<PAGE>


SCHEDULE 14A

                                 (RULE 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION
           PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

[ ] Filed by the Registrant

[ ] Filed by a Party other than the Registrant

Check the appropriate box:

[ ] Preliminary Proxy Statement
    Confidential, For Use of the Commission Only (as permitted by
    Rule 14a-6(e)(2)

[X] Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

                            BHA Group Holdings, Inc.
-------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)


-------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)  Title of each class of securities to which transaction applies:

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

(2)  Aggregate number of securities to which transaction applies:

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

(3)  Per unit price or other underlying value of transaction computed pursuant
     to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
     calculated and state how it was determined):

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

(4)  Proposed maximum aggregate value of transaction:

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

(5)  Total fee paid:

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

[ ] Fee paid previously with preliminary materials

    ----------------------------------------------------------------------------
<PAGE>

Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1)  Amount previously paid:

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

(2)  Form, Schedule or Registration Statement no.:

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

(3)  Filing Party:

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

(4)  Date Filed:

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<PAGE>

                            BHA GROUP HOLDINGS, INC.

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS


                           Tuesday, February 19, 2002


To the Stockholders of BHA Group Holdings, Inc.

     Notice is hereby given that the Annual Meeting of Stockholders of BHA
Group Holdings, Inc. (the "Company") will be held at the office of the Company,
Second (2nd) Floor, BHA Group Holdings, Inc. Corporate Headquarters, 8800 East
63rd Street, Kansas City, Missouri 64133, on Tuesday, February 19, 2002, at
10:30 a.m., Kansas City time, for the following purposes:

     o To elect directors for the ensuing year;

     o To approve an amended and restated stock incentive plan for the Company;

     o To ratify the selection of KPMG LLP as independent auditors of the
       Company for the fiscal year ending September 30, 2002; and

     o To transact such other business as may properly come before the meeting
       or any adjournment thereof.

     The close of business on January 4, 2002 has been designated as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting of Stockholders or any adjournments thereof.

     MANAGEMENT REQUESTS ALL STOCKHOLDERS TO SIGN AND DATE THE ENCLOSED FORM OF
PROXY AND RETURN IT IN THE POSTAGE PAID, SELF-ADDRESSED ENVELOPE PROVIDED FOR
YOUR CONVENIENCE. PLEASE DO THIS WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING OF STOCKHOLDERS. SHOULD YOU ATTEND, YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.



                                        By Order of the Board of Directors




                                        Stanley D. Biggs
                                        Secretary





Kansas City, Missouri
January 9, 2002

<PAGE>

                            BHA GROUP HOLDINGS, INC.

                              ---------------------
                                 PROXY STATEMENT
                              ---------------------

                              DATED JANUARY 9, 2002
                       FOR ANNUAL MEETING OF STOCKHOLDERS
                      TO BE HELD TUESDAY, FEBRUARY 19, 2002

     This Proxy Statement is furnished by the Board of Directors (the "Board")
of BHA Group Holdings, Inc. (the "Company") in connection with the solicitation
of proxies to be voted at the Annual Meeting of Stockholders of the Company
which will be held at the principal executive offices of the Company, Second
(2nd) Floor, BHA Group Holdings, Inc. Corporate Headquarters, 8800 East 63rd
Street, Kansas City, Missouri 64133, on Tuesday, February 19, 2002 at 10:30
a.m., Kansas City time, and all adjournments thereof (the "Annual Meeting").
The close of business on January 4, 2002 has been designated as the record date
(the "Record Date") for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.

     Any proxy delivered pursuant to this solicitation may be revoked, at the
option of the person executing the proxy, at any time before it is exercised,
either by delivering a signed revocation to the Secretary of the Company at any
time prior to the Annual Meeting, or, at the Annual Meeting, by delivering a
signed revocation to the Chairman of the meeting at any time prior to the
commencement of the voting thereon. A duly executed proxy conferring different
authority than an earlier proxy of the same stockholder will constitute a
revocation of such earlier proxy.

     UNLESS OTHERWISE SPECIFIED IN THE PROXY (AND EXCEPT FOR "BROKER NON-VOTES"
DESCRIBED BELOW), STOCK REPRESENTED BY PROXIES WILL BE VOTED (I) FOR THE
ELECTION OF THE BOARD'S NOMINEES FOR DIRECTORS; (II) FOR THE PROPOSED AMENDED
AND RESTATED STOCK INCENTIVE PLAN; (III) FOR THE RATIFICATION OF THE SELECTION
OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2002 ("FISCAL 2002"); AND (IV) IN THE DISCRETION OF THE PROXY
HOLDERS WITH RESPECT TO SUCH MATTERS AS MAY COME BEFORE THE ANNUAL MEETING.

     The cost of soliciting proxies will be borne by the Company. In addition
to the use of the mails, proxies may be solicited personally or by telephone by
some of the regular employees of the Company. The Company does not expect to
pay any compensation for the solicitation of proxies, but may reimburse brokers
and other persons holding stock in their names, or in the names of nominees,
for their expense incurred in sending proxy materials to their principals and
obtaining their proxies. On or about January 9, 2002, this Proxy Statement and
the accompanying form of proxy are to be mailed to each stockholder of record
as of the Record Date.

     As of December 20, 2001, the Company had outstanding 6,084,653 shares of
the Company's $.01 par value common stock (the "Common Stock"), the Company's
only class of voting securities outstanding. Each share of Common Stock
outstanding entitles the holder thereof to one vote. The majority of all the
outstanding shares of Common Stock constitutes a quorum at the Annual Meeting.
Shares of Common Stock represented by proxies that reflect abstentions and
"broker non-votes" (i.e. Common Stock represented at the Annual Meeting by
proxies held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) will be counted as a vote represented and voted at the Annual Meeting
for purposes of determining the number of votes required to approve a proposal.
Shares of Common Stock represented by proxies that withhold authority to vote
for any proposal or for an individual nominee for election as a director and
broker non-votes will not be counted as a vote represented and voted at the
Annual Meeting for purposes of determining the number of votes required to
approve a proposal or to elect such nominee and effectively count as a vote
against such proposal or nominee.

<PAGE>

                              ELECTION OF DIRECTORS
                                (PROPOSAL NO. 1)


NOMINEES FOR ELECTION OF DIRECTORS

     Seven directors are to be elected at the Annual Meeting, each to hold
office until the next annual meeting of stockholders and until his successor is
duly elected and qualified. In voting for directors, for each share of Common
Stock held of record, such stockholder is entitled to cast one vote either in
favor of or against each candidate, or to abstain from voting on any or all
candidates. It is intended that shares represented by the enclosed form of
proxy will be voted in favor of the election of all of the nominees named below
as directors, all of whom are now directors of the Company, unless otherwise
specified in such proxy.If any of the nominees should become unavailable for
election, the shares represented by such proxies will be voted for such
substitute nominees as may be nominated by the Board. The election of directors
requires the affirmative vote of the holders of a plurality of the shares
present or represented and entitled to vote at the Annual Meeting.

     The following information is given with respect to the nominees:

<TABLE>
<CAPTION>
                                                                                             DIRECTOR
NAME                                                PRINCIPAL OCCUPATION                      SINCE
----                                                --------------------                     --------
<S>                                <C>                                                      <C>
Lamson Rheinfrank, Jr. .........   Chairman of the Board of the Company(1)                    1986

James E. Lund ..................   Chief Executive Officer and President of the               1986
                                   Company(2)

James J. Thome .................   Chief Operating Officer and Executive Vice President       1990
                                   of the Company(3)

Don H. Alexander ...............   President and Chief Executive Officer of Alexander         1986
                                   & Associates, Inc.(4)

Robert D. Freeland .............   Chairman of the Board of Havens Steel Company(5)           1988

Thomas A. McDonnell ............   President and Chief Executive Officer of DST               1993
                                   Systems, Inc.(6)

Richard C. Green, Jr. ..........   Chairman of the Board of UtiliCorp United, Inc.(7)         1995

</TABLE>

----------
(1)   Mr. Rheinfrank, age 61, has been Chairman of the Board of the Company
      since its inception in July 1986. He was the Chief Executive Officer and
      Chairman of the Board of Directors of Standard Havens, Inc. ("Standard
      Havens") from 1967 until May 1989 when Standard Havens, which had been an
      affiliate of the Company, was acquired by a subsidiary of Raytheon
      Company. Mr. Rheinfrank also served as the non-executive Chairman of the
      Board of Celotex Corporation from 1997 to 2000, a Director of Commerce
      Bank of Kansas City and an advisory director of Havens Steel Company and
      U.S. Engineering Co.

(2)   Mr. Lund, age 52, has been a Director of the Company since its inception
      in July 1986. He has been President and Chief Executive Officer of the
      Company since April 1993 and prior thereto, served as Executive Vice
      President. Mr. Lund joined Standard Havens in 1979 where he served in
      various capacities through 1986 including the position of Vice President
      and General Manager of the Baghouse Accessories Division.

(3)   Mr. Thome, age 46, has been Chief Operating Officer of the Company since
      May 1997 and Executive Vice President of the Company since April 1993. He
      has been a Director of the Company since February 1990. He joined the
      Company in 1986 as National Sales Manager and became Vice President of
      the Company in November 1988. Prior to his employment with the Company,
      Mr. Thome served in various positions with Standard Havens from 1979 to
      1986.

(4)   Mr. Alexander, age 63, has been a Director of the Company since its
      inception in July 1986. Mr. Alexander is President and Chief Executive
      Officer of Alexander & Associates, Inc., a private investment group;
      Chairman of EMCO Specialty Products, Inc, a manufacturing company of hat
      and coat racks; Chairman of Tulsa Power LLC, a Tulsa-based manufacturer
      of machinery for the wire and cable industry; and a Director of the Bank
      of Blue Valley, a commercial banking company in Overland Park, Kansas.

(5)   Mr. Freeland, age 64, has been a Director of the Company since November
      1988. He is Chairman of the Board of Havens Steel Company of Kansas City,
      Missouri, a global steel construction company. From 1983 to 1993, he was
      President and Chief Executive Officer and has been a Director of Havens
      Steel Company since 1971. Mr. Freeland is a past President and Board
      Member of the Central Fabricators Association of Chicago, Illinois, and is
      the immediate past Chairman and current Board Member of the American
      Institute of Steel Construction of Chicago, Illinois.


                                       2
<PAGE>


(6)   Mr. McDonnell, age 56, has been a Director of the Company since December
      1993. Mr. McDonnell is the President and Chief Executive Officer and a
      Director of DST Systems, Inc. ("DST"), a company providing information
      processing and computer software services primarily to mutual funds and
      financial service organizations. He has been employed by DST in various
      capacities since 1973. He is a Director of Commerce Bancshares, Inc.,
      Ascential Software, Inc., Euronet Services, Inc., Computer Sciences
      Corporation and Garmin Ltd.

(7)   Mr. Green, age 47, has been a Director of the Company since November
      1995. Mr. Green is Chairman of the Board of Directors of UtiliCorp
      United, Inc. ("UtiliCorp United"), a global energy company. His
      association with UtiliCorp United began in 1976 with assignments in a
      variety of operating and staff positions involving plant supervision,
      legal, finance and treasury functions. He was appointed Chief Executive
      Officer of UtiliCorp United in 1985 and Chairman of the Board of
      Directors of UtiliCorp United in 1989. He is a Trustee of the Urban
      Institute in Washington, DC and a member of the board of directors of
      Yellow Corp. and the Midwest Research Institute.


COMMITTEES AND MEETINGS OF THE BOARD

     During the Company's fiscal year ended September 30, 2001 ("Fiscal 2001"),
the Board held four regular meetings and one special meeting. The Board has an
Audit Committee and a Compensation Committee, but does not have a Nominating
Committee.

     The Audit Committee consists of Messrs. Alexander, Freeland, McDonnell and
Green. During Fiscal 2001, the Audit Committee met three times. The Audit
Committee reviews and reports to the Board with respect to various auditing and
accounting matters, including the nomination of the Company's independent
public accountants, the scope of audit procedures, general accounting policy
matters, and the performance of the Company's independent public accountants.

     During Fiscal 2001, the Compensation Committee, comprised of Messrs.
Alexander, Freeland, McDonnell and Green, met four times. The Compensation
Committee is responsible for the review and approval of the annual corporate
compensation guidelines, executive officer bonuses, executive officer
compensation, and the potential levels of contribution to or awards under the
Company's Profit Sharing and Employee Stock Ownership Plans, 401(k) plan and
the Amended and Restated Incentive Stock Option Plan for the ensuing year.

     During Fiscal 2001, all of the directors attended at least 75% of the
meetings of the Board and committees of which they are members.


DIRECTORS' COMPENSATION

     Currently, each director who is not employed by the Company receives an
annual retainer of $14,000 plus $1,000 for each meeting of the Board or any
committee he attends, which, upon election, can be paid in the form of Common
Stock. All eligible directors elected to receive Common Stock for all
compensation earned in Fiscal 2001.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     To the Company's knowledge, based solely on a review of copies of Section
16(a) forms submitted to the Company during and with respect to fiscal 2001,
all officers, directors and beneficial owners of more than 10% of Common Stock
of the Company filed timely reports under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") during Fiscal 2001.


        COMPANY OFFICERS AND SENIOR OFFICERS OF SUBSIDIARY CORPORATIONS

     Messrs. Rheinfrank, Lund and Thome are officers of the Company who are
listed above as nominees for director. The only officers of the Company and
senior officers of the Company's subsidiaries other than these individuals are
H. Torsten Andersch, James C. Shay, Robert B. O'Conor, and Stanley D. Biggs.

     H. Torsten Andersch, age 44, is a Vice President having joined the
Company's wholly-owned subsidiary, BHA Group GmbH as Sales Manager in September
1990. He became Assistant General Manager in December 1990 and was promoted to
General Manager of BHA Group GmbH in September 1992. Prior to September 1990,
he was employed as Sales Manager at Eastman Christensen GmbH.


                                       3
<PAGE>

     James C. Shay, age 38, has been Senior Vice President and Chief Financial
Officer since August 1999. He had been Treasurer and Chief Financial Officer
since March 1994 and was the Corporate Secretary from May 1997 to August 1999.
He joined the Company as Controller in June 1992. From 1986 to 1992, he was
employed at KPMG LLP as an Audit Manager and in various other positions.

     Robert B. O'Conor, age 44, has been the Senior Vice President of Sales of
the Company's principal operating subsidiary since July 1999. He was Vice
President of Sales from 1996 until 1999. From 1983, when he joined the Company,
through 1996, he held numerous positions in Sales and Product Management. Prior
to August 1983, he was employed in sales and engineering positions for
Owens-Corning Fiberglass Corporation.

     Stanley D. Biggs, age 43, joined the Company in August 1999 as Vice
President, Treasurer and Corporate Secretary. From 1988 until August 1999, he
was employed by The Rival Company as Vice President, Treasurer and Corporate
Secretary and various other positions.


                CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In July 2001, the Company and Mr. McDonnell purchased 20,000 and 47,500
shares of the Company's common stock, respectively from Havens Steel Company of
Kansas City. Mr. Freeland is a Director of the Company and is also the Chairman
of the Board of Havens Steel Company. Mr. Rheinfrank is the Chairman of the
Board of the Company and is an advisory director of Havens Steel Company. The
shares were acquired in a broker transaction at a price of $13.25 per share,
which was the market value on the date of the transaction.


                                       4
<PAGE>

                             EXECUTIVE COMPENSATION


I. SUMMARY COMPENSATION TABLE

     The following table shows, for the Company's Chief Executive Officer and
each of the other four most highly compensated executive officers of the
Company (collectively, the "named executive officers"), information concerning
compensation earned for services in all capacities during the Fiscal 2001, as
well as compensation earned by each such person for the two previous fiscal
years.

<TABLE>
<CAPTION>
                                                      ANNUAL COMPENSATION
                                      ---------------------------------------------------
          NAME AND
          PRINCIPAL           FISCAL                       ANNUAL        OTHER ANNUAL
          POSITION             YEAR       SALARY($)     BONUS(1)($)   COMPENSATION(2)($)
             (A)               (B)           (C)            (D)               (E)
----------------------------  ------  ---------------- ------------- --------------------
<S>                          <C>      <C>              <C>           <C>
James E. Lund,                 2001      250,000            50,400           --
 Chief Executive Officer       2000      250,000            58,300           --
 and President                 1999      241,800              --             --

Lamson Rheinfrank, Jr.,        2001      178,500            25,200           --
 Chairman                      2000      178,500            29,150           --
                               1999      178,500              --             --

James J. Thome,                2001      250,000            50,400           --
 Executive Vice President      2000      250,000            58,300           --
 and Chief Operating           1999      241,800              --             --
 Officer

James C. Shay,                 2001      170,000            44,100           --
 Senior Vice President and     2000      170,000            51,013           --
 Chief Financial Officer       1999      146,700              --             --

Robert B. O'Conor,             2001      171,990(6)         10,500           --
 Senior Vice President         2000      172,895             5,000           --
 of Sales                      1999      163,855              --             --


<CAPTION>
                                     LONG-TERM COMPENSATION
                             ---------------------------------------
                                       AWARDS              PAYOUTS
                             -------------------------- ------------
                                             SECURITIES
          NAME AND             RESTRICTED    UNDERLYING
          PRINCIPAL               STOCK       OPTIONS/      LTIP         ALL OTHER
          POSITION            AWARDS(S)($)    SARS(#)    PAYOUTS($)   COMPENSATION($)
             (A)                   (F)          (G)          (H)            (I)
---------------------------- -------------- ----------- ------------ ----------------
<S>                          <C>            <C>         <C>          <C>
James E. Lund,                     --            --          --          24,894(3)
 Chief Executive Officer           --          36,000        --          15,225(4)
 and President                     --            --          --           8,700(5)

Lamson Rheinfrank, Jr.,            --            --          --          36,654(3)
 Chairman                          --          18,000        --          20,235(4)
                                   --            --          --           7,120(5)

James J. Thome,                    --            --          --          21,330(3)
 Executive Vice President          --          36,000        --          13,850(4)
 and Chief Operating               --            --          --           4,710(5)
 Officer

James C. Shay,                     --            --          --          16,154(3)
 Senior Vice President and         --          27,000        --          13,126(4)
 Chief Financial Officer           --            --          --           3,420(5)

Robert B. O'Conor,                 --            --          --          15,509(3)
 Senior Vice President             --            --          --          12,087(4)
 of Sales                          --          20,000        --           4,170(5)
</TABLE>

----------
(1)   Annual bonus payments are based on the Company's financial performance
      for each fiscal year and were paid in the subsequent fiscal year (see
      "Compensation Committee Report on Executive Compensation -- Annual Cash
      Incentives").

(2)   No amounts for executive earnings and other personal benefits are shown
      because the aggregate dollar amount per executive is less than either
      $50,000 or 10% of annual salary and bonus.

(3)   Amounts of All Other Compensation for Fiscal 2001 include the following:

      (i)   Contributions by the Company under the ESOP and Profit Sharing
            plans: each executive $6,654;

      (ii)  Contributions by the Company under the 401(k) plan: each executive
            $900; and,

      (iii) Premiums on life insurance for executives paid by the Company: Mr.
            Lund, $17,340; Mr. Rheinfrank, $29,100; Mr. Thome, $13,776; Mr.
            Shay, $8,600; Mr. O'Conor, $7,955.

(4)   Amounts of All Other Compensation for Fiscal 2000 include the following:

      (i)   Contributions by the Company under the ESOP and Profit Sharing
            Plans: each executive $7,360;

      (ii)  Contributions by the Company under the 401(k) plan: each executive
            $750; and,

      (iii) Premiums on life insurance for executives paid by the Company: Mr.
            Lund, $7,115; Mr. Rheinfrank, $12,125; Mr. Thome, $5,740; Mr. Shay,
            $5,016; Mr. O'Conor, $3,977.

(5)   Amounts of All Other Compensation for Fiscal 1999 include the following:

      (i)   Contributions by the Company under the ESOP: each executive $2,400;

      (ii)  Contributions by the Company under the 401(k) plan: each executive
            $600; and,

      (iii) Premiums on life insurance for executives paid by the Company: Mr.
            Lund, $5,700; Mr. Rheinfrank, $4,120; Mr. Thome, $1,710; Mr. Shay,
            $420; Mr. O'Conor, $1,170.

(6)   Base salary for Mr. O'Conor also includes monthly incentives tied to
      sales results.


                                       5
<PAGE>

II. OPTION/SAR GRANTS TABLE

     No individual grants of stock options or freestanding SARs were made
during Fiscal 2001 to any of the named executive officers.


III. AGGREGATED OPTION EXERCISES IN FISCAL 2001 AND FISCAL YEAR-END ("FY-END")
     OPTION VALUES

<TABLE>
<CAPTION>
                                     SHARES                                                        VALUE OF UNEXERCISED
                                  ACQUIRED ON      VALUE     NUMBER OF SECURITIES UNDERLYING      IN-THE MONEY OPTIONS AT
              NAME                EXERCISE(#)   REALIZED($)  UNEXERCISED OPTIONS AT FY-END(#)          FY-END($)(2)
               (A)                    (B)           (C)                    (D)                              (E)
-------------------------------- ------------- ------------- -------------------------------- -------------------------------
                                                              EXERCISABLE   UNEXERCISABLE(1)   EXERCISABLE   UNEXERCISABLE(1)
                                                             ------------- ------------------ ------------- -----------------
<S>                              <C>           <C>           <C>           <C>                <C>           <C>
James E. Lund ..................     19,965        76,965       107,811    78,300                847,394         190,080
Lamson Rheinfrank, Jr. .........      5,989        17,548            --    60,300                     --          95,040
James J. Thome .................     19,965        76,965        93,170    78,300                732,316         190,000
James C. Shay ..................     14,340        77,440        25,543    70,675                143,078         142,560
Robert B. O'Conor ..............     20,718       101,589         6,807    20,000                 36,894          36,800
</TABLE>

----------
(1)   Includes options that have not met vesting requirements, minimum fair
      market value requirements and/or minimum earnings per share requirements.
      The majority of the stock options currently outstanding were issued with
      provisions restricting the exercise unless the Company achieves a share
      price of $25.00 per share or earnings per diluted share of $1.25.

(2)   Based on a fair market value as of September 30, 2001 of $15.00 per
      share. Values are stated on a pre-tax basis.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     During Fiscal 2001, the Compensation Committee was comprised of Messrs.
Alexander, Freeland, McDonnell and Green. No such member of the Compensation
Committee was at any time an officer or employee of the Company or any of its
subsidiaries.


EXECUTIVE EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL PROVISIONS

     The Company has employment agreements with each officer who serves on its
Executive Committee (each, an "Agreement" and collectively, the "Agreements").
The Agreements, which were effective February 1, 2000 are subject to one year
automatic extensions on each October 1, unless either party gives notice within
90 days of such October 1 of his or its election to have such automatic
extensions cease. All of the Agreements have been automatically extended.

     Each Agreement prohibits the executive from competing with the Company for
the two-year period after the termination of such employment with the Company.
Each Agreement further provides that if the Company terminates the Agreement
without cause or if the executive terminates his Agreement for good reason, the
executive covered by such Agreement is entitled to receive one year base salary
together with a specified percentage of the executive's annual bonus potential.
If the Agreement is terminated for these reasons and the circumstances relate
to a change in control of the Company, then the corresponding base salary and
annual bonus payments will cover a two year period. In the event such payments
are subject to an excise tax imposed by Section 4999 of the Code, the Company
is required to make an additional gross-up payment to the employee to offset
the effect of the excise tax on the employee.


                                       6
<PAGE>

            COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Board believes that increasing the value of the Company to its
stockholders is the Board's most important objective and should be the key
measure of management performance. The Board also believes that executive
compensation should be objectively determined. For this reason, the
Compensation Committee, which is made up of directors who are not employees of
the Company, is responsible for determining the compensation packages of the
Company's executives.

     The Company is focused on achieving consistent earnings growth and
increasing returns to its shareholders. In previous filings, the Company has
stated that although it remains cautious about near term results due to
challenging business conditions, the following are its longer-term financial
goals:

     o Increase compounded earnings per diluted share at a 12% to 15% annual
       rate over time.

     o Increase return on average equity to 15% by fiscal 2004. Moving beyond
       fiscal 2004, the longer-term goal is a 20% return on average equity.

     The Compensation Committee's role in determining the compensation of the
executives of the Company is to assure that the Company's compensation strategy
is aligned with the above stated objectives and that executive compensation is
structured to provide fair, reasonable and competitive base salary levels and
the opportunity for the executives to earn incentive compensation reflecting
both the Company's and the individual's performance.

     The executive compensation program is designed to accomplish the Board's
objectives. The program is based upon the principles that: executive
performance should be judged and compensated primarily on the basis of the
Company's earnings and the strength of the Company's financial position;
long-term appreciation in stockholder value is an appropriate measure of the
Company's financial performance; and the most effective approach to promoting
the financial success of the Company is to align the stockholders' and the
executives' interests. This alignment is best accomplished through a
compensation strategy emphasizing long-term stock ownership. As a result, the
program is designed to increase the proportion of long-term compensation tied
to increases in the Company's earnings, financial position and appreciation in
stockholder value. The annual cash compensation for executive officers is
primarily in the form of base salary, which is being maintained at levels
consistent with competitive market compensation practices, and annual cash
incentives based on quantitative objectives tied to the Company's financial
performance. Annual cash compensation is supplemented with long-term incentive
compensation, primarily in the form of stock incentives, intended to link
executive compensation to changes in stockholders' value. The Compensation
Committee intends that the application of these principles will result in total
executive compensation and capital accumulation potential above competitive
levels for superior stockholder returns and below competitive levels for
average or lesser returns.

     There are three components to the Company's compensation program for the
officers that serve on its Executive Committee: base salary, annual cash
incentives and long-term stock incentives. Each of these components is
discussed in detail below.


BASE SALARY

     Base salaries for Fiscal 2001 were established under the Agreements for
each officer that serves on the Executive Committee. Factors considered in
setting these salaries include the responsibilities of the position,
compensation of executives in companies of similar size or in the same industry
and external market conditions. Each of the executive officers' base salaries
were fixed at the same amount for fiscal 2000 and 2001.


                                       7
<PAGE>

ANNUAL CASH INCENTIVES

     The stated goal of the Compensation Committee is to structure executive
compensation that focuses the efforts of senior management on achieving the
above stated business goals of the Company. An annual cash incentive matrix
covering multiple years is utilized to compensate senior management for
achieving consistent and increasing earnings growth over several periods. The
annual cash payments for each executive under this program are fixed for each
of the multiple years covered by the matrix. The matrix determines the amount
of annual cash incentive for each executive based on each individual's maximum
potential award and the Company's earnings per diluted share (EPS) for that
year. During fiscal 2000 and 2001, each of the Company's executive officers
earned a cash incentive under this program.


LONG-TERM STOCK INCENTIVES

     The Committee believes that long-term changes in stockholder value are an
important measure of the Company's performance. The Committee uses stock
incentives (primarily stock options) to align the interests of the Company's
stockholders and executives.

     With respect to stock incentives, the Compensation Committee has expressed
its desire that the executives increase their ownership in the Company by
retaining ownership of a substantial portion of the shares of the Company's
Common Stock acquired through the stock incentive awards. The Compensation
Committee has advised the executive officers that they should retain a majority
(less shares forfeited or used to pay the option exercise price or taxes) of
all restricted stock and stock acquired through the exercise of options
previously awarded. Since 1994, the executives of the Company have exercised
certain stock options and have retained the maximum number of shares possible
after using a portion of the shares to pay the option exercise price and income
taxes.


                    COMPENSATION OF CHIEF EXECUTIVE OFFICER

     Mr. Lund received total compensation amounting to $325,294 in Fiscal 2001.
His Fiscal 2001 base salary was unchanged from Fiscal 2000. He earned a cash
incentive payment based on the Company's financial performance against the
requirements of the three-year cash incentive matrix currently in place. The
Compensation Committee considers Mr. Lund's compensation to be in line with
industry and market size standards and to be consistent with Company
performance objectives.

    This report was presented to and approved by the Board.

    Thomas A. McDonnell
    Don H. Alexander
    Robert D. Freeland
    Richard C. Green, Jr.

                                       8

<PAGE>

                     AUDIT COMMITTEE REPORT TO SHAREHOLDERS

     The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal
controls. The Audit Committee is composed of four directors, each of whom is
independent as defined by the National Association of Securities Dealers'
listing standards. The Audit Committee operates under a written charter
approved by the Board of Directors. A copy of the charter was filed with the
Proxy Statement dated January 16, 2001.

     Management is responsible for the Company's internal controls and
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.

     In connection with these responsibilities, the Audit Committee met with
management and the independent accountants to review and discuss the September
30, 2001 financial statements. The Audit Committee also discussed with the
independent accountants the matters required by Statement on Auditing Standards
No. 61 (Communication with Audit Committees). The Audit Committee also received
written disclosures from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
that firm's independence.

     Based upon the Audit Committee's discussions with management and the
independent accountants and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
September 30, 2001, to be filed with the Securities and Exchange Commission.


                                        Respectfully submitted,


                                        THE AUDIT COMMITTEE



                                        Richard C. Green, Jr.
                                        Don H. Alexander
                                        Robert D. Freeland
                                        Thomas A. McDonnell

                                       9
<PAGE>

                       INDEPENDENT ACCOUNTANT DISCLOSURE


AUDIT FEES

     The aggregate fees billed for professional services rendered by KPMG LLP
for the audit of our annual financial statements for the year ended September
30, 2001 and the reviews of the condensed financial statements included in our
quarterly Reports on Forms 10-Q for the year ended September 30, 2001 were
$76,700.


FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

     There were no fees billed for information technology services rendered by
KPMG LLP during the year ended September 30, 2001.


INCOME TAX SERVICES FEES

     The aggregate fees billed for income tax services rendered by KPMG LLP
during the year ended September 30, 2001, including fees for domestic and
international tax consulting and compliance were $85,000.


ALL OTHER FEES

     The aggregate fees billed for all other services, exclusive of the fees
disclosed above relating to financial statement audit services, financial
information systems design and implementation and income tax services rendered
by KPMG LLP during the year ended September 30, 2001 were $54,700, consisting
primarily of audits of the Company's employee benefit plans and statutory
audits of certain of the Company's international subsidiaries.

     The Audit Committee of the Board of Directors has determined that the
provision of these services is compatible with maintaining the independence of
KPMG LLP.


                                       10
<PAGE>

               COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
                            PERFORMANCE GRAPHS FOR
                           BHA GROUP HOLDINGS, INC.

     The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on September 30, 1996 in the Company's Common Stock,
the Standard & Poors 500 Stock Index and the First Analysis Environmental
Index. The comparisons in this table are required by the Securities and
Exchange Commission. The stock price performance shown on the graph is not
intended to forecast or be indicative of future price performance.


Company/Index              9/96     9/97     9/98      9/99      9/00      9/01
-------------             ------   ------   ------    ------    ------    ------
BHA Group Holdings, Inc.  100.00   131.76    99.40     82.91    123.52    131.09
S&P 500 Comp. Ltd.        100.00   140.45   153.14    195.74    221.74    162.71
First Analysis            100.00   133.38   122.06    121.66    131.31    114.31





                                       11
<PAGE>

               COMPARISON OF LONG-TERM CUMULATIVE TOTAL RETURNS
                            PERFORMANCE GRAPHS FOR
                           BHA GROUP HOLDINGS, INC.

     The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on November 30, 1986 (which corresponds to the month in
which the Company's stock first traded) in the Company's Common Stock, the
Standard & Poors 500 Stock Index and the First Analysis Environmental Index.
The stock price performance shown on the graph is not intended to forecast or
be indicative of future price performance.


                               [GRAPHIC OMITTED]


<TABLE>
<CAPTION>
Company/Index               11/86         9/87        9/88         9/89       9/90         9/91         9/92        9/93
-------------               ------       ------      ------       ------     ------       ------       ------      ------
<S>                        <C>          <C>         <C>          <C>        <C>          <C>          <C>         <C>
BHA Group Holdings, Inc.    100.00       207.41      266.71       625.06     558.43       475.04       508.42      468.89
S&P 500 Comp. Ltd.          100.00       133.07      116.61       155.10     140.77       184.64       205.05      231.70
First Analysis              100.00       145.94      128.83       180.30     157.09       183.84       166.41      158.28



<CAPTION>
Company/Index                9/94         9/95        9/96         9/97       9/98         9/99         9/00        9/01
-------------               ------       ------      ------       ------     ------       ------       ------      ------
<S>                        <C>          <C>         <C>          <C>        <C>          <C>          <C>         <C>
BHA Group Holdings, Inc.    440.39       461.60      550.16       724.95     546.88       456.20       679.60      721.25
S&P 500 Comp. Ltd.          240.25       311.71      375.08       526.80     574.45       734.17       831.70      610.29
First Analysis              159.47       177.65      197.01       246.51     205.89       219.46       253.20      220.42
</TABLE>




                                       12
<PAGE>

        SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of December 20, 2001, the Company had outstanding and entitled to vote
6,084,653 shares of Common Stock. As of December 20, 2001, the trustee of the
ESOP was the registered holder of 780,503 shares of Common Stock, 704,921 of
which have vested in participant accounts. Participants in the ESOP are
entitled to vote both the vested and unvested shares which are in their
account.

     The following table sets forth, as of December 20, 2001, certain
information with respect to (a) each person known by the Company to own
beneficially five percent or more of the outstanding Common Stock, (b) each of
the directors and nominees for director of the Company, (c) each of the
executive officers named in the Summary Compensation Table, and (d) all
directors, executive and senior officers of the Company and its subsidiaries as
a group:

<TABLE>
<CAPTION>
            NAME AND ADDRESS                     AMOUNT AND NATURE          PERCENT OF
           OF BENEFICIAL OWNER              OF BENEFICIAL OWNERSHIP(1)     COMMON STOCK
----------------------------------------   ----------------------------   -------------
<S>                                        <C>                            <C>
Royce & Associates, Inc. ...............              907,828                  14.9%
 1414 Avenue of the Americas, 9th Floor
 New York, New York 10019-2578

Merrill Lynch Asset Management .........              651,777                  10.7%
 800 Scudder Mill Road
 Plainsboro, NJ 08536-1606

T. Rowe Price Associates ...............              644,400                  10.6%
 100 East Pratt Street, 7th Floor
 Baltimore, Maryland 21202-1090

Lamson Rheinfrank, Jr. .................              502,810(2)                8.3%
 BHA Group Holdings, Inc.
 8800 East 63rd Street
 Kansas City, Missouri 64133

Dimensional FD Advisors, Inc. ..........              325,307                   5.3%
 1299 Ocean Avenue, 11th Floor
 Santa Monica, CA 90401-1005

James E. Lund ..........................              198,317(3)                3.3%
 BHA Group Holdings, Inc.
 8800 East 63rd Street
 Kansas City, Missouri 64133

James J. Thome .........................              159,707(4)                2.6%
 BHA Group Holdings, Inc.
 8800 East 63rd Street
 Kansas City, Missouri 64133

Thomas A. McDonnell ....................               76,348(5)                 *
 DST Systems, Inc.
 333 W. 11th Street, 5th Floor
 Kansas City, Missouri 64105

James C. Shay ..........................               38,414(6)                 *
 BHA Group Holdings, Inc.
 8800 East 63rd Street
 Kansas City, Missouri 64133

Robert B. O'Conor ......................               27,722(7)                 *
 BHA Group, Inc.
 8800 East 63rd Street
 Kansas City, MO 64133
</TABLE>

                                       13
<PAGE>

<TABLE>
<CAPTION>
                NAME AND ADDRESS                        AMOUNT AND NATURE          PERCENT OF
              OF BENEFICIAL OWNER                  OF BENEFICIAL OWNERSHIP(1)     COMMON STOCK
-----------------------------------------------   ----------------------------   -------------
<S>                                               <C>                            <C>
Don H. Alexander ..............................              31,460(8)                 *
 Alexander & Associates, Inc.
 408 Miami
 Kansas City, KS 66105

Robert D. Freeland ............................              15,801(9)                 *
 Havens Steel Company
 7219 East 17th Street
 Kansas City, Missouri 64126

Richard C. Green, Jr. .........................              15,346(10)                *
 UtiliCorp United, Inc.
 MSC 2-283
 20 West 9th Street
 Kansas City, Missouri 64105

All directors, named executive and senior
 Officers as a group (10 people) (11) .........           1,076,231                  17.7%
</TABLE>

----------
*     Less than 1%

(1)   All information is as of December 20, 2001 and was determined in
      accordance with Rule 13d-3 under the Exchange Act, based upon information
      furnished by the persons listed or contained in filings made by them with
      the Securities and Exchange Commission. Unless otherwise indicated,
      beneficial ownership disclosed consists of sole voting and dispositive
      power.

(2)   Consists of 30,833 shares of Common Stock held of record by Mr.
      Rheinfrank, 195,404 shares of Common Stock held by irrevocable family
      trusts of which Mr. Rheinfrank is the co-trustee, 7,000 shares of Common
      Stock held by his daughters (as to which shares he disclaims any
      beneficial interest), 32,490 shares of Common Stock owned by Mr.
      Rheinfrank's wife (as to which shares he disclaims any beneficial
      interest), 21,200 shares of Common Stock in the Rheinfrank Foundation,
      187,550 shares of Common Stock in the Rheinfrank Family Limited
      Partnership, 8,076 shares of Common Stock held of record by the trustee
      of the ESOP for Mr. Rheinfrank who is entitled to vote such shares by
      virtue of the allocation under the ESOP, and 20,257 shares held in
      account under the BHA Group Holdings, Inc. 401(K) Plan.

(3)   Consists of 63,954 shares of Common Stock held of record by Mr. Lund,
      8,052 shares of Common Stock owned by Mr. Lund's wife (as to which shares
      he disclaims any beneficial interest), options to purchase 107,811 shares
      of Common Stock under the Plan which are exercisable within 60 days of
      December 20, 2001, and 18,500 shares of Common Stock held of record by
      the trustee of the ESOP for Mr. Lund who is entitled to vote such shares
      by virtue of the allocation under the ESOP.

(4)   Consists of 50,065 shares of Common Stock held of record by Mr. Thome,
      options to purchase 93,170 shares of Common Stock under the Plan which
      are exercisable within 60 days of December 20, 2001, 16,239 shares of
      Common Stock held of record by the trustee of the ESOP for Mr. Thome who
      is entitled to vote such shares by virtue of the allocation under the
      ESOP, and 233 shares held in account under the BHA Group Holdings, Inc.
      401(K) Plan.

(5)   Consists of 68,862 shares of Common Stock held of record by Mr. McDonnell
      and options to purchase 7,486 shares under the Plan which are exercisable
      within 60 days of December 20, 2001.

(6)   Consists of 7,066 shares of Common Stock held of record by Mr. Shay,
      options to purchase 25,543 shares of Common Stock under the Plan which
      are exercisable within 60 days of December 20, 2001, 4,022 shares of
      Common Stock held of record by the trustee of the ESOP for Mr. Shay who
      is entitled to vote such shares by virtue of the allocation under the
      ESOP, and 1,783 shares held in account under the BHA Group Holdings, Inc.
      401(K) Plan.

(7)   Consists of 11,737 shares of Common Stock held of record by Mr. O'Conor,
      options to purchase 6,807 shares of Common Stock under the Plan which are
      exercisable within 60 days of December 20, 2001, 8,154 shares of Common
      Stock held of record by the trustee of the ESOP for Mr. O'Conor who is
      entitled to vote such shares by virtue of the allocation under the ESOP,
      and 1,024 shares held in account under the BHA Group Holdings, Inc.
      401(K) Plan.

(8)   Consists of 31,460 shares of Common Stock held of record by Mr.
      Alexander.

(9)   Consists of 15,801 shares of Common Stock held of record by Mr. Freeland.


(10)  Consists of 15,346 shares of Common Stock held of record by Mr. Green.

(11)  Total beneficial ownership of all directors, named executives and senior
      officers as a group as reported is 1,076,231 shares or 17.7% of common
      shares currently outstanding. Excluding unexercised stock options, such
      ownership is 808,794 shares or 13.3% of the total common shares
      outstanding.

                                       14
<PAGE>

            PROPOSAL TO AMEND AND RESTATE THE COMPANY'S AMENDED AND
                         RESTATED INCENTIVE STOCK PLAN
                               (PROPOSAL NO. 2)

GENERAL.

     The stockholders are being asked to approve an Amended and Restated
Incentive Stock Plan (the "Restated Plan") which will, among other things, (i)
increase the number of shares of Common Stock available for issuance under the
existing Amended and Restated Incentive Stock Plan (the "Current Plan" or the
"Plan") by 500,000 shares from 1,231,761 shares (as adjusted for stock
dividends, and excluding shares issued pursuant to previously exercised options
and other shares previously granted pursuant to the Current Plan)to an
aggregate of 1,731,761 shares, (ii) expand the types of incentive awards the
Board may grant to explicitly include reload options (as described below),
(iii) increase the number of shares of Common Stock available for grants of
awards under the Restated Plan by the number of shares used by plan
participants to pay the exercise price of an award and/or the income tax
withholding obligations related to the exercise of an award, (iv) periodically
decrease the number of shares of Common Stock available for grants of awards
under the Restated Plan by the number of shares issued by the Company upon
exercise of options theretofore granted pursuant to the Restated Plan, and (v)
extend the termination date of the Current Plan from February 23, 2008 to
December 20, 2011. The Board approved the terms of the Restated Plan on
December 20, 2001, subject to stockholder approval at the Annual Meeting.

     With respect to awards issued under the Restated Plan using the 500,000
additional shares authorized by the Board on December 20, 2001, the
Compensation Committee may not utilize over 250,000 of such additional shares
for (i) options and stock appreciation rights granted to non-employee members
of the Board, and (ii) restricted stock and other stock based awards (other
than options and stock appreciation rights) under the Restated Plan. If the
Restated Plan is approved, the Restated Plan would cover an aggregate of
1,731,761 shares of Common Stock having an aggregate market value (as of
December 31, 2001) of $25,976,415 and after taking into account those awards
previously granted, 653,709 shares having an aggregate market value (as of
December 31, 2001) of $9,805,635 would be available for future issuance
(excluding the number of shares used by participants to pay the exercise price
and income tax withholdings related to an award after December 20, 2001).

     The following summary of the material features of the Restated Plan does
not purport to be complete and is qualified by reference to the complete text
of the Restated Plan, which is attached to this Proxy Statement as Appendix A.
Unless otherwise indicated below, the terms of the Restated Plan are not
materially different than those of the Current Plan.


TERMS OF THE RESTATED PLAN.

     Administration of the Plan. Under the Restated Plan, the Compensation
Committee has the authority, subject to the provisions of the Restated Plan, to
determine to whom options, restricted stock and/or other awards may be granted
and the terms and conditions of those awards, to provide for conditions under
which awards shall be forfeited, to accelerate the vesting of any award, to
interpret and construe the provisions of the Restated Plan and any award
agreement and to make determinations pursuant to any Restated Plan provision or
award agreement which shall be final and binding on all Restated Plan
participants. Under the Restated Plan, the Board has the right to retain or
reclaim all or a portion of the administration of the Restated Plan. Unless
otherwise determined by the Board, the Restated Plan requires the Compensation
Committee to consist solely of two or more members of the Board who are
"disinterested persons" within the meaning of Rule 16b-3(b)(3) of the
Securities Exchange Act of 1934 and are "outside directors" for purposes of
Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the
"Code").

     Awards Available under the Restated Plan. The Restated Plan permits the
Compensation Committee to grant stock options, restricted stock and other
awards to employees, officers, directors and consultants of the Company and its
subsidiaries. A summary of the material provisions of the awards available
under the Restated Plan is provided below.


                                       15
<PAGE>

     Non-Qualified and Incentive Stock Options. The Restated Plan permits the
grant of incentive stock options ("ISOs") (within the meaning of Section 422 of
the Code) or non tax-qualified stock options (i.e., stock options which are not
ISOs). Under the Restated Plan, the exercise price of an awarded option will be
set by the Compensation Committee and stated in an option agreement between the
Company and the recipient of the option. The Restated Plan provides that no
option will have an exercise price of less than 100% of fair market value of
the underlying shares on the date of grant.

     The Restated Plan permits the exercise price of an award to be paid (i) in
cash, (ii) by delivery of the Company's Common Stock with a fair market value
equal to the exercise price, (iii) pursuant to a broker-assisted "cashless
exercise" program if established by the Company, and (iv) by such other methods
as the Compensation Committee may deem appropriate.

     The Restated Plan limits the maximum number of shares of Common Stock that
may be issued to any single participant pursuant to options and stock
appreciation rights under the Restated Plan in any single calendar year to
100,000.

     Reload Options. Unlike the Current Plan, the Restated Plan explicitly
permits the grant of reload options, which are awards in the form of a stock
option to a participant who tendered shares of Common Stock to pay the exercise
price of a previously granted stock option award. The number of shares of
Common Stock subject to the newly granted reload option will equal the number
of shares tendered by the participant to pay the exercise price, plus the
number of shares withheld by the Company or surrendered by the participant to
pay the applicable withholding tax. A reload option will expire on the
expiration date of the original option exercised in connection with the reload
option grant. Under the Restated Plan, the number of shares of Common Stock
available for the grant of awards under the Restated Plan is increased by the
number of shares of Common Stock used by a participant to pay the exercise
price and income tax withholdings related to an award.

     Shares surrendered by a participant to pay the exercise price of an option
and/or the applicable withholding tax obligation must be owned by such
participant for at least six months.

     Restricted Stock. The Restated Plan permits the Compensation Committee to
award restricted stock to participants under the plan. The restricted stock
awards are subject to forfeiture until certain restrictions, terms and
conditions as the Compensation Committee may determine are fulfilled.

     Award in lieu of Compensation Election. The Restated Plan permits the
Compensation Committee to grant a director, officer or employee the right to
elect to exchange annual retainers, fees or compensation for awards (such as
stock option, restricted stock or stock awards) under the Restated Plan.

     Stock Appreciation Rights. The Restated Plan permits the Compensation
Committee to award stock appreciation rights ("SARs"), which may or may not be
granted together with options. Generally, SARs permit the holder thereof to
receive an amount (in cash or its equivalent value in Common Stock) equal to
the number shares of Common Stock with respect to which SARs are exercised
multiplied by the excess of the fair market value of the Common Stock on the
exercise date over the exercise price or other price specified in the award
agreement.

     Dividend Equivalent Award. The Restated Plan permits the Compensation
Committee to grant an award that represents the right to receive a dividend
with respect to any new or previously existing award, which will entitle the
recipient to receive at the time of settlement an amount equal to the actual
dividends paid on the Common Stock covered by the award and delivered to the
recipient. This type of award may be paid in the form of Common Stock, cash or
a combination of both.

     Stock Award. The Restated Plan permits the Compensation Committee to grant
an award of Common Stock. Such grant may be on a contingent basis.

     Other Stock Based Awards. The Restated Plan permits the Compensation
Committee to grant other Common Stock based awards that are related to or serve
a function similar to the awards described above.

     Vesting of Awards. The Restated Plan permits the Compensation Committee to
determine the time at which any award becomes exercisable and/or vested. The
Restated Plan also permits the Compensation Committee to accelerate the
exercisability and/or vesting of any award.


                                       16
<PAGE>

     Adjustment upon Changes in Capitalization. Under the Restated Plan, the
aggregate number of shares of Common Stock as to which awards may be granted to
participants, the number of shares thereof covered by each outstanding award,
and the price per share of each such award, will all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease in
such shares, effected without receipt of consideration by the Company, or other
change in corporate or capital structure. The Restated Plan permits the
Compensation Committee to make any changes it deems necessary or desirable to
preserve the intended benefits of the Restated Plan for the Company and the
plan participants in the event of any reorganization, recapitalization, merger,
consolidation, spin-off, extraordinary dividend or other distribution or
similar transaction.

     Amendments to the Restated Plan. The Board may at any time terminate the
Restated Plan or from time to time make such modifications or amendments of the
Restated Plan as it may deem advisable. However, the Board may not make any
amendments to the Restated Plan that would increase the number of shares of
Common Stock available under the Restated Plan without the affirmative vote of
the holders of a majority of the outstanding shares of the capital stock of the
Company present or represented and entitled to vote at a duly held stockholders
meeting.


PARTICIPANTS IN THE RESTATED PLAN.

     If the Restated Plan is adopted, approximately 60-80 people, consisting of
4 directors who are not executive officers, 4 executive officers (including 3
directors who are executive officers), together with other managers and
consultants of the Company and its subsidiaries, will be eligible to
participate in all aspects of the Restated Plan.


TERMINATION OF THE RESTATED PLAN.

     The Restated Plan will terminate on December 20, 2011, while the Current
Plan terminates on February 23, 2008.


REASONS FOR THE RESTATED PLAN.

     The Company believes that the most effective approach to promoting the
financial success of the Company is to align the stockholders' and the
employees' interests. The Compensation Committee concluded this alignment is
best accomplished through a compensation strategy emphasizing long-term stock
ownership. The amendment to the Current Plan to explicitly contemplate and
authorize the issuance of reload options is intended, among other things, to
build executive and employee stock ownership.

     As of December 20, 2001, of the 2,221,084 shares of Common Stock then
issuable under the Current Plan, options to purchase 892,065 shares of Common
Stock had been exercised, 67,137 shares of Common Stock were granted as
restricted stock grants, 30,121 shares of Common Stock were granted to members
of the Board in lieu of cash compensation, and options to purchase 1,078,052
shares of Common Stock were outstanding, leaving 153,709 shares of Common Stock
available for future issuance under the Current Plan. The Board has determined
that the number of shares of Common Stock available for future issuance
pursuant to awards under the Current Plan must be increased if the plan is to
constitute a meaningful program by which the Company may continue to align the
stockholders' and employees' interests and to attract and retain desirable key
personnel. Accordingly, the Board, subject to stockholder approval at the
Annual Meeting, has approved an increase in the number of shares of Common
Stock available for issuance under the Restated Plan of 500,000 shares to an
aggregate of 1,731,761 shares. At December 20, 2001, the increase of 500,000
shares represented approximately eight percent of the outstanding number of
shares of Common Stock. The Compensation Committee intends to grant options and
other awards to individuals as part of an overall compensation strategy
intended to balance both long- and short-term objectives. The amount to be
granted to each individual will take in account (i) the long-term incentive
requirements of the individual's position and (ii) whether the individual has
exercised options and held shares of the Company's stock. The Compensation
Committee intends to maintain a reserve of approved but unissued stock options
to enable the Company to attract new and retain existing personnel.


                                       17
<PAGE>


FEDERAL INCOME TAX CONSEQUENCES.

     The following summary generally describes the principal federal (and not
state and local) income tax consequences of awards granted under the Restated
Plan. It is general in nature and is not intended to cover all tax consequences
that may apply to a particular employee or to the Company. The provisions of
the Code and the regulations thereunder relating to these matters are
complicated and their impact in any one case may depend upon the particular
circumstances. This discussion is based on the Code as currently in effect.

     The Restated Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act (ERISA), nor is it qualified under
Section 401(a) of the Code.

     Non-Qualified Stock Options. If a non-qualified stock option is granted in
accordance with the terms of the Restated Plan, no income will be recognized by
the recipient at the time the non-qualified stock option is granted. On
exercise of a non-qualified stock option, the amount by which the fair market
value of the Common Stock on the date of exercise exceeds the purchase price of
such shares will generally be taxable to the holder as ordinary income, and
will be deductible for tax purposes by the Company (or one of its subsidiaries)
in the year in which the holder recognizes the ordinary income. The disposition
of shares acquired upon exercise of a non-qualified stock option will
ordinarily result in long-term or short-term capital gain or loss (depending on
the applicable holding period) in an amount equal to the difference between the
amount realized on such disposition and the sum of the purchase price and the
amount of ordinary income recognized in connection with the exercise of the
non-qualified stock option.

     Incentive Stock Options. If an ISO is granted in accordance with the terms
of the Restated Plan, no income will be recognized by the recipient at the time
the ISO is granted. On exercise of an ISO, the holder will generally not
recognize any income and the Company (or one of its subsidiaries) will
generally not be entitled to a deduction for tax purposes. However, the
difference between the purchase price and the fair market value of the shares
received on the date of exercise will be treated as a positive adjustment in
determining alternative minimum taxable income, which may subject the holder to
the alternative minimum tax. If the shares acquired upon exercise of the ISO
are neither disposed of within two years after the date of the grant of the ISO
nor within one year after the date of exercise of the ISO, any profit realized
upon the disposition of such shares will be taxed as long-term capital gains.
However, if the holder disposes of shares acquired upon exercise of an ISO
within two years after the date of grant or within one year after the date of
exercise (a "disqualifying disposition"), the holder will generally recognize
ordinary income upon such disposition, and the Company (or one of its
subsidiaries) will generally be entitled to a deduction for tax purposes, in
the amount of the excess of the fair market value of the Common Stock on the
date the ISO is so exercised over the purchase price (or the gain on sale, if
less). Any excess of the amount realized by the holder on the disqualifying
disposition over the fair market value of the shares on the date of exercise of
the ISO will ordinarily constitute long-term or short-term capital gain
(depending on the applicable holding period).

     Stock Appreciation Rights. The amount of any cash (or the fair market
value of any Common Stock) received upon the exercise of SARs under the
Restated Plan will be includible in the holder's ordinary income and the
Company (or one of its subsidiaries) will be entitled to a deduction for such
amount.

     Restricted Stock. Generally, if restricted stock is awarded in accordance
with the terms of the Restated Plan, no income will be recognized by such
recipient at the time the award is made. Instead, a recipient of restricted
stock will be required to recognize as ordinary income the fair market value of
such restricted stock upon the lapse of the forfeiture provisions applicable
thereto, less any amount paid therefor. The recipient may, however, elect to
recognize as ordinary income at the time the restricted stock is first awarded
the fair market value of such restricted stock at the time of receipt, less any
amount paid therefor. Absent the making of the election referred to in the
preceding sentence, any cash dividends or other distributions paid with respect
to restricted stock prior to lapse of the applicable restriction will be
recognized by the recipient as ordinary income at the time of receipt. In each
case, the Company (or one of its subsidiaries) will be entitled to a deduction
in the same amount as the recipient recognizes compensation income.


                                       18
<PAGE>

     Non-Employee Directors' Stock. A non-employee director who elects to
receive payment of his director fees in the form of stock will recognize
ordinary income upon the receipt of such stock equal to its fair market value
and the Company will be entitled to a deduction in the same amount.


BENEFITS TO BE RECEIVED UNDER THE RESTATED PLAN.

     The Compensation Committee and the Board have not yet determined the
benefits or awards that will be allocated under the Restated Plan to executive
officers, directors and other employees. Under the terms of the Restated Plan,
the number of awards to be granted is within the discretion of the Compensation
Committee.


VOTE REQUIRED.

     Approval of the Restated Plan requires the affirmative vote of the holders
of a majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting. THE BOARD RECOMMENDS A VOTE FOR THE
APPROVAL OF THE RESTATED PLAN AND IT IS INTENDED THAT SHARES REPRESENTED BY THE
ENCLOSED FORM OF PROXY WILL BE VOTED IN FAVOR OF APPROVAL OF THE RESTATED PLAN
UNLESS OTHERWISE SPECIFIED IN SUCH PROXY.




                                       19
<PAGE>

                   INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                               (PROPOSAL NO. 3)

     KPMG LLP is the accounting firm which examined and reported on the
Company's financial statements for Fiscal 2001. KPMG LLP has been selected by
the Board to serve as the Company's accounting firm for Fiscal 2002.
Representatives of KPMG LLP are expected to attend the Annual Meeting. The
representatives of KPMG LLP will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.

     The Board is seeking stockholder approval of its selection of KPMG LLP.
Stockholder approval requires the affirmative vote of the holders of a majority
of the shares present or represented and entitled to vote at the Annual
Meeting. THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF
KPMG LLP AND IT IS INTENDED THAT SHARES REPRESENTED BY THE ENCLOSED FORM OF
PROXY WILL BE VOTED IN FAVOR OF THE RATIFICATION OF THE SELECTION OF KPMG LLP
UNLESS OTHERWISE SPECIFIED IN SUCH PROXY. If stockholders do not ratify the
appointment of KPMG LLP as the auditors of the Company for Fiscal 2002 at the
Annual Meeting, the Board, on recommendation of its Audit Committee, may
reconsider the selection.


                TIME FOR SUBMISSION OF PROPOSAL OF STOCKHOLDERS

     Any stockholder who intends to present a proposal to be included in the
Company's proxy statement for action at the Company's Annual Meeting of
Stockholders scheduled to be held on February 18, 2003, must comply with and
meet the requirements of Regulation 14a-8 of the Exchange Act. That regulation
requires, among other things, that a proposal to be included in the Company's
proxy statement for its annual meeting in 2003, must be received by the Company
at its principal executive office, 8800 East 63rd Street, Kansas City, Missouri
64133, by September 16, 2002. In addition, if a stockholder presents a matter
for action at the Company's next annual meeting without providing the Company
with notice of such matter by November 30, 2002, stock represented at such
meeting by proxies solicited by the Board of Directors may be voted in the
discretion of such proxy holders against the matter proposed by such
stockholder.


                           GENERAL AND OTHER MATTERS

     Management knows of no matter other than the matters described above which
will be presented to the Annual Meeting. However, if any other matters properly
come before the meeting, or any of its adjournments, the person or persons
voting the proxies will vote them in accordance with his or their best judgment
on such matters. You are urged to sign and return your proxy to make certain
your shares will be voted at the Annual Meeting.


                                        By Order of the Board of Directors



                                        STANLEY D. BIGGS
                                        Secretary



Kansas City, Missouri
January 9, 2002


                                       20
<PAGE>

                           BHA GROUP HOLDINGS, INC.


                   AMENDED AND RESTATED INCENTIVE STOCK PLAN


I. PURPOSE

     The purpose of the BHA Group Holdings, Inc. Amended and Restated Incentive
Stock Plan (the "Plan") is to attract and retain and provide incentives to
employees, officers, directors and consultants of the Corporation, and to
thereby increase overall shareholder value. The Plan generally provides for the
granting of stock, stock options, reload options, stock appreciation rights,
restricted shares or any combination of the foregoing to the eligible
participants.


II. DEFINITIONS

     (a) "Award" includes, without limitation, stock options (including
incentive stock options within the meaning of Section 422(b) of the Code and
reload options) with or without stock appreciation rights, dividend equivalent
rights, stock awards, restricted share awards, or other awards that are valued
in whole or in part by reference to, or are otherwise based on, the Common
Stock ("other Common Stock-based Awards"), all on a stand-alone, combination or
tandem basis, as described in or granted under this Plan.

     (b) "Award Agreement" means a written agreement setting forth the terms
and conditions of each Award made under this Plan.

     (c) "Board" means the Board of Directors of the Corporation.

     (d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

     (e) "Committee" means the Compensation Committee of the Board or such
other committee of the Board as may be designated by the Board from time to
time to administer this Plan, the members of which shall consist solely of two
or more members of the Board who are "disinterested persons" within the meaning
of Rule 16b-3(b)(3) of the Exchange Act and are "outside directors" for
purposes of Code Section 162(m)(4)(C) of the Code, unless otherwise determined
by the Board.

     (f) "Common Stock" means the common stock, $.01 par value, of the
Corporation.

     (g) "Corporation" means BHA Group Holdings, Inc., a Delaware corporation.

     (h) "Employee" means an employee of the Corporation or a Subsidiary.

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

     (j) "Fair Market Value" means the mean of the highest and lowest trading
prices or of the high bid and low ask prices of the shares of Common Stock as
officially reported on the relevant date (or if there were no sales on such
date, on the next preceding date on which such trading or bid or ask price was
recorded) by the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed
or admitted to trading on any such national securities exchange, the closing
price as furnished by the National Association of Securities Dealers through
NASDAQ or a similar organization if NASDAQ is no longer reporting such
information, or, if the Common Stock is not quoted on NASDAQ, as determined in
good faith by resolution of the Board (whose determination shall be
conclusive), based on the best information available to it.

     (k) "Participant" means an Employee, officer, director or consultant who
has been granted an Award under the Plan.

     (l) "Plan Year" means a twelve-month period beginning with January 1 of
each year.

     (m) "Subsidiary" means any corporation or other entity, whether domestic
or foreign, in which the Corporation has or obtains, directly or indirectly, a
proprietary interest of more than 50% by reason of stock ownership or
otherwise.


                                       21
<PAGE>


III. ELIGIBILITY

     Any Employee, officer, director or consultant of the Corporation or
Subsidiary selected by the Committee is eligible to receive an Award.


IV. PLAN ADMINISTRATION

     (a) Except as otherwise determined by the Board, the Plan shall be
administered by the Committee. The Board, or the Committee to the extent
determined by the Board, shall periodically make determinations with respect to
the participation of Employees, officers, directors and consultants in the Plan
and, except as otherwise required by law or this Plan, the grant terms of
Awards, including vesting schedules, price, restriction or option period,
dividend rights, post-retirement and termination rights, payment alternatives
such as cash, stock, contingent awards or other means of payment consistent
with the purposes of this Plan, and such other terms and conditions as the
Board or the Committee deems appropriate which shall be contained in an Award
Agreement with respect to a Participant. In making the foregoing
determinations, the Committee may take into account the nature of the services
rendered by such individuals, their present and potential contributions to the
Corporation's success, their record with respect to holding the Corporation's
stock received upon exercise of compensatory stock options, and such other
factors as the Committee, in its discretion, shall deem relevant.

     (b) The Board or Committee shall have authority to interpret and construe
the provisions of the Plan and any Award Agreement and make determinations
pursuant to any Plan provision or Award Agreement which shall be final and
binding on all persons. No member of the Committee shall be liable for any
action or determination made in good faith, and the members shall be entitled
to indemnification and reimbursement in the manner provided in the
Corporation's Certificate of Incorporation, as it may be amended from time to
time.

     (c) The Board or Committee shall have the authority at any time to provide
for the conditions and circumstances under which Awards shall be forfeited. The
Committee shall have the authority to accelerate the vesting of any Award and
the times at which any Award becomes exercisable.


V. CAPITAL STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN

     (a) The capital stock subject to the provisions of this Plan shall be
shares of authorized but unissued Common Stock and shares of Common Stock held
as treasury stock. Subject to adjustment in accordance with the provisions of
Section X, and subject to Section V(c) below, the total number of shares of
Common Stock available for grants of Awards from the initial effective date of
the Plan to the scheduled termination of the Plan shall be 1,731,761, and
thereafter the number of shares of Common Stock subject to the Plan shall be
automatically adjusted at the end of each fiscal quarter of the Corporation to
be reduced by the number of shares of Common Stock issued during such fiscal
quarter upon exercise of options theretofore granted pursuant to the Plan. The
Treasurer of the Corporation shall maintain a ledger showing at any time the
number of shares of Common Stock then subject to the provisions of the Plan. As
of December 20, 2001, there were 653,709 shares of Common Stock available for
future grants of Awards, 153,709 of which (the "Pre-Existing Available Shares")
were available immediately prior to December 20, 2001 and 500,000 of which (the
"Newly Available Shares") became available on December 20, 2001.

     (b) The grant of a restricted share Award shall be deemed to be equal to
the maximum number of shares which may be issued under the Award. Awards
payable only in cash will not reduce the number of shares available for Awards
granted under the Plan.

     (c) There shall be carried forward and be available for Awards under the
Plan all of the following: (i) any unused portion of the limit set forth in
paragraph (a) of this Section V; (ii) shares represented by Awards which are
cancelled, forfeited, surrendered, terminated, paid in cash or expire
unexercised; (iii) the excess amount of variable Awards which become fixed at
less than their maximum limitations and (iv) if the exercise price of any stock
option Award and/or the withholding tax obligation relating to the exercise of
any stock option Award is satisfied by tendering shares of Common Stock (by
either actual delivery or by attestation), the number of shares so tendered.


                                       22
<PAGE>

     (d) Subject to adjustment in accordance with the provisions of Section X
and subject to Section V(c) above, the total number of Newly Available Shares
that may be issued in conjunction with Awards granted pursuant to Sections
VI(e), (f), (g), (h) and (i) and Awards of options and stock appreciation
rights to non-employee members of the Board shall be limited to 250,000 shares.


VI. AWARDS UNDER THIS PLAN

     As the Board or Committee may determine, the following types of Awards and
other Common Stock-based Awards may be granted under this Plan on a
stand-alone, combination or tandem basis:

     (a) Stock Option. A right to buy a specified number of shares of Common
Stock at a fixed exercise price during a specified time, all as the Committee
may determine; provided that the exercise price of any option shall not be less
than 100% of the Fair Market Value of the Common Stock on the date of grant of
the Award.

     (b) Incentive Stock Option. An Award in the form of a stock option which
shall comply with the requirements of Section 422 of the Code or any successor
section as it may be amended from time to time. Subject to adjustment in
accordance with the provisions of Section X, the aggregate number of shares
which may be subject to incentive stock option Awards under this Plan shall not
exceed 1,731,761 shares, subject to Section V(c) above. To the extent that
Section 422 of the Code requires certain provisions to be set forth in a
written plan, said provisions are incorporated herein by this reference.

     (c) Reload Option. An Award in the form of a stock option granted to a
Participant who tendered shares of Common Stock to pay the exercise price of a
stock option Award. The number of shares of Common Stock subject to the reload
option shall equal the number of shares tendered to pay the exercise price,
plus the number of shares withheld by the Company or surrendered by the
Participant to pay the statutory minimum amount applicable to the withholding
tax obligation. A reload option will expire on the expiration date of the
original option exercised in connection with the reload option grant.

     (d) Stock Appreciation Right. A right, which may or may not be contained
in the grant of a stock option or incentive stock option, to receive in cash
(or its equivalent value in Common Stock) the excess of the Fair Market Value
of a share of Common Stock on the date the right is surrendered over the option
exercise price or other price specified in the Award Agreement.

     (e) Restricted Shares. The issuance of Common Stock to a Participant
subject to forfeiture until such restrictions, terms and conditions as the
Committee may determine are fulfilled.

     (f) Dividend or Equivalent. A right to receive dividends or their
equivalent in value in Common Stock, cash or in a combination of both with
respect to any new or previously existing Award.

     (g) Stock Award. The issuance of Common Stock, which may be on a
contingent basis, to a Participant.

     (h) Award in lieu of Compensation Election. A right given to a Director,
officer or Employee to elect to exchange annual retainers, fees or compensation
for Awards (such as stock options, restricted shares or stock awards) under the
Plan.

     (i) Other Stock-Based Awards. Other Common Stock-based Awards which are
related to or serve a similar function to those Awards set forth in this
Section VI.


VII. AWARD AGREEMENTS

     Each Award under the Plan shall be evidenced by an Award Agreement setting
forth the terms and conditions of the Award and executed by the Corporation and
Participant.


VIII. OTHER TERMS AND CONDITIONS

     (a) Assignability. Unless provided to the contrary in any Award, no Award
shall be assignable or transferable except by will or by the laws of descent
and distribution and during the lifetime of a Participant, the Award shall be
exercisable only by such Participant.


                                       23
<PAGE>

     (b) Termination of Employment or Other Relationship. The Committee shall
determine the disposition of the grant of each Award in the event of the
retirement, disability, death or other termination of a Participant's
employment or other relationship with the Corporation or a Subsidiary.

     (c) Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to shares covered by an Award until the date the
Participant is the holder of record. No adjustment will be made for dividends
or other rights for which the record date is prior to such date.

     (d) No Obligation to Exercise. The grant of an Award shall impose no
obligation upon the Participant to exercise the Award.

     (e) Payments by Participants. The Committee may determine that Awards for
which a payment is due from a Participant may be payable: (i) in U.S. dollars
by personal check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits; (ii) through the
delivery or deemed delivery based on attestation to the ownership of shares of
Common Stock (including restricted shares) owned by the Participant for at
least six months with a Fair Market Value equal to the total payment due from
the Participant; (iii) pursuant to a broker-assisted "cashless exercise"
program if established by the Corporation; (iv) by a combination of the methods
described in (i) through (iii) above; or (v) by such other methods as the
Committee may deem appropriate.

     (f) Withholding. Except as otherwise provided by the Committee, (i) the
deduction of withholding and any other taxes required by law will be made from
all amounts paid in cash and (ii) in the case of payments of Awards in shares
of Common Stock, the Participant shall be required to pay (in cash or by
surrender of shares of Common Stock owned by the Participant for at least six
months) the amount of any taxes required to be withheld prior to receipt of
such stock, or alternatively, a number of shares the Fair Market Value of which
equals the amount required to be withheld may be deducted from the payment.

     (g) Maximum Awards. The maximum number of shares of Common Stock that may
be issued to any single Participant pursuant to options and stock appreciation
rights under this Plan in any single Plan Year is 100,000.


IX. TERMINATION, MODIFICATION AND AMENDMENTS

     (a) The Plan may from time to time be terminated, modified or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
the capital stock of the Corporation present or represented and entitled to
vote at a duly held stockholders meeting.

     (b) The Board may at any time terminate the Plan or from time to time make
such modifications or amendments of the Plan as it may deem advisable;
provided, however, that the Board shall not make any amendments to the Plan
that would increase the number of shares of Common Stock available under the
Plan without the approval of at least the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Corporation
present or represented and entitled to vote at a duly held stockholders
meeting.

     (c) No termination, modification or amendment of the Plan may adversely
affect the rights conferred by an Award without the consent of the recipient
thereof.


X. RECAPITALIZATION

     The aggregate number of shares of Common Stock as to which Awards may be
granted to Participants, the number of shares thereof covered by each
outstanding Award, and the price per share thereof in each such Award, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a subdivision or consolidation of
shares or other capital adjustment, or the payment of a stock dividend or other
increase or decrease in such shares, effected without receipt of consideration
by the Corporation, or other change in corporate or capital structure;
provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated. The Committee may also make the foregoing
changes and any other changes, including changes in the classes of securities
available, to the extent it is deemed necessary or desirable to preserve


                                       24
<PAGE>

the intended benefits of the Plan for the Corporation and the Participants in
the event of any other reorganization, recapitalization, merger, consolidation,
spin-off, extraordinary dividend or other distribution or similar transaction.


XI. NO RIGHT TO EMPLOYMENT

     No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
be retained in the employ of, or in the other relationship with, the
Corporation or a Subsidiary. Further, the Corporation and each Subsidiary
expressly reserve the right at any time to dismiss a Participant without any
liability, or any claim under the Plan, except as provided herein or in any
Award Agreement issued hereunder.


XII. GOVERNING LAW

     To the extent that federal laws do not otherwise control, the Plan shall
be construed in accordance with and governed by the laws of the State of
Delaware.


XIII. EFFECTIVE DATE AND TERM

     The initial effective date of this Plan was February 24, 1998 and the
effective date of this amendment and restatement is December 20, 2001. The Plan
shall terminate on December 20, 2011. No Awards shall be granted after the
termination of the Plan.


                                       25


<PAGE>


PROXY

                            BHA GROUP HOLDINGS, INC.
               8800 EAST 63RD STREET, KANSAS CITY, MISSOURI 64133

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

               ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 19, 2002

     The undersigned hereby appoints James E. Lund and Stanley D. Biggs, or
either of them, as Proxy or Proxies of the undersigned with full power of
substitution to attend and to represent the undersigned at the Annual Meeting of
Stockholders of BHA Group Holdings, Inc. (the "Company") to be held on February
19, 2002, and at any adjournments thereof, and to vote thereat the number of
shares of stock of the Company the undersigned would be entitled to vote if
personally present, in accordance with the instructions set forth on this proxy
card. Any proxy heretofore given by the undersigned with respect to such stock
is hereby revoked.



         Dated:
               ------------------------------,----------------
                        Month/Day                  Year



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



         -------------------------------------------------------------------
         PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. FOR JOINT ACCOUNTS, EACH
         JOINT OWNER MUST SIGN. PLEASE GIVE FULL TITLE IF SIGNING IN A
         REPRESENTATIVE CAPACITY.


[ ] PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING


PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE



1.       ELECTION OF DIRECTORS

         NOMINEES: Don H. Alexander, Robert D. Freeland, Richard C. Green, Jr.,
         James E. Lund, Thomas A. McDonnell, Lamson Rheinfrank, Jr., and James
         J. Thome.

         [ ] FOR ALL nominees listed above.

         [ ] FOR ALL nominees listed above EXCEPT:


         -----------------------------------------------------------------------
         (Instruction: To withhold authority to vote on any individual nominee,
         write the name above.)

         [ ] WITHHOLD AUTHORITY to vote for all nominees listed above.


                                       23

<PAGE>


2.       APPROVAL OF THE PROPOSAL TO AMEND AND RESTATE THE COMPANYS AMENDED
         AND RESTATED INCENTIVE STOCK OPTION PLAN.

         [ ] FOR approval of the Restated Plan.

         [ ] AGAINST approval of the Restated Plan.

         [ ] ABSTAIN


3.       RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
         THE FISCAL YEAR ENDING SEPTEMBER 30, 2002.

         [ ] FOR the ratification of KPMG LLP.

         [ ] AGAINST the ratification of KPMG LLP.

         [ } ABSTAIN



4.       ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.

         If no specification is made, this proxy will be voted FOR Proposals 1,
         2, and 3 listed above.





M344-BHAR.doc


                                       24




