $1,150,000 at December 31, 1998.

(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 are stated at cost. 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

26
<PAGE> 27
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 intellectual property and patents,
customer relationships, tradenames 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. Goodwill associated with assets acquired in a
purchase business combination is included in impairment evaluations when events
or circumstances exist that indicate the carrying amount of those assets may not
be recoverable. Recoverability of intangible assets is determined based upon the
excess of carrying amounts over expected future net cash flows (undiscounted) of
the underlying business or product line. The assessment of the recoverability of
intangible assets will be impacted if estimated future net 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 expected to 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 purchases denominated in foreign currencies. Other than these
contracts, the Company has no other involvement with derivative financial
instruments. Transaction gains and losses were not material during any period
presented in the accompanying financial statements. The Company had no material
open currency contracts at December 31, 1998.

(i) Employee Benefit Plans

The Company grants stock options pursuant to certain stock incentive plans.
Except for stock options granted pursuant to a consulting agreement, the Company
accounts for stock option grants using the intrinsic value-based method.

The Company sponsors defined contribution plans that cover substantially
all employees. The Company also sponsors a defined benefit pension plan for
bargaining unit 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. On January 1, 1998, the Company adopted
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits" (Statement 132). Statement 132
revises employers' disclosures about defined benefit pension plans, however, did
not change the method of accounting for such plans.

27
<PAGE> 28
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(j) Earnings Per Share

The accompanying financial statements include a dual presentation of basic
earnings per share and diluted earnings per share. Basic earnings per share are
computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share are computed by increasing the weighted-average number of
common shares by the dilutive potential common shares that were outstanding
during the period.

Dilutive potential common shares during all periods presented were limited
to the effect of outstanding stock options determined by application of the
treasury stock method. Dilutive stock options included in the computation of
diluted earnings per share totaled 30,103 in 1996, 27,597 in 1997 and 121,812 in
1998. Common stock that is contingently issuable to the former stockholders of
Biosystems (see note 2), and the effect of written put options, could each
potentially result in dilution of basic earnings per share in the future. These
securities were not included in the computation of diluted earnings per share
during 1997 and 1998 because all necessary conditions for issuance of contingent
shares had not been satisfied and because the effect of written put options was
antidilutive.

(k) Financial Instruments

Financial instruments of the Company consist of cash, accounts receivable,
accounts payable and long-term debt. The carrying amounts of these financial
instruments approximate their fair value.

(l) Research and Development

Research and development costs are expensed as incurred and totaled
$1,110,000 in 1997 and $4,000,000 in 1998.

(m) 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.

(2) ACQUISITIONS

(a) 1997 and 1998 Acquisitions

Effective February 27, 1998, the Company acquired substantially all assets
and assumed substantially all liabilities of Howard Leight Industries ("Howard
Leight"), a manufacturer of hearing protection products (including disposable,
reusable and banded ear plugs, and ear muffs) for cash consideration of $125.9
million, $5.9 million of which represented the refinancing of Howard Leight
indebtedness (the "Leight Acquisition"). The acquisition was financed
principally by proceeds from bank debt.

Effective September 30, 1997, the Company acquired all of the capital stock
of Biosystems, Inc. ("Biosystems"), a manufacturer of gas monitors and equipment
for testing self-contained breathing apparatus, in exchange for 826,514 shares
of its common stock having a fair market value equal to $13.5 million. The
initial acquisition price may be increased if the operating results of
Biosystems in the year 2000 exceed certain defined thresholds. The Company also
acquired all of the outstanding capital stock of Comasec Holdings, Inc.
("Comasec") on May 30, 1997 for cash consideration of $27.4 million. The assets
of Comasec consisted primarily of its wholly owned subsidiary, Survivair, Inc.
("Survivair"), a manufacturer of respiratory protection products. Finally, the
Company acquired Lase-R Shield for $1.0 million in June of 1997. The

28
<PAGE> 29
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

acquisitions of Biosystems, Survivair and Lase-R Shield are referred to
collectively as the "1997 Acquisitions."

In connection with the Biosystems acquisition the Company provided former
shareholders of Biosystems put options covering 578,560 of the shares issued in
connection with that acquisition. The put options may be exercised at any time
through September 30, 1999, at a price equal to approximately $16.38 per share.

In accordance with generally accepted accounting principles, the cash paid
and fair value of common stock issued to effect the Leight Acquisition and the
1997 Acquisitions was allocated to the fair value of assets purchased and
liabilities assumed. In each case, the excess of acquisition price over fair
value of net assets acquired was recorded as goodwill and is being amortized
over 30-40 years. The fair value of purchased in-process research and
development was $4.7 million for Howard Leight, $2.4 million for Biosystems and
$1.3 million for Survivair. Acquired in-process research and development
projects had not yet reached technological feasibility and had no alternative
future uses, accordingly, the fair value assigned to these projects was expensed
as of the respective acquisition dates.

There were no individually significant in-process research and development
projects, except for a project to develop a new generation of Howard Leight Air
Soft(TM) ear plugs. The value of this project was determined based upon future
cash flows expected to result from development of the project, discounted at a
risk-adjusted rate equal to 21%, and based upon an assumption that the project
was 73% complete as of the date of acquisition. The percent complete was based
upon an assessment of (i) cost incurred through the acquisition date, (ii)
estimated remaining cost to complete, (iii) complexity of the work completed to
date and (iv) difficulty of completing the remaining development.

The purchase price for the acquisitions of Howard Leight, Biosystems and
Survivair has been allocated approximately as shown in the following table (in
thousands).

<TABLE>
<CAPTION>
HOWARD LEIGHT BIOSYSTEMS SURVIVAIR
------------- ---------- ---------
<S> <C> <C> <C>
Working capital...................................... $ 6,200 $1,000 $ 4,000
Property and equipment............................... $10,100 $ 700 $ 6,100
Identifiable intangible assets....................... $89,000 $3,300 $ 4,300
Purchased in-process research and development........ $ 4,700 $2,400 $ 1,300
Long-term debt....................................... $(5,900) $ -- $ --
Goodwill............................................. $15,900 $6,100 $11,700
</TABLE>

The Leight Acquisition and the 1997 Acquisitions have been accounted for as
purchases and, accordingly, operating results of the acquired companies have
been included in the accompanying financial statements of the Company beginning
with the respective acquisition dates. The following table presents pro forma
results of operations of the Company as if the acquisitions of Howard Leight and
Survivair had occurred as of January 1, 1997. Pro forma operating results of
Biosystems or Lase-R Shield do not materially affect the information presented
below. The pro forma operating results include results of operations for the
indicated periods with adjusted depreciation on property and equipment,
increased amortization of intangible assets and assumed interest expense on the
cash purchase price. The pro forma information given is unaudited, does not
purport to be indicative of the results that actually would have been obtained
if the operations were combined during the periods presented, and is not
intended to be a projection of future results or trends.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1998
------------------------------------- ---- ----
<S> <C> <C>
Net sales................................................... $189,900 $226,900
Net income.................................................. $ 16,000 $ 20,600
Basic and diluted earnings per share........................ $ 0.92 $ 1.17
</TABLE>

29
<PAGE> 30
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Excluding acquisition-related items in both years and excluding
non-recurring termination benefits in 1998, proforma net income would have been
$21.2 million in 1997 and $25.4 million in 1998, and proforma basic and diluted
earnings per share would have been $1.22 in 1997 and $1.44 in 1998.

(b) Subsequent Event (unaudited)

On February 25, 1999, the Company announced it had entered into an
agreement to acquire Perfect Fit Glove Co., Inc. and certain affiliates and
related assets ("Perfect Fit"), manufacturers and distributors of protective
gloves and other related products worldwide with fiscal year 1998 net sales of
$47.3 million. The Company will be acquiring the assets of Perfect Fit for an
approximate purchase price of $37.8 million in cash plus the assumption of the
sellers' balance sheet liabilities, currently estimated at $16.0 million. The
Company has agreed to pay an additional earnout of up to $6.0 million to the
extent actual consolidated cash flow of the acquired business for 1999 exceeds
certain specified targets. In connection with the acquisition, the Company will
enter into employment agreements with the four key executives of Perfect Fit.
The acquisition will be accounted for under the purchase method of accounting
and is expected to close during the second quarter of 1999. The acquisition is
expected to be financed by a loan from Banque Nationale de Paris at an interest
rate per annum of three-month LIBOR plus approximately 0.5%.

(3) INVENTORIES

Inventories included the following at December 31 (in thousands):

<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Raw materials and supplies.................................. $ 8,572 $16,407
Work-in-process............................................. 4,453 5,165
Finished goods.............................................. 10,424 16,674
------- -------
$23,449 $38,246
======= =======
</TABLE>

(4) PROPERTY AND EQUIPMENT

Property and equipment included the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES (YEARS) 1997 1998
------------- ---- ----
<S> <C> <C> <C>
Machinery and equipment................................ 5-10 $22,059 $28,622
Dies and molds......................................... 5 10,519 13,274
Buildings and leasehold improvements................... 10-40 8,345 15,337
Furniture and fixtures................................. 10 1,524 2,576
Computer equipment..................................... 5 2,115 2,897
Vehicles............................................... 3 132 249
Deposits on equipment.................................. 2,771 8,997
------- -------
47,465 71,952
Less accumulated depreciation and amortization......... 11,585 17,954
------- -------
$35,880 $53,998
======= =======
</TABLE>

Depreciation and amortization of property and equipment totaled $3,472,000
in 1996, $4,523,000 in 1997 and $6,406,000 in 1998.

30
<PAGE> 31
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) INTANGIBLE ASSETS

The value of identifiable intangible assets is generally determined by
independent appraisal upon the date of acquisition. Intangible assets included
the following at December 31 (in thousands):

<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES (YEARS) 1997 1998
------------- ---- ----
<S> <C> <C> <C>
Intellectual property and patents..................... 9-30 $17,568 $102,371
Customer relationships................................ 10-20 19,523 19,523
Tradenames and other intangibles...................... 20-30 -- 4,618
Goodwill.............................................. 20-40 46,321 63,926
------- --------
83,412 190,438
Less accumulated amortization......................... 12,694 20,501
------- --------
$70,718 $169,937
======= ========
</TABLE>

(6) INCOME TAXES

Total federal and state income tax expense included the following (in
thousands):

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1996:
Federal.................................................. $10,105 $ 604 $10,709
State.................................................... 1,383 110 1,493
------- ----- -------
$11,488 $ 714 $12,202
======= ===== =======
Year ended December 31, 1997:
Federal.................................................. $ 9,600 $(259) $ 9,341
State.................................................... 1,277 (30) 1,247
------- ----- -------
$10,877 $(289) $10,588
======= ===== =======
Year ended December 31, 1998:
Federal.................................................. $10,735 $(149) $10,586
State.................................................... 1,119 (27) 1,092
------- ----- -------
$11,854 $(176) $11,678
======= ===== =======
</TABLE>

Actual income tax expense differs from expected income tax expense
(computed by applying the statutory U.S. Federal corporate income tax rate to
income before income taxes) as follows (in thousands, except percentages):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Computed expected tax expense......................... $11,052 $ 8,754 $11,441
State income taxes, net of federal income tax
benefit............................................. 971 810 710
Non-deductible purchased in-process research and
development......................................... -- 1,302 --
Net tax benefit of foreign sales corporation.......... -- (187) (394)
Other................................................. 179 (91) (79)
------- ------- -------
$12,202 $10,588 $11,678
======= ======= =======
Effective rate........................................ 38.6% 42.3% 35.7%
======= ======= =======
</TABLE>

31
<PAGE> 32
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 as follows (in thousands):

<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................... $ 326 $ 412
Inventory related items................................... 917 1,241
Pension and compensation related expenses................. 412 954
Accrued costs............................................. 719 722
Other..................................................... 481 402
------ ------
Total gross deferred tax assets........................ 2,855 3,731
------ ------
Less valuation allowance............................... -- --
------ ------
Net deferred tax assets................................ 2,855 3,731
------ ------
Deferred tax liabilities:
Excess of tax over financial statement depreciation and
amortization........................................... 3,012 5,375
Difference in basis of acquired assets.................... 4,375 2,412
Other..................................................... 93 117
------ ------
Total deferred tax liabilities......................... 7,480 7,904
------ ------
Net deferred tax liability............................. $4,625 $4,173
====== ======
</TABLE>

(7) LONG-TERM DEBT

In February 1998 the Company entered into an agreement with Banque
Nationale de Paris pursuant to which the bank made a term loan (the "BNP Loan")
in the principal amount of $110.0 million. The BNP Loan requires quarterly
payments at an effective annual rate equal to three-month LIBOR plus 0.5% and
requires principal repayments in equal quarterly installments over seven years.
The Company also maintains a $31.0 million revolving line of credit facility
(the "Revolving Facility") with Citizens Bank of Rhode Island. The Revolving
Facility is available to fund acquisitions and for other general corporate
purposes, bears interest at a rate per annum equal to three-month LIBOR plus
0.7% and is due in full on May 31, 2000.

Principal outstanding at December 31, 1998, totaled $98,214,000 under the
BNP Loan and $9,550,000 under the Revolving Facility. Aggregate maturities of
long-term debt for each of the five years subsequent to December 31, 1998 are as
follows: 1999 -- $15,714,000; 2000 -- $25,264,000; 2001 -- $15,714,000; 2002
- -- $15,714,000; 2003 -- $15,714,000 and thereafter $19,644,000.

(8) COMMITMENTS AND CONTINGENCIES

The Company leases production, office and warehouse space, and certain
equipment under non-cancelable operating leases. Minimum future rentals under
non-cancelable operating leases, by year, are approximately as follows: 1999 --
$1,520,000; 2000 -- $1,359,000; 2001 -- $865,000; 2002 -- $738,000; 2003 --
$577,000 and thereafter -- $350,000. Rent expense totaled approximately
$1,015,000 in 1996, $1,522,000 in 1997 and $1,920,000 in 1998.

Outstanding commitments as of December 31, 1998 for the purchase of
property, machinery and equipment were approximately $6,900,000. The Company had
outstanding letters of credit equal to approximately $1,400,000 at December 31,
1998, 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

32
<PAGE> 33
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

such litigation will not have a material effect on the Company's financial
position, results of operations or cash flows.

(9) EMPLOYEE BENEFIT PLANS

(a) Defined Contribution Plans

The Company sponsors defined contribution plans for all eligible employees.
Employer contribution expense totaled approximately $212,000 in 1996, $453,000
in 1997 and $836,000 in 1998. Increases in contribution expense have occurred
principally as a result of greater numbers of participants resulting from the
acquisitions described in note 2.

(b) Defined Benefit Plan

The Company sponsors a defined benefit pension plan covering bargaining
unit employees. Benefits are based on years of service times a predetermined
monthly amount. The Company's policy is to fund the minimum required
contribution subject to any full funding limitation. Assumptions used to develop
the projected benefit obligation were a discount rate of 7.75% in 1996 and 1997,
a discount rate of 6.75% in 1998, and a long-term rate of return on assets of
8.5% during all years presented. The following table sets forth the benefit
obligation, assets at fair value, and funded status of the plan at December 31
(in thousands):

<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
BENEFIT OBLIGATION
Benefit obligation at beginning of year..................... $1,239 $1,410
Service cost................................................ 48 47
Interest cost............................................... 96 109
Benefit payments............................................ (16) (29)
Actuarial loss.............................................. 43 224
------ ------
Benefit obligation at end of year........................... $1,410 $1,761
====== ======
ASSETS AT FAIR VALUE
Fair value of assets at beginning of year................... $ 664 $ 843
Actual return on assets..................................... 89 71
Contributions............................................... 106 156
Benefit payments............................................ (16) (29)
------ ------
Fair value of assets at end of year......................... $ 843 $1,041
====== ======
FUNDED STATUS
Benefit obligation.......................................... $1,410 $1,761
Assets at fair value........................................ 843 1,041
------ ------
Net underfunded obligation.................................. $ 567 $ 720
====== ======
Accrued benefit liability included in the balance sheet..... $ 567 $ 720
====== ======
</TABLE>

Periodic pension cost during the years ended December 31, 1996, 1997 and
1998 included the following (in thousands):

<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Service cost................................................ $48 $48 $47
Interest cost............................................... 88 96 109
Actual return on assets..................................... (62) (89) (71)
Net amortization and deferral............................... 16 33 (1)
--- --- ---
Periodic pension cost....................................... $90 $88 $84
=== === ===
</TABLE>

33
<PAGE> 34
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Bacou USA, Inc. 1996 Stock Incentive 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,
1,350,000 shares of the Company's common stock have been reserved for issuance
under the Employee Plan. Options granted under the Employee Plan generally
become fully vested after four years from the date of grant and have a ten-year
term. The Company also sponsors the Bacou USA, Inc. 1996 Non-Employee Director
Stock Option Plan (the "Director Plan") and the 1998 Howard S. Leight Stock
Option Plan (the "Leight Plan"). In the aggregate, 300,000 shares of common
stock have been reserved for issuance under the Director Plan and 50,000 shares
have been reserved under the Leight Plan. Options granted under the Director
Plan and the Leight Plan became fully vested on the date of grant and have a
ten-year term.

Following is a summary of stock option activity:

<TABLE>
<CAPTION>
1996 1997 1998
---------------------------- ---------------------------- ----------------------------
NUMBER OF WEIGHTED AVERAGE NUMBER OF WEIGHTED AVERAGE NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- ---------------- --------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of
year............... -- $ -- 388,700 $15.13 577,900 $15.23
Granted.............. 405,000 15.12 235,000 15.35 470,000 17.52
Exercised............ (2,200) 15.00 (6,400) 15.00 (22,500) 15.53
Canceled............. (14,100) 15.00 (39,400) 15.00 (36,000) 16.28
------- ------ ------- ------ ------- ------
Outstanding at end of
year............... 388,700 $15.13 577,900 $15.23 989,400 $16.27
======= ====== ======= ====== ======= ======
Exercisable at end of
year............... 80,300 $15.27 299,200 $15.26 525,500 $15.90
======= ====== ======= ====== ======= ======
</TABLE>

Following is a summary of options outstanding at December 31, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- -------------------------------------------------------------------------- ------------------------------
WEIGHTED AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING YEARS AVERAGE NUMBER AVERAGE
RANGE OF OUTSTANDING OF CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
EXERCISE PRICES ----------- ------------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$14.75 - 15.00........ 414,200 7.58 $14.95 253,200 $14.94
15.63 - 17.31........ 179,000 8.71 16.31 152,000 16.15
17.50 - 20.81........ 396,200 9.13 17.64 120,300 17.61
------- ---- ------ ------- ------
$14.75 - 20.81........ 989,400 8.41 $16.27 525,500 $15.90
======= ==== ====== ======= ======
</TABLE>

The Company accounts for substantially all stock option grants using the
intrinsic value-based method and, accordingly, no compensation cost has been
recognized for such stock options in the financial statements. Had the Company
determined compensation cost based on the fair value at the grant date for its
stock options, the Company's net income, and earnings per share (basic and
diluted), would have been reduced to $18,761,000 or $1.14 per share in 1996,
$13,362,000 or $0.77 per share in 1997 and $19,729,000 or $1.12 per share in
1998. The per share weighted-average fair value of stock options granted was
$7.64 in 1996, $6.73 in 1997 and $7.42 in 1998. The Black Scholes option pricing
model was used to determine the fair value of stock options, including the
following weighted-average assumptions: expected dividend yield 0.0%; risk-free
interest rate of 6.1% in 1996, 5.75% in 1997 and 4.75% in 1998; expected
volatility of 0.50 in 1996 and 0.40 in 1997 and 1998; and an expected life of 6
years in 1996 and 5 years in 1997 and 1998. The Company's historical volatility
from March 27, 1996 (the date of its initial public offering) through December
31, 1998 was approximately 0.37.

34
<PAGE> 35
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(10) SEGMENT DATA

The Company has acquired seven separate businesses from its inception in
April 1993 through the period ended December 31, 1998. Acquired businesses
generally were operated initially as separate subsidiaries of the Company. In
1997 the Company initiated a plan of reorganization for the purpose of combining
businesses having similar operating characteristics and market opportunities.
The reorganization resulted in the combination of four businesses during 1997
and two businesses during 1998, into a single operating subsidiary named Bacou
USA Safety, Inc. ("Bacou Safety"). During 1998 the Company also initiated
actions to combine the various sales-forces and develop a common marketing
strategy for its Bacou Safety business.

During 1998 the Company adopted Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
(Statement 131). Under provisions of Statement 131 the Company has two
reportable segments, which include the safety products segment and the optical
frames and instruments segment. The safety products segment consists of
businesses which operate within the Company's Bacou Safety subsidiary and which
sell products principally to industrial and fire safety distributors. Products
manufactured within this segment include consumable products (protective eyewear
and hearing protection) and technical products (respirators and gas monitors).
The optical frames and instruments segment consists of the Company's Titmus
Optical, Inc. (Titmus) subsidiary. Titmus manufactures eyeglass frames and
components, which are sold principally to optical laboratories, and vision
screening equipment. Eyeglass frames and components are purchased by optical
laboratory customers who fit complete frames with prescription lenses.

The Company evaluates segment performance based upon a measure of profit
represented by operating income prior to non-recurring gains and losses,
intangible amortization expense, interest and taxes. Accounting policies for
reportable segments are consistent with the policies described in note 1 to the
consolidated financial statements.

35
<PAGE> 36
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Presented below is a summary of financial data for the Company's reportable
segments. Adjustments to reconcile segment operating income to consolidated
operating income include amortization expense totaling $4,039,000 in 1996,
$4,095,000 in 1997 and $7,748,000 in 1998, and also include non-recurring items
totaling $360,000 in 1996, $5,924,000 in 1997 and $7,716,000 in 1998.
Information presented below as "All Other" includes all non-operating entities.
Amounts shown below for total assets exclude intercompany receivables and
investments in wholly-owned subsidiaries.

<TABLE>
<CAPTION>
OPTICAL
FRAMES AND
SAFETY INSTRUMENTS RECONCILING CONSOLIDATED
SEGMENT SEGMENT(1) ALL OTHER ADJUSTMENTS TOTAL
(IN THOUSANDS) ------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1996
Net sales................................ $ 77,563 $31,705 $ -- $ -- $109,268
Operating income (loss).................. 33,481 4,216 (1,674) (4,399) 31,624
Depreciation............................. 2,660 794 18 -- 3,472
Total assets............................. 69,871 33,775 21,463 -- 125,109
Capital expenditures..................... 2,922 7,730 16 -- 10,668
1997
Net sales................................ $ 99,378 $31,491 $ -- $ -- $130,869
Operating income (loss).................. 34,035 3,056 (2,438) (10,019) 24,634
Depreciation............................. 3,487 1,020 16 -- 4,523
Total assets............................. 113,694 35,266 3,391 -- 152,351
Capital expenditures..................... 4,488 2,092 257 -- 6,837
1998
Net sales................................ $189,363 $30,218 $ -- $ -- $219,581
Operating income (loss).................. 57,005 2,523 (5,322) (15,464) 38,742
Depreciation............................. 5,194 1,185 27 -- 6,406
Total assets............................. 250,172 41,938 1,660 -- 293,770
Capital expenditures..................... 12,381 1,742 263 -- 14,386
</TABLE>

- ---------------

(1) Includes sales of discontinued product lines totaling $3,100,000 in 1996.

There were no sales to any individual customer during any of the years in
the three-year period ended December 31, 1998 that represented 10% or more of
consolidated sales. The Company has no material long-lived assets located in
foreign countries. The Company attributes net sales to an individual country
based upon the location of the customer and sales to all foreign countries
totaled $7,942,000 in 1996, $15,087,000 in 1997 and $33,102,000 in 1998.

36
<PAGE> 37
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(11) QUARTERLY FINANCIAL RESULTS AND MARKET DATA (UNAUDITED)

Following is a summary of quarterly operating results and share data.
Quarterly information shown below does not vary from amounts reported on any
Form 10-Q previously filed by the Company, except that the Company amended
previously filed quarterly reports during 1998 to give effect to new guidance
issued by the Securities and Exchange Commission in September 1998 concerning
valuation of purchased in-process research and development, resulting in a $1.6
million increase to previously reported net income. There were no dividends paid
or declared during any period presented 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.

<TABLE>
<CAPTION>
QUARTER
-------------------------------------
FIRST SECOND THIRD FOURTH FULL YEAR
(IN THOUSANDS, EXCEPT PER SHARE DATA) ----- ------ ----- ------ ---------
<S> <C> <C> <C> <C> <C>
1997
Net sales....................................... $26,380 $32,330 $35,744 $36,415 $130,869
Gross profit.................................... 13,998 17,469 17,803 17,132 66,402
Income before income taxes...................... 6,650 7,606 5,372 5,382 25,010
Net income...................................... 4,132 4,245 2,453 3,592 14,422
Earnings per share:
Basic......................................... $ 0.24 $ 0.24 $ 0.14 $ 0.21 $ 0.83
Diluted....................................... $ 0.24 $ 0.24 $ 0.14 $ 0.21 $ 0.83
Market price:
High.......................................... 16 5/8 16 1/4 18 18 1/2 18 1/2
Low........................................... 15 14 3/4 15 3/4 17 14 3/4
1998
Net sales....................................... $49,515 $58,864 $56,899 $54,303 $219,581
Gross profit.................................... 24,816 31,017 30,161 27,731 113,725
Income before income taxes...................... 4,138 9,572 10,486 8,492 32,688
Net income...................................... 2,736 6,099 6,675 5,500 21,010
Earnings per share:
Basic......................................... $ 0.15 $ 0.35 $ 0.38 $ 0.31 $ 1.19
Diluted....................................... $ 0.15 $ 0.35 $ 0.38 $ 0.31 $ 1.19
Market price:
High.......................................... 18 1/8 22 3/4 25 3/8 21 7/8 25 3/8
Low........................................... 15 3/4 15 7/8 17 1/8 15 15
</TABLE>

The Company completed acquisitions of Survivair, Biosystems and Howard
Leight on May 29, 1997, September 30, 1997 and February 27, 1998, respectively.
For comparative purposes, net income and earnings per share (basic and diluted)
excluding non-recurring items related to these acquisitions and excluding a
severance charge equal to $1.4 million in 1998, would have been as follows:

<TABLE>
<CAPTION>
QUARTER
-----------------------------------
FIRST SECOND THIRD FOURTH FULL YEAR
(IN THOUSANDS, EXCEPT PER SHARE DATA) ----- ------ ----- ------ ---------
<S> <C> <C> <C> <C> <C>
1997
Net income.......................................... $4,132 $5,883 $5,351 $4,132 $19,498
Earnings per share.................................. $ 0.24 $ 0.34 $ 0.31 $ 0.23 $ 1.12
1998
Net income.......................................... $6,425 $7,196 $6,675 $5,500 $25,796
Earnings per share.................................. $ 0.36 $ 0.41 $ 0.38 $ 0.31 $ 1.46
</TABLE>

37
<PAGE> 38

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 Bacou's proxy
statement for its 1999 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or before April 30, 1999 are hereby
incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

"Compensation of Directors and Officers" in Bacou's proxy statement for its
1999 Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or before April 30, 1999 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 Bacou's proxy statement for its 1999 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission on or
before April 30, 1999 are hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

"Certain Transactions" in Bacou's proxy statement for its 1999 Annual
Meeting of Stockholders to be filed with the Securities and Exchange Commission
on or before April 30, 1999 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

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 statements, and notes thereto.

Independent Auditors' Report on Financial Statement Schedule

3. Exhibits

38
<PAGE> 39

FORM 10-K EXHIBITS INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
2.1 -- Stock Purchase Agreement dated as of April 14, 1997 among
Bacou S.A. and Francis Berend, Pierre Alain Berend, Philippe
Berend, Pascal Berend and the other sellers parties thereto
(incorporated by reference to Exhibit 2(a) of the Company's
Form 8-K filed May 12, 1997)
2.2 -- Agreement dated April 14, 1997 between Bacou S.A. and Bacou
USA, Inc. (incorporated by reference to Exhibit 2(b) of the
Company's Form 8-K filed May 12, 1997)
2.3 -- First Amendment to Stock Purchase Agreement dated May 30,
1997 (incorporated by reference to Exhibit 2(c) of the
Company's Form 8-K filed June 16, 1997)
2.4 -- Stock Redemption Agreement dated May 30, 1997 between
Comasec International, S.A. and Pro-Tech Respirators, Inc.
(incorporated by reference to Exhibit 2(d) of the Company's
Form 8-K filed June 16, 1997)
2.5 -- Agreement and Plan of Merger dated as of September 30, 1997
by and among Bacou USA, Inc., ISH Transaction, Inc.,
Biosystems, Inc. and the Shareholders of Biosystems, Inc.
(incorporated by reference to Exhibit 2(a) of the Company's
Form 8-K filed October 15, 1997)
2.6 -- Asset Purchase Agreement dated December 31, 1997 between
Bacou USA Safety, Inc. and Howard S. Leight & Associates,
Inc. (d/b/a Howard Leight Industries) (incorporated by
reference to Exhibit 2(a) of the Company's Form 8-K filed on
March 13, 1998)
2.7 -- Letter Agreement by and between Howard S. Leight and Bacou
USA, Inc. (incorporated by reference to Exhibit 2(b) of the
Company's Form 8-K filed on March 13, 1998)
2.8 -- Letter Agreement by and among Howard S. Leight, Bacou S.A.
and Engineering Bacou S.A. (incorporated by reference to
Exhibit 2(c) of the Company's Form 8-K filed on March 13,
1998)
2.9 -- First Amendment to Asset Purchase Agreement dated February
27, 1998 (incorporated by reference to Exhibit 2(d) of the
Company's Form 8-K filed on March 13, 1998)
2.10 -- Stock Purchase Agreement dated February 27, 1998 among Bacou
USA Safety, Inc., Howard S. Leight & Associates, Inc. (d/b/a
Howard Leight Industries), Howard S. Leight and John Dean
(incorporated by reference to Exhibit 2(e) of the Company's
Form 8-K filed on March 13, 1998)
2.11 -- Stock Purchase Agreement dated February 27, 1998 among Bacou
USA Safety, Inc., Howard S. Leight & Associates, Inc. (d/b/a
Howard Leight Industries) and Howard S. Leight (incorporated
by reference to Exhibit 2(f) of the Company's Form 8-K filed
on March 13, 1998)
2.12 -- Asset Purchase Agreement dated as of February 24, 1999 by
and among Perfect Fit Glove Co., Inc. and the other seller
parties thereto, and Bacou USA Safety, Inc.
3.1 -- Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3(a) of the Company's
Registration Statement filed on Form S-1(Commission File No.
333-00470) (the "Company's Registration Statement"))
3.2 -- Bylaws (incorporated by reference to Exhibit 3(b) of the
Company's Registration Statement)
4.1 -- Revolving Line of Credit Agreement dated May 21, 1997 by and
between Bacou USA, Inc. and Citizens Bank of Rhode Island
(incorporated by reference to Exhibit 4(a) of the Company's
Form 10-Q filed August 14, 1997)
</TABLE>

39
<PAGE> 40

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
4.2 -- First Amendment to Revolving Line of Credit Agreement by and
between Bacou USA, Inc. and Citizens Bank of Rhode Island
(incorporated by reference to Exhibit 4(c) of the Company's
Form 10-Q filed August 14, 1997)
4.3 -- Second Amendment and Agreement to Revolving Line of Credit
Agreement between Bacou USA, Inc. and Citizens Bank of Rhode
Island (incorporated by reference to Exhibit 4.3 of the
Company's Form 10-K filed March 27, 1998)
4.4 -- First Amendment and Agreement to Revolving Credit Note
between Bacou USA, Inc. and Citizens Bank of Rhode Island
(incorporated by reference to Exhibit 4.4 of the Company's
Form 10-K filed March 27, 1998)
4.5 -- Credit Line Agreement by and between Bacou USA, Inc. and
Banque Nationale de Paris dated February 19, 1998
(incorporated by reference to Exhibit 10(a) of the Company's
Form 8-K filed on March 13, 1998)
10.1.1* -- Employment Agreement dated as of January 1, 1996 by and
between the Company and Walter Stepan (incorporated by
reference to Exhibit 10(w) of Company's Registration
Statement)
10.1.2* -- First Amendment to Employment Agreement with Walter Stepan
(incorporated by reference to Exhibit 4(g) of Company's Form
10-Q filed November 14, 1997)
10.1.3* -- Second Amendment to Employment Agreement with Walter Stepan
dated as of August 25, 1998 (incorporated by reference to
Exhibit 10.2 of the Company's Form 10-Q filed November 16,
1998)
10.2.1* -- Employment Agreement dated May 8, 1995 by and between the
Company and Philip B. Barr (incorporated by reference to
Exhibit 10(b) of Company's Registration Statement)
10.2.2* -- First Amendment to Employment Agreement with Philip B. Barr
(incorporated by reference to Exhibit 10(x) to Amendment No.
1 to the Company's Registration Statement)
10.2.3* -- Second Amendment to Employment Agreement with Philip B. Barr
(incorporated by reference to Exhibit 10(y) to Amendment No.
1 to the Company's Registration Statement)
10.2.4* -- Third Amendment to Employment Agreement with Philip B. Barr
(incorporated by reference to Exhibit 4(h) of the Company's
Form 10-Q filed November 14, 1997)
10.3* -- Employment Agreement dated January 1, 1996 by and between
Uvex Safety and Harry D. Neff (incorporated by reference to
Exhibit 10(c) of Company's Registration Statement)
10.4* -- Employment Agreement dated May 30, 1997 between Survivair,
Inc. and Jack Bell (incorporated by reference to Exhibit
4(a) of the Company's Form 10-Q filed November 14, 1997)
10.5* -- Employment Agreement dated October 1, 1997 between
Biosystems, Inc. and Jack Burt (incorporated by reference to
Exhibit 4(d) of the Company's Form 10-Q filed November 14,
1997)
10.6* -- Employment Agreement dated February 17, 1998 between Titmus
Optical, Inc. and Bradford L. Brooks (incorporated by
reference to Exhibit 10.22 of the Company's Form 10-K filed
March 27, 1998)
10.7.1* -- Employment Agreement dated February 27, 1998 between Bacou
USA Safety, Inc. and John Dean (incorporated by reference to
Exhibit 99(a) of the Company's Form 8-K filed on March 13,
1998)
10.7.2* -- Letter Agreement dated May 19, 1998 between Bacou USA
Safety, Inc. and John Dean
10.7.3* -- Bonus Plan for John Dean for 1998 and 1999 (incorporated by
reference to Exhibit 10.37 of the Company's Form 10-K filed
March 27, 1998)
</TABLE>

40
<PAGE> 41

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
10.8.1* -- Employment Agreement dated June 3, 1998 between Bacou USA
Safety, Inc. and Thomas W. Klein (incorporated by reference
to Exhibit 10.1 of the Company's Form 10-Q filed on August
5, 1998)
10.8.2* -- First Amendment to Employment Agreement with Thomas W. Klein
dated August 3, 1998 (incorporated by reference to Exhibit
10.1 of the Company's Form 10-Q filed November 16, 1998)
10.8.3* -- Second Amendment to Employment Agreement with Thomas W.
Klein dated January 1, 1999
10.9* -- Employment Agreement dated February 1, 1999 between Bacou
USA Safety, Inc. and Alan H. Bennett
10.10 -- Registration Rights Agreement dated July 31, 1994 by and
between Walter Stepan and the Company (incorporated by
reference to Exhibit 10(h)(i) of Company's Registration
Statement)
10.11 -- 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 Company's Registration Statement)
10.12 -- Registration Rights Agreement dated September 30, 1997 by
and among Bacou USA, Inc. and each person identified therein
(incorporated by reference to Exhibit 2(b) of the Company's
Form 8-K filed October 15, 1997)
10.13 -- Corporate Opportunities Agreement dated as of January 1,
1996 between the Principal Stockholder and the Company
(incorporated by reference to Exhibit 10(j) of Company's
Registration Statement)
10.14 -- 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 Company's Registration
Statement)
10.15 -- 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 Company's Registration
Statement)
10.16 -- 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 Company's Registration
Statement)
10.17 -- 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
Company's Registration Statement)
10.18 -- 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 Company's
Registration Statement)
10.19* -- Bacou USA, Inc. 1996 Stock Incentive Plan (incorporated by
reference to Exhibit10 (g) of the Company's Registration
Statement)
10.20* -- Bacou USA, Inc. 1996 Non-Employee Director Stock Option Plan
(incorporated by reference to Exhibit 10(x) of the Company's
Form 10-K filed March 31, 1997)
10.21* -- 1998 Howard S. Leight Stock Option Plan (incorporated by
reference to Exhibit 10.35 of the Company's Form 10-K filed
March 27, 1998)
10.22 -- Purchase and Sale Agreement dated November 20, 1998 by and
between Uvex Winter Optical, Inc. and Uvex Safety
Manufacturing, Inc.
10.23 -- Lease Agreement dated February 27, 1998 by and between
Howard S. Leight and Bacou USA Safety, Inc. (incorporated by
reference to Exhibit 10.38 of the Company's Form 10-K filed
March 27, 1998)
</TABLE>

41
<PAGE> 42

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
10.24* -- Bonus Plan for Executives of Subsidiaries and Divisions of
Bacou USA, Inc. for 1998 and 1999 (incorporated by reference
to Exhibit 10.39 of the Company's Form 10-K filed March 27,
1998)
10.25* -- Consultant Agreement dated as of February 27, 1998 between
Howard S. Leight and Bacou USA Safety, Inc. (incorporated by
reference to Exhibit 99(e) of the Company's Form 8-K filed
March 13, 1998)
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

The Company filed three reports on Form 8-K during the quarterly period
ended December 31, 1998, all for the purpose of disclosing the contents of Press
Releases issued by the Company.

The first report, dated October 7, 1998, reported the Company's sales for
the third quarter of 1998, as well as the withdrawal of the Company's August 5,
1998 registration statement and the continuation of its stock buyback program.

The second report, dated October 14, 1998, reported the financial results
of the Company for the third quarter and nine months year-to-date.

The third report, dated November 4, 1998, reported that the Company had
been selected by Forbes Magazine as one of the 200 best small businesses in the
United States.

42
<PAGE> 43

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 26 day of March, 1999.

BACOU USA, INC.

By /s/ PHILIP B. BARR
------------------------------------
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 and on the dates indicated.

<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, Chief Operating Officer, Secretary,
PHILIP B. BARR Director

/s/ JEFFREY T. BROWN Director of Financial Reporting, Treasurer
- --------------------------------------------- and Chief Accounting Officer
JEFFREY T. BROWN

/s/ PHILIPPE BACOU Chairman of the Board, Director
- ---------------------------------------------
PHILIPPE BACOU

Director
- ---------------------------------------------
CHRISTOPHE BACOU

/s/ KARL F. ERICSON Director
- ---------------------------------------------
KARL F. ERICSON

/s/ HOWARD S. LEIGHT Director
- ---------------------------------------------
HOWARD S. LEIGHT

Director
- ---------------------------------------------
ALFRED J. VERRECCHIA

/s/ HERBERT A. WERTHEIM Director
- ---------------------------------------------
HERBERT A. WERTHEIM
</TABLE>

43
<PAGE> 44

ITEM 14(A) 2. FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(1) DEDUCTIONS(2) PERIOD
----------- ---------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
BAD DEBT ALLOWANCE (IN THOUSANDS)
Year ended December 31 1996............ 657 291 -- 156 792
Year ended December 31, 1997........... 792 211 209 267 945
Year ended December 31, 1998........... 945 266 150 211 1,150
</TABLE>

- ---------------

(1) Represents the beginning bad debt allowance of businesses acquired during
the period.

(2) Deductions consist of uncollectible accounts charged-off during the period,
net of recoveries.

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 are not material
and therefore have been omitted.

44
<PAGE> 45

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Bacou USA, Inc.:

Under date of February 5, 1999, we reported on the consolidated balance
sheets of Bacou USA, Inc. and subsidiaries as of December 31, 1997 and 1998, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1998,
which are included in the December 31, 1998 annual report on Form 10-K of Bacou
USA, Inc. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related consolidated financial
statement schedule included in the Form 10-K. This financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion on the 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 LLP

Providence, Rhode Island
February 5, 1999

45
<PAGE> 46

FORM 10-K EXHIBITS INDEX

46
<PAGE> 47

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
4.3 -- Second Amendment and Agreement to Revolving Line of Credit
Agreement between Bacou USA, Inc. and Citizens Bank of Rhode
Island (incorporated by reference to Exhibit 4.3 of the
Company's Form 10-K filed March 27, 1998)
4.4 -- First Amendment and Agreement to Revolving Credit Note
between Bacou USA, Inc. and Citizens Bank of Rhode Island
(incorporated by reference to Exhibit 4.4 of the Company's
Form 10-K filed March 27, 1998)
4.5 -- Credit Line Agreement by and between Bacou USA, Inc. and
Banque Nationale de Paris dated February 19, 1998
(incorporated by reference to Exhibit 10(a) of the Company's
Form 8-K filed on March 13, 1998)
10.1.1* -- Employment Agreement dated as of January 1, 1996 by and
between the Company and Walter Stepan (incorporated by
reference to Exhibit 10(w) of Company's Registration
Statement)
10.1.2* -- First Amendment to Employment Agreement with Walter Stepan
(incorporated by reference to Exhibit 4(g) of Company's Form
10-Q filed November 14, 1997)
10.1.3* -- Second Amendment to Employment Agreement with Walter Stepan
dated as of August 25, 1998 (incorporated by reference to
Exhibit 10.2 of the Company's Form 10-Q filed November 16,
1998)
10.2.1* -- Employment Agreement dated May 8, 1995 by and between the
Company and Philip B. Barr (incorporated by reference to
Exhibit 10(b) of Company's Registration Statement)
10.2.2* -- First Amendment to Employment Agreement with Philip B. Barr
(incorporated by reference to Exhibit 10(x) to Amendment No.
1 to the Company's Registration Statement)
10.2.3* -- Second Amendment to Employment Agreement with Philip B. Barr
(incorporated by reference to Exhibit 10(y) to Amendment No.
1 to the Company's Registration Statement)
10.2.4* -- Third Amendment to Employment Agreement with Philip B. Barr
(incorporated by reference to Exhibit 4(h) of the Company's
Form 10-Q filed November 14, 1997)
10.3* -- Employment Agreement dated January 1, 1996 by and between
Uvex Safety and Harry D. Neff (incorporated by reference to
Exhibit 10(c) of Company's Registration Statement)
10.4* -- Employment Agreement dated May 30, 1997 between Survivair,
Inc. and Jack Bell (incorporated by reference to Exhibit
4(a) of the Company's Form 10-Q filed November 14, 1997)
10.5* -- Employment Agreement dated October 1, 1997 between
Biosystems, Inc. and Jack Burt (incorporated by reference to
Exhibit 4(d) of the Company's Form 10-Q filed November 14,
1997)
10.6* -- Employment Agreement dated February 17, 1998 between Titmus
Optical, Inc. and Bradford L. Brooks (incorporated by
reference to Exhibit 10.22 of the Company's Form 10-K filed
March 27, 1998)
10.7.1* -- Employment Agreement dated February 27, 1998 between Bacou
USA Safety, Inc. and John Dean (incorporated by reference to
Exhibit 99(a) of the Company's Form 8-K filed on March 13,
1998)
10.7.2* -- Letter Agreement dated May 19, 1998 between Bacou USA
Safety, Inc. and John Dean
10.7.3* -- Bonus Plan for John Dean for 1998 and 1999 (incorporated by
reference to Exhibit 10.37 of the Company's Form 10-K filed
March 27, 1998)
10.8.1* -- Employment Agreement dated June 3, 1998 between Bacou USA
Safety, Inc. and Thomas W. Klein (incorporated by reference
to Exhibit 10.1 of the Company's Form 10-Q filed on August
5, 1998)
10.8.2* -- First Amendment to Employment Agreement with Thomas W. Klein
dated August 3, 1998 (incorporated by reference to Exhibit
10.1 of the Company's Form 10-Q filed November 16, 1998)
</TABLE>

47
<PAGE> 48

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
10.8.3* -- Second Amendment to Employment Agreement with Thomas W.
Klein dated January 1, 1999
10.9* -- Employment Agreement dated February 1, 1999 between Bacou
USA Safety, Inc. and Alan H. Bennett
10.10 -- Registration Rights Agreement dated July 31, 1994 by and
between Walter Stepan and the Company (incorporated by
reference to Exhibit 10(h)(i) of Company's Registration
Statement)
10.11 -- 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 Company's Registration Statement)
10.12 -- Registration Rights Agreement dated September 30, 1997 by
and among Bacou USA, Inc. and each person identified therein
(incorporated by reference to Exhibit 2(b) of the Company's
Form 8-K filed October 15, 1997)
10.13 -- Corporate Opportunities Agreement dated as of January 1,
1996 between the Principal Stockholder and the Company
(incorporated by reference to Exhibit 10(j) of Company's
Registration Statement)
10.14 -- 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 Company's Registration
Statement)
10.15 -- 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 Company's Registration
Statement)
10.16 -- 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 Company's Registration
Statement)
10.17 -- 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
Company's Registration Statement)
10.18 -- 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 Company's
Registration Statement)
10.19* -- Bacou USA, Inc. 1996 Stock Incentive Plan (incorporated by
reference to Exhibit10 (g) of the Company's Registration
Statement)
10.20* -- Bacou USA, Inc. 1996 Non-Employee Director Stock Option Plan
(incorporated by reference to Exhibit 10(x) of the Company's
Form 10-K filed March 31, 1997)
10.21* -- 1998 Howard S. Leight Stock Option Plan (incorporated by
reference to Exhibit 10.35 of the Company's Form 10-K filed
March 27, 1998)
10.22 -- Purchase and Sale Agreement dated November 20, 1998 by and
between Uvex Winter Optical, Inc. and Uvex Safety
Manufacturing, Inc.
10.23 -- Lease Agreement dated February 27, 1998 by and between
Howard S. Leight and Bacou USA Safety, Inc. (incorporated by
reference to Exhibit 10.38 of the Company's Form 10-K filed
March 27, 1998)
10.24* -- Bonus Plan for Executives of Subsidiaries and Divisions of
Bacou USA, Inc. for 1998 and 1999 (incorporated by reference
to Exhibit 10.39 of the Company's Form 10-K filed March 27,
1998)
10.25* -- Consultant Agreement dated as of February 27, 1998 between
Howard S. Leight and Bacou USA Safety, Inc. (incorporated by
reference to Exhibit 99(e) of the Company's Form 8-K filed
March 13, 1998)
11 -- Statement Re: Computation of Per Share Earnings
</TABLE>

48
<PAGE> 49

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
21 -- Subsidiaries of the Company
23 -- Accountants' Consent
27 -- Financial Data Schedule
</TABLE>

- ---------------

* Management contract or compensatory plan or arrangement.

<PAGE> 1

EXHIBIT 2.12

ASSET PURCHASE AGREEMENT

by and among

PERFECT FIT GLOVE CO., INC.

SCHAS CIRCULAR INDUSTRIES, INC.

X-PERT INDUSTRIAL PRODUCTS LIMITED

PERFECT INDUSTRIAL PRODUCTS, INC.

YADKIN LEASING COMPANY, INC.

FRANK A. STUCKE

JOSEPH P. HOERNER

EDWARD MESANOVIC

and

BACOU USA SAFETY, INC.

Dated as of February 24, 1999

<PAGE> 2

TABLE OF CONTENTS

SECTION PAGE
- ------- ----

Preamble 1

Article I PURCHASE AND SALE 1

Article II DESCRIPTION OF ASSETS; EXCLUDED ASSETS 2

Section 2.01. Assets

Section 2.02. Excluded Assets

Article III ASSUMPTION OF LIABILITIES 2

Section 3.01. Assumed Liabilities

Section 3.02. Non-Assumed Liabilities

Article IV INSTRUMENTS OF TRANSFER AND ASSUMPTION 3

Section 4.01. Transfer Documents

Section 4.02. Assumption Documents

Article V PURCHASE PRICE; ALLOCATION 4

Section 5.01. Purchase Price

Section 5.02. Payment of Purchase Price

Section 5.03. Allocation of Purchase Price

Section 5.04. Purchase Price Adjustment

Section 5.05. Earnout

Article VI CLOSING 6

<PAGE> 3

Article VII SELLING GROUP'S REPRESENTATIONS 7

Section 7.01. Organization; Qualification

Section 7.02. Consents, Authorization, Execution and
Delivery of Agreement

Section 7.03. Subsidiaries and Interests in Other Companies

Section 7.04. Title to Assets; Condition of Assets.

Section 7.05. Real Property--Owned

Section 7.06. Real and Personal Property--Leased

Section 7.07. Existing Contracts

Section 7.08. Governmental Licenses

Section 7.09. Compliance with Laws.

Section 7.10. No Violation of Existing Agreements.

Section 7.11. Litigation and Legal Proceedings

Section 7.12. Environmental Compliance

Section 7.13. Employees

Section 7.14. Employee Benefits

Section 7.15. Tax Matters

Section 7.16. Financial Statements

Section 7.17. Customers/Agents/Suppliers

Section 7.18. Insurance

Section 7.19. Brokers

Section 7.20. Undisclosed Liabilities

Section 7.21. Proprietary Rights

-iii-

<PAGE> 4

Section 7.22. Accounts Receivable and Bad Debts

Section 7.23. Certain Business Relationships with
Selling Group

Section 7.24. Warranty and Product Liability Claims

Section 7.25. Absence of Certain Business Practices

Section 7.26. Year 2000 Compatibility

Section 7.27. Disclosure

Article VIII PURCHASER'S REPRESENTATIONS 16

Section 8.01. Organization; Qualification

Section 8.02. Consents; Authorization; Execution and
Delivery of Agreement

Section 8.03. Brokers

Article IX CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE 17

Section 9.01. Accuracy of Representations and Warranties;
Performance of this Agreement

Section 9.02. Resolutions

Section 9.03. Incumbency Certificates

Section 9.04. Consents

Section 9.05. Due Diligence

Section 9.06. No Material Adverse Change

Section 9.07. Opinion of Counsel to Selling Group

Section 9.08. Closing Escrow Agreement

Section 9.09. Real Property

-iv-

<PAGE> 5

Section 9.10. Employment Agreements

Section 9.11. HSR Act Notification

Section 9.12. Environmental Assessment

Section 9.13. Good Standing Certificates

Article X CONDITIONS PRECEDENT TO SELLING GROUP'S
OBLIGATION TO CLOSE 19

Section 10.01. Accuracy of Representations and Warranties;
Performance of this Agreement

Section 10.02. Directors' Resolutions

Section 10.03. Incumbency Certificate

Section 10.04. Opinion of Counsel to Purchaser

Section 10.05. HSR Act Notification

Section 10.06. Employment Agreements

Article XI CASUALTY LOSSES 20

Article XII INDEMNIFICATION 21

Section 12.01. Indemnification by Selling Group

Section 12.02. Indemnification by Purchaser

Section 12.03. Notice of Claims; Defense of Third Party

Section 12.04. Closing Escrow Agreement

Article XIII CONFIDENTIALITY, PRESS RELEASES 24

Section 13.01. Confidentiality

Section 13.02. Press Releases

Section 13.03. Required Disclosures

Article XIV BROKERS' FEES 24

-v-

<PAGE> 6

Article XV COVENANTS OF SELLING GROUP 25

Section 15.01. Conduct of Business

Section 15.02. No Solicitation

Section 15.03. Access and Information

Section 15.04. Financial Statements

Section 15.05. Use of Business Name

Section 15.06. Change of Selling Group Names

Section 15.07. Bank Accounts

Section 15.08. Payment to Alico

Section 15.09. Post-Closing Schedules

Article XVI MISCELLANEOUS 27

Section 16.01. Additional Instruments of Transfer

Section 16.02. Notices

Section 16.03. Expenses

Section 16.04. Transfer Taxes

Section 16.05. Collection Procedures

Section 16.06. Specific Performance

Section 16.07. Governing Law

Section 16.08. Assignment

Section 16.09. Successors and Assigns

Section 16.10. Amendments; Waivers

Section 16.11. Entire Agreement

-vi-

<PAGE> 7

Section 16.12. Counterparts

Section 16.13. Severability

Section 16.14. Section Headings

Section 16.15. Interpretation

Section 16.16. Further Assurances

Section 16.17. Third Parties

Section 16.18. Mediation

Section 16.19. Arbitration

Section 16.20. Termination

DEFINED TERMS 35

SCHEDULES 38

EXHIBITS 64

-vii-
<PAGE> 8

SCHEDULES

2.01 Itemized Assets to be Purchased

2.02 Excluded Assets

3.01 Assumed Liabilities

3.02 Non-Assumed Liabilities

5.03 Allocation of Purchase Price

7.02 Consents Needed

7.04(a) Liens

7.04(b) Building, Zoning Compliance

7.05 Owned Real Property

7.06 Leased Real Property

7.07 Existing Contracts

7.08 Governmental Licenses

7.09 Compliance with Laws

7.10 Violations of Existing Contracts

7.11 Litigation

7.12 Environmental Compliance

7.13 Employees

7.16(a)(i) Historical Financial Statements

7.16(a)(ii) Current Financial Statements

-viii-

<PAGE> 9

7.16(c) Ordinary Business Practices--Financial Statements

7.16(d) Dividends or distributions--Financial Statements

7.17 Customers/Agents/Suppliers

7.21. Intellectual Property Rights

7.22 Accounts Receivable and Bad Debts

7.23 Affiliate Relationships

7.24(a) Warranties and Product Liability Claims

7.24(b) Incidents involving Personal Injury

7.25 Certain Business Practices

7.27 Other Disclosures

15.01(e) Compensation

15,01(f) Acts or Omissions

15.01(g) Dividends or Distributions

-ix-
<PAGE> 10

EXHIBITS

4.01(a) Assignment and Bill of Sale

4.02 Assumption Agreement

5.02 Closing Escrow Agreement

5.05 Earnout Calculation

9.10(a) Employment Agreement with Joseph P. Hoerner

9.10(b) Employment Agreement with Frank A. Stucke

9.10(c) Employment Agreement with William Alico

9.10(d) Employment Agreement with Edward Mesanovic

-x-

<PAGE> 11

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 24, 1999 by and among (i) Perfect Fit Glove Co., Inc., a New
York corporation ("PFG"), (ii) SCHAS Circular Industries, Inc., a North Carolina
corporation ("SCHAS"), (iii) X-Pert Industrial Products Limited, a New York
corporation ("X-PERT"), (iv) Perfect Industrial Products, Inc., a New York
corporation ("PIP") (PFG, SCHAS, X-Pert, and PIP, collectively "GLOVE SELLERS"),
(v) Frank A. Stucke, an individual residing in West Seneca, New York ("Stucke")
and Joseph P. Hoerner, an individual residing in Orchard Park, New York
("Hoerner") who together constitute the majority stockholders of PFG and all of
the stockholders of SCHAS and X-Pert, along with (vi) Edward Mesanovic, an
individual residing in Tonawanda, New York ("Mesanovic"), the sole shareholder
of PIP (collectively Stucke, Hoerner and Mesanovic, the "STOCKHOLDERS"), (vii)
Yadkin Leasing Company, Inc., a North Carolina corporation ("YADKIN") (the Glove
Sellers and Yadkin, collectively the "OPERATING COMPANIES" and the Operating
Companies and Stockholders, collectively "SELLING GROUP") and (viii) Bacou USA
Safety, Inc., a Delaware corporation ("PURCHASER").

WHEREAS, Glove Sellers manufacture and market protective gloves and
other related products in the United States and throughout the world ("GLOVE
BUSINESS"). Yadkin engages in leasing activities in connection with the Glove
Business in North Carolina ("Leasing Business"). Stucke and Hoerner own and
manage real property in Cheektowaga, New York and SCHAS leases property in
Wilkesboro, North Carolina relating to the Glove Business ("REAL ESTATE
BUSINESS") (the Glove Business, the Leasing Business and the Real Estate
Business, collectively the "BUSINESS"); and

WHEREAS, Purchaser desires to purchase from Selling Group, and Selling
Group desires to sell to Purchaser, substantially all of the assets and rights
of Selling Group relating to the Business, all subject to the terms and
conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein set forth and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:

ARTICLE I
PURCHASE AND SALE

Subject to the terms and conditions set forth in this Agreement,
Selling Group agrees to sell, convey, assign, transfer and deliver to Purchaser,
and Purchaser agrees to purchase from Selling Group at the Closing, all of
Selling Group's right, title and interest in and to the Assets, free and clear
of all debts, liabilities, obligations, and taxes other than Assumed
Liabilities, and free and clear of LIENS (other than Permitted Liens).

-1-

<PAGE> 12

ARTICLE II
DESCRIPTION OF ASSETS; EXCLUDED ASSETS

SECTION 2.01. ASSETS. The assets to be conveyed to Purchaser shall
include all real and personal tangible and intangible assets, properties and
rights owned by Selling Group of whatever description (including without
limitation, all permits and licenses, material agreements, contracts and leases
(provided that consents to assignment have been obtained to the extent required
by law or by the terms of such documents or that Purchaser has agreed to assume
the obligations thereunder post-Closing while consents are being obtained), real
property and personal property as set forth on Schedule 2.01 hereto), cash,
customer records, machinery, equipment, vehicles, computers and software,
furniture, fixtures, supplies, inventory and all other physical assets,
agreements, contracts and leases that are not deemed material, interests,
systems and documents regarding real property, Intellectual Property, credits
and other prepaid items, claims and rights of recovery, purchase orders,
accounts receivable, rights to bill and receive payment for products shipped
and/or services performed but unbilled or unpaid, advertising, marketing and
promotional materials, all rights to receive warranties, guarantees or
indemnification, and all goodwill as a going concern which relate in any way to
the ownership, use or operation of the Business, except assets specifically
excluded pursuant to Section 2.02 hereof as of the date hereof plus or minus
such assets acquired or disposed of in the ordinary course of business on or
prior to the Closing (collectively, the "ASSETS"). Such Assets shall be free and
clear of all Liens, other than Permitted Liens, as of the Closing.

SECTION 2.02. EXCLUDED ASSETS. The properties and assets specifically
listed and described in SCHEDULE 2.02 hereto which relate to the Business shall
not be included in the Assets, shall be retained by Selling Group and shall not
be sold, assigned or transferred to Purchaser (the "EXCLUDED ASSETS").

ARTICLE III
ASSUMPTION OF LIABILITIES

SECTION 3.01. ASSUMED LIABILITIES. At Closing, Purchaser shall assume
and agree to perform and discharge the following to the extent not previously
performed or discharged as of the Closing: (i) all obligations of Selling Group
which accrue and are to be performed from and after the Closing under those
permits and licenses, material agreements, contracts and leases either set forth
on SCHEDULE 2.01 attached hereto or those agreements, contracts and leases of a
non-material nature which are not required by this Agreement to be set forth on
SCHEDULE 2.01 (all of such assets referred to in item (i) being referred to
hereinafter as the "ASSUMED CONTRACTS"); (ii) all liabilities of Selling Group
as reflected on the Closing Date Balance Sheet; and (iii) such items as are set
forth on Schedule 3.01 (such items (i) through (ii) are collectively referred to
herein as the "ASSUMED LIABILITIES").

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SECTION 3.02. NON-ASSUMED LIABILITIES. Other than as may be required by
Section 12.01(d) hereof, Purchaser shall not be liable for any other
liabilities, debts, contracts, agreements, including without limitation any
contracts or agreements set forth on SCHEDULE 2.02, or other obligations of
Selling Group of any nature whatsoever, other than the Assumed Liabilities (the
"NON-ASSUMED LIABILITIES") AS SET FORTH ON SCHEDULE 3.01, including without
limitation the following Non-Assumed Liabilities: (a) liabilities and
obligations for federal, state, or local income taxes arising in connection with
the Business for periods ending on or prior to the Closing or arising as a
result of the transactions contemplated by this Agreement, (b) liabilities and
obligations, the existence of which constitutes a breach of any representation
or warranty made by any Selling Group member in this Agreement or in any
document delivered by it pursuant hereto, (c) liabilities and obligations
incurred in connection with the preparation of this Agreement, and the
consummation of the transactions contemplated hereby, except for reasonable
legal and accounting fees not to exceed $75,000 and reasonable accounting fees
for work performed by Skrobacz & Company specifically requested by Purchaser
pursuant to Section 7.16(a)(iii) and (iv) of this Agreement, (d) liabilities and
obligations based upon tortious or illegal conduct, (e) except for that certain
agreement dated January, 1998 by and between SCHAS and Bryant Miller, the
liabilities and obligations arising under any agreement with employees in the
nature of a golden parachute or similar payment, (f) except for such employment
terms as Purchaser may agree upon, any liabilities and obligations with respect
to those employees of any Selling Group member listed in SCHEDULE 3.02 (certain
family members), (g) any liabilities and obligations for any violation of any
Environmental Law in connection with the Business occurring prior to the Closing
Date, and (h) any environmental liabilities and obligations in connection with
the Business occurring prior to the Closing Date relating to the Assets, any of
which arise out of conduct which occurred or conditions which existed on or
before Closing, even if such liability, obligation, conduct or condition is
first discovered or a claim is first asserted after the Closing.

ARTICLE IV
INSTRUMENTS OF TRANSFER AND ASSUMPTION

SECTION 4.01. TRANSFER DOCUMENTS. (a) At the Closing, Selling Group
will deliver to Purchaser (i) one or more Bills of Sale in substantially the
form attached hereto as EXHIBIT 4.01 (a "BILL OF SALE"), (ii) all such other
good and sufficient instruments of sale, transfer and conveyance, including,
without limitation, assignments of leases and deed(s) of real property, in such
form and including such matters as Purchaser shall reasonably request and as
shall be reasonably acceptable to Selling Group, as shall be effective to vest
in Purchaser all of Selling Group's right and title to, and interest in, the
Assets; and (iii) all contracts and commitments, instruments, books and records
(except as otherwise provided in Section 2.02 hereof) and other data included in
the Assets.

(b) Notwithstanding anything to the contrary in this
Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Government Document or any claim, right or benefit arising
thereunder or resulting therefrom if an assignment or transfer or an attempt to
make such an assignment or transfer without the consent of a third party would

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<PAGE> 14

constitute a breach or violation thereof or affect adversely the rights of
Purchaser or any Selling Group member thereunder; and any transfer or assignment
to Purchaser by any Selling Group member of any interest under any Government
Document that requires the consent of a third party shall be made subject to
such consent or approval being obtained. In the event any such consent or
approval is not obtained on or prior to the Closing Date, each Selling Group
member shall continue to use all reasonable efforts to obtain any such approval
or consent after the Closing Date until such time as such consent or approval
has been obtained, and each Selling Group member will cooperate with Purchaser
in any reasonable manner to provide that the Purchaser shall receive the
interest of any Government Document, including performance by each Selling Group
member, as the case may be, as agent, PROVIDED that Purchaser shall undertake to
pay or satisfy the corresponding liabilities for the enjoyment of such benefit
to the extent Purchaser would have been responsible therefor if such consent or
approval had been obtained.

SECTION 4.02. ASSUMPTION DOCUMENTS. At the Closing, Purchaser and
Selling Group will execute and deliver (a) an Assumption Agreement in
substantially the form attached hereto as EXHIBIT 4.02 (the "ASSUMPTION
AGREEMENT") and (b) all such other good and sufficient instruments of assumption
in such form and including such matters as Selling Group shall reasonably
request and as shall be reasonably acceptable to Purchaser in order to effect
the assumption of the Assumed Liabilities by Purchaser.

ARTICLE V
PURCHASE PRICE; ALLOCATION

SECTION 5.01. PURCHASE PRICE. The total purchase price for the Assets
shall be Thirty- Seven Million Eight Hundred Thousand Dollars ($37,800,000) PLUS
the assumption of the Assumed Liabilities as set forth in Section 3.01 , as
adjusted in accordance with the provisions of Section 5.04 (as adjusted, the
"PURCHASE PRICE").

SECTION 5.02. PAYMENT OF PURCHASE PRICE. The following portions of the
Purchase Price shall be payable by Purchaser at the Closing, as follows:

(a) By the wire transfer delivery of Thirty-Five Million Eight
Hundred Thousand Dollars ($35,800,000) in immediately available funds to such
bank account or accounts as per written instructions of Selling Group, given to
Purchaser at least five days prior to the Closing; and

(b) By the wire transfer delivery of Two Million Dollars
($2,000,000) (the "CLOSING ESCROW PAYMENT") to Marine Midland Bank as escrow
agent (the "CLOSING ESCROW AGENT") to be held, invested and disbursed pursuant
to the terms of the Closing Escrow Agreement substantially in the form of
EXHIBIT 5.02 hereto (the "CLOSING ESCROW AGREEMENT").

SECTION 5.03. ALLOCATION OF PURCHASE PRICE. The parties agree to
allocate the aggregate of the Purchase Price and the Assumed Liabilities
(collectively, the "AGGREGATE

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PURCHASE PRICE"), among the respective portions of the Business in accordance
with an allocation schedule to be prepared by Purchaser at its expense. Such
allocation schedule shall be prepared in accordance with the applicable
provisions of the Code and the allocation shall be determined according to the
procedures set forth in Schedule 5.03.

SECTION 5.04. PURCHASE PRICE ADJUSTMENT.

(a) Purchaser and Selling Group acknowledge that it will not be
possible to determine the Net Worth of the Operating Companies as of the Closing
Date until after the Closing. For purposes of the Closing, Purchaser and Selling
Group have estimated the Net Worth to be Nine Million Seven Hundred Twenty Two
Thousand Dollars ($9,722,000) (the "ESTIMATED NET WORTH"). Accordingly, within
approximately ninety (90) days after the Closing Date, Purchaser, at its
expense, shall cause Skrobacz & Company accountants to prepare and deliver to
Selling Group combined audited financial statements (with all material
eliminations made) for PFG and SCHAS and the unaudited financial statements for
X-Pert, PIP and Yadkin for the period beginning on January 1, 1999 and ending on
the Closing Date prepared in accordance with GAAP consistent with past practice
(except for certain accruals and prepaid expenses set forth on Schedule 3.01)
(such financial statements, the "CLOSING DATE FINANCIAL STATEMENTS"). The
balance sheet included in such Closing Date Financial Statements (the "CLOSING
DATE BALANCE SHEET") shall identify Net Worth at the close of such period
("CLOSING DATE NET WORTH") as set forth in Section 7.16(a)(iv). The Excluded
Assets shall be deducted from the Closing Date Net Worth and the Non-Assumed
Liabilities shall be added to the Closing Date Net Worth to determine the
Deliverable Net Worth.

(b) Selling Group shall complete its review of the Closing Date
Financial Statements within sixty (60) days after its receipt thereof. If
Selling Group agrees with the Closing Date Financial Statements, or if Selling
Group does not object to the same within such sixty (60) day period, then the
Closing Date Financial Statements and Closing Date Net Worth reflected therein
shall be deemed final and adopted by Purchaser and Selling Group.

(c) If Selling Group believes that any amendment should be made to
the Closing Date Financial Statements, Selling Group shall give Purchaser
written notice of such proposed amendments, and the reasons therefor, within the
same sixty (60) day period. If Purchaser agrees with the proposed amendments,
these shall be made and the Closing Date Financial Statements, as amended, will
be deemed final and adopted by Purchaser and Selling Group. If any proposed
amendments are disputed by Purchaser, the parties shall negotiate in good faith
to resolve all disputed amendments.

(d) If, after a period of thirty (30) days following the date on
which Selling Group has given Purchaser written notice of any proposed
amendments to the Closing Date Financial Statements, any such amendments still
remain disputed, then the disputed items shall be referred to an independent
auditor, which shall be a nationally recognized accounting firm, to be mutually
agreed between Purchaser and Selling Group or selected by an arbitrator selected
by Purchaser and Selling Group. The independent auditor shall function as an
arbitrator whose decision shall be final and binding on the parties. The
independent auditor shall render a written decision

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which shall be based upon proper compliance with this Section 5.04. The fees and
expenses of the independent auditor shall be split equally by the parties,
unless the independent auditor shall determine that a party has acted in bad
faith with respect to any claim or defense, in which case the party which has
been determined to have acted in bad faith shall be obligated to pay all of the
fees and expenses.

(e) No later than ten (10) days after the Closing Date Financial
Statements have been adopted, as provided in Section 5.04(b), (c) or (d), as the
case may be, if the Estimated Net Worth exceeds the Closing Date Net Worth (the
"Net Worth Shortfall"), Purchaser shall instruct the Closing Escrow Agent to
promptly release and pay Purchaser the amount of the Net Worth Shortfall from
the first One Million Dollars ($1,000,000) of the Escrowed Funds (as such term
is defined in the Closing Escrow Agreements) and any remainder left over
reflecting the difference between One Million Dollars ($1,000,000) and the Net
Worth Shortfall shall be paid to Selling Group. Interest that has accrued on the
total $1,000,000 escrow deposit shall be allocated to the parties according to
the amounts paid to each party by the Closing Escrow Agent.

(f) No later than ten (10) days after the Closing Date Financial
Statements have been adopted, as provided in Section 5.04(b), (c) or (d), as the
case may be, if the Estimated Net Worth is less than the Closing Date Net Worth,
then Purchaser shall instruct the Closing Escrow Agent to promptly release and
pay Selling Group $1,000,000 of the Escrowed Funds, as well as all interest
income accrued thereon.

SECTION 5.05. EARNOUT. (a) In addition to the Purchase Price, Purchaser
shall pay Selling Group an earnout (the "Earnout") based on a comparison of the
actual consolidated cash flow of the Business ("EBITDA") for 1999 with a target
of $8,758,000 subject to such adjustments as agreed upon by the parties, all as
set forth in EXHIBIT 5.05.

(b) As and to the extent earned, the dollar value of the Earnout
shall be payable in cash to Selling Group as soon as practicable following the
determination of the EBITDA of the Operating Companies for 1999, which is
expected to be no later than February 29, 2000.

(c) For purposes of computing the Earnout, the EBITDA shall be
equal to the consolidated pro forma EBITDA earnings of the Operating Companies
for the period January 1 through December 31, 1999. To make this calculation,
Purchaser shall prepare, at its expense, a PRO FORMA consolidating income
statement for the Business of the Operating Companies for the period January 1
through December 31, 1999 in accordance with GAAP, such accounting principles to
be applied consistently with past practice (including certain accrued expenses
and liabilities set forth on Schedule 3.01).

ARTICLE VI
CLOSING

Subject to the terms and conditions hereof, the closing (the "Closing")
shall take place at the offices of Phillips Lytle Hitchcock Blaine & Huber LLP,
3400 Marine Midland Center,

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<PAGE> 17

Buffalo, New York 14203, on April 1, 1999 (or such other date as shall be agreed
upon by the parties (the "CLOSING DATE")). At Closing, each party shall deliver
or cause to be delivered to the other party the instruments of transfer and
assumption referenced in Article IV of this Agreement and the other deliveries
required hereunder and Purchaser shall deliver the Purchase Price as required
pursuant to Section 5.02.

ARTICLE VII
SELLING GROUP'S REPRESENTATIONS

Each member of the Selling Group (except for Edward Mesanovic, who
makes these representations only as they may pertain to PIP), jointly and
severally represents and warrants (such representations and warranties to
survive the Closing as set forth herein) that:

SECTION 7.01. ORGANIZATION, QUALIFICATION. Each of the Operating
Companies is duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and qualification, and each
corporate Selling Group member has all necessary corporate power and authority
and each individual Selling Group member has all necessary power and authority
to own and operate its or his properties and to carry on its or his business as
now being conducted or proposed to be conducted and to carry out the
transactions contemplated by this Agreement. Each Selling Group member has the
full power and authority to execute and deliver and, perform its or his
respective obligations under this Agreement and to undertake the transactions
contemplated hereby.

SECTION 7.02. CONSENTS, AUTHORIZATION, EXECUTION AND DELIVERY OF
AGREEMENT. Except as set forth on SCHEDULE 7.02 hereto, all necessary consents
and approvals have been obtained by each Selling Group member for the execution
and delivery of this Agreement. The execution, delivery and performance of this
Agreement by Selling Group and the transfer of the Assets to Purchaser have been
duly and validly authorized and approved by all necessary corporate and
stockholder action (with respect to the Operating Companies). This Agreement is
a valid and binding obligation of each Selling Group member, enforceable against
each such member in accordance with its terms except as enforceability may be
limited by applicable bankrupcty, insolvency, reorganization, arrangement or
similar laws affecting the rights of creditors generally and subject to the
discretion of courts to award equitable remedies.

SECTION 7.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES. The
Corporate Selling Group members have no subsidiaries, and the Selling Group
members do not own or control any shares or other securities of, or have any
other proprietary interest in, any corporation, partnership, limited liability
company, joint venture, business association or other Person related to the
Business (other than their ownership or control of another Selling Group
member).

SECTION 7.04. TITLE TO ASSETS; CONDITION OF ASSETS. (a) Each Selling
Group member has, and will convey or cause to be conveyed to Purchaser at
Closing, as the case may be, good and marketable title to the Assets owned by
it, free and clear of all Liens other than Permitted Liens. All Liens in effect
on the date hereof which are to be discharged at Closing are listed on

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SCHEDULE 7.04(a) hereto. The tangible personal property included among the
Assets is in good working condition and repair, reasonable wear and tear
excepted. The Assets constitute all of the assets which are used or useful in
the operation of the Business as it is currently being conducted by Selling
Group. Except as disclosed on SCHEDULE 7.23, no officer, director, stockholder,
partner or employee of any Selling Group member or any other Person, other than
a member of Selling Group, owns, leases or has any rights in any property, or
other assets used in or useful to the Business other than the Excluded Assets.

(b) Except as set forth on SCHEDULE 7.04(b), all of the buildings,
fixtures and improvements owned or leased by Selling Group, and all heating and
air conditioning equipment, plumbing, electrical and other mechanical facilities
and the roof, walls and other structural components of the real property which
are part of, or located in such buildings, or improvements that are owned or
leased by Selling Group, substantially comply with applicable zoning laws and
the building, health, fire and, subject to the limitations set forth in the
representations of Selling Group in Section 7.12, environmental protection codes
of all applicable governmental jurisdictions, have no structural defects and do
not require any repair other than routine maintenance and the repair of ordinary
wear and tear.

SECTION 7.05. REAL PROPERTY - OWNED.

(a) The Owned Real Property set forth on SCHEDULE 2.01 and the use
thereof are both in compliance with all applicable Real Property Laws, and no
Selling Group member has received any work orders or notice of any defect in the
construction or state of repair of any of the Owned Real Property or notice of
any violation or claimed violation of any Real Property Law or of any changes or
proposed changes to Real Property Laws which will adversely affect the current
use of any of the Owned Real Property. The Owned Real Property and their
continued use, occupancy and operation as currently used, occupied and operated
do not constitute a nonconforming use under any Real Property Law and the
continued existence, use, occupancy and operation of each Improvement, and the
right and ability to repair and/or rebuild such Improvement in the event of
casualty, is not dependent on any special permit, exception, approval or
variance. To the Knowledge of any Selling Group member, there is no pending or
anticipated change in any Real Property Law which would have an adverse effect
upon the ownership, alteration, use, occupancy or operation of any of the Owned
Real Property or any portion thereof, or upon the reconstruction of any
Improvement in the event of a casualty. No dispute currently exists with any
governmental entity with respect to any Real Property Law or the application
thereof to any of the Owned Real Property. There are no encroachments upon any
of the Owned Real Property and the Improvements situated upon such Owned Real
Property do not encroach upon or violate any rights or way, easements or the
lands of others. There are no violations of law or rule with respect to water
supply, sewage or waste disposal facilities. No portion of any of the Owned Real
Property has suffered any damage by fire or other casualty which has not
heretofore been completely repaired and restored to its original condition.
Except as set forth on SCHEDULE 7.05, no portion of any of the Owned Real
Property is located in a special flood hazard area as designated by federal
governmental authorities nor is any portion of the Owned Real Property subject
to conservation authority regulation.

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(b) No Selling Group member has received any notice of any special
assessment or condemnation from a governmental entity with respect to any of the
Owned Real Property.

(c) Except as set forth on SCHEDULE 7.05, no Selling Group member
owns, holds or is obligated under, or is a party to, any option, right of first
refusal or other contractual right to purchase, acquire, sell or dispose of all
or any part of the Owned Real Property or any interest therein and no Selling
Group member is a lessor, sublessor or grantor under any contract granting to
another Person any right to the possession, use, occupancy or enjoyment of all
or any part of the Owned Real Property or any interest therein.

SECTION 7.06. REAL AND PERSONAL PROPERTY - LEASED. Set forth on
SCHEDULE 2.01 are true and accurate listings of all real and personal property
leases to which a Selling Group member is a party setting forth (i) the name of
the lessor and (ii) with respect to the real property leases, a description of
the property leased. Except as set forth on SCHEDULE 7.06 all of the leases set
forth on such Schedules are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, (ii) all accrued and
currently payable rents and other payments required by such leases have been
paid, (iii) Selling Group and, to Selling Group's Knowledge, each other party
thereto have materially complied with all respective covenants and provisions of
such leases, (iv) neither Selling Group nor, to Selling Group's Knowledge, any
other party is in material default in any respect under any such leases, (v) no
party has asserted any defense, set off, or counter claim thereunder, (vi) no
waiver, indulgence or postponement of any obligations thereunder has been
granted by any party, and (vii) the validity or enforceability of any such lease
will be in no way affected by the sale of the Assets to Purchaser, provided all
required consents have been obtained from the other parties to such lease.

SECTION 7.07. EXISTING CONTRACTS. SCHEDULE 2.01 hereto set forth all
contracts, commitments and agreements (written and oral) (except those
terminable with notice provided in thirty (30) or fewer days) in effect on the
date hereof with Selling Group's customers, all leases to which a Selling Group
member is a party, and all other contracts, commitments and agreements (written
and oral) to which a Selling Group member is a party which relate to the
ownership of the Assets or the operation of the Business that are being assigned
to Purchaser (the "Existing Contracts"). Except as disclosed on SCHEDULE 7.07,
no officer, director, partner or employee of a Selling Group member or any
Person (other than Selling Group members) controlling, controlled by or
affiliated with or family member of any such officer, director or employee has
any contractual relationship relating to the ownership or operation of the
Business that is being sold, transferred or assigned to Purchaser. Selling Group
has heretofore delivered to Purchaser true and correct copies of the Existing
Contracts. Except as disclosed on SCHEDULE 7.07, Selling Group has no knowledge
of any material breach or threatened breach by the other parties to any Existing
Contracts. The Existing Contracts are in full force and effect and Selling Group
is in compliance with each of its respective material obligations under such
Existing Contracts. Except for the Existing Contracts, no Selling Group member
has entered into any other contract, commitment or agreement relating to the
ownership of the Assets or the operation of the Business, including, but not
limited to, leases or guaranty agreements. There are no claims by third parties
that a Selling Group member is required to enter into other agreements to enable
it to continue to own the Assets and operate the Business as it is presently
being operated.

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SECTION 7.08. GOVERNMENTAL LICENSES. Selling Group holds all
Authorizations which are required in connection with the ownership of the
Assets. All Authorizations are in full force and effect. Except as set forth on
SCHEDULE 7.08, the ownership of the Assets and the operation of the Business by
Selling Group are not subject to specific industry regulation or supervision by
any federal or state governmental unit.

SECTION 7.09. COMPLIANCE WITH LAWS. Except as set forth on Schedule
7.09, to the best of Selling Group's knowledge, it is currently complying with,
has complied with, and is not in default under or in violation of any statute,
law (including environmental or employment laws), ordinance, decree, order, rule
or regulation of any governmental body applicable to the Assets or the Business.

SECTION 7.10. NO VIOLATION OF EXISTING CONTRACTS. Except as set forth
on SCHEDULE 7.10, the execution, delivery and performance of this Agreement by
Selling Group and Selling Group's transfer of the Assets to Purchaser (i) will
not violate any provision of any law (ii) will not, with or without the giving
of notice or the passage of time, or both, conflict with or result in any breach
of any of the terms or conditions of, or constitute a default under any Existing
Contract, and (iii) will not result in the creation of any Lien upon the Assets
or the Business other than Permitted Liens.

SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS. There is no outstanding
judgment against any Selling Group member or any director, officer, partner or
stockholder of a Selling Group member affecting the Business or the Assets or
which questions the validity of any action taken or to be taken by a Selling
Group member pursuant to or in connection with the provisions of this Agreement.
Except as set forth on SCHEDULE 7.11, there is no litigation, proceeding or
investigation pending, or, to Selling Group's knowledge, threatened, against a
Selling Group member or any director, officer, partner or stockholder of a
Selling Group member affecting the Business or the Assets or which questions the
validity of any action taken or to be taken by Selling Group pursuant to or in
connection with the provisions of this Agreement. Except as set forth on
SCHEDULE 7.11, there are no proceedings pending to which a Selling Group member
or any director, officer, partner or stockholder of a Selling Group member is a
party or, to Selling Group's Knowledge, threatened, nor has Selling Group
received written notice of any demand by any governmental agency, utility or
other party, to terminate, modify or adversely change the terms and conditions
of any Selling Group member's rights with respect to the Authorizations or
Existing Contracts.

SECTION 7.12. ENVIRONMENTAL COMPLIANCE. Except as otherwise disclosed
in SCHEDULE 7.12 attached hereto, (a) any Hazardous Substance generated, used,
treated, stored, or disposed of during Selling Group's ownership, occupation or
use of the Assets or the Business has been and is being used, treated, stored or
disposed of in material compliance with all Environmental Laws, and; (b) Selling
Group has received no notice of any material violation of any applicable
Environmental Laws relative to the Assets or the Business. Based upon Selling
Group's information and belief, (y) no friable asbestos or polychlorinated
biphenyl, and no underground storage tank, is contained in or located on or
under any property or facility owned, occupied,

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used or leased by Selling Group, and (z) during Selling Group's ownership,
occupation or use of the Assets or the Business, there has never been a release
of any Hazardous Substances in, on, under, off or around any property or
facility used, occupied, owned or leased by Selling Group. All environmental
permits applicable to the Selling Group's use of the Owned Real Property and
Leased real property have been obtained, are in full force and effect and are
set forth on Schedule 7.12.

Except as otherwise disclosed in SCHEDULE 7.12 attached hereto, and to
the best of Selling Group's knowledge and belief, no Hazardous Substance has
been generated, stored, disposed of or released, except in accordance with
applicable Environmental Laws, in, on, under, off or around the land and
buildings comprising the main assembly plant in Cheektowaga, New York at any
time prior to the time that such plant was owned, occupied, used and/or leased
by the Selling Group.

SECTION 7.13. EMPLOYEES. SCHEDULE 7.13 sets forth a true and complete
list of the names and current salaries of all salaried employees of Selling
Group, and a list of average hourly pay rates for hourly employees, involved in
the operation of the Business. Except as set forth on SCHEDULE 7.13, such
employees are employees at will. Set forth on Schedule 7.13 is a list of
employees' accrued but unused vacation. Selling Group has withheld all amounts
required by law or agreement to be withheld by it from the wages, salaries and
other payments to its employees and is not liable for any arrears of wages or
any taxes for failure to comply with any of the foregoing. There are no
collective bargaining agreements covering any of the employees of Selling Group.
Selling Group has not breached or otherwise failed to comply with any provision
of any collective bargaining agreement or other labor union contract applicable
to any of its employees. No consent of any union (or similar group or
organization) is required in connection with the consummation of the
transactions contemplated hereby. There are no pending, or, to Selling Group's
Knowledge threatened or anticipated, and to the best knowledge of Selling Group,
there is no factual basis for, any (a) employment discrimination (including age,
sex, racial or handicap discrimination) charges or complaints against or
involving Selling Group, before any federal, state, or local board, department,
commission or agency or (b) unfair labor practice charges or complaints,
disputes or grievances affecting Selling Group. There are no pending, or, to
Selling Group's Knowledge, threatened or anticipated (a) union representation
petitions respecting the employees of Selling Group, (b) efforts being made to
organize any of the employees of Selling Group, or (c) strikes, slow downs, work
stoppages, or lockouts or threats affecting Selling Group.

SECTION 7.14. EMPLOYEE BENEFITS. (a) Each "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) that any member of Selling Group
maintains or contributes to and has ever maintained or contributed to with
respect to the Business is named as follows: the Perfect Fit Glove Co., Inc.
401(k) Plan (the "401(k) Plan" and the Perfect Fit Glove Co., Inc.
Profit-Sharing Plan and Trust (the "Profit Sharing Plan") (both collectively,
the "Retirement Plans"). No member of Selling Group, nor any trade or business
(whether or not incorporated) which is, or was at any relevant time, aggregated
with each Operating Company pursuant to Section 414(b), (c), (m) or (o) of the
Code, maintains or contributes to, has ever maintained or contributed to, or had
an obligation to maintain or contribute to, any multi-employer plan within

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the meaning of Section 4001(3) of ERISA or to any "employee pension benefit
plan" that is subject to Title IV of ERISA or the minimum funding requirements
of Section 412 of the Code and Section 302 of ERISA.

(b) (i) With respect to the Retirement Plans, no liability
currently exists for Selling Group for any breach of fiduciary duty under Title
I of ERISA and no event has occurred and no condition exists, which could
subject Selling Group to any liability or breach of fiduciary duty under Title I
of ERISA; (ii) with respect to the Retirement Plans, there is no liability under
Title IV of ERISA.

SECTION 7.15. TAX MATTERS. Except as set forth on SCHEDULE 7.15, (a)
each Selling Group member has timely filed all Tax (as defined below) returns
and statements which it is required to file; (b) all such returns are materially
complete and accurate and disclose all Taxes required to be paid for the periods
covered thereby; (c) no Selling Group member has waived any statute of
limitations in respect of Taxes or agreed to an extension of time with respect
to a Tax assessment or deficiency; (d) no assessment of any additional Taxes for
periods for which returns have been filed has been asserted and no basis exists
therefor; (e) to Selling Group's knowledge, there are no unresolved questions or
claims raised by any Taxing authority concerning the Tax liability of any
Selling Group member, (f) all Taxes which Selling Group members are required by
law to withhold or to collect for payment have been duly withheld and collected,
and have been paid and (g) each of Glove Sellers (except PIP and X-Pert) has
made a valid election to be taxed as an "S Corporation" (as defined in Section
1361 of the Code) and will be classified for Federal income tax purposes as an S
Corporation for the period from the date of its election through the Closing
Date. Each Selling Group member has paid all Taxes due prior to the date hereof
and will pay when due (or contest in good faith by appropriate proceedings) all
Taxes which may become due on or before the Closing Date.

SECTION 7.16. FINANCIAL STATEMENTS.

(a) (i) Purchaser has heretofore been furnished with true
and complete copies of the preliminary unaudited balance sheet of PFG
as of September 30, 1997 and September 30, 1998 and for SCHAS as of
December 31, 1997 and September 30, 1998 and the related statements of
income and retained earnings for the years (or periods, as the case may
be) then ended, and the combined balance sheet of the Operating
Companies as of December 4, 1998 (the "Base Period")(the "Base Period
Financial Statements"), each of such balance sheet and income statement
being attached hereto as SCHEDULE 7.16(a)(i), (THE "HISTORICAL
FINANCIAL STATEMENTS"). From and after the Base Period, the
Stockholders have not taken any dividends, distributions or withdrawals
from any of the Operating Companies except to pay salaries and rent in
the normal course of business or to pay income taxes on account of
their position as stockholders of the following S Corporations: PFG and
SCHAS

(ii) Not less than one (1) week prior to the Closing, at
Selling Group's cost, Purchaser shall be furnished with the audited
balance sheet of PFG as of

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September 30, 1998 and for SCHAS as of December 31, 1998 and the
related statements of income and retained earnings and cash flows for
the year then ended prepared in accordance with generally accepted
accounting principles consistent with past practices (except for
certain accruals and prepaid expenses set forth on Schedule 3.01 and a
review of opening inventory) as set forth on Schedule 7.16(a)(ii)
(collectively, the "Current Financial Statements");

(iii) On or before July 1, 1999, at Purchaser's cost,
Purchaser will be furnished with the audited balance sheet of PFG as of
December 31, 1998 and March 31, 1999 and SCHAS as of March 31, 1999 and
the related statements of income and retained earnings and cash flows
for the period then ended prepared in accordance with generally
accepted accounting principles consistent with past practice; and

(iv) On or before July 1, 1999, at Purchaser's cost,
Purchaser will be furnished with a Schedule of the combined companies
comprising the Business of Selling Group in substantially the same form
as the Base Period Financial Statements setting forth combined Closing
Date Net Worth of Selling Group.

(b) Each of the Historical and Current Financial Statements
delivered under Section 7.16 (a)(i) and (ii) hereof was prepared in accordance
with GAAP applied on a basis consistent with prior periods and past practices
and, with respect to the Current Financial Statements, subject to usual and
customary year-end adjustments and except for the omission of certain footnotes
and other presentation items required by GAAP with respect to audited financial
statements; each of the balance sheets included in such Historical and Current
Financial Statements fairly presents in all material respects the financial
condition of Selling Group, as at the close of business on the date thereof; and
each of the statements of income included in such Historical and Current
Financial Statements fairly presents in all material respects the results of
operations of Selling Group, for the fiscal period then ended.

(c) Except as set forth on SCHEDULE 7.16(c) since December 31,
1998, Selling Group has not, except in the ordinary course of business
consistent with past practice:

(i) sold, assigned or transferred any of its Assets
(except for the Excluded Assets or for assets sold or disposed of and
replaced by other assets of comparable use and value) or canceled any
material debts or material claims;

(ii) waived any material rights, whether or not in the
ordinary course of business;

(iii) entered into any other transaction, or entered into
any transaction with any officer, director, partner or shareholder of a
Selling Group member, or any affiliate or family member of any such
Person;

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<PAGE> 24

(iv) suffered any material damage, destruction or casualty
loss with respect to the Assets, whether or not covered by insurance;

(v) obligated itself or the Business to give free or
reduced price goods to customers or distributors with respect to the
Business; or

(vi) entered into any agreement or understanding to do any
of the foregoing.

(d) Except as set forth on Schedule 7.16(d), since December 4,
1998, PFG, SCHAS, X-Pert and PIP and since December 31, 1998, Yadkin, and
Hoerner and Stucke as owners of the Owned Real Property, have not made any
dividend or distribution of any of the Assets to any officer, director or
shareholder of a Selling Group member or any affiliate or family member of such
officer, director or shareholder.

SECTION 7.17. CUSTOMERS/AGENTS/SUPPLIERS. SCHEDULE 7.17 attached hereto
sets forth a true, accurate, and complete list of (a) the names of the top
twenty-five (25) customers and distributors receiving goods from Selling Group
(ranked by dollars) during 1998 , (b) the names of all agents and
representatives who service customers on behalf of Selling Group, if any, and
(c) the names of the top ten (10) suppliers of raw materials, supplies or other
goods or services to Selling Group (ranked by dollars) in connection with the
Business, during 1998.

SECTION 7.18. INSURANCE. Selling Group has delivered previously to
Purchaser all policies of title, liability, fire, worker's compensation and
other forms of insurance (including bonds) which insure against risks and
liabilities to an extent and in a manner customary in the industry and which are
reasonably adequate to provide coverage against risks of a nature to which
Selling Group would normally be exposed in the operation of the Business. All
such insurance policies and binders are in full force and effect. Selling Group
has complied in all material respects with each of such insurance policies and
binders and has not failed to give any notice or present any claim thereunder in
a due and timely manner. To the best of Selling Group's knowledge, there are no
outstanding unpaid claims under any of such insurance policies or binders and
Selling Group has not received any notice of cancellation or non-renewal of any
such policy or binder. To Selling Group's knowledge, there is no inaccuracy in
any application for such policies or binders which would reasonably be expected
to materially adversely affect coverage thereunder. No insurance carrier has
canceled or reduced any insurance coverage for Selling Group or has given any
notice or other indication of its intention to cancel or reduce any such
coverage in the past five years.

SECTION 7.19. BROKERS. Selling Group has not engaged any agent, broker
or other person acting pursuant to the express or implied authority of Selling
Group which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.

SECTION 7.20. UNDISCLOSED LIABILITIES. Selling Group has no liabilities
or obligations of any nature, whether absolute, accrued, contingent or
otherwise, which are not reflected or

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<PAGE> 25

reserved against on the Current Financial Statements, except for non-material
liabilities and obligations that have arisen in the ordinary and usual course of
business and consistent with past practice (none of which results from, arises
out of, relates to, is in the nature of, or is caused by any breach of contract,
breach of warranty, tort, infringement or violation of law) and except for
liabilities and obligations directly related to the transactions contemplated
hereby, as set forth on the Schedules hereto.

SECTION 7.21. PROPRIETARY RIGHTS. Except as set forth on SCHEDULE 7.21,
Selling Group lawfully possesses, and the Assets will include, all Intellectual
Property rights that are used or useful in the conduct of the Business. Except
as set forth on Schedule 7.21, none of the Intellectual Property rights owned by
Selling Group infringes upon the rights of any third party. Except as set forth
on SCHEDULE 7.21, Selling Group does pay any royalty to any Person with respect
to any of the Intellectual Property rights, Selling Group does not receive
royalties with respect thereto and Selling Group has not licensed or sublicensed
any of the Intellectual Property rights to any Person.

SECTION 7.22. ACCOUNTS RECEIVABLE AND BAD DEBTS. Except for a mortgage
note in the approximate face amount of $133,000 involving real property on South
Park Avenue, Buffalo, New York, all notes and accounts receivable of Selling
Group shown on the Current Financial Statements or thereafter acquired were or
(to the extent not heretofore collected) are valid and genuine, were acquired in
the ordinary course of business and are subject to no asserted counterclaims,
defenses or setoffs (subject to reserves for bad debts as will be taken into
account in the determination of Current Assets at Closing in accordance with
Section 5.04). SCHEDULE 7.22 attached hereto sets forth a true, materially
complete and accurate list of all such reserves and a list of the accounts
receivable and the aging of such customer receivables as of February 22, 1999.

SECTION 7.23. CERTAIN BUSINESS RELATIONSHIPS WITH SELLING GROUP. Except
as set forth in SCHEDULE 7.23 attached hereto, none of the officers, directors
or stockholders of a Selling Group member, its affiliates or family members, has
been involved in any business arrangement or relationship with a Selling Group
member within the past 12 months.

SECTION 7.24. WARRANTY AND PRODUCT LIABILITY CLAIMS.

(a) Except as disclosed on SCHEDULE 7.24(a), there are no written
warranties or guaranties, expressed or implied, with respect to any products
manufactured or sold or services rendered in connection with the Business, and
no claims are pending or asserted or, to the Knowledge of Selling Group,
threatened that any product of Selling Group was defective or caused any injury
or harm to any Person or property, including all such claims or allegations
relating to returns, express or implied warranty violations, failure to warn or
similar matters. To the Knowledge of each member of Selling Group, no Person has
any basis upon which to make any such claims. All pending or, to the Knowledge
of any Selling Group member, threatened or asserted claims set forth on SCHEDULE
7.24(a) are covered by insurance and are not subject to any deductibles other
than the amount of the deductible set forth opposite such claim on such
Schedule. There are no statements, citations or decisions specifically directed
to Selling Group

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by any governmental entity stating that any product manufactured, marketed or
distributed at any time by any Selling Group member is defective or unsafe or
fails to meet any standards promulgated by any such governmental entity. There
have been no recalls with respect to any product manufactured, marketed or
distributed within the past five (5) years by any Selling Group member with a
value greater than $10,000 and to the knowledge of Selling Group, no such recall
is threatened.

(b) SCHEDULE 7.24(b) sets forth all incidents involving personal
injury since January 1, 1995 that have alleged to have been, or that, to the
Knowledge of any Selling Group member, could be alleged to have been, caused by
any product manufactured or sold by a Selling Group member or by any services
rendered by a Selling Group member, regardless of whether a claim therefor has
been asserted or threatened against any Person.

SECTION 7.25. ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set
forth on SCHEDULE 7.25, no Selling Group member, any officer, employee or agent
of any Selling Group member, or any other person acting on their behalf, has,
directly or indirectly, within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the Business (or
assist any Selling Group member in connection with any actual or proposed
transaction relating to the Business) (i) which subjected or might have
subjected any Selling Group member to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which if not given in
the past, might have had a Material Adverse Effect, (iii) which if not continued
in the future, might have a Material Adverse Effect or subject any Selling Group
member to suit or penalty in any private or governmental litigation or
proceeding, (iv) for any of the purposes described in Section 162(c) of the Code
or (v) for the purpose of establishing or maintaining any concealed fund or
concealed bank account.

SECTION 7.26. YEAR 2000 COMPATIBILITY. To the Knowledge of each Selling
Group member, all of the computer-based systems of each Selling Group member
will have been upgraded on or before September 30, 1999 at a cost of not more
than $10,000 so that such systems operating and effectively processing data for
dates on and after January 1, 2000, including without limitation the processing,
accepting, calculating, storing and outputting of times or dates on or after
such date and any time periods determined or to be determined based on such
times or dates.

SECTION 7.27. DISCLOSURE. Except as set forth on Schedule 7.27, no
provision of this Agreement relating to Selling Group, the Business or the
Assets or any other document, Schedule, Exhibit or other information furnished
by Selling Group to Purchaser in connection with the execution, delivery and
performance of this Agreement, or the consummation of the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated in
order to make the statement, in light of the circumstances in which it is made,
not misleading. In connection with the preparation of this Agreement and the
documents, descriptions, opinions, certificates, Exhibits, Schedules or written
material prepared by Selling Group and appended hereto or delivered or to be
delivered hereunder, Selling Group agrees it will disclose to Purchaser any fact
known to

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<PAGE> 27

Selling Group which Selling Group knows or believes would adversely affect
Purchaser's decision to proceed with the execution of this Agreement. There is
no fact now known to Selling Group relating to the Business or Assets which in
Selling Group's reasonable opinion adversely affects the condition of the
Assets, or the ownership, operation or financial condition of the Business which
has not been disclosed to Purchaser or set forth in the Exhibits or Schedules
attached hereto. All Schedules attached hereto are accurate and complete as of
the date hereof.

ARTICLE VIII
PURCHASER'S REPRESENTATIONS

Purchaser hereby represents and warrants that:

SECTION 8.01. ORGANIZATION; QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has all corporate power and authority to (i) own
and operate its properties, (ii) carry on its business as it is now being
conducted, and (iii) carry out the transactions contemplated by this Agreement
and to own and operate the Assets and the Business, subject to obtaining all
necessary consents required for the transfer by Selling Group of the Assets, if
any.

SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF
AGREEMENT. All necessary consents and approvals have been obtained by Purchaser
for the execution and delivery of this Agreement. The execution and delivery of
this Agreement by Purchaser has been duly and validly authorized and approved by
all necessary corporate action. Purchaser has full power and authority to
execute and deliver and perform its obligations under this Agreement. This
Agreement is a valid and binding obligation of Purchaser, enforceable against it
in accordance with its terms.

SECTION 8.03. BROKERS. Purchaser has not engaged any agent, broker or
other person acting pursuant to the express or implied authority of Purchaser
which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.

ARTICLE IX
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE

The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or prior
to the Closing of each of the following conditions, any of which may be waived
in writing by Purchaser:

SECTION 9.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties made by Selling
Group in this Agreement shall be true and correct at and as of the Closing.
Selling Group shall have complied with and performed all of the agreements and
covenants required by this Agreement to be performed or

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complied with by it on or prior to the Closing. Purchaser shall have been
furnished with a certificate executed by the President of each of the Operating
Companies dated as of the Closing, certifying to the fulfillment of the
foregoing conditions.

SECTION 9.02. RESOLUTIONS. The Operating Companies shall deliver to
Purchaser copies of the resolutions of the board of directors and stockholders
of each (including a unanimous written consent of the stockholders of PFG)
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an officer of each Operating
Company.

SECTION 9.03. INCUMBENCY CERTIFICATES. Purchaser shall have received a
certificate or certificates of an officer of each Operating Company, certifying
as to the genuineness of the signatures of officers of each of the Operating
Companies authorized to take certain actions or execute any certificate,
document, instrument or agreement to be delivered pursuant to this Agreement,
which incumbency certificate shall include the true signatures of such officers.
Purchaser shall have received a certificate of the Stockholders, certifying that
they are, as the case may be, the sole owners of the Operating Companies and the
Owned Real Property.

SECTION 9.04. CONSENTS. Selling Group shall have delivered to Purchaser
such instruments, consents and approvals of third parties (the form and
substance of which shall be reasonably satisfactory to Purchaser) as are
reasonably necessary to assign to Purchaser without modification thereof, as of
the Closing, the Assets and the Assumed Contracts, and Purchaser shall have
obtained all Authorizations reasonably necessary for the consummation of the
transactions contemplated by this Agreement.

SECTION 9.05. DUE DILIGENCE. Purchaser and its agents and
representatives shall have conducted a satisfactory legal, tax, accounting,
environmental, regulatory and business due diligence review of the Assets and
the Business including, without limitation, the Business properties, and
customers, the results of which shall be satisfactory to the Purchaser. If as a
result of such due diligence review, Purchaser decides to terminate the
Agreement or believes that a material change must be made to the Agreement, then
Purchaser shall notify Selling Group of such determination within thirty (30)
days after the execution of the Agreement or ten (10) days after receipt of
final Schedules, as the case may be. Without limiting the generality of the
foregoing, Purchaser shall be satisfied that the Assets constitute all assets
and property necessary to operate the Business as Purchaser contemplates. If,
during the course of its due diligence review, Purchaser obtains knowledge of a
clear and material breach by Selling Group of any of the Selling Group's
representations set forth herein (but not including knowledge of facts that may
lead to a material breach), Purchaser shall provide the information upon which
such knowledge is based to Selling Group.

SECTION 9.06. NO MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the financial condition, assets, business, properties
or prospects of the Business or Assets, from December 4, 1998 to the Closing.

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SECTION 9.07. OPINION OF COUNSEL TO SELLING GROUP. Purchaser shall have
been furnished with an opinion of Phillips Lytle Hitchcock Blaine & Huber LLP,
counsel to Selling Group, dated as of the Closing and addressed to Purchaser,
and to any institution designated by Purchaser which has provided financing in
connection with the transactions contemplated by this Agreement, in a form to be
mutually agreed upon.

SECTION 9.08. CLOSING ESCROW AGREEMENT. Selling Group shall have
executed and delivered the Closing Escrow Agreement to Purchaser.

SECTION 9.09. REAL AND PERSONAL PROPERTY. Selling Group shall have
delivered to the Purchaser:

(a) the Assignment and Bill of Sale assigning to Purchaser all of
Selling Group's right, title and interest in and to the
Existing Contracts, Intellectual Property and all other
agreements and instruments constituting the Assets, dated as
of the Closing Date;

(b) the Assumption Agreement;

(c) an assignment of lease, dated as of the Closing Date, with
respect to each Lease, in form reasonably satisfactory to
Purchaser, together with any necessary transfer declarations
or other filings;

(d) certificates of title to all motor vehicles included in the
Assets to be transferred to Purchaser hereunder, duly endorsed
for transfer to Purchaser as of the Closing date;

(e) a tax and title search which covers the Owned Real Property,
fully guaranteed by a title insurance corporation licensed
under Article 64 of the Insurance Law. The first set-out of
the search shall be the first recorded source of title in the
County Clerk's Office. The last continuation of the search
shall be dated after the date hereof. Selling Group shall also
provide local tax certificates where not covered by the
search.

(f) a survey of the Owned Real Property prepared by a professional
who is licensed or otherwise authorized under the New York
Education Law to practice land surveying ("Surveyor"). The
survey shall be dated within four years prior to the Closing
Date (provided that any such survey includes the current
configuration of the buildings thereon and subject to any
requirement imposed by any lender to Purchaser), be prepared
according to Bar Association of Erie County standards and
shall show the Owned Real Property and location of all
buildings, other structures and improvements affecting it,
along with Selling Group's affidavit of discharge.

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<PAGE> 30

(g) Subject to the rights of the Erie County IDA, good and
marketable title to the Owned Real Property in fee simple,
free and clear of all liens and encumbrances, except as stated
in this Agreement. Purchaser will accept the Owner Real
Property subject to (i) restrictions of record, provided they
do not conflict with the present improvements or uses, or
intended uses or intended improvements (as defined in
Paragraph 13 of the Bar Association of Erie County Contract)
and have not been violated, unless their enforcement is barred
by law; (ii) easements and rights-of-way of record for water
lines, sanitary sewer lines, drainage, gas pipeline,
electrical lines and telephone lines, provided they are or may
be used to service the Owned Real Property and provided the
present improvements, or intended uses or intended
improvements are or will not be on the easements or rights of
way;

(h) title insurance in such form and substance as set forth in the
Erie County Bar Association Real Estate Contract;

(i) cure of any title defects to which Purchaser shall have
objected within ten (10) days of receipt of written notice
from Purchaser of such objection;

(h) a Warranty Deed with lien covenant, together with such
documentation reasonably necessary for Selling Group to comply
with this Agreement.

(k) such other documents or instruments as may be reasonably
necessary to give effect to the intent of this Agreement.

SECTION 9.10. EMPLOYMENT AGREEMENTS. Each of Hoerner, Stucke and
William Alico ("Alico") shall have entered into an Employment Agreement with
Purchaser according to the terms as set forth in EXHIBITS 9.10(a), (b) AND (c),
respectively (which exhibits shall be attached to this Agreement prior to
Closing).

SECTION 9.11. HSR ACT NOTIFICATION. The applicable waiting period and
the extensions thereof shall have expired or have been terminated pursuant to
the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended (the "HSR
Act").

SECTION 9.12. ENVIRONMENTAL ASSESSMENT. Purchaser shall have conducted
a Phase I environmental assessment (which shall include a record and site
investigation and analysis), at the expense of Selling Group (such expense to be
reimbursed by Purchaser upon the Closing), and as reasonably warranted by the
results of such Phase I assessment, a Phase II assessment, of the Owned Real
Property and all leased real property and the results of such environmental
assessment shall be satisfactory to Purchaser in its sole discretion.

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Section 9.13. GOOD STANDING CERTIFICATES. Selling Group shall have
provided to Purchaser, with respect to each corporate member of Selling Group, a
good standing certificate issued by the Secretary of State of the state of
incorporation of each such member, and a tax good standing certificate or
franchise tax report showing all reports filed and all franchise taxes paid
issued by the taxing authority of the state in which each such member has its
principal business offices.

ARTICLE X
CONDITIONS PRECEDENT TO
SELLING GROUP'S OBLIGATION TO CLOSE

The obligations of Selling Group under this Agreement with respect to
the sale of the Assets shall be subject to the fulfillment on or prior to the
Closing of each of the following conditions, any of which may be waived in
writing by Selling Group:

SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties by Purchaser
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing. Purchaser shall have complied with and performed in
all material respects all of the agreements and covenants required by this
Agreement to be performed and complied with by it on or prior to the Closing.
Selling Group shall have been furnished with a certificate of an officer of
Purchaser, dated as of the Closing, certifying to the fulfillment of the
foregoing conditions.

SECTION 10.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to
Selling Group copies of the resolutions of its Board of Directors authorizing
the execution, delivery and performance of this Agreement and all instruments
and documents to be delivered in connection herewith and the transactions
contemplated hereby, duly certified by an authorized officer of Purchaser.

SECTION 10.03. INCUMBENCY CERTIFICATE. Selling Group shall have
received a certificate of a secretary of Purchaser, certifying as to the
genuineness of the signatures of representatives of Purchaser authorized to take
certain actions or execute any certificate, document, instrument or agreement to
be delivered pursuant to this Agreement, which incumbency certificate shall
include the true signatures of such representatives.

SECTION 10.04. OPINION OF COUNSEL TO PURCHASER. Selling Group shall
have been furnished with an opinion of Edwards & Angell, LLP, counsel to
Purchaser, dated as of the Closing and addressed to Selling Group in a form TO
BE MUTUALLY AGREED UPON.

SECTION 10.05. HSR ACT NOTIFICATION. The applicable waiting period and
the extensions thereof shall have expired or have been terminated pursuant to
the HSR Act.

SECTION 10.06. EMPLOYMENT AGREEMENTS. Each of Hoerner,Stucke, Alico and
Mesanovic shall have entered into an Employment Agreement with Purchaser
according to the terms as set

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forth on EXHIBITS 9.10(a), (b), (c) AND (d), respectively (which exhibits shall
be attached hereto prior to the Closing).

ARTICLE XI
CASUALTY LOSSES

In the event that there shall have been suffered between the date
hereof and Closing any casualty loss relating to the Assets that becomes known
to any member of Selling Group, Stockholders will promptly notify Purchaser in
such event. Selling Group shall, at its option, (i) repair, rebuild or replace
the portion of the Assets damaged, destroyed or lost prior to the Closing Date,
or (ii) assign to Purchaser at Closing all claims to insurance proceeds or other
rights of Selling Group against third parties arising from such casualty loss
(the "Claims"); provided, however, that if such insurance proceeds are or will
not be sufficient in Purchaser's reasonable judgment to cover the entire
casualty loss, then Selling Group shall pay the difference at Closing to the
extent any Claim is not assignable; provided further, however, that if the
amount payable by Selling Group would exceed $50,000, then Selling Group may
elect not to pay such difference at Closing, in which event Purchaser may
terminate this Agreement without further liability to either party. Such Claim
may be pursued by Purchaser, for its own account and benefit, in the name of
such Selling Group member.

ARTICLE XII
INDEMNIFICATION

SECTION 12.01. INDEMNIFICATION BY SELLING GROUP. (a) After the Closing,
Selling Group (except for Mesanovic who shall provide such indemnification only
for Losses incurred by Purchaser relating to PIP) agrees on a joint and several
basis to indemnify and to hold Purchaser, its shareholders, officers, directors,
employees and agents harmless from and against and in respect of any Losses by
Purchaser arising from or related to:

(i) Any liability not specifically and expressly assumed
by the Purchaser, including without limitation any Non-Assumed
Liability, whether or not known or asserted at or prior to Closing,
relating to or arising from the ownership, operation, control or sale
of the Business or any of the Assets or any other state of facts which
existed at or prior to Closing;

(ii) Any misrepresentation or breach of warranty in any
representation or warranty of Selling Group in this Agreement, the
Schedules or Exhibits hereto, the Closing Escrow Agreement, the Bill of
Sale, the Assumption Agreement or in any closing certificate delivered
by a Selling Group member to Purchaser pursuant to Article IX hereof;

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(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of a Selling Group member under this Agreement to
be performed on or following the Closing Date;

(iv) All reasonable costs and expenses (including
reasonable attorneys' fees) incurred by Purchaser in connection with
any action, suit, proceeding, demand, assessment or judgment incident
to any of the matters Purchaser is indemnified against by Selling Group
in this Agreement;

(v) Unless reflected on the Balance Sheet of the
Operating Companies, all Losses related to any product liability claim
relating to product sold, shipped, or manufactured by Selling Group
prior to the Closing; and

(vi) Unless reflected on the Balance Sheet of the
Operating Companies, all Losses related to any product warranty claim
relating to product sold, shipped, or manufactured by Selling Group
prior to the Closing.

(b) In addition and subject to the terms of this Article
XII, Selling Group agrees on a joint and several basis to indemnify Purchaser
against and hold it harmless from any and all Losses which Purchaser may incur
by reason of the failure (if any) of Selling Group to comply with the bulk
transfers article of the Uniform Commercial Code of New York and North Carolina.

(c) The indemnification obligations of Selling Group as
provided herein shall only be with respect to indemnification claims made by
Purchaser within eighteen (18) months after the Closing; provided, however, the
indemnification obligations of Selling Group with respect to Losses incurred by
Purchaser relating to:

(i) fraud (which is intentional) or intentional
misrepresentation; or

(ii) a breach of Section 7.15 (Tax Matters)

shall survive until thirty (30) days after the expiration of the applicable
statute of limitations (including any extension thereof); the indemnification
obligations of Selling Group with respect to Losses incurred by Purchaser
relating to a breach of Section 7.12 shall survive for a period of ten (10)
years after the Closing Date; and the indemnification obligations of Selling
Group with respect to Losses incurred by Purchaser relating to a breach of
Section 7.01 shall survive without limitation.

(d) Notwithstanding any of the above, (i) Purchaser shall
only be entitled to payment or reimbursement by Selling Group of its Losses
pursuant to this Section 12.01 if the aggregate amount of all its Losses is at
least $75,000 (which shall not include any Purchase Price Adjustment made
pursuant to Section 5.04), in which event Purchaser shall be entitled to payment
of all Losses; and (ii) Selling Group shall not be required to make payments to
Purchaser pursuant to this Section 12.01 to the extent that the aggregate of all
amounts paid to

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Purchaser shall exceed the sum of $1,000,000, except that there
shall be no limitation on Selling Group's liability to Purchaser for Losses
incurred by Purchaser relating to intentional fraud or misrepresentation, or a
breach of Section 7.01 or 7.15 hereof and the limitation for amounts paid to
Purchaser with respect to Losses incurred arising out of a breach of Section
7.12 shall not exceed the sum of $2,000,000.

SECTION 12.02. INDEMNIFICATION BY PURCHASER. (a) After the Closing,
Purchaser agrees to indemnify and to hold Selling Group, and its directors,
officers, stockholders, employees, representatives and agents harmless from and
against and in respect of any Losses incurred by Selling Group from:

(i) All liabilities and obligations of Purchaser, and all
claims and demands made in respect thereof relating to or arising from,
Purchaser's ownership, operation or control of the Assets or the
Business after the Closing, including on account of the Assumed
Liabilities;

(ii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Purchaser, in this
Agreement, the Schedules or Exhibits hereto, including the Closing
Escrow Agreement, the Assumption Agreement or in any closing
certificate delivered by Purchaser to Selling Group pursuant to Article
X hereof;

(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Purchaser under this Agreement to be performed
on or following the Closing Date; and

(iv) All costs and expenses (including reasonable
attorneys' fees) incurred by Selling Group in connection with any
action, suit, proceeding, demand, assessment or judgment incident to
any of the matters Selling Group is indemnified against by Purchaser in
this Agreement.

(b) The indemnification obligations of Purchaser as provided
herein shall only be with respect to indemnification claims made by Selling
Group within nine (9) months after the Closing.

SECTION 12.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party
claiming indemnification under this Article XII (the "ASSERTING PARTY") must
notify (in writing, in reasonable detail and within a reasonable period of time
after the Asserting Party becomes aware of such claim) the party from which
indemnification is sought (the "DEFENDING PARTY") of the nature and basis of
such claim for indemnification. If such claim relates to a THIRD PARTY CLAIM,
the Defending Party and the Asserting Party shall decide which party will assume
and control the defense of the Third Party Claim at its own expense with counsel
selected by the Defending Party from and after such time as the Defending Party
unconditionally agrees in writing that the Defending Party shall be obligated
under the terms of its indemnity hereunder in connection with such Third Party

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Claim Such agreement shall not be deemed an admission of liability as against
any such third party.

If the Defending Party does agree in writing or assume the defense as
set forth above, the Third Party Claim pursuant to this Section 12.03, the
Asserting Party shall have the right (i) to control the defense thereof and
(ii), if the Asserting Party shall have notified the Defending Party of the
Asserting Party's intention to negotiate a settlement of the Third Party Claim
(at the Defending Party's expense to the extent the matter is determined to be
subject to this indemnification), which notice shall include the material terms
of any proposed settlement in reasonable detail, to settle the Third Party Claim
(at the Defending Party's expense to the extent the matter is determined to be
subject to indemnification hereunder) on terms not materially inconsistent with
those set forth in such notice, unless the Defending Party shall have notified
the Asserting Party in writing of the Defending Party's election to assume
liability for and the defense of the Third Party Claim pursuant to this Section
12.03 within ten days after receipt of such notice, and the Defending Party
promptly thereafter shall have taken appropriate action to implement such
defense. The Asserting Party shall not be entitled to settle any such Third
Party Claim pursuant to the preceding sentence unless such settlement includes
an unconditional release of the Defending Party by the Third party claimant on
account thereof, PROVIDED that such requirement shall be deemed waived to the
extent that the Defending Party does not undertake to provide and promptly
execute and, concurrently with delivery of any such release, deliver a
corresponding release of the third party claimant with respect to such Third
Party Claim. The Asserting Party and the Defending Party shall use all
reasonable efforts to cooperate fully with respect to the defense and settlement
of any Third Party Claim covered by this Article XII.

SECTION 12.04. CLOSING ESCROW AGREEMENT. The obligation of Selling
Group to indemnify Purchaser for Losses arising from or related to the matters
described in Section 12.01 shall be secured by the amounts held pursuant to the
Closing Escrow Agreement, the form of which is set forth in EXHIBIT 5.02.

ARTICLE XIII
CONFIDENTIALITY, PRESS RELEASES

SECTION 13.01. CONFIDENTIALITY. Each party shall treat the confidential
information of the other with the same degree of confidentiality and security as
it does its own confidential information.

SECTION 13.02. PRESS RELEASES. No press release or public disclosure,
either written or oral, of the existence or terms of this Agreement shall be
made by a Selling Group member without the prior written consent of Purchaser.
To the extent consistent with federal or state securities laws, Purchaser shall
provide Selling Group with a draft of its proposed Press Release concerning any
aspect of this Agreement and the transaction contemplated hereby for comment by
Selling Group.

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SECTION 13.03. REQUIRED DISCLOSURES. This Article XIII shall not be
construed to prohibit any party from making any disclosures to any governmental
authority that it is required to make by law or from filing this Agreement with,
or disclosing the terms of this Agreement to, any institutional lender to such
party, or to prohibit a Selling Group member, Purchaser or any of their
affiliates from disclosing to its investors, partners, accountants, auditors,
attorneys, parent company and broker/dealers such terms of this transaction as
are customarily disclosed to them in connection with the sale or acquisition of
a business; PROVIDED, HOWEVER, that any such party shall be informed of the
confidential nature of such information and shall agree to keep such information
confidential; and PROVIDED, HOWEVER, that each party shall provide to the other
reasonable advance copies of any public release except where the provision of
such advance notice is not permissible.

ARTICLE XIV
BROKERS' FEES

Each party represents and warrants to the other that it shall be solely
responsible for the payment of any fee or commission due to any broker or finder
it has engaged with respect to this transaction and the other party hereto shall
be indemnified for any liability with respect to such payment pursuant to
Article XII of this Agreement.

ARTICLE XV
COVENANTS OF SELLING GROUP

SECTION 15.01. CONDUCT OF BUSINESS. From the date hereof to the Closing
Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by the Purchaser in writing, each Selling Group member
shall:

(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore conducted, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end that its goodwill and going business shall be in all material
respects unimpaired following the Closing;

(b) pay accounts payable and other obligations of the Business
when they become due and payable in the ordinary course of business consistent
with prior practice;

(c) perform in all material respects all of its obligations
under all Assumed Contracts and other agreements and instruments relating to or
affecting the Business or the Assets, and comply in all material respects with
all laws applicable to it, the Assets or the Business;

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<PAGE> 37

(d) not enter into or assume any material agreement, contract
or instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof outside
of the normal course of business;

(e) except as set forth on SCHEDULE 15.01(e), not grant (or
commit to grant) any increase in the compensation (including incentive or bonus
compensation) of any employee employed in the operation of the Business or
institute, adopt or amend (or commit to institute, adopt or amend) any
compensation or benefit plan, policy, program or arrangement or collective
bargaining agreement applicable to any such employee. (Set forth on Schedule
15.01(e) (to be provided no later than Closing) is a comparison of Compensation
paid to each employee of Selling Group as of August 31, 1998 with such
compensation as of February 28, 1999); and

(f) except as set forth on Schedule 15.01(f), not take any
action or omit to take any action, which action or omission would result in a
breach of any of the representations and warranties set forth in Section
7.16(c);

(g) expect as set forth on Schedule 15.01(g), make no
dividends or distributions from PFG to Hoerner, Stucke or any entity owned or
controlled by Hoerner or Stucke except for normal and customary salary payments
in the ordinary course of business, or any dividends necessary to make required
income tax payments of Hoerner or Stucke because of their position as
stockholders of "S" Corporations: PFG and SCHAS. For any such dividends or
distributions paid to Hoerner and/or Stucke for tax payments, a certification
shall be provided to Purchaser by Skrobacz & Company that such dividend was paid
only for the purpose of such tax payment. To the extent that any other such
withdrawals, dividends or disbursements are made, the Selling Group shall
replenish the Net Worth or a deduction to the Purchase Price of such amount
shall be made.

SECTION 15.02. NO SOLICITATION. During the period beginning upon
execution of this Agreement up to and including the Closing, no Selling Group
member or any Person acting on its or his behalf shall (i) solicit or encourage
any inquiries or proposals for, or enter into any discussions with respect to,
the acquisition of any properties and assets held for use in connection with,
necessary for the conduct of, or otherwise material to, the Business or (ii)
furnish or cause to be furnished any non-public information concerning the
Business to any Person (other than Purchaser and its agents and
representatives), other than in the ordinary course of business or pursuant to
law and after prior written notice to Purchaser. No Selling Group member shall
sell, transfer or otherwise dispose of, grant any option or proxy to any Person
with respect to, create any Lien upon, or transfer any interest in, any Asset,
other than in the ordinary course of business and consistent with this
Agreement.

SECTION 15.03. ACCESS AND INFORMATION.

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(a) So long as this Agreement remains in effect, each Selling Group
member will give Purchaser and its Advisors all reasonable access during normal
business hours to, and furnish them with all documents, records, work papers and
information with respect to, all of such Person's properties, assets, books,
contracts, commitments, reports and records relating to the Business. In
addition, each Selling Group member will permit Purchaser and its Advisors
reasonable access to such personnel of Selling Group during normal business
hours as may be necessary or useful to Purchaser, provided that access shall
have been approved by each Selling Group member, in its review of the
properties, assets and business affairs of the Business and the above-mentioned
documents, records and information. Selling Group will keep Purchaser generally
informed as to the affairs of the Business.

(b) Selling Group will cause each Selling Group member to transfer to
Purchaser at the Closing all books and records relating to the Business
although, to the extent necessary for any Selling Group member to respond to any
legal inquiry or deal with any tax matter, Purchaser shall, on and after the
Closing, allow such Selling Group member reasonable access to the necessary
books and records for such purpose, which right shall survive the Closing for a
period of seven years.

SECTION 15.04. FINANCIAL STATEMENTS. Until the Closing, on or before
the 21st day of each month, each Selling Group member shall deliver to Purchaser
monthly trial balances of the Business (without adjustment) as at and for the
monthly period ending the last day of the preceding month (the "SUBSEQUENT
MONTHLY TRIAL BALANCES"), which shall include a balance sheet and statement of
income. At the time that the Subsequent Monthly Trial Balances are delivered to
Purchaser, each Selling Group member shall by such delivery be deemed to have
made the representations and warranties to the Purchaser with respect to such
Subsequent Monthly Trial Balances set forth in Section 7.16.

SECTION 15.05. USE OF BUSINESS NAME. Other than in connection with
their employment with Purchaser, after the Closing, no Selling Group member
will, directly or indirectly, use or do business, or assist any third party in
using or doing business, under the names and marks "Perfect Fit Glove", "SCHAS
Circular Industries", "X-Pert Industrial Products", "Perfect Industrial
Products", "Yadkin Leasing Company", (or any other name confusingly similar to
such name and mark).

Section 15.06. CHANGE OF SELLING GROUP NAMES. Immediately after the
Closing, Selling Group shall change the name of PFG, SCHAS, X-Pert, PIP and
Yadkin to MERIAWNY, INC., MATTWNY, INC., JOEYWNY, INC., ANDREAWNY, INC. and
MICHAELWNY, INC., respectively.

SECTION 15.07. BANK ACCOUNTS. At least two weeks prior to the Closing
each Selling Group member shall deliver to Purchaser a list setting forth all
banks and other financial institutions with which Selling Group maintains an
account or a safe deposit box, showing the account numbers of all such accounts
and the names of the persons authorized as signatories thereon or to act or deal
in connection therewith. Selling Group shall cooperate with Purchaser

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<PAGE> 39

and shall execute all necessary documentation to effect fully any changes
desired, as of the Closing, by Purchaser in the persons authorized as
signatories thereon or to act or deal in connection therewith.

SECTION 15.08. PAYMENT TO ALICO. At the Closing, Selling Group shall
make a payment to Alico of $800,000 (less applicable withholdings) in connection
with his execution of an employment agreement with Purchaser.

SECTION 15.09. POST-CLOSING SCHEDULES. Selling Group hereby agrees to
deliver the Schedules called for in Sections 7.16(a)(iii) and (iv) on a timely
basis and Selling Group hereby agrees to provide a representation at the time of
such delivery as to the financial statements delivered pursuant to Section
7.16(a)(iii) that is comparable to the representations made by Selling Group in
Section 7.16(b) with respect to the financial statements delivered pursuant to
Section 7.16(a)(i) and (ii).

ARTICLE XVI
MISCELLANEOUS

SECTION 16.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time to
time after the Closing, each party shall, if requested by another party, make,
execute and deliver such additional assignments, bills of sale, deeds and other
instruments, as may be reasonably necessary or proper to carry out the specific
provisions of this Agreement, including transfer to Purchaser of all of Selling
Group's right, title and interest in and to the Assets. Such efforts and
assistance shall be at the cost of the requesting party.

(b) Anything in this Agreement to the contrary
notwithstanding, Selling Group is not obligated to sell, assign, transfer or
convey to Purchaser any of its Interests without first obtaining all necessary
approvals, consents or waivers. To the extent any of the approvals, consents or
waivers required pursuant to Section 9.04 have not been obtained by Selling
Group as of the Closing and Purchaser elects to proceed with the Closing,
Selling Group shall, for the remaining term of such Interest, use its
commercially reasonable efforts to (i) obtain the consent of any such third
party; (ii) cooperate with Purchaser in any reasonable and lawful arrangements
designed to provide the benefits (including, without limitation, the payment to
Purchaser of any monies received by a Selling Group member in connection
therewith) of such Interest to Purchaser so long as Purchaser performs all
obligations with respect to the Interest (and the payment of all expenses in
connection therewith); and (iii) enforce, at the request of Purchaser and at the
expense and for the account of Purchaser, any rights of Selling Group arising
from such Interest against such issuer thereof or the other party or parties
thereto (including the right to elect to terminate any such Interest in
accordance with the terms thereof upon the request of Purchaser); PROVIDED,
HOWEVER, that neither Purchaser nor Selling Group shall be obligated to pay any
consideration or other sums therefor (except for filing fees and other ordinary
administrative charges and except as set forth above) to the third party, or to
commence any proceedings against the third party, from whom such approval,
consent or waiver is requested.

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SECTION 16.02. NOTICES. All notices and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if delivered, sent by recognized overnight delivery service
or registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:

(i) If to Purchaser:

Bacou USA Safety, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: Winfield W. Major, Esq.

with a required copy to:

Edwards & Angell, LLP
2800 BankBoston Plaza
Providence, Rhode Island 02903
Attention: Richard M.C. Glenn, III Esq.

(ii) If to Selling Group Member:

Joseph P. Hoerner
5555 Armor Duells Road
Orchard Park, NY 14127

and

Frank A. Stucke
36 Pine Tree Lane
West Seneca, NY 14224

with a required copy to:

Phillips Lytle Hitchcock Blaine & Huber LLP
3400 Marine Midland Center
Buffalo, NY 14203
Attention: James W. Smyton, Esq.

Notices delivered personally shall be effective upon delivery against
receipt. Notices delivered by overnight delivery service shall be effective when
received. Notices delivered by registered or certified mail shall be effective
on the date set forth on the receipt of registered or certified mail, or 72
hours after mailing, whichever is earlier.

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SECTION 16.03. EXPENSES. Each party shall bear its own expenses and
costs incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby, except that Purchaser has
agreed to assume and pay on the Closing Date up to $75,000 in reasonable
professional fees incurred by Selling Group in connection with such transactions
as are set forth on the Closing Date Financial Statements or as set forth on
Schedule 3.01. Purchaser shall pay Skrobacz & Company directly for the
reasonable cost of preparing the financial statements of Selling Group pursuant
to Section 7.16(iii) and (iv).

SECTION 16.04. TRANSFER TAXES. Selling Group shall be liable to pay the
transfer taxes imposed in connection with sale of the Owned Real Property to
Purchaser hereunder. Purchaser shall bear all use, sales and transfer taxes, if
any, imposed in connection with the sale and delivery of the Assets (other than
the Owned Real Property) acquired by Purchaser under this Agreement.
Notwithstanding anything else to the contrary set forth in this Section 16.04,
Purchaser shall in no event be responsible in any manner for the payment of any
Taxes on any income or gain which any Selling Group member may realize as a
result of the sale of the Assets or otherwise related to the transactions
contemplated by this Agreement.

SECTION 16.05. COLLECTION PROCEDURES. From and after the Closing,
Purchaser shall have the right and authority, at its expense, to collect for its
account all items to which it is entitled as provided in this Agreement and to
endorse with the name of the appropriate Selling Group member any checks or
drafts received on account of any such items.

SECTION 16.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event a Selling Group member shall fail to perform any
of its material obligations under the terms of this Agreement, money damages
alone will not be adequate to compensate Purchaser. The parties, therefore,
agree and acknowledge that in the event a Selling Group member fails to perform
such obligation under this Agreement prior to Closing, Purchaser shall be
entitled, in addition to any action for monetary damages and in addition to any
other rights and remedies on account of such failure, to specific performance of
the terms of this Agreement and of the covenants and obligations hereunder.

SECTION 16.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without
application of principles of conflicts of law).

SECTION 16.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (by merger or other operation of law or otherwise) without the
prior written consent of the other party, which consent will not be unreasonably
withheld, except that Purchaser shall have the right to assign its rights,
interests and obligations under this Agreement after the Closing to any
affiliate thereof or to any institutional lender, provided that Purchaser shall
remain liable for its obligations hereunder.

SECTION 16.09. SUCCESSORS AND ASSIGNS. All agreements made and entered
into in connection with this transaction shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns.

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SECTION 16.10. AMENDMENTS; WAIVERS. No alteration, modification or
change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any such
right, power or privilege. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default. No single or partial
exercise of any such right, power or privilege shall preclude the further or
full exercise thereof.

SECTION 16.11. ENTIRE AGREEMENT. This Agreement merges all previous
negotiations and agreements between the parties hereto, either verbal or
written, and constitutes the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement.

SECTION 16.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be an original, but all
of which together shall constitute one agreement. Facsimile signatures shall be
deemed original signatures.

SECTION 16.13. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law, but only
as long as the continued validity, legality and enforceability of such provision
or application does not materially (a) alter the terms of this Agreement, (b)
diminish the benefits of this Agreement or (c) increase the burdens of this
Agreement, for any person.

SECTION 16.14. SECTION HEADINGS. The Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.

SECTION 16.15. INTERPRETATION. As both parties have participated in the
drafting of this Agreement, any ambiguity shall not be construed against either
party as the drafter.

SECTION 16.16. FURTHER ASSURANCES. (a) For a period of twelve (12)
months after Closing, Selling Group agrees to provide to Purchaser from time to
time any information that Selling Group possesses with respect to the operation
of the Business and Assets prior to the Closing which the Purchaser reasonably
requests in the future in connection with the Purchaser's financing efforts now
or in the future.

(b) With respect to the 401(k) Plan and the Profit Sharing Plans, it is
Purchaser's intention to elect, within ninety (90) days after Closing, after
thorough review of each such Plans, and after consultation with Selling Group,
and subject to legal compliance, either to cause the Operating Companies to
terminate each Plan and distribute the assets thereof to the Participants
therein, or to allow the Participants to rollover their assets in such Plan into
Purchaser's retirement plan.

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(c) Upon the Closing, all employees of the Operating Companies shall be
offered employment with Purchaser in positions comparable to their current
positions as employees of the applicable division or subsidiary of Purchaser.
Except for Messrs. Hoerner, Stucke, Mesanovic and Alico, during the terms of
their employment contracts, all such employees will be employees at will of
Purchaser. The employees of the Operating Companies who elect to accept
Purchaser's offer of employment will retain their years of seniority with the
Operating Companies in their employment with Purchaser for purposes of vacation,
health benefits and retirement plan eligibility and vesting. Notwithstanding the
above, Purchaser makes no commitment of future employment to any employee of the
Operating Companies nor is Purchaser making any commitment that it will not make
future changes in job assignments, employment structure or compensation. Within
12 months after Closing, Purchaser shall have completed a review of Selling
Group's benefit and welfare plans and shall convert such plans to Purchaser's
plans. In such process, Purchaser shall make its best efforts to retain the
general level of benefits of Selling Group employees.

SECTION 16.17. THIRD PARTIES. Nothing herein, expressed or implied, is
intended to or shall confer on any person other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

SECTION 16.18. MEDIATION. In the event of any dispute between the
parties hereto prior to any such party initiating Arbitration proceedings
pursuant to Section 16.19, the parties shall endeavor to mediate such dispute
for a period of 60 days. To assist in such mediation, the parties may elect to
retain the services of a professional mediator experienced in Alternative
Dispute Resolution among commercial parties, the costs of which shall be borne
equally by the parties to the dispute. If, at the conclusion of such mediation
period (as extended by mutual agreement of the parties), the dispute has not
been resolved to the mutual satisfaction of the parties, then any party may
initiate Arbitration proceedings, as appropriate.

SECTION 16.19. ARBITRATION. In the event that Mediation proceedings
shall not have resulted in the settlement of disputes among the parties, the
parties shall initiate Arbitration proceedings. The parties shall select one (1)
arbitrator in accordance with the laws of New York and the rules, regulations
and procedures of the American Arbitration Association (the "AAA") except with
respect to the selection of the arbitrator which shall be as provided in this
Section 16.19. The Purchaser and the Selling Group agree to appoint the
arbitrator within thirty (30) days of receipt of notice from one party to the
other parties setting forth a description of the claim and dispute and
requesting that the arbitrator be appointed. If the parties fail to select an
arbitrator within such thirty-day period, any party hereto may instruct the AAA
to appoint an arbitrator. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The site of the arbitration
shall be New York, New York. The arbitrators shall award reimbursement of
attorneys' fees and other costs of arbitration to the prevailing party, in such
manner as the arbitrators shall deem appropriate. In addition, the losing party
shall reimburse the prevailing party for attorneys' fees and disbursements and
court costs incurred by the prevailing party in successfully seeking any
preliminary equitable relief or judicially enforcing any arbitration award.

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SECTION 16.20. TERMINATION. At any time prior to the Closing, this
Agreement may be terminated (a) by the written consent of Selling Group and
Purchaser, (b) by Purchaser if there has been a material misrepresentation,
breach of warranty or breach of covenant by any Selling Group member in its
representations, warranties and covenants set forth herein, (c) by all Selling
Group members if there has been a material misrepresentation, breach of warranty
or breach of covenant by Purchaser in its representations, warranties and
covenants set forth herein, (d) by Purchaser if the conditions stated in Article
IX have not been satisfied at or prior to the Closing Date or (e) by Selling
Group if the conditions stated in Article X have not been satisfied at or prior
to the Closing Date.

IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Purchase Agreement to be executed by its duly authorized representative as of
the day and year first above written.

SELLING GROUP:

PERFECT FIT GLOVE CO., INC.

By: /s/ Joseph P. Hoerner
---------------------------------------
Joseph P. Hoerner, President

By: /s/ Frank A. Stucke
---------------------------------------
Frank A. Stucke, Vice President

SCHAS CIRCULAR INDUSTRIES, INC.

By: /s/ Joseph P. Hoerner
---------------------------------------
Joseph P. Hoerner, President

By: /s/ Frank A. Stucke
---------------------------------------
Frank A. Stucke, Vice President

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<PAGE> 45

X-PERT INDUSTRIAL PRODUCTS LIMITED

By: /s/ Frank a Stucke
---------------------------------------
Frank A. Stucke, President

By: /s/ Joseph P. Hoerner
---------------------------------------
Joseph P. Hoerner, Vice President

PERFECT INDUSTRIAL PRODUCTS, INC.

By: /s/ Edward Mesanovic
---------------------------------------
Edward Mesanovic, President and Secretary

YADKIN LEASING COMPANY, INC.

By: /s/ Joseph P. Hoerner
---------------------------------------
President

By: /s/ Frank A. Stucke
---------------------------------------
Vice President

-35-
<PAGE> 46

STOCKHOLDERS:

/s/ Frank A. Stucke
-------------------------------------------
Frank A. Stucke, Individually

/s/ Joseph P. Hoerner
-------------------------------------------
Joseph P. Hoerner, Individually

/s/ Edward Mesanovic
-------------------------------------------
Edward Mesanovic, Individually
(with respect to his interest in PIP only)

PURCHASER:

BACOU USA SAFETY, INC.

By: /s/ Walter Stepan
---------------------------------------
Walter Stepan, Chairman, President and
Chief Executive Officer

By: /s/ Philip B. Barr
---------------------------------------
Philip B. Barr, Vice Chairman,
Treasurer and Secretary

-36-
<PAGE> 47

DEFINED TERMS

"ADVISORS" means the lenders, investors, accountants, counsel, consultants,
employees and agents of each party to this Agreement.

"AUTHORIZATIONS" shall include all licenses, consents, permits, approvals and
authorizations of public and governmental bodies.

"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.).

"CODE" means the Internal Revenue Code of 1986, as amended.

"EBITDA" means the earnings of the Operating Companies before adjustments for
interest, taxes, depreciation and amortization.

"ENVIRONMENTAL LAWS" means each of the following statutes and all regulations
promulgated thereunder as well as any and all comparable State statutes and
regulations in the form in which all such statutes and regulations exist on the
date that this Agreement is executed (as updated to the Closing Date): CERCLA;
the Federal Water Pollution Control Act, 33 U.S.C. ss. 1251, et seq.; the Clean
Air Act, 42 U.S.C. ss. 7401 et seq.; RCRA; the Safe Drinking Water Act, 42
U.S.C. ss. 3300(f), et seq.; and the Toxic Substances Control Act, 15 U.S.C. ss.
2601, et seq.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"GOVERNMENT DOCUMENT" means any governmental approval, instrument, contract,
lease, permit or other agreement or arrangement.

"HAZARDOUS SUBSTANCE" means any substance which, as of the date of this
Agreement, is listed as hazardous or toxic in the regulations implementing
CERCLA or RCRA or listed as a hazardous substance under any applicable state
environmental laws, or any substance which has been determined by regulation,
ruling or otherwise by any agency or court to be a hazardous or toxic substance
regulated under federal or state law, and shall include petroleum and petroleum
products.

"INTELLECTUAL PROPERTY" means all of the following, along with all related
income, royalties, damages and payments, if any, due or payable as of the
Closing Date or thereafter: inventions, trademarks, service marks, trade dress,
trade names, patents, logos and registrations and applications for a
registration thereof together with all of the goodwill associated therewith,
copyrights and copyrightable works and registrations and applications for the
registration thereof, computer software, data, data bases, documentation
thereof, trade secrets and other confidential

-37-

<PAGE> 48
information, other intellectual property rights and intangible embodiments
thereof (in whatever form or medium); together with all books, records, drawings
and other indicia.

"KNOWLEDGE" with respect to the Selling Group means the actual knowledge of any
officer or managerial employee regarding that subject matter which is the usual
and customary responsibility of such person, as the case may be, in each case
after due inquiry and investigation.

"LIENS" means any and all security interests, liens, pledges, charges, rights of
third parties and encumbrances of every kind.

"LOSSES" means any losses, damages, costs, expenses (including costs of
investigations and reasonable attorney fees), suits, demands, judgments and
diminutions in value suffered or incurred by any Indemnified Party. All Losses
shall be computed net of the Present Value (at Purchaser's then marginal
borrowing cost) of the actual income tax effect (if any) resulting therefrom to
Purchaser and of any insurance coverage with respect thereto.

"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any effect that is,
or series of related effects that are, in the aggregate, materially adverse to
the business, assets, properties, condition (financial or otherwise) or
prospects of such Person.

"NET WORTH" means net worth of Selling Group as determined in accordance with
GAAP as consistently applied with past practices, less the value of any Excluded
Asset and any Non-Assumed Liability.

"OWNED REAL PROPERTY" means all real property owned by Selling Group on or prior
to the date hereof which is set forth on SCHEDULE 2.01.

"PERMITTED LIENS" means (i) any Lien for taxes and assessments not yet past due
or otherwise being contested in good faith and for which appropriate reserves
have been established and reflected on the Closing Date Balance Sheet (as such
term is defined in Section 5.04), (ii) any Lien affecting real property that
does not interfere with the use by Selling Group of the property subject thereto
or affected thereby (including any easements, rights of way, restrictions,
installations of public utilities, minor title imperfections and restrictions,
reservations in land patents, zoning ordinances or other similar Liens), and
(iii) as to leaseholds, interests of the lessors thereof and Liens affecting the
interests of such lessors.

-38-

<PAGE> 49

"PERSON" means any individual, partnership, corporation, person or entity.

"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. ss. 6901, et seq.).

"REAL PROPERTY LAWS" means all applicable laws,, zoning or use ordinances,
rules, regulations and legal requirements.

TAX" or "TAXES" means all taxes, charges, fees, levies, imposts and other
assessments including all income, sales, use, goods and services, value added,
capital, capital gains, alternative net worth, transfer, profits, withholding,
payroll, employer health, excise, real property and personal property taxes, and
any other taxes, customs duties, stamp duties, fees, assessments or similar
charges in the nature of a tax, together with any interest, fines and penalties
imposed by any governmental authority (including federal, state, provincial,
municipal and foreign governmental authorities), and whether disputed or not.

"THIRD PARTY CLAIM" means a claim, suit, litigation or other action by a third
party against the Asserting Party or any fixed or contingent liability to a
third party.

-39-

<PAGE> 1

EXHIBIT 10.7.2

Hand Delivered
- --------------
Personal and Confidential
- -------------------------

May 19, 1998

Mr. John Dean, President
Howard Leight Industries division
of Bacou USA Safety, Inc.
7828 Waterville Road
San Diego, CA 92173

Dear John:

When countersigned by you in the space provided below, this letter will amend
your Employment Agreement dated February 27, 1998 with Bacou USA Safety, Inc.
(the "Agreement"). This Amendment is provided in fulfillment of your request on
Friday, April 24, 1998 at the offices of Bacou USA, Inc. in Smithfield, Rhode
Island. Effective upon execution of this letter agreement by you, the Agreement
is amended as follows:

1. You resign the office of President and Chief Operating Officer of Bacou USA
Safety, Inc. ("Safety"), continuing with the office of President of the Howard
Leight Industries division of Safety until the end of your term of employment.
Your term of employment shall end on December 31, 1998, subject to the right of
Safety to place you on a paid leave of absence at any time after May 19, 1998.

2. Notwithstanding the termination of your employment effective December 31,
1998, Safety agrees to pay you salary at the rate of $400,000 per annum at
normal payroll intervals and two bonuses, one in the amount of $416,666.67 by
the end of February 1999 and another in the amount of $500,000 by the end of
February 2000. In consideration of the payments made by Bacou as set forth
above, you agree (a) that you will be bound by and comply with Sections 6, 7, 8
and 9 of the Agreement as if you were an employee of Safety until February 28,
2000; and (b) you will reasonably cooperate in making a smooth transition to a
new division President of our choice.

3. Payment of salary and bonus as provided in the preceding paragraph shall
fulfill all monetary obligations of Bacou USA, Inc. and its subsidiaries and
affiliates, including but not limited to those arising under the Agreement, and
shall serve as full, complete and final

<PAGE> 2
Mr. John Dean
May 19, 1998
Page 2

settlement of all claims for severance benefits, vacation pay, fringe benefits
or other payments of any kind (except you shall remain entitled to the
reimbursement of reasonable and necessary business travel expenses incurred
prior to the end of the Term).

4. In all other respects, the Agreement remains in full force and effect.

Sincerely,

/s/ Walter Stepan /s/ Philip B. Barr
- ---------------------------------- ------------------------------------
Walter Stepan Philip B. Barr
Vice Chairman, President and CEO Executive V.P. and CFO,
Bacou USA, Inc. and Chairman and Bacou USA, Inc. and Vice
CEO, Bacou USA Safety, Inc. Chairman, Secretary and
Treasurer, Bacou USA Safety, Inc.

ACCEPTED AND AGREED:

/s/ John Dean
- ----------------------------------
John Dean

<PAGE> 1

EXHIBIT 10.8.3

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT made as of the 1st day of
January, 1999 by and between Thomas W. Klein (the "Executive"), currently
residing at 1057 Abeto Court, Chula Vista, California 91910, and Bacou USA
Safety, Inc., a corporation organized and existing under the laws of the State
of Delaware (the "Company"), with its principal offices at 10 Thurber Boulevard,
Smithfield, Rhode Island 02917.

W I T N E S S E T H:

WHEREAS, the Executive and the Company entered into that certain
Employment Agreement as of the 3rd day of June, 1998 (the "Employment
Agreement"); and

WHEREAS, the Executive and the Company entered into that certain First
Amendment to Employment Agreement (the "First Amendment") as of the 3rd day of
August, 1998; and

WHEREAS, the Executive and the Company wish to amend the terms of the
Employment Agreement and the First Amendment, effective as of the date hereof.

NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Executive hereby agree as follows:

1. Section 2 of the Employment Agreement (as amended by the First
Amendment) is hereby revised to read as follows:

2. PERIOD OF EMPLOYMENT. The Company shall employ the
Executive, and the Executive shall perform the duties assigned
him by the Company, for a term beginning January 1, 1999 to
December 31, 2001 (the "Three-Year Term"). On January 1, 2002,
and at the end of each year thereafter, the period of
employment shall be automatically extended, without further
action by either party, for successive one-year periods (each,
a "Renewal Term") unless at least six months prior to the end
of any Term either party shall have served written notice on
the other of its election to allow this Agreement to terminate
at the end of such Term.

<PAGE> 2
The Three-Year Term and any Renewal Term are sometimes
collectively referred to herein as the "Term".

If either party notifies the other party that he or
it shall not extend the period of employment beyond the end of
the Term, the Company may, at its option, decide that the
Executive shall take a leave-of-absence for part or all of the
remaining time of his employment, continuing to receive all
compensation as if actively working.

2. Section 3 of the Employment Agreement is hereby amended by
adding a new subsection (v) thereto, which shall read as
follows:

(v) The Executive's employment being terminated by the
Company without cause during the Three-Year Term. If
the Board of Directors of the Company shall determine
that the Executive's employment shall be terminated
without cause (as "cause" is defined in Section 3(iv)
hereof) prior to the end of the Three-Year Term, the
Executive's employment shall terminate as of such
effective date. In such event, the Company shall
continue to pay the Executive for the remainder of
the Three-Year Term at a rate of 50% of his Base
Salary (as defined in Section 4(a)) then in effect.

3. Section 3 of the Employment Agreement is further amended by
adding a new subsection (vi) thereto, which shall read as
follows:

(vi) The Executive shall voluntarily terminate his
employment during the Three-Year Term. If the
Executive shall terminate his employment voluntarily,
then he shall pay the Company for the remainder of
the Three-Year Term at a rate of 25% of his Base
Salary then in effect.

4. Section 4(a) of the Employment Agreement (as amended by the
First Amendment) is hereby amended by deleting the term "Two
Hundred Twenty Thousand Dollars ($220,000.00)" and inserting
"Two Hundred Thirty Thousand Dollars ($230,000)" in lieu
thereof.

In all other respects, the Employment Agreement (as amended by the
First Amendment) shall remain in full force and effect.

<PAGE> 3

IN WITNESS WHEREOF, the Executive and the Company have duly executed
this Second Amendment to Employment Agreement as of the day and year first above
written.

BACOU USA SAFETY, INC.

By: /s/ Walter Stepan /s/ Philip B. Barr
Walter Stepan Philip B. Barr
Chairman, President and CEO Vice Chairman, Secretary & Treasurer

EXECUTIVE:

/s/ Thomas W. Klein
Thomas W. Klein

<PAGE> 1

EXHIBIT 10.9
-------------

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of this 1st day of February, 1999, by and between
Alan H. Bennett ("Executive"), currently residing at 19380 Soda Springs Drive,
Bend, Oregon 97702, and Bacou USA Safety, Inc. (the "Company"), which is a
wholly owned subsidiary of Bacou USA, Inc. ("Bacou"), both being corporations
organized under the laws of Delaware and having their principal offices at 10
Thurber Boulevard, Smithfield, RI 02917.

W I T N E S S E T H :

WHEREAS, Company wishes to secure the services of Executive as President
of its Uvex Safety division (the "Uvex Division") for the period provided in
this Agreement; and

WHEREAS, Executive is willing to enter into this Agreement for such
period and on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual promises herein contained,
Company and Executive hereby agree as follows:

1. EMPLOYMENT. During the period of employment set forth in Section 2 of
this Agreement, Company shall employ Executive, and Executive shall serve as
President of the Uvex Division, reporting to the President and Chief Executive
Officer of the Company. Executive shall promptly relocate his permanent
residence to the Smithfield, Rhode Island area. 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 the Company. Ancillary employment including
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 or his designee ("Bacou CEO"). Executive also agrees that he
will not engage in any other business activities without the prior approval of
the Bacou 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 Bacou CEO. The
Executive represents and warrants to Company that he is now under no contract or
agreement nor will he execute any contract or agreement that will in any manner
interfere, conflict with or prevent him from performing his duties under the

<PAGE> 2

terms and conditions of this Agreement, recognizing that his performance
hereunder will require the devotion of his full time and attention during and
beyond regular business hours during the Term (as hereinafter defined),
including extensive travel.

2. PERIOD OF EMPLOYMENT. The Executive's employment under this
Agreement shall initially cover the period beginning February 1, 1999 to June
30, 2000 (the "Initial Term"). On July 1, 2000, and at July 1 of each year
thereafter, the period of employment shall be automatically extended, without
further action by either party, for successive one year periods ending June 30
of the following year (each a "Renewal Term") unless at least six months prior
to the end of any Term (i.e., by December 31 of any year) either party shall
have served written notice on the other of its election to allow this Agreement
to terminate at the end of its current Term. The Initial Term and any Renewal
Terms are hereinafter sometimes collectively referred to as the "Term."

If either party notifies the other party that it shall not
extend the period of employment, Company may, at its option, decide that the
Executive shall take a leave-of-absence for part or all of the remaining time of
his employment, continuing to receive all compensation as if actively working.

3. TERMINATION. The period of employment shall be terminated upon
the first to occur of the following:

(i) The expiration of the period of employment pursuant to Section 2
of this agreement.

(ii) The Executive's death.

(iii) The Executive becoming permanently disabled. Permanent
disability shall mean physical or mental incapacity of a nature
which prevents Executive from performing his duties under this
Agreement for a period of more than six months in any twelve
month period.

(iv) The Executive's employment being terminated by Company for
cause. Termination for cause shall mean termination by action of
the Board of Directors of Company because of any of the
following: (a) the willful failure of Executive to perform his
duties and obligations under this Agreement (including but not
limited to his obligation to promptly relocate his permanent
residence to the Smithfield, Rhode Island area); (b) the failure
to abide by, or to execute in a reasonable and responsible
manner, the policies and procedures of the Company as in effect
from time to time; (c) gross negligence in the performance of
his duties under this Agreement; (d) the

-2-
<PAGE> 3

commission by Executive of a felony; (e) engaging in any
activity that is competitive with the business of the Company;
or (f) engaging in fraudulent, unethical or dishonest
activities.

4. COMPENSATION AND BENEFITS.

(a) The Executive shall receive regular compensation (the
"Base Salary") at the initial rate of Two Hundred Fifty Thousand Dollars
($250,000.00) per annum during 1999. The Base Salary shall be payable in arrears
less the usual payroll deductions at the same times and in the same manner as
salaries paid to other employees of the Company. The Base Salary prevailing at
any time shall be reviewed for a possible increase on an annual basis beginning
in January 2000.

(b) In addition to the Base Salary, the Executive shall be
entitled to receive annual incentive compensation payments ("Incentive
Compensation") at such times and in such amounts as may be determined pursuant
to the Bonus Plan for Executives of subsidiaries of Bacou USA, Inc., as in
effect for the applicable year (the "Company Plan"; a copy of the Company Plan
for 1998 and 1999 is attached to this Agreement as Exhibit B); provided,
however, that the minimum amount of Incentive Compensation payable for 1999
shall be forty percent (40%) of the Base Salary paid to Executive in 1999.
Executive acknowledges that, by agreeing to participate in the Company Plan he
thereby waives any rights to participate in any other incentive compensation
plan of the Company.

(c) Incentive Compensation shall be paid by Company for each
fiscal year within ten (10) days after a decision is made by the Board of
Directors of Company as to the amount of such Incentive Compensation, but in any
event no later than the earlier of the annual meeting of the Board of Directors
of the Company or February 28 following the fiscal year for which the Incentive
Compensation is paid.

(d) The Executive shall be entitled to participate in any
stock option plan which Bacou USA, Inc. may adopt for Company at levels to be
determined by the Board of Directors of Company in their sole discretion. In
connection with the execution of this Agreement and subject to the execution of
the Stock Option Notice and Agreement attached hereto as Exhibit C, Executive
shall be granted options to purchase fifteen thousand (15,000) shares of common
stock of Bacou at a per share price equal to the closing price on the New York
Stock Exchange on February 1, 1999, subject to vesting 25 percent on August 1,
1999 and 25 percent each on the first through third anniversaries of the date of
this Agreement.

-3-
<PAGE> 4

(e) The Executive shall be entitled to participate in all
savings, thrift, retirement or pension, short term and long term disability,
health and accident, Blue Cross/Blue Shield, Major Medical or other
hospitalization, holiday, vacation, and other fringe benefit programs generally
available to senior executives of Company in accordance with and subject to the
terms and conditions of such programs.

(f) In addition, the Executive shall be entitled to receive
the following benefits:

(i) The Executive shall have the use of a company car,
subject to the Automobile Policy of Bacou USA, Inc.

(ii) The Executive shall be entitled to vacation
pursuant to the Bacou USA, Inc. Executive Vacation Policy. Vacation days will be
taken at a time convenient for both the Executive and Company. To the extent the
Executive does not take all vacation days the remaining days will be carried
forward for an unlimited period or be paid to the Executive at the level of his
Base Salary valid for the fiscal year in which vacation days are not taken.

(iii) When traveling on Company business, the Executive
will be provided coach-class airfare on domestic trips; business
class airfare will be provided on international trips.

(iv) The Executive is authorized to incur reasonable
expenses in connection with and for the promotion of the business
of Company, including expenses for meals and lodging (regular hotel room, no
suites), entertainment, and similar items as required from time to time by the
Executive's duties. Company shall reimburse the Executive for all such expenses
upon the presentation of an account therefor, together with appropriate
supporting documentation.

(v) In connection with the execution of this Agreement,
the Company shall pay Executive Forty Thousand Dollars ($40,000.00) and provide
relocation assistance in accordance with the terms and conditions of the
Relocation Assistance Agreement attached hereto as EXHIBIT A.

5. LIMITATIONS ON AUTHORITY. Except as otherwise provided herein,
approval by the Bacou CEO must be obtained prior to the Executive taking any of
the following actions on behalf of the Company:

(a) Acquisition or disposition of real property or any
rights deriving therefrom, or changing title in any
such real property;

-4-

<PAGE> 5

(b) Making unplanned capital expenditures or any commitment
therefor in an amount greater than $10,000 for any
individual expenditure and $50,000 in the aggregate in
any fiscal year;

(c) Borrowing or guaranteeing any borrowings from or on
behalf of any party, or altering the terms of any loan
agreements for such borrowings except for any such
loans or borrowings as shall be agreed upon by the
Board of Directors of Company;

(d) Hiring, terminating, promoting or demoting executive
personnel with annual salary in excess of $50,000 or
granting unbudgeted raises, bonuses or other
compensatory payments to any employee of the Company;

(e) Granting retirement benefits or other non-earned income
to any person;

(f) Modification of any qualified plan or other benefit
plan, e.g., health insurance;

(g) Acquiring the assets or shares of any business;

(h) Acquiring or disposing of the assets or shares of the
Company or selling any fixed asset of the Company below
book value or writing off inventory of the Company with
an aggregate book value exceeding $50,000 in any fiscal
year;

(i) Entering into or terminating agreements of any kind or
nature with a monthly financial obligation in excess of
U.S. $5,000 for more than six (6) months except
purchase orders for materials required for the
manufacture of products for sale in the ordinary course
of business;

(j) Making basic changes in the administration,
organization, production, and distribution of Company
or any of its affiliates, as well as closing or
curtailing the functions of Company or any of its
affiliates;

(k) Filing any lawsuit;

(l) Making cash or non-cash corporate contributions above
the annually budgeted amount;

-5-

<PAGE> 6

(m) When there is a large volume of sales, the making of
decisions requiring both extraordinary risks and
extraordinary expenditures;

(n) Entering into any transaction on behalf of Company or
its affiliates which is not in the usual course of its
business;

(o) Adoption or modification of the annual budget.

Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of
Company. In addition, should the Bacou 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 Company. The Executive will immediately inform
the Bacou CEO of any such decisions made by him.

6. NON-DISCLOSURE OF INFORMATION. It is understood that the business of
Company and its affiliates is of a confidential nature. During the period of the
Executive's employment with Company, the Executive may have received and/or may
secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
Company or its said affiliates or subsidiaries. The Executive agrees that during
and after the term of this Agreement he will not (except as authorized by
Company or in the proper performance of his duties or except as ordered by a
court or other body of competent jurisdiction or as otherwise required by law),
directly or indirectly, divulge, disclose or appropriate to his own use, or to
the use of any third party, any secret, proprietary or confidential information
or knowledge obtained by him during the term hereof concerning such confidential
matters of Company or its subsidiaries or affiliates, including, but not limited
to, information pertaining to trade secrets, systems, manuals, confidential
reports, methods, processes, designs, equipment lists, operating procedures,
equipment and methods used and preferred by Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
Company or any of its subsidiaries or affiliates which are, directly or
indirectly, in the possession or under the control of the Executive. The
provisions of this paragraph shall continue to apply after the Executive ceases
to be employed by Company for a period of seven (7) years except in respect of
any information or knowledge disclosed to the public, other than through an
unauthorized disclosure by the Executive.

7. TRADE SECRETS. The Executive covenants that he shall, while employed
by Company, assign, transfer, and set over to Company or its designee all right,
title and interest in and to all trade secrets, secret processes, inventions,
improvements, patents,

-6-

<PAGE> 7

patent applications, trademarks, trademark applications, copyrights, copyright
registrations, discoveries and/or other developments (hereinafter "Inventions")
which he may, thereafter, alone or in conjunction with others, during or outside
normal working hours, conceive, make, acquire or suggest at any time which
relate to the products, processes, work, research, or other activities of
Company or any of its subsidiaries or affiliates. Any and all Inventions which
are of a proprietary nature and which the Executive may conceive, may acquire or
suggest, either alone or in conjunction with others, during his employment with
Company (whether during or outside normal working hours) relating to or in any
way pertaining to or connected with Company's business, shall be the sole and
exclusive property of Company or its designee and the Executive, whenever
requested to do so by Company, shall, without further compensation or
consideration properly execute any and all applications, assignments or other
documents which Company or its designee shall deem necessary in order to apply
for and obtain Letters Patent of the United States and/or comparable rights
afforded by foreign countries for the Inventions, or in order to assign and
convey to Company or its designee the sole and exclusive right, title and
interest in and to the Inventions. This obligation shall continue beyond the
termination of this Agreement with respect to Inventions conceived or made by
the Executive during the term of his employment by Company, and shall be binding
upon his assigns, executors, administrators, and other legal representatives.

8. NON-COMPETITION. (a) During the term of this Agreement or any renewal
thereof and, at Company's option for a period of up to one year thereafter,
should the Executive's contract be terminated or not be renewed, the Executive
agrees that he will not within the geographical area of the United States,
engage, either directly or indirectly, individually or as an owner, partner,
joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding Company or
other business entity which is in a business similar to that of Company or any
of its affiliates. In the event that Company chooses to exercise its option to
prevent the Executive from competing with Company following termination or
non-renewal of his employment, Company shall notify the Executive in writing
within two (2) weeks following his last day of employment or within two (2)
weeks of notice by Company of its decision that the Executive shall take a
leave-of-absence, in either case specifying the period of up to one year
following termination, resignation, or non-renewal of employment during which
such competitive activity shall be prohibited. In the event Company exercises
its option, Company shall continue to pay Executive his Base Salary at the time
of termination, resignation or non-renewal for the period during which the
Executive is prohibited from competition with Company. Notwithstanding the
foregoing, the Executive (as hereinbefore described in Section 2(d)) may own
five (5%) percent of the securities of any business in competition with the
business of Company or any of its affiliates, which securities are regularly
traded on a public exchange, provided that any such ownership shall not result
in the Executive becoming a record or beneficial owner at any time of more than
five (5%) percent of equity securities of said business entity.

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<PAGE> 8

(b) The Executive shall not during the term of his Employment
under this Agreement or any renewal thereof, and for a period of three (3) years
thereafter, employ, retain or arrange to have any other person or entity employ
or retain any person who was employed by Company or any of its affiliated
companies having an annual compensation of at least U.S. $50,000 per annum
during the term of this Agreement or any renewal thereof.

(c) If any provision of this Section is held to be unenforceable
because of the scope, duration or area of its applicability or otherwise, the
legal entity making that determination will have the power to modify the scope,
duration or area, or all of them, and the provision will then apply in its
modified form.

9. PROPERTY. All letters, memoranda, documents, business notes
(including all copies thereof) and other information contained on any other
computer media including computer disks and hard drives of the Executive in any
manner relating to the duties of Executive under this agreement are the property
of Company.

10. NOTICES. Any notices or other communications required to be
given pursuant to this Agreement shall be in writing and shall be deemed given:
(i) upon delivery, if by hand; (ii) three (3) business days after mailing, if
sent by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) business day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
business day at the place of receipt, it shall be effective as of the following
business day. All notices and other communications hereunder shall be given as
follows:

(a) If to the Company, to it at:

Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: President

Telephone No.: 401-233-0333
Telecopier No.: 401-232-2230

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<PAGE> 9

(b) If to the Executive, to him at the current address shown
in the payroll records of the Company.

Either party may change its address for receiving notice by written notice given
to the other names above in the manner provided above.

11. FULL AND COMPLETE AGREEMENT; AMENDMENT. This Agreement
(together with the Exhibits attached hereto) 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 (except Exhibit B which is subject to
modification from time to time by Bacou USA, Inc.)

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 Rhode Island. The expense
of arbitration shall be borne by the respective parties except to the extent
that the arbitrators shall determine that the entire expense shall be borne by a
single party.

14. BINDING NATURE. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective heirs, personal
representatives, successors and assigns.

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<PAGE> 10

IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.

BACOU USA SAFETY, INC.

By: /s/ Walter Stepan /s/ Philip B. Barr
Walter Stepan Philip B. Barr
Chairman, President Vice Chairman, Secretary
and CEO and Treasurer

EXECUTIVE:

/s/ Alan H. Bennett
Alan H. Bennett

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<PAGE> 1

EXHIBIT 10.22

PURCHASE AND SALE AGREEMENT

BY AND BETWEEN

UVEX WINTER OPTICAL, INC.

AS SELLER

AND

UVEX SAFETY MANUFACTURING, INC.

AS BUYER

NOVEMBER 20, 1998

<PAGE> 2

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into as of the 20th day of November, 1998 by and between Uvex Winter Optical,
Inc., a Rhode Island corporation having a principal place of business and
mailing address of 910 Douglas Pike, Smithfield, Rhode Island 02917 ("Seller"),
and Uvex Safety Manufacturing, Inc., a Delaware corporation having a principal
place of business and mailing address of 10 Thurber Boulevard, Smithfield, Rhode
Island 02917 ("Buyer").

ARTICLE I

PROPERTY

Section 1.01. PROPERTY. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, upon the terms and
conditions set forth herein, the following properties and assets:

(a) That certain parcel of land consisting of approximately 7.000 acres
located in the Town of Smithfield, County of Providence, State of Rhode Island,
more particularly described in EXHIBIT A-1 attached hereto and made a part
hereof for all purposes, together with (i) any and all rights and appurtenances
pertaining to such real property, including any easements, and all right, title
and interest of Seller in and to adjacent streets, alleys and rights-of-way, and
(ii) any and all rights or privileges appurtenant to or used in connection with
the ownership or operation of such real property (all of the foregoing are
collectively referred to herein as the "Developed Real Property").

(b) That certain parcel of land consisting of approximately 8.39 acres
located in the Town of Smithfield, County of Providence, State of Rhode Island,
more particularly described in EXHIBIT A-2 attached hereto and made a part
hereof for all purposes, together with (i) any and all rights and appurtenances
pertaining to such real property, including any easements, and all right, title
and interest of Seller in and to adjacent streets, alleys and rights-of-way, and
(ii) any and all rights or privileges appurtenant to or used in connection with
the ownership or operation of such real property (all of the foregoing are
collectively referred to herein as the "Undeveloped Real Property"). The
Undeveloped Real Property shall be a subdivided portion of existing real estate
of approximately 14.02 acres which is currently owned by Seller and which is
comprised of four separate parcels of land (the "Seller's Undeveloped Land") as
set forth on that certain survey map on EXHIBIT A-3 attached hereto. It is
anticipated that the Undeveloped Real Property shall be formed from two parcels
of the Seller's Undeveloped Land. The Developed Real Property and the
Undeveloped Real Property are sometimes collectively referred to as the "Real
Property".

(c) All improvements, structures and fixtures now constructed and
completed with respect to and situated on the Real Property, including without
limitation all buildings, parking

<PAGE> 3

areas, loading dock facilities, landscaping and other improvements, structures
and fixtures (all of the foregoing are collectively referred to herein as the
"Improvements").

(d) All equipment, furniture, furnishings, machinery, heating,
plumbing, ventilation and air conditioning systems and equipment, carpet, tile,
floor coverings, security devices, sprinkler systems, keys, maintenance
equipment and supplies and all other tangible personal property owned by Seller
and used or to be used in connection therewith or with the Improvements along
with Seller's interest as lessee in any rented or leased personal property, all
of which rented or leased property is listed on EXHIBIT D attached hereto, to
the extent approved by Buyer (all of the foregoing are collectively referred to
herein as the "Personal Property").

The Real Property, the Improvements and the Personal Property are collectively
referred to herein as the "Property".

ARTICLE II

PURCHASE PRICE/FINANCING

Section 2.01. PURCHASE PRICE. The purchase price (the "Purchase Price")
to be paid by Buyer to Seller for the Property is Five Million Eight Hundred
Thousand and 00/100 U.S. Dollars (US$5,800,000.00). The Purchase Price will be
paid by Buyer to Seller at the Closing (as hereinafter defined) in immediately
available wire transferred funds.

Section 2.02. FINANCING. The parties acknowledge that Buyer is seeking
revenue bond financing (the "Financing") for the purpose of, among other things,
payment of the Purchase Price, through the Rhode Island Economic Development
Corporation or an affiliate thereof ("EDC"), and that the revenue bonds issued
pursuant to the Financing (the "Revenue Bonds") shall be sold through a private
placement transaction to a financial institution or other accredited investor
(the "Bond Purchaser").

ARTICLE III

REVIEW ITEMS AND INSPECTION

Section 3.01. REVIEW ITEMS. On or before November 30, 1998 (the "Review
Item Delivery Date"), Seller, at Seller's sole cost and expense, shall deliver
to Buyer the following items (the "Review Items"), to the extent in Seller's
possession or control:

(a) Copies of any surveys of the Property in Seller's possession.

(b) Copies of real estate and personal property tax statements for the
Property for the past two (2) calendar years.

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<PAGE> 4

(d) Copies, to the extent available, of all site plans, soil and
substrata studies, environmental assessment reports and studies, architectural
renderings, engineering plans and studies, floor plans, landscape plans, utility
schemes, and as-built plans and specifications for the Property.

(e) Copies, to the extent available, of any and all appraisals,
engineering inspections and handicapped accessibility reports of the Property.

(f) (i) Copies of all documents available to Seller affecting title to
any of the Property, including, without limitation, all documents pertaining to
any encumbrances, restrictions, easements and other matters of record and (ii)
copies of all title insurance policies issued to Seller or to any lender to
Seller.

Section 3.02. INSPECTION. Buyer shall have the right, at all reasonable
times, to conduct on-site inspections of the Property and physical inspections
and tests of the Property during the Review Period (as hereinafter defined),
including, without limitation, the right to enter and inspect all portions of
the Property, and to inspect all of Seller's records relating to the Property.
Seller hereby agrees to fully cooperate with Buyer in providing access to any
and all information requested by Buyer, including the execution of any consents
or applications for information from governmental or quasi-governmental
agencies. Buyer shall indemnify Seller from any physical damage to the Property
and personal injury directly resulting from Buyer's entry on the Real Property
during the Review Period.

ARTICLE IV

REVIEW PERIOD

Section 4.01. REVIEW PERIOD. Buyer has from the date of this Agreement
until 5:00 p.m. Eastern time on January 31, 1999, subject to extensions set
forth in this Article IV (the "Review Period") to review and approve the Review
Items and to conduct such inspections, interviews, tests and audits as Buyer, in
Buyer's sole discretion, deems appropriate, including, without limitation,
environmental, engineering and zoning inspections and investigations and review
of those matters disclosed by Buyer's Survey (as defined in Section 4.05 hereof)
of the Property and those matters related to title to the Property.

Section 4.02. BUYER'S NOTICE. If Buyer, in its sole and absolute
discretion, based on its review of the items to be delivered by Seller to Buyer
under Article III hereof, believes that the results of such inspections,
interviews, tests or any other fact or situation with respect to the Property
would cause Buyer to be unable to use the Property as Buyer intends, then in
such event Buyer shall have the right to terminate this Agreement by giving
Seller written notice thereof (the "Buyer's Notice") on or before the expiration
of the Review Period as extended in this Article IV, and this Agreement shall be
immediately terminated upon Buyer's delivery of the Buyer's Notice to Seller.
The Buyer's Notice need not set forth the reason for such termination.

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<PAGE> 5

Section 4.03. TERMINATION. If Buyer elects to terminate this Agreement
in accordance with, and subject to the terms of this Article IV, the parties
hereto shall thereupon be relieved of all liabilities and obligations hereunder
except for their respective liabilities and obligations under the Lease (as
defined in Section 4.04 herein).

Section 4.04. ENVIRONMENTAL SITE ASSESSMENTS. During the Review Period,
Buyer has the right, at Buyer's expense, to have Phase I and Phase II
environmental site assessments performed of the Property. If Buyer, in Buyer's
sole discretion, determines that a Phase II site assessment is appropriate, any
such Phase II site assessment will be requested and performed as soon as
reasonably possible after completion and review of the Phase I report. The
Review Period solely with respect to environmental matters, may, upon written
notice to Seller during the Review Period, be extended an additional ninety (90)
days by Buyer in order to conduct and evaluate any such Phase I or Phase II site
assessment report. If any such environmental site assessment report reveals
contamination at or above reportable levels or violation of any environmental
law or regulation, and Seller, after receipt of written notice from Buyer
together with complete copies of such written reports and analyses which reflect
said environmental condition or violation, does not agree, within twenty (20)
days after written request from Buyer, to fully remediate such contamination and
cure all violation(s) of applicable environmental laws or regulations prior to
Closing, then Buyer shall have the right either (a) to purchase the Property
subject to such contamination and without reduction of the Purchase Price or (b)
to terminate this Agreement in accordance with Section 4.02 hereof. If Buyer, in
Buyer's sole discretion, objects to any matters disclosed in the Phase I or
Phase II environmental site assessment report, then Buyer shall have the right
to terminate this Agreement in accordance with Section 4.02 hereof and the
parties shall have no further obligations hereunder. Nothing contained in this
Section 4.04 shall impair any of Seller's remedies or Buyer's obligations with
respect to such matters under that certain Lease Agreement dated as of April 15,
1993 by and between Seller as Landlord and Uvex Safety LLC,
predecessor-in-interest to Buyer, as Tenant, as amended from time to time (the
"Lease") which is attached hereto as EXHIBIT F.

Section 4.05. TITLE, SURVEY AND ZONING. During the Review Period, Buyer
has the right, at Buyer's expense, to obtain a complete, updated title report or
commitment with respect to the Property (with copies of all instruments listed
as exceptions to title). If Buyer, in Buyer's sole discretion, objects to any
matters disclosed in the title report or title commitment, the Buyer shall have
the right to terminate this Agreement in accordance with Section 4.02 hereof and
the parties shall have no further obligations hereunder.

During the Review Period, Buyer has the right, at Seller's expense, to
obtain an ALTA/ACSM "as built" survey of the Property (the "Survey"). If the
Survey discloses any easements, restrictions, encroachments or adverse matters
which are unacceptable to Buyer in Buyer's reasonable discretion, then Buyer
shall have the right to terminate this Agreement in accordance with Section 4.02
hereof and the parties shall have no further obligations hereunder.

During the Review Period, Buyer has the right, at Buyer's expense, to
review all applicable governmental regulations of the Property, including zoning
and building code

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<PAGE> 6

compliance. If it becomes necessary to seek the approval of the Town of
Smithfield for changes to the zoning of the Real Property, or to subdivide the
Real Property, then the Review Period shall be extended until such time as such
zoning or subdivision shall have been completed to Buyer's satisfaction. If
during the Review Period, Buyer objects to any matter revealed by such review,
then Buyer shall have the right to terminate this Agreement in accordance with
Section 4.02 hereof and the parties shall have no further obligations hereunder.

Section 4.06. STRUCTURAL AND MECHANICAL INSPECTIONS. During the Review
Period, Buyer has the right, at Buyer's expense, to have structural and
mechanical inspections performed with respect to the Improvements. If Buyer, in
Buyer's sole discretion, objects to any matters disclosed in the structural or
mechanical inspection reports, then Buyer shall have the right to terminate this
Agreement in accordance with Section 4.02 hereof and the parties shall have no
further obligations hereunder.

Section 4.07. LEASE REVIEW. Buyer is the lessee of the Developed Real
Property, the Improvements and the Personal Property pursuant to the Lease. The
Lease shall continue in full force and effect until the Closing.

Section 4.08. ENGINEERING ASSESSMENT. During the Review Period, Buyer
has the right, at Buyer's expense, to have an engineering assessment and soil
analysis of the Property performed to determine whether the conditions at the
Property are satisfactory to Buyer from a structural, mechanical and engineering
standpoint for the construction of an addition to the building situated on the
Developed Real Property (the "Planned Improvements"). If Buyer, in Buyer's sole
discretion, objects to any matters disclosed in the engineering assessment, then
Buyer shall have the right to terminate this Agreement in accordance with
Section 4.02 hereof, and the parties shall have no further obligations
hereunder.

ARTICLE V

GOOD AND MARKETABLE TITLE

CONVEYANCE. At the Closing, Seller will convey good, marketable and
insurable fee simple title to the Real Property and the Improvements to Buyer or
Buyer's nominee by a Quitclaim Deed in the form attached hereto as EXHIBIT B and
made a part hereof (the "Deed") and good and marketable title to the Personal
Property by a bill of sale and assignment of contracts in the form attached
hereto as EXHIBIT C (the "Bill of Sale"), free and clear of any and all deeds of
trust, mortgages, security interests or other liens or indebtedness,
encumbrances, conditions, easements, rights-of-way, assessments and
restrictions, except for the Permitted Encumbrances (as hereinafter defined).

(a) General real estate taxes for the year in which the Closing occurs
and subsequent years not yet due and payable.

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<PAGE> 7

(b) All easements, restrictions, rights-of-way, party wall agreements,
encroachments, covenants, reservations, agreements, leases (including the
Lease), licenses, conditions and other matters of record (the "Permitted
Encumbrances") set forth on EXHIBIT F attached hereto and made a part hereof for
all purposes as of the date hereof, affecting all or any portion of the Property
to the extent (i) not disapproved by Buyer during the Review Period; (ii)
reflected on the Survey, and not disapproved by Buyer during the Review Period;
and/or (iii) created by or consented and agreed to in writing by Buyer prior to
or at the Closing.

ARTICLE VI

CLOSING

Section 6.01. CLOSING. The closing of the purchase and sale of the
Property (the "Closing") will be held at the offices of Edwards & Angell, LLP,
One BankBoston Plaza, Providence, Rhode Island 02903, and will occur, subject to
satisfaction of all conditions precedent set forth in this Agreement, on
February 28, 1999, or the thirtieth (30th) day following the satisfaction of the
conditions precedent set forth in Section 9.05 hereof, but in no event later
than June 30, 1999, or on such other date as may be agreed to in writing by
Seller and Buyer (the "Closing Date").

Section 6.02. SELLER'S OBLIGATIONS. At the Closing, Seller shall
execute and deliver to Buyer, and/or cause the execution and delivery by all
parties other than Buyer of, the following:

(a) The Deed.

(b) The Bill of Sale.

(c) A FIRPTA affidavit and a Rhode Island Residency Affidavit if Seller
is a Rhode Island resident, or non-resident withholding, both in form and
substance acceptable to Buyer and the title insurance company selected by Buyer
(the "Title Company").

(d) A Lease Termination Agreement confirming that all obligations of
the parties under the Lease have been performed and discharged, along with
original counterparts (to the extent available) or copies of the Lease and of
all operating agreements, reciprocal easement agreements, options, warranties,
guarantees, permits and other agreements related to the Property, including all
modifications, supplements or amendments to each of the foregoing.

(e) All keys to the Property not already in Buyer's possession.

(f) To the extent necessary to permit the Title Company to remove any
exception in the owner's policy for mechanic's and material supplier's liens and
general rights of parties in possession, an affidavit as to debts and liens and
parties in possession executed by Seller in favor of Buyer and the Title Company
and in a form acceptable to Buyer and the Title Company, along with any other
items reasonably required by the Title Company.

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<PAGE> 8

(g) Seller's certification that all representations and warranties made
by Seller under this Agreement are true, complete and correct in all material
respects as of the Closing.

(h) Estoppel certificates, in form and substance reasonably
satisfactory to Buyer, from all parties to any restrictive covenants or
easements, materially affecting all or any portion of the Property, PROVIDED,
HOWEVER, Seller's failure, despite good faith efforts, to obtain such estoppel
certificates shall not be deemed a default by Seller.

(i) Evidence acceptable to Buyer and the Title Company of Seller's
authority to consummate the transactions contemplated by this Agreement,
including without limitation, a good standing certificate issued by the Rhode
Island Secretary of State, a tax good standing certificate issued by the Rhode
Island Division of Taxation, a copy of Seller's Articles of Incorporation
certified by the Rhode Island Secretary of State and a secretary's certificate
regarding votes, by-laws and incumbency.

(j) To the extent required pursuant to the provisions of Section 4.04
hereof, evidence reasonably acceptable to Buyer of completion of all remediation
of the Property.

(k) A settlement statement with respect to the purchase and sale of the
Property (the "Settlement Statement").

(l) Discharges, releases and terminations with respect to any
mortgages, assignments, financing statements or other security documents with
respect to the Property or a payoff letter from the holder(s) of any such
security document acceptable to Buyer and the Title Company.

(m) A release of tax lien by the Rhode Island Division of Taxation with
respect to the Property or an affidavit that the sale of the Property is not a
sale of substantially all of the assets of Seller acceptable to Buyer and the
Title Company.

Section 6.03. BUYER'S OBLIGATIONS. At the Closing, Buyer shall
deliver the Purchase Price to Seller by wire transfer of immediately available
funds, and shall execute and deliver to Seller the following:

(a) Evidence reasonably acceptable to Seller of Buyer's authority to
consummate the transactions contemplated by this Agreement.

(b) Buyer's certification that all representations and warranties made
by Buyer under this Agreement are true, complete and correct in all material
respects as of the Closing.

Section 6.04. POSSESSION. At the Closing, full possession of the
Property, subject to the Lease, shall be delivered by Seller to Buyer in the
same condition as it is now. Seller and Buyer

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<PAGE> 9

shall reinspect the Property prior to Closing to determine whether the condition
of the Property is in conformance with the terms of this Agreement.

ARTICLE VII

CLOSING ADJUSTMENTS

Section 7.01. ADJUSTMENTS AND PRORATIONS. Unless otherwise agreed to in
the Lease, the following adjustments and prorations shall be made at Closing:

(a) Real estate taxes due and payable in the current year together with
current installments of special assessments which constitute liens on the
Property and interest thereon due and payable therewith, and water and sewer
charges on the basis of the fiscal period for which assessed (without regard to
when such charges are payable) shall be prorated as of 12:01 a.m. local time on
the date of the Closing on the basis of a 365-day year, except that if any
amount to be prorated covers a period of less than a year, the proration as to
such amount shall be made as of the Closing on the basis of the period so
covered. The net amount of any adjustments shall be added to or subtracted from
the Purchase Price, as applicable.

(b) All charges for electric and gas service and other utilities (other
than water and sewer) supplied to the Real Property and the Improvements prior
to the Closing shall be the obligation of Seller, and Seller agrees to pay such
amounts as may be due in connection with such utilities promptly upon
notification of such overdue payment.

(c) In the event that real estate taxes are to be prorated hereunder
and if the Closing shall occur before a new tax rate is fixed, the proration of
real estate taxes shall be upon the basis of the old tax rate for the preceding
tax period applied to the latest assessed valuation; PROVIDED, HOWEVER, that
Seller and Buyer agree to make all necessary adjustments to such proration after
the Closing upon receipt of the new tax rate to reflect the actual tax rate
applicable to the period(s) for which such proration is made.

(d) If there is a water meter for the Real Property and the
Improvements, Seller shall furnish a reading or readings to a date not more than
three (3) business days before the Closing Date and the unfixed meter charge
shall be prorated on the basis of such last reading.

(e) Seller shall have the option to credit Buyer as an adjustment of
the Purchase Price with the amount of any unpaid real estate taxes, assessments,
water and sewer charges, together with any adjustments hereunder in favor of
Buyer, in which case Buyer shall have assumed the obligation to pay such amounts
when they become due and payable.

(f) Real estate tax refunds and credits received after the Closing Date
which are attributable to the fiscal year during which the Closing occurs shall
be prorated between Seller and Buyer based upon when the Closing Date occurs,
after deducting the expenses of collection

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<PAGE> 10

thereof. All refunds and credits relating to any prior years shall belong to
Seller, and Buyer agrees to send any such items to Seller immediately upon
receipt.

(g) Any errors or omissions in computing prorations at the Closing
shall be corrected immediately upon discovery after the Closing.

(h) Rent under the Lease shall be pro-rated for the month in which the
Closing occurs. Seller shall pay over all security deposits or credit Buyer with
the total amount of security deposits.

Section 7.02. TRANSACTION COSTS. Each party will pay such party's own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, (1) all costs and expenses
stated herein to be borne by a party and (2) each party's respective legal fees
and expenses. Buyer, in addition to Buyer's other expenses, shall pay at the
Closing (1) all recording charges payable in connection with the recording of
the Deed and (2) all premiums for Buyer's title insurance policy. Seller, in
addition to Seller's other expenses, shall pay at the Closing the cost of any
documentary stamps or other sales or transfer taxes applicable to the sale.

Section 7.03. INDEMNITY. Each party hereby agrees to indemnify the
other party and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including (without
limitation) reasonable attorneys' fees, resulting from any misrepresentation or
breach of warranty or covenant made by such party in this Agreement or in any
document, certificate, or exhibit given or delivered to the other pursuant to or
in connection with this Agreement.

Section 7.04. BROKERAGE COMMISSIONS. Seller and Buyer represent and
warrant that neither has dealt with any real estate broker, agent or
salesperson, and acknowledge and agree that any other fees or real estate
commissions occasioned by the execution and/or consummation of this Agreement
shall be the sole responsibility of the party contracting therefor, and such
party agrees to indemnify, protect, defend and hold harmless the other party
from any and all claims for such other fees or real estate commissions.

Section 7.05. SURVIVAL. The terms of this Article shall survive the
termination of this Agreement on the Closing and delivery of the Deed for a
period of three (3) years.

ARTICLE VIII

TERMINATION AND REMEDIES

Section 8.01. BUYER'S DEFAULT. If Buyer is in default under the terms
of this Agreement or if Buyer fails or refuses to close for any reason, except
for Seller's default or the permitted termination of this Agreement by either
Buyer or Seller (other than under this Section 8.01) as

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<PAGE> 11

herein expressly provided, Seller shall be entitled, as Seller's sole and
exclusive remedy, to terminate this Agreement. Seller has no right to
specifically enforce Buyer's obligations under this Agreement, however, Buyer
hereby agrees to promptly reimburse Seller for Seller's reasonable out-of-pocket
expenses, including its reasonable attorneys' fees, incurred in connection with
the negotiation of this Agreement and the pursuit of the transaction
contemplated hereby. Otherwise, Seller shall not seek or collect any other
damages of any kind, including lost profit, punitive, consequential, treble or
other damages from or against Buyer. In no event shall any officer, director or
employee of Buyer be personally liable for any of Buyer's obligations under this
Agreement or the documents to be delivered at the Closing.

Section 8.02. SELLER'S DEFAULT. If Seller is in default under the terms
of this Agreement, or if Seller fails or refuses to close for any reason, except
for Buyer's default or the permitted termination of this Agreement by either
Seller or Buyer (other than under this Section 8.02) as herein expressly
provided, Buyer shall be entitled to terminate this Agreement upon written
notice to Seller. Upon such termination of the Agreement, Seller promptly shall
reimburse Buyer for Buyer's Environmental Costs and any and all other
out-of-pocket expenses incurred by Buyer, including its reasonable attorneys'
fees and all payments made to third parties, in connection with the negotiation
and execution of this Agreement and the pursuit of the transaction contemplated
hereby. In no event shall any officer, director or employee of Seller be
personally liable for any of Seller's obligations under this Agreement or the
documents to be delivered at the Closing.

Section 8.03. LEGAL FEES. In the event of any litigation between the
parties with respect to the subject matter of this Agreement, the prevailing
party shall be entitled to recover such party's reasonable legal fees from the
other party.

ARTICLE IX

REPRESENTATIONS, WARRANTIES, COVENANTS AND CONDITIONS PRECEDENT

Section 9.01. SELLER'S REPRESENTATIONS. Seller hereby represents and
warrants to Buyer, as of the date hereof and as of the Closing, as follows:

(a) Seller does not have notice that Improvements are in violation of
any applicable laws, statutes, ordinances, codes, covenants, conditions and
restrictions of any kind or nature affecting the Real Property or Improvements,
including, to the extent applicable, all handicapped accessibility laws, rules
and regulations including applicable fire and safety requirements.

(b) Seller does not have notice that the Property is in breach of any
applicable law and regulation pertaining to subdivision, planning, zoning and
land use, building and fire safety, parking, and environmental requirements,
including (without limitation) laws and regulations concerning odors, noise, air
emissions, discharge of water or pollution, and alteration of or encroachment
upon any fresh water or salt water wetland, flood plain or coastal area.

-10-

<PAGE> 12

(c) (i) To the best of Seller's knowledge, there are no underground
storage tanks on the Property and (ii) Seller has not used or knowingly
permitted the Property to be used and to the best of Seller's knowledge, the
Property has not been used for, storage, transfer, transportation or disposal of
dangerous, toxic or hazardous materials, chemicals, wastes or similar substances
or for the discharge of the same into the environment other than in the normal
course of Seller's business and consistent with local, state and federal
regulations.

(d) Seller has paid or will pay in the normal course for all labor,
materials, architectural services, supplies, equipment and utilities serving the
Property and all taxes and assessments on or with respect to the Property.

(e) The Property is owned solely by Seller and is not subject to any
lease, financing contract, or security interest, mortgage, lien or other
encumbrance other than the Lease set forth on EXHIBIT F attached hereto.

(f) There are no legal or administrative proceedings commenced or
threatened against the Property or Seller with respect to the Property or its
use and enjoyment, including (without limitation) proceedings involving
environmental regulation, zoning, subdivision, condemnation, building or fire
safety codes or special assessments.

(g) Seller knows of no facts which would prevent Buyer from using and
operating the Property after the Closing in the manner in which the Property has
been operated or used by Seller.

(h) Seller has received no notice and has no knowledge of any pending
public improvements, liens or special assessments to be made in respect of, or
assessed against, the Property by any governmental authority.

(i) To the best of Seller's knowledge, there are no attachments,
executions, assignments for the benefit of creditors or voluntary or involuntary
proceedings in bankruptcy pending against or contemplated by Seller or otherwise
applicable to the Property, and to the best of Seller's knowledge no such
actions have been threatened.

(j) Seller is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Rhode Island, and has all requisite
power and authority to carry on Seller's business as now conducted.

(k) Seller has all requisite power and authority to execute, deliver
and perform Seller's obligations under this Agreement. No consent, approval or
other action by any person or entity is required with respect to Seller's
execution, delivery and performance of Seller's obligations under this
Agreement. Neither the execution and delivery of this Agreement by Seller nor
Seller's performance of Seller's obligations hereunder will result in a
violation or breach of any term or provision or constitute a default or
accelerate the performance required under any other agreement or document to
which Seller is a party or is otherwise bound or to which the Property, or any
part thereof, is subject and will not constitute a violation of any law,

-11-

<PAGE> 13

ruling, regulation or order to which Seller is subject. This Agreement
constitutes a valid and binding obligation of Seller enforceable in accordance
with its terms.

(l) No person, firm or corporation or other entity has any right or
option to lease or rent beyond the Closing Date or otherwise acquire the
Property, or any part thereof.

(m) The Real Property may be subdivided to accommodate the intention of
the Buyer and Seller herein.

(n) Seller has not received any notice of any reportable environmental
contamination on the Property and Seller has delivered to Buyer, prior to the
date of this Agreement, copies of all reports in Seller's possession relating to
the environmental condition of the Property.

All representations and warranties contained herein will be true on and
as of the Closing except as otherwise disclosed by Seller to Buyer in writing
and approved as so disclosed by Buyer at or prior to the Closing. In the event
Seller receives new information which would make any representation or warranty
in this Section 9.01 untrue, incomplete or misleading, Seller shall not be in
default under this Agreement, provided Seller provides such information in
writing to Buyer within the earlier of 24 hours prior to Closing or three (3)
business days of Seller's receipt of such information. In such event, Buyer
shall have ten (10) business days to respond to such information, including the
right to terminate this Agreement and receive its out-of-pocket expenses and
costs. Further, the representations set forth in Section 9.01 of this Agreement
pertaining to the Undeveloped Real Property shall survive the Closing for three
(3) years. The representations pertaining to the Developed Property shall not
survive the Closing.

Section 9.02. BUYER'S REPRESENTATIONS. Buyer hereby represents and
warrants to Seller, as of the date hereof and as of the Closing, as follows:

(a) Buyer is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
power and authority to carry on Buyer's business as now conducted.

(b) Buyer has all requisite power and authority to execute, deliver and
perform Buyer's obligations under this Agreement. No consent, approval or other
action by any person or entity is required with respect to Buyer's execution,
delivery and performance of Buyer's obligations under this Agreement. No
consent, approval or other action by any person or entity will be needed
thereafter to authorize Buyer's execution and performance of this Agreement.

Section 9.03. DISCOVERY. If either Seller or Buyer discovers, prior to
or at the Closing, that any representation or warranty of the other party is
false, misleading or inaccurate in any material respect, the discovering party
may, at such party's option, terminate this Agreement and the parties hereto
shall be relieved of all liabilities and obligations hereunder except that the
discovering party shall have the right to have its out-of-pocket expenses
reimbursed by the other party pursuant to the provisions of Section 8.01 or 8.02
herein, as applicable.

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<PAGE> 14

Section 9.04. OPERATING COVENANTS. Subject to the terms and conditions
of the Lease, Seller agrees to operate and maintain the Property prior to the
Closing in a manner consistent with Buyer's current operating procedures,
applicable legal requirements and good industry practice and shall not, without
the prior written consent of Buyer, do any of the following:

(a) Enter into any contract that will not be fully performed by Seller
on or before the Closing or that will not be susceptible of cancellation by
Buyer on or after the Closing upon thirty (30) or fewer days prior written
notice, without cost or liability to Buyer, or amend, modify or supplement any
existing contract or agreement which will survive the Closing.

(b) Enter into any lease or amend, modify, supplement or extend any
lease, except for the Lease as agreed to by Seller and Buyer.

(c) Fail to maintain adequate insurance covering Seller's interest in
the Property or to advise Buyer promptly of the occurrence of any fire or other
casualty affecting the Property.

(d) Sell, assign or create any right, title or interest whatsoever in
or to the Property or create or permit to exist any lien, encumbrance or charge
thereon.

(e) Take any action, or omit to take any action, which action or
omission would have the effect of violating any of the representations and
warranties of Seller contained in this Agreement.

Section 9.05. CONDITIONS PRECEDENT. Buyer shall not be obligated to
perform its obligations under this Agreement unless all of the following
conditions precedent are satisfied (or waived in writing by Buyer) and are
otherwise true and correct as of the Closing.

(a) There has been no material adverse change in the matters reflected
in any Review Item reviewed by Buyer during the Review Period since the date
Buyer reviewed such Review Item, except to reflect those items approved or
otherwise created in writing by Buyer.

(b) All of Seller's representations and warranties are true and correct
in all material respects.

(c) Seller has performed all of Seller's covenants, agreements and
obligations under this Agreement and is otherwise not in default.

(d) Buyer has obtained at Buyer's expense no later than the Closing a
commitment for a policy of title insurance in standard ALTA form issued by the
Title Company at standard rates in the full amount of the Purchase Price
insuring indefeasible, fee simple title to the Real Property and Improvements in
Buyer subject only to the Permitted Encumbrances and the standard printed
exceptions that are acceptable to Buyer.

(e) Revenue Bonds satisfactory in all respects to Buyer shall have been
authorized for issuance by the EDC and Buyer shall have received a binding
commitment from a Bond

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<PAGE> 15

Purchaser to purchase the Revenue Bonds at Closing in order to fund the Buyer's
payment of the Purchase Price and the payment of such other expenses of Buyer as
set forth in Buyer's Revenue Bond Application submitted to EDC on November 16,
1998.

ARTICLE X

NOTICES

Section 10.01. NOTICES. Any notice, demand or other communication which
may or is required to be given under this Agreement must be in writing and must
be: (a) personally delivered; (b) transmitted by United States postage prepaid
mail, registered or certified mail, return receipt requested; (c) transmitted by
reputable overnight courier service, such as Federal Express; or (d) transmitted
by legible facsimile (with answer back confirmation) to Buyer and Seller as
listed below. Notices hereunder shall be directed as follows:

If to Seller: Uvex Winter Optical, Inc.
910 Douglas Pike
Smithfield, Rhode Island 02917
Attn.: Bruce Campbell
Telephone: 401-232-7670
Facsimile: 401-232-7890

With a copy to: Edwards & Angell, LLP
(which shall not One BankBoston Plaza
constitute notice) Providence, RI 02903-2499
Attention: Susan Keller, Esq.
Telephone: (401) 274-9200
Facsimile: (401) 276-6611

-14-
<PAGE> 16

If to Buyer: Uvex Safety Manufacturing, Inc.
10 Thurber Boulevard
Smithfield, Rhode Island 02917
Attention: Winfield W. Major, Esq.
Telephone: (401) 233-0333
Facsimile: (401) 232-2230

Notwithstanding the foregoing, any notices delivered by one party to the other
party under Article IV hereof shall be deemed given on the date and time of
posting if transmitted by United States mail, postage prepaid, registered or
certified mail, return receipt requested, to the respective addresses set forth
above. Buyer's counsel may deliver any notice under Article IV on behalf of
Buyer.

ARTICLE XI

RISK OF LOSS

Section 11.01. MINOR DAMAGE. Subject to the terms and conditions of the
Lease, in the event of "minor" loss or damage being defined for the purpose of
this Agreement as damage to the Property such that the Property could be
repaired or restored, in the opinion of an architect mutually acceptable to
Seller and Buyer (with any fees, costs or expenses pertaining to such opinion to
be borne equally by Buyer and Seller), to a condition substantially identical to
that of the Property immediately prior to the event of damage at a cost equal to
or less than Fifty Thousand and 00/100 Dollars ($50,000.00), neither Seller nor
Buyer shall have the right to terminate this Agreement due to such damage but
Seller shall, at Buyer's option as expressed to Seller in writing, either (a)
reduce the Purchase Price by an amount equal to the cost to repair such damage,
or (b) repair and restore the damaged portion of the Property to a condition
substantially identical to that which existed immediately prior to the
occurrence of such damage and in either such event Seller shall retain all of
Seller's right, title and interest to any claims and proceeds Seller may have
with respect to any casualty insurance policies relating to the Property. If
Buyer elects to have Seller repair and restore the damaged portion of the
Property, Seller shall act promptly and diligently to complete such repairs in a
good and workmanlike manner and shall complete such repairs prior to the Closing
if reasonably possible. If it is not reasonably possible to complete such
repairs prior to the Closing, Seller shall complete such repairs as soon as
reasonably possible, and the Closing shall be extended for a reasonable period
of time to allow completion of any such repairs.

-15-

<PAGE> 17

Section 11.02. MAJOR DAMAGE. Subject to the terms and conditions of the
Lease, in the event of a "major" loss or damage (being defined as any loss or
damage which is not "minor" as defined herein above), Buyer shall have the
option of terminating this Agreement by written notice to Seller, in which event
Seller and Buyer shall thereupon be released from any and all liability
hereunder and Seller shall reimburse Buyer for Buyer's Environmental Costs and
any and all of Buyer's out-of-pocket expenses. If Buyer elects not to terminate
this Agreement, Buyer and Seller shall proceed with the Closing, provided Seller
shall assign all of Seller's right, title and interest to any claims and
proceeds Seller may have with respect to any casualty insurance policies
relating to the Property, and Buyer shall receive a credit against the Purchase
Price in an amount equal to the aggregate amount of any deductible(s) under the
insurance policies assigned to Buyer, plus any costs to repair any such major
damage not covered by insurance.

Section 11.03. CONDEMNATION. If before the Closing any condemnation or
eminent domain proceeding is threatened or initiated against all or any portion
of the Property and, in the reasonable opinion of Buyer, such condemnation or
eminent domain proceeding would materially interfere with the current use of the
Property, then Buyer may terminate this Agreement upon written notice to Seller
and Seller and Buyer shall thereupon be released from any and all further
liability hereunder and the parties shall have no further obligation to each
other. If Buyer does not elect to terminate this Agreement within ten (10)
business days after receipt of written notice of the commencement of any such
proceedings, or if, in the reasonable opinion of Buyer, such condemnation or
eminent domain proceedings would not materially interfere with Buyer's proposed
use of the Property, the Closing shall take place as provided herein and Seller
shall assign to Buyer at the Closing all rights and interest of Seller in and to
any condemnation awards payable or to become payable on account of such
condemnation or eminent domain proceedings.

ARTICLE XII

MISCELLANEOUS

Section 12.01. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors, heirs, administrators and assigns. Without being relieved of any
liability under this Agreement, Buyer reserves the right to take title to the
Property in a name or nominee or assignee other than Buyer.

Section 12.02. AMENDMENTS AND TERMINATION. Except as otherwise provided
herein, this Agreement may be amended or modified by, and only by, a written
instrument executed by Seller and Buyer.

Section 12.03. CONTINUATION AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. All representations and warranties by the respective parties
contained herein or made in writing pursuant to this Agreement are intended to
and shall remain true and correct as of the time of

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<PAGE> 18

Closing, shall be deemed to have been repeated as of the Closing and shall be
deemed to be material. Certain of such representations and warranties shall
survive the execution and delivery of this Agreement, the delivery and recording
of the Deed and transfer of title as set forth in Section 9.01 hereof.

Section 12.04. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Rhode Island.

Section 12.05. MERGER OF PRIOR AGREEMENTS. Except for the Lease, which
shall be terminated upon the Closing, this Agreement supersedes all prior
written or oral agreements and understandings between the parties hereto
relating to the subject matter hereof.

Section 12.06. TIME OF ESSENCE. Time is of the essence to both Seller
and Buyer in the performance of this Agreement, and they have agreed that strict
compliance by both of them is required as to any date and/or time set out
herein, including, without limitation, the dates and times set forth in Article
IV of this Agreement. If the final day of any period of time set out in any
provision of this Agreement falls upon a Saturday, Sunday or a legal holiday
under the laws of the State of Rhode Island, then and in such event, the time of
such period shall be extended to the next day which is not a Saturday, Sunday or
legal holiday.

Section 12.07. CONFIDENTIALITY. Seller shall use reasonable efforts to
keep the identity of Buyer confidential and shall not reproduce or distribute
this Agreement or the information contained herein.

Section 12.08. COUNTERPARTS. This Agreement may be executed in
identical counterparts, each of which, when construed together, shall be deemed
an original hereof.

Section 12.09 RAW LAND. The Buyer acknowledges that portions of the
Real Property are "raw land" and that no percolation tests have been performed
on the Real Property and that the Real Property has not been certified for
development nor approved by the Department of Environmental Management as
suitable for on-site disposal of sanitary sewage and by signing the Agreement,
the Buyer acknowledges such facts as are required in Chapter 19.5 of Title 23 of
the General Laws of Rhode Island.

Section 12.10 NON-RESIDENT WITHHOLDING TAX. Seller has represented that
it is a corporation organized and existing under the laws of the State of Rhode
Island and that it is resident in Rhode Island. However, if the Seller is a not
resident of the State of Rhode Island or will not be residents at the time of
the Closing, the Buyer must withhold six (6) percent of the total payment to the
Sellers (9% if the Sellers are a corporation), in accordance with R.I.G.L.
Section 44-30-71.3, as same may be amended from time to time, and pay such
amount to the Division of Taxation as a non-resident withholding tax. In order
to have such tax based on gain rather than net proceeds of sale, the Seller must
submit an election from to the Division of Taxation at least twenty (20) days
prior to Closing. The Seller agrees to pay the entire amount of such tax found
to be due at or after the Closing, whether or not such tax was correctly
calculated

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<PAGE> 19

at the Closing, it being understood that the tax shall not exceed the amount of
net proceeds to the Seller. This shall survive the transfer of title to the
Property.

IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as of
the day and year first above written.

Seller:

Uvex Winter Optical, Inc.

By: R. Winter
Name: R. Winter
Title: _______________________________

Buyer:

Uvex Safety Manufacturing, Inc.

By: /s/ Walter Stepan /s/ Philip B. Barr
Name: Walter Stepan Philip B. Barr
Title: Chairman & CEO Vice Chairman,
Secretary & Treasurer

-18-

<PAGE> 1
EXHIBIT 11

BACOU USA, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>

Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1998 1997 1998
---- ---- ---- ----

BASIC:

<S> <C> <C> <C> <C>
Weighted average shares outstanding 17,590 17,607 17,383 17,601
==================== ========================
Net income $ 3,592 $ 5,500 $ 14,422 $ 20,010
==================== ========================
Per share amount $ 0.21 $ 0.31 $ 0.83 $ 1.19
==================== ========================

DILUTED:

Weighted average shares outstanding 17,590 17,607 17,383 17,601

Net effect of dilutive stock options
based on the treasury stock method
using the average market price 67 116 28 122

--------------------- ------------------------
Total 17,657 17,723 17,411 17,723
===================== ========================
Net income $ 3,592 $ 5,500 $ 14,422 $ 21,010
===================== ========================
Per share amount $ 0.21 $ 0.31 $ 0.83 $ 1.19
===================== ========================
</TABLE>

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSIDIARY STATE/COUNTRY OF INCORPORATION
---------- -------------------------------

(1) Bacou USA Safety, Inc. Delaware

(2) Uvex Safety Manufacturing, Inc. Delaware

(3) Titmus Optical, Inc. Delaware

(4) Bacou USA Finance, Inc. Minnesota

(5) Bacou Foreign Sales Corporation U.S. Virgin Islands

(6) Howard Leight de Mexico S.A. De C.V. Tijuana, Baja California

(7) Howard Leight (Europe), Ltd. London, England

</TABLE>

<PAGE> 1
EXHIBIT 23

ACCOUNTANTS' CONSENT

The Board of Directors
Bacou USA, Inc.:

We consent to incorporation by reference in the registration statements
(No. 333-09251 and 333-72637) on Form S-8 of Bacou, USA, Inc. of our reports
dated February 5, 1999, relating to the consolidated balance sheets of Bacou
USA, Inc. and subsidiaries as of December 31, 1997 and 1998, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1998, and the related
schedule, which reports appear in the December 31, 1998 annual report on Form
10-K of Bacou USA, Inc.

KPMG LLP

Providence, Rhode Island
March 26, 1999

<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,090
<SECURITIES> 0
<RECEIVABLES> 27,110
<ALLOWANCES> 1,150
<INVENTORY> 38,246
<CURRENT-ASSETS> 69,835
<PP&E> 53,998
<DEPRECIATION> 0
<TOTAL-ASSETS> 293,770
<CURRENT-LIABILITIES> 38,743
<BONDS> 92,050
0
0
<COMMON> 17
<OTHER-SE> 144,445
<TOTAL-LIABILITY-AND-EQUITY> 293,770
<SALES> 219,581
<TOTAL-REVENUES> 219,581
<CGS> 105,856
<TOTAL-COSTS> 105,856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,291
<INCOME-PRETAX> 32,688
<INCOME-TAX> 11,678
<INCOME-CONTINUING> 21,010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,010
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19

</TABLE>