<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year
ended February 28, 1995 Commission file no. 0-10823
----------------- -------
BCT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2358849
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
3000 NE 30th Place, Fifth Floor, Fort Lauderdale, Florida 33306
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 563-1224
--------------
Securities registered pursuant to Section 12 (b) of the Act:
NONE
----
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK, par value $.04 per share
--------------------------------------
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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Registrant's voting stock held by non-
affiliates of Registrant, at May 15 , 1995 was approximately $14,914,198.
The number of shares outstanding of Registrant's Common Stock, par
value $.04 per share, at May 15 , 1995 was 4,778,740.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
----
This document consists of 53 pages.
The Index to exhibits appears on pages 25 through 26.
<PAGE>
Item 1. Business
- ------- --------
(a) General
-------
BCT International, Inc. (the "Company") is a holding company with two
wholly-owned subsidiaries: Business Cards Tomorrow, Inc., a Florida corporation
directly owned by the Company ("BCT"); and BCT Delray, Inc., a Florida
corporation directly owned by BCT ("BCT Delray"). BCT operates the Business
Cards Tomorrow system, the world's largest wholesale printing chain. Since its
founding in 1975, the system has grown to include 98 "Business Cards Tomorrow
Plants" (the "Plants") specializing in trade thermography production in 37
states and Canada.
All but two of the Plants are owned by franchisees; one Plant is owned
by BCT Delray, which acquired the Plant in June 1993, and the other Plant is
held by BCT, which acquired the Plant in December 1994. BCT's operations also
include the Pelican Paper Products Division which supplies paper products to the
BCT Plants. The Company operates in a single industry segment: the
franchising, ownership and operation of and sale of paper products to trade
thermography production facilities, i.e., the BCT Plants.
(b) Narrative description of the business
-------------------------------------
Business Cards Tomorrow, Inc.
- -----------------------------
General
-------
The Plants typically operate through the placement of business card
and stationery catalogs with commercial and retail "quick" printers, office
superstores, forms brokers, office supply companies and stationers in the
Plants' trade areas. These catalogs are utilized by printers, office
superstores, forms brokers, office supply companies and stationers to secure
orders from their customers for thermographed printed products. Such orders are
normally picked up daily by the Plants' route drivers, who also deliver products
previously ordered. The Plants specialize in the "fast turnaround" of their
products, delivering some items, such as business cards printed in black ink, in
one business day, with most products being delivered within one week of the date
of order. While most Plants receive at least some orders by mail and fax, this
normally does not constitute a major portion of a Plant's business.
Thermography is a specialized printing process that gives a raised
printing effect similar to engraving and requires specialized equipment and
operating techniques. Most commercial and "quick" printers and office
superstores choose not to invest in this specialized equipment, preferring to
subcontract this type of work to wholesale "trade" printing companies such as
Business Cards Tomorrow Plants that specialize in thermography.
BCT supplies business card, stationery, rubber stamp and wedding
invitation and social stationery catalogs to its Plants and also sells them the
paper products featured in the catalogs through its Pelican Paper Products
division ("PPP").
PPP is a supplier of paper products for the BCT Plants. PPP purchases
raw paper directly from paper mills and paper brokers and utilizes the services
of converters to convert the raw material to finished paper products. PPP
utilizes three public storage facilities located strategically throughout the
United States to house and ship out paper products to the Plants.
BCT markets its franchise operations to potential franchisees through
major business newspapers as well as printing trade publications. The
development of a specific market is determined by a number of different
criteria, including resources available, customer base and operating
efficiencies. In order for BCT to penetrate franchise markets, it has assembled
an experienced staff, certain members of which have expertise in franchise
development. BCT has developed the BCT franchise network primarily through the
sale of franchises to third parties. BCT Delray and BCT each own and operate a
Plant (the "Company Plants"). BCT Plants are located throughout the Continental
U.S. and Hawaii and Canada. As demographics change and develop, the potential
for new markets may expand. As of May 1995, BCT has identified between 30 - 45
franchise markets available for sale.
Page 1
<PAGE>
BCT derives revenues from five principal sources: royalties, which
are based on a percentage of sales from the BCT Plants; franchise fees from
newly franchised Plants and resale fees from the resale of operating Plants;
sales of paper products to franchisees; catalog and miscellaneous equipment and
parts sales classified as printing sales; and gross revenue from the Company
Plants.
As of May 1, 1995, 98 BCT Plants are in operation in 37 states and
Canada. The current number of Plants compares with 97 and 92 Plants in
operation on May 1, 1994 and 1993, respectively. Total BCT system sales reached
approximately $80,000,000 for fiscal 1995, an average of $824,000 per franchise,
compared to total and average sales of $74,000,000 and $792,000 for fiscal
1994, and $69,000,000 and $750,000 for fiscal 1993, respectively.
BCT receives either a 5% or 6% royalty fee based on gross BCT Plant
sales for original 15 - 25 year contracts. The royalty fee is dependent on the
initial franchise agreement date. Generally, agreements dated through mid-1986
carry 5% royalties. Thereafter, the 6% royalty applies. Certain franchise
agreements are up for renewal. The Company has developed a renewal royalty
scale for these Plants. See "Franchises" below for a detailed description. For
fiscal years ended 1995, 1994 and 1993, continuing franchise royalties comprised
approximately 34%, 31% and 33% of total revenue, respectively. Pelican Paper
Products sales to the franchisees for fiscal years ended 1995, 1994 and 1993
were approximately 59%, 57% and 55% of total revenue, respectively.
Raw Materials
-------------
The primary raw materials of the BCT Plants are paper products which
are readily available from numerous industry suppliers. It is common practice
within the paper industry to place minimum order levels when ordering specific
materials. In addition, the need to maintain a complete stock of raw materials
for all items listed in BCT's catalogs requires significant continuing inventory
investment. Consequently, PPP frequently carries higher levels of inventory
than what is required according to PPP's customer demands. While BCT, through
PPP, sells paper products to its franchised Plants and the Company Plants, the
Plants are under no obligation to purchase these products from BCT and all such
products are available from other suppliers.
The paper industry does suffer periodic shortages of specific paper
products as well as price fluctuations caused by supply and demand changes, but
these shortages and price fluctuations typically affect all similar types of
printers in an industry such as "trade" thermographers and can generally be
mitigated through the use of alternate supply sources in the industry and
substitution with similar products. Any increases in the cost of paper from the
mills is generally passed on to the Plants. It is not considered by BCT as very
likely that any of its Plants would be out of operation for any significant
period of time due to an unavailability of raw materials resulting from major
supply or price changes in the paper industry.
Franchises
----------
BCT's franchise agreements with individual franchised Plants are
typically for a 15-to-25 year period and are renewable for additional 10-year
periods. The right to renew is contingent upon the franchisee not being in
default under any material term of the franchise agreement. BCT may terminate a
franchise agreement under certain circumstances where the franchisee is in
material default under the franchise agreement and has not cured such default(s)
after notice from BCT. BCT's existing franchise agreements with individual
Plants have an average remaining term of approximately 16 years.
Beginning in fiscal 1996, certain franchise agreements are up for
renewal. There are 16 Plants that come up for renewal in 1996 - 1998, and in
the subsequent 10 years, three Plants come up for renewal. In fiscal 1995,
management established a program to induce early renewal of its franchise
agreements. The Company began negotiating with each renewal candidate as to the
terms of its renewed franchise agreement. The renewal royalty scale that the
Company initiated is as follows:
<TABLE>
<CAPTION>
Gross Sales For Royalty
Each Quarter Percentage
------------ ----------
<S> <C>
$0 to $375,000 5.0 %
$375,001 to $500,000 4.5 %
$500,001 to $750,000 4.0 %
$750,001 or more 3.5 %
</TABLE>
Page 2
<PAGE>
The renewal royalty scale is based on total sales, not incremental
sales. For example, if a Plant increases quarterly sales from $350,000 to
$380,000, its aggregate royalty will decrease from $17,500 ($350,000 x .05) to
$17,100 ($380,000 x .045). This renewal scale is designed to provide a strong
incentive for growth of Plant revenues beyond the $1.5 million annual level.
For the fiscal year ended 1995, average Plant sales were $824,000. It is not
anticipated that this renewal royalty scale will have an adverse effect on the
Company's royalty revenues.
As of February 28, 1995, a new franchisee is required to pay an
initial fee of $85,000, which consists of a $35,000 franchise fee and a $50,000
opening package fee, and an ongoing royalty of 6% of the gross sales of the
franchised Plant. Additionally, a new franchisee must obtain an initial
equipment and furnishings package at a cost of approximately $175,000. This
package may be purchased from BCT or from other sources as long as it meets the
standards of performance established by BCT. Each franchisee is typically
expected to obtain his own financing, but BCT may aid the franchisee in
obtaining such financing. In fiscal 1993, BCT accepted interest-bearing term
notes from franchisees as a condition of the sale of their franchises. BCT did
not finance any sales of franchises in fiscal 1995 and 1994.
Each new BCT franchisee is required to attend a two week training
session at BCT's National Training Center in Fort Lauderdale, Florida. This
training consists of equipment orientation and business management, marketing
and sales techniques required to operate a successful Plant. Upon completion of
the initial training, BCT furnishes a qualified field representative for a
period of ten days to instruct the franchisee in the operation of his Plant,
advise in the hiring of personnel and assist in the establishment of standard
operating procedures.
BCT also provides ongoing support to its franchisees through periodic
regional seminars, annual conventions, and visits from Company management and
field representatives. During fiscal 1993, management strengthened its
operational support of the franchisees by ensuring that each franchisee would
receive operational visits annually. These visits are scheduled on a priority
basis depending on the relative needs of the franchisees. An operational visit
consists of an overview of the Plant's production, sales and marketing efforts
and financial performance.
Wedding Invitations and Social Stationery Catalog
-------------------------------------------------
BCT introduced its Wedding Invitations and Social Stationery Catalog
in February 1993. The introduction of this product line enables the BCT
franchise system to directly compete, product line by product line, with its two
major national competitors. See "competition". BCT is utilizing its Company
Plants and three franchised Plants to refine the implementation of this product
line. The artwork for the designs is proprietary to BCT, which has prevented
competitors from replicating the Catalog. BCT anticipates a staged
implementation of this product line over a three-year period. A thorough
marketing study of the Wedding Invitations and Social Stationery Catalog and its
product line has been initiated by the Company to assist it in repositioning the
Catalog. The Plants will also place the Catalog with commercial and retail
"quick" printers, office superstores, office supply companies and stationers in
the Plants' trade areas. Presently, this represents the Catalog's primary
market. The marketing study will also address the Catalog's existing primary
market and perhaps the expansion of it. Orders will be generated, received,
produced and delivered similarly to the business card and stationery orders.
BCT's decision to enter the wedding and social industry market was
based in large part on the size and growth of this market. According to the
September 2, 1991 issue of Forbes Magazine, the wedding industry is a $32
billion annual business with wedding invitations and ensembles comprising
approximately $700 million annually. The May 1993 issue of Quick Print Magazine
stated that the average printer brokers $7,200 in wedding invitations yearly.
Company Plants
--------------
BCT, through its wholly-owned subsidiary BCT Delray, acquired its
first Company Plant in June 1993, in Delray Beach, Florida, (the Delray Company
Plant). In December 1994, BCT acquired another Company Plant in Honolulu,
Hawaii. BCT intends to make additional acquisitions of franchised Plants in
future years as appropriate opportunities arise. BCT utilizes the Company
Plants as its test sites for the improvement of the BCT operating system as well
as the testing of new products.
Page 3
<PAGE>
Rubber Stamps Tomorrow
----------------------
During fiscal 1989, BCT introduced its "Rubber Stamps Tomorrow"
("RST") franchise concept. In January 1990, after 15 months of evaluation, it
was determined that RST could not be developed as a stand alone franchise
concept but was a valuable additional product line for the BCT system. As a
result, BCT entered into an agreement with the company that initially developed
and test marketed the RST concept to purchase all tradename, trademark, service
mark and related rights as they pertain to the Rubber Stamps Tomorrow name.
Effective September 1, 1994, BCT incorporated the RST program into the BCT
operating system, requiring all franchised Plants to implement the RST program
as part of their franchise. Each participating BCT Plant is required to pay an
ongoing royalty of 5% to 6% of the gross sales of rubber stamp products
depending upon the initial franchise agreement date.
Competition
-----------
The Company and its franchisees compete with other franchisors,
franchisees and independent operators in the graphic arts industry, some of whom
may be better established and/or have greater resources than the Company and its
franchisees. While the Company believes that its BCT franchise system is the
leading supplier of thermographed business cards to printers throughout the
United States (supported by the May 1993 Quick Print Magazine "Supply and
Services Survey," indicating a 23% market share in the brokered printing
category for business cards), there can be no assurances that competitors will
not imitate or improve upon the Company's business strategy. BCT's major
national competitors are Regency Thermographers and Carlson Craft; however,
BCT's franchisees also compete with numerous local and regional operations.
BCT's franchisees compete primarily on the basis of turnaround time, quality and
close customer contact.
Trade and Service Marks
-----------------------
The Company has received federal registration of the names "Business
Cards Tomorrow" and "BCT International, Inc." and the BCT commercial logo, as
well as the names and commercial marks for "Typesetting Express", "Engraving
Tomorrow", "Thrift-T-Cards", "Thermo-Rite", and "Rubber Stamps Tomorrow".
Research and Development
------------------------
The Company performs ongoing research and development seeking
improvements in the operating procedures and products of its franchises. These
activities are primarily done at the Delray Company Plant and at the Company's
corporate headquarters. Also, the Company often requests individual
franchisees to perform tests of various equipment, materials or techniques in an
actual production environment.
In fiscal 1993, the Company began a new research and development
project known as Advanced Management Operating System ("AMOS"). In order for
individual BCT Plants to expand to a multi-million dollar sales level, a system
must be created to provide control over the expanded production, thus resulting
in increased profitability. The integral components of the AMOS system are as
follows: composition; verification; computer generated grouping; job tracking;
integration of accounts receivable and collections; and generation of advanced
management reports. The Company has utilized the services of experienced
computer system design consultants; to expedite the completion of the test phase
and make AMOS operational. In March of 1995, the AMOS test phase was completed,
and AMOS is fully operational. The BCT Plants will be leasing the AMOS
software, at a nominal monthly rate from the computer system design consultants.
To date, the Company has incurred expenses totalling $518,000 for the research
and development of AMOS. During fiscal 1995, 1994 and 1993, the Company spent
approximately $279,000, $367,000 and $283,000 on research and development,
respectively.
Government Regulation
---------------------
The Federal Trade Commission has adopted rules relating to the sales
of franchises and disclosure requirements to potential franchise purchasers.
Additionally, various states have adopted laws regulating franchise sales and
operations. As a franchisor, the Company is required to comply with these
federal and state regulations and believes that it is not operating in violation
of any of these regulations.
Page 4
<PAGE>
Employees
---------
The Company has 69 employees, all of whom are located at either (i)
the Company's corporate headquarters in Fort Lauderdale, Florida, (ii) the
Company's printing facility in Fort Lauderdale, Florida, or (iii) the Company
Plants in Delray Beach, Florida and Honolulu, Hawaii.
Financial Information Relating to Foreign and Domestic Operations
-----------------------------------------------------------------
<TABLE>
<CAPTION>
February 28, February 28, February 28,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Foreign operations $ 779,000 $ 717,000 $ 642,000
Domestic operations $12,765,000 $12,404,000 $10,050,000
Operating Profit:
Foreign operations $ 112,000 $ 103,000 $ 40,000
Domestic operations $ 919,000 $ 665,000 $ 738,000
Identifiable Assets:
Foreign operations $ 251,000 $ 352,000 $ 61,000
Domestic operations $ 9,767,000 $ 7,429,000 $ 5,682,000
</TABLE>
Item 2. Properties
- ------- ----------
The Company's corporate headquarters are located at 3000 NE 30th Place, Fifth
Floor, Fort Lauderdale, Florida, and occupy approximately 8,200 square feet. The
lease on this facility continues to October 1997 at a monthly rental of
approximately $8,400. In May 1995, PPP leased 1,200 square feet of space on the
Fourth Floor of the same building. The lease on this facility continues to
October 1997 at a monthly rental of approximately $1,200.
A Company Plant is located in Delray Beach, Florida, in a facility containing
approximately 6,000 square feet, which is leased for a monthly rental of $3,000.
The lease on this facility continues through April 2000.
Another Company Plant is located in Honolulu, Hawaii, in a facility containing
approximately 4,200 square feet, which is leased for a monthly rental of $5,000.
The lease on this facility continues through May 1997.
The Company also leases approximately 7,560 square feet of space in Fort
Lauderdale, at a monthly rental of approximately $5,000, for use as a Company
printing and training facility. The lease on this facility continues through
February 1997.
Management believes that the Company's existing facilities are adequate for
the foreseeable future and that additional suitable facilities will be available
at commercially reasonable rates.
Page 5
<PAGE>
Item 3. Legal Proceedings
- ------- -----------------
(a) Varrieur v. BCT International, Inc.
-----------------------------------
On April 28, 1989, Douglas B. Varrieur, a former officer and director of the
Company, filed suit against the Company in the Circuit Court for Hillsborough
County, Florida. Varrieur's complaint was based on the Company's April 19, 1989
termination for cause of his five-year employment agreement with the Company
dated August 4, 1988 (the "Employment Agreement"). The Employment Agreement
provided for an annual salary of $104,000 together with certain other benefits
and was entered into in connection with the Company's acquisition on that date
of a controlling interest in Print Shack International, Inc. ("Print Shack"),
from Varrieur and certain other Print Shack shareholders. Pursuant to the
Employment Agreement, Varrieur served as an executive officer of the Company and
Print Shack. Print Shack generated massive losses for the Company and was shut
down in fiscal 1991.
Varrieur's complaint is based on his allegation that the Company did not have
good cause to terminate his employment and therefore breached the Employment
Agreement. The original complaint contained four counts: Count I sought
unspecified money damages based on the alleged breach of the Employment
Agreement; Count II sought specific performance of the Employment Agreement,
i.e., that Varrieur be reinstated; Count III sought cancellation and rescission
of the August 4, 1988, agreement pursuant to which the Company acquired
Varrieur's 44% interest in Print Shack (the "Stock Purchase Agreement"); and
Count IV sought a declaratory judgment to the effect that the three-year non-
competition covenant of the Employment Agreement is unenforceable.
The court dismissed with prejudice all of Varrieur's initial claims, except
for Count I. In the fall of 1993, Varrieur amended his complaint to assert a
claim (new Count III) for an alleged breach by the Company of its agreement to
indemnify him and his wife against personal liability arising from debts of
Print Shack. This claim was based on a suit filed by a Print Shack creditor
against the Company, the Varrieurs as guarantors and others based on a
promissory note issued by Print Shack. The Company assumed full responsibility
for defending this action and settled it in January 1994, thereby extinguishing
the subject debt. Varrieur is seeking, pursuant to his indemnification claim,
to recover damages in excess of $1,750 in the form of legal fees, together with
unspecified damages allegedly arising from damage to his credit.
Discovery proceedings began in May 1990 and have continued on a sporadic
basis. In November 1994, Varrieur moved to set the case for jury trial. In
March 1995, the court denied Varrieur's motion, finding that he had previously
waived his right to jury trial. In April 1995, Varrieur appealed the court's
decision denying him a jury trial.
The Company intends to vigorously contest Varrieur's claim, including the
pending appeal. Based on the facts available to it and the advice of counsel,
the Company believes that it had good cause for terminating Varrieur, and that
Varrieur's claim is without merit.
It is the opinion of the Company's management and counsel that the likelihood
that Varrieur's claim will have a material adverse effect on the consolidated
financial position and results of operations of the Company is remote.
(b) Garrett v. American Franchise Group, Inc. and William A. Wilkerson.
------------------------------------------------------------------
On July 1, 1992, Michael J. Garrett, the Company's former chief financial
officer, who was terminated in May 1992, filed suit in the Circuit Court for
Broward County, Florida, against the Company and its directors. The complaint
alleged that Garrett was wrongfully discharged in violation of the Florida
Whistle-blowers Act of 1986, Florida Statutes Section 112.3187 (the "Act"). The
------- --------
complaint also alleged that the Company owed Garrett $14,580 in back pay accrued
through the date of termination.
On July 21, 1992, the Defendants filed a motion to dismiss Garrett's claim
under the Act with prejudice on the grounds that the Act applied only to public
employees. In addition, the Defendants moved for an award of attorney's fees
pursuant to the Act.
On September 29, 1992, the parties, acting through their respective counsel,
entered into a stipulation of settlement pursuant to which Garrett dismissed
with prejudice his claim under the Act, together with any and all other claims
which he might have arising from the termination of his employment, and the
Defendants dismissed with prejudice their claim for attorney's fees.
Page 6
<PAGE>
On December 4, 1992, Garrett, acting through new counsel, served an amended
complaint against the Company and its Chairman and CEO, William A. Wilkerson.
Garrett sought damages in excess of $500,000 from the Company based on his
employment agreement dated January 1, 1986, which he claimed was still in
effect. He also sought unspecified damages against Wilkerson for allegedly
tortiously interfering with his business relationship with the Company by
allegedly making false representations to induce the Company's Board of
Directors to terminate Garrett.
The Company moved to dismiss the amended complaint with prejudice on the
grounds that (i) Garrett's employment agreement expired on January 1, 1991, and
(ii) the stipulation barred Garrett from asserting any further claims arising
from his termination.
At the December 29, 1992 hearing on the Company's motion to dismiss, Garrett's
new counsel argued that Garrett's original counsel did not have authority to
enter into the stipulation. The court dismissed with prejudice Garrett's claim
against the Company based on the employment agreement, finding that the
agreement had expired by its terms in 1991. The court denied the motion to
dismiss with respect to the claim against Wilkerson, indicating that evidence
would need to be taken with respect to the stipulation.
On January 28, 1993, Garrett served a second amended complaint against the
Company and Wilkerson, restating his claims for back pay and tortious
interference and adding two new counts: (i) a count seeking a declaratory
judgment to the effect that the stipulation is unenforceable based on the
alleged lack of authority of Garrett's initial counsel, alleged fraud by the
Company's counsel, and certain procedural grounds; and (ii) a claim for wrongful
discharge under Section 448.102, Florida Statutes, which prohibits the discharge
------- --------
of private employees based on their threats to disclose or refusal to
participate in violations of law. Pursuant to this claim, Garrett sought
reinstatement to his former position, together with back pay and benefits and
attorney's fees.
On February 12, 1993, the Company filed its answer denying all of Garrett's
material allegations and further asserting as affirmative defenses (i) that
Garrett had been paid all compensation accrued through the date of termination,
and (ii) that all of Garrett's claims, except for his claim for back pay accrued
through termination, were barred by the stipulation.
On November 8, 1993, the court held a non-jury trial on Garrett's declaratory
judgment count, pursuant to which Garrett sought a judgment to the effect that
the settlement stipulation was unenforceable. On November 15, 1993, the court
entered a final declaratory judgment in favor of the Company and Wilkerson,
holding that the stipulation was enforceable and operated to bar all claims by
Garrett arising from the termination of his employment.
On December 2, 1993, the Company and Wilkerson moved, based on the declaratory
judgment, to dismiss with prejudice Garrett's principal remaining counts, i.e.,
Count III seeking to hold Wilkerson liable for allegedly fraudulently inducing
the Company's Board of Directors to terminate Garrett, and Count IV seeking back
pay and reinstatement based on Section 448.102.
On April 14, 1994, the motion to dismiss by the Company and Wilkerson was
granted, and Counts III and IV of the second amended complaint were dismissed
with prejudice. On May 2, 1994, Garrett filed his notice of appeal of the trial
court's decision. The trial court's decision in favor of the Company and
Wilkerson was affirmed by the appellate court on January 25, 1995.
The Company has paid the undisputed portion of Garrett's back pay claim so
that his claim is now limited to a disputed amount of approximately $7,700. The
Company intends to vigorously contest Garrett's remaining claim for back pay,
which it believes to be without merit and in any event not material.
Item 4. Submission of Matters to a Vote of Securities Holders
- ------- -----------------------------------------------------
No matters were submitted to a vote of securities holders, through the
solicitation of proxies or otherwise, during the fiscal quarter ended February
28, 1995.
Item 5. Market for Registrant's Common Stock and Related Security Holder
- ------- ----------------------------------------------------------------
Matters
-------
The Company's Common Stock is traded in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") Stock Market's National Market
under the symbol "BCTI".
Page 7
<PAGE>
The following table sets forth, for the quarters indicated, the high and low
closing bid prices in the NASDAQ Small Cap Market for a share of common stock as
reported by NASDAQ through February 15, 1995, and the closing price for the
common stock as reported on the NASDAQ National Market since February 15, 1995.
The NASDAQ quotations through February 15, 1995 represent prices between
dealers, do not include retail markups, markdowns or commissions, and may not
represent actual transactions.
<TABLE>
<CAPTION>
Fiscal Quarters High Low
----------------------- ------ ------
<S> <C> <C> <C>
1994
First Quarter $3.38 $2.75
Second Quarter $3.50 $2.62
Third Quarter $2.62 $1.87
Fourth Quarter $3.31 $2.00
1995 First Quarter $3.38 $2.50
Second Quarter $3.38 $2.63
Third Quarter $5.63 $3.25
Fourth Quarter $5.38 $4.38
1996
First Quarter
(through May 15, 1995) $5.38 $4.62
</TABLE>
On May 15, 1995, the closing price per share of common stock, as reported by
NASDAQ, was $5.00.
There is currently no established public trading market for any securities of
the Company other than the common stock.
The approximate number of holders of record of the Company's common stock as
of May 15, 1995 was 1,023.
During the fiscal years ended February 28, 1995, 1994, and 1993, no cash
dividends were declared on the outstanding Common Stock. The declaration of
dividends on Common Stock was prohibited by the loan covenants with the
Company's bank. The Company's loan with the bank was satisfied in February
1994. The Company has no plans to pay any dividends on the common stock.
Page 8
<PAGE>
<TABLE>
<CAPTION>
Item 6. Selected Financial Data 000's
- ------------------------------- omitted
--------
CONTINUING OPERATIONS FEB. 28, FEB. 28, FEB. 28, FEB. 29, FEB. 28,
for the fiscal year ended: 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
REVENUES:
Continuing Franchisee Fees
and Commissions $ 4,540 $ 4,004 $ 3,517 $2,993 $ 2,675
Paper Sales 7,926 7,537 5,849 5,045 4,713
Printing Sales 508 514 675 574 351
Sales of Franchises 466 957 573 189 328
Interest and Other Income 104 109 78 108 106
------- ------- ------ ------ -------
13,544 13,121 10,692 8,909 8,173
------- ------- ------ ------ -------
EXPENSES:
Cost of Paper Sales 6,512 6,238 5,198 4,457 4,178
Cost of Printing Sales 385 290 338 364 196
Cost of Franchises Sold 326 691 402 122 186
Selling, General and
Administrative 4,664 4,137 3,158 3,501 2,791
Research and Development
Costs 279 367 283 123 68
Depreciation and
Amortization 286 338 239 215 241
Interest and Other 61 292 296 424 237
------- ------- ------ ------ -------
12,513 12,353 9,914 9,206 7,897
------- ------- ------ ------ -------
Subordinated Debenture
Conversion Expense --- --- --- 331 ---
Loss on Disposal of
Rental Properties --- --- --- 75 642
Income tax benefit 124 93 --- --- ---
------- ------- ------ ------ -------
Income (Loss) From
Continuing Operations 1,155 861 778 (703) (366)
Extraordinary Item:
Gain on early
extinguishment of debt --- --- 53 --- ---
DISCONTINUED OPERATIONS:
Loss from Operations of
Discontinued Subsidiary --- --- --- --- (456)(1)
Loss on Disposal of Net
Asset of Subsidiary
including Provision of
$38 for Operating Losses
During Phase Out Period --- --- --- --- (1,258)(1)
------- ------- ------ ------ -------
Net Income (Loss) $ 1,155 $ 861 $ 831 $ (703) $(2,080)
======= ======= ====== ====== =======
</TABLE>
(1) During fiscal 1991, the Company disposed of the PrintShack subsidiary.
Page 9
<PAGE>
Item 6. Selected Financial Data (continued) 000's omitted (except for per
- ------- -------------------------------------------------
share data)
<TABLE>
<CAPTION>
For the fiscal year ended: FEB. 28, 1995 FEB. 28, 1994 FEB. 28, 1993 FEB. 29, 1992 FEB. 28, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings (loss) per Common Share:
Income (loss) from
continuing operations
Primary $ .18 $ .17 $ .27 $ (.29) $ (.19)
Fully diluted .18 .10 .19 $ (.29) (.19)
Extraordinary Item:
Primary --- --- .02 --- ---
Fully diluted --- --- .01 --- ---
Discontinued Operations:
Primary --- --- --- --- (.88)
Fully diluted --- --- --- --- (.88)
Net Income (loss)
------- ------ ------ ------ -------
Primary $ .18 $ .17 $ .29 (.29) (1.07)
------- ------ ------ ------ -------
Fully Diluted $ .18 $ .10 $ .20 (.29) (1.07)
======= ====== ====== ====== =======
Total Assets $10,018 $7,781 $5,743 $5,137 $ 5,445
Long-term debt $ 48 $ 459 $2,073 $2,619 $ 3,004
Preferred stock $ 810 $1,622 $ 765 $ --- $ ---
Net Working Capital $ 5,542 $1,067 $1,153 $ 22 $ 11
Stockholders' Equity (2) $ 7,759 $2,290 $1,247 $ 299 $ 24
</TABLE>
(2) During the five fiscal years ended February 28, 1995, no cash dividends
have been declared on the common stock outstanding.
Page 10
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations
-------------
Fiscal 1995 Compared to Fiscal 1994
- -----------------------------------
Total revenue for fiscal 1995 increased by $423,000 or 3% over the
prior fiscal year. Royalty revenue increased by $536,000 or 13%; paper sales
increased by $389,000 or 5%; revenue from the Company Plants increased by
$189,000 or 29%; and revenue from franchise Plant sales decreased by $491,000 or
51%, reflecting the sale of two franchises. The decline in franchise Plant
sales is not indicative of a lack of marketable territories. The Company is
aggressively seeking experienced franchise sales staff to strengthen its
franchise sales department.
Cost of goods sold as a percentage of revenues for fiscal 1995, at
54%, was consistent with the comparable percentage for fiscal 1994. Cost of
goods sold includes a $100,000 reserve for slow-moving inventory related to the
Wedding and Social Stationery Catalog. The Company has engaged a marketing
consultant to assist management in the repositioning of its Wedding and Social
Stationery Catalog and product line. Selling, general, and administrative
expenses represented 34% and 31% of gross revenues in fiscal 1995 and 1994,
respectively. The primary causes of the increase in selling, general and
administrative expenses as a percentage of revenues were the increased expenses
associated with (i) the Company Plants' operations (a $233,000 or 27% increase
over the prior year's level) and (ii) the Company's formalization of its
marketing department. The costs associated with the marketing department in
fiscal 1995 increased by $153,000 (58%) from the prior year's level.
With the retirement of the Company's convertible subordinated
debentures and various notes payable, interest expense decreased by $231,000 or
79%, during fiscal 1995.
The Company had income from continuing operations of $1,155,000 for
fiscal 1995, which compared favorably to income of $861,000 for fiscal 1994.
Fiscal 1994 Compared to Fiscal 1993
- -----------------------------------
Total revenue for fiscal 1994 increased $2,429,000 or 23% over the
prior fiscal year. Royalty revenue increased by $487,000 or 14%; paper sales
increased by $1,037,000 or 18%; revenue from the Company Plant, which opened in
June 1993, totaled $651,000; and revenue from franchise Plant sales increased
by $383,000 or 67%, reflecting the sale of five new franchises and three
additional territories. The revenue growth also reflects the use of the new
business card catalog by 95% of the franchisees, the impact of the Company
obtaining two large national accounts, the purchase of all the Canadian sub-
franchise agreements and the commencement of operations of the Company Plant.
Cost of goods sold as a percentage of revenues for fiscal 1994, at
55%, was consistent with the comparable percentage for fiscal 1993. Selling,
general and administrative expenses represented 31% and 30% of gross revenues in
fiscal 1994 and 1993, respectively. The primary increase in the selling,
general and administrative expenses related to expenses associated with the
operations of the Company Plant. The Company incurred nonrecurring legal
expenses in the amount of approximately $100,000 in fiscal 1994.
In fiscal 1994, the Company continued to expend significant funds for
research and development. The increase in these costs from the prior year was
$84,000 or 30%.
The Company had income from continuing operations of $861,000 for
fiscal 1994, which compared favorably to an income of $778,000 for fiscal 1993.
Page 11
<PAGE>
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1994, upon the completion of the Series B convertible
preferred stock private placement, the Company had received net proceeds of
$1,973,000 and issued 2,225,000 shares of the Series B convertible preferred
stock at $1.00 per share. At February 28, 1994, a principal amount of
$1,682,000 was outstanding under the Company's Series A 11% convertible
subordinated debentures (the "Debentures"). A total of $1,180,000 of the
preferred stock proceeds was utilized to pay off the Debentures; $402,000 of the
Debentures were converted to Common Stock, and $100,000 of the Debentures owned
by the Company's Chairman were exchanged for preferred stock. See Item 13:
"Certain Relationships and Related Transactions". The balance of the private
placement proceeds was used for general working capital.
Through February 28, 1995, the Company made capital expenditures of
approximately $261,000, most of which were dedicated to the computerized
automation of the Company's accounting and inventory management system as well
as the networking of the Company's corporate office computer system. The
Company anticipates that it will require an additional $100,000 to complete the
automation program for PPP during fiscal 1995.
The Company's Wedding Invitations and Social Stationery Catalog (The
"Social Catalog") continues to be performing at less than original plan; only
2,823 catalogs ($127,000) have been sold since inception. Because of the slow
implementation of this catalog by its franchisees, during fiscal 1995 the
Company engaged a marketing consultant to perform comprehensive research on the
Social Catalog. To date, two of the three stages of research have been
completed. It is apparent from the research completed to date that the Social
Catalog program needs to be modified. At February 28, 1995, a $100,000 reserve
was recorded for the Social Catalog, the net investment in Social Catalog
inventories at February 28, 1995 approximates $122,000.
In December 1994, the Company, through its demand conversion of the
Series B preferred stock and exercise of the Series B preferred stock warrants,
received a capital infusion of $1,938,000, which is net of a $86,000 commission
to its investment banker and $15,000 in redemption fees to those warrantholders
who did not exercise. These proceeds are being invested in cash equivalents and
marketable equity securities pending utilization for revenue-generating
opportunities.
During fiscal 1995, the Company utilized working capital as well as
investment income to make debt payments totalling $352,000, which satisfied,
among other debts, a $285,000 note due to the Company's bank.
The Company plans to continue to improve its working capital and cash
positions during fiscal 1996 by focusing its efforts on increasing cash
collections and developing new product lines while containing capital
expenditures and keeping inventories at their current levels.
The Company believes that internally generated funds will be
sufficient to satisfy the Company's working capital and capital expenditure
requirements for the foreseeable future; however, there can be no assurance that
external financing will not be needed or that, if needed, it will be available
on commercially reasonable terms.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The financial statements and schedules listed in the accompanying
Index to consolidated financial statements and schedules on page F-1 are filed
as a part of this report.
Item 9. Disagreements on Accounting and Financial Disclosure
- ------- ----------------------------------------------------
None
Page 12
<PAGE>
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
<TABLE>
<CAPTION>
Date Elected
Name Age Position Or Appointed
------------ --------- ---------- ------------
<S> <C> <C> <C>
William Wilkerson 53 Chairman of the Board and January 1978
Chief Executive Officer
A. George Cann 38 Chief Operating Officer and May 1995
President of BCT
Donna M. Pagano-Leo 34 Chief Financial Officer,
Treasurer and October 1992
Secretary May 1995
Thomas J. Cassady 73 Director April 1988
Robert F. Bond 54 Director May 1980
Raymond J. Kiernan 70 Director December 1983
John N. Galardi 57 Director August 1990
Henry A. Johnson 60 Director February 1975
Bill LeVine 75 Director May 1992
</TABLE>
William Wilkerson has been Chairman of the Board and a Director of the
Company since January 1986. In May 1988, he accepted the additional
responsibility of Chief Executive Officer. He was President and Chief Executive
Officer of Business Cards Tomorrow, Inc. (a Florida corporation) from January
1978 to January 1982 and Chairman from January 1982 to January 1986.
A. George Cann was appointed as President of Business Cards Tomorrow,
Inc. in April 1995. Previously, Mr. Cann worked in the Kinko's organization for
13 years in various capacities. Since December 1987, he has been President and
a principal shareholder of Kinko's Grand Rapids, Inc., the owner and operator of
three Kinko's copy center stores in Michigan. Mr. Cann's role with Kinko's
Grand Rapids, Inc., has been limited to that of a passive investor since he
joined the Company. From February 1991 through September 1994, Mr. Cann held
the position of Vice President of Operations and Product Development at Kinko's
Service Corporation, Ventura, California. From June 1990 through February 1991,
he was a Director of Kinko's Service Corporation. From May 1990 through
February 1991, he was Regional Manager in Michigan for K-Graphics, Inc., a
multi-state owner and operator of Kinko's stores.
Donna M. Pagano-Leo joined the Company in August 1992 and became Vice
President/Chief Financial Officer and Treasurer of the Company in October 1992.
In May 1995, Ms. Leo was elected as the Company's secretary. Ms. Leo is a
certified public accountant, a member of the Florida Institute of Certified
Public Accountants and the American Institute of Certified Public Accountants,
and has worked in public accounting since 1983. Prior to joining the Company,
Ms. Leo served as an audit manager with the accounting firm of Price Waterhouse
LLP for seven years and as a staff accountant with the accounting firm of Arthur
Young & Co. for two years.
Thomas J. Cassady became a Director of the Company in April 1988 and
has been a Director of Photo Control Corporation, Minneapolis, Minnesota, since
February 1978. Mr. Cassady is a veteran of more than 30 years in the financial
and securities field, having served as President and Chief Administrative
Officer of Merrill, Lynch, Pierce, Fenner and Smith, Inc., until his retirement
in 1978.
Page 13
<PAGE>
Robert F. Bond has been a Director of the Company since May 1980 and
was Secretary/Treasurer from February 1981 to August 1988 and Chairman of the
Board from January 1985 to January 1986. Since 1985, Mr. Bond has been a
principal in First Madison Group, an investment banking firm in Montville, New
Jersey.
Raymond J. Kiernan has been a Director of the Company since December
1983 and has been a Director of Fleet Bank of New York, Fleet Trust Company and
Fleet Trust Company of Florida since 1983. In 1979, Mr. Kiernan retired from
his position as a Vice President and Division Director of Merrill, Lynch,
Pierce, Fenner & Smith, Inc. He is a former Governor of the National Association
of Securities Dealers. In April 1995, he retired his Directorship position of
Fleet Bank of New York.
John N. Galardi became a Director of the Company in August 1990. He
has been a franchisor for more than 30 years and is the Chairman of the Board of
Galardi Group, Inc., a restaurant holding company based in Newport Beach,
California, which operates 350 fast food restaurants. In addition, Mr. Galardi
is an investor in several other private businesses.
Henry A. Johnson, founder of BCT, has been a Director of the Company
since January 1986. From January 1986 until October 1988, he was Senior Vice
President/Operations of the Company. In October 1988, he resigned his position
with the Company and became Senior Vice President/Operations of BCT. In
February 1989, he accepted the additional responsibilities of Executive Vice
President of BCT. Previously, he was Senior Vice President/Operations for
Business Cards Tomorrow, Inc. (a Florida corporation), from January 1978. In
March 1990, he retired from his position with BCT; however, he has continued to
provide consulting services to BCT. Since March 1991, Mr. Johnson has opened
and operated a private printing business, Colorful Copies, located in Las Vegas,
Nevada.
Bill LeVine became a Director of the Company in May 1992. Mr. LeVine
is the pioneer of the quick printing industry. He founded Postal Instant Press
(PIP Printing) in 1967 and served as its Chairman, Chief Executive Officer and
President until January 1988. Since that time, he has focused on private
investments. Since 1992, Mr. LeVine has been a Board of Director of Fast Frame,
Inc. Mr. LeVine has been a Director of First Business Bank, Los Angeles,
California, since 1982, and Rentrak Corporation, formerly National Video,
Portland, Oregon, since 1987.
Compliance with Section 16 (a) of the Exchange Act
The Company has reviewed the Forms 3 and 4 and amendments thereto
furnished to it pursuant to SEC Rule 16a-3(e) during its most recent fiscal year
and Form 5 and amendments thereto furnished to the Company with respect to its
most recent fiscal year. Based solely on such review, the Company has
identified each person who, at any time during the fiscal year, was a director,
officer or beneficial owner of more than 10% of the Company's Common Stock and
failed to file on a timely basis, as disclosed in the above-described Forms,
reports required by the Securities Exchange Act of 1934 during the most recent
fiscal year or prior fiscal years. The following table sets forth for each such
person the number of late reports and the number of transactions that were not
reported on a timely basis. The Company is not aware of any failure to file a
required Form, as all known delinquencies were cured.
<TABLE>
<CAPTION>
NUMBER OF LATE
NAME POSITION NUMBER OF LATE REPORTS REPORTED TRANSACTIONS
- ----------- -------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Bond Director 1 2
Wilkerson Chairman of Board 1 1
LeVine Director 1 1
Bronson 10% Beneficial Owner 2 7
</TABLE>
Page 14
<PAGE>
Item 11. Executive Compensation
- -------- ----------------------
(a) Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors, which is comprised of
non-employee directors, has overall responsibility to review and recommend
broad-based compensation plans for executive officers of the Company and its BCT
subsidiary to the Board of Directors. One of the members of the Compensation
Committee, Mr. LeVine, has invested significant sums of money in the Company.
(See Item 13. "Certain Relationships and Related Transactions"). Pursuant to
recently adopted rules designed to enhance disclosure of companies' policies
toward executive compensation, set forth below is a report submitted by Messrs.
Kiernan, Galardi and LeVine in their capacity as the Board's Compensation
Committee addressing the Company's compensation policies for fiscal 1995 as they
affected Mr. William A. Wilkerson, Chairman of the Board and Chief Executive
Officer and Mr. Peter T. Gaughn, President of BCT, Chief Operating Officer and
Secretary. Mr. Gaughn resigned from the Company in January 1995.
Compensation Policies For Executive Officers
The executive compensation program is based on a philosophy which aligns
compensation with business strategy, Company values and management initiatives.
The principles underlying this compensation philosophy are: the linkage of
executive compensation to the enhancement of shareholder value; maintenance of a
compensation program that will attract, motivate and retain key executives
critical to the long-term success of the Company; creation of a performance
oriented environment by rewarding performance leading to the attainment of the
Company's goals; evaluation of competitiveness of salary and equity incentive
opportunities; and determination of the adequacy and propriety of the annual
bonus plan, including structure and performance measures.
Relationship of Performance Under Compensation Plans
Compensation paid Messrs. Wilkerson and Gaughn in fiscal 1995, as reflected in
the following Tables, consisted of base salary. The Compensation Committee is
awaiting the audited results for fiscal 1995 prior to determining any annual
bonus to Mr. Wilkerson. In addition, as indicated in the Tables, in fiscal 1995
the Compensation Committee awarded stock options to Mr. Wilkerson.
The Company's executive compensation policies are oriented toward utilization
of objective performance criteria. The principal measures of performance that
are utilized by the Compensation Committee are targeted versus actual operating
budget and income growth. Subjective performance criteria are utilized to only
a limited degree.
Annual Bonus Arrangements
The Company's annual bonuses to its executive officers, as indicated above,
are based on both objective and subjective performance criteria. Objective
criteria include actual versus target annual operating budget performance and
actual versus target annual income growth. Target annual income growth and
target annual operating budgets utilized for purposes of evaluating annual
bonuses are based on business plans which have been approved by the Board of
Directors. Subjective performance criteria encompass evaluation of each
officer's initiative and contribution to overall corporate performance, the
officer's managerial ability, and the officer's performance in any special
projects that the officer may have undertaken. Performance under the subjective
criteria was determined at the end of fiscal 1995 after informal discussions
with other members of the Board.
Page 15
<PAGE>
Mr. Wilkerson's Fiscal 1995 Compensation
During fiscal 1993, the Compensation Committee approved a seven year
employment contract for Mr. Wilkerson for fiscal years beginning in fiscal 1994.
All of Mr. Wilkerson's fiscal 1995 compensation was paid pursuant to this
contract. The agreement calls for minimum annual remaining salary amounts
during the employment term as follows:
<TABLE>
<CAPTION>
Year Ending February 28/29 Amount
- ---------------------------- --------
<S> <C>
1996 $275,000
1997 $300,000
1998 $300,000
1999 $300,000
2000 $300,000
</TABLE>
In the event that Mr. Wilkerson is substantially incapacitated during the term
of his employment for a period of 90 days in the aggregate during any twelve
month period, the Company has the right to terminate his employment. Under such
termination, Mr. Wilkerson will receive one-half of his salary in effect on the
date of termination for the remaining term of the agreement. Additionally, in
the event of Mr. Wilkerson's death during his employment, his designated
beneficiary or his estate shall be paid one-half of his salary in effect on the
date of his death for the remaining term of the agreement.
The performance considerations utilized by the Compensation Committee in
determining the terms of Mr. Wilkerson's employment contract were as follows:
. His hiring of a new and successful management team.
. His ability to lead the Company to substantial and increasing profitability.
. His implementation of a new franchisee credit and collection policy achieving
maximum collectibility.
. His development of new and positive investment banking and market maker
relationships.
. His success in maintaining the Company's NASDAQ listing under difficult
circumstances through conversion of subordinated debentures, a preferred
stock offering and increased profitability.
. The Company's overall performance in fiscal 1993 yielding substantial revenue
and income growth and substantially surpassing goals set forth in the
targeted operating budget.
Mr. Wilkerson's fiscal 1995 and 1996 salary was kept at $275,000, which is the
minimum level prescribed for those years in his employment contract.
Mr. Gaughn's Fiscal 1995 Compensation
Mr. Gaughn's fiscal 1995 compensation reflects a cost of living salary
increase of 5%. Mr. Gaughn resigned his position in January 1995.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
RAYMOND J. KIERNAN JOHN N. GALARDI BILL LEVINE
Page 16
<PAGE>
(c) Compensation Tables
The following tables set forth the compensation received for services in all
capacities to the Company during its fiscal years ended February 28, 1995, 1994
and 1993, by the two executive officers of the Company as to whom the total
salary and bonus in the most recent year exceeded $100,000.
Page 17
<PAGE>
BCT INTERNATIONAL, INC.
-----------------------
SUMMARY COMPENSATION TABLE
--------------------------
FISCAL YEARS 1995, 1994 AND 1993
--------------------------------
000'S OMITTED
-------------
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- -----------------------------------------------------------------------------------------------------
FORM OF PAYMENT
FISCAL ---------------
NAME POSITION YEAR SALARY BONUS CASH SHARES OPTIONS
- ---- ---------- ------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
W.A. Wilkerson Chairman of 1995 $287(1) $ 23(2) $310 --- 200
the Board and 1994 $237(1) $ 2(2) $239(2) --- ---
Chief Executive 1993 $187 $--- $187 --- 2
Officer
P.T. Gaughn Chief Operating 1995 $106 $ 25(3) $131 --- ---
Officer, 1994 $109 $--- $109 --- 10
Secretary 1993 $ 99 $--- $ 99 --- 12
and President
of Subsidiary(4)
</TABLE>
(1) Salary for fiscal 1995 and 1994 includes a $12 car allowance.
(2) Bonus for fiscal 1994 of $25 was determined in July 1993, of which $2
was paid in fiscal 1994 and the remainder was paid in fiscal 1995.
(3) Bonus for fiscal 1993 of $25 was determined in July 1993 and was paid
in fiscal 1995.
(4) Mr. Gaughn resigned from his positions with the Company in January of
1995.
Page 18
<PAGE>
BCT INTERNATIONAL, INC.
-----------------------
AGGREGATED OPTION EXERCISES AND YEAR-END
----------------------------------------
OPTION VALUES FOR FISCAL 1995
-----------------------------
000'S OMITTED
-------------
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES 2/28/95 (#) 2/28/95 ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME POSITION EXERCISE # REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
W.A. Wilkerson Chairman of --- $ --- 309 / 0 $813 / 0
the Board and
Chief Executive
Officer
P.T. Gaughn Chief Operating --- $ --- 70 / 0 $102 / 0
Officer,
Secretary
and President
</TABLE>
Page 19
<PAGE>
BCT INTERNATIONAL, INC.
-----------------------
EXECUTIVE MANAGEMENT COMPENSATION
---------------------------------
OPTION GRANTS IN FISCAL YEAR 1995
---------------------------------
000'S OMITTED
-------------
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
OPTIONS GRANTED TO EXERCISE EXPIRATION APPRECIATION
NAME POSITION GRANTED EMPLOYEES PRICE DATE FOR OPTION TERM
- ------------------- --------------- ------- ---------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
5% ($) 10% ($)
W.A. Wilkerson Chairman of
the Board and
Chief Executive 200 100% $3.375 8/24/04 $1,100/$1,750
Officer
P.T. Gaughn Chief Operating
Officer,
Secretary and --- --- --- --- $ --- /$ ---
President of
Subsidiary
</TABLE>
Page 20
<PAGE>
(d) Other Compensation Arrangements
Outside directors of the Company receive director's fees of $750 per month
plus $750 for each Board of Directors meeting attended and $500 for each
committee meeting attended.
Item 12. (a) Security Ownership of Certain Beneficial Owners and Management
- ------------ --------------------------------------------------------------
The following table sets forth as of May 15, 1995, information with respect
to the only persons known to the Company to be beneficial owners of more than
5% of the Company's outstanding common stock (excluding treasury stock), as well
as the beneficial ownership of all directors and officers of the Company
individually and all directors and officers as a group. Based on the
information available to the Company, except as set forth in the accompanying
footnotes, each person has sole investment and voting power with respect to the
shares of common stock indicated. At May 15, 1995, 4,778,740 shares of common
stock were outstanding.
Page 21
<PAGE>
<TABLE>
<CAPTION> PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME BENEFICIALLY OWNED (1) COMMON STOCK
- ---- ---------------------- ------------
<S> <C> <C>
Certain Beneficial Owners:
Steven N. Bronson 673,194 (2) 13.44%
Barber & Bronson, Inc.
2101 West Commercial Blvd., Suite 1500
Fort Lauderdale, Florida 33309
Officers and Directors:
William A. Wilkerson 1,327,387 ( 3) 25.90%
Bill LeVine 685,032 ( 4) 13.14%
Henry A. Johnson 151,847 ( 5) 3.15%
Robert F. Bond 101,250 ( 6) 2.07%
Raymond J. Kiernan 81,500 ( 7) 1.68%
Thomas J. Cassady 26,250 ( 8) 0.55%
John N. Galardi 30,062 ( 9) 0.63%
A. George Cann 11,000 (10) 0.23%
Donna M. Pagano-Leo 24,000 (11) 0.50%
Officers and Directors
as a group (9 persons) 2,438,329 (12) 41.57%
</TABLE>
- -------------------------
(1) This column sets forth shares of Common Stock which are deemed to be
"beneficially owned" by the persons named in the table under Rule 13D-3 of
the Securities and Exchange Commission ("SEC").
(2) Includes 228,750 shares covered by currently exercisable warrants.
(3) Includes 346,250 shares covered by currently exercisable stock options and
warrants.
(4) Includes 371,621 shares covered by currently convertible Series A
Convertible Preferred Stock, and 61,250 shares covered by currently
exercisable stock options.
(5) Includes 43,750 shares covered by currently exercisable stock options.
(6) Includes 101,250 shares covered by currently exercisable stock options.
(7) Includes 80,000 shares covered by currently exercisable stock options.
(8) Includes 23,750 shares covered by currently exercisable stock options.
(9) Includes 25,000 shares covered by currently exercisable stock options.
(10) Includes 10,000 shares covered by currently exercisable stock options.
(11) Includes 24,000 shares covered by currently exercisable stock options.
(12) Includes 1,086,871 shares covered by currently exercisable stock options
and warrants and currently convertible Series A Preferred Stock.
Page 22
<PAGE>
(b) Security Ownership of Management (Preferred Stock)
--------------------------------------------------
The following table sets forth as of May 15, 1995, information with respect
to each class of equity securities of the Company other than Common Stock
beneficially owned by each of the directors and officers of the Company
individually and all directors and officers as a group.
<TABLE>
<CAPTION>
Name of Number of Shares Percent
Title of Class Beneficial Owner Beneficial Owned of Class
- ---------------------- ---------------- ---------------- ---------
<S> <C> <C> <C>
Series A Convertible Bill LeVine 550,000 67.9%
Preferred Stock Director
</TABLE>
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
On February 28, 1994, the Company's Chairman and Chief Executive Officer
William A. Wilkerson purchased 75,000 shares of the Company's Series B
Convertible Preferred Stock at a price of $1.00 per share pursuant to the
Company's private placement of such stock. He paid the $75,000 purchase price
by applying the $73,065 balance of a note owed to him by the Company, together
with $1,935 cash. The Series B convertible preferred stock carried a 9% annual
dividend, was scheduled to be redeemed in three years (March 1997) and was
convertible into common stock at a price of $2.25 per share. The conversion
ratio was based on the market price of the Company's common stock at the time
of the commencement of the private placement offering of the Series B
convertible preferred stock. The 75,000 shares of Series B convertible
preferred stock were accompanied by three-year warrants issued to Mr. Wilkerson
entitling him to purchase 33,333 shares of common stock at an exercise price of
$3.00 per share.
On March 31, 1994, Mr. Wilkerson exchanged his $100,000 principal amount of
the Company's 11% convertible subordinated debentures, due March 31, 1994, for
100,000 additional shares of the Series B Preferred Stock, together with 44,444
additional warrants.
In October 1994, the Company executed a commitment letter with a bank for a
$200,000 unsecured line of credit, with an interest rate of prime + 1.5% and an
expiration date of July 1, 1995. Draws against this line of credit are for
capital projects and must be preapproved by the bank. This line of credit is
personally guaranteed by Mr. Wilkerson.
On November 1, 1994, Mr. Wilkerson converted his 175,000 shares of Series B
convertible preferred stock into 77,778 shares of the Company's common stock,
pursuant to the Company's exercise of its option to convert the entire Series
after six months in the event that the common stock traded at or above $3.50 for
20 consecutive trading days. In connection with the conversion of the Series B
convertible preferred stock, the Company exercised its option to redeem 77,778
Series B Warrants held by Mr. Wilkerson for $3,889 ($.05 each) on December 8,
1994.
On August 24, 1994 the Board of Directors awarded Messrs. Wilkerson and
Bond 200,000 and 15,000, respectively, immediately-exercisable non-qualified
stock options, at an exercise price of $3.375 (the market price on the date of
grant).
In March 1991, the Company entered into a consulting agreement with BCT's
founder and Director Henry A. Johnson, who had retired as an officer of the
Company during fiscal 1991. Under this agreement, Mr. Johnson has provided such
consulting services as are requested by the Board and/or the Company's chief
executive officer, in exchange for fees of $50,000 per year, payable in equal
monthly installments. In May 1992, the agreement was formalized pursuant to a
written consulting contract with an expiration date of February 29, 1996.
On May 7, 1992, Mr. LeVine was appointed to the Company's Board of
Directors. On that date, he purchased 550,000 shares of the Company's Series A
convertible preferred stock at a price of $1 per share. The Series A preferred
stock carries a cumulative annual dividend of 12%, is scheduled to be redeemed
in five years (May 1997), and is convertible into common stock at a ratio of
1.48 shares of preferred stock per share of common stock. The conversion ratio
was based on the market price of the common stock at the time of the
transaction. In connection with his appointment to the Board and his purchase
of the Series A preferred stock, Mr. LeVine was granted 10-year options to
purchase 51,250 shares of common stock at a price of $1.48 per share (the market
price on the date of grant).
Page 23
<PAGE>
On February 28, 1994, Mr. LeVine purchased 500,000 shares of the Company's
Series B convertible preferred stock at a price of $1 per share. Accompanying
the 500,000 shares were three-year warrants entitling Mr. LeVine to acquire upon
exercise 222,222 shares of the Company's common stock at an exercise price of
$3.00 per share.
On November 1, 1994, Mr. LeVine's 500,000 shares of Series B convertible
preferred stock were forcibly converted by the Company into 222,222 shares of
the Company's common stock. In connection with this conversion, the Company
redeemed 222,222 Series B warrants held by Mr. LeVine for $11,111 ($.05 each) on
December 8, 1994.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------- ---------------------------------------------------------------
(a) Financial Statements and Financial Statement Schedules
(1) Financial Statements - beginning on page F-1;
Report of Independent Certified Public Accountants - page F-2
Consolidated Balance Sheets at February 28, 1995 and February 28,
1994 - page F-3
Consolidated Statements of Operations for the fiscal years ended
February 28, 1995, February 28, 1994, and February 28, 1993 -
pages F-4 and F-5.
Consolidated Statements of Changes in Stockholders' Equity for
the fiscal years ended February 28, 1995, February 28, 1994, and
February 28, 1993 - pages F-6 through F-8
Consolidated Statements of Cash Flows for the fiscal years ended
February 28, 1995, February 28, 1994, and February 28, 1993 -
pages F-9 and F-10
Notes to Consolidated Financial Statements - pages F-11 through
F-23
(2) Financial Statement Schedules
For the Years Ended February 28, 1995, February 28, 1994, and
February 28, 1993:
Schedule VIII - Valuation and Qualifying Accounts - page F-24
Schedule X - Supplementary Income Statement Information page F-25
All other schedules are omitted because they are not applicable
or the required information is shown in the financial statements or
notes thereto.
(b) Reports of Form 8-K
The Company did not file any report on Form 8-K during the last
quarter of fiscal 1995.
Page 24
<PAGE>
<TABLE>
(c) Exhibits
<S> <C>
3.1 Certificate of Incorporation of the Company, as amended.
3.2 By-Laws of the Company, as amended, as filed with the SEC as Exhibit
3.1 to the Company's 1984 Registration Statement on Form S-1, are
incorporated herein by reference.
4.1 Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock, as filed with the SEC as Exhibit 4.2 to
the Company's report on Form 10-K for the fiscal year ended February
29, 1992, is incorporated herein by reference.
4.2 Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock, as filed with the SEC as Exhibit 4.2 to
the Company's report on Form 10-K for the fiscal year ended February
28, 1994, is incorporated herein by reference.
10.1 Agreement dated May 7, 1992, between the Company and Bill LeVine, as
filed with the SEC as Exhibit 10.7 to the Company's report on Form
10-K for the fiscal year ended February 29, 1992, is incorporated
herein by reference.
10.2 Form of March 1994 subscription agreement for Series B Convertible
Preferred Stock as filed with the SEC as Exhibit 10.4 to the
Company's report on Form 10-K for the fiscal year ended February 29,
1994, is incorporated herein by reference.
10.3 Consulting Agreement dated March 1, 1992, between the Company and
Henry A. Johnson, as filed with the SEC as Exhibit 10.10 to the
Company's report on Form 10-K for the fiscal year February 29, 1992,
is incorporated herein by reference.
10.4 Employment Agreement dated March 1, 1993 between the Company and
William A. Wilkerson, as filed with the SEC as Exhibit 10.9 to the
Company's report on Form 10-K for the fiscal year ended February 28,
1993, is incorporated herein by reference.
10.5 Agreement dated January 1, 1993 between Business Cards Tomorrow,
Inc. and Hence/EDP, as filed with the SEC as Exhibit 10.12 to the
Company's report on Form 10-K for the fiscal year ended February 28,
1993, is incorporated herein by reference.
10.6 Note Agreement and Security Agreement dated May 27, 1993 between BCT
Delray, Inc. and Carney Bank, as filed with the SEC as Exhibit 10.19
to the Company's report on Form 10-K for the fiscal year ended
February 28, 1993, is incorporated herein by reference.
10.7 Purchase and Sale Agreement dated April 12, 1993 between Business
Cards Tomorrow, Inc. and David Falk, as filed with the SEC as
Exhibit 10.13 to the Company's report on Form 10-K for the fiscal
year ended February 28, 1993, is incorporated herein by reference.
10.8 Purchase and Sale Agreement dated March 10, 1993 between Business
Cards Tomorrow, Inc. and A.B. & W. H. Enterprises, Inc., as filed
with the SEC as Exhibit 10.14 to the Company's report on Form 10-K
for the fiscal year ended February 28, 1993, is incorporated herein
by reference.
10.9 Assignment of Contract dated May 12, 1993 between Business Cards
Tomorrow, Inc. and T.K.O. Enterprises, Inc., as filed with the SEC
as Exhibit 10.15 to the Company's report on Form 10-K for the fiscal
year ended February 28, 1993, is incorporated herein by reference.
</TABLE>
Page 25
<PAGE>
<TABLE>
<S> <C>
10.10 Guaranty dated May 12, 1993 between Business Cards Tomorrow, Inc.
and A.B. & W. H. Enterprises, Inc., as filed with the SEC as
Exhibit 10.16 to the Company's report on Form 10-K for the fiscal
year ended February 28, 1993, is incorporated herein by reference.
10.11 Agreement dated February 1, 1994 between the Company and Barber &
Bronson, Inc. as filed with the SEC as Exhibit 10.18 to the
Company's report on Form 10-K for the fiscal year ended February
28, 1994, is incorporated herein by reference.
10.12 Agreement dated May 24, 1993 between the Company and American
Equipment Leasing, Inc. as filed with the SEC as Exhibit 10.19 to
the Company's report on Form 10-K for the fiscal year ended
February 28, 1994, is incorporated herein by reference.
10.13 Line of Credit Agreement dated October 5, 1994 between the Company
and Intercontinental Bank.
10.14 Employment letter dated March 2, 1995 between the Company and A.
George Cann.
</TABLE>
Page 26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BCT INTERNATIONAL, INC.
(Registrant)
DATE: May 24, 1995 By: /s/ William Wilkerson
----------------------- -----------------------
William Wilkerson
Chairman of the Board &
Chief Executive Officer
DATE: May 24, 1995 By: /s/ Donna M. Pagano-Leo
------------------------ --------------------------
Donna M. Pagano-Leo
Vice President, Treasurer &
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this report has been signed below by the following persons on behalf
of Registrant and in the capacities and on the dates indicated.
/s/ William Wilkerson /s/ Henry A. Johnson
- -------------------------------- ------------------------
William Wilkerson Henry A. Johnson
Chairman of the Board & Director Director
Date: May 24, 1995 Date: May 24, 1995
/s/ Robert F. Bond /s/ Raymond J. Kiernan
- -------------------------------- ------------------------
Robert F. Bond Raymond J. Kiernan
Director Director
Date: May 24, 1995 Date: May 24, 1995
/s/ Thomas J. Cassady /s/ Bill LeVine
- -------------------------------- ------------------------
Thomas J. Cassady Bill LeVine
Director Director
Date: May 24, 1995 Date: May 24, 1995
/s/ John N. Galardi
- --------------------------------
John N. Galardi
Director
Date: May 24, 1995
Page 27
<PAGE>
BCT INTERNATIONAL, INC.
-----------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
--------------------------------------------------------
<TABLE>
<CAPTION>
Financial Statements: Page Numbers
- -------------------- ------------
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets at February 28, 1995 and February 28, 1994 F-3
Consolidated Statements of Operations for the fiscal years ended February 28, 1995,
February 28, 1994 and February 28, 1993 F-4 to F-5
Consolidated Statements of Changes in Stockholders' Equity
for the fiscal years ended February 28, 1995,
February 28, 1994 and February 28, 1993 F-6 to F-8
Consolidated Statements of Cash Flows for the fiscal years ended February 28, 1995,
February 28, 1994 and February 28, 1993 F-9 to F-10
Notes to Consolidated Financial Statements F-11 to F-23
Schedules:
- ---------
For the fiscal years ended February 28, 1995, February 28, 1994 and
February 28, 1993:
VIII Valuation and Qualifying Accounts F-24
X Supplementary Income Statement Information F-25
</TABLE>
All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
F-1
Page 28
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Board of Directors and Stockholders of BCT International, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of BCT International, Inc. and its subsidiaries at February 28,
1995 and 1994, and the results of their operations and their cash flows for
each of the three years in the period ended February 28, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
------------------------
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
May 15, 1995
F-2
Page 29
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, 1995 February 28, 1994
---------------------- -----------------------
000's omitted
<S> <C> <C>
ASSETS
-------
Current Assets:
Cash and cash equivalents $ 1,299 $ 80
Short-term investments 1,071 ---
Restricted cash --- 738
Accounts and notes receivable, net of
allowance for doubtful
accounts of $337 ($229 in 1994) and
deferred interest of $18
($23 in 1994) 2,305 1,603
Receivables from employees 76 57
Inventory, net of reserve of $105 ($5 in 1994) 1,863 1,867
Assets held for sale 216 ---
Prepaid expense and other current assets 25 51
Net deferred tax asset 88 81
-------- --------
Total current assets 6,943 4,477
-------- --------
Accounts and notes receivable, net of
allowance for doubtful
accounts of $551 ($607 in 1994) 259 483
Property and equipment at cost, net of
accumulated depreciation
and amortization of $313 ($217 in 1994) 640 593
Net deferred tax asset 1,466 1,340
Deposits and other assets 131 136
-------- --------
2,496 2,552
Excess of purchase price over fair
value of net assets acquired,
less accumulated amortization of $1,533 ($1,426 in 1994) --- 108
Trademark, net of accumulated amortization of $24 ($19 in 1994) 170 173
Intangible assets, net of accumulated amortization of $113 ($50 in 1994) 409 471
------- ---------
$10,018 $ 7,781
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------
Current Liabilities:
Accounts payable $ 928 $ 1,236
Notes payable 162 103
Convertible subordinated debentures --- 1,582
Convertible subordinated debentures - related party --- 100
Accrued liabilities 287 276
Accrued payroll 24 113
------- --------
Total current liabilities 1,401 3,410
Notes payable 48 459
-------- --------
Total liabilities 1,449 3,869
-------- --------
Commitments and contingencies (Note 9) --- ---
-------- ---------
Preferred stock, Series A, 12%
cumulative, $1 par value,
mandatorily redeemable, 810 shares
authorized, issued
and outstanding 810 810
Preferred stock, Series B, 9%
cumulative, $1 par value,
mandatorily redeemable, 2,500 shares
authorized, 0
shares issued and outstanding (825 shares in 1994) --- 812
-------- --------
810 1,622
-------- --------
Stockholders' equity:
Common stock, $.04 par value,
authorized 25,000,
issued and outstanding 4,785 shares (3,008 shares in 1994) 191 120
Paid in capital 11,110 6,625
Accumulated deficit (3,054) ( 3,981)
-------- ----------
8,246 2,764
Less: Treasury stock, at cost, 224 shares (219 shares in 1994) (488) ( 474)
-------- ----------
Total stockholders' equity 7,759 2,290
-------- ----------
$10,018 $ 7,781
======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
Page 30
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the For the For the
Fiscal year ended Fiscal year ended Fiscal year ended
February 28, 1995 February 28, 1994 February 28, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
000's omitted
-----------------
Revenues:
Continuing franchise fees
and commissions $ 4,540 $ 4,004 $3,517
Paper sales 7,926 7,537 5,849
Printing sales 508 514 675
Sales of franchises 466 957 573
Miscellaneous 104 109 78
------- ------- ------
13,544 13,121 10,692
------- ------- ------
Expenses:
Cost of paper sales 6,512 6,238 5,198
Cost of printing sales 385 290 338
Cost of franchises sold 326 691 402
Goodwill amortization 108 197 180
Selling, general and
administrative 4,664 4,137 3,158
Research and development costs 279 367 283
Depreciation and amortization 178 141 59
Interest 60 270 259
Interest - related party 1 22 37
------- ------- ------
12,513 12,353 9,914
------- ------- ------
Income before income taxes and
extraordinary item 1,031 768 778
Income tax benefit 124 93 ---
------- ------- ------
Income before extraordinary item 1,155 861 778
Extraordinary item:
Gain on early extinguishment
of debt --- --- 53
------- ------- ------
Net income $ 1,155 $ 861 $ 831
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
Page 31
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
<TABLE>
<CAPTION>
For the For the For the
Fiscal year ended Fiscal year ended Fiscal year ended
February 28, 1995 February 28, 1994 February 28, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
000's omitted (except per share data)
- -------------
Primary:
Average number of
shares outstanding 3,410 2,765 2,791
Common stock equivalents 1,661 689 495
------ ------ ------
Totals 5,071 3,454 3,286
====== ====== ======
Fully diluted:
Average number of
shares outstanding 3,410 2,765 2,791
Common stock equivalents
and dilutive securities 3,184 2,312 2,205
------ ------ ------
Totals 6,594 5,077 4,996
====== ====== ======
Earnings per
- ------------
common share:
- -------------
Operations:
Primary $ .18 $ .17 $ .27
Fully diluted .18 .10 .19
Extraordinary item:
Primary --- --- .02
Fully diluted --- --- .01
Net income
Primary $ .18 $ .17 $ .29
====== ====== ======
Fully diluted $ .18 $ .10 $ .20
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
Page 32
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
000's omitted
-------------
Common Stock
---------------------
Less: Less:
Number of Par Paid In Accumulated Treasury Notes
Shares Value Capital Deficit Stock Receivable Total
----------- ------- ------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance March 1, 1992 2,908 $116 $6,293 $ (5,503) $ (449) $ (158) $ 299
Issuance of shares
in lieu of salaries
and bonuses to
employees 73 3 105 --- --- --- 108
Issuance of shares to
the Chairman of the Board
for the exercise of options
in the amount of $81 65 2 79 --- --- --- 81
Purchase of minority
stockholders fractional
shares (4) --- (6) --- --- --- (6)
Cancellation of common
stock for notes
receivable from
stockholders (86) (3) (155) --- --- 158 ---
Issuance of shares
for the exercise of
options in the amount
of $7 2 --- 7 --- --- --- 7
Dividend declared on Series A
Convertible Preferred Stock --- --- --- (73) --- --- (73)
Net income --- --- --- 831 --- --- 831
------- ------- -------- -------- ---------- -------- -------
Balance February 28, 1993 2,958 118 6,323 (4,745) (449) (---) 1,247
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
Page 33
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
<TABLE>
<CAPTION>
000's
omitted
-------
Common Stock
------------------- Less Less:
Number of Par Paid In Accumulated Treasury Notes
Shares Value Capital Deficit Stock Receivable Total
-------- ------ ------- ----------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Cancellation of common stock for
notes receivable from employees (8) --- --- --- (25) --- (25)
Conversion of $175 of subordinated
convertible debentures with a
conversion rate of $3.00 58 2 173 --- --- --- 175
Tax benefit from exercise of employee
stock options and stock compensation
awards --- --- 76 --- --- --- 76
Issuance of warrants --- --- 53 --- --- --- 53
Dividend declared on Series A
Convertible Preferred Stock --- --- --- (97) --- --- (97)
Net income --- --- --- 861 --- --- 861
------- ------ ----- ------ ----- ------ -----
Balance February 28, 1994 3,008 120 6,625 (3,981) (474) --- 2,290
Cancellation of common stock
for note receivable from an employee (5) --- --- --- (14) --- (14)
Cancellation of common stock
of an employee (59) (2) (15) --- --- --- (17)
Conversion of $252 of subordinated
convertible debentures with a
conversion rate of $3.00 84 3 249 --- --- --- 252
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
Page 34
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
<TABLE>
<CAPTION> 000's
omitted
-------
Common Stock
--------------- Less: Less:
Number of Par Paid In Accumulated Treasury Notes
Shares Value Capital Deficit Stock Receivable Total
--------- ----- ------- ----------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Conversion of $150 of subordinated
convertible debentures with a
conversion rate $2.27 66 3 147 --- --- --- 150
Exercise of 10 stock options with an
exercise price of $1.25 10 --- 12 --- --- --- 12
Exercise of 6 warrants with an
exercise price of $2.92 3 --- 9 --- --- --- 9
Issuance of warrants --- --- 38 --- --- --- 38
Accretion of commission paid on
Series B convertible preferred stock --- --- (78) --- --- --- (78)
Conversion of 2,225 of Series B convertible
preferred stock to common stock
with a conversion rate of $1.25 989 40 2,185 --- --- --- 2,225
Exercise of 689 Series B convertible preferred stock
warrants with an exercise price of $3.00 689 27 2,039 --- --- --- 2,066
Cost associated with exercise of Series B
convertible preferred stock warrants --- --- (86) --- --- --- (86)
Redemption of 300 Series B convertible
preferred stock warrants with a
redemption price of $.05 --- --- (15) --- --- --- (15)
Net income --- --- --- 1,155 --- --- 1,155
Dividend declared on convertible
preferred stock --- --- --- (228) --- --- (228)
----- ------ ------- ------- ------ ------- ------
Balance February 28, 1995 4,785 $191 $11,110 $(3,054) (488) --- $7,759
===== ====== ======= ======== ====== ======= ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
Page 35
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the For the
Fiscal year ended Fiscal year ended Fiscal year ended
February 28, 1995 February 28, 1994 February 28, 1993
------------------ ------------------ ------------------
000's omitted
------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,155 $ 861 $ 831
Adjustments to reconcile net income
to net cash provided by
operating activities:
Income tax benefit (594) (502) ---
Income tax expense 470 409 ---
Depreciation and amortization 286 338 239
Cost assigned to warrants issued 38 53 ---
Provision for doubtful accounts 352 196 242
Reserve for inventory 100 --- ---
Fair value of shares issued in lieu of salaries --- --- 108
Gain on early extinguishment of debt --- --- (53)
Changes in operating assets and liabilities
(Increase) in accounts and notes receivable (355) (439) (337)
Decrease (increase) in inventory 4 (278) (412)
Decrease (increase) in prepaid expenses and
other assets 20 (7) (67)
(Decrease) increase in accounts payable (308) 413 (184)
(Decrease) increase in other accrued liabilities (78) (62) 29
-------- ------ ------
Net cash provided by operating activities 1,090 982 396
-------- ------ ------
Cash flows from investing activities:
Payment for short-term investments (1,071) --- ---
Capital expenditures for property and equipment (261) (359) (201)
Proceeds from disposition of equipment --- 4 ---
Acquisition of Canadian Master Area Franchise
Agreement --- (120) ---
Acquisition of Company Plant --- (50) ---
-------- ------ ------
Net cash used for investing activities (1,332) (525) (201)
-------- ------ ------
Cash flows from financing activities:
Issuance of Series A Convertible Preferred Stock --- --- 550
Issuance of Series B Convertible Preferred Stock 1,300 738 ---
Investment banker fee associated with Series B
Convertible Preferred Stock (65) --- ---
Restricted cash --- (738) ---
Dividend payments on Series A Preferred Stock (97) (97) (58)
Dividend payments on Series B Preferred Stock (131) --- ---
Exercise of Series B Convertible Preferred Stock 2,066 --- ---
Investment banker fee associated with Series B warrants (86) --- ---
Redemption of nonexercised Series B warrants (15) --- ---
Repurchase of Common Stock --- --- (6)
Exercise of stock options and warrants 21 --- ---
Issuance of Common Stock --- --- 7
Proceeds from borrowings --- 310 ---
Proceeds from borrowings - related party --- --- 23
Repayments on borrowings (352) (584) (437)
Repayments on borrowings - related party --- (89) (106)
Redemption of convertible subordinated debentures (1,180) --- (98)
-------- ------ ------
Net cash provided by (used for) financing activities 1,461 (460) (125)
-------- ------ ------
Net increase (decrease) in cash and cash equivalents 1,219 (3) 70
Cash and cash equivalents at beginning of year 80 83 13
-------- ------ ------
Cash and cash equivalents at end of year $ 1,299 $ 80 $ 83
======== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
Page 36
<PAGE>
BCT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
000's omitted
-------------
<TABLE>
<CAPTION>
For the For the For the
Fiscal year ended Fiscal year ended Fiscal year ended
February 28, 1995 February 28, 1994 February 28, 1993
----------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Supplemental disclosures:
- -------------------------
Interest paid during the year $85 $278 $299
--- ---- ----
Income taxes paid during the year $18 $ 17 $ -
--- ---- ----
</TABLE>
Noncash activities:
- ------------------
In fiscal 1993, the Company issued 73 shares of common stock in lieu of
salaries to certain officers and key employees. The fair value ascribed to the
common stock and additional paid in capital is $3 and $105, respectively.
In fiscal 1993, a major supplier converted $200 of a note payable into $200
of Series A convertible preferred stock.
In fiscal 1993, the Chairman of the Board of the Company exercised stock
options with an aggregate exercise price of $81 by reducing an $81 obligation
due to him from the Company.
In fiscal 1993, notes receivable due from directors in the amount of $158
were satisfied through the cancellation of 86 shares of common stock of the
Company that collateralized these notes receivable. The value ascribed to the
common stock and additional paid in capital is $3 and $155, respectively.
In fiscal 1994, 60 shares of Series A convertible preferred stock were
issued in exchange for assets purchased.
In fiscal 1994, $175 of convertible debentures were converted into 58
shares of common stock.
In fiscal 1994, notes receivable due from employees in the amount of $25
were satisfied through the cancellation of 8 shares of common stock of the
Company that collateralized these notes receivable. The value ascribed to the
common stock and additional paid in capital is $0 and $25, respectively.
In fiscal 1994, the Company issued debt of $300 relating to the acquisition
of BCT Delray and the Canadian Area Master Franchise Agreement.
In fiscal 1994, the Chairman of the Board exchanged $73 of notes payable
into Series B convertible preferred stock.
In fiscal 1995, $252 and $150 of subordinated convertible debentures were
converted into 84 and 66 shares of common stock, respectively.
In fiscal 1995, a note receivable due from an employee in the amount of $17
was satisfied through the return of 5 shares of common stock of the Company
which collateralized this note.
In fiscal 1995, the Chairman of the Board exchanged $100 of convertible
debentures for 100 shares of Series B convertible preferred stock together with
44 additional warrants.
In fiscal 1995, 2,225 shares of Series B convertible preferred stock were
converted into 989 shares of the Company's common stock.
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
Page 37
<PAGE>
BCT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000's omitted)
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------- -------------------------------------------------------
Business
BCT International Inc. (the Company), franchises wholesale thermography
printing Plants through its wholly-owned subsidiary, Business Cards Tomorrow,
Inc. (BCT), for which it receives initial franchise fees and continuing
royalties. BCT, through its wholly-owned subsidiary BCT Delray, Inc. (BCT
Delray), acquired its first Company Plant in fiscal 1994. A second Company
Plant was acquired by BCT in fiscal 1995. The Company also sells paper stock
and catalogs to its franchisees and the Company Plants. At February 28, 1995,
the Company has 98 thermography printing Plants in operation, 96 of which are
franchised. The total number of Plants was 97 in 1994 and 92 in 1993.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiary, BCT, and BCT's wholly-owned subsidiary BCT Delray.
All significant intercompany transactions have been eliminated.
Short-Term Investments
Short-term interest bearing investments are those with maturities of less
than one year but greater than three months when purchased and are readily
convertible to cash. The short-term investments are classified as held to
maturity and are stated at amortized cost, which approximates fair value.
Inventory
Inventory, consisting primarily of paper products, printing supplies and
catalogs for sale to its franchisees and the Company Plants, is stated at the
lower of cost (first in, first out method) or market.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful life of the asset. Leasehold
improvements are amortized over the lives of the respective leases or the
estimated useful lives of the improvements, whichever is shorter. Costs of
major additions and improvements are capitalized and expenditures for
maintenance and repairs which do not extend the life of the assets are expensed.
Upon the sale or disposition of property and equipment, the cost and related
accumulated depreciation is eliminated from the accounts, and any resultant gain
or loss is credited or charged to operations.
Assets Held for Sale
Assets held for sale consist of the net assets of the Company Plant in
Honolulu, Hawaii, and are carried at the lower of cost or market value.
Excess of Purchase Price Over Fair Value of Net Assets Acquired
Excess of purchase price over fair value of net assets acquired from the
reverse acquisition on December 31, 1985 with The Good Taco Corporation was
being amortized over a period of fifteen years through 2001. The excess
purchase price was ascribed to the acquisition of a public company and to the
acquisition of $3,360 of tax net operating loss carryforwards. At February 28,
1995, the asset has been reduced to no value.
F-11
Page 38
<PAGE>
Trademark
The trademark is amortized using the straight-line method over 40 years.
Intangible Assets
Intangible assets consist of Canadian franchise rights and goodwill
acquired in fiscal 1994 with the Canadian Master Area Franchise Agreement and
goodwill acquired in fiscal 1994 with the purchase of the Company Plant. The
acquisition of the Canadian Master Area Franchise Agreement enabled the Company
to cancel the area agreement with the seller and purchase all of the Canadian
sub-franchise agreements. The purchase price was $230, of which $120 was paid
in cash at closing, and the remaining $110 was paid in 11 consecutive monthly
installments of $6 with a final balloon payment of $44. The amortization period
for the Canadian acquisition intangible assets is 19 years, which represents the
remaining life of the franchise agreements acquired.
In June 1993, in connection with the strategy of beginning to operate
Company Plants, the Company purchased franchise stores at a net cost of $300.
The goodwill associated with this acquisition totalled $239. The amortization
period for the assets related to the purchase of the Company Plants is 5 years.
Sales of Franchises
Revenue from the sales of individual franchises, including the initial
equipment package, is recognized upon the opening of the related franchise and
when all significant services have been substantially performed. Revenue from
the sale of an area franchise is recognized when all significant services
relating to the sale have been completed.
Continuing Franchise Royalties, Paper and Printing Revenues
Continuing franchise royalties, paper and printing revenues are recognized
monthly when earned. Collectibility of these revenues is assessed on a regular
basis. The allowance for doubtful accounts is established through a provision
for losses charged to selling, general and administrative expense. Accounts
receivable are charged off against the allowance for doubtful accounts when
management believes that collectibility is unlikely. The allowance is an amount
that management believes will be adequate to absorb possible losses in existing
accounts and notes receivable that may become uncollectible.
Research and Development
Research and development costs include costs for new product development
which are charged to operations as incurred.
Income Taxes
In February 1993, the Company prospectively adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), Accounting for Income Taxes. FAS 109 is
---------------------------
an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, FAS 109 generally considers all expected
future events other than enactments of changes in the tax law or rates. The
change to FAS 109 in 1993 had no significant effect on the fiscal 1993 financial
statements.
F-12
Page 39
<PAGE>
Earnings Per Common Share
Primary earnings per common share are calculated by dividing net earnings
applicable to common stock by the weighted average number of Common Stock shares
outstanding and common stock equivalents which consist of stock options and
stock warrants. On a fully-diluted basis, net earnings, weighted average shares
outstanding and common stock equivalents are adjusted to assume the conversion
of convertible subordinated debentures and preferred stock from the date of
issue.
Cash and Cash Equivalents
For the purposes of reporting cash flows, cash and cash equivalents include
investments with maturities of ninety days or less at purchase date.
Presentation and Reclassification
All dollar and share amounts, except amounts related to per share data, are
expressed in thousands of dollars. Certain items in the 1994 and 1993
consolidated financial statements have been reclassified for comparative
purposes.
NOTE 2: SHORT-TERM INVESTMENTS
- ------ ----------------------
Short term investments consist of the following at February 28, 1995:
<TABLE>
<CAPTION>
Carrying
Value Market
<S> <C> <C>
U.S. Treasury Bill, face value
of $75, due May 25, 1995 $ 74 $ 74
U.S. Treasury Bill, face value
of $1,000, due June 1, 1995 985 985
------- -------
1,059 1,059
Accrued interest 12 12
------- -------
$ 1,071 $ 1,071
======= =======
</TABLE>
F-13
Page 40
<PAGE>
NOTE 3: ACCOUNTS AND NOTES RECEIVABLE
- ------- -----------------------------
Accounts and notes receivable consist of the following:
<TABLE>
<CAPTION>
February 28, February 28,
1995 1994
------------- -------------
<S> <C> <C>
Continuing franchise fees
receivable $1,231 $ 997
Paper sales receivable
from franchisees 1,147 807
Notes receivable from sale of
franchises, interest at 8 1/2%
to 10%, due in monthly
installments through 1997 148 139
Notes receivable due from franchisees,
interest at 10% to 12 1/2%, payable
in monthly installments through
1998 605 770
Company Plant accounts receivable
from customers 86 88
Miscellaneous 253 144
------ ------
3,470 2,945
Less - allowance for doubtful accounts (888) (836)
and deferred interest (18) (23)
------ ------
2,564 2,086
Less - amount not expected to
be collected within one year,
net of $551 allowance
for doubtful accounts
($607 in 1994) (259) (483)
------ ------
$2,305 $1,603
------ ------
</TABLE>
In the normal course of business, to meet the financing needs of its
franchisees, the Company extends credit to its franchisees throughout the United
States and Canada. Although the Company has a diversified receivable portfolio,
a substantial portion of the franchisees' ability to honor their commitments to
the Company is reliant upon the economic stability of the market in the
franchisee's particular geographic area. The Company's exposure to loss in the
event of nonperformance by the franchisees is represented by the contractual
amount of the notes and accounts receivables and the franchise equipment leases
guaranteed by the Company (see Note 9). The Company controls the credit risk of
its receivables through credit approvals, limits and monitoring procedures. The
Company may require collateral or other security to support the receivables with
credit risk.
F-14
Page 41
<PAGE>
At February 28, 1995, approximately $170 ($503 in 1994) of accounts and
notes receivable, although currently due, are classified into long term accounts
and notes receivable, based upon historic payment performance of the
franchisees. A significant portion of the allowance for doubtful accounts
relates to these accounts and notes receivable. Amounts included in long term
notes receivable include the following contractual payment terms: 1996 - $112,
1997 - $296, 1998 - $164, 1999 - $180.
Bad debt expense for the years ended February 28, 1995, February 28, 1994
and February 28, 1993, was approximately $352, $196 and $242, respectively.
Interest income is recognized on a cash basis for those accounts and notes
receivables with specific reserves. Interest income for all other accounts and
notes receivable are recognized on an accrual basis.
NOTE 4: PROPERTY AND EQUIPMENT
- ------- ----------------------
Major classifications of property and equipment are as follows:
<TABLE>
<CAPTION>
Estimated
useful
February 28, February 28, lives
1995 1994 (in years)
------------- ------------ ----------
<S> <C> <C> <C>
Leasehold improvements $ 53 $ 53 5 - 32
Machinery and equipment 181 141 3 - 20
Dies and artwork 118 118 25
Videos 37 37 5
Furniture, fixtures and other
equipment 104 99 5 - 10
Computers 407 311 5
Franchisee software 48 46 3
Auto 5 5 5
----- -----
953 810
Less - accumulated depreciation
and amortization (313) (217)
----- -----
$ 640 $ 593
===== =====
</TABLE>
F-15
Page 42
<PAGE>
NOTE 5: CONVERTIBLE SUBORDINATED DEBENTURES AND NOTES PAYABLE
- ------- -----------------------------------------------------
Convertible subordinated debentures and notes payable consist of the
following:
<TABLE>
<CAPTION>
February 28, February 28,
1995 1994
------------- -------------
<S> <C> <C>
Series A - 11% convertible subordinated debentures,
interest payable quarterly, due March 31, 1994 $ --- $ 1,682
======== =======
Note payable to bank, secured by receivables, property,
equipment and inventory, monthly principal and
interest payments, interest at 8% --- 285
Note payable to prior owner of Company Plant secured
by equipment, monthly principal and interest payments
of $4, interest at 8% per annum, due May 28, 1998 131 166
Unsecured amount due to Continental Stamps West,
interest imputed at 13%, principal and interest due
in monthly installments of $4 through
February 1997 79 111
-------- -------
210 562
Less - amount due after one year (162) (103)
-------- -------
$ 48 $ 459
======== =======
</TABLE>
In October 1994, the Company executed a commitment letter with a bank for a
$200 unsecured line of credit, with an interest rate of prime + 1.5% and an
expiration date of July 1, 1995. Advances against this line of credit are for
capital projects and must be preapproved by the bank. This line of credit is
guaranteed by the Company's Chairman of the Board. No advances were outstanding
under this line of credit at February 28, 1995.
Convertible subordinated debentures
- -----------------------------------
In fiscal 1990, the Company issued $2,580 of Series A 11% convertible
subordinated debentures, $600 of which replaced a $600 note payable to the
Chairman of the Board. The convertible subordinated debentures were due March
31, 1994, interest was payable each calendar quarter, and the debentures were
convertible into common stock at a rate of $3.00 per share. Further, upon
conversion, each share of common stock was to be accompanied by the issuance of
a three-year warrant, with two warrants required to purchase one share of common
stock at an exercise price of $7.00 per share.
During fiscal 1992, to induce the conversion of the debentures, the Company
temporarily reduced the conversion price from $3.00 to $1.25 per share of common
stock. Further, the exercise price for the warrants was reduced from $7.00 to
$2.92 per share. The revised conversion agreement was effective from July 31,
1991 through September 30, 1991. In conjunction with the induced conversion,
$573 of debentures were converted to increase the Company's equity position;
$500 of these debentures were converted by the Company's Chairman of the Board.
This induced conversion resulted in subordinated debenture conversion expense in
the approximate amount of $331. This expense represents the fair value of the
shares transferred in excess of shares issuable pursuant to the original
conversion terms.
On May 15, 1992, $150 of the debentures were redeemed by the Company in a
privately negotiated transaction at an aggregate redemption price of $98.
During fiscal 1994, an additional $175 of debentures were converted pursuant to
the original terms.
At February 28, 1994, $1,682 principal amount of debentures remained
outstanding. Of these debentures, $532 were convertible into 177 common shares
at $3.00 per share plus 177 warrants. In fiscal 1995, $252 of these debentures
were converted into 84 shares of common stock and 84 warrants, and the Chairman
of the Board converted $100 of these debentures into Series B convertible
preferred stock. The remaining $180 of these debentures was satisfied at the
maturity date with proceeds from the private placement of Series B convertible
preferred stock (see Note 6 - Preferred Stock).
F-16
Page 43
<PAGE>
The remaining $1,150 of the debentures outstanding at February 28, 1994
were subject to anti-dilutive provisions upon the occurrence of certain events.
The conversion price was subject to reduction for the grant of options and
warrants and the issuance of additional shares of common stock and convertible
securities with a price less than the then current conversion price. As of
February 28, 1994, the conversion price of these debentures had been reduced
from $3.00 to $2.27 per share, resulting in 506 shares of common stock issuable
upon conversion. Furthermore, the warrant exercise price had been reduced from
$7.00 to $4.46 per share. On March 17, 1994, $150 of these debentures were
converted into 66 shares of common stock, together with 66 warrants. The
remaining $1,000 of these debentures were satisfied at the maturity date with
proceeds from the private placement of Series B convertible preferred stock
(See Note 6 - Preferred Stock).
Scheduled maturities after February 28, 1995, for notes payable are as
follows:
<TABLE>
<CAPTION>
Fiscal Notes
Year Payable
------ -------
<S> <C>
1996 $ 168
1997 42
-------
$ 210
=======
</TABLE>
F-17
Page 44
<PAGE>
NOTE 6: PREFERRED STOCK
- ------- ---------------
Effective May 1992, 750 shares of Series A Convertible Preferred Stock,
$1.00 par value, were authorized and issued by the Company. In January 1994,
60 additional shares of Series A preferred stock were authorized and issued,
bringing the total to 810 shares. Dividends on these shares are cumulative and
accrue from the date of original issue at a 12% rate per annum, payable
quarterly on the first day of each January, April, July and October. Dividends
in arrears are non-interest bearing. Dividends must either be fully paid or
declared and aggregated for payment prior to the declaration of dividends on the
common shares. The Series A preferred stock is non-voting except as it relates
to any action affecting the terms of the priority of the preferred stock.
Upon the event of a voluntary or involuntary liquidation, the holders of
the Series A preferred stock will be entitled to receive $1.00 per share plus
all accrued and unpaid dividends. The Series A preferred stock is convertible
into common stock at a ratio of 1.48 shares of preferred stock for each share of
common stock. The Company has the option to require conversion of the preferred
stock beginning two years after the date of issuance if the common stock closing
price or last reported sales price is at least $7.00 per share for 10
consecutive business days. If the preferred stock is not converted within five
years of issuance, the Company must redeem the stock at $1.00 per share plus all
accrued and unpaid dividends.
Effective February 17, 1994, 2,500 shares of Series B convertible preferred
stock, $1.00 par value, were authorized by the Company for sale in a private
placement offering at a $1.00 price per share. A total of 2,225 shares were
sold in the offering. The net proceeds of the offering, which totalled $1,973,
were used by the Company (i) to pay off the outstanding 11% convertible
subordinated debentures due on March 31, 1994 of $1,180 and (ii) for general
working capital. Dividends on the Series B convertible preferred stock were
cumulative and accrued from the date of original issue at a 9% rate per annum,
payable quarterly on the first day of each January, April, July and October.
Total Series B dividends declared and paid to holders were $129.
Upon the event of a voluntary liquidation, the holders of the Series B
preferred stock were entitled to receive $1.00 per share plus all accrued and
unpaid dividends. The Series B preferred stock was convertible into common
stock at a ratio of 2.25 shares of preferred stock per share of common stock.
The Company had the right to require conversion of the Series B preferred stock
into common stock six months after the date of issuance in the event the common
stock's closing bid price or last sale price was at or above $3.50 per share for
20 consecutive trading days. The Company exercised this right on November 1,
1994. As a result, the Series B preferred stock totalling 2,225 shares was
converted into 989 shares of the Company's common stock.
The holders of the Series B convertible preferred stock received one warrant
for each 2.25 shares of preferred stock purchased, entitling the holder to
purchase one share of the Company's common stock for three years from the date
of issuance at an exercise price of $3.00 per share. Contemporaneous with the
Company's forced conversion of the Series B preferred stock into common stock,
the holders were required to either exercise their Series B Warrants or have
them redeemed by the Company. Effective December 8, 1994, 689 warrants were
exercised at $3.00 per warrant and the Company issued 689 shares of its common
stock, yielding gross proceeds to the Company of $2,067. A commission of $86
was paid to an investment banker in connection with the exercise of these
warrants and was offset against additional paid in capital. The Company
redeemed the 300 remaining Series B warrants at a price of $.05 each or $15.
The original commission of $78 paid in connection with the sale of the Series B
preferred stock was fully accreted to additional paid in capital upon the
conversion of Series B preferred stock into common stock.
On February 28, 1994, 825 shares of Series B convertible preferred stock were
issued and outstanding. A commission of $13 was paid with respect to one
investor, and the Chairman of the Board converted the remaining balance of a
note owed to him by the Company in the amount of $73 plus $2 of cash into $75 of
the Series B convertible preferred stock. Consequently, the Company received
$738 of cash (restricted cash on the balance sheet due to escrow of the funds)
in exchange for the 825 preferred shares issued. The $13 commission reduced the
purchase price of the outstanding Series B convertible preferred stock. This
difference was accreted utilizing the interest method and the accreted amount
was offset against additional paid in capital.
In fiscal 1995, an additional 1,400 shares of Series B convertible
preferred stock were issued. The Company received $1,300 in cash for these
shares and the Chairman of the Company exchanged $100 of the 11% convertible
subordinated debentures for 100 shares of Series B convertible preferred stock.
A further commission of $65 was paid to the investment bankers and reduced the
value of the Series B convertible preferred stock. This difference was accreted
utilizing the interest method and the accreted amount was offset against
additional paid in capital.
F-18
Page 45
<PAGE>
NOTE 7: STOCKHOLDERS' EQUITY
- ------- --------------------
Common Stock
- ------------
On November 16, 1993, the Company's shareholders voted to increase the
number of shares authorized from 6,250 shares to 25,000 shares.
Stock Options
- -------------
Stock options outstanding, exercisable and exercise price for the three years
ended February 28, 1995 are as follows:
<TABLE>
<CAPTION>
Options
Outstanding Price Range Aggregate
----------- ------------- ---------
<S> <C> <C> <C>
At March 1, 1992 689 $1.25 to $3.13 $1,132
Options granted 278 $1.48 to $3.50 630
Options exercised (67) $1.25 to $2.75 (88)
Options cancelled --- --- ---
----- ---------------- ------
At February 28, 1993 900 $1.25 to $3.50 1,674
Options granted 115 $2.38 274
Options exercised --- --- ---
Options cancelled (9) $1.25 to $1.48 (12)
----- ---------------- ------
At February 28, 1994 1,006 $1.25 to $3.50 1,936
Options granted 215 $3.38 727
Options exercised (10) $1.25 (12)
Options cancelled (31) $1.25 to $2.38 (53)
Options expired (16) $3.00 (48)
----- ---------------- ------
At February 28, 1995 1,164 $1.25 to $3.50 $2,550
===== ================ ======
Options exercisable
At February 28, 1995 1,116 $1.25 to $3.50 $2,412
===== ================ ======
</TABLE>
F-19
Page 46
<PAGE>
Warrants
- --------
As of February 28, 1995, there were outstanding warrants for the purchase
of 694 shares of common stock, 37 of which are held by the Chairman of the
Board. The exercise price and the dates are as follows:
<TABLE>
<CAPTION>
Title of Issue Aggregate Amount Date from which Price at which
Called for of Securities Called Warrants Last Warrants
by Warrants for by Warrants are Exercisable Exercise Date are Exercisable
--------------- -------------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
Issued during 1985 merger 31 March 6, 1985 March 5, 1995 $1.32 to $2.75
Issued during 1985 merger 38 September 8, 1986 September 7, 1996 $1.25
Converted Subordinated 175 August 30, 1991 - July 26, 1997 $4.46 to $7.00
Debentures March 31, 1994
Issued to Investment
Banker 150 May 31, 1993 May 31, 1998 $3.13
Issued to Investment
Banker 300 February 1, 1994 February 1, 1999 $2.00 to $4.00
---
Warrants outstanding 694
===
</TABLE>
As of February 28, 1995, 289 warrants issued in conjunction with
convertible subordinated debentures had expired and 6 of these warrants were
exercised yielding $9. The 989 warrants issued in conjunction with the Series B
convertible preferred stock were called for exercise at $3.00 per share or
redemption at $.05 each by the Company on November 1, 1994. Of the 989
warrants, 689 were exercised yielding gross proceeds of $2,066, and the
remaining 300 were redeemed by the Company for $15.
As of February 28, 1994, the following warrants were issuable in conjunction
with the convertible subordinated debentures:
<TABLE>
<S> <C> <C> <C> <C>
Issuable in conjunction with
Convertible Subordinated
Debentures 88 July 26, 1994 July 26, 1997 $7.00
Issuable in conjunction with
Convertible Subordinated
Debentures 89 March 31, 1994 March 31, 1997 $7.00
Issuable in conjunction with
Convertible Subordinated
Debentures 301 March 31, 1994 March 31, 1997 $4.46
Issuable in conjunction with
Investment Banking
agreement dated
February 1, 1994 225 May 1, 1994 November 1, 1999 $2.00 to $4.00
---
703
===
</TABLE>
As of February 28, 1995, the above warrants were either issued or
cancelled.
F-20
Page 47
<PAGE>
NOTE 8: INCOME TAXES
- ------- ------------
The components of the provision for (benefit from) income taxes for the
years ended February 28, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Current Provision:
Federal $ 26 $ 16 $ ---
State --- 20 ---
----- ----- -----
Total current 26 36 ---
Deferred provision (benefit) (150) (205) ---
Tax benefit from exercise of employee stock
options and stock compensation awards
credited to paid in capital --- 76 ---
----- ----- -----
Total (benefit) $(124) $ (93) $ ---
----- ----- -----
</TABLE>
The Company's net deferred tax asset is comprised of the following:
<TABLE>
<CAPTION>
February 28, 1995 February 28, 1994 February 28, 1993
------------------ ------------------ -----------------
<S> <C> <C> <C>
Deferred Tax Asset - Current:
Bad debt reserve $ 132 $ 175 $ 109
Other 44 27 108
------- -------- --------
Total Deferred Tax Asset 176 202 217
------- -------- --------
Valuation Allowance (88) (121) (217)
------- -------- --------
Deferred Tax Liabilities - Current:
Other --- --- ---
------- -------- --------
Total Deferred Tax Liability --- --- ---
------- -------- --------
Net Deferred Tax Asset - Current $ 88 $ 81 $ ---
======= ======== ========
Deferred Tax Asset - Non-Current:
Bad debt reserve $ 215 $ 151 $ 134
Net operating loss carryovers 2,747 3,213 3,501
Fixed assets --- --- ---
Other 34 22 ---
------- -------- --------
Total Deferred Tax Asset 2,996 3,386 3,635
------- -------- --------
Valuation Allowance (1,466) (2,010) (3,620)
------- -------- -------
Deferred Tax Liabilities - Non-Current:
Fixed assets (64) (36) (15)
------- -------- -------
Total Deferred Tax Liability (64) (36) (15)
------- -------- -------
Net Deferred Tax Asset - Non-Current $ 1,466 $ 1,340 $ ---
======= ======== =======
Net Deferred Tax Asset - Total $ 1,554 $ 1,421 $ ---
======= ======== =======
</TABLE>
F-21
Page 48
<PAGE>
The net change in the valuation allowance for the deferred tax asset was a
decrease of $577 and $1,706 and $388 for the fiscal years ended February 28,
1995, 1994 and 1993, respectively. For the year ended February 28, 1993, the
reduction in the valuation allowance related primarily to the reduction in the
net deferred tax asset. For fiscal year ended February 28, 1994, $288, of the
reduction in the valuation allowance related to the utilization of acquired net
operating loss carryforwards which reduced goodwill. The remaining reduction in
the valuation allowance of $1,418 relates to management's change in judgment
about the realizability of the related deferred tax asset in future years. Of
this amount, $928 related to the valuation allowance for acquired net operating
losses which reduced goodwill and the remaining decrease of $490 in the
valuation allowance reduced tax expense. For fiscal year ended February 28,
1995, the decrease of $577 in the valuation allowance reduced tax expense of
$577.
Net operating loss carryforwards for Federal income tax purposes total
approximately $7,300 at February 28, 1995. The net operating loss carryforward
includes $540 with certain limitations. Net operating losses expire as follows:
<TABLE>
<CAPTION>
Year of
Expiration Amount
------------ -------
<S> <C>
1998 $ 7
2000 1,238
2001 1,723
2002 1,327
2003 294
2005 1,721
2006 962
2007 12
2008 16
------
$7,300
======
</TABLE>
For Federal income tax purposes, the Company has approximately $19 of
general business credit carryovers which expire at various dates through 2001.
If certain substantial changes in the Company's ownership should occur,
there would be an annual limitation on the amount of carryforward which could be
utilized.
The difference between the statutory and effective tax rates are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
Amount Rate Amount Rate Amount Rate
------ ----- ------- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Tax at statutory rate $ 351 34% $ 269 35% $283 34%
Non-deductible amortization
of purchase price over
fair value of net assets 37 3
acquired (8) (1) 65 8 61 7
Other --- --- (4) (1) 6 1
State income tax, net of
federal benefit 47 5 51 7 38 4
Alternative minimum tax 26 3 16 2 --- ---
Decrease in Federal and
state valuation allowance (577) (56) (490) (62) (388) (46)
----- --- ---- --- ---- ---
$(124) (12)% $(93) (11)% $ -- --%
===== === ==== === ==== ===
</TABLE>
F-22
Page 49
<PAGE>
NOTE 9: COMMITMENTS AND CONTINGENCIES
- ------- -----------------------------
The Company is a party to various litigation matters, including a matter
with a prior officer of the Company. In the opinion of management, potential
losses, if any, on the various matters will not have a material impact on the
financial condition or results of operation of the Company.
The Company's corporate offices and office equipment are leased under
noncancellable lease agreements. The leases initially expire at various dates
through 2000, and contain options for renewals. There are provisions in the
leases for rent increases based on cost of living increases under certain
conditions.
The following are the approximate minimum annual noncancellable rentals to
be paid under the provisions of the leases:
<TABLE>
<CAPTION>
Fiscal Year Lease Commitments
------------ -----------------
<S> <C>
1996 275
1997 285
1998 128
1999 35
2000 41
----
$764
====
</TABLE>
Rental expense amounted to the following approximate amounts for the
corresponding periods:
<TABLE>
<CAPTION>
For the year ended Amount
------------------ ------
<S> <C>
February 28, 1995 $193
February 28, 1994 $175
February 28, 1993 $245
</TABLE>
At February 28, 1995, the Company has guaranteed the payment of equipment
lease obligations for certain of its franchisees for an aggregate amount of
approximately $1,450.
In March 1993, the Company entered into an employment agreement with the
Chairman of the Board. The term of the employment contract is seven years. The
agreement calls for minimum annual salary amounts during the term of this
contract as follows:
<TABLE>
<CAPTION>
Year Ending February 28, Amount
------------------------ ------
<S> <C>
1996 $275
1997 $300
1998 $300
1999 $300
2000 $300
</TABLE>
In the event that the Chairman of the Board is substantially incapacitated
during the term of his employment for a period of 90 days in the aggregate
during any twelve month period, the Company has the right to terminate his
employment. Upon termination, the Chairman of the Board will receive one-half
of his salary in effect on the date of termination for the remaining term of the
agreement. Additionally, in the event of the Chairman's death during his
employment, his designated beneficiary or his estate shall be paid one-half of
his salary in effect on the date of his death for the remaining term of the
agreement.
In March 1991, the Company entered into a consulting agreement with a
Director (and founder of BCT), who had retired as an officer of the Company
during fiscal 1991. Under this agreement, consulting services are required in
exchange for fees of $50 per year, payable in equal monthly installments. In
May 1992, this agreement was formalized pursuant to a consulting contract with
an expiration date of February 29, 1996.
F-23
Page 50
<PAGE>
BCT INTERNATIONAL, INC.
-----------------------
000's omitted SCHEDULE VIII
- -------------
VALUATION AND QUALIFYING ACCOUNTS
---------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
---------------------
Balance at Charged to Balance at
beginning costs and end of
of year expenses Other Deductions year
--------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
For the year ended February 28, 1995
Allowance for doubtful accounts $ 836 $352 $ --- $ (300) (1) $ 888
====== ==== ======= ======= ======
Deferred tax assets valuation allowance $2,131 $--- $ --- $ (577) $1,554
====== ==== ======= ======= ======
For the year ended February 28, 1994
Allowance for doubtful accounts $ 647 $196 $ --- $ (7) (1) $ 836
====== ==== ======= ======= ======
Deferred tax assets valuation allowance $3,837 $--- $ --- $(1,706) (3) $2,131
====== ==== ======= ======= ======
For the year ended February 28, 1993
Allowance for doubtful accounts $ 738 $242 $ --- $ (333) (1) $ 647
====== ==== ======= ======= ======
Deferred tax assets valuation allowance $ --- $--- $ 3,837 (2) $ --- $3,837
====== ==== ======= ======= ======
</TABLE>
Allowance for doubtful accounts at February 28, 1995 of $888 is comprised of
$337 related to current receivables and $551 to long-term receivables.
(1) Write off of uncollectible receivables.
(2) A deferred tax asset value
(3) The excess of purchase price over fair value of net assets acquired was
reduced by $1,216, of the valuation allowance, since this reduction
represents the utilization of the acquired operating loss carryforwards.
F-24
Page 51
<PAGE>
SCHEDULE X
BCT INTERNATIONAL, INC.
-----------------------
000's omitted
-------------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
------------------------------------------
COLUMN A
--------
<TABLE>
<CAPTION>
Item February 28, 1995 February 28, 1994 February 28, 1993
----- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Advertising Costs $156 $162 $152
==== ==== ====
Amortization of excess cost over
value of net assets acquired $108 $193 $180
==== ==== ====
Amortization of intangible assets $ 68 $ 22 $---
==== ==== ====
</TABLE>
F-25
Page 52
<PAGE>
EXHIBIT 3.1
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "THE GOOD TACO CORPORATION" FILED IN THIS OFFICE ON THE SEVENTH
DAY OF APRIL, A.D. 1981, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: *3469563
Date: 06/02/1992
<PAGE>
CERTIFICATE OF INCORPORATION
OF
THE GOOD TACO CORPORATION
FIRST: The name of the corporation is: THE GOOD TACO CORPORATION.
SECOND: The address of its registered office in the State of Delaware is 410
South State Street in the City of Dover, County of Kent. The name of the
registered agent at such address is UNITED CORPORATE SERVICES, INC.
THIRD: The nature of the business or purpose to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is 8,000,000 shares of common stock, par value $.01 per
share.
FIFTH: The name and mailing address of the incorporator is as follows:
Name: Sharon Anson
Mailing Address: c/o Reavis & McGrath
345 Park Avenue
New York, New York 10154
SIXTH: The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights and powers conferred herein upon
stockholders and directors are granted subject to this reservation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of
forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this certificate, hereby declaring and certifying that this
is my act and deed and the facts herein stated are true and accordingly have
hereunto set my hand this 6th day of April, 1981.
Sharon Anson, Incorporator
<PAGE>
STATE OF NEW YORK
STATE OF NEW YORK
BE IT REMEMBERED that on this 6th day of April 1981, personally came before me a
Notary Public for the State of New York, Sharon Anson, the party to the
foregoing certificate of incorporation, known to me personally to be such, and
she acknowledged the said certificate to be her act and deed and that the facts
stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
Notary Public
Susan B. Tillem
Notary Public, State of New York
No. 463-4370
Qualified in Newman County
Certificate Filed in New York
Commission Expires March 30, 1983
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER OF
DELAWARE & FOREIGN CORPORATIONS OF "THE GOOD TACO CORPORATION" FILED IN THIS
OFFICE ON THE SECOND DAY OF JUNE, A.D. 1981, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: *3469565
Date: 06/02/1992
<PAGE>
CERTIFICATE OF MERGER
OF
THE GOOD TACO CORPORATION
(a Florida Corporation)
INTO
THE GOOD TACO CORPORATION
(a Delaware Corporation)
THE GOOD TACO CORPORATION, the undersigned corporation, does hereby certify:
FIRST: The name and state of incorporation of each of the constituent
corporations of the merger is as follows:
The Good Taco Corporation (a Delaware corporation)
The Good Taco Corporation (a Florida corporation)
SECOND: An Agreement and Plan of Merger between the parties to the merger has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of subsection (c)
of section 252 of the General Corporation Law of the State of Delaware.
THIRD: The name of the corporation surviving the merger is THE GOOD TACO
CORPORATION, a Delaware corporation.
FOURTH: The certificate of incorporation of THE GOOD TACO CORPORATION, a
Delaware corporation, shall be the certificate of incorporation of the surviving
corporation.
FIFTH: The executed Agreement and Plan of Merger is on file at the principal
place of business of the surviving corporation. The address of the principal
place of business is 1851 South Dixie Highway, Pompano Beach, Florida 33060.
SIXTH: A copy of the Agreement and Plan of Merger will be furnished on request
and without cost to any stockholders of either constituent corporation.
SEVENTH: The authorized capital stock of each foreign corporation which is a
party to the merger is as follows:
Number of
Authorized Par Value
Corporation Class Shares per Share
- ----------- ----- ------ ---------
THE GOOD TACO CORPO- Common Stock 3,357,200 $.01 par value
RATION (a Florida
corporation)
Dated: May 15, 1981
THE GOOD TACO CORPORATION
(a Delaware corporation)
By:
Richard F. Lynch
President
ATTEST:
By:
Robert F. Bond
Secretary
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "THE GOOD TACO CORPORATION" FILED IN THIS OFFICE ON THE NINTH DAY OF
NOVEMBER, A.D. 1982, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: 3469567
Date: 06/02/1992
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
THE GOOD TACO CORPORATION
(Pursuant to Section 242 of the General
Corporation Law of the State of Delaware)
THE GOOD TACO CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation held by
conference telephone on September 8, 1982, resolutions were duly adopted setting
forth a proposed amendment to the Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and directing that said
amendment be considered by the stockholders of the Corporation entitled to vote
in respect thereof.
SECOND: That thereafter, pursuant to the By-Laws of the Corporation, the annual
meeting of stockholders of the Corporation was duly held upon notice in
accordance with Section 222 of the General Corporation Law of the State of
Delaware on September 21, 1982, at which meeting the necessary number of shares
as required by statute and the Certificate of Incorporation of the Corporation
were voted in favor of said amendment.
THIRD: That said amendment would amend the Certificate of Incorporation of the
Corporation by adding new Article SEVENTH:
"SEVENTH" The Board of Directors is expressly authorized and empowered to alter,
amend or repeal the by-laws of the Corporation, subject to the power of the
stockholders of the corporation to alter or repeal any or all by-laws made by
the Board of Directors."
FOURTH: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto
affixed and this certificate to be signed by its President and attested by its
Secretary this 21 day of September, 1982.
THE GOOD TACO CORPORATION
By:
Richard F. Lynch
President
(Corporate Seal)
Attest
By:
Robert F. Bond
Secretary
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
Be it remembered that on this 22 day of September, 1982, personally came before
me Richard F. Lynch, President of The Good Taco Corporation, a corporation
organized under the laws of the State of Delaware, party to the foregoing
certificate, known to me personally to be such, and acknowledged the said
certificate to be the act and deed of said corporation and that the facts stated
therein are true; that the signature of the President is his own proper
handwriting; that the seal affixed is the common or corporate seal of the said
corporation; and that his act of sealing, executing and delivering said
certificate was duly authorized by resolution of the board of directors of the
said corporation. Given under my hand and seal of office the day and year
aforesaid.
Bette J. McKinley
Notary Public
Notary Public, State of Florida
My Commission Expires May 2, 1985
Notarial Seal
STATE OF FLORIDA
COUNTY OF BROWARD
Be it remembered that on this 22 day of September, 1982, personally came before
me Robert F. Bond, Secretary of The Good Taco Corporation, a corporation
organized under the laws of the State of Delaware, party to the foregoing
certificate, known to me personally to be such, and acknowledged the said
certificate to be the act and deed of said corporation and that the facts stated
therein are true; that the signature of the Secretary is his own proper
handwriting; that the seal affixed is the common or corporate seal of the said
corporation; and that his act of attesting said certificate was duly authorized
by resolution of the board of directors of the said corporation. Given under my
hand and seal of office the day and year aforesaid.
Bette J. McKinley
Notary Public
Notary Public, State of Florida
My Commission Expires May 2, 1985
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "THE GOOD TACO CORPORATION" FILED IN THIS OFFICE ON THE SECOND DAY OF AUGUST,
A.D. 1984, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: *3469569
Date: 06/02/1992
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE GOOD TACO CORPORATION
(Pursuant to Section 242 of the General
Corporation Law of the State of Delaware)
THE GOOD TACO CORPORATION, a corporation incorporated and existing under the
laws of the State of Delaware (hereinafter called the "Corporation"), DOES
HEREBY CERTIFY that:
FIRST: At a meeting of the Board of Directors of the Corporation held on May 2,
1984, resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and directing that the amendment be considered at the next annual
meeting of the stockholders of the Corporation.
SECOND: The annual meeting of stockholders of the Corporation was duly called
and held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware on June 25, 1984, at which meeting the necessary
number of shares as required by Section 242 of the General Law of the State of
Delaware and the Certificate of Incorporation of the Corporation were voted in
favor of said amendment.
THIRD: Said amendment would amend the Certificate of Incorporation of the
Corporation by adding Article EIGHTH to the Corporation's Certificate of
Incorporation as follows:
EIGHTH: (a) The number of directors constituting the whole Board shall be as
fixed from time to time by vote of a majority of the whole Board; provided,
however, that the number of directors shall not be less than three and that the
number shall not be reduced so as to shorten the term of any director at the
time in office. The number of directors constituting the whole Board shall
hereafter be five until otherwise fixed by a majority of the whole Board in
accordance with the preceding sentence.
(b) The Board of Directors shall be divided into three classes, designated Class
I, Class II and Class III, as nearly equal in number as the then total number of
directors constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in 1984,
directors of Class I shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting, and
directors of Class III shall be elected to hold office for a term expiring at
the third succeeding annual meeting. At each meeting of stockholders the
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. At each annual meeting of stockholders the successors to the class of
directors whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships resulting
from any increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, or by a sole remaining
director. Any directors so chosen shall hold office, until the next election of
the class for which such directors shall have been chosen and until their
successors shall be elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Any newly
created or eliminated directorships resulting from an increase or decrease in
the authorized number of directors shall be apportioned by the Board of
Directors among the three classes of directors so as to maintain such classes as
nearly equal as possible.
FOURTH: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto
affixed and this certificate to be signed by its President and attested by its
Secretary this 1st day of August, 1984.
THE GOOD TACO CORPORATION
By: Richard F. Lynch
President
(Corporate Seal)
Attest:
By: Robert F. Bond
Secretary
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF OWNERSHIP
& MERGER OF "THE GOOD TACO CORPORATION" FILED IN THIS OFFICE ON THE TWENTY-
SEVENTH DAY OF JANUARY, A.D. 1986, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: *3469571
Date: 06/02/1992
<PAGE>
CERTIFICATE OF OWNERSHIP
Pursuant to Section 253 of the Delaware General Corporation Law, the undersigned
hereby certify that The Good Taco Corporation, a Delaware corporation (the
"Company"), owns 100% of the stock of GTC Acquisition Corp., a Florida
corporation ("GTC"), and that the attached is a true and correct copy of the
resolution adopted on the 10th day of January, 1986, by the Board of Directors
of the Company providing for the merger of the Company and GTC and the change of
the name of the Company as the surviving corporation to "Business Cards
Tomorrow, Inc."
Dated: January 20, 1986
THE GOOD TACO CORPORATION
By:
Its President
And:
Its Assistant Secretary
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
I, Nancy J. Smith, a notary public, do hereby certify that on this 20th day of
January 1986, personally appeared before me Alton E. Day, who being by me first
duly sworn, declared that he is the President, who signed the foregoing document
as an officer of the said corporation, and that the statements therein contained
are true.
Nancy J. Smith
Notary Public of Florida
My Commission Expires:
Notary Public, State of Florida
My Commission Expires November 29, 1986
STATE OF FLORIDA
COUNTY OF BROWARD
I, Nancy J. Smith, a notary public, do hereby certify that on this 20th day of
January 1986, personally appeared before me Michael J. Garrett, who being by me
first duly sworn, declared that he is the Assistant Secretary, who signed the
foregoing document as an officer of the said corporation, and that the
statements therein contained are true.
Nancy J. Smith
Notary Public of Florida
My Commission Expires:
Notary Public, State of Florida
My Commission Expires November 29, 1986
<PAGE>
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE GOOD TACO CORPORATION
RESOLVED, that The Good Taco Corporation, a Delaware corporation (the "Company")
hereby consent to the following action in accordance with Section 141(f) of the
Delaware General Corporation Law:
WHEREAS, the Company now owns all the stock of GTC Acquisition Corp., a stock
corporation organized under the laws of the State of Florida ("Subsidiary") and
engaged in business similar and incidental to that of the Company; and
WHEREAS, it is deemed advisable that the Company merge with Subsidiary in order
that all the estate, property, rights, privileges, and franchises of Subsidiary
shall vest in and be possessed by the Company, be it
RESOLVED, That the Company merge with Subsidiary and assume all its obligations,
the Company to be the surviving corporation;
RESOLVED FURTHER, That the name of the Company as the surviving corporation
shall be changed to "Business Cards Tomorrow, Inc.;" and
RESOLVED FURTHER, That the President or Vice President and the Secretary or
Assistant Secretary of the Company are hereby authorized and directed to make
and execute, in the name and under the corporate seal of the Company, a
certificate of ownership of all the stock of the Subsidiary, and of the adoption
and date of adoption of these resolutions, and to file such certificate in the
office of the Secretary of State for the State of Delaware, and to do all other
acts and things that may be necessary to carry out and effectuate the purpose of
these resolutions.
IN WITNESS WHEREOF, I have affixed by name as Assistant Secretary and have
caused the corporate seal of said Corporation to be hereunto affixed as of the
10th day of January, 1986.
ASSISTANT SECRETARY
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF RENEWAL OF
"BUSINESS CARDS TOMORROW, INC." FILED IN THIS OFFICE ON THE TWENTY-FIRST DAY OF
NOVEMBER, A.D. 1986, AT 10 O'CLOCK A.M.
Secretary of State
Authentication: *3469573
Date: 06/02/1992
<PAGE>
Certificate
for Renewal and Revival of Charter
Business Cards Tomorrow, Inc., a corporation organized under the laws of
Delaware, the certificate of incorporation of which was filed in the office of
the Secretary of State on the 7th day of April 1981, and recorded in the office
of the Recorder of Deeds for _______ County, the charter of which was voided for
non-payment of taxes, now desires to procure a restoration, renewal and revival
of its charter, and hereby certifies as follows:
1. The name of this corporation is Business Cards Tomorrow, Inc.
2. The registered office in the State of Delaware is located at 410 S. State
Street, City of Dover, Zip Code 19901 County of Kent the name and address of its
registered agent is United Corporate Services, Inc. 410 S. State Street, Dover,
DE 19901.
3. The date when the restoration, renewal, and revival of the charter of this
company is to commence is the twenty-eighth day of February, same being prior to
the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is to be perpetual.
4. This corporation was duly organized and carried on the business authorized by
its charter until the first day of March A.D. 1986, at which time its charter
became inoperative and void for non-payment of taxes and this certificate for
renewal and revival is filed by authority of the duly elected directors of the
corporation in accordance with the laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312 of
the General Corporation Law of the State of Delaware, as amended, providing for
the renewal, extensions and restoration of charters, Alton E. Day the last and
acting President, and Robert F. Bond, the last and acting Secretary of Business
Cards Tomorrow, Inc., have hereunto set their hands to this certificate this
20th day of November, 1986
ALTON E. DAY
LAST AND ACTING PRESIDENT
ATTEST:
ROBERT F. BOND
LAST AND ACTING SECRETARY
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "BUSINESS CARDS TOMORROW, INC." FILED IN THIS OFFICE ON THE SIXTH DAY OF
MARCH, A.D. 1987, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: *3469575
Date: 06/02/1992
<PAGE>
CERTIFICATE OF AMENDMENT TO
THE CERTIFICATE OF INCORPORATION OF
BUSINESS CARDS TOMORROW, INC.
Business Cards Tomorrow, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), CERTIFIES:
The amendment of the Corporation's Certificate of Incorporation, set forth in
the following resolution, approved by the Board of Directors and Shareholders of
the Corporation, was adopted in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware:
RESOLVED, that the number of shares of common stock of the Corporation
authorized to be issued by increased from 8,000,000 shares to 25,000,000 shares,
and that Article Fourth of the Corporation's Certificate of Incorporation shall
be amended to read as follows:
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is 25,000,000 shares of common stock, par value $.01 per
share.
IN WITNESS WHEREOF, Business Cards Tomorrow, Inc. has caused this Certificate to
be signed and attested by its duly authorized officers this 24 day of March,
1987.
BUSINESS CARDS TOMORROW, INC.
By: Alton E. Day, President
<PAGE>
Attest:
Michael J. Garrett, Assistant
Secretary
STATE OF FLORIDA
COUNTY OF BROWARD
BEFORE ME, the undersigned authority, personally appeared Alton E. Day and
Michael J. Garrett, who are well known to me to be the persons described in and
who subscribed to the above Certificate of Amendment to the Certificate of
Incorporation, and they did freely and voluntarily acknowledge before me,
according to law, that they made and subscribed the same for the use and purpose
therein mentioned and set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal, at Fort
Lauderdale in said County and State this 24 day of March, 1987.
Nancy J. Fryman
Notary Public, State of Florida
My commission expires: November 29, 1990
Bonded through Notary Public Underwriters
<PAGE>
State of Delaware
Office of Secretary of State
I, Michael Harkins, Secretary of State of the State of Delaware, do hereby
certify the attached is a true and correct copy of the Certificate of Amendment
of Business Cards Tomorrow, Inc. filed in this office on the sixth day of
October, A.D. 1988, at 9 o'clock a.m.
Michael Harkins, Secretary of State
Authentication: 11890834
Date: 10/14/1988
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
BUSINESS CARDS TOMORROW, INC.
Pursuant to Section 242 of the Delaware General Corporation Law, the undersigned
adopts the following Amendment to its Certificate of Incorporation:
1. The name of the Corporation is Business Cards Tomorrow, Inc.
2. The following amendment to the Certificate of Incorporation was adopted by
the Shareholders of the Corporation on October 3, 1988, in the manner prescribed
by Sections 211 and 242 of the Delaware General Corporation Law:
Article I
The name of this Corporation shall be American Franchise Group, Inc.
3. The number of shares of the Corporation issued and outstanding at the time of
adoption was 7,386,786 shares of common stock, $.01 par value, and the number of
shares voting in favor of the Amendment was 6,336,112 shares.
Dated October 3, 1988.
BUSINESS CARDS TOMORROW, INC.
By: Alton E. Day
President
By: Michael J. Garrett
Assistant Secretary
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
BEFORE ME, the undersigned authority, personally appeared Alton E. Day and M. J.
Garrett, who are well known to me to be the persons described in and who
subscribed the above Certificate of Amendment to the Certificate of
Incorporation, and they did freely and voluntarily acknowledge before me
according to the law that they made and subscribed the same for the use and
purpose therein mentioned and set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal, at Fort
Lauderdale in said County and State this 3 day of October, 1988.
Nancy J. Fryman
Notary Public, State of Florida
My commission expires: November 29, 1990
Bonded through Notary Public Underwriters
<PAGE>
Exhibit 22
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME OF STATE OF DOING PERCENT
SUBSIDIARY INCORPORATION BUSINESS AS OWNED
- ------------------------------- ------------- ----------------------------- --------
<S> <C> <C> <C>
Business Cards Tomorrow, Inc. Florida Business Cards Tomorrow, Inc. 100%
</TABLE>
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "AMERICAN FRANCHISE GROUP, INC." FILED IN THIS OFFICE ON THE SIXTH DAY OF
MAY, A.D. 1992, AT 10 O'CLOCK A.M.
Secretary of State
Authentication: *3469583
Date: 06/02/1992
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
AMERICAN FRANCHISE GROUP, INC., (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors of the
Company on May 5, 1992, resolutions were duly adopted pursuant to Section 141(f)
of the Delaware General Corporation Law setting forth a proposed amendment of
the Certificate of Incorporation of the Company, declaring said amendment to be
advisable and calling a meeting of the stockholders of the Company for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the Company be authorized to issue 5,000,000 shares of preferred
stock, $1.00 par value, and that Article Fourth of the Company's Certificate of
Incorporation shall be amended to read as follows:
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is 25,000,000 shares of common stock, par value $.01 per
share, and 5,000,000 shares of preferred stock, par value $1.00 per share.
Authority is hereby expressly granted to and vested in the board of directors of
the corporation to provide for the issue of the preferred stock in one or more
series and in connection therewith to fix by resolutions providing for the issue
of such series the number of shares to be included in such series and the
designations and voting powers, full or limited, or no voting powers, and the
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of such series of the
preferred stock which are not fixed by the certificate of incorporation, to the
full extent now or hereafter permitted by the laws of the state of Delaware.
Without limiting the generality of the grant of authority contained in the
preceding sentence, the board of directors is authorized to determine any or all
of the following, and the shares of each series may vary from the shares of any
other series in any or all of the following respects:
1. The number of shares of such series (which may subsequently be increased,
except as otherwise provided by the resolutions of the board of directors
providing for the issue of such series, or decreased to a number not less than
the number of shares then outstanding) and the distinctive designation thereof;
2. The dividend rights, if any, of such series, the dividend preferences if
any, as between such series and any other class or series of stock, whether and
the extent to which shares of such series shall be entitled to participate in
dividends with shares of any other series or class of stock, whether and the
extent to which dividends on such series shall be cumulative, and any
limitations, restrictions or conditions on the payment of such dividends;
3. The time or times during which, the price or prices at which, and any other
terms or conditions on which the shares of such series may be redeemed, if
redeemable;
4. The rights of such series, and the preferences, if any, as between such
series and any other class or series of stock, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation and
whether and the extent to which shares of any such series shall be entitled to
participate in such event with any other class or series of stock;
5. The voting powers, if any, in addition to the voting powers prescribed by
law of shares of such series, and the terms of exercise of such voting powers;
6. Whether shares of such series shall be convertible into or exchangeable for
shares of any other series or class of stock, or any other securities, and the
terms and conditions, if any, applicable to such right; and
7. The terms and conditions, if any, of any purchase, retirement or sinking
fund which may be provided for the shares of such series.
SECOND: The thereafter, on May 5, 1992, pursuant to resolution by written
consent of the holders of a majority of the issued and outstanding shares of the
common stock of the Company in accordance with Section 228 of the Delaware
General Corporation Law, the necessary number of shares as required by statute
were voted in favor of the amendment, and written notice of such action has been
given to the Company's nonconsenting stockholders in accordance with Section
228.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the Delaware General Corporation Law.
FOURTH: That the capital of the Company shall not be reduced under or by reason
of said amendment.
Dated: May 5, 1992
AMERICAN FRANCHISE GROUP, INC.
By: William A. Wilkerson, President
ATTEST: Ellen Tannenbaum
Assistant Secretary
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "AMERICAN FRANCHISE GROUP, INC." FILED IN THIS OFFICE ON THE TWELFTH DAY OF
MAY, A.D. 1992, AT 10:50 O'CLOCK A.M.
Secretary of State
Authentication: *3469591
Date: 06/02/1992
<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 10:50 a.m. 05/12/1992
9211335071-911871
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
AMERICAN FRANCHISE GROUP, INC., (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Company on May 7,
1992, resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Company, declaring said amendment to be
advisable and calling a meeting of the stockholders of the Company for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that Article Fourth of the Company's Certificate of Incorporation
shall be amended to read as follows:
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is 6,250,000 shares of common stock, par value $.04 per
share, and 5,000,000 shares of preferred stock, par value $1.00 per share.
Authority is hereby expressly granted to and vested in the board of directors of
the corporation to provide for the issue of the preferred stock in one or more
series and in connection therewith to fix by resolutions providing for the issue
of such series the number of shares to be included in such series and the
designations and voting powers, full or limited, or no voting powers, and the
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of such series of the
preferred stock which are not fixed by the certificate of incorporation, to the
full extent now or hereafter permitted by the laws of the state of Delaware.
Without limiting the generality of the grant of authority contained in the
preceding sentence, the board of directors is authorized to determine any or all
of the following, and the shares of each series may vary from the shares of any
other series in any or all of the following respects:
1. The number of shares of such series (which may subsequently be increased,
except as otherwise provided by the resolutions of the board of directors
providing for the issue of such series, or decreased to a number not less than
the number of shares then outstanding) and the distinctive designation thereof;
2. The dividend rights, if any, of such series, the dividend preferences if
any, as between such series and any other class or series of stock, whether and
the extent to which shares of such series shall be entitled to participate in
dividends with shares of any other series or class of stock, whether and the
extent to which dividends on such series shall be cumulative, and any
limitations, restrictions or conditions on the payment of such dividends;
3. The time or times during which, the price or prices at which, and any other
terms or conditions on which the shares of such series may be redeemed, if
redeemable;
4. The rights of such series, and the preferences, if any, as between such
series and any other class or series of stock, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation and
whether and the extent to which shares of any such series shall be entitled to
participate in such event with any other class or series of stock;
5. The voting powers, if any, in addition to the voting powers prescribed by
law of shares of such series, and the terms of exercise of such voting powers;
6. Whether shares of such series shall be convertible into or exchangeable for
shares of any other series or class of stock, or any other securities, and the
terms and conditions, if any, applicable to such right; and
7. The terms and conditions, if any, of any purchase, retirement or sinking
fund which may be provided for the shares of such series.
SECOND: The thereafter, on May 11, 1992, pursuant to resolution by written
consent of the holders of a majority of the issued and outstanding shares of the
common stock of the Company in accordance with Section 228 of the Delaware
General Corporation Law, the necessary number of shares as required by statute
were voted in favor of the amendment, and written notice of such action has been
given to the Company's nonconsenting stockholders in accordance with Section
228.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the Delaware General Corporation Law.
FOURTH: That the capital of the Company shall not be reduced under or by reason
of said amendment.
Dated: May 11, 1992
AMERICAN FRANCHISE GROUP, INC.
By: William A. Wilkerson, President
ATTEST: Ellen Tannenbaum
Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT TO
THE CERTIFICATE OF INCORPORATION OF
BCT INTERNATIONAL, INC.
BCT International, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), CERTIFIES:
The amendment to the Corporation's Certificate of Incorporation, set forth in
the following resolution, approved by the Board of Directors and Shareholders of
the Corporation, was adopted in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware:
RESOLVED, that the number of shares of common stock of the Corporation
authorized to be issued be increased from 6,250,000 shares to 25,000,000 shares,
and that Article Fourth of the Corporation's Certificate of Incorporation shall
be amended to read as follows:
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is 25,000,000 shares of common stock, par value $.04 per
share, and 5,000,000 shares of preferred stock, par value $1.00 per share.
IN WITNESS WHEREOF, BCT International, Inc., has caused this Certificate to be
signed and attested by its duly authorized officers this 25th day of May, 1994.
BCT INTERNATIONAL, INC.
By: Peter T. Gaughn,
Vice President and
Chief Operating Officer
Attest:
Laura Sennett, Assistant Secretary
<PAGE>
EXHIBIT 3.2
<PAGE>
THE GOOD TACO CORPORATION
BY LAWS
ARTICLE I
OFFICERS
Section 1. The registered office shall be in the City of Dover, State of
Delaware.
Section 2. The Corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the board of
directors, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the board of directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may
be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1982,
shall be held on June 30, if not a legal holiday, and if a legal holiday, then
on the next business day following, at 10:30 A.M., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which they shall elect such class of
board of directors whose term shall expire at that annual meeting, and transact
such other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or; if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the chairman of the board, if any, and shall
Page 1
<PAGE>
be called by the president or secretary at the request in writing of a majority
of the board of directors, or at the request in writing of stockholders owning
one-third in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express provision of the statutes or of the certificate of
incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
written notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Page 2
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors shall be fixed as provided in the
certificate of incorporation.
Section 2. Directors shall be elected and vacancies filled as provided in the
certificate of incorporation. Unless otherwise restricted by the certificate of
incorporation or these by-laws, if there are no directors in office, then an
election of directors may be held in the manner provided by statute and if, at
the time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
Section 5. The first meeting of the board of directors following the election
of any class of directors shall be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the chairman of the
board or the president on two days' notice to each director, personally, by
mail, by telephone or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of two directors.
Section 8. At all meeting so the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation.
If a quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement of the meeting, until a quorum shall be present.
Page 3
<PAGE>
Section 9. Unless otherwise restricted by the certificate of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority of
the whole board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have such power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation or
these by-laws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Page 4
<PAGE>
REMOVAL OF DIRECTORS
Section 14. Any directors or the entire board of directors may be removed,
only for cause, by the holders of a majority of the outstanding shares entitled
to vote at an election of directors.
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS; INSURANCE
Section 15. (a) Any person who was or is a party, or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, and whether or not
brought by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, or other
enterprise (the "Indemnified Party"), shall be indemnified by the corporation,
unless the conduct of such person is finally adjudged to have been grossly
negligent or to constitute willful misconduct, against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding,
including any appeal thereof. Expenses (including attorneys' fees) incurred in
defending a civil or criminal action, suit, or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized hereby. Any such indemnification hereunder shall continue as to a
person who has ceased to be a director, officer, employee or agent, and shall
inure to the benefit of the heirs, executors, and administrators of such person.
(b) Any indemnification under subsection (a) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsection (a) of this section.
Such determination shall be made by the board of directors by a majority vote of
a quorum, which may include directors who are or were or may become parties to
such action, suit or proceeding, or by independent legal counsel in a written
opinion.
(c) In order to provide for just and equitable contribution in any
case in which any Indemnified Party makes a claim for indemnification pursuant
to this section but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time of appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this section provides for indemnification in such case or that contribution may
be required on the part of any Indemnified Party in circumstances for which
indemnification is provided under this Section, then, and in each such case, the
corporation and such Indemnified Party, shall contribute to the aggregate
losses, claims, damages, expenses, or liabilities to which they may be subject
(after contribution from others) in such proportion so that such Indemnified
Party is responsible for the portion represented by the percentage that his
annual salary or other compensation paid to the Indemnified Party
Page 5
<PAGE>
bears to the total annual revenues of the corporation and the corporation is
responsible for the remaining portion. However, in any such case, no
Indemnified Party shall be required to contribute any amount in excess of his
annual salary or other compensation, and all the Indemnified Parties, taken
together as a group, shall not be required to contribute any amount in excess of
their aggregate annual salaries or other compensation.
(d) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person. This
section is intended to create the broadest rights of indemnification and
contribution permitted under law for those seeking such indemnification or
contribution.
(e) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this section.
(f) For the purposes of this section, references to "the corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provision
of this section with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon pre-paid, and such notice shall be deemed to
be given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the provisions of
the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Page 6
<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a secretary and a treasurer. The
corporation may also have a chairman of the board and/or such other executive
officers chosen by the board of directors, including vice-presidents, and one or
more assistant secretaries and assistant treasurers. Any number of offices may
be held by the same person, unless the certificate of incorporation or these by-
laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a secretary and a treasurer.
Section 3. The board of directors may appoint, and may empower the president
to appoint, such other officers and agents as it shall deem necessary who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the board.
Section 4. The salaries of all executive officers of the corporation shall be
fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the actions of such board. Any
vacancy occurring in any office of the corporation shall be filled by the board
of directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board, if there shall be such an officer,
shall, if present, preside at all meetings of the board of directors, and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the board of directors or prescribed by the by-laws.
THE PRESIDENT
Section 7. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 8. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENT
Section 9. In the absence of the president or in the event of his inability or
refusal to act, the vice president, if there shall be such an officer, (or in
the event there be more than one vice president, the vice presidents in the
order designated by the directors, or in the absence of any designation, then in
the order of their election)
Page 7
<PAGE>
shall perform the duties of the president, and when so acting shall have all the
powers of and be subject to the restrictions upon the president. The vice
presidents shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 10. The secretary shall attend all meetings of the board of directors
and all meetings of the stockholders and record all the proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors or president,
under whose supervision he shall be. He shall have custody of the corporate
seal of the corporation and he, or an assistant secretary, shall have authority
to affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
board of directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 11. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors. The books of
account shall at all times be open to inspection by any director.
Section 13. He shall disburse the funds of the corporation as may be ordered
by the board of directors, taking proper vouchers for such disbursements, and
shall render to the president and the board of directors, at its regular
meetings, or when the board of directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
Section 14. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 15. The assistant treasurer or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors (or if
there be no such determination, then in the order of their
Page 8
<PAGE>
election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to have
a certificate signed by, or in the name of the corporation by, the chairman or
vice chairman of the board of directors, or the president or a vice president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation. Certificates may be issued for partly paid shares and in such
case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid therefor,
and the amount paid thereon shall be specified.
Section 2. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such an officer, transfer agent or registrar before such certificate is issued,
it may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer agent or transfer clerk, as registrar of transfers before
issuance.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate or stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate
or certificates, the board of directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates or his legal representative, to
advertise the same in such a manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Page 9
<PAGE>
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meetings, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation subject to the
provisions of the certificates of incorporation, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
Page 10
<PAGE>
CHECKS
Section 4. All checks or demands for money and notes of the corporation shall
be signed by such officer or officers or such other person or persons as the
board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution of
the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or replaced or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon its board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting. If the power to adopt, amend or repeal by-
laws is conferred upon the board of directors by the certificate of
incorporation, it shall not divest or limit the power of the stockholders to
adopt amend or repeal by-laws.
Page 11
<PAGE>
EXHIBIT 4.1
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF STOCK
DESIGNATION OF "AMERICAN FRANCHISE GROUP, INC." FILED IN THIS OFFICE ON THE
EIGHTH DAY OF MAY, A.D. 1992, AT 9 O'CLOCK A.M.
Secretary of State
Authentication: *3443710
Date: 05/08/1992
<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 09:00 a.m. 05/08/1992
921295166 - 911871
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
OF
AMERICAN FRANCHISE GROUP, INC.
AMERICAN FRANCHISE GROUP, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), in accordance
with Section 151(g) of the General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Company's Board of Directors by
the Certificate of Incorporation, as amended, of the Company, said Board of
Directors, at a duly noted and held meeting on 5/7/92 in accordance with Section
141(f) of the Delaware General Corporation Law, on May 7, 1992, adopted a
resolution providing for the authorization and issuance of a series of shares of
convertible preferred stock, and that a copy of such resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board of Directors of the
Company in accordance with the provisions of its Certificate of Incorporation,
as amended, a series of preferred stock of the Company be and it hereby is
created, such series of preferred stock to be designated "Series A Convertible
Preferred Stock," said series to consist of 750,000 shares of the par value of
$1.00 per share, of which the preferences, voting powers and relative,
participating, option and other special rights, and the qualifications,
limitations or restrictions thereof, shall be as follows:
1. Designation and Number of Shares. Shares of the series shall be designated
--------------------------------
and known as the "Series A Convertible Preferred Stock" of the Company (the
"Preferred Stock"). The Series A shall consist of 750,000 shares. Shares of
the Series A which are retired, purchased or otherwise acquired by the Company
shall be canceled and shall revert to authorized but unissued preferred stock,
undesignated as to series and subject to reissuance by the Company as shares of
preferred stock of any one or more series.
2. Dividends.
---------
2A. General Dividend Obligation. The Company shall pay to the holders of the
---------------------------
Preferred Stock, when and as declared by the Company's Board of Directors out of
the funds of the Company legally available for the payment of dividends under
the General Corporation Law of the State of Delaware, a dividend at the times
and in the amounts provided for in this paragraph 2.
2B. Calculation of Dividends. Dividends on each share of Preferred Stock shall
------------------------
be calculated cumulatively on a quarterly basis from the date of the original
issuance, whether or not such dividends shall have been declared and whether or
not there shall be profits, surplus or other funds of the Company legally
available for the payment of dividends.
<PAGE>
2C. Payment of Dividends. When, as and if declared by the Company's Board of
--------------------
Directors, and subject to any restrictions now or hereafter existing in any
agreement relating to any indebtedness of the Company, dividends shall be
payable quarterly on the first day of each January, April, July and October (or
the immediately preceding business day if such first day is a Saturday, Sunday
or legal holiday), commencing July 1, 1992, at a rate of $.12 per year and $.03
per quarter.
2D. Priority. As long as any shares of Preferred Stock shall be outstanding,
--------
no dividend, whether in cash or property, shall be paid or declared, nor shall
any other distribution be made, on the Common Stock of the Company or any other
equity security of the Company (the common stock and any other such equity
security shall be referred to individually as a "Security" and collectively as
the "Securities") nor shall shares of Common Stock or any other Security be
purchased, redeemed, or otherwise acquired for value by the Company, unless all
dividends on the Preferred Stock for all past quarterly dividend periods and for
the then current quarterly period shall have been paid or declared and a sum
sufficient for the payment thereof set apart therefor. The provisions of this
paragraph 2D shall not, however, apply to a dividend payable in the Common Stock
of the Company or any other Security or to the acquisition of shares of the
Common Stock of the Company or any other Security in exchange for shares of any
other Security.
3. Liquidation, Dissolution, etc. Upon any liquidation, dissolution or winding
-----------------------------
up of the Company, whether voluntary or involuntary, the holders of the
Preferred Stock shall be entitled, before any distribution or payment is made
upon any Securities, to be paid out of the assets of the Company available for
distribution to its stockholders an amount in cash equal to the aggregate of the
par value plus all accrued but unpaid dividends (the "Liquidation Value") of all
shares of Preferred Stock outstanding, whereupon the holders of such shares
shall not be entitled to any further payment. If, upon such liquidation,
dissolution or winding up, the assets of the Company to be distributed among the
holders of the shares of Preferred Stock shall be insufficient to permit payment
to such holders of the aggregate amount which they are entitled to be paid, then
the entire assets of the Company to be distributed to such holders shall be
distributed pro rata based upon the aggregate Liquidation Value of such shares
held by each holder. Upon any such liquidation, dissolution or winding up after
the holders of the Preferred Stock shall have been paid in full the amount to
which they shall be entitled, the remaining assets of the Company may be
distributed to the holders of Securities. Written notice of such liquidation,
dissolution or winding up, stating a payment date, the amount of the payment and
the place where the amounts distributable shall be payable, shall be mailed to
the record holders of shares of Preferred Stock at the addresses for such record
holders shown on the Company's stock transfer records by certified or registered
mail, return receipt requested, not less than 60 days prior to the payment date
stated in such written notice. Neither the consolidation or merger of the
Company into or with any other corporation or corporations, nor the sale or
transfer by the Company of all or any part of its assets, nor the reduction of
the capital stock of the Company, shall be deemed to be a liquidation,
dissolution or winding up of the Company within the meaning of the provisions of
this paragraph 3.
4. Conversion.
----------
4A. Conversion Procedure.
--------------------
(i) For five years after the date of issuance, all or any of the issued and
outstanding shares of Preferred Stock may be converted at the option of the
holder thereof into the Company's common stock, $.01 par value (the "Common
Stock"), at a ratio of .37 shares of Preferred Stock for each share of Common
Stock (the "Conversion Ratio"). The number of shares of Common Stock into which
the Preferred Stock may be converted (the "Conversion Stock") shall be subject
to adjustment from time to time, in accordance with this paragraph 4, to prevent
dilution of the conversion rights.
<PAGE>
(ii) The Company may require conversion of the Preferred Stock at the
Conversion Ratio beginning two years after the date of issuance in the event
that the closing bid price or last sale price of the Common Stock as reported by
the NASDAQ Stock Market is at or above $1.75 per share for 10 consecutive
trading days. In order to accomplish the foregoing involuntary conversion, the
Company must send notice of same to the holders of the Preferred Stock at their
addresses shown on the Company's stock transfer records by certified mail,
return receipt requested, within five business days after the end of the above-
described 10-day period. The Conversion Ratio, as well as the $1.75 per share
trigger price (the "Trigger Price"), shall be subject to adjustment, in
accordance with this paragraph 4, to prevent dilution of the conversion rights.
(iii) The voluntary conversion described in clause (i) above shall be effected
by the surrender of the certificate representing the Preferred Stock to be
converted at the principal office of the Company (or such other office of the
Company as the Company may designate by notice in writing to the holder of the
shares) at any time during its usual business hours, together with written
notice by the holder of such shares stating that such holders desires to convert
the shares, or a stated number of the shares, represented by such certificate or
certificates, which notice shall also specify the name or names (with addresses)
and denominations in which the certificate or certificates for Conversion Stock
shall be issued and shall include instructions for delivery thereof. Such
conversion shall be deemed to have been effected as of the close of business on
the date on which such certificate or certificates shall have been surrendered
and such notice shall have been received, and at such time (the "Conversion
Time") the rights of the holders of the Preferred Stock (or specified portion
thereof) as such shall cease, and the person or persons in whose name or names
any certificate or certificates for shares of Conversion Stock are to be issued
upon such conversion shall be deemed to have become the holder or holders of
record of the shares of Conversion Stock represented thereby.
(iv) The involuntary conversion described in clause (ii) above shall be
effective as of the close of business on the date of the mailing of the notice
thereof to the holders (for purposes of such conversion, the "Conversion Time").
The holder shall have 10 business days following the date of receipt of the
notice of conversion within which to specify and deliver to the Company a
different name or names (with addresses) and/or denominations for the issuance
of the Conversion Stock. In the event that the Company does not timely receive
such specification, all of the Conversion Stock shall be issued in the name of
the Preferred Stock holder. At the Conversion Time, the rights of the holders
of the Preferred Stock as such shall cease and the person or persons in whose
name or names any certificate or certificates of Conversion Stock are to be
issued upon such conversion shall be deemed to have become the holder or holders
of record of the shares of Conversion Stock represented thereby.
(v) As soon as practicable after the Conversion Time (and in no event more than
30 days after the Conversion Time with respect to the certificate(s) specified
in clauses (a) and (c) below, or more than 10 days after the Conversion Time
with respect to the payment specified in clause (b) below), the Company shall
deliver to the converting holder, or, with respect to the certificate(s)
specified in clause (a) below, as specified by such converting holder:
(a) a certificate or certificates representing the number of shares of
Conversion Stock issuable by reason of such conversion;
(b) payment of cash in lieu of any fractional share of Conversion Stock
otherwise issuable by reason of such conversion as calculated pursuant to
paragraph 4B(ii) below; and
<PAGE>
(c) a certificate representing any shares of Preferred Stock which shall have
been represented by the certificate or certificates which shall have been
delivered to the Company in connection with such conversion but which shall not
have been converted.
4B. Additional Conversion Terms and Conditions. The Company covenants and
------------------------------------------
agrees that:
(i) The Company will at all times reserve and keep available out of its
authorized but unissued shares of Common Stock or its treasury shares, or
otherwise, solely for the purpose of issue upon the conversion of the shares of
Preferred Stock as provided in this paragraph 4, such number of shares of
Conversion Stock as shall then be issuable upon the conversion of all
outstanding shares of Preferred Stock. The Company covenants that all shares of
Conversion Stock which shall be so issuable shall, when issued, be duly and
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges. The Company will take all action which may be necessary to ensure that
all such shares of conversion Stock may be so issued without violation of any
applicable law or regulation or any requirements of any domestic stock exchange
(except for official notice of issuance which will be immediately transmitted by
the Company upon issuance) upon which shares of Conversion Stock or other
shares of the same class may be listed.
(ii) The company shall not be required to issue any fractions of shares of
Common Stock upon conversions of Preferred Stock. If any interest in a
fractional share of Common Stock would otherwise be deliverable upon the
conversion of any Preferred Stock, the Company shall make adjustment for such
fractional share interest by payment of an amount in cash equal to the same
fraction of the market value of a full share of Common Stock of the Company.
For such purpose, the market value of a share of Common Stock shall be the
average of the bid and asked price of a share of Common Stock on the NASDAQ
Stock Market on the day immediately preceding the date upon which such shares
are surrendered for conversion. If the Common Stock shall not at the time be
traded on the NASDAQ Stock Market, such market value of the Common Stock shall
be the prevailing market value of the Common Stock on any other securities
exchange or in the open market, as determined by the Company, which
determination shall be conclusive.
(iii) In the event that the Company shall at any time subdivide or combine in a
greater or lesser number of shares the outstanding shares of Common Stock, the
number of shares of Common Stock issuable upon conversion of the Preferred Stock
shall be proportionately increased (and the Trigger Price decreased) in the case
of subdivision or decreased (and the Trigger Price increased) in the case of a
combination, effective in either case at the close of business on the date when
such subdivision or combination shall become effective.
(iv) In the event that the Company shall be recapitalized, consolidated with or
merged into any other corporation, or shall sell or convey to any other
corporation all or substantially all of its property as an entirety, provision
shall be made as part of the terms of such recapitalization, consolidation,
merger, sale or conveyance so that any holder of Preferred Stock may thereafter
receive in lieu of the Common Stock otherwise issuable to him upon conversion of
his Preferred Stock, but at the conversion ratio stated in this paragraph 4, the
same kind and amount of securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance, with respect to the
Common Stock of the Company.
(v) In the event that the Company shall at any time pay to the holders of
Common Stock a dividend in Common Stock, the number of shares of Common Stock
issuable upon conversion of the Preferred Stock shall be proportionately
increased (and the Trigger Price decreased), effective at the close of business
on the record date for determination of the holders of Common Stock entitled to
such dividend.
<PAGE>
(vi) The foregoing adjustments shall be made successively if more than one
event listed in subparagraphs (iii), (iv) and (v) shall occur.
(vii) The issuance of certificates for shares of Common Stock upon conversion
of the Preferred Stock shall be made without charge for any tax in respect of
such issuance. However, if any certificate is to be issued in a name other than
that of the holder of record of the Preferred Stock so converted, the person or
persons requesting the issuance thereof shall pay to the Company the amount of
any tax which may be payable in respect of any transfer involved in such
issuance, or shall establish to the satisfaction of the Company that such tax
has been paid or is not due and payable.
5. Redemption. Five years after the date of issuance thereof, to the extent
----------
that it has not been previously converted, the Preferred Stock shall be redeemed
by the Company at a price of $1.00 per share, together with all accrued but
unpaid dividends, payable to the holder at his address listed on the Company's
stock transfer books. Effective at the end of such five-year period, the
Preferred Stock shall be canceled and the Company's sole obligation to the
holders shall be to pay such redemption price, together with all accrued but
unpaid dividends, out of the funds legally available therefor.
6. Voting Rights. The Preferred Stock shall have no voting rights, except that
-------------
so long as any shares of Preferred Stock are outstanding, the consent of the
holders of at least a majority (or any greater amount then required by law) of
the shares of such stock at the time outstanding, given in person or by proxy,
either in writing or by a vote at a meeting of the holders of the Preferred
Stock called for the purpose, shall be necessary for authorizing or effecting
the amendment, alteration or repeal of any of the provisions of the Certificate
of Incorporation or By-Laws of the Company, as amended to date and presently in
effect, or of this resolution, so as to affect adversely the preferences,
priority, rights, powers or privileges of the Preferred Stock as such or the
holders thereof as such.
7. Governing Law. This Certificate shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
Dated: May 7, 1992
AMERICAN FRANCHISE GROUP, INC.
By: William A. Wilkerson
Attest: Ellen Tannenbaum
<PAGE>
EXHIBIT 4.2
<PAGE>
State of Delaware
Office of Secretary of State
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "BCT INTERNATIONAL, INC.", FILED IN THIS OFFICE ON THE TWENTY-
FIFTH DAY OF FEBRUARY, A.D. 1994, AT 11:27 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
William t. Quillen, Secretary of State
Authentication: 7045456
Date: 03/03/94
<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 11:27 a.m. 02/25/1994
944028554-911871
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK
OF
BCT INTERNATIONAL, INC.
BCT INTERNATIONAL, INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), in accordance with
Section 151 (g) of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Company's Board of Directors by
the Certificate of Incorporation, as amended, of the Company, said Board of
Directors, pursuant to action at a meeting duly noticed and held on February 17,
1994, a resolution providing for the authorization and issuance of the Company's
Series B Convertible Preferred Stock, and that a copy of such resolution is as
follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of
its Certificate of Incorporation, as amended, a series of
preferred stock of the Company be and it hereby is created,
such series of preferred stock to be designated "Series B
Convertible Preferred Stock", said series to consist of
2,500,000 shares of the par value of $1.00 per share, of which
the preferences, voting powers and relative, participating,
option and other special rights, and the qualifications,
limitations or restrictions thereof, shall be as follows:
1. Designation and Number of Shares. Shares of the series shall be designated
--------------------------------
and known as the "Series B Convertible Preferred Stock" of the Company (the
"Preferred Stock"). The Series B shall consist of 2,500,000 shares. Shares of
the Series B which are retired, purchased or otherwise acquired by the Company
shall be cancelled and shall revert to authorized but unissued preferred stock,
undesignated as to series and subject to reissuance by the Company as shares of
preferred stock of any one or more series.
2. Dividends.
---------
2A. General Dividend Obligation. The Company shall pay to the holders of
---------------------------
the Preferred Stock, when and as declared by the Company's Board of Directors
out of the funds of the Company legally available for the payment of dividends
under the General Corporation Law of the State of Delaware, a dividend at the
times and in the amounts provided for in this paragraph 2.
2B. Calculation of Dividends. Dividends on each share of Preferred Stock
------------------------
shall be calculated cumulatively on a quarterly basis from the date of the
original issuance, whether or not such dividends shall have been declared and
whether or not there shall be profits, surplus or other funds of the Company
legally
1
<PAGE>
available for the payment of dividends.
2C. Payment of Dividends. When, as and if declared by the Company's
--------------------
Board of Directors, and subject to any restrictions now or hereafter existing in
any agreement relating to any indebtedness of the Company, dividends shall be
payable quarterly on the first day of each January, April, July and October (or
the immediately preceding business day if such first day is a Saturday, Sunday
or legal holiday), commencing July 1, 1994, at a per share rate of $.09 per year
and $.0225 per quarter.
2D. Priority. As long as any shares of Preferred Stock shall be
--------
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on the Common Stock of the
Company or any other equity security of the Company other than the Company's
Series A Convertible Preferred Stock consisting of 810,000 shares (the "Series A
Stock") (the Common Stock and any other such equity security [excluding the
Series A Stock] shall be referred to individually as a "Security" and
collectively as the "Securities") nor shall shares of Common Stock or any other
Security be purchased, redeemed, or otherwise acquired for value by the Company,
unless all dividends on the Preferred Stock for all past quarterly dividend
periods and for the then current quarterly period shall have been paid or
declared and a sum sufficient for the payment thereof set apart therefor. The
provisions of this paragraph 2D shall not, however, apply to a dividend payable
in the Common Stock of the Company or any other Security or to acquisition of
share of the Common Stock of the Company or any other Security in exchange for
shares of any other Security.
3. Liquidation, Dissolution, etc. Upon any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the holders of the
Preferred Stock shall be entitled, before any distribution or payment is made
upon any Securities, to be paid out of the assets of the Company available for
distribution to its stockholders an amount in cash equal to the aggregate of the
par value plus all accrued but unpaid dividends (the "Liquidation Value") of all
shares of Preferred Stock outstanding, whereupon the holders of such shares
shall not be entitled to any further payment. If, upon such liquidation,
dissolution or winding up, the assets of the Company to be distributed among the
holders of the shares of Preferred Stock shall be insufficient to permit payment
to such holders of the aggregate amount which they are entitled to be paid, then
the entire assets of the Company to be distributed to such holders shall be
distributed pro rata based upon the a ggregate Liquidation Value of such shares
--------
held by each holder. Upon any such liquidation, dissolution or winding up after
the holders of the Preferred Stock shall have been paid in full the amount to
which they shall be entitled, the remaining assets of the Company may be
distributed to the holders of Securities. Written notice of such liquidation,
dissolution or winding up, stating a payment date, the amount of the payment and
the place where the amounts distributable shall be payable, shall be mailed to
the record holders of shares of Preferred Stock at the addresses for such record
holders shown on the Company's stock transfer records by certified or registered
mail, return receipt requested, not less than 60 days prior to the payment date
stated in such written notice. Neither the consolidation or merger of the
Company into or with any other corporation or corporations, nor the sale or
transfer by the Company of all or any part of its assets, nor the reduction of
the capital stock of the Company, shall be deemed to be a liquidation,
dissolution or winding up of the Company within the meaning of the provisions of
this paragraph 3.
2
<PAGE>
4. Conversion.
----------
4A. Conversion Procedure.
--------------------
(i) For three years after the date of issuance, all or any of the issued
and outstanding shares of Preferred Stock may be converted at the option of
the holder thereof into the Company's common stock, $.04 par value (the
"Common Stock"), at a ratio of 2.25 shares of Preferred Stock for each
share of Common Stock (the "Conversion Ratio"). The number of shares of
Common Stock into which the Preferred Stock may be converted (the
"Conversion Stock") shall be subject to adjustment from time to time, in
accordance with this paragraph 4, to prevent dilution of the conversion
rights.
(ii) The Company may require conversion of the Preferred Stock at the
Conversion Ratio beginning six months after the date of issuance in the
event that the closing bid price or last sale price of the Common Stock as
reported by the NASDAQ Stock Market is at or above $3.50 per share for 20
consecutive trading days. In order to accomplish the foregoing involuntary
conversion, the Company must send notice of same to the holders of the
Preferred Stock at their addresses shown on the Company's stock transfer
records by certified mail, return receipt requested, within five business
days after the end of the above-described 20-day period. The Conversion
Ratio, as well as the $3.50 per share trigger price (the "Trigger Price"),
shall be subject to adjustment, in accordance with this paragraph 4, to
prevent dilution of the conversion rights.
(iii) The voluntary conversion described in clause (i) above shall be
effected by the surrender of the certificate representing the Preferred
Stock to be converted at the principal office of the Company (or such other
office of the Company as the Company may designate by notice in writing to
the holder of the shares) at any time during its usual business hours
together with written notice by the holder of such shares stating that such
holder desires to convert the shares, or a stated number of the shares,
represented by such certificate or certificates, which notice shall also
specify the name or names (with addresses) and denominations in which the
certificate or certificates for Conversion Stock shall be issued and shall
include instructions for delivery thereof. Such conversion shall be deemed
to have been effected as if the close of business on the date on which such
certificate or certificates shall have been surrendered and such notice
shall have been received, and at such time (the "Conversion Time") the
rights of the holders of the Preferred Stock (or specified portion thereof)
as such shall cease, and the person or persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued
upon such conversion shall be deemed to have become the holder or holders
of record of the shares of Conversion Stock represented thereby.
(iv) The involuntary conversion described in clause (ii) above shall be
effective as of the close of business on the date of the mailing of the
notice thereof to the holders (for purposes of such conversion, the
"Conversion Time"). The holder shall have 10 business days following the
date of receipt of the notice of conversion within which to specify and
deliver to the Company a different name or names (with addresses) and/or
denominations for the issuance of
3
<PAGE>
the Conversion Stock. In the event that the Company does not timely receive
such specification, all of the Conversion Stock shall be issued in the name
of the Preferred Stock holder. At the Conversion Time, the rights of the
holders of the Preferred Stock as such shall cease and the person or
persons in whose name or names any certificate or certificates of
Conversion Stock are to be issued upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Conversion
Stock represented thereby.
(v) As soon as practicable after the Conversion Time (and in no event more
than 30 days after the Conversion Time with respect to the certificate(s)
specified in clauses (a) and (c) below, or more than 10 days after the
Conversion Time with respect to the payment specified in clause (b) below),
the Company shall deliver to the converting holder, or, with respect to the
certificate(s) specified in clause (a) below, as specified by such
converting holder:
(a) a certificate or certificates representing the number of shares of
Conversion Stock issuable by reason of such conversion;
(b) payment of cash in lieu of any fractional share of Conversion Stock
otherwise issuable by reason of such conversion as calculated
pursuant to paragraph 4B(ii) below; and
(c) a certificate representing any shares of Preferred Stock which shall
have been represented by the certificate or certificates which shall
have been delivered to the Company in connection with such
conversion but which shall not have been converted.
4B. Additional Conversion Terms and Conditions. The Company covenants
------------------------------------------
and agrees that:
(i) The Company will at all times reserve and keep available out of its
authorized but unissued shares of Common Stock or its treasury shares, or
otherwise, solely for the purpose of issue upon the conversion of the
shares of Preferred Stock as provided in this paragraph 4, such number of
shares of Conversion Stock as shall then be issuable upon the conversion of
all outstanding shares of Preferred Stock. The Company covenants that all
shares of Conversion Stock which shall be so issuable shall, when issued,
be duly and validly issued, fully paid and non-assessable and free from all
taxes, liens and charges. The Company will take all action which may be
necessary to ensure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or regulation or any
requirements of any domestic stock exchange (except for official notice of
issuance which will be immediately transmitted by the Company upon
issuance) upon which shares of Conversion Stock or other shares of the same
class may be listed.
(ii) The Company shall not be required to issue any fractions of shares of
Common Stock upon conversions of Preferred Stock. If any interest in a
fractional share of Common Stock would otherwise be deliverable upon the
conversion of any Preferred Stock, the Company shall make adjustment for
such fractional share interest by payment of an amount in cash equal to the
same fraction of the market value of a full share of Common Stock of the
Company. For such purpose, the market value of a share of Common Stock
shall be the average of the bid and asked price of
4
<PAGE>
a share of Common Stock on the NASDAQ Stock Market on the day immediately
preceding the date upon which such shares are surrendered for conversion.
If the Common Stock shall not at the time be traded on the NASDAQ Stock
Market, such market value of the Common Stock on any other securities
exchange or in the open market, as determined by the Company, which
determination shall be conclusive.
(iii) In the event that the Company shall at any time subdivide or combine
in a greater or lesser number of shares the outstanding shares of Common
Stock, the number of share of Common Stock issuable upon conversion of the
Preferred Stock shall be proportionately increased (and the Trigger Price
decreased) in the case of subdivision or decreased (and the Trigger Price
increased) in the case of a combination effective in either case at the
close of business on the date when such subdivision or combination shall
become effective.
(iv) In the event that the Company shall be recapitalized, consolidated
with or merged into any other corporation, or shall sell or convey to any
other corporation all or substantially all of its property as an entirety,
provision shall be made as part of the terms of such recapitalization,
consolidation, merger, sale or conveyance so that any holder of Preferred
Stock may thereafter receive in lieu of the Common Stock otherwise issuable
to him upon conversion of his Preferred Stock, but at the Conversion Ratio
stated in this paragraph 4, the same kind and amount of securities or
assets as may be distributable upon such recapitalization, consolidation,
merger, sale or conveyance, with respect to the Common Stock of the
Company.
(v) In the event that the Company shall at all time pay to the holders of
Common Stock a dividend in Common Stock, the number of shares of Common
Stock issuable upon conversion of the Preferred Stock shall be
proportionately increased (and the Trigger Price decreased), effective at
the close of business on the record date for determination of the holders
of Common Stock entitled to such dividend.
(vi) The foregoing adjustments shall be made successively if more than one
event listed in subparagraphs (iii), (iv) and (v) shall occur.
(vii) The issuance of certificates for shares of Common Stock upon
conversion of the Preferred Stock shall be made without charge for any tax
in respect of such issuance. However, if any certificate is to be issued in
a name other than that of the holder of record of the Preferred Stock so
converted, the person or persons requesting the issuance thereof shall pay
to the Company the amount of any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the satisfaction
of the Company that such tax has been paid or is not due and payable.
5. Redemption. Three years after the date of issuance thereof, to the extent
----------
that it has not been previously converted and to the extent that it has not been
previously converted and to the extent that funds are legally available
therefor, the Preferred Stock shall be redeemed by the Company at a price of
$1.00 per share, together with all accrued but unpaid dividends, payable to the
holder at his address listed on the Company's stock transfer books. Effective
at the end of such three-year period, the Preferred Stock shall be
5
<PAGE>
cancelled and the Company's sole obligation to the holder shall be to pay such
redemption price, together with all accrued but unpaid dividends, out of the
funds legally available therefor.
6. Voting Rights. The Preferred Stock shall have no voting rights, except
-------------
that so long as any shares of Preferred Stock are outstanding, the consent of
the holders of at least a majority (or any greater amount then required by law)
of the shares of such stock at the time outstanding, given in person or by proxy
either in writing or by a vote at a meeting of the holders of the Preferred
Stock called for the purpose, shall be necessary for authorizing or effecting
the amendment, alteration or repeal of any of the provisions of the Certificate
of Incorporation or By-Laws of the Company as amended to date and presently in
effect, or of this resolution, so as to affect adversely the preferences,
priority, rights, powers or privileges of the Preferred Stock as such or the
holders thereof as such.
7. Registration Rights. The registration rights set forth in this paragraph 7
-------------------
are granted in consideration of the holder's acceptance of the Preferred Stock
and of the terms and conditions defining and limiting such rights as set forth
in this paragraph 7. By accepting the Preferred Stock, the holder accepts such
terms and conditions and agrees to be bound thereby.
If at any time or times after the date hereof the Company shall determine to
register (including pursuant to a demand of any other stockholder or security
holder of the Company exercising registration rights) any of its Common Stock
under the Securities Act of 1933, as amended (the "Act"), other than on Forms S-
8 or S-4 or their then respective equivalents, the company will promptly give
written notice thereof to the then holders of the Preferred Stock and the last
registered holders of Preferred Stock which has been converted and will use its
best efforts to effect the registration under the Act, pursuant to the
contemplated registration statement, of the Common Stock underlying the
Preferred Stock and the Class B warrants (the "Warrants") issued together
therewith (the "Underlying Stock") which such holders (collectively the "Selling
Holders") may request in writing delivered to the Company within 15 days after
the notice given by the Company if such Selling Holders in such request to the
Company shall have requested the registration of at least 20% of the Underlying
Stock; provided, however, that in the case of the registration of Common Stock
by the Company pursuant to an underwritten public offering, the Company shall
not be required to register Underlying Stock which the principal underwriter of
any such underwritten offering shall refuse in writing to include in such
offering on the grounds that such inclusion would materially affect the
offering. If some but not all of the Underlying Stock requested to be registered
is not included in any such registration by reason of any such refusal by the
underwriter, all Selling Holders who have requested participation in the
offering may participate in the offering on a pro rata basis in proportion to
the amount of Underlying Stock as to which they have in each instance requested
participation. All expenses of registration and offering, except the fees of
special counsel to any Selling Holder, shall be borne by the Company, except
that each such Selling Holder shall bear all underwriting commissions and
expenses of the underwriter attributable to his or its Underlying Stock being
registered.
Notwithstanding the foregoing, the Company's above-described obligation to
register the Underlying Stock shall be limited to the first two public offerings
of Common Stock by the Company after the date hereof in which at least 50% of
the Underlying Stock requested to be registered is in fact registered or with
respect to which less than 20% of the Underlying Stock is timely requested to be
registered.
Notwithstanding the foregoing, in the event that either (1) the Company requires
conversion of the Preferred
6
<PAGE>
Stock pursuant to paragraph 4A(ii) hereof or (2) within six months after the
date of issuance or as of no less than one year after the date of issuance,
holders of at least 50% of the Preferred Stock have voluntarily converted such
stock pursuant to paragraph 4A(i) hereof, then upon a written request delivered
to the Company by the Selling Holders, the Company shall use its best efforts to
effect the registration under the Act of the Underlying Stock requested to be
registered provided that the Selling Holders in such request shall have
requested the registration of at least 50% of the Underlying Stock. All
expenses of registration and offering, except the fees of special counsel to any
Selling Holder, shall be borne by the Company, except that each such Selling
Holder shall bear all underwriting commissions and expenses of the underwriter
attributable to his or its Underlying Stock being registered.
Notwithstanding the foregoing, the Company shall not be required to effect a
registration under this paragraph 7 to the extent that, in the unqualified
opinion of counsel for the Company, the selling Holders may then sell the
Underlying Stock as to which they had requested registration under the
provisions of the Act without registration under the Act.
Whenever the Company is required hereunder to register Underlying Stock, it
agrees that it shall also do the following:
A. Prepare for filing and file with the Securities and Exchange
Commission such amendments and supplements to said registration statement and
the prospectuses used in connection therewith as may be necessary to keep said
registration statement effective and to comply with the provisions of the Act
with respect to the sale of securities covered by said registration statement
for the period necessary (but in no event more than nine months) to complete the
proposed public offering;
B. Promptly furnish to each Selling Holder such copies of preliminary
and final prospectuses and such other documents as said holder may reasonably
request to facilitate the public offering of his Underlying Stock, and notify
each Selling Holder if such prospectuses become inaccurate in any material
respect and furnish updated or corrected prospectuses as soon as possible
thereafter;
C. Use its best efforts to register or qualify the Underlying Stock
covered by said registration statement under the securities or "blue sky" laws
of such jurisdictions as any Selling Holder may reasonably request; provided,
however, that the Company shall not be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or take any action which would
subject it to the service of process in suits other than those arising out of
the offer or sale of the securities covered by the registration statement in any
jurisdiction where it is not now so subject;
D. Promptly furnish to each Selling Holder copies of
(i) an opinion of counsel for the Company, dated the effective date
of the registration statement, and
(ii) "comfort" letters signed by the Company's independent public
accountants who have examined and reported on the Company's financial
statements included
7
<PAGE>
in the registration statement, to the extent permitted by the
standards of the American Institute of Certified Public Accountants,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants' "comfort" letters) with respect to events subsequent to the date of
the financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' "comfort" letters delivered to the underwriters in
an underwritten public offering of securities, to the extent that the Company is
required to deliver or cause the delivery of such opinion or "comfort" letters
to the underwriters in an underwritten public offering of securities;
E. Permit each Selling Holder or his counsel or other representatives
to inspect and copy such corporate documents and records as may reasonably be
requested by them; and
F. Promptly furnish to each Selling Holder a copy of all appropriate
material documents filed with and correspondence from or to the Securities and
Exchange Commission in connection with the offering of the holder's securities.
Incident to any registration statement hereunder, the Company will indemnify and
hold harmless each underwriter, each Selling Holder and each controlling person
thereof against all claims, losses, damages and liabilities, joint or several,
including legal and other expenses incurred in investigating or defending
against the same, arising out of any untrue statement of a material fact
contained therein or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
arising out of any violation by the Company of the Act, any state securities or
"blue sky" laws or any rule or regulation thereunder in connection with such
registration, except insofar as the same may have been caused in writing to the
Company by such holder expressly for use therein. Promptly, and in any event
within 20 days, after receipt by any Selling Holder or any underwriter or any
person controlling any of them of written notice of the assertion or
commencement of any action in respect of which indemnity may be sought against
the Company, such Selling Holder, underwriter or controlling person, as the case
may be, will notify the Company in writing of such assertion or commencement,
and, subject to the provisions hereinafter stated, the Company shall assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to such Selling Holder or such underwriter or
such controlling person, as the case may be) and the payment of all costs and
expenses related thereto, insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Company. Such
Selling Holder or any underwriter or any such controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, provided that the Company shall have the right to control any
such litigation, but the fees and expenses of such counsel shall not be at the
expense of the Company unless the employment of such counsel has been
specifically authorized by the Company. The Company shall not be liable to
indemnify any person for any settlement of any such action effected without the
Company's consent.
With respect to any untrue statement or omission in the information furnished in
writing to the Company by any Selling Holder expressly for use in any
registration statement referred to herein, such holder will indemnify the
Company and the underwriters, their respective directors and officers, the other
Selling Holders, and each person controlling any of them against all claims,
losses, damages and liabilities, including
8
<PAGE>
legal and other expenses incurred in investigating or defending the same, to
which any of them may become subject. Promptly, and in any event within 20 days,
after receipt of written notice of the assertion or commencement of any action
in respect of which indemnity may be sought against such Selling Holder, the
Company will notify such holder in writing of such assertion or commencement,
and such holder shall, subject to the provisions hereinafter stated, assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to the Company) and the payment of expenses
insofar as such action shall relate to the alleged liability in respect of which
indemnity may be sought against such holder. The company and each such other
Selling Holder, underwriter, director, officer or controlling person shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof, provided that the indemnifying Selling Holder shall have
the right to control any such litigation, but the fees and expenses of such
counsel shall not be at the expense of such Selling Holder unless employment of
such counsel has been specifically authorized by such holder. Such Selling
Holder shall not be liable to indemnify any person for any settlement of any
such action effected without such holder's consent.
The holder of each certificate for Preferred Stock and any of its respective
transferees may transfer the registration rights granted under this paragraph 7
to any person, provided that the Company is given written notice by the holder
--------
at the time of such transfer stating the name and address of the transferee and
identifying the Underlying Stock with respect to which the rights are being
transferred and, provided further that the transferee agrees in writing to be
----------------
bound by all the terms and conditions of this paragraph 7.
At any time the Company is requested to include Underlying Stock of any holder
in a registration statement pursuant to this paragraph 7, such holder shall
promptly provide to the Company such information relating to such holder or his
Underlying Stock as the Company shall reasonably request for use in or in the
preparation of such registration statement.
8. Governing Law. This certificate shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
Dated: February 24, 1994
BCT INTERNATIONAL,INC.
By: Peter Gaughn
--------------------
Vice President
Attest: Laura Sennett
--------------------------
Assistant Secretary
<PAGE>
EXHIBIT 10.1
<PAGE>
AGREEMENT
- ---------
AGREEMENT dated as of May 7, 1992, between American Franchise Group, Inc., a
Delaware corporation (the "Company"), and the 1982 LeVine Prevocable Trust
("Investor").
WHEREAS, pursuant to a certain preferred stock purchase agreement of even date
(the "Stock Purchase Agreement"), Investor is purchasing from the Company at a
price of $1.00 per share 550,000 shares of the Company's Series A Convertible
Preferred Stock (the "Preferred Stock"); and
WHEREAS, the parties wish to memorialize certain further agreements and
understandings among them relating to their business relationship.
NOW THEREFORE, in consideration of the mutual convenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follow:
1. On the date hereof, Investor shall purchase the Preferred Stock pursuant to
execution and delivery to the Company of the Stock Purchase Agreement,
together with the purchase price provided for therein, whereupon the
Company shall immediately issue the Preferred Stock to him.
2. The Company will use its best efforts to cause its directors to promptly
appoint Investor to the Company's Board of Directors and to nominate
Investor and use their best efforts to cause Investor to be elected to the
Board of Directors by the Company's shareholders, for so long as Invester
continues to hold at least 50% of the Preferred Stock being purchased by
Investor hereunder and is is willing to serve. During LeVine's tenure as a
director, Company to obtain and maintain Director's liability insurance.
3. On the date hereof, the Company shall grant to Investor a five-year option,
evidenced by the Company's standard non-qualified stock option agreement to
purchase 185,000 shares of the Company's $.01 par value Common Stock at an
exercise price equal to the average of the closing bid and asked prices of
the Company's Common Stock on this date.
4. For so long as Investor owns at least 50% of the Preferred Stock being
purchased by Investor hereunder, the Company shall cause its officers and
directors to refrain from directly or indirectly buying or selling any of
the Company's securities except to the extent that any such transaction is
previously approved by an independent committee of the Company's Board of
Directors established for the purpose of reviewing such transactions.
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first above written.
AMERICAN FRANCHISE GROUP, INC
By: William A. Wilkerson
-------------------------------
William A. Wilkerson, Chairman
Bill LeVine Trustee
-----------------------------------
The 1982 LeVine Revocable Trust
<PAGE>
EXHIBIT 10.2
<PAGE>
PLEASE READ CAREFULLY BEFORE SIGNING
------------------------------------
SUBSCRIPTION AGREEMENT
BCT International, Inc.
3000 N.E. 30th Place
Fort Lauderdale, Florida 33306-1957
PURCHASE OF _______ SHARE OF
PREFERRED STOCK OF BCT INTERNATIONAL, INC.
------------------------------------------
Gentlemen:
The undersigned (individually or collectively, as the case may be, referred to
as "Investor") hereby represents, warrants, covenants and agrees to the
following:
1. Subscription; Offering. Investor hereby agrees to purchase ______ shares
----------------------
(the "Shares") of Series B Convertible Preferred Stock, $1.00 par value (the
"Preferred Stock"), of BCT International, Inc. (the "Company") at a price of
$1.00 per Share and upon the terms and conditions set forth herein. The purchase
price shall be tendered immediately upon execution of this Agreement by
Investor. This Agreement shall become effective when it has been executed and
delivered, together with the purchase price, by Investor and accepted by the
Company. This subscription is made pursuant to a private offering by the Company
of up to 2,500,000 shares of Preferred Stock. The net proceeds of the Offering
will be used by the Company (i) to pay off some or all of the Company's Series A
Convertible Subordinated Debentures due March 31, 1994, the principal amount of
which is $1,777,000 as of February 1, 1994, and (ii) to the extent that Offering
proceeds remain available after the Debentures are paid in full, for general
working capital. A Commission equal to 5% of the gross proceeds of the Offering
will be paid to the Company's placement agent, Barber & Bronson, Inc., Fort
Lauderdale, Florida ("BBI"), to the extent that such proceeds are procured
through BBI. Simultaneous with the issuance of the Shares, Investor shall
receive Class B warrants (the "Warrants") to purchase ______ shares of the
Company's $.04 par value common stock (the "Common Stock"), representing one
Warrant for each 2.25 Shares of Preferred Stock purchased. BBI will also receive
a commission equal to 5% of the gross proceeds of the exercise of Warrants by
investors procured through BBI. See section 5 below for a description of the
Preferred Stock and the Warrants.
2. Investment Purpose. Investor hereby represents that the Shares and
------------------
Warrants are being acquired solely for his account and for investment purposes
only, within the meaning of the Securities Act of 1993 and the rules and
regulations thereunder, as amended (the "1933 Act"), and that he has no plan,
intention, contract, understanding, agreement or arrangement with any person to
sell, assign, pledge, hypothecate or otherwise transfer to any person the
Shares, the Warrants or any part thereof.
3. Risk Factors. Investor understands that his investment in the Shares and
------------
Warrants is speculative and involves a high degree of risk. Investor has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of investments generally and of
his investment
1
<PAGE>
in the Shares and Warrants in particular and is ABLE TO BEAR THE ECONOMIC RISK
OF THIS INVESTMENT WITH FULL UNDERSTANDING THAT HE MAY LOSE HIS ENTIRE
INVESTMENT. In particular, Investor recognizes and understands that:
(a) Equity Risk. The Shares are equity, and not debt, instruments, and
-----------
therefore the Company is not legally required to pay dividends and/or redeem the
Shares in the event that, at the time of a scheduled payment, (i) the Company's
capital surplus and/or profits are insufficient or (ii) in the good faith
judgment of the Company's Board of Directors, the Company has insufficient funds
with which to make the payment given the Company's other needs. In the event of
a liquidation of the Company, all of the Company's creditors and Senior
Preferred Stock holders (see item 3(b) below) must be paid in full before any
payments may be made on account of the Shares. Under Delaware law, dividends may
be paid only out of the Company's capital surplus or profits from the then
current or prior fiscal year, and stock may be redeemed only to the extent that
the Company's capital is not impaired and the redemption payment will not impair
capital.
(b) Subordination to Senior Preferred Stock. Payment of dividends on the
---------------------------------------
Preferred Stock as well as redemption payments and payments on liquidation of
the Company are subordinate to the prior payment of all amounts due on the
Company's $1.00 par value Series A Convertible Preferred Stock, which consists
of 810,000 shares (750,000 issued in May 1992 and 60,000 issued in February
1994) bearing a 12% annual dividend payable quarterly, with redemption scheduled
for five years from the date of issuance (the Senior Preferred Stock").
(c) Operating History. Although the Company has operated profitably since the
-----------------
beginning of the fiscal year ended February 28, 1993, reversing major losses in
the fiscal year ended in February 1992, 1991, respectively, this recent
improvement in the Company's operating results may not be indicative of future
results. Further, the Company continues to suffer from a shortage of liquidity
and working capital due to its growth and other factors, and there can be no
assurances that this shortage will be eliminated.
(d) Control. The Company's current officers and director own a majority of the
-------
Company's Common Stock, and, accordingly, for the forseeable future those
persons will be able to continue to elect the entire Board of Directors and
otherwise control the Company.
(e) Lack of Public Market for Preferred Stock. No public trading market is
-----------------------------------------
expected to develop for the Preferred Stock. The sale, transfer or other
disposition of the Preferred Stock or underlying Common Stock and Warrants is
substantially restricted and may not be made unless the securities are
registered under the 1933 Act unless their resale is exempt therefrom.
(f) Thin Public Market for Common Stock. Although the Company's Common Stock
-----------------------------------
is publicly traded on the NASDAQ Stock Market, the Common Stock historically has
registered low trading volume and, consequently, the price of the Common Stock
has been quite volatile. Further, pursuant to NASDAQ rules, the Company's
Common Stock could be delisted in the event that its equity, stock price or
certain other indicators fail to meet minimum NASDAQ standards. A delisting
would severely reduce the already limited liquidity of the Common Stock.
2
<PAGE>
4. Disclosure. Investor acknowledges that the executive officers and
----------
directors of the Company have provided him with access to all material books and
records of the Company, including but not limited to all material contracts and
accounting records of the Company, and otherwise have provided him with access
to such information concerning the Company and its affairs as is necessary in
order for him to evaluate the merits and risks of his investment in the Shares
and Warrants. Investor also acknowledges that the Company has given him the
opportunity to ask questions of and receive answers from the directors and the
executive officers of the Company and other persons acting on their behalf
concerning the terms and conditions of the offer to him of the Shares and
Warrants and to obtain any additional information concerning the Company, to the
extent that the directors, executive officers and others possess such
information or can acquire it without unreasonable effort or expense so that he
can verify the accuracy of the information given to him at the time of the offer
and his purchase of the Shares and Warrants. Investor further acknowledges
receipt of, and confirms that he has reviewed and understood, the following
documents relating to the Company: (i) 1993 Annual Report to Shareholders; (ii)
1993 Form 10-K as filed with the Securities and Exchange Commission; (iii) 1993
annual proxy statement; and (iv) Form 10-Q Reports as filed with the Securities
and Exchange Commission for the quarters ended May 31, August 31 and November
30, 1993.
5. Description of Preferred Stock and Warrants. Investor understands the
-------------------------------------------
rights of holders of the Preferred Stock and Warrants, which are set forth in
the Certificate of Designations, Preferences and Rights of the Preferred Stock
attached hereto as Exhibit "A" and the form of Warrant attached hereto as
Exhibit "B" both of which Investor has read and understood. These rights are
summarized as follows:
(a) Dividend Rights. Holders of shares of Preferred Stock are entitled to
---------------
receive, when and as declared by the Company's Board of Directors out of the
funds of the Company legally available for the payment of dividends, cash
dividends at the rate of $.09 per share (9%) per annum, payable quarterly on the
1st day of each of January, April, July and October. Dividends on the Preferred
Stock are cumulative and accrue from the date of original issue. No interest
will be paid by the Company on dividends in arrears. No cash dividend may be
declared and paid or set apart for payment upon the Company's Common Stock until
any past quarterly dividend on the Preferred Stock has been fully paid or
declared and set apart for payment.
(b) Voting Rights. The Preferred Stock will have no voting rights, except with
-------------
respect to action affecting the terms or priority of the Preferred Stock, in
which case a majority vote of the outstanding Preferred Stock, voting as a
class, will be required to approve such action.
(c) Liquidation Rights. In the event of a voluntary or involuntary liquidation
------------------
of the Company, the holders of Preferred Stock will be entitled to receive $1.00
per share plus all accrued and unpaid dividends before any distribution is made
to the holders of the Company's Common Stock or any other class or series of
stock ranking junior to the Preferred Stock as to distribution of assets.
(d) Preemptive Rights. Holders of Preferred Stock will have no preemptive
-----------------
right to purchase any securities of the Company.
(e) Conversion; Redemption. The Preferred Stock will be convertible into the
----------------------
Company's Common Stock at a ratio of 2.25 shares of Preferred Stock for each
share of Common Stock (the "Conversion Ratio"). The Company may require
conversion at the conversion ratio beginning six months after the date of
issuance in the event that the Common Stock's closing bid price or last sale
price as reported by NASDAQ is at or above
3
<PAGE>
$3.50 per share for 20 consecutive trading days. If the Preferred Stock is not
converted within three years of issuance, it shall be redeemed by the Company at
a price of $1.00 per share, plus all accrued and unpaid dividends, to the extent
that funds are legally available therefor.
(f) Subordination to Senior Preferred Stock. No payments (whether dividend,
---------------------------------------
redemption or liquidation payments) may be made on account of the Preferred
Stock if at the time scheduled for such payments any amount is due but unpaid
with respect to the Senior Preferred Stock.
(g) Warrants. Each Warrant shall entitle Investor to purchase one share of
--------
Common Stock for three years from the date of issuance at an exercise price of
$3.00 per share. The Warrants may be redeemed by the Company, at its option,
beginning six months after the date of issuance, at a price of $.05 each in the
event that the Common Stock's closing bid price or last sale price is at or
above $3.50 for 20 consecutive trading days.
6. Restrictions on Transfer. Investor is aware of the fact that neither the
------------------------
Shares nor the Common Stock into which they are convertible (the "Conversion
Stock") nor the Warrants or the Common Stock issuable upon their exercise have
been registered nor is registration contemplated under the 1933 Act, and
accordingly, that such Shares, Warrants and underlying securities must be held
until they are subsequently registered under said Act or unless, in the opinion
of counsel for the Company, a sale or transfer may be made without registration
thereunder. Investor agrees that any certificate evidencing the Shares,
Warrants or underlying securities will bear a legend restricting the transfer
thereof consistent with the foregoing and that a notation will be made in the
records of the Company restricting the transfer thereof consistent with the
foregoing.
7. Private Offering. Investor acknowledges that neither the Company nor any
----------------
person acting on behalf of the Company offered to sell the Shares or Warrants by
means of any form of general advertising, including but not limited to media
advertising or seminars.
8. Suitability of Investment. Investor, after carefully reviewing the merits
-------------------------
and risks of his proposed investment in the Shares and Warrants, including those
risks described in the Disclosure Documents and herein, together with those
risks particular to his personal situation, has determined that this investment
is suitable for him. Investor has adequate financial resources for an
investment of this character, and at this time Investor could bear a complete
loss of his investment. Further, Investor will continue to have, after making
his investment in the Shares and Warrants, adequate means of providing for his
current needs, the needs of those dependent on him, and possible personal
contingencies and will have no need to liquidate his investment in the Shares
and Warrants for an indefinite period of time. Investor's overall commitment to
investments which are not readily marketable is not disproportionate to
Investor's net worth.
9. Unregistered Offering. Investor understands that the Shares and Warrants
---------------------
are not being registered, and the Company has no intention of registering the
Shares and Warrants under, the 1933 Act on the basis that the offering of the
Shares and Warrants is exempt from registration under the 1933 Act as a
"transaction by an issuer not involving any public offering" and that reliance
on such exemption is predicated, in part, on Investor's representations and
warranties contained in this Subscription Agreement and those of other
purchasers of the Shares and Warrants. In the view of the SEC, the statutory
basis for the exemption claimed by the Company in connection with the offering
of Shares and Warrants would not be present if,
4
<PAGE>
notwithstanding Investor's representations and warranties (or the
representations and warranties of other subscribers), Investor has (or they
have) the intention of acquiring the Shares or Warrants for resale upon the
occurrence or nonoccurrence of some predetermined event.
10. Absence of Official Evaluation. Investor understands that no federal or
------------------------------
state agency has made any findings or determinations as to the fairness of the
terms of an investment in the Shares and Warrants nor any recommendation or
endorsement of a purchase of the Shares and Warrants.
11. Residence. If Investor is an individual, his principal residence is in
---------
the country and state or other jurisdiction indicated, and his citizenship is as
indicated at Item I.5, page 2, of the Purchaser Questionnaire. If Investor is a
corporation, partnership, trust, estate, or other entity, its principal office
is in the country and state or other jurisdiction indicated at Item III.4, page
3, of the Purchaser Questionnaire. Investor has no intention of changing his
residence, citizenship, or principal office to any other country or state or
jurisdiction.
12. Accpetance. Investor acknowledges that the Company shall, in its sole
----------
discretion, have the right to accept or reject his subscription, in whole or in
part, for any reason or for no reason. If Investor's subscription is accepted
by the Company, he shall, and he hereby agrees to, execute any and all
additional documents necessary in the opinion of the Company to complete his
subscription and acquisition of the Shares and Warrants.
13. Purchaser Questionnaire. Investor understands that acceptance of his
-----------------------
subscription is based, in part, on the information set forth in the Purchaser
Questionnaire attached hereto. Investor represents that the information set
forth in the Purchaser Questionnaire is true, correct, and complete at the date
hereof and agrees to notify the Company immediately of any material change in
such information. Investor understands that the information furnished in
response to such questionnaire is intended to enable the Company to discharge
its responsibilities under the private placement exemption of the 1933 Act and
certain state securities laws and that the Company will rely upon such
information.
Investor understands and agrees that, although the Company will use its best
efforts to keep the information provided in the Questionnaire strictly
confidential, the Company may present the Questionnaire and the information
provided in answers to it to such parties as he may deem advisable if called
upon to establish the availability under any federal or state securities laws of
an exemption from registration or if the contents thereof are relevant to any
issue in any action, suit or proceeding to which the Company is a party, or by
which the Company is or may be bound.
14. Entity as Investor. If the Investor is a corporation, partnership, trust
------------------
or other entity (i) it is
authorized and qualified to make its investment in the Shares and Warrants by
the Articles (or Certificate)
of Incorporation and Bylaws of the corporation or by the trust or partnership
agreement, as the case may be; (ii) it has not been formed for the specific
purpose of acquiring an interest in the Shares and Warrants and it has
substantial business activities in addition to the investment in the Shares and
Warrants; (iii) it has not been in existence for less than 90 days prior to the
date hereof; (iv) the person signing this Subscription Agreement on behalf of
such entity has been duly authorized by such entity to do so; and (v) on a
consolidated basis, it meets the net worth requirements, as evidenced in its
most recent financial statement,
5
<PAGE>
for an investment in the Shares and Warrants. An Investor corporation, upon
request of the Company or counsel to the Company, shall furnish the Company a
true and correct copy of the provisions of the corporation's Articles (or
Certificate) of Incorporation or Bylaws, or both, authorizing the corporation to
make such investment, and shall supply herewith a copy (certified by the
secretary or other authorized officer) of appropriate corporate resolutions
authorizing the specific investment. In the case of a trust or partnership, the
trustee or managing partner, as the case may be, shall supply herewith a true
and correct copy of the provisions of the trust instrument or partnership
agreement authorizing the trustee or managing partner to make such investment on
behalf of the trust or partnership.
If the Investor is an individual retirement account or annuity, Keogh plan, or
pension, profit sharing, retirement, or other employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974 (a
"Plan"), the Investor has so advised the Company by checking the following
_______ [check if applicable] and the undersigned's decision to invest in the
Shares and Warrants was made by a duly authorized person who is independent of
the Company and its affiliates, and who did not receive any advise or
recommendation from the Company or its affiliates based upon the particular
facts and circumstances of the Plan or its beneficiaries.
15. Nonreliance. Investor is not relying on the Company or any of its
-----------
officers, directors or agents with respect to the tax and/or economic effect if
his investment in the Shares and Warrants. Except as set forth in the
Disclosure Documents or herein, no representations or warranties have been made
to Investor by the Company or any agent, employee or affiliate thereof and in
entering into this transaction Investor is not relying upon information other
than that contained in the Disclosure Documents or herein and the results of his
own independent investigation.
16. Prohibitions on Cancellation Termination, Revocation, Transferability and
-------------------------------------------------------------------------
Assignment. Investor hereby acknowledges and agrees that, except as may be
- ----------
specifically provided herein or by applicable law, he is not entitled to cancel,
terminate, or revoke this Subscription Agreement or his subscription set forth
herein, and this Subscription Agreement shall survive his death or disability or
any assignment of his Shares and Warrants. He further agrees that he may not
transfer or assign his rights under this Subscription Agreement, and
transferability of the Shares and Warrants will be restricted.
17. Indemnification of the Company. Investor agrees to indemnify and hold
------------------------------
harmless the Company and its officers, directors, employees, agents,
representatives and affiliates against any and all loss, liability, claim,
damage, and expenses whatsoever (including, but not limited to, any and all
attorneys' fees and expenses reasonably incurred in investigating, preparing, or
defending against any litigation commenced or threatened, or any claim
whatsoever, through all appeals) arising out of or based upon any false
representation or warranty by Investor or breach or failure by Investor to
comply with any covenant or agreement made by him herein or in any other
document furnished by him in connection with his subscription to purchase the
Shares and Warrants.
18. Representation of Florida Resident. If Investor is a Florida resident, he
----------------------------------
agrees as follows: the Shares and Warrants referred to in this Subscription
Agreement are being sold to and acquired by him in a transaction exempt from
registration under Section 517.061 (11), Florida Statutes. He understands that
------- --------
the offering of Shares and Warrants has not been registered under said statute
and that he has the privilege to void his purchase of the Shares and Warrants
within three days after the first tender of consideration is made
6
<PAGE>
by him to the Company or within three days after the availability of this
privilege is communicated to him, whichever occurs later.
19. Notification, Discharge, Termination. Neither this Subscription Agreement
------------------------------------
nor any provisions hereof may be modified, discharged, or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
20. Notices. Any notice, demand, or other communication that any party hereto
-------
may be required, or may elect, to give to anyone interested hereunder shall be
in writing and shall be sufficiently given if (a) deposited, postage prepaid, in
United States mail, registered or certified, return receipt requested, addressed
to such address as may be given herein; or (b) delivered personally or by fax at
such address.
21. Separate Signature Pages. This Subscription Agreement may be executed
------------------------
through the use of separate signature pages or in any number of counterparts,
and each of such counterparts shall, for all purposes, constitute one agreement
binding on all the parties, notwithstanding that all parties are not signatories
to the same counterpart.
22. Successors and Assigns. Except as otherwise provided herein, this
----------------------
Subscription Agreement shall be binding upon and inure to the benefit of
Investor and his heirs, executors, administrators, successors, legal
representatives, and assigns. If Investor is more than one person, the
obligations of Investor shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his heirs,
executors, successors, administrators, legal representatives and assigns.
23. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained herein shall
survive Investor's payment for the Shares, acceptance by the Company of his
subscription to purchase the Shares, and the delivery of the Shares and
Warrants.
24. Entire Agreement. This Subscription Agreement contains the entire
----------------
agreement of the parties, and there are no representations, covenants, or other
agreements except as stated or referred to herein.
25. Governing Law. This Subscription Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Florida, both substantive
and remedial.
26. Severability. If any provision of this Subscription Agreement shall be
------------
held to be void or unenforceable under the laws of any jurisdiction governing
its construction or enforcement, this Subscription Agreement shall not be void
or vitiated thereby, but shall be construed to be in force with the same effect
as though such provision were omitted.
27. Section Headings. The section headings contained herein are for reference
----------------
purposes only and shall not in any way affect the meaning or interpretation of
this Subscription Agreement.
28. Gender. Whenever (i) the singular or plural number, or (ii) the
------
masculine, feminine or neuter gender is used herein, it shall equally include
the others and shall apply jointly and severally, where the context so requires.
7
<PAGE>
29. Subscription Procedure. To subscribe for the Shares the Investor must fill
----------------------
in the following blanks and complete, execute and deliver this Subscription
Agreement and the following specified documents to the Company:
a. Number of Shares purchased:____________________.
b. Number of Warrants acquired:___________________.
c. Please indicate how to register the Shares and Warrants.
i._____________________________ investor's name alone.
ii.____________________________ Tenants in Common.
(All parties must sign all required documents).
iii.___________________________ Other (please indicate)__________.
d. The Purchaser Questionnaire must be completed and returned.
e. A check in the amount of $________, payable to the Company, must be
delivered with this completed Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
this ____ day of ____________, 1994.
ENTITY SUBSCRIBER SIGN HERE: INDIVIDUAL SUBSCRIBER SIGN HERE:
___________________________________ __________________________________
Name of Subscriber Signature
__________________________________
Name of Subsccriber
By:________________________________ Address:__________________________
___________________________________ __________________________________
Name and Title of Person Signing __________________________________
Fax No.___________________________
Address:___________________________ Social Security Number
___________________________________ __________________________________
___________________________________
Fax No.____________________________
8
<PAGE>
Tax Indentification Number
____________________________________ __________________________________
Signature of Joint Subscriber (if
purchased as tenants in common,
joint tenants, tenants by the
entirety or community property)
__________________________________
Name of Joint Subscriber
Address:__________________________
__________________________________
__________________________________
Fax No.___________________________
Social Security Number
__________________________________
9
<PAGE>
ACCEPTANCE
- ----------
The subscriber of ______________________ to purchase ______________________
Shares of Series B Convertible Preferred Stock of BCT INTERNATIONAL, INC., is
hereby accepted this _______ day of ____________, 1994.
BCT INTERNATIONAL, INC.
By:___________________________
10
<PAGE>
EXHIBIT 10.3
<PAGE>
Draft 5/27/92
CONSULTING AGREEMENT
- --------------------
AGREEMENT entered into as of the 1st day of March, 1992, between American
Franchise Group, Inc., a Delaware corporation (together with its subsidiaries,
the "Company"), and Henry A. Johnson ("Consultant").
WHEREAS, since March 1, 1991, Consultant has provided consulting services to the
Company pursuant to an oral agreement, and the Company desires that Consultant
continue to provide consulting services to the Company pursuant hereto and
Consultant is agreeable to providing such services.
NOW THEREFORE, in consideration of the premises and the mutual promises set
forth herein, the parties hereto agree as follows:
1. For a period of 48 months from the date hereof (the "Consulting Period"),
Consultant shall serve as a consultant to the Company on all matters
pertaining to his knowledge of the Company's business and operations.
Consultant's services shall include consultation with, and advice to,
directors, officers and employees of the Company for the purpose of making
Consultant's knowledge and experience available to those persons in
connection with the fulfillment of their duties to the Company.
2. During the Consulting Period, the Company shall be entitled to Consultant's
services for reasonable times when and to the extent requested by, and
subject to the direction of the Chief Executive Officer of the Company and
the President of the Company's Business Cards Tomorrow, Inc., subsidiary.
3. Consultant's services shall be rendered only at the Company's office at
3000 N.E. 30th Place, Fort Lauderdale, Florida (the "Office") or from
Consultant's home at 1941 Napoleon Drive, Las Vegas, Nevada 89115, unless
by mutual agreement from time to time arrangements are made for those
services to be rendered elsewhere. Reasonable travel and living expenses
necessarily incurred by Consultant to render services at locations other
than the office or his home shall be reimbursed by the Company promptly
upon receipt of proper statements with regard to the nature and amount of
those expenses. Those statements shall be furnished to the Company monthly
at the end of each calendar month of the Consulting Period during which any
of those expenses are incurred.
4. As compensation for the consulting services provided for in Sections 1-3
above, the Company shall pay to Consultant a monthly consulting fee of
$4,166.67, which shall be paid on the 10th day of each month during the
Consulting Period, with the first such payment due on March 10, 1992, and
the last such payment due on February 10, 1996.
5. Consultant agrees that, during the Consulting Period and thereafter, he
will not disclose to anyone any trade secrets of the Company or any
confidential or non-public information relating to the Company's business,
operations or prospects.
<PAGE>
6. Consultant acknowledges that it would be extremely difficult, if not
impossible, to measure accurately the damages to the Company from any
breach by Consultant of Section 5 of this Agreement, and that the injury to
the Company from any such breach would be incalculable and irremediable.
Accordingly, Consultant agrees that upon any breach of Section 5 of this
Agreement, the Company's remedy at law would be inadequate, and the Company
shall be entitled as a matter of right to institute legal proceedings in
any court of competent jurisdiction and receive an injunction restraining
the further and continued breach of Section 5 of this Agreement, and
recovery of all damages to the Company incurred, by reason of conducting
the activity in violation of Section 5 of this Agreement.
7. In any legal or equitable action brought with respect to this Agreement
(including, but not limited to, suit for injuctive relief for a breach of
the terms and provisions of Section 5 of this Agreement), the prevailing
party shall be entitled to recover all of its reasonable attorneys' fees
and costs in connection therewith, including those incurred at the pre-
trial, trial and appellate levels.
8. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective legal representative and to any successor
to the Company, which successor shall be deemed substituted for the Company
under the terms of this Agreement.
9. Any notice, request, instruction, legal process or other document to be
given hereunder shall be in writing and shall be delivered personally,
against receipt, or by registered or certified mail, return receipt
requested, as set forth below:
If to Consultant:
Henry A. Johnson
1941 Napoleon Drive
Las Vegas, NV 89115
If to Company:
William A. Wilkerson
Chief Executive Officer
American Franchise Group, Inc.
3000 N.E. 30th Place
Fort Lauderdale, FL 33306-1957
10. This instrument contains the entire agreement between the parties hereto
with repect to the provision of consulting services by Consultant.
11. This Agreement shall be construed and enforced in accordance with the laws
of the State of Florida.
12. The invalidity or unenforceability of any provision hereof shall in no way
effect the validity or enforceability of any other provision.
<PAGE>
13. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which shall be considered one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
HENRY A. JOHNSON
---------------------------------------
Henry A. Johnson
AMERICAN FRANCHISE GROUP, INC.
By: WILLIAM A. WILKERSON
------------------------------------
Chairman & Chief Executive Officer
<PAGE>
Exhibit 10.4
<PAGE>
EMPLOYMENT AGREEMENT
- --------------------
THIS AGREEMENT is made and entered into as of March 1, 1993, by and between BCT
International, Inc., a Delaware corporation (together with its subsidiaries,
"BCT") and William A. Wilkerson ("Employee").
W I T N E S S E T H:
- -------------------
WHEREAS, BCT desires to secure the services of Employee, and Employee desires to
furnish such services to BCT upon the terms and conditions set forth in this
Agreement; and
WHEREAS, Employee, by reason of the nature of Employee's duties, will be
provided access to BCT's trade secrets and other confidential information and
BCT desires to maintain the confidentiality of the same.
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Duties. BCT hereby employees Employee, and Employee agrees to serve BCT, as
------
its Chairman of the Board and Chief Executive Officer, or in a comparable
position, for the term set forth below in paragraph 3. During the entire term
of his employment, Employee shall be the chief executive officer of BCT,
responsible for overall management and supervision of all the operations of BCT.
Employee agrees to carry out such employment in a good and professional manner
and to the reasonable satisfaction of BCT. Employee shall serve under the
direction and supervision of the Board of Directors of BCT (the "Board").
Employee, in his discretion, may perform a substantial portion of his services
from locations other than BCT's principal office, provided that the use of such
locations does not materially impair the performance of his duties.
2. Compensation. BCT covenants and agrees that, in consideration of the
------------
services performed hereunder, it will pay to Employee at its regular and
customary intervals a minimum annual salary during the term of this Agreement as
follows:
<TABLE>
<S> <C>
Year ending February 28, 1994 $225,000
Year ending February 28, 1995 $275,000
Year ending February 29, 1996 $275,000
Year ending February 28, 1997 $300,000
Year ending February 28, 1998 $300,000
Year ending February 28, 1999 $300,000
Year ending February 29, 2000 $300,000
</TABLE>
Employee shall also be eligible for such bonuses and additional salary increases
as the Board deems appropriate in its sole discretion.
3. Term. The term of Employees employment hereunder shall be through February
----
29, 2000, subject to the termination provisions set forth in paragraphs 7, 8 and
9 hereof.
<PAGE>
4. Benefits. Employee shall be entitled to the following benefits during the
--------
period of his employment hereunder:
(a) BCT shall provide Employee with an automobile of his choice, and shall pay
for appropriate insurance thereon, for use by Employee in connection with his
employment; provided, however, that BCT's monthly expense for this benefit shall
not exceed an amount deemed reasonable by the Board.
(b) BCT shall pay the reasonable cost of an annual physical examination of
Employee.
(c) BCT shall pay the reasonable cost of preparation of Employee's annual
personal income tax returns.
(d) Employee shall be entitled, in accordance with BCT's general policies for
senior management, to participation in any pension, stock option, employee stock
ownership and profit sharing plans, incentive/performance awards, paid vacation,
health, casualty, disability and life insurance and other employment benefits as
are made available from time to time by the Board.
(e) BCT shall reimburse Employee for all reasonable out-of-pocket expenses
incurred by him in connection with the performance of his duties hereunder upon
the presentation of appropriate documentation therefor in accordance with BCT's
regular procedures.
5. Disability. In the event that Employee shall be incapacitated by reason of
----------
mental or physical disability or otherwise during the term of his employment
such that he is substantially prevented from performing his principal duties and
services hereunder for a period of 90 consecutive days, or for shorter period
aggregating 90 days during any twelve-month period, BCT thereafter shall have
the right to terminate Employee's employment under this Agreement by sending
written notice of such termination to Employee or his legal representative and
thereupon his employment hereunder shall immediately terminate. Upon such
termination, Employee shall be entitled to receive and shall be paid by BCT one-
half of his salary in effect on the date of termination for the remaining term
of this Agreement, paid at BCT's regular and customary intervals for the payment
of salaries. Employee shall accept such payment in full discharge and release
of BCT of and from any further obligations under this Agreement.
6. Death. In the event of Employee's death during the term of his employment,
-----
his designated beneficiary or, if no such beneficiary shall have been designated
by employee, the estate of employee, shall be entitled to receive and shall be
paid by BCT one-half of Employee's salary in effect on the date of his death for
the remaining term of this Agreement, paid at BCT's regular and customary
intervals for the payment of salaries, in full discharge and release of BCT of
and from any further obligations under this Agreement.
7. Termination for Cause.
---------------------
(a) BCT shall have the right to terminate the employment of Employee hereunder
for cause at any time if:
(i) Employee shall be convicted by a court of competent and final jurisdiction
of any crime (whether or not involving BCT) which constitutes a felony in the
jurisdiction involved or shall be habitually drunk or intoxicated in public or
otherwise act in such a manner as to materially adversely reflect upon the
reputation of BCT; or
<PAGE>
(ii) Employee shall commit any material act of fraud, embezzlement or similar
conduct against or shall breach a material fiduciary obligation to BCT; or
(iii) Employee shall fail or refuse to perform in any material respect any of
his duties and responsibilities as required by this Agreement, provided that
termination of Employee's employment pursuant to this subparagraph 7(a) (iii)
shall not constitute valid termination for cause unless Employee shall first
have received written notice from the Board stating specifically the nature of
such failure or refusal and affording Employee at least 30 days to correct the
complained of act or omission.
(b) In the event that the employment of Employee shall be terminated by BCT for
cause pursuant to subparagraph 7(a)(i) or (ii) hereof, Employee shall be
entitled to receive the salary provided for in paragraph 2 hereof through the
date of such termination. In the event that the employment of Employee shall be
terminated by BCT for cause pursuant to subparagraph 7(a)(iii) hereof, Employee
shall be entitled to receive the salary provided for in paragraph 2 hereof for
one month after the date of termination. Employee shall accept payment pursuant
to this subparagraph 7(b) in full discharge and release of BCT of and from any
further obligations under this Agreement. Nothing contained in this paragraph 7
shall constitute a waiver or release by BCT of any rights or claims it may have
against Employee pursuant to paragraph 10 hereof or for actions or omissions
which may give rise to an event causing termination of this Agreement pursuant
to this paragraph 7.
8. Termination Without Cause.
-------------------------
(a) BCT may terminate Employee's employment hereunder without cause at any time
upon 30 days prior written notice, provided that in such event Employee shall be
paid his minimum salary in accordance with paragraph 2 through the date set
forth in paragraph 3, at BCT's regular and customary intervals for the payment
of salaries. In addition, during such period Employee shall continue to receive
his benefits described in paragraph 4 as in effect at the date of termination.
Employee shall accept such payments and benefits in full discharge and release
of BCT of and from any further obligations under this Agreement.
(b) For purposes of this Agreement, the following events shall be deemed, at
Employee's option, which must be exercised by written notice delivered to BCT
within 30 days following occurrence of the event in question, a termination of
Employee's employment hereunder without cause:
(i) The location at which Employee's primary responsibilities are to be carried
out is moved to any location more than 25 miles from the present location of BCT
without the prior written approval of Employee.
(ii) Employee's responsibilities are substantially changed without the prior
written approval of Employee.
(iii) Employee is instructed by the Board to implement or abide by a material
decision which is made in bad faith inconsistent with the purpose and intent of
this Agreement and the Board fails to rescind such decision within 10 days after
Employee's written objection to such order.
9. Termination by Employee. Employee may terminate his employment hereunder,
------------------------
subject to the restrictive covenants hereinafter stated, upon giving 60 days
prior written notice to BCT, in which event Employee's salary and benefits, as
set forth in paragraphs 2 and 4, shall be continued through the date of
termination. Employee shall accept such salary and benefits in full discharge
and release of BCT of and from any further obligations under this Agreement.
<PAGE>
10. Restrictive Convenants.
----------------------
(a) Employee recognizes and acknowledges that confidential information may
exist, from time to time, with respect to the business of BCT. Accordingly,
Employee agrees that he will not, during or after term of employment hereunder,
except if required in connection with his duties hereunder, disclose any
confidential information relating to the business of BCT to any individual or
entity. The provisions of this paragraph 10(a) shall not apply to information
which is or shall become generally known to the public or the trade (except by
reason of Employee's breach of his obligations hereunder), information which is
or shall become available in trade or other publications (except by reason of
Employee's breach of his obligations hereunder), and information which Employee
is required to disclose by order of a court of competent jurisdiction (but only
to the extent specifically ordered by such court and, when reasonably possible,
if Employee shall give BCT prior notice of such intended disclosure so that it
has the opportunity to seek a protective order if it deems appropriate).
(b) As used in this Agreement, "confidential information" shall mean studies,
plans, reports, surveys, analyses, sketches, drawings, notes, records,
unpublished memoranda or documents, and all other nonpublic information relating
to BCT's activities, including, without limitation, all methods, processes,
techniques, shop practices, equipment, research data, marketing and sales
information, personnel data, customer lists, supplier lists, franchisee lists,
employee lists, financial data, and all other techniques, know-how and trade
secrets which presently or in the future are in the possession of BCT.
"Confidential information" shall not include general knowledge, expertise or
skills gained by Employee with respect to the industry in which BCT operates.
(c) For so long as he is employed hereunder, Employee shall not engage (either
as principal, agent or consultant, or through any corporation, firm or
organization in which he may be an officer, director, employee, controlling
stockholder, partner, member or with which he is otherwise affiliated) directly
or indirectly in any activity or business anywhere which is competitive with
BCT. In addition, unless he is terminated without cause pursuant to paragraph 8
hereof, Employee will not so engage in any such competitive activity for a
period of three years after termination. Employee acknowledges that this
paragraph shall not be construed to limit in any way Employee's obligations
regarding use or disclosure of confidential information as set forth above in
paragraph 10(a).
(d) All memoranda, notes, records, reports, software, sketches, photographs,
drawings, plans, papers, or other documents or computer-stored information made
or compiled by or made available to Employee in the course of employment with
BCT, including all copies thereof, are and shall be the sole and exclusive
property of BCT and shall be promptly delivered and returned to BCT by Employee
immediately upon termination of employment with BCT.
11. Injunction. Employee acknowledges that the services to be rendered by him
----------
are of a special, unique and extraordinary character and that, in connection
with such services, he will have access to confidential information vital to
BCT's business. Accordingly, Employee consents and agrees that if he violates
any of the provisions of paragraph 10 hereof, BCT would sustain irreparable harm
and, therefore, in addition to any other remedies which may be available to it,
BCT shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining Employee from committing or continuing any such violation
of this Agreement. Nothing in this Agreement shall be construed as prohibiting
BCT from pursuing any other remedy or remedies including, without limitation,
recovery of damages.
<PAGE>
12. Modification or Elimination of Restrictions. In the event that any of the
-------------------------------------------
restrictions contained in paragraph 10 hereof shall be held to be in any way an
unreasonable restriction on Employee, then the court so holding may reduce the
territory and/or period of time in which such restriction operates, or modify or
eliminate any such restriction to the extent necessary to render such paragraphs
enforceable.
13. Arbitration; Litigation. Except for the relief provided for in paragraphs
-----------------------
11 and 12, any controversy or claim arising out of or relating to this Agreement
or the breach or validity of any part hereof shall be settled solely through
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall have substantial knowledge and experience in the operation of
companies doing business in fields similar to BCT's. The arbitration shall be
conducted in Broward County, Florida. Expenses of the arbitration, including
the arbitrator's fees, shall be shared equally by the parties, with the
prevailing party entitled to reimbursement by the non-prevailing party. In
addition, the prevailing party shall be entitled to recover from the non-
prevailing party its reasonable attorney's fees and expenses incurred in
connection with such arbitration and any litigation arising hereunder.
14. Employee's Address. Upon termination, with or without cause, of his
------------------
employment hereunder and for a period of one year thereafter, Employee shall
advise BCT of his home and business addresses and the identity of his employer,
including any changes therein.
15. Entire Agreement; Amendment. This Agreement represents the entire
---------------------------
agreement between the parties with respect to the subject matter hereof and
shall not be modified or affected by any prior offer, proposal, statement or
representation, oral or written, made by or fore either party. Whenever the
masculine pronoun is used, it includes the feminine pronoun, and the singular
includes the plural, and vice versa, where the context requires. This Agreement
may not be amended or modified except by an instrument in writing signed by BCT
and Employee.
16. Severability, Successors and Assigns. Should any provision or clause
------------------------------------
hereof be held to be invalid, such invalidity shall not affect any other
provision or clause hereof which can be given effect without such invalid
provision. This Agreement shall inure to the benefit of and be binding upon
BCT, its successors and assigns and upon Employee and his heirs, executors,
administrators, or other legal representatives.
17. Laws Applicable. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
year and date first above written.
BCT INTERNATIONAL, INC.
By: Raymond J. Kiernan
William A. Wilkerson
<PAGE>
Exhibit 10.5
<PAGE>
ESCROW AGREEMENT AND INSTRUCTIONS
THIS ESCROW AGREEMENT is made by and between Business Cards Tomorrow, Inc.
("Customer") and Hence EDP ("Hence") with reference to the Customer enhanced
software system ACT2/Ingrid Area Composition & Typesetting system ("ACT 2"), and
the Agreement dated 5/6/93 ("the License/Sublicense Agreement") between Customer
and Hence.
To carry out the terms of the License/Sublicense Agreement, especially paragraph
14 thereof, Customer and Hence hereby give the following instructions to D.
Steve Cameron, Esq., 9430 Olympic Boulevard, Beverly Hills, California 90212
("Escrow Agent"):
1. Upon the execution of the License/Sublicense Agreement, Hence will deposit
in escrow with Escrow Agent the source code in machine readable form for ACT 2
and the custom software modifications, enhancements, and additions thereto for
Customer's use (the resultant package to be called ACT 2 with Customer
enhancements).
2. The source code deposited by Hence in escrow with Escrow Agent shall be
maintained by Escrow Agent for the sole benefit of Hence or its successors or
assigns, including Hence's President, Douglas W. Stout ("Stout"), provided that
Hence, its successors, assigns or Stout, is/are able to comply in all material
respects with Hence's obligations under the License/Sublicense Agreement.
3. As compensation in full for Escrow Agent's performance of all his services
hereunder, Hence shall pay to Escrow Agent a fixed fee of $100 per annum.
Except as may be determined by the Court pursuant to paragraph 4 below, all
expenses incurred by Escrow Agent in the performance of its duties hereunder
shall be for its own account, and Customer shall not be responsible therefor.
4. In the event Hence, its successors, assigns or Stout is/are unable to comply
in all material respects with Hence's obligations under the License/Sublicense
Agreement, (i.e. Hence is in default of a material provision of the
License/Sublicense Agreement or Hence has ceased doing business) Escrow Agent,
on the written demand of Customer pursuant to paragraph 14 of the
License/Sublicense Agreement shall deliver the source code to an authorized
representative of Customer. Escrow Agent shall not be or become liable for
damages or otherwise to Hence or to any person or entity as a result of its
compliance with Customer's demands pursuant to said paragraph 14.
5. Escrow Agent shall act hereunder as an escrow holder only and is not
responsible or liable in any manner whatever for the sufficiency, correctness,
genuineness or validity of the source code deposited with it in escrow, or with
respect to the rights or liabilities of any person or entity executing this
escrow agreement and instruction or the License/Sublicense Agreement.
6. Escrow Agent shall not be liable for any error or judgment or for any act
done or omitted by it in good faith, or for any mistake of fact or law except
for its own willful misconduct, and Escrow Agent shall have no duties to anyone
except Customer and Hence with respect to this escrow agreement and escrow
instructions.
7. No notices or demand to Escrow Agent shall be of any effect unless in
writing. No change of these instruction shall be of any effect unless in
writing signed by Customer and Hence, and no such writing shall be of any effect
unless given to Escrow Agent.
<PAGE>
8. All notices and writings to be given hereunder shall be delivered in person
or forwarded by fax or ordinary mail addressed to Customer, Hence and/or Escrow
Agent at such addresses and fax numbers as may be designated by them in writing
to the other parties.
9. This escrow agreement and instructions shall be binding on the personal
representatives and successors and assigns of the parties hereto, and shall be
interpreted in accordance with the laws of the State of California.
10. Unless sooner terminated or canceled by Customer upon 30 days written
notice to Hence and Escrow Agent, the term of this escrow agreement and
instructions shall commence on the execution of the License/Sublicense Agreement
and continue for a period of 60 days after the termination, cancellation, or
expiration of the License/Sublicense Agreement.
11. This escrow agreement and instructions constitute the sole escrow agreement
and instructions between the parties and supersede all prior understandings,
writings, or other communications among the parties as to an escrow agreement
and instructions under the License/Sublicense Agreement.
Dated:
BUSINESS CARDS TOMORROW, INC.
By:
Dated: 5/6/93
Hence EDP
By:
Dated: 4/6/93
D. Steve Cameron
<PAGE>
SOURCE LICENSE AGREEMENT
This Agreement is made by and between Hence EDP (hereinafter HENCE), 2021 Sperry
Avenue Suite 20, Ventura, California 93003, and the following licensee
(hereinafter LICENSEE).
Licensee: Business Cards Tomorrow, Inc.
Address: 3000 Northeast 30th Place, Fifth Floor, Fort Lauderdale, FL 33306
RECITALS
HENCE is the owner of all rights and interest in and to the Licensed Source
Program(s) together with all of the related materials and documentation set
forth in Schedule "A" to this Agreement, and other related material which HENCE
may from time-to-time make available. Such programs and related materials are
hereinafter collectively referred to as the "Licensed Source Program". LICENSEE
desires to acquire from HENCE the non-exclusive right to use the Licensed Source
Program on the terms set forth in this Agreement.
1. LICENSE GRANT AND LIMITATIONS.
(a) HENCE hereby grants and LICENSEE hereby accepts a non-transferable, non-
assignable, and non-exclusive right and license to use the Licensed Source
Program solely in LICENSEE's business and in that of its wholly owned
subsidiaries and divisions.
(b) This Agreement shall become effective from the date on which it is accepted
by HENCE and will remain in effect until terminated by HENCE or by LICENSEE as
set forth in this Agreement.
(c) HENCE retains title to the Licensed Source Program, and such additional
software programs and related materials and documentation which HENCE may from
time-to-time make available. HENCE retains all rights and copyrights,
trademarks, service marks, or other proprietary markings.
(d) In using the Licensed Source Program, the LICENSEE shall reproduce and
include thereon HENCE's copyright notice, trademark, service mark, or other
proprietary markings, together with any confidential legends.
2. LICENSEE'S OBLIGATIONS.
(a) LICENSEE may use the Licensed Source Program and all resultant software,
developments, improvements or modifications only in its own businesses and that
of its wholly owned subsidiaries and divisions.
(b) LICENSEE shall perform all installation, training, and maintenance with
respect to the Licensed Source Program.
(c) LICENSEE acknowledges and agrees that the Licensed Source Program, as well
as all resultant software, developments, improvements or modifications, together
with all related materials and documentation, is a trade secret that is to
remain the property of HENCE. LICENSEE shall not disclose any such information
to any third party other than to its wholly owned subsidiaries and divisions
pursuant to the terms of this Agreement. LICENSEE shall instruct all personnel
to keep such information confidential.
<PAGE>
(d) Except for the use by Licensee and its wholly owned subsidiaries and
divisions, LICENSEE shall not copy, or permit anyone else, to copy, in whole or
in part, the Licensed Source Program, including data or program files provided
by HENCE under this Agreement without the expressed written consent of HENCE.
(e) LICENSEE agrees that any disclosure of the Licensed Source Program in
contravention of the terms of this Agreement constitutes a material breach of
this Agreement and shall terminate the license granted by this Agreement.
LICENSEE further agrees that it shall be strictly liable for all damages to
HENCE that result from any such improper disclosure of the Licensed Source
Program.
(f) LICENSEE shall not use the Licensed Source Program, or any resultant
software, developments, improvements or modifications to compete with HENCE.
Any such use shall constitute a material breach of this Agreement, and LICENSEE
shall be strictly liable for all damages to HENCE as a result.
3. CONSIDERATION FOR SOURCE LICENSE.
(a) The consideration to be paid by LICENSEE for the Licensed Source Program is
$250,000.00.
(b) LICENSEE shall pay all sales, use, excise or other taxes that may be
imposed by virtue of this Agreement or upon the use of the Licensed Source
Program.
4. REPLACEMENT COPIES.
HENCE shall send or transmit to LICENSEE, within ten working days after written
notice by LICENSEE, a replacement copy of any Licensed Source Program that is
lost or damaged.
5. WARRANTY
(a) HENCE hereby warrants its ownership and marketing rights to the Licensed
Source Program, and that the Licensed Source Program as delivered by HENCE is
capable operating in conformance with the Licensed Source Program's applicable
description.
(b) EXCEPT AS SPECIFICALLY PROVIDED IN THIS PARAGRAPH, HENCE MAKES NO
WARRANTIES EITHER EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATIONS, THE CONDITION OF THE LICENSED SOURCE PROGRAM, ITS
MERCHANTABILITY, OR ITS FITNESS FOR ANY PARTICULAR USE.
6. INDEMNITY
(a) If notified promptly in writing of any judicial action brought against
LICENSEE based on an allegation that LICENSEE's use of the Licensed Source
Program infringes a United States patent or copyright, any rights of a third
party or constitutes misuse or misappropriation of a trade secret
("Infringement"), HENCE will defend such action at its expense and will pay the
costs and damages awarded in any such action or the costs of settling such
action, provided that HENCE shall have the sole control of the defense of any
such action and all negotiations for its settlement or compromise, In the event
that a final injunction shall be obtained against LICENSEE's use of the Licensed
Source Program by reason of Infringement, or in HENCE's opinion be likely to
become the subject of a claim of Infringement, HENCE may at its option and
expense either: (i) secure for LICENSEE the right to continue to use the
Licensed Source Program as
<PAGE>
contemplated hereunder; or (ii) replace or modify the licensed Program to make
its use hereunder non-infringing while being capable of performing the same
function. If neither option is reasonably available to Hence, then this
Agreement may be terminated at the option of either party hereto without further
obligation or liability.
(b) HENCE shall have no liability for any claim of infringement based on
LICENSEE's use or combination of the Licensed Source Program with products or
data of the type for which the Licensed Source Program was neither designed nor
intended.
7. LIMITATIONS OF LIABILITY
(a) HENCE SHALL NOT BE LIABLE FOR LOSS OF PROFIT, LOSS OF BUSINESS, OR OTHER
FINANCIAL LOSS WHICH MAY BE CAUSED BY, DIRECTLY OR INDIRECTLY, THE INADEQUACY OF
THE LICENSED SOURCE PROGRAM FOR ANY PURPOSE OR USE THEREOF OR BY ANY DEFECT OR
DEFICIENCY THEREIN.
(b) LICENSEE agrees that, except as provided in Paragraph 5 (Warranties),
HENCE's liability for damages, if any, shall not exceed the consideration paid
to HENCE by LICENSEE under this Agreement. No action, regardless of form,
arising out of any transaction under this Agreement may be brought by either
party more than one year after the injured party has knowledge of the occurrence
which gives rise to the cause of such action.
8. TERMINATION
(a) Basis for termination by HENCE: HENCE shall have the right without
obligation or liability to LICENSEE: (i) to terminate this Agreement if LICENSEE
fails to pay the full consideration due under this Agreement; or (ii) if
LICENSEE commits any other breach of this Agreement, and, if remediable, fails
to remedy such a breach within thirty (30) days after written notice by HENCE of
such a breach; or (iii) if LICENSEE ceases business; or (iv) if a petition in
bankruptcy is filed by or against LICENSEE; or (v) if a receiver, trustee in
bankruptcy or other similar officer is appointed to take charge of all or part
of LICENSEE's property. LICENSEE's obligation to pay the full consideration for
the Licensed Source Program shall survive the termination of this Agreement by
HENCE.
(b) Basis for Termination by LICENSEE: LICENSEE shall have the right, without
further obligation or liability to HENCE, except as specified in Paragraph 2
(LICENSEE's Obligations), and Paragraph 8(a) (Termination) to terminate this
Agreement if HENCE commits any breach of this Agreement and fails to remedy such
breach within thirty (30) days after written notice by LICENSEE of such breach.
(c) Disposition of Licensed Source Program on Termination: LICENSEE's
obligation to pay the full consideration shall survive the termination of this
Agreement. Upon the expiration or termination of this Agreement for any reason,
the license and all other rights granted hereunder to LICENSEE shall immediately
cease, and LICENSEE shall immediately: (I) return the Licensed Source Program to
HENCE together with all documentation, notes and other material respecting the
License Program; (ii) purge all copies of the Licensed Source Program or any
portion thereof from all systems and from any computer storage medium or device
on which LICENSEE has placed or permitted others to place the Licensed Source
Program; and (iii) give HENCE a written certification that through its best
efforts and to the best of its knowledge, LICENSEE has complied with all of its
obligations under Paragraph 8(c).
<PAGE>
9. GENERAL PROVISIONS
(a) Unless otherwise provided by this Agreement, any notice required or
permitted by this Agreement to either party shall be deemed to have been duly
given if in writing and delivered personally, sent via facsimile, or mailed by
first-class mail, postage prepaid and addressed to HENCE and LICENSEE at the
address contained in this Agreement or at such other addresses as HENCE and
LICENSEE may give from time to time.
(b) LICENSEE shall not assign this Agreement or its rights hereunder without the
prior written consent of HENCE. Any attempt to make such an assignment without
HENCE's consent shall be void.
(c) HENCE and LICENSEE agree that this Agreement shall be modified only by a
written agreement duly executed by persons authorized to execute agreements on
their behalf.
(d) HENCE and LICENSEE agree that no failure to exercise, and no delay in
exercising any right, power, or privilege under this Agreement on the part of
either party shall operate as a waiver of any right, power, or privilege
hereunder. HENCE and LICENSEE further agree that no single or partial non
exercise of any right, power, or privilege under this Agreement shall preclude
further exercise thereof.
(e) If any legal action or proceeding is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
in addition to any other relief to which that party may be entitled. This
provision shall be construed as applicable to the entire Agreement.
(f) If any or part of this Agreement is found or deemed by a court of competent
jurisdiction to be invalid or unenforceable, that part shall be severable from
the remainder of this Agreement and shall not cause the invalidity of
unenforceability of the remainder of this Agreement.
(g) This Agreement shall be deemed to have been made in, and shall be construed
pursuant to, the laws of the State of California.
(h) HENCE and LICENSEE acknowledge and agree that this Agreement is the complete
and exclusive statement of the mutual understanding of the parties and that it
supersedes and cancels all previous written and oral agreements and
communication relating to the subject matter of this Agreement.
Accepted By:
HENCE
Name: Douglas W. Stout
Title: President
Date: 5/6/93
LICENSEE
Name: Kurt Nielsen
Title: VP R & D
Date: 4/15/93
<PAGE>
EXHIBIT B
<PAGE>
PROGRAM LICENSE AGREEMENT
PERPETUAL LICENSE
This Agreement is made by and between Hence EDP (hereinafter HENCE), 2021 Sperry
Avenue Suite 20, Ventura, California 93003, and the following licensee
(hereinafter CUSTOMER).
Licensee: Business Cards Tomorrow, Inc.
Address: 3000 Northeast 30th Place, Fifth Floor, Fort Lauderdale, FL 33306
1. PROGRAM LICENSE
(a) HENCE hereby grants and Customer hereby accepts a perpetual non-
transferable, non-assignable, and non-exclusive right and license to use the
Licensed Program(s) together with all of the related materials and documentation
set forth in Schedule "A" to this Agreement, and other related materials which
HENCE may from time-to-time make available. Such programs and related materials
are hereinafter collectively referred to as the licensed Program.
(b) The use of the Licensed Program shall be limited to installation and use on
a single Central Processing Unit (CPU) designated by model, serial number and
location, or a Local Area Network of CPU's (LAN) designated by model, serial
number (of network) and location, as set forth in Schedule "B" to this
Agreement. If the Licensed Program will be used on more than one CPU or LAN, an
additional license will be required for each CPU or LAN. The CPU or LAN is
hereinafter called SYSTEM.
(c) CUSTOMER shall have the right to transfer the location of the SYSTEM or
transfer the Licensed Program to a different System from time-to-time, including
temporary transfers due to malfunctions of the designated SYSTEM, provided,
however, that prior written notice shall be furnished to HENCE for any permanent
transfer and that the Licensed Program shall not be installed and used on more
than one SYSTEM at a time.
(d) The rights and license granted CUSTOMER to use the Licensed Program are
restricted solely and exclusively to the CUSTOMER (or a declared subsidiary or
affiliate of CUSTOMER and identified to HENCE as a subsidiary or affiliate in
Schedule "B"), and may not be assigned, sub-licensed or subleased or otherwise
made available for use by third parties. For purposes of this Agreement, use is
defined as copying any portion of the Licensed Program's instructions or data
from storage units or media into a CPU for processing.
(e) CUSTOMER shall have no right to assign this Agreement without prior written
consent of HENCE, except that CUSTOMER shall have the right upon prior written
notice to HENCE to assign without such consent to any company succeeding to all
or substantially all of CUSTOMER's business and assets, provided that such
assignee shall sign an agreement with HENCE acknowledging said assignment and
the acceptance of all terms, conditions, and obligations of this Agreement as
imposed on CUSTOMER herein. In the event of such assignment, CUSTOMER's rights
under this Agreement shall be terminated, and CUSTOMER's obligations under this
Agreement shall be discharged, except for the protection, security and non-
disclosure obligations assumed by CUSTOMER on signing this Agreement.
<PAGE>
2. TERM
This Agreement is effective from the date on which it is accepted by HENCE and
will remain in effect until terminated by HENCE or by CUSTOMER as set forth in
this Agreement.
3. CONSIDERATION
The consideration for this Agreement is $40,000.00, plus installation fees
outlined in Schedule E, payable as follows:
(a) The sum of $20,000.00 in lawful money of the United States of signing of
this Agreement by CUSTOMER.
(b) The sum of $20,000.00 in lawful money of the United States 30 days after
installation and training.
(c) Fees for optional installation and training (Schedule E) will be separately
invoiced and will be payable 30 days after installation and training.
4. INSTALLATION AND TRAINING
(a) The Licensed Program will be delivered 30 to 60 days after execution of
this Agreement by HENCE. If an INSTALLATION and TRAINING option are outlined in
Schedule E, HENCE will install the Licensed Program on CUSTOMER's designated
SYSTEM, and perform any necessary modifications required to permit the full use
thereof by CUSTOMER in accordance with that option. CUSTOMER will provide all
necessary computer time.
(b) INSTALLATION is scheduled for May 1, 1993 and will take place then unless
both parties agree to a difference schedule prior to that date.
(c) After installation, HENCE will conduct training at the CUSTOMER site, on
the operation and use of the Licensed Program.
5. PROGRAMMING SERVICES
(a) HENCE shall, at no cost to CUSTOMER, correct Licensed Program errors
detected by CUSTOMER during the period ended 180 days after the completion of
the installation, provided that the error can be recreated with the latest
release of the Licensed Program.
(b) If HENCE is called upon by CUSTOMER to correct an error, and such error is
found to be caused by CUSTOMER's misuse of the Licensed Program, CUSTOMER
supplied data, SYSTEM or operator failure of any other cause not inherent in the
Licensed Program, HENCE reserves the right to charge CUSTOMER for such service
on a time and materials basis, at HENCE's standard rates then in effect.
6. PERMISSION TO COPY OR MODIFY LICENSED PROGRAM
(a) CUSTOMER shall not copy, or permit anyone else to copy, in whole or part,
the Licensed Program, including data or program files provided by HENCE under
this Agreement without the express written consent of HENCE.
<PAGE>
(b) CUSTOMER agrees that any disclosure of the Licensed Program to a third party
constitutes a material breach of this Agreement and shall terminate the license
granted by this agreement in addition to the other methods of termination set
forth in Paragraph 12 of this Agreement.
(c) CUSTOMER further agrees that it shall be strictly liable for all damages to
HENCE that result from any disclosure of the Licensed Program to any third
party.
(d) CUSTOMER may not modify any portion of the Licensed Program, without express
written consent of HENCE.
7. REPLACEMENT COPIES
HENCE shall send or transmit to CUSTOMER, within 3 working days after notice by
CUSTOMER, a replacement copy of any Licensed Program that is lost or damaged.
The cost for such replacement will be limited to the costs of the storage media,
computer time and deliver or telephone line time.
8. PROTECTION AND SECURITY
(a) The ideas and expressions thereof contained in the Licensed Program are
acknowledged to be proprietary information belonging to HENCE. The Licensed
Program is provided by HENCE to CUSTOMER in confidence and solely for the
private use of CUSTOMER as expressly provided herein.
(b) CUSTOMER shall not provide, disclose, or permit to be disclosed all or any
part of the Licensed Program except as necessary for the authorized use thereof.
(c) CUSTOMER shall adopt and follow reasonable procedures to maintain the
confidentiality of the Licensed Program, and agrees to take appropriate action,
by agreement or otherwise, with its employees or other persons permitted access
to the Licensed Program, and to satisfy its obligations under this Agreement
particularly with respect to use, copying modification, protection and security
of the Licensed Program.
(d) CUSTOMER acknowledges that HENCE retains title of the Licensed Program and
that HENCE shall be free to license the Licensed Program to any other person,
firm, corporation or governmental entity at any time for any purpose whatsoever.
9. WARRANTY
(a) HENCE hereby warrants its ownership and marketing rights to the Licensed
Program, and that the Licensed Program as delivered by HENCE, if properly
installed in accordance with HENCE's instructions, is capable operating in
conformance with the Licensed Program's applicable description as set forth
during training and in Schedule "C" (Options and Enhancements).
(b) EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION, HENCE MAKES NO WARRANTIES
EITHER EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT
LIMITATIONS, THE CONDITION OF THE LICENSED PROGRAM, ITS MERCHANTABILITY, OR ITS
FITNESS FOR ANY PARTICULAR USE.
<PAGE>
10. INDEMNITY
(a) If notified promptly in writing of any judicial action brought against
CUSTOMER based on an allegation that CUSTOMER's use of the Licensed Program
infringes a United States patent or copyright, any rights of a third party or
constitutes misuse or misappropriation of a trade secret ("Infringement"), HENCE
will defend such action at its expense, will keep customer advised of the
proceedings and will pay the costs and damages awarded in any such action or the
costs of settling such action, provided that HENCE shall have the sole control
of the defense of any such action and all negotiations for its settlement or
compromise. In the event that a final injunction shall be obtained against
CUSTOMER's use of the Licensed Program by reason of Infringement, or in HENCE's
opinion be likely to become the subject of a claim of Infringement, HENCE may at
its option and expense either: (i) secure for CUSTOMER the right to continue to
use the Licensed Program as contemplated hereunder; or (ii) replace or modify
the licensed Program to make its use hereunder non-infringing while being
capable of performing the same function. If neither option is reasonably
available to Hence, then this Agreement may be terminated at the option of
either party hereto without further obligation or liability other than as
provided in Section 12 (Termination) hereof except that HENCE shall promptly
refund to CUSTOMER that portion of the License fee payable hereunder, obtained
by multiplying said price by a fraction, the denominator of which is 36 months,
and the numerator of which is 36 months less the number of full months since
execution of this Agreement by HENCE.
(b) Any modification or attempted modification of the Licensed Program by
CUSTOMER or any failure by CUSTOMER to implement any improvements or updates to
the Licensed Program as supplied by HENCE shall void this indemnity unless
CUSTOMER has obtained prior written authorization from HENCE permitting such
modification, attempted modification or failure to implement. HENCE shall have
no liability for any claim of infringement based on CUSTOMER's use or
combination of the Licensed Program with products or data of the type for which
the Licensed Program was neither designed nor intended.
11. LIMITATIONS OF LIABILITY
(a) HENCE SHALL NOT BE LIABLE OR LOSS OF PROFIT, LOSS OF BUSINESS, OR OTHER
FINANCIAL LOSS WHICH MAY BE CAUSED BY, DIRECTLY OR INDIRECTLY, THE INADEQUACY OF
THE LICENSED PROGRAM FOR ANY PURPOSE OR USE THEREOF OR BY ANY DEFECT OR
DEFICIENCY THEREIN.
(b) CUSTOMER agrees that, except as provided in Paragraph 10 (Indemnity),
HENCE's liability for damages, if any, shall not exceed the charges paid to
HENCE by CUSTOMER for use of the Licensed Program under this Agreement. No
action, regardless of form, arising out of any transaction under this Agreement
may be brought by either party more than one year after written notification by
the injured party that he has knowledge of the occurrence which gives rise to
the cause of such action.
12. TERMINATION
(a) Basis for termination by HENCE. HENCE shall have the right without
obligation or liability to CUSTOMER: (i) to terminate this Agreement if CUSTOMER
is delinquent in making payments of any sum due under this Agreement and
continues to be delinquent for a period of sixty (60) days after the last day
payment is due, provided, however, a written notice is given to CUSTOMER by
HENCE of the expiration date of the aforementioned sixty (60) day delinquency
period at least ten (10) days prior to the occurrence of said expiration date;
or (ii) to terminate this Agreement if CUSTOMER commits any other breach of this
Agreement and fails to remedy such a breach within thirty (30) days after
written notice by HENCE of such a breach. CUSTOMER'S obligation to pay all
accrued charges shall survive the termination of this Agreement. HENCE's
termination of this Agreement and repossession of the Licensed Program shall be
without prejudice to any other remedies that HENCE may lawfully have.
<PAGE>
(b) Basis for Termination by CUSTOMER. CUSTOMER shall have the right, without
further obligation or liability to HENCE, except as specified in Section 8
(Protection and Security), and 12(c) (Disposition of Licensed Program on
Termination) to terminate this Agreement if HENCE commits any breach of this
Agreement and fails to remedy such breach within thirty (30) days after written
notice by CUSTOMER of such breach, in which event, HENCE shall reimburse
CUSTOMER in the same manner as for the removal of the Licensed Program due to
infringement under Section 10 (Indemnity).
(c) Disposition of Licensed Program on Termination. Upon the expiration or
termination of this Agreement for any reason, the license and all other rights
granted hereunder to CUSTOMER shall immediately cease, and CUSTOMER shall
immediately: (i) return the Licensed Program to HENCE together with all
documentation, notes and other material respecting the License Program; (ii)
purge all copies of the Licensed Program or any portion thereof from all systems
and from any computer storage medium or device on which CUSTOMER has placed or
permitted others to place the Licensed Program; and (iii) give HENCE a written
certification that through its best efforts and to the best of its knowledge,
CUSTOMER has complied with all of its obligations under Section 12(c).
13. SALES AND USE TAXES
There shall be added to the charges applicable under this Agreement amounts
equal to any taxes, however designated, levied or based on such charges or upon
this Agreement or services rendered in connection with any of the foregoing, or
any taxes or amounts in lieu thereof paid or payable by HENCE in respect of the
foregoing, exclusive of ordinary personal property taxes assessed against or
payable by HENCE and taxes based upon net income.
14. SUBSEQUENT MAINTENANCE
(a) HENCE agrees to provide continuing maintenance and enhancements for an
hourly fee based on HENCE's rates which are outlined in Section "D" (Maintenance
Fees) of this License. HENCE reserves the right to change this fee or rate from
time to time and agrees to give CUSTOMER written notification 90 days before
such an increase.
(b) Response time for maintenance will depend on HENCE's workload of other
clients with similar requirements, but the highest priority will be given to a
situation where CUSTOMER is inoperative because the LICENSED PROGRAM is failing.
15. GENERAL PROVISIONS
(a) This Agreement and all matters relating to it or obligations arising in
respect to it shall be governed by the laws by the State of California. Venue
for all disputes arising from this Agreement shall be Los Angeles, California.
(b) Any waiver of HENCE of any particular breach hereunder by CUSTOMER shall
not constitute a continuing waiver or a waiver of any other breach or default,
and any waiver of CUSTOMER of any particular breach hereunder by HENCE shall not
constitute a continuing waiver or a waiver of any other breach or default.
<PAGE>
(c) Any provisions in this Agreement that may be invalid or illegal in any
State shall fall by itself in that State, but shall in no way be held to
invalidate any of the remaining provisions otherwise not invalid or illegal.
(d) This Agreement expresses the entire understanding of the parties with
reference to the subject matter hereof, and no representations or agreements
modifying or supplementing the terms of the Agreement shall be valid unless in
writing signed by a person authorized to sign agreements on behalf of each
party.
(e) The term "this Agreement" as used herein includes any future written
Agreements, modifications, amendments, or supplements made in accordance
herewith.
(f) The foregoing terms and conditions shall prevail, regardless of any
variations in the terms and conditions of any order submitted by CUSTOMER.
(g) If any legal action or proceeding is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
in addition to any other relief to which that party may be entitled. This
provision shall be construed as applicable to the entire Agreement.
Accepted By:
HENCE
Name: Douglas W. Stout
Title: President
Date: 5/6/93
LICENSEE
Name: Kurt Nielsen
Title: VP R & D
Date: 4/15/93
<PAGE>
SCHEDULE A
LICENSED PROGRAM
The Licensed Programs and related materials to be provided by HENCE to CUSTOMER
under this Agreement are as follows: Standard ACT 2 System, including all
software outlined by the Hence EDP ACT 2 User's Manual.
SCHEDULE B
DESIGNATED SYSTEM FOR LICENSED PROGRAM
1. NAME OF INSTALLATION:
2. LOCATION:
3. SYSTEM MANUFACTURER, TYPE, AND MODEL NUMBER: (To be determined)
4. SYSTEM SERIAL NUMBER: (To be determined)
5. OPERATING SYSTEM: (Novell NetWare, version to be determined)
SCHEDULE C
OPTIONS & ENHANCEMENTS
Standard ACT 2 System, any additional options or enhancements will be determined
and priced during integration.
SCHEDULE D
MAINTENANCE FEES
SCHEDULE E
INSTALLATION & TRAINING
Installation and training in accordance with preceding Agreement between Hence
EDP and BCT.
<PAGE>
EXHIBIT C
<PAGE>
Exhibit 10.6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BCT Delray, Inc. Carney Bank Loan Number 2030357-03
- ------------------------------ ---------------
1395 NW 17th Avenue 1101 N. Congress Avenue Date 5/27/93
- ------------------------------ ----------------------
Delray Bch, FL 33445 Boynton Beach, FL 33426 Maturity Date 5/27/98
- ------------------------------ -------------
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS Loan Amount $ 310,000.00
"I" includes each borrower above, "You" means the lender, its --------------
jointly and severally. successors and assigns. Renewal Of
-------------------------------------------------------------------------------------------------------------------------------
I promise to pay to you, or your order, at your address listed above the
PRINCIPAL, sum of **Three Hundred Ten Thousand and xx/100********************************** Dollars $ 310,000.00
</TABLE>
[X] Single Advance: I have received all of this principal sum. No
additional advances are contemplated under this note.
[_] Multiple Advance: The principal sum shown above is the maximum amount
of principal I can borrow under this note. As of
today I have received the amount of $___________ and
future principal advances are contemplated.
[_] Conditions: The conditions for future advances are ____________________
_______________________________________________________________________
_______________________________________________________________________
[_] Open-End Credit: You and I agree that I may borrow up to the
maximum amount of principal more than one time.
This feature is subject to all other conditions
and expires no later than________________________.
[_] Closed-end Credit: You and I agree that I may borrow up to the
maximum only one time (and subject to all other
conditions).
PURPOSE: The purpose of this loan is Business: Equipment Purchases
-------------------------------------------
INTEREST: I agree to pay interest on the principal balance(s) owing from time to
time as stated in this section. Interest will be calculated on a _______________
360/Actual
-----------------------------------------------
[_] Fixed Rate: I agree to pay interest at the fixed, simple rate of
8.50 % per year.
______
[_] Variable Rate: I agree to pay interest at the initial simple rate
of ________% per year. This rate may change as
stated below.
[_] Index Rate: The future rate will be ________ the following
index rate:___________________________________
______________________________________________
______________________________________________
[_] No Index: The future rate will not be subject to any
internal or external index. It will be entirely
in your control.
[_] Frequency and Timing: The rate on this note may increase
as often as ____________________________________
An increase in the interest rate will take
effect _________________________________________
[_] Limitations: The rate on this note will not at any time
(and no matter what happens to any index rate
used) go above or below these limits.
[_] Maximum Rate: The rate will not go above 25%
---------
[_] Minimum Rate: The rate will not go below _________
POST-MATURITY RATE: I agree to pay interest on the unpaid balance owing after
maturity and until paid in full as stated below.
[_] on the same fixed or variable rate basis in effect before maturity
(as indicated above).
[_] at a rate equal to 25%
-------------.
[X] ADDITIONAL CHARGES: In addition to interest, I [_] have paid [X] agree to
pay the following additional charges ___________________
See Settlement Statement
--------------------------------------------------------
PAYMENTS: I agree to pay this note as follows:
[_] Interest: I agree to pay accrued interest _____________________________
_____________________________________________________________
[_] Principal: I agree to pay the principal ______________________________
____________________________________________________________
[X] Installments: I agree to pay this note in 60 payments. The first
----
payment will be in the amount of $ 4929.39 and will
-----------
be due on June 27, 1993 . A payment of $ 4929.39
----------------- -----------
will be due on the 27th day of each month thereafter.
------ -------
The final payment of the entire unpaid balance of
principal interest will be due May 27, 1988 .
--------------
[_] Effect of Variable Rate: An increase in the interest rate will have the
following effect on the payments:
[_] The amount of each scheduled payment will be increased. [_] The
amount of the final payment will be increased.
[_] ___________________________________________________________________
ADDITIONAL TERMS:
________________________________________________________________________________
SECURITY: I give you a security interest in the following:
(1) any property of mine; whether I own it now or in the future, which is
in your possession (This includes, but is not limited to, property I
give you for safekeeping, collection, or exchange, and all dividends
and distributions from the property.);
(2) the property described below, together with all parts, accessories,
repairs, improvements and accessions to the property and all proceeds
and products from the property.
[X] Inventory: All Inventory wherover it is located which I
own now or may own in the future, which I will
sell or lease, or which has been or will be
supplied under contracts of service, or which
are raw materials, work in process, or
materials used or consumed in my business.
[X] Equipment: All equipment which I own now or may own in the
future including, but not limited to, all
machinery, vehicles, furniture, fixtures,
manufacturing equipment, farm machinery and
equipment, show equipment, office and
recordkeeping equipment, and parts and tools.
Any equipment described in a list or schedule
which I give to you will also be included in
the secured property, but such a list is not
necessary for a valid security interest in my
equipment.
[_] Farm Products: All farm products which I own now or may
own in the future including, but limited
to:
(a) all poultry and livestock and their young,
along with their products and produce.
(b) all crops, annual or perennial, and all
products of the crops; and
(c) all feed, seed, fertilizer, medicines, and
other supplies used or produced in my
farming operations.
[X] Accounts, Instruments, Documents, Chattel Paper and Other
Rights to Payment: All rights I have I have now or may
have in the future payment of money including,
but not limited to:
(a) payment for goods sold or leased or for
services rendered, whether or not I have
earned such payment by performance; and
(b) rights to payment arising out of all
present and future debt instruments,
chattel paper and loans and obligations
receivable.
The above include any rights and interests
(including all liens and security interests)
which I may have by law or agreement against
any account debtor or obligor of mine.
[X] General Intangibles: All general intangibles I own now or
may own in the future including, but limited
to, tax refunds, applications for patents,
patents copyrights, trademarks, trade secrets,
good will, trade names, customer lists, permits
and franchises, and the right to use my name.
[_] Additional Property: Described as follows:
Description of real estate if the above property is crops, timber, minerals
(Including oil or gas) or fixtures:_____________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Name of record owner, if not me:________________________________________________
[_] If checked, this security agreement should be filed in the real estate
records.
- --------------------------------------------------------------------------------
Any person who signs within this box does so to give you a security interest in
the property described above. This person does not promise to pay the note.
Signed Date
- --------------------------------------------------------------------------------
I will use the property listed as security above for: [_] farming operations
[X] business purposes [_] ______________________________________________________
[X] If checked, this note is secured by a separate Security Agreement
-----------------------------
________________________________________________________________________________
dated May 27, 1993. (Failure to list a prior security agreement here does not
--------------
mean that the agreement does not secure this note.)
SIGNATURES: I AGREE TO THE TERMS SET OUT ON THE FRONT AND BACK OF THIS
AGREEMENT, I have received a copy of this document on today's date.
BCT Delray, Inc.
X ______________________________________________________________________________
Peter Gaughn, President
--------------------------------------------------------------------------
X ______________________________________________________________________________
--------------------------------------------------------------------------
X ______________________________________________________________________________
--------------------------------------------------------------------------
<PAGE>
SECURITY AGREEMENT
DATE May 27, 1993
--------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEBTOR BCT Delray Inc SECURED Carney Bank
PARTY
- ----------------------------------------------------------------------------------------
BUSINESS
OR
RESIDENCE 1395 NW 17th Avenue ADDRESS 11O1 N Congress Avenue
ADDRESS
- ----------------------------------------------------------------------------------------
CITY CITY
STATE & Delay Beach, FL 33445 STATE & Boynton Beach, FL 33426
ZIP CODE ZIP CODE
- ----------------------------------------------------------------------------------------
</TABLE>
1. SECURITY INTEREST AND COLLATERAL. To secure the payment and performance of
each and every debt,liability and obligation of every type and description which
Debtor may now or at any time hereafter owe to Secured Party (whether such debt,
liability or obligation now exists or is hereafter created or incurred, and
whether it is or may be direct or indirect, due to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or joint, several
or joint and several; all such debts, liabilities and obligations being herein
collectively referred to as the "Obligations"), Debtor hereby grants Secured
party a security interest (herein called the "Security Interest") in the
follwing property (herein called the "Collateral") (check applicable boxes and
complete information):
(a) INVENTORY:
[X] All inventory of Debtor, whether now owned or hereafter acquired and
wherever located.
(b) EQUIPMENT, FARM PRODUCTS AND CONSUMER GOODS:
[_] All equipment of Debtor, whether now owned or hereafter acquired,
including but not limited to all present and future machinery,
vehicles, furniture, fixtures, manufacturing equipment, farm machinery
and equipment,shop equipment, office and recordkeeping equipment,
parts and tools, and the goods described in any equipment schedule or
list herewith or hereafter furnished to Secured Party by Debtor (but
no such schedule or list need be furnished in order for the security
interest granted herein to be valid as to all of Debtor's equipment).
[_] All farm products of Debtor, whether now owned or hereafter acquired,
including but not limited to (I) all poultry and livestock and their
young, products thereof and produce thereof, (ii) all crops, whether
annual or perennial, and the products thereof, and (iii) all feed,
seed, fertilizer, medicines and other supplies used or produced by
Debtor in farming operations. The real estate concerned with the
above described crops growing or to be grown is:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
and the name of the record owner is:___________________________________
[_] The following goods or types of goods:_________________________________
_______________________________________________________________________
_______________________________________________________________________
(c) ACCOUNTS AND OTHER RIGHTS TO PAYMENTS:
[X] Each and every right of Debtor to the payment of money, whether such
right to payment arises out of a sale, lease or other disposition of
goods or other property by Debtor, out of a rendering of services by
Debtor, out of a loan by Debtor, out of the overpayment of taxes or
other liabilities of Debtor, or otherwise arises under any contract
or agreement, whether such right to payment is or is already earned by
performance, and howsoever such right to payment may be evidenced,
together with all other rights and interests (including all liens
sercurity interests) which Debtor may at any time have by law or
agreement against any account debtor or other obligor obligated to make
any such payment or agianst any of the property of such account debtor
or other obligor; all including but not limited to all present and
future debt instruments, chattel papers, accounts, and loans and
obligations receivable.
[_] _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(d) GENERAL INTANGIBLES
[X] All general intangibles of Debtor, whether now owned or hereafter
acquired, including, but not limited to, applications for patents,
copyrights, trademarks, trade secrets, good will, tradenames, customer
lists, permits and franchises, the right to use Debtor's name, and tax
refunds.
together with all substitutions and replacements for and products of any of the
foregoing property and, in the case of all tangible Collateral, together with
all accessions and, except in the case of consumer goods, together with (I) all
accessories, attachments, parts, equipment and repairs now or hereafter attached
or affixed to be used in connection with any such goods, and (ii) all warehouse
receipts, bills of lading and other documents of title now hereafter covering
such goods.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents, warrants and
agrees that:
(a) Debtor is [_] an individual, [_] a partnership, [X] a corporation and, if
Debtor is an individual, the Debtor's residence is at the address of
Debtor shown at the beginning of this Agreement.
(b) The Collateral will be used primarily for [_] personal, family or
household purposes; [_] farming operations; [X] business purposes.
(c) [_] If any part or all of the tangible Collateral will become so related to
particular real estate as to become a fixture, the real estate concerned
is:________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
And the name of the record owner is:_______________________________________
(d) Debtor's chief executive office is located at______________________________
or, if left blank, at the address of Debtor shown at the beginning of
Agreement.
___________________________________________________________________________
THIS AGREEMENT CONTAINS ADDITIONAL PROVISIONS SET FORTH ON PAGE 2 OF THIS
DOCUMENT, ALL OF WHICH ARE MADE A PART HEREOF.
Carney Bank BCT Delray, Inc.
- -------------------------------------- ---------------------------------------
Secured Party's Name Debtor's Name
By Thomas McKenna By Peter Gaughn
------------------------------------ -------------------------------------
Title: Senior Vice President Title: President
-------------------------------- ---------------------------------
By ____________________________________
Title:_________________________________
<PAGE>
EXHIBIT 10.7
<PAGE>
PURCHASE AND SALE AGREEMENT
This Agreement, made and entered into this date, by and between David Falk,
hereinafter referred to as ("Seller"), and Business Cards Tomorrow, Inc., a
Delaware corporation, hereinafter referred to as ("Purchaser").
W I T N E S S E T H:
Whereas, the Seller owns a Business Cards Tomorrow Franchise business located at
1545 Donna Road, West Palm Beach, Florida 33409, which the Purchaser is
desirous of purchasing.
Now Therefore, in consideration of the mutual benefits accruing to the
respective parties under the provisions of this Agreement, it is hereby agreed
as follows:
1. SALE OF THE BUSINESS: The Seller shall sell and the Purchaser shall
purchase, free from all encumbrances, except as hereinafter set forth, the
assets of the above mentioned Business Cards Tomorrow Franchise business, as per
the attached inventory.
2. PURCHASE PRICE: The total purchase price is: $261,689.00 payable as
follows:
<TABLE>
<S> <C>
a) Cash at closing,
plus or minus incidental prorations 50,000.00
b) Purchase money mortgage/security agreement on the
assets being sold in the sum of: 190,000.00
(as per e) below)
c) Buyer to assume existing leases and notes 21,689.00
$261,689.00
</TABLE>
d) Seller to take back a purchase money mortgage/security agreement in the sum
of $190,000.00, at eight (8%) percent interest, payable in consecutive equal
monthly installments of $3,852.52 for a period of five (5) years. Purchaser to
pay for documentary stamps and recording costs of mortgage. (See addendum
page.)
e) Purchaser to pay for the inventory on hand at time of closing; at a mutually
agreeable price.
f) Purchase is purchasing the equipment, as per the attached list, in "AS IS"
condition.
3. CONTINGENCIES:
a) Consent of the Lessor to the assignment of the lease to the Purchaser, in
writing, which lease is attached hereto.
b) Subject to approval of this agreement by the Board of Directors of BCT
International, Inc.
c) See Addendum Page
4. REPRESENTATIONS BY SELLER: The Seller represents and warrants in connection
with the operation of the business being sold that:
a) The business is not a party to any lawsuits, claims or proceedings in
connection with the business and Seller will hold harmless Purchaser from any
claims which arise from acts or conditions committed or permitted by Seller
prior to closing.
b) That it has good and marketable title, free and clear of all liens and
encumbrances except for those which Purchaser is taking subject to or assuming.
<PAGE>
ADDENDUM PAGE TO PURCHASE AND SALE AGREEMENT
DAVID FALK, AND BUSINESS CARDS TOMORROW, INC.
Dated: April, 1993
Paragraph 2. d), add:
The Security Agreement shall secure all of the items set out on the attached
Equipment Inventory and Assets list, and replacements thereof. In the event
that any of these items are to be replaced, the Seller will subordinate for the
Purchaser to any institutional lender. In the event that Purchaser wants to
sell off any of the equipment, consent must be obtained from Seller, which will
not be unreasonably withheld. Further, consent will not be unreasonably
withheld by Purchaser for items Seller wants to retain.
Paragraph 3. c)
Subject to David and Barbara Falk being accepted to BCT's HMO or PPO Health Plan
or any substitute plan. The Falks will pay the cost of insurance plus two (2)
percent for administrative fees. This coverage cannot be canceled in the first
year without the Falk's consent. During the remaining term of this Agreement,
the Falks will be given the same right and guarantees as any other employee at
BCT International, Inc. with regard to its health plan.
Paragraph 8. a) 1)
Directly or indirectly engage in, solicit or accept any wholesale printing of
business cards, social invitations, announcements, stationery, rubber stamps,
ink supplies to any person, customers of seller or give any other person,
corporation, partnership or other entity the information, right, power or
authority to do the same, and has herefore been conduced by Seller anywhere in
Indian River, Broward or Palm Beach Counties.
Paragraph 8. a) 4): Delete
Further, BCT International, Inc. agrees to pay no more than $4,629.00 for
accrued vacation owed to BCT #2's employees at time of closing.
<PAGE>
c) That there are no violations of any municipal, state or federal laws or
ordinances to the best of Seller's knowledge in connection with the assets or
their use.
d) Seller agrees that it will conduct the business from the date of this
Agreement to the date of closing in substantially the same manner as it has been
conducted in the past and in accordance with all the applicable laws and
regulations, and that it has not entered into any transactions other than in the
ordinary course of business.
e) All equipment, fixtures, furnishings and machinery being sold pursuant to
this Agreement, shall be in good working condition at the time of closing.
f) Seller acknowledges that there are no brokerage fees due.
g) Seller agrees to continue to operate the plant, doing business as usual,
until the transfer of assets herein.
h) Seller represents that all equipment being sold herewith are free and clear,
with no leases or notes.
5. SELLER'S RESPONSIBILITIES: At the closing, Seller shall deliver to the
Purchaser, the following instruments and documents:
a) Bill of Sale. This Bill of Sale to be delivered at the closing will
transfer all assets herein being sold free from all debts and encumbrances,
except for those which Purchaser is taking subject to or assuming, and will
contain the usual warranties and affidavit of title.
b) Instrument of Assignment: The Assignment to be delivered at the closing
will transfer Seller's right to all transferable insurance policies, leases,
contracts, licenses and goodwill.
c) Seller's Affidavit of Creditors of the Business.
d) Seller's Affidavit that all federal withholding and employment taxes, state
sales and use taxes and any other taxes due and owing to any of the Business's
employees, or any other debts due and owing by the Business, have been paid
through the date of the closing of the within transaction.
6. Seller agrees to remain on call for the Business for a term of up to four
(4) weeks, after the closing, at Purchaser's Option, to assist and facilitate
the smooth and efficient transfer of the Business. Seller shall receive
7. BULK SALES: The parties shall comply with all applicable provisions of the
Uniform Commercial Code relating to bulk transfers as adopted in the State of
Florida, inclusive of the following:
a) Seller shall furnish the Purchaser, at least fifteen (15) days prior to the
date of closing, with a list of existing creditors. Such list shall be signed
and sworn to be the Seller and shall contain the names and business addresses of
all of the Seller's creditors, with the amount, when known, and also the names
of all persons who are known to the Seller to assert claims against it even
though such claims are disputed.
b) The Seller and the Purchaser shall prepare a schedule of all items of
property being transferred in sufficient detail to identify such items.
<PAGE>
8. COVENANT NOT TO COMPETE:
a) The Seller, DAVID FALK, does hereby covenant and agree that upon closing of
this transaction, he will not, participant in a partnership, sole
proprietorship, corporation or other entity, or as an operator, investor,
shareholder, partner, director, employee, consultant, manager, advisor or in any
other capacity whatsoever, either directly or indirectly, for a term of five (5)
years from the date of closing, do any other following acts:
1) (See Addendum Page)
2) Directly or indirectly divulge, communicate, use to the detriment of
Purchaser, or for the benefit of any other person or persons, or misuse in any
way, any confidential information or trade secrets relating to the Business,
including, but not limited to, personnel information, secret processes, know-
how, customer lists, recipes, formulas, or other technical data. Covenantors
acknowledge and agree that any information or data they have acquired regarding
any of these matters or items were received in confidence.
3) Directly or indirectly induce, request or advise any present employee of
Seller or Purchaser to lease the employ of such parties.
4) (See Addendum Page)
5) Directly or indirectly request or advise any present or future customers or
suppliers of the Business heretofore operated by Seller to withdraw, curtail or
cancel any of their business or other relationships with Purchaser.
b) The parties hereto acknowledge that the restrictions contained herein are
reasonable restraints upon Seller and further acknowledge that any violation of
the terms of this covenant not to compete could have a substantial detrimental
effect on Purchaser's Business and its ability to meet its obligations both as
set forth herein and as otherwise incurred. Seller has carefully considered the
nature and extent of the restrictions imposed upon him and the rights of
remedies conferred upon him under the provisions of this covenant not to
compete, and hereby acknowledges and agrees that the same are reasonable in time
and territory , are designated to eliminate competition which would otherwise be
unfair to Purchaser, do not stifle Sellers' sole means of support, are fully
required to protect the legitimate interest of Purchaser and do not confer a
benefit upon Purchaser disproportionate to the detriment of Seller.
c) Seller agrees that any damages resulting from violation by him of any of the
covenants contained in this Paragraph will be impossible to ascertain and for
that reason, agree that Purchaser shall be entitled to an injunction without the
necessity of posting bond, from any court of competent jurisdiction restraining
any violation of any or all of said covenant either directly or indirectly and
such right to injunction shall be cumulative and in addition to whatever other
remedies Purchaser may have. Seller acknowledges that this provision has been
called to his attention and he understands it is a material covenant and that
without his agreement to these provisions this Agreement and all documents
executed pursuant hereto would not have been entered into be Purchaser. It is
hereby further recognized and agreed that in the event of any litigation at law
or in equity with respect to any breach of this covenant not to compete, the
Purchaser shall be entitled to recover any and all reasonable attorneys' fees
and other costs of litigation, through appeals, from Seller.
d) If any portion of the covenants contained in this Paragraph is held to be
unreasonable, arbitrary or against public policy, the covenants herein shall be
considered severable and shall be divisible both as to time and as to
geographical areas; and each month of the specified period shall be deemed to be
a separate period of time.
<PAGE>
In the event any court determines the specified time period or geographical
areas to be unreasonable, arbitrary or against public policy, a lesser time
period or geographical area and not against the public policy may be enforced
against Seller.
e) The existence of any claim or cause of action by Seller against the
Purchaser, whether predicted upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Purchaser of the foregoing
convenants, but shall be litigated separately.
f) Nothing hereby contained shall be construed or interpreted as restricting
Seller from engaging in the retail printing business, including the sale, but
not the production, of thermography work.
9. RISK OF LOSS: All risk of loss up to the time of closing shall be borne by
the Seller. If any loss or damage, whether due to fire, storm, flood, riot,
explosion or other casualty, exceeds TWENTY (20%) PERCENT of the purchase price,
the Purchaser shall have the option to cancel this Agreement by giving notice to
the Seller. Upon such cancellation, the Purchaser shall be entitled to the
return of all monies paid or deposited pursuant to this Agreement and all
obligations under this Agreement shall thereupon terminate.
10. CLOSING. The closing of this transaction shall be held in the offices of
BCT International, Inc. on or about May 15, 1993. Each of the parties hereto
shall execute and deliver at closing all instruments and documents reasonably
required to effectuate the terms and conditions of this Agreement.
11. PRORATIONS, DEPOSITS AND EXPENSES OF SALE. The purchase price shall be
adjusted for prorations of rent, insurance, utilities, licenses, vacation pay,
bonuses, and similar items being transferred to the Purchaser, which amounts
shall be paid by Seller. Transferable deposits and the deposit on the Lease to
the premises shall be credited to the Seller. The Seller shall have the right
to the refund of any non-transferable deposits and Purchaser shall be
responsible for making his own deposits therefore.
12. TAKING OF INVENTORIES: On the date prior to the closing date,
representatives of Seller and Purchaser shall jointly count the inventory for
the purpose of confirming that said inventory is in accordance with the
requirements of the representations of Seller as set forth in this Agreement. In
valuing the inventory, the Seller's current cost for the purchase of said items
shall be utilized for determining the value less any applicable discounts. Any
business conducted during or subsequent to the time such physical inventory is
taken, shall be for the benefit of Purchaser.
13. ACCOUNTS RECEIVABLE: Purchaser shall act as Seller's agent in receiving
accounts due Seller, if Seller shall furnish to Purchaser at closing a complete
list of such receivables and a request in writing at closing that Purchaser so
act. Purchaser's only duty with regard to such accounts receivables shall be to
include such receivables in its weekly and monthly statements sent to its
customers and to remit, on the first and third Fridays of the month to Seller,
any monies received at the Business premises of Purchaser on account of such
receivables. It is agreed between Purchaser and Seller that cash receipts are
to be applied to invoices as designated by the remitter and, where no
designation is made, the receipt is to be applied to the oldest open invoice(s)
for the applicable customer, unless it can be reasonably determined that said
payment was not to be applied to the oldest open invoice but to a more current
invoice. Seller shall retain the right to contact customers, as necessary, to
collect amounts owing to the Seller and may use agents and pursue legal action
as may be required. Purchaser shall neither settle nor compromise any of the
accounts receivable due the Seller. Purchaser shall be under no obligation to
bring any legal action against any customer of Seller who does not make timely
payments to purchaser of any of such accounts receivable due Seller.
<PAGE>
14. ATTORNEY'S FEES AND COSTS: In connection with any litigation arising out
of this Agreement, the prevailing party shall be entitled to recover all costs
incurred, including reasonable attorneys' fees, inclusive of those costs and
fees or any appellate action.
15. DEFAULT BY PURCHASER: If Purchaser fails to perform any of the covenants
of this Agreement, all monies paid pursuant to this Agreement by the Purchaser
as aforesaid shall be retained by or for the account of Seller, as consideration
for the execution of this Agreement and as agreed liquidated damages in full
settlement of any and all claims for damages.
16. DEFAULT BY SELLER: If Seller fails to perform any of covenants of this
Agreement, the Purchaser shall have the right of enforcing this Agreement by
specific performance or at his option, the right of recovery of all monies paid,
without thereby waiving any action for damages resulting from Seller's breach.
17. BINDING EFFECT: This Agreement shall be binding upon and inure to the
benefit of the heirs, administrators, executors, successors, and assigns of each
of the parties hereto.
18. INVALIDITY: If any terms or provisions of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such terms or provision to the persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
19. GOVERNING LAW: The terms and provisions of this Agreement shall be
governed by the laws of the State of Florida.
20. CAPTIONS: Captions and headings to the various paragraphs of this
Agreement are for convenience only, and carry no legal effect and shall in no
way effect the interpretation or construction of the paragraphs of this
Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and seals this 12th day
of April, 1993.
Witnessed by:
Cynthia Falk
David Falk Seller
BUSINESS CARDS TOMORROW, INC.,
a Delaware corporation
BY: Peter Gaughn
President
<PAGE>
Equipment Inventory and Assets
Front Office:
1 utility shelf
1 desk - 54" x 24"
2 desks - 48" x 30"
1 desk - 60" x 30"
1 desk - 60" x 30" with 43" x 18" return
1 Minolta copier - Model 450Z with cabinet
1 Wyse 286 computer with monitor and Okidata 320 printer
1 printer stand
1 4-drawer lateral file cabinet
2 72-bin shelves
3 bookcases
1 utility table
5 secretarial chairs
Owners Office (front):
1 couch
1 60" x 30" desk
1 teak credenza
1 4-drawer file cabinet
1 executive chair
Pre-Press Department:
3 computer/terminal stands
2 AST 386 computers with Designview monitors
1 Dest scanner
1 QMS 815 printer
1 30" x 60" desk (cut down to computer height)
1 Sharp SF8300 compier with cabinet
1 48" x 30" tables
2 72" x 30" tables
2 light tables
1 table waxer
4 secretarial chairs
2 draftsman chairs
1 Model 4000 Ps 1 stat camera
Proofreading Room:
1 72" x 30" table
2 chairs
1 under-counter refrigerator
1 coffeemaker
<PAGE>
Press Room:
1 96" x 30" table
3 60" x 24" workbenches
3 AB Dick 360 presses
2 T-51 2-color heads
2 Therm-O-type Thermographers
1 Embossograph Thermographer
1 Itek 615S Platemaker
1 time clock with card rack
2 stack wagons
19 36" x 18" shelves
7 48" x 24" shelves
1 102" x 25" industrial shelving
1 Therm-O-Type SL 12 slitter
1 Therm-O-Type Quad 12 slitter/scorer
1 Shrink Wrap System
4 48" x 24" work tables/cabinets
2 24" x 24" work tables/cabinets
1 metal supply cabinet
1 Seypa 92-4 (Royal Zenith) 36" paper cutter
Stamp Dept:
1 60" x 24" workbench
4 36" x 18" shelves
1 48" x 24" worktables - cabinet
1 72" x 30" table
1 Merigraph stamp unit
1 Craftsman drill press
1 Craftsman 12" band saw
1 washout sink
Ink Dept./Storage area:
8 36" x 18" shelves
1 102" x 25" industrial shelves
1 ink table
1 electronic scale
1 calculator (Sharp QS 1604)
1 60" x 30" desk
1 desk chair
4 misc. chairs
<PAGE>
Back Offices:
2 4-drawer file cabinets
2 48" x 30" desks
1 Secretarial desk with return
1 286 computer with monitor
1 72" x 36" desk
1 executive chair
Merlin Telephone System:
7 10-button phones
3 34-button phones
3 misc. calculators
Franchise Agreement of May 27, 1975 as amended September 10, 1976
Telephone Numbers
<PAGE>
EXHIBIT 10.8
<PAGE>
PURCHASE AND SALE AGREEMENT
This Agreement, made and entered into this date, by and between BRAMOW
ENTERPRISES, INC., a Florida corporation, hereinafter referred to as ("Seller"),
and Business Cards Tomorrow, Inc., a Delaware corporation, hereinafter referred
to as ("Purchaser").
W I T N E S S E T H:
Whereas, the Seller owns a Business Cards Tomorrow Franchise business located at
3023 N.W. 60th Street, Fort Lauderdale, Florida, which the Purchaser is desirous
of purchasing.
Now Therefore, in consideration of the mutual benefits accruing to the
respective parties under the provisions of this Agreement, it is hereby agreed
as follows:
1. SALE OF THE BUSINESS: The Seller shall sell and the Purchaser shall
purchase, free from all encumbrances, except as hereinafter set forth, the
assets of the above mentioned Business Cards Tomorrow Franchise business, as per
the attached inventory.
2. PURCHASE PRICE: The total purchase price is: $197,955.00 payable as
follows:
<TABLE>
<S> <C>
a) Down payment to be held in escrow and released at 50,000.00
closing by: David Feldman, P.A., plus or minus
incidental prorations
b) Purchase money mortgage/security agreement on the
assets being sold in the sum of: 147,955.00
(as per e) below)
$197.955.00
c) Purchaser to issue credit for BCT catalogs recently purchased by the Seller. 170 catalogs.
d) Seller to pay a $4,000.00 transfer fee, payable as follows:
Cash at closing $ 2,202.00
Security deposit refund from landlord $ 1,798.00
</TABLE>
If the security deposit is less, than the month's Note payment, then same with
be adjusted accordingly.
e) Seller to take back a purchase money mortgage/security agreement in the sum
of $147,955.00, at eight (8%) percent interest, payable in consecutive equal
monthly installments of $3,000.00 for a period of five (5) years. Purchaser to
pay for documentary stamps and recording costs of mortgage. Payment due 1st of
month, 7 day grace period. Late penalty $100.
f) Purchaser to pay for the inventory on hand at time of closing; at a mutually
agreeable price.
g) Purchase is purchasing the equipment, as per the attached list, in "AS IS"
condition.
3. CONTINGENCIES:
a) Consent of the Lessor to the assignment of the lease to the Purchaser, in
writing, which lease is attached hereto.
b) Subject to approval of this agreement by the Board of Directors of BCT
International, Inc.
<PAGE>
4. REPRESENTATIONS BY SELLER: The Seller represents and warrants in connection
with the operation of the business being sold that:
a) The business is not a party to any lawsuits, claims or proceedings in
connection with the business and Seller will hold harmless Purchaser from any
claims which arise from acts or conditions committed or permitted by Seller
prior to closing.
b) That it has good and marketable title, free and clear of all liens and
encumbrances except for those which Purchaser is taking subject to or assuming.
c) That there are no violations of any municipal, state or federal laws or
ordinances to the best of Seller's knowledge in connection with the assets or
their use.
d) Seller agrees that it will conduct the business from the date of this
Agreement to the date of closing in substantially the same manner as it has been
conducted in the past and in accordance with all the applicable laws and
regulations, and that it has not entered into any transactions other than in the
ordinary course of business.
e) All equipment, fixtures, furnishings and machinery being sold pursuant to
this Agreement, shall be in good working condition at the time of closing.
f) Seller acknowledges that there are no brokerage fees due.
g) Seller agrees to continue to operate the plant, doing business as usual,
until the transfer of assets herein.
h) Seller represents that all equipment being sold herewith are free and clear,
with no leases or notes.
5. SELLER'S RESPONSIBILITIES: At the closing, Seller shall deliver to the
Purchaser, the following instruments and documents:
a) Bill of Sale. This Bill of Sale to be delivered at the closing will
transfer all assets herein being sold free from all debts and encumbrances,
except for those which Purchaser is taking subject to or assuming, and will
contain the usual warranties and affidavit of title.
b) Instrument of Assignment: The Assignment to be delivered at the closing
will transfer Seller's right to all transferable insurance policies, leases,
contracts, licenses and goodwill.
c) Seller's Affidavit of Creditors of the Business.
d) Seller's Affidavit that all federal withholding and employment taxes, state
sales and use taxes and any other taxes due and owing to any of the Business's
employees, or any other debts due and owing by the Business, have been paid
through the date of the closing of the within transaction.
6. Seller agrees to remain at the Business for a term of up to ( ) weeks, after
the closing, at Purchaser's Option, to assist and facilitate the smooth and
efficient transfer of the Business. Seller shall receive
<PAGE>
7. BULK SALES: The parties shall comply with all applicable provisions of the
Uniform Commercial Code relating to bulk transfers as adopted in the State of
Florida, inclusive of the following:
a) Seller shall furnish the Purchaser, at least fifteen (15) days prior to the
date of closing, with a list of existing creditors. Such list shall be signed
and sworn to be the Seller and shall contain the names and business addresses of
all of the Seller's creditors, with the amount, when known, and also the names
of all persons who are known to the Seller to assert claims against it even
though such claims are disputed.
b) The Seller and the Purchaser shall prepare a schedule of all items of
property being transferred in sufficient detail to identify such items.
8. COVENANT NOT TO COMPETE:
a) The Seller, Seller's Stockholder, ARNOLD BRAMOW, STANLEY BRAMOW, and WILLIAM
HOFFMAN, individually, and Guarantors, hereinafter sometimes collectively
referred to as ("Covenantors" or individually as "Covenantor") do hereby
covenant and agree that upon closing of this transaction, they will not,
individually or collectively, as a participant in a partnership, sole
proprietorship, corporation or other entity, or as an operator, investor,
shareholder, partner, director, employee, consultant, manager, advisor or in any
other capacity whatsoever, either directly or indirectly, for a term of seven
(7) years from the date of closing, do any other following acts:
1) Directly or indirectly engage in the wholesale or retain thermography
printing business or in the same or similar business as is presently and has
heretofore been conducted by Seller anywhere in Dade, Broward or Palm Beach
Counties.
2) Directly or indirectly divulge, communicate, use to the detriment of
Purchaser, or for the benefit of any other person or persons, or misuse in any
way, any confidential information or trade secrets relating to the Business,
including, but not limited to, personnel information, secret processes, know-
how, customer lists, recipes, formulas, or other technical data. Covenantors
acknowledge and agree that any information or data they have acquired regarding
any of these matters or items were received in confidence.
3) Directly or indirectly induce, request or advise any present employee of
Seller or Purchaser to lease the employ of such parties.
4) Directly or indirectly engage in, solicit or accept any business from any
present customer of Seller or give any other person, corporation, partnership or
other entity the information, right, power or authority to do same.
5) Directly or indirectly request or advise any present or future customers or
suppliers of the Business heretofore operated by Seller to withdraw, curtail or
cancel any of their business or other relationships with Purchaser.
b) The parties hereto acknowledge that the restrictions contained herein are
reasonable restraints upon Covenantors and further acknowledge that any
violation of the terms of this covenant not to compete could have a substantial
detrimental effect of Purchaser's Business and its ability to meet its
obligations both as set forth herein and as otherwise incurred. Covenantors have
carefully considered the nature and extent of the restrictions imposed upon him
and the rights of remedies conferred upon him under the provisions of this
covenant not to compete, and hereby acknowledges and agrees that the same are
reasonable in time and
<PAGE>
territory, are designated to eliminate competition which would otherwise be
unfair to Purchaser, do not stifle Covenantors' sole means of support, are fully
required to protect the legitimate interest of Purchaser and do not confer a
benefit upon Purchaser disproportionate to the detriment of Covenantors.
c) Covenantors, jointly and severally, agree that any damages resulting from
violation by him of any of the covenants contained in this Paragraph will be
impossible to ascertain and for that reason, agree that Purchaser shall be
entitled to an injunction without the necessity of posting bond, from any court
of competent jurisdiction restraining any violation of any or all of said
covenant either directly or indirectly and such right to injunction shall be
cumulative and in addition to whatever other remedies Purchaser may have.
Covenantors acknowledge that this provision has been called to their attention
and they understands it is a material covenant and that without their agreement
to these provisions this Agreement and all documents executed pursuant hereto
would not have been entered into by Purchaser. It is hereby further recognized
and agreed that in the event of any litigation at law or in equity with respect
to any breach of this covenant not to compete, the Purchaser shall be entitled
to recover any and all reasonable attorneys' fees and other costs of litigation,
through appeals, jointly and severally, from Covenantors.
d) If any portion of the covenants contained in this Paragraph is held to be
unreasonable, arbitrary or against public policy, the covenants herein shall be
considered severable and shall be divisible both as to time and as to
geographical areas; and each month of the specified period shall be deemed to be
a separate period of time. In the event any court determines the specified time
period or geographical areas to be unreasonable, arbitrary or against public
policy, a lesser time period or geographical area and not against the public
policy may be enforced against Covenantors.
e) The existence of any claim or cause of action by Covenantor against the
Purchaser, whether predicted upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Purchaser of the foregoing
convenants, but shall be litigated separately.
f) Nothing hereby contained shall be construed or interpreted as restricting
Seller from engaging in the retail printing business, including the sale, but
not the production, of thermography work.
9. RISK OF LOSS: All risk of loss up to the time of closing shall be borne by
the Seller. If any loss or damage, whether due to fire, storm, flood, riot,
explosion or other casualty, exceeds TWENTY (20%) PERCENT of the purchase price,
the Purchaser shall have the option to cancel this Agreement by giving notice to
the Seller. Upon such cancellation, the Purchaser shall be entitled to the
return of all monies paid or deposited pursuant to this Agreement and all
obligations under this Agreement shall thereupon terminate.
10. CLOSING. The closing of this transaction shall be held in the offices of
no later than April 30th, 1994 at 5:00 p.m. Each of the parties hereto shall
execute and deliver at closing all instruments and documents reasonably required
to effectuate the terms and conditions of this Agreement.
11. PRORATIONS, DEPOSITS AND EXPENSES OF SALE. The purchase price shall be
adjusted for prorations of rent, insurance, utilities, licenses, vacation pay,
bonuses, and similar items being transferred to the Purchaser, which amounts
shall be paid by Seller. Transferable deposits and the deposit on the Lease to
the premises shall be credited to the Seller. The Seller shall have the right
to the refund of any non-transferable deposits and Purchaser shall be
responsible for making his own deposits therefore.
<PAGE>
12. TAKING OF INVENTORIES: On the date prior to the closing date,
representatives of Seller and Purchaser shall jointly count the inventory for
the purpose of confirming that said inventory is in accordance with the
requirements of the representations of Seller as set forth in this Agreement. In
valuing the inventory, the Seller's current cost for the purchase of said items
shall be utilized for determining the value less any applicable discounts. Any
business conducted during or subsequent to the time such physical inventory is
taken, shall be for the benefit of Purchaser.
13. ACCOUNTS RECEIVABLE: Purchaser shall act as Seller's agent in receiving
accounts due Seller, if Seller shall furnish to Purchaser at closing a complete
list of such receivables and a request in writing at closing that Purchaser so
act. Purchaser's only duty with regard to such accounts receivables shall be to
include such receivables in its weekly and monthly statements sent to its
customers and to remit, on the first and third Fridays of the month to Seller,
any monies received at the Business premises of Purchaser on account of such
receivables. It is agreed between Purchaser and Seller that cash receipts are
to be applied to invoices as designated by the remitter and, where no
designation is made, the receipt is to be applied to the oldest open invoice(s)
for the applicable customer, unless it can be reasonably determined that said
payment was not to be applied to the oldest open invoice but to a more current
invoice. Seller shall retain the right to contact customers, as necessary, to
collect amounts owing to the Seller and may use agents and pursue legal action
as may be required. Purchaser shall neither settle nor compromise any of the
accounts receivable due the Seller. Purchaser shall be under no obligation to
bring any legal action against any customer of Seller who does not make timely
payments to purchaser of any of such accounts receivable due Seller.
14. ATTORNEY'S FEES AND COSTS: In connection with any litigation arising out
of this Agreement, the prevailing party shall be entitled to recover all costs
incurred, including reasonable attorneys' fees, inclusive of those costs and
fees or any appellate action.
15. DEFAULT BY PURCHASER: If Purchaser fails to perform any of the covenants
of this Agreement, all monies paid pursuant to this Agreement by the Purchaser
as aforesaid shall be retained by or for the account of Seller, as consideration
for the execution of this Agreement and as agreed liquidated damages in full
settlement of any and all claims for damages.
16. DEFAULT BY SELLER: If Seller fails to perform any of covenants of this
Agreement, the Purchaser shall have the right of enforcing this Agreement by
specific performance or at his option, the right of recovery of all monies paid,
without thereby waiving any action for damages resulting from Seller's breach.
17. BINDING EFFECT: This Agreement shall be binding upon and inure to the
benefit of the heirs, administrators, executors, successors, and assigns of each
of the parties hereto.
18. INVALIDITY: If any terms or provisions of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such terms or provision to the persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
19. GOVERNING LAW: The terms and provisions of this Agreement shall be
governed by the laws of the State of Florida.
<PAGE>
20. CAPTIONS: Captions and headings to the various paragraphs of this
Agreement are for convenience only, and carry no legal effect and shall in no
way effect the interpretation or construction of the paragraphs of this
Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and seals this 10th day
of March, 1993.
Witnessed by:
BRAMOW ENTERPRISES, INC., a
Florida corporation
ARNOLD BRAMOW, Individually
STANLEY BRAMOW, Individually
WILLIAM HOFFMAN, Individually
BUSINESS CARDS TOMORROW, INC.,
a Florida corporation
BY: Peter Gaughn
President
<PAGE>
Exhibit 10.9
<PAGE>
ASSIGNMENT OF CONTRACT
KNOW ALL MEN BY THESE PRESENCE, that BUSINESS CARDS TOMORROW, INC., a Florida
corporation, party of the first part, also referred to as Assignor, in
consideration of the sum of ($10.00) ten dollars and other valuable
considerations to paid by party of the second part, T.K.O. Enterprises, Inc.
referred to as Assignee, at or before the ensealing and delivery of these
presence, the receipt whereof is hereby acknowledged, party of the first part
does hereby grant, bargain, sell, assign, transfer and set over unto the said
party of the second part, her heirs and assigns, forever, a certain Purchase and
Sale Agreement bearing date 10th Day of March A.D. 1993, made and entered into
by party of the first part and BRAMOW ENTERPRISES, INC., a Florida corporation,
ARNOLD BRAMOW, individually, STANLEY BRAMOW, Individually, and WILLIAM HOFFMAN,
Individually, a copy of which is attached hereto and made a part hereof.
A portion of the consideration of this assignment being that the party of the
second party herein assumes all the obligations of the Purchaser under the terms
and conditions under the aforedescribed contract and to hold harmless and
indemnify assignor from any breach or wrong doing incidental to the contract
herein being assigned. This indemnification includes but is not limited to, any
attorney's fees incurred in the defense or enforcement of any provisions of the
aforementioned contract or assignment.
To Have and to Hold the same unto the said party of the second part, and its
heirs and assigns forever.
In Witness Whereof, the said parties have hereunto set their hands and seals
this 12 day of May A.D. 1993.
Signed, sealed and delivered
in presence of us.
BUSINESS CARDS TOMORROW, INC.,
a Florida corporation
By: Peter T. Gaughn (Seal)
President
T.K.O. ENTERPRISES, INC.
By: Lillian Roberts, President
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was sworn to and subscribed before me this 12th day of
May 1993, by Peter Gaughn, as President and on behalf of Business Cards
Tomorrow, Inc., a Florida corporation, to me personally known (x), who produced
his/her driver's license ( )/passport ( ), as identification and who did take
an oath.
Diana S. Munroe
Notary Public
My Commission Expires:
Official Notary Seal
Diana S. Munroe
Notary Public State of Florida
Commission No. CC205111
My Commission Exp. May 29, 1996
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was sworn to and subscribed before me this 12th day of
May 1993, by LILLIAN ROBERTS*, to me personally known ( ), who produced his/her
driver's license ( )/passport ( ), as identification and who did take an oath.
*LILLIAN ROBERTS, PRESIDENT, T.K.O. ENTERPRISES, INC.
Notary Public
My Commission Expires:
This Instrument prepared by:
Address
This instrument was prepared by:
David Feldman, Attorney
Financial Federal Building
407 Lincoln Road, NE PH
Miami Beach, Florida 33139
(305) 534-4721
<PAGE>
Exhibit 10.10
<PAGE>
Exhibit 10.10
Guaranty
FOR GOOD AND VALUABLE CONSIDERATIONS received, the undersigned, BUSINESS CARDS
TOMORROW, INC., a Florida corporation ("Guarantor"), hereby unconditionally
represents, promises, and guaranties the following:
1. Identification of Guarantor: The Guarantor is a solvent, duly organized,
- -------------------------------
and validly existing corporation organized under the laws of the State of
Florida with its principal office and mailing address in the State of Florida
being: 3000 N.E. 30th Place, Fort Lauderdale, Florida 33306.
2. Consideration: The Guarantor has received good and valuable considerations
- -----------------
for this Guaranty.
3. Obligation Guarantor: The Guarantor unconditionally guaranties to A.B. and
- ------------------------
W.H. ENTERPRISES, INC. f/k/a BRAMOW ENTERPRISES, INC., a Florida corporation,
including any successors and assigns ("Payee"), the prompt and full payment in
currency of the United States of America at the address for the Payee set forth
below, or at such other place and/or such other person as the Payee may
designate in writing to the Guarantor, all principal, interest, attorney's fees
and costs, and any other sums which may become due, under that certain
Promissory Note of T.K.O. Distributors, Inc., a Florida corporation ("Maker")
and all performances and obligations of the Maker under that certain Security
Agreement of the Maker and the Payee of even date ("Security Agreement")
(collectively all payments and performances due to Payee are the "Obligations").
The address for the Payee, for the purposes of this Guaranty, is: 20281 E.
Country Club Drive #2308, North Miami Beach, Florida 33180.
4. Term of Guaranty: This Guaranty shall continue until such time that the
- --------------------
Obligations, and all performances due hereunder of the Guarantor, are satisfied
in full.
5. Bankruptcy of Borrower: In the event that any payments received by the
- --------------------------
Payee from the Borrower under the Obligations must be returned due to bankruptcy
or similar law, the Guarantor hereby also unconditionally guarantees the payment
of such returned amounts to the Payee.
6. Waiver by the Payee: No waiver of Payee with respect to the Guarantor or
- -----------------------
the Maker will be valid unless in writing, and signed by the Payee, and no such
waiver shall be deemed a waiver of any other.
7. Subordination: The Guarantor subordinates any debts existing now or coming
- -----------------
into effect in the future of the Maker to the Guarantor to the prompt and full
satisfaction of the Obligations due to the Payee.
8. Remedies of Payee: Payee shall have the right to proceed against the
- ---------------------
Guarantor upon the expiration of a fifteen (15) day grace period to cure, which
is commenced by written notice to Guarantor prior to any action of any nature
against the Maker, in the event of any default of the Obligations by the Maker
and/or Guarantor.
9. Governing State: The Guarantor hereby acknowledges that this Guaranty shall
- -------------------
be governed exclusively by the laws of the State of Florida with the sole venue
for any suit, action, or proceeding with respect to this Guaranty to be at a
court of competent jurisdiction in Broward County, Florida, without any
reference, with respect to the foregoing, to conflict of law principles.
<PAGE>
10. Miscellaneous: Guarantor shall not take any act or permit any act which
- ------------------
would cause any default by the Maker of the Obligations, any default of any of
the Obligations shall be deemed a default by the Guarantor of this Guaranty, the
Payee shall be entitled to reasonable attorneys' fees and costs, trial level
through any appeals, if any, in the event of any defaults of the Obligations
and/or this Guaranty in addition to other remedies and damages, there is no
other agreement or instrument which voids or diminishes the Obligations of the
Guarantor hereunder, and Guarantor shall provide immediate written notice to
Payee of any change in address of Guarantor. Obligations of the Guarantor
hereunder if not paid when due shall accrue interest at the maximum rate
permitted under the law.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of
the 12 day of May 1993.
Witnesses:
Beverly J. Perraud
BUSINESS CARDS TOMORROW, INC.
By: Peter T. Gaughn
Its: President
<PAGE>
Exhibit 10.11
<PAGE>
BCT International, Inc.
Bill Wilkerson/President
3000 N.E. 30th Place
Ft. Lauderdale, FL 33306
Dear Mr. Wilkerson:
AGREEMENT made as of the 1st day of Feb., 1994 be and between BCT International,
Inc. ("BCT", "the Company"), having an office for the transaction of business
located at 3000 N.E. 30th Place, Ft. Lauderdale, FL 33306 and Barber & Bronson,
Inc. ("BBCO"), having an office for the transaction of business located at 2101
West Commercial Blvd., Suite 1500, Fort Lauderdale, FL 33309.
WHEREAS, BCT is a public company and desires to obtain the investment banking,
financial and advisory services of BBCO.
WHEREAS, BBCO desires to provide to investment banking, financial and advisory
services required by BCT.
WITNESSETH:
NOW, THEREFORE, the parties agree as follows:
1. BBCO is hereby hired and engaged as investment banker and as a financial
advisor to BCT as it relates to any and all corporate finance matters or other
corporate business that BCT deems appropriate and consistent with standard
investment banking and financial advisory relationships. BBCO shall promptly and
expeditiously provide competent investment banking and advisory services during
the term of this agreement to BCT.
2. The term of this agreement shall be for three (3) years from Feb. 1, 1994.
BCT agrees that it will not enter into similar agreements during the term of
this agreement without the written consent of BBCO. Either party may cancel
this agreement upon 30 days' prior written notice.
3. BCT agrees to pay to BBCO the sum of $3,500.00 per month, commencing on
March 1, 1994, the first day of the month thereafter, for the term of this
agreement. BCT agrees to pay on a pre-approved basis all expenses such as
travel and any other expenses BBCO and BCT deem appropriate for BBCO to provide
such services to BCT.
4. In consideration of the services to be rendered by BBCO and the sum of
$300.00, BCT hereby grants to grant BBCO five (5) year Warrants (which Warrants
may only be assigned to stockholders, officers, and directors of BBCO) to
purchase shares of the Company's common stock exercisable on a scaled basis as
follows:
4.1. 100,000 Warrants exercisable at $2.00;
4.2. 100,000 Warrants exercisable at $3.00;
4.3. 100,000 Warrants exercisable at $4.00.
The Warrants shall be delivered to: Eric P. Littman, Esquire, 1428 Brickell
Avenue, Suite 202, Miami, Florida 33131 and shall be held in escrow by him and
released as follows: 25% upon receipt; 25% three months from the date of
receipt; 25% six months from the date of receipt and the remaining 25% nine
months from the date of receipt. In the event that BBCO goes out of business or
this agreement is terminated prior to the delivery of all the warrants out of
escrow, the escrow agent shall return to BCT all undistributed warrants
<PAGE>
After the expiration of one year from Feb. 1, 1994, BBCO shall have the right to
request two registrations or qualifications of the shares underlying the
Warrants with the Securities and Exchange Commission at the sole expense of BCT,
so long as BBCO exercises a minimum of 100,000 warrants at each time of request.
In such registration(s), BCT may register other shares at its sole discretion.
5. The Company currently has approximately $1,770,000 of Convertible
Subordinated Debentures outstanding. BBCO shall use its best efforts to replace
the current outstanding Convertible Subordinated Debentures as follows: BBCO,
as placement agent for the Company, will use its best efforts to sell, in a
Private Placement to Accredited Investors only, investing in units of $25,000
each, up to $2,000,000 of the Company's securities, which securities shall be in
the form of a 9%, $1.00 per share Preferred Stock, with such security having (1)
a term of 3 years with dividends payable quarterly at the rate of 9% per annum;
(2) a conversion feature such that it is convertible into common stock at the
ratio of 1 share of common stock for every 2.25 shares of preferred stock; (3)
for each share so converted, an additional warrant to purchase common stock of
the Company at a price of at least $3.00 per share; and (4) a provision allowing
it to be called by BCT if BCT's common stock trades at a bid price of $3.00 for
twenty consecutive trading days. The common stock provided for in the Private
Placement shall have piggy-back registration rights; and shall be callable.
Pursuant to standard terms which will be agreed upon by the Company and BBCO.
BBCO shall be entitled to a 5% placement fee and to be reimbursed for all its
expenses for the Private Placement. The Company shall be responsible for the
costs of the Private Placement, including all legal fees of it and BBCO. The
proceeds from the Private Placement will be used to retire the outstanding
Convertible Subordinated Debentures and, if any funds remain, the remainder of
the funds shall be used for working capital. The Company shall have the right
to place its own investors in the Private Placement and BBCO shall not be
entitled to a placement fee for investors which are not BBCO clients.
In the event that $2,000,000 is not raised in the Private Placement, BBCO agrees
to act as the placement agent in a regulation D private placement upon terms to
be agreed upon with BCT.
During the term of this agreement with respect to other public offering(s),
and/or private placements, underwriters compensation will be determined on a
deal by deal basis and BBCO reserves the right to participate in the
underwriting group.
6. If BBCO initiates or introduces a merger or acquisition for BCT that BCT
accepts and completes, BBCO shall be entitled to receive and BCT agrees to pay
BBCO in cash and/or non-cash consideration (at BBCO's option) upon the
successful completion, a fee of:
5% of the first $3,000,000 of the consideration paid in the Transaction;
4% of the consideration in excess of $3,000,000 and up to $4,000,000;
3% of the consideration in excess of $4,000,000 and up to $5,000,000;
2% of the consideration in excess of $5,000,000;
In an instance where BBCO raises capital for BCT to complete an acquisition or
merger, compensation will be determined on a deal to deal basis. In the event
of prospective financing, merger or acquisition transactions both BCT and BBCO
will enter into standard Investment Banking Engagement Agreements pertaining to
those specific transactions as subsequently negotiated between the parties.
<PAGE>
7. BBCO and BCT shall comply with all applicable laws, including without
limitation, the rules and regulations of the National Association of Securities
Dealers, Inc.
8. BCT agrees to indemnify and hold BBCO and its associates harmless from and
against all losses, claims damages, liabilities, costs and expenses arising out
of statements or claims made by any officer or director of BCT or any statement
or claim made by others authorized in writing on their behalf. This
indemnification shall survive the term of this agreement until expiration of all
applicable statutes of limitations.
9. BBCO agrees to indemnify and hold BCT and its associates harmless from and
against all losses, claims damages, liabilities, costs and expenses arising out
of acts, statements or claims made by any salesman, officer or director of BBCO
or any statements or claims made by authorized others in its behalf. This
indemnification shall survive the term of this agreement until expiration of all
applicable statutes of limitations.
10. This agreement shall be construed and enforced according to the laws of
Florida and shall be binding upon each of the parties hereto and their
respective successors, assignees and designees; provided, however, that no party
hereto shall assign its rights or delegate its duties hereunder without the
prior written consent of the other party.
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first above written.
BCT International, Inc.
By: Bill Wilkerson
CEO
Barber & Bronson, Inc.
By: Steven N. Bronson
President
<PAGE>
Exhibit 10.12
<PAGE>
Canyon Capital, Inc.
24012 Calle De La Plata, Suite 310
P.O. Box 3710
Laguna Hills, Ca. 92654
Attention: Thomas O'Connor, President
American Commercial Credit Corp.
P.O. Box 13428
Reading, Pa. 19612
Attention: A.A. Haberberger, President
RE: Operating Agreement/Recourse and Remarketing Agreement
Gentlemen:
Background:
Reference is made to a "Recourse and Remarketing Agreement" dated November 14,
1986 ("Remarketing Agreement") and an "Operating Agreement" dated the same date
("Operating Agreement") entered into between Canyon Capital, Inc. ("Canyon") and
Business Cards Tomorrow, Inc. ("BCT"). The Operating Agreement was amended by
letter agreement between Canyon and BCT dated November 20, 1986. For purposes
of this letter agreement, the Remarketing Agreement and the Operating Agreement
shall sometimes be referred to collectively as the "Agreements".
The Agreements relate to equipment purchased by Canyon from BCT ("Equipment"),
which Equipment was purchased for the sole purpose of leasing said Equipment
under full payout finance leases ("Leases") between Canyon and the respective
lessees thereunder ("Lessees"), and concern various matters related to the
purchase of the Equipment. These matters include but are not limited to: the
furnishing of credit information by BCT to Canyon regarding prospective Lessees;
Canyon's agreement to purchase equipment and provide financing to licensees of
BCT, said financing to be provided within the discretion of Canyon;
establishment of a loss reserve pool ("Pool"); procedures for additional funds
to be provided to the Pool both by Canyon and by BCT; procedures to be followed
in the event of a default by a Lessee, including Canyon being entitled to draw
funds from the Pool and having a limited right of indemnification from BCT;
remarketing procedures in the event of Equipment coming off lease at the end of
the term, or Equipment being repossessed, including compensation payable to BCT.
BCT understands that Canyon is about to be purchased by American Commercial
Credit Corp. ("ACCC") and subsequently merged into ACCC, and that ACCC is
requesting the assurance of BCT of its continued performance under the
Agreements, notwithstanding the merger between ACCC and Canyon and any future
termination of the Operating Agreement. BCT has agreed to do so under the terms
and conditions of this letter agreement. Accordingly, subject to the
consummation of the purchase of Canyon by ACCC, it is agreed between BCT, Canyon
and ACCC as follows:
1. Future Purchase of Equipment. ACCC agrees that for a period of no less than
six months after closing of its purchase of Canyon, ACCC and its affiliate, AEL
Leasing Co., Inc., ("AEL") shall purchase Equipment from BCT for purposes of
leasing same under finance leases to franchisees of BCT, in their discretion,
all subject to the credit and business standards (including amounts of
concentration) which were employed by Canyon over the past year in the purchase
of Equipment and furnishing of financing to franchisees of BCT.
<PAGE>
2. Acknowledgment of BCT Performance. BCT acknowledges that it shall be bound
by its obligations under the terms of the Agreements with regard to those Leases
(and Equipment subject thereof) existing as of the date of this letter, and/or
entered subsequently to the date of this letter between Canyon, ACCC and AEL and
the Lessees thereunder, in which BCT is the supplier of the Equipment (whether
the Lessee shall be the original user of the Equipment or has assumed the Lease)
notwithstanding any future termination of the "Operating Agreement" between
Canyon/ACCC and BCT.
3. Obligations Accrued as to Existing Lessees. BCT further acknowledges that
the obligations of BCT under the Agreements be deemed to have accrued with
regard to those Leases (and Equipment subject thereof) existing as of the date
of this letter, and/or entered subsequently to the date of this letter between
Canyon, ACCC and AEL and the Lessees thereunder, shall continue to exist in full
force and effect with regard to those Lessees following any termination of the
Operating Agreement by either party, including but not limited to the
obligations of remarketing of Equipment and indemnification of ACCC/AEL in the
event of default by the Lessee, until the obligations of all such Lessees under
said Leases shall have been satisfied in full.
4. AEL and ACCC Obligations and Rights. AEL and ACCC shall be entitled to the
benefits of the Agreement, and shall be bound by the obligations of the
agreement as such obligations applied by Canyon, as if they were original
signatories to the Agreements.
5. No Existing Default by Canyon. BCT hereby acknowledges that Canyon is in
compliance with all of the terms and conditions of the Agreements as of the date
of this letter, and further that there is no event or condition new existing, or
which, if it continued to exist uncured, would constitute a default or event of
default by Canyon under the terms of the Agreements. BCT understands that ACCC
is specifically relying on this paragraph.
6. Pool Amount. The amount of the Pool as of the date hereof is the sum of
$70,283.88. Canyon and BCT agree that this shall be deemed to be the correct
amount of the Pool, and that neither shall owe any additional funds on account
of any amounts that may have been payable prior to the date hereto, and that no
amounts shall be payable except for future contributions payable at the time of
the entry of Leases, or future quarterly contributions by Canyon.
7. Ownership of Pool/Periodic Evaluation of Pool Amount. This will confirm
that the Pool shall at all times by the property of BCT, subject to the security
interest in the Pool in favor of Canyon. Further, this shall confirm that two
years from the date of this letter, and every two year anniversary thereafter of
this letter, the parties shall evaluate the amount of the Pool. It is agreed
that the ratio of outstandings of Leases to the amount of the Pool at the time
of each evaluation shall be no less than the ratio of outstandings on Leases to
the amount of the Pool as of the date of this letter. As of the date of this
letter, the amount of outstandings on Leases is $1,586,331.10, which is a ratio
of 22.57:1 in relation to the current amount of the Pool. To the extent that
the ratio shall be less than 22.57:1, monies will be remitted to BCT such that
the ratio shall become 22.57:1. If the ratio is greater than the current ratio,
then no funds will be remitted.
8. Entire Agreement. Except as expressly modified by the terms of this letter,
the Agreements shall remain in full force and effect. This represents the
entire agreement between the parties with regard to the Agreements, and
supersedes all other discussions, letters, memorandums and other agreements.
If you are in agreement with the terms of this letter, please signify by
countersigning where provided below.
Agreed: May 24, 1993
Canyon Capital, Inc.
BCT International, Inc.
American Commercial Credit Corp.
<PAGE>
EXHIBIT 10.13
<PAGE>
Intercontinental Bank
8211 West Broward Blvd.
Plantation, Florida 33324
October 5, 1994
Mr. William Wilkerson
Chairman & CEO
BCT International, Inc.
3000 N.E. 30th Place
Fifth Floor
Fort Lauderdale, Florida 33306
Dear Bill:
Intercontinental Bank has agreed to lend BCT International, Inc. under the
following terms and conditions:
BORROWER: BCT International, Inc.;
GUARANTOR: William A. Wilkerson
AMOUNT: $200,000;
TYPE: Advised line of credit, subject to bank approval for each draw requested;
INTEREST RATE: Citibank prime rate plus 1.5%, floating;
FEES AND COSTS: Out of Pocket expenses;
MATURITY: July 1, 1995;
COLLATERAL: Unsecured
REPORTING REQUIREMENTS: Borrower will provide 10Q's and 10K's at issue time,
and analysis of accounts receivable on a quarterly basis;
COMMITMENT EXPIRATION: This commitment must be executed and returned to the
undersigned not later than October 11, 1994, or this commitment will be null and
void.;
LOAN CLOSING: This loan must be closed by November 1, 1994 or this commitment
executed will be null and void.
Please return a copy of this commitment with an original signature to the
undersigned at your earliest convenience.
Sincerely yours,
John R. Morris
Vice President
<PAGE>
Terms and conditions as hereinabove written agreed to this 6th day of October,
1994.
BCT International, Inc.
William A. Wilkerson
- -----------------------------------
William A. Wilkerson, Chairman/CEO
Guarantor:
William A. Wilkerson
- -----------------------------------
William A. Wilkerson
2
<PAGE>
EXHIBIT 10.14
<PAGE>
BCT International, Inc.
3000 N.E. 30th Place, 5th Floor
Ft. Lauderdale, FL 33306
March 2, 1995
Mr. A. George Cann
Dear George:
This letter will memorialize our conversations concerning your employment with
BCT.
TITLE: President of Business Cards Tomorrow, Inc.
BASE SALARY: $125,000 per year
BONUS: To participate in the incentive plan adopted by the
Compensation Committee providing for bonuses based on
operating profit for officers of the Company and BCT. The
Bonus pool equals 50% of the first $100,000 over targeted
operating income and 25% of additional profits over targeted
operating income.
STOCK OPTIONS: 40,000 Stock Options
with a three year vesting schedule
10,000 vested immediately
BENEFITS: Blue Cross/Blue Shield Health Insurance, 401K plan -after 1
year employment, ten (10) paid holidays, and ten (10) paid
sick days.
In addition, during the first three years of employment with the Company, if you
were to be terminated, then the Company is obligated to pay your present salary
at the time for a period for six months.
William A. Wilkerson
- ------------------------------------
William A. Wilkerson, Chairman/CEO
