SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1997 Commission File No. 0-27682
GLOBE BUSINESS RESOURCES, INC.
Incorporated under the IRS Employer
laws of Ohio Identification No. 31-1256641
1925 Greenwood Avenue
Cincinnati, OH 45246
Phone: (513) 771-8221
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of January 2, 1998, 4,548,399 shares of the Registrant's common stock,
no par value, were outstanding.
Page 1
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - 3
November 30, 1997 and February 28, 1997
Consolidated Statement of Income - 4
Three and nine months ended November 30, 1997 and 1996
Consolidated Statement of Cash Flows - 5
Nine months ended November 30, 1997 and 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 15
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
November 30, February 28,
1997 1997
---------------- -------------
(Unaudited)
ASSETS:
Cash $ 876 $ 717
Trade accounts receivable, less
allowance for doubtful
accounts of $798 and $460,
respectively 8,509 5,345
Other receivables 581 342
Prepaid expenses 1,890 1,504
Rental furniture, net 53,931 48,462
Property and equipment, net 7,881 4,907
Goodwill and other intangibles, net 22,998 10,243
Other, net 326 258
-------------- --------------
Total assets $ 96,992 $ 71,778
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 5,856 $ 4,012
Customer deposits 1,359 1,343
Accrued compensation 2,633 1,762
Accrued taxes 542 557
Deferred income taxes 4,008 2,901
Accrued interest payable 522 371
Other accrued expenses 975 480
Debt 46,285 30,516
-------------- --------------
Total liabilities 62,180 41,942
-------------- --------------
Common stock and other shareholders' equity:
Common stock, no par, 15,000,000 and
10,000,000 shares authorized, 4,519,724
and 4,440,509 shares issued and outstanding 21,040 19,883
Retained earnings 17,856 14,037
Fair market value in excess of historical
cost of acquired net assets attributable
to related party transactions (4,084) (4,084)
-------------- --------------
Total common stock and other shareholders'
equity 34,812 29,836
-------------- --------------
Total liabilities and shareholders' equity $ 96,992 $ 71,778
============== ==============
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the three months ended, For the nine months ended,
--------------------------- --------------------------
November 30, November 30, November 30, November 30,
1997 1996 1997 1996
------------ ------------- ------------- ------------
(Unaudited) (Unaudited)
Revenues:
<S> <C> <C> <C> <C>
Rental sales $ 11,415 $ 10,361 $ 35,015 $ 30,154
Corporate housing sales 11,586 3,455 28,050 7,124
Retail sales 5,032 3,788 12,246 11,149
----------- ----------- ----------- -------------
28,033 17,604 75,311 48,427
----------- ----------- ----------- -------------
Costs and expenses:
Cost of rental sales 2,442 2,643 8,307 7,834
Cost of corporate housing
sales 8,392 2,458 20,011 4,960
Cost of retail sales 3,041 2,351 7,594 6,860
Warehouse and delivery 3,011 2,102 8,354 6,032
Occupancy 1,774 1,506 5,171 4,355
Selling and advertising 2,529 2,273 7,006 6,243
General and administration 3,916 2,189 10,169 6,322
----------- ----------- ----------- -------------
25,105 15,522 66,612 42,606
----------- ----------- ----------- -------------
Operating income 2,928 2,082 8,699 5,821
Other expenses (income):
Interest expense 801 470 2,154 1,077
Other, net 80 (40) 155 (98)
----------- ----------- ----------- -------------
881 430 2,309 979
Income before income taxes 2,047 1,652 6,390 4,842
Provision for income taxes 790 606 2,485 1,849
----------- ----------- ----------- -------------
Net income $ 1,257 $ 1,046 $ 3,905 $ 2,993
=========== =========== =========== =============
Net income per common share $ 0.28 $ 0.24 $ 0.88 $ 0.70
=========== =========== =========== =============
Weighted average number of
common shares outstanding 4,470 4,353 4,451 4,305
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
For the nine months ended,
--------------------------
November 30, November 30,
1997 1996
------------ ------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,905 $ 2,993
Adjustments to reconcile net income to
net cash provided by operating activities:
Rental furniture depreciation 5,399 4,456
Other depreciation and amortization 1,752 778
Provision for losses on accounts receivable 398 167
Provision for deferred income taxes 1,107 752
(Gain)/loss on sale of property and equipment (4) 7
Book value of furniture sales and rental
buyouts 9,234 8,911
Changes in assets and liabilities:
Accounts receivable (4,188) (1,236)
Other assets, net 13 1
Prepaid expenses (38) (111)
Accounts payable 1,429 (723)
Customer deposits (143) (217)
Accrued compensation 85 (536)
Accrued taxes (40) 404
Accrued interest payable 151 68
Other accrued expenses 276 (239)
--------- --------
Net cash provided by operating activities 19,336 15,475
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to rental furniture (19,419) (18,260)
Purchases of property and equipment (3,291) (1,034)
Proceeds from disposition of property and equipment 7 -
Debenture retirement - (59)
Purchase of businesses, net of cash acquired (11,814) (10,249)
--------- --------
Net cash used in investing activities (34,517) (29,602)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on the revolving credit agreement 95,756 70,915
Repayments on the revolving credit agreement (111,458) (55,705)
Borrowings on the senior note 30,000 -
Borrowings/(repayments) of other debt 1,384 (594)
Principal payments under capital lease obligations (366) (245)
Exercise of common stock options 24 15
--------- --------
Net cash provided by financing activities 15,340 14,386
--------- --------
Net increase in cash 159 259
Cash at beginning of period 717 133
--------- --------
Cash at end of period $ 876 $ 392
========= =========
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
NOTE 1 -- PRESENTATION OF INTERIM INFORMATION
In the opinion of the management of Globe Business Resources, Inc., the
accompanying unaudited consolidated financial statements include all adjustments
considered necessary to present fairly its financial position as of November 30,
1997, and the results of its operations for the three and nine months ended
November 30, 1997 and 1996 and its cash flows for the nine months ended November
30, 1997 and 1996. Interim results are not necessarily indicative of results for
a full year.
The consolidated financial statements and notes are presented in accordance
with the requirements of Form 10-Q, and do not contain certain information
included in the Company's audited consolidated financial statements and notes in
its Form 10-K for the fiscal year ended February 28, 1997.
NOTE 2 -- ACQUISITIONS
On April 28, 1997, Globe acquired substantially all the assets of privately
owned The Hotel Alternative, Inc. ("THA") for approximately $3,400 in cash, the
assumption of certain liabilities and contingent consideration consisting of up
to $1,000 payable in the fourth quarter of fiscal year 1998 and up to 50,000
shares of Globe common stock, currently held in escrow, issuable in the first
quarter of fiscal year 1999. THA, with operations in Seattle, Washington and
Portland, Oregon, provides short-term housing to transferring or temporarily
assigned corporate personnel, new hires, trainees and consultants. THA
maintained an inventory of approximately 500 leased housing units at the time of
acquisition and had annual revenues of approximately $6.0 million for the year
ended December 31, 1996.
On June 5, 1997, Globe and the prior owner of Guest Suites, Inc. agreed to
final settlement of contingent consideration related to Globe's December 16,
1996 asset acquisition. The settlement, recorded as an adjustment to the
original purchase price during the second quarter of fiscal 1998, consisted of
$350 and 2,500 shares of Globe common stock.
On July 11, 1997, Globe acquired substantially all the assets of privately
owned Executive Relocation Services, Inc. ("ERS") for approximately $1,600 in
cash, the assumption of certain liabilities and contingent consideration
consisting of up to $500 payable in two installments of up to $250 in the first
quarter of fiscal 1999 and fiscal 2000. ERS operates in Nashville, Tennessee and
provides short-term housing to transferring or temporarily assigned corporate
personnel, new hires, trainees and consultants. ERS maintained an inventory of
approximately 200 leased housing units at the time of acquisition and had annual
revenues of approximately $2.6 million for the year ended December 31, 1996.
On September 1, 1997, Globe acquired substantially all the assets of
privately owned Research Triangle Guest Houses ("RTGH"), a division of Turner
Creek Enterprises, Inc., for approximately $225 in cash. RTGH operates in
Raleigh/Durham, North Carolina and provides short-term housing to transferring
or temporarily assigned corporate personnel, new hires, trainees and
consultants. RTGH maintained an inventory of approximately 170 leased housing
units at the time of acquisition and had annual revenues of approximately $2.7
million for the year ended June 30, 1997.
On October 10, 1997, Globe acquired substantially all the assets of
privately owned Corporate Lodging, Inc. ("CLI") for approximately $1,100 in cash
and the assumption of certain liabilities. CLI operates in Nashville, Tennessee
and provides short-term housing to transferring or temporarily assigned
corporate personnel, new hires, trainees and consultants. CLI maintained an
inventory of approximately 170 leased housing units at the time of acquisition
and had annual revenues of approximately $2.1 million for the year ended
December 31, 1996.
On November 1, 1997, Globe acquired privately owned Oxford Furnished
Apartments, Inc. ("OFA") pursuant to a stock purchase agreement for $6.0 million
in cash, 91,000 shares of Globe common stock, and contingent consideration
payable in cash by March 1, 1998, subject to certain levels of operating income
for the twelve months ended December 31, 1997. At closing, Globe paid $6.0
million in cash and delivered 63,700 shares of common stock. The remaining
27,300 shares of common stock were placed in escrow to be distributed November
1, 1998 if certain representations and warranties are met. OFA, based in
Indianapolis, Indiana with operations in Illinois, Indiana, Michigan and Ohio,
provides short-term housing to transferring or temporarily assigned corporate
personnel, new hires, trainees and consultants. OFA maintained an inventory of
approximately 1,000 leased housing units at the time of acquisition and had
annual revenues of approximately $13.0 million for the year ended December 31,
1996.
In accordance with APB No. 16, these acquisitions were accounted for using
the purchase method.
Page 6
<PAGE>
The purchase price allocation for the acquired businesses is as follows:
(Unaudited)
-----------
Cash, receivables and prepaids $ 897
Rental furniture 683
Property and equipment 331
Other assets 81
Goodwill and other intangibles 13,385
----------
15,377
Liabilities assumed (1,536)
----------
$ 13,841
==========
The following table sets forth certain Globe consolidated income statement
data on a pro forma basis, as if THA, ERS, RTGH, CLI, and OFA were acquired at
the beginning of the periods indicated.
Nine months ended
November 30,
-------------------------
1997 1996
-------------------------
Revenues $ 93,856 $ 75,847
Net income 4,827 3,993
Net income per common share $ 1.07 $ 0.91
Weighted average number of common
shares outstanding 4,499 4,369
SUBSEQUENT EVENT
On December 1, 1997, Globe acquired substantially all the assets of
privately owned O'Shaughnessy Enterprises, Inc., dba Suite Living, ("SL") for
approximately $2,600 in cash, 73,395 shares of Globe common stock and the
assumption of certain liabilities. The cash component is payable on January 2,
1998 by means of a 6% promissory note, while 28,395 shares of common stock were
issued at closing. The remaining 45,000 shares, currently held in escrow, are
issuable December 1, 1998 if certain representations and warranties are met. SL,
based in Oceanside, California, provides short-term housing to transferring or
temporarily assigned corporate personnel, new hires, trainees and consultants in
Southern California and Phoenix, Arizona. SL maintained an inventory of
approximately 400 leased housing units at the time of acquisition and had annual
revenues of approximately $5.1 million for the year ended December 31, 1996.
NOTE 3 -- EARNINGS PER SHARE
Earnings per share for the periods ended November 30, 1997 and 1996 were
determined by dividing net income applicable to common stock by the weighted
average number of shares of common stock outstanding during the period.
Outstanding stock options are not included as common stock equivalents as their
exercise would not cause a dilutive effect in excess of 3%.
The Financial Accounting Standards Board issued SFAS No. 128, "Earnings Per
Share", in February 1997. This Statement must be adopted in the fourth quarter
of fiscal year 1998. Early adoption is not permitted. Had earnings per share
been calculated under the provisions of SFAS No. 128 for the third quarter and
first nine months of fiscal years 1998 and 1997, reported earnings per share and
related shares outstanding would have been as follows:
Page 7
<PAGE>
<TABLE>
<CAPTION>
For the three months ended, For the nine months ended,
------------------------------- -------------------------------
November 30, November 30, November 30, November 30,
1997 1996 1997 1996
-------------- -------------- -------------------------------
(Unaudited) (Unaudited)
Earnings per common share:
<S> <C> <C> <C> <C>
Basic $ 0.28 $ 0.24 $ 0.88 $ 0.70
Diluted $ 0.27 $ 0.24 $ 0.86 $ 0.69
Weighted average number of common shares outstanding:
Basic 4,470 4,353 4,451 4,305
Diluted 4,578 4,379 4,535 4,340
</TABLE>
NOTE 4 -- RENTAL FURNITURE
November 30, February 28,
1997 1997
----------------- --------------------
(Unaudited)
Furniture on rental $ 41,783 $ 39,509
Furniture on hand 22,058 16,808
----------------- ------------------
63,841 56,317
Accumulated depreciation (9,910) (7,855)
----------------- ------------------
$ 53,931 $ 48,462
================= ==================
Page 8
<PAGE>
NOTE 5 -- DEBT
Outstanding debt consists of:
November 30, February 28,
1997 1997
----------- ----------
(Unaudited)
The Fifth Third Bank and PNC Bank unsecured
revolving note, average interest of 7.35% $ 12,852 $ -
The Fifth Third Bank, PNC Bank, KeyBank and
Fountain Square Commercial Funding Corp.
secured revolving note, average interest
of 7.59% - 28,554
7.54% Senior Notes, unsecured, interest
payable semi-annually on March 1 and
September 1, due September 1, 2007 30,000 -
6.0% note payable to seller of acquired
business, payable in monthly installments,
due December 31, 2000 925 1,150
7.5% note payable to seller of acquired
business, payable in monthly installments,
due November 2, 1998 204 271
8.5% construction loan payable to The Fifth
Third Bank, interest payable in monthly
installments, due December 1, 1997 1,520 -
Capital lease obligations 784 541
------------ ----------
$ 46,285 $ 30,516
============ ==========
The funds required for the THA, ERS and RTGH acquisitions (see Note 2) were
derived from borrowings under the Company's secured revolving Credit Agreement.
This agreement was replaced on September 29, 1997 by the unsecured revolving
Credit Agreement. The funds required for the CLI and OFA acquisitions (see Note
2) were derived from borrowings under the Company's unsecured revolving Credit
Agreement. At November 30, 1997, the revolving Credit Agreement provided a total
unused credit facility of approximately $17.1 million.
SUBSEQUENT EVENT
Effective December 1, 1997 the construction loan was amended to a mortgage
note due December 1, 2002, with principal and interest payable monthly. The
Company can elect to fix the interest rate for a one, three, or five year period
based on the corresponding Treasury Note rate plus 175 basis points. Principal
and interest are amortized over a fifteen year period. At December 1, 1997 the
interest rate was 7.2%.
Page 9
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements beginning on page 3.
GENERAL
Globe is a major participant in the temporary relocation industry,
operating in the rent-to-rent furniture business as well as in corporate
housing. The rent-to-rent furniture business rents quality office and
residential furniture to a variety of corporate and individual customers. The
corporate housing business provides short-term housing through an inventory of
leased housing units to temporarily assigned corporate personnel, new hires,
trainees and consultants. Additionally, the Company sells residential and office
furniture that no longer meets its "showroom condition" standards for rental
through its clearance centers and offers new furniture for sale through its
showrooms and account executives.
The Company's fiscal year ends on February 28/29.
The discussions contained under Results of Operations and Liquidity and
Capital Resources include forward-looking information which is subject to risks
and qualifications including, but not limited to, those set forth in Exhibit 99
to the Company's Form 10-K for the year ended February 28, 1997.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain income
statement data as a percentage of total revenues and certain gross profit data
as a percentage of respective rental, corporate housing and retail sales
revenues.
For the three months ended, For the nine months ended,
--------------------------- --------------------------
November 30, November 30, November 30, November 30,
1997 1996 1997 1996
------------ ------------ ------------ -------------
Revenues:
Rental sales 40.7% 58.9% 46.5% 62.3%
Corporate housing
sales 41.3% 19.6% 37.2% 14.7%
Retail sales 18.0% 21.5% 16.3% 23.0%
------- ------- ------- -------
Total revenues 100.0% 100.0% 100.0% 100.0%
Gross profit:
Rental sales 78.6% 74.5% 76.3% 74.0%
Corporate housing
sales 27.6% 28.9% 28.7% 30.4%
Retail sales 39.6% 37.9% 38.0% 38.5%
------- ------- ------- -------
Total gross profit 50.5% 57.7% 52.3% 59.4%
Operating expenses 40.1% 45.8% 40.8% 47.4%
------- ------- ------- -------
Operating income 10.4% 11.8% 11.6% 12.0%
Interest/other 3.1% 2.4% 3.1% 2.0%
------- ------- ------- -------
Income before taxes 7.3% 9.4% 8.5% 10.0%
======= ======= ======= =======
Page 10
<PAGE>
IMPACT OF CORPORATE HOUSING ACQUISITIONS
Globe entered the corporate housing business in fiscal 1997 by making three
asset acquisitions, one in June 1996 and two in December 1996. Globe acquired
five additional corporate housing businesses in the first nine months of fiscal
1998 with the asset acquisitions of The Hotel Alternative, Inc. in April 1997,
Executive Relocation Services, Inc. in July 1997, Research Triangle Guest Houses
in September 1997 and Corporate Lodging, Inc. in October 1997 and the stock
purchase of Oxford Furnished Apartments, Inc. in November 1997. A sixth
corporate housing acquisition was made in December 1997, subsequent to
completion of the third quarter.
The acquisition of Oxford Furnished Apartments was the Company's most
significant to date and marks Globe's entry into the corporate housing business
in eight midwestern markets.
The corporate housing business has a lower gross profit margin, as well as
lower operating expenses as a percentage of sales, than the furniture rental
business. As a result, the Company's gross profit margin and operating expenses
as a percentage of sales are both lower in the first nine months of fiscal 1998
than in the prior year. Gross profit margin on rental sales for the first nine
months of 1998 was 76.3%, versus 28.7% for the combined corporate housing
businesses. Comparable gross profit margins for the first nine months of 1997
were 74.0% and 30.4%, respectively. Because the Company started to integrate its
furniture rental and corporate housing operations in the first quarter of fiscal
1998, operating expenses and, therefore, operating margins for furniture rental
and corporate housing cannot be specifically identified, however, the combined
operating margin for the businesses has remained stable, dropping only slightly
to 11.6% for the first nine months of 1998 from 12.0% for the same period of
1997.
Corporate housing companies' assets consist primarily of accounts
receivable, customer deposits and some minor furniture and fixed asset balances.
Consequently, the purchase price for these businesses is allocated largely to
goodwill and other intangibles. Cost of goodwill and other intangibles related
to the fiscal 1998 and 1997 corporate housing acquisitions approximated $23.9
million and is being amortized as a cost of corporate housing revenues on a
straight-line basis primarily over twenty years. Goodwill and intangibles
amortization reduced gross profit by $0.6 million, or 2.2 percentage points, in
the first nine months of fiscal 1998 and a $0.1 million, or 1.3 percentage
points in the first nine months of fiscal 1997. These amortization expenses
reduced the Company's operating margin by 0.8 percentage points in the first
nine months of fiscal 1998 versus 0.2 percentage points in the same period of
fiscal 1997. Excluding amortization expenses, operating margins improved to
12.4% in the first nine months of fiscal 1998 from 12.2% in the first nine
months of fiscal 1997.
Globe plans to continue its consolidation of corporate housing through
additional acquisitions, thereby capitalizing on the desire of many corporations
to have a corporate housing company that can meet their needs nationally. With
the fiscal 1998 and 1997 acquisitions, Globe has expanded its presence into
seventeen markets and is the market leader in several of these markets, with
annualized corporate housing revenues in excess of $60 million. Globe is
currently in the number two position in the industry.
As Globe increases its presence in the corporate housing business it is
possible that competing corporate housing companies that are customers of Globe
may transfer their furniture rental business to other vendors. At the end of
December, 1997, the Company's annualized revenues from competing corporate
housing companies approximated $6.7 million.
Due to the significant impact of the corporate housing acquisitions on the
Company's operations and financial results, the Company's historical results of
operations and period-to-period comparisons will not be indicative of future
results.
Page 11
<PAGE>
COMPARISON OF THIRD QUARTER FISCAL 1998 TO THIRD QUARTER FISCAL 1997
Total revenues of $28.0 million increased $10.4 million, or 59.2%, in the
third quarter of fiscal 1998, from $17.6 million in the third quarter of fiscal
1997, primarily due to acquisitions which occurred subsequent to the third
quarter of fiscal 1997. Excluding the corporate housing operations, total
revenues increased $2.3 million, or 16.2%, in the third quarter of fiscal 1998
compared to the third quarter of fiscal 1997.
Rental revenues of $11.4 million in the third quarter of fiscal 1998
increased 10.2% from $10.4 million in the third quarter of fiscal 1997. This
growth resulted from significant volume increases in the California and Denver
markets as well as several midwestern markets, and is partially attributable to
a furniture rental acquisition which occurred during the third quarter of fiscal
1997.
Corporate housing revenues of $11.6 million in the third quarter of fiscal
1998 increased 235.3% from $3.4 million in the third quarter of fiscal 1997.
This increase was primarily caused by acquisitions which occurred subsequent to
the third quarter of fiscal 1997.
Sales revenues of $5.0 million increased $1.2 million, or 32.8%, in the
third quarter of fiscal 1998 from $3.8 million in the third quarter of fiscal
1997, driven by a large new office furniture sale.
Gross profit of $14.2 million in the third quarter of fiscal 1998 increased
$4.0 million, or 39.5%, from $10.2 million in the third quarter of fiscal 1997
and declined as a percentage of revenues to 50.5% from 57.7% over the same
period due to the higher mix of corporate housing revenues and the lower margins
associated with these revenues. Gross profit on both rental and retail sales
improved versus the comparable prior year period.
Operating expenses of $11.2 million in the third quarter of fiscal 1998
increased 39.2% from $8.1 million in the third quarter of fiscal 1997 primarily
as a result of acquisitions, but, as a percentage of total revenues declined to
40.1% from 45.8% over the same period as a result of corporate housing's lower
operating expenses as a percent of sales.
As a result of the changes in revenues, gross profit and operating expenses
discussed above, operating income increased 40.6% to $2.9 million, or 10.4% of
revenues in the third quarter of fiscal 1998, from $2.1 million, or 11.8% of
revenues in the third quarter of fiscal 1997.
Interest/other expense increased $0.5 million to $0.9 million in the third
quarter of fiscal 1998 from $0.4 million in the third quarter of fiscal 1997 and
as a percentage of total revenues increased to 3.1% from 2.4% over the same
period. The increased expense for fiscal 1998 was due primarily to higher debt
balances than in the comparable period of fiscal 1997. The debt increase was the
result of funding required for acquisitions.
Income before income taxes of $2.0 million in the third quarter of fiscal
1998 increased $0.4 million, or 23.9%, compared to the third quarter of fiscal
1997 and as a percentage of revenues decreased to 7.3% from 9.4% over the same
period.
The Company's effective tax rate, which includes federal, state and local
taxes, increased slightly to 38.6% in the third quarter of fiscal 1998 as
compared to 36.7% in the third quarter of fiscal 1997.
Page 12
<PAGE>
COMPARISON OF NINE MONTHS ENDED NOVEMBER 30, 1997 TO NINE MONTHS ENDED NOVEMBER
30, 1996
Total revenues of $75.3 million increased $26.9 million, or 55.5%, in the
first nine months of fiscal 1998, from $48.4 million in the first nine months of
fiscal 1997, primarily due to acquisitions. Excluding the corporate housing
operations, total revenues increased $6.0 million, or 14.4%, in the first nine
months of fiscal 1998 compared to the first nine months of fiscal 1997.
Rental revenues of $35.0 million in the first nine months of fiscal 1998
increased 16.1% from $30.2 million in the first nine months of fiscal 1997,
driven by strong volume growth in the California and Denver markets plus several
midwestern markets. The growth is partially attributable to furniture rental
acquisitions made during the second and third quarters of fiscal 1997.
Corporate housing revenues of $28.1 million in the first nine months of
fiscal 1998 increased from $7.1 million in the first nine months of fiscal 1997
due to acquisitions.
Sales revenues of $12.2 million increased $1.1 million, or 9.8%, in the
first nine months of fiscal 1998 from $11.1 million in the first nine months of
fiscal 1997. This increase is largely attributable to a large new office
furniture sale which occurred during the third quarter.
Gross profit of $39.4 million in the first nine months of fiscal 1998
increased $10.6 million, or 36.9%, from $28.8 million in the first nine months
of fiscal 1997 and declined as a percentage of revenues to 52.3% from 59.4% over
the same period due to the higher mix of corporate housing revenues and the
lower margins associated with these revenues.
Operating expenses of $30.7 million in the first nine months of fiscal 1998
increased 33.8% from $23.0 million in the first nine months of fiscal 1997
primarily as a result of acquisitions, but, as a percentage of total revenues
declined to 40.8% from 47.4% over the same period due to the impact of corporate
housing's lower operating expenses as a percentage of sales.
As a result of the changes in revenues, gross profit and operating expenses
discussed above, operating income increased 49.4% to $8.7 million, or 11.6% of
revenues in the first nine months of fiscal 1998, from $5.8 million, or 12.0% of
revenues in the first nine months of fiscal 1997.
Interest/other expense increased $1.3 million to $2.3 million in the first
nine months of fiscal 1998 from $1.0 million in the first nine months of fiscal
1997 and as a percentage of total revenues increased to 3.1% from 2.0% over the
same period. The increased expense for fiscal 1998 was due primarily to higher
debt balances than in the comparable period of fiscal 1997. The increase in debt
was driven by funding required for acquisitions.
Income before taxes of $6.4 million in the first nine months of fiscal 1998
increased $1.6 million, or 32.0%, compared to the first nine months of fiscal
1997 and as a percentage of revenues decreased to 8.5% from 10.0% over the same
period.
The Company's effective tax rate, which includes federal, state and local
taxes, increased slightly to 38.9% in the first nine months of fiscal 1998 from
38.2% in the same period of fiscal 1997.
Page 13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On September 29, 1997, the Company established a $30.0 million unsecured
line of credit which replaced an existing $45.0 million secured line of credit.
Interest rates for this revolving line of credit are based on a leverage
formula, which is currently the lesser of the prime rate minus 25 basis points
or LIBOR plus 150 basis points. At January 2, 1998, the line of credit provided
up to $30.0 million of financing for the Company which will be available for
acquisitions and general corporate purposes. The unused line of credit as of
January 2, 1998 was $16.9 million.
The term of the line of credit will expire on September 30, 2000, requiring
full payment of the then outstanding balance. The Company expects to have other
financing arrangements in place prior to this date.
On September 29, 1997, the Company completed a private placement of $30.0
million of unsecured 7.54% Senior Notes due September 1, 2007, with interest
payable semi-annually on March 1 and September 1. These Senior Notes may be
redeemed at a premium after one year.
From March 1, 1997 through January 2, 1998 Globe used approximately $15.3
million from its lines of credit, issued 94,595 shares of common stock and
assumed certain liabilities in completing six acquisitions and reaching a final
settlement on contingent consideration for a fiscal 1997 acquisition. (See note
2 to the consolidated financial statements for further discussion of these
acquisitions.)
The Company's principal use of cash is for furniture purchases. The Company
purchases furniture to replace furniture which has been sold and to maintain
adequate levels of rental furniture to meet existing and new customer needs.
Furniture purchases were $19.4 million in the first nine months of fiscal 1998
and $18.3 million in the first nine months of fiscal 1997. As the Company's
growth strategies are implemented, furniture purchases are expected to increase.
Capital expenditures were $3.3 million and $1.0 million in the first nine
months of fiscal 1998 and 1997, respectively. The significant increase in fiscal
1998 is largely attributable to continued development of computer systems and
construction of a new building in Indianapolis, Indiana. Costs to further
develop the computer systems will be incurred in the next 12-15 months. These
expenses are anticipated to be approximately $1.6 million. Acquisitions of
property and equipment financed through capital leases and not reflected in the
preceding capital expenditure data were $0.5 million and $0.1 million over the
same periods.
On March 13, 1997, Globe obtained a $1.5 million mortgage note to fund
construction of the building in Indianapolis. The Company can elect to fix the
interest rate for a one, three, or five year period based on the corresponding
Treasury Note rate plus 175 basis points. The initial term of the note requires
full payment of the then outstanding balance on December 1, 2002, however the
Company expects to renew the note for an additional five-year period at this
date.
In the first nine months of fiscal 1998 and 1997, net cash provided by
operations was $19.3 million and $15.5 million, respectively, generating $3.4
and $3.9 million, respectively, less cash than was necessary to fund investing
activities (excluding acquisitions), thus requiring use of the Company's credit
facilities. Furniture purchases, which have historically been seasonally
weighted to the first half of the year, are the primary reason for use of the
credit facilities. In order to support the large retail sale which occurred
during the third quarter and to begin replacing rental furniture with owned
furniture at selected corporate housing locations, third quarter 1998 purchases
continued at levels consistent with the first two quarters. These purchases are
expected to decrease during the fourth quarter. Any temporary cash deficiencies
resulting from these purchases will be funded via the line of credit. The
Company expects cash flow from operations plus the credit facilities to be
sufficient to fund the Company's needs for the foreseeable future.
Page 14
<PAGE>
PART II
ITEM 1
LEGAL PROCEEDINGS
None
ITEM 2
CHANGES IN SECURITIES
On October 31, 1997 the Company issued 91,000 shares of common stock to
Mary Beth Gadus as part of the consideration for the acquisition of Oxford
Furnished Apartments, Inc. 63,700 of these shares were delivered at closing.
27,300 of these shares are held in escrow to be distributed November 1, 1998 if
certain conditions are met.
These issuances were exempt from registration under the Securities Act of
1933 pursuant to the exemptions from registration provided by Section 4(2) of
the Act.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5
OTHER INFORMATION
None
ITEM 6
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits:
3(i) Amendment to Articles of Incorporation
10.8 1997 Stock Option and Incentive Plan*
10.9 1997 Directors Stock Option Plan*
10.10 Credit Agreement among the Registrant, The Fifth Third Bank and
PNC Bank dated as of September 29, 1997
10.11 7.54% Senior Notes due September 1, 2007 among the Registrant,
Security Life of Denver Insurance Company, Life Insurance Company
of Georgia, Peerless Insurance Company, Indiana Insurance Company
and Southland Life Insurance Company dated as of September 1,1997
Page 15
<PAGE>
10.12 Severance Agreement for Jeffery D. Pederson, filed herewith
27 Financial Data Schedule
* Incorporated by reference to the definitive proxy statement for the 1997
annual shareholders meeting.
Certain instruments evidencing debt of the registrant, none of which exceed
10% of total assets, are not being filed herewith. A copy will be provided to
the SEC at its request.
(b) Reports on Form 8-K filed during the third quarter of 1998:
Form 8-K filed November 10, 1997 for the Oxford Furnished Apartments, Inc.
acquisition.
Page 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Globe Business Resources, Inc.
By: Sharon G. Kebe
--------------------------------
Senior Vice President-Finance
and Treasurer (Principal
Financial Officer)
Signed: January 6, 1998
Page 17
Exhibit 10.12
SEVERANCE COMPENSATION AGREEMENT
THIS SEVERANCE COMPENSATION AGREEMENT ("Agreement") dated as of October 16,
1997 is made between GLOBE BUSINESS RESOURCES, INC., an Ohio corporation (the
"Company"), and JEFFERY D. PEDERSON (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company's Board of Directors has, after due deliberation,
determined that it is appropriate, and in the best interests of the Company and
its shareholders, to reinforce and to encourage the continued attention and
dedication of the Executive to his assigned duties;
NOW, THEREFORE, this Agreement sets forth the severance compensation which
the Company will pay to the Executive if the Executive's employment with the
Company terminates under one or more of the circumstances described herein:
1. Term. This Agreement shall terminate upon the earlier to occur of:
(a) the termination of the Executive's employment with the Company based on
death, Disability (as defined in Section 3(a)), Retirement (as defined in
Section 3(b)) or Cause (as defined in Section 3(c)) or by the Executive other
than for Good Reason (as defined in Section 3(d)); or
(b) two (2) years from the date of a Change in Control of the Company (as
defined herein) if the Executive has not terminated his employment for Good
Reason as of such time.
2. Definition of Change in Control. For purposes of this Agreement, a
"Change in Control of the Company" shall be deemed to have occurred if:
(i) there shall be consummated any consolidation or merger of the
Company and, as a result of such consolidation or merger: (x) less than
fifty percent (50%) of the outstanding common shares and fifty percent
(50%) of the voting power of the outstanding shares of the surviving or
resulting corporation are owned, immediately after such consolidation or
merger, by the owners of the Company's common shares immediately prior to
such consolidation or merger; or (y) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended and as in effect on the date of this Agreement (the "Exchange
Act")) shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act, as in effect on the date of this Agreement) of
twenty-five percent (25%) or more of the surviving or resulting
corporation's outstanding common shares, or of twenty five percent (25%) or
more of the voting power of the outstanding shares of the surviving or
resulting corporation, and (z) in each such case, within two (2) years
after the consummation of such consolidation or merger, individuals who
were directors of the Company immediately prior to the public announcement
of such consolidation or
<PAGE>
- 2 -
merger cease to constitute a majority of the Board of Directors of the
Company or its successor by consolidation or merger; or
(ii) any sale, lease, exchange or other transfer or disposition (in
one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company shall be consummated; or
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company, or
(iv) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act, as in effect on the date of this Agreement) shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act, as in effect on the date of this Agreement) of twenty-five
percent (25%) or more of the Company's outstanding common shares, or of
twenty-five percent (25%) or more of the voting power of the Company's
outstanding shares, and, within two (2) years after such person becomes
such beneficial owner, individuals who were directors of the Company
immediately prior to the public announcement of the transaction pursuant to
which such person became such beneficial owner cease to constitute a
majority of the Board of Directors of the Company; or
(v) during any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the entire Board of Directors shall
cease for any reason to constitute a majority thereof unless the election
or the nomination for election by the Company's shareholders of each new
director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period.
3. Termination Events; Notice of Termination; Date of Termination.
(a) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
with the Company on a full-time basis for six (6) months and, within thirty (30)
days after written Notice of Termination is thereafter given by the Company, the
Executive shall not have returned to the full-time performance of the
Executive's duties, the Company may terminate this Agreement for "Disability."
(b) Retirement. The term "Retirement" as used in this Agreement shall mean
termination by the Company or the Executive of the Executive's employment based
on the Executive's having reached age sixty-five (65) or such other age as shall
have been fixed in any arrangement established with the Executive's consent with
respect to the Executive.
(c) Cause. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder only on the basis of fraud, misappropriation or
embezzlement on the part of the Executive. Notwithstanding the foregoing, the
Executive shall not be deemed to have been
<PAGE>
- 3 -
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Company's Board
of Directors at a meeting of the Board of Directors called and held for the
specific purpose of considering the termination of the Executive's employment
(after reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that the Executive was guilty of conduct set forth in the second sentence of
this Section 3(c) and specifying the particulars thereof in reasonable detail.
(d) Good Reason. The Executive may terminate the Executive's employment for
Good Reason at any time during the term of this Agreement. For purposes of this
Agreement "Good Reason" shall mean any of the following (without the Executive's
express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal of
the Executive from, or any failure to reelect the Executive to, any of such
positions, except in connection with the termination of his employment for
Disability, Retirement or Cause or as a result of the Executive's death or
by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary;
(iii) any failure by the Company to continue in effect any benefit
plan or arrangement (including, without limitation, the Company's
retirement plan, group life insurance plan, and medical, dental, accident
and disability plans) in which the Executive is participating without
substituting other plans providing the Executive with substantially similar
benefits (hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under, any
such Benefit Plan or deprive the Executive of any material fringe benefit
enjoyed by the Executive;
(iv) any failure by the Company to continue the Executive's
eligibility to participate in annual executive bonus arrangements (if any)
in which the Executive is participating without substituting other plans
or arrangements providing him with substantially similar benefits
(hereinafter referred to as "Incentive Plans") or the taking of any action
by the Company which would significantly reduce the Executive's opportunity
to earn incentive compensation which is related to performance results as
compared to performance expectations periodically determined by the
Company;
(v) a relocation of the Company's principal executive offices to a
location outside the Greater Cincinnati Metropolitan area, except for
required travel by the Executive on the Company's business to an extent
substantially consistent with the Executive's business travel obligations;
<PAGE>
- 4 -
(vi) any failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled;
(vii) any material breach by the Company of any provision of this
Agreement;
(viii) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; or
(ix) any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f).
(e) Notice of Termination. Any termination by the Company pursuant to
Section 3(a), 3(b) or 3(c) shall be communicated to the Executive by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate those specific termination provisions
in this Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. For purposes of this
Agreement, no purported termination by the Company shall be effective or have
any legal force or effect without such Notice of Termination.
(f) Date of Termination. "Date of Termination" shall mean: (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days after
Notice of Termination is given to the Executive (if (and only if) the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such thirty (30) day period); or (ii) if the Executive's
employment is terminated by the Company for any other reason, the date on which
a Notice of Termination is given to the Executive by the Company.
4. When Compensation is Payable.
(a) Whether or not a Change in Control of the Company has occurred while
the Executive is still an employee of the Company, the Executive shall be
entitled to compensation under this Agreement if and when the Company terminates
the Executive's employment for any reason other than death, Disability (as
defined in Section 3(a)), Retirement (as defined in Section 3(b)) or Cause (as
defined in Section 3(c)).
(b) If a Change in Control of the Company shall have occurred while the
Executive is still an employee of the Company, the Executive shall be entitled
to compensation under this Agreement upon the subsequent termination of the
Executive's employment with the Company by the Executive or by the Company
unless such termination is a result of: (i) the
<PAGE>
- 5 -
Executive's death; (ii) the Executive's Disability (as defined in Section 3(a));
(iii) the Executive's Retirement (as defined in Section 3(b)); (iv) the
Executive's termination by the Company for Cause (as defined in Section 3(c));
or (v) the Executive's decision to terminate employment other than for Good
Reason (as defined in Section 3(d)).
5. Severance Compensation Upon Termination of Employment; Non-Competition
Covenant.
(a) If compensation is payable under this Agreement pursuant to either
Section 4(a) or Section 4(b), then the Company shall pay to the Executive: (i)
the full base salary to which the Executive is entitled through the Date of
Termination, (ii) credit for any unused vacation; and (iii) severance pay in an
amount equal to the excess over $100 of two (2) times the average of the
aggregate annual compensation paid to the Executive by the Company and any of
its subsidiaries during the two (2) calendar years preceding the termination;
provided, however, that if the severance payment under clause (iii), either
alone or together with the other payments which the Executive has the right to
receive from the Company, would constitute a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")),
such severance payment shall be reduced to the largest amount as will result in
no portion of the severance payment under clause (iii) being subject to the
excise tax imposed by Section 4999 of the Code; and, provided, further, that, if
at the time compensation is payable under this Agreement, the Executive's
principal residence is not in the Greater Cincinnati metropolitan area, then the
severance payment amount under clause (iii) shall be the excess over $100 of one
(1) times the average annual compensation paid to the Executive by the Company
and any of its subsidiaries during the two (2) calendar year period preceding
termination. If the Company and the Executive cannot agree on the reduction, if
any, in the severance payment under clause (iii) pursuant to the first proviso
of the sentence immediately preceding, the determination of the amount of such
reduction, shall be made by tax counsel selected by the Company's independent
auditors and reasonably acceptable to the Executive, and such determination
shall be conclusive and binding on the parties. The amounts specified in clauses
(i), (ii) and (iii) above shall be paid in cash in a lump sum within thirty (30)
days following the Date of Termination. The Executive shall have no obligation
to seek other employment or take any other action in order to mitigate damages
or the amount of any payment provided for under this Agreement.
(b) The Company shall maintain in full force and effect, for the continued
benefit of the Executive until the earlier of: (i) one (1) year after the Date
of Termination; or (ii) commencement of full time employment by the Executive
with a new employer, all life insurance, medical, health and accident and
disability plans, programs or arrangements in which the Executive was entitled
to participate immediately prior to the Date of Termination, provided that
continued participation by the Executive is possible under the general terms and
provisions of such plans and programs. In the event that participation in any
such plan or program is barred, the Company shall arrange to provide to the
Executive benefits substantially similar to those which the Executive is
entitled to receive under such plans and programs.
<PAGE>
- 6 -
(c) If the Executive actually receives and accepts the compensation
described above in Sections 5(a) and 5(b), in consideration of payment of such
compensation the Executive shall not, for a period of two (2) years from the
Date of Termination, engage, directly or indirectly, whether as an officer,
director, employee, consultant, investor, or otherwise, in any business that
competes with any business in which the Company is then engaged anywhere in the
United States of America; provided, however, the period of non-competition shall
be one (1) year from the Date of Termination if the Executive receives under
clause (iii) of Section 5(a) the excess over $100 of one (1) times the average
annual compensation paid to the Executive by the Company and any of its
subsidiaries during the two (2) calendar year period preceding termination. The
Executive acknowledges the reasonableness of the geographic and temporal scope
of the foregoing non-competition covenant and agrees that, if the Executive
breaches or threatens to breach this covenant and does not cure such breach or
threatened breach within thirty (30) days after receipt of written notice from
the Company of such breach or threatened breach, the Company shall have, in
addition to the legal right to discontinue performance of its compensation
payment obligations hereunder, the right to obtain injunctive and other
equitable relief from a court of competent jurisdiction without the need to post
bond or other security. Nothing in this Section 5(c) shall prevent or preclude
the Executive from owning less than five percent (5%) of the equity of a
publicly traded company or other entity that engages in a business that competes
with the Company.
6. No Obligation to Mitigate Damages; No Effect on Other Contractual Rights.
The provisions of this Agreement, and any payment provided for hereunder,
shall not reduce any amounts otherwise payable to the Executive, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan or Incentive Plan,
employment agreement or other contract, plan or arrangement.
7. Successor to the Company.
(a) The Company shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if such succession or assignment had not taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 7 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law. If at any time during the term of this Agreement the
Executive is employed by any corporation a majority of the voting securities of
which is then owned by the Company, "Company" as used in Sections 4, 5 and 12
<PAGE>
- 7 -
hereof shall in addition include such employer. In such event, the Company
agrees that it shall pay or shall cause such employer to pay any amounts owed to
the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
8. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid, as
follows:
If to the Company:
Globe Business Resources, Inc.
11260 Chester Road
Suite 400
Cincinnati, Ohio 45247
Attention: Chairman
with a required copy to:
Keating, Muething & Klekamp, P.L.L.
1800 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Edward E. Steiner, Esq.
If to the Executive:
Jeffery D. Pederson
13649 Iroquois
Tustin, CA 92680;
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in a
writing signed by the Executive and the Company. No waiver by either party
<PAGE>
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at a prior or subsequent time. No agreements or representatives,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall be governed by and construed in accordance with
the internal substantive laws of the State of Ohio.
10. Validity. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Legal Fees and Expenses. The Company shall indemnify and hold harmless
the Executive from and therefore shall pay, within ten (10) days after demand
therefor by the Executive, all legal fees and expenses that the Executive may
incur as a result of the Company's contesting the validity, enforceability or
the Executive's interpretation of, or determinations under, this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
ATTEST: GLOBE BUSINESS RESOURCES, INC.
Patricia D. Bush By: David D. Hoguet
- --------------------------------- -------------------------------
David D. Hoguet
Chairman
Nancy Reagan
- ---------------------------------
EXECUTIVE
Patricia D. Bush Jeffery D. Pederson
- --------------------------------- -----------------------------------
JEFFERY D. PEDERSON
Nancy Reagan
- ---------------------------------
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