BT OFFICE PRODUCTS INTERNATIONAL INC, DEF 14A, 1996-05-24

BT OFFICE PRODUCTS INTERNATIONAL INC
DEF 14A, 1996-05-24
PAPER & PAPER PRODUCTS

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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the registrant [x]
Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

BT OFFICE PRODUCTS INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)

Payment of filing fee (Check the appropriate box):

[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions apply:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:

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

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:

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BT OFFICE PRODUCTS INTERNATIONAL, INC.
2150 EAST LAKE COOK ROAD
BUFFALO GROVE, IL 60089-1877
(847) 793-7500
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1996
--------------------

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of BT Office Products International, Inc., a Delaware
corporation (the "Company"), will be held at the Drake Hotel, 140 East Walton
Place, Chicago, Illinois 60611 at 10:00 a.m. on June 25, 1996, for the
following purposes:

1. To elect directors of the Company to serve until the next annual
meeting of stockholders and until their successors are duly elected
and qualified;

2. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent auditors for the fiscal year ending December 31, 1996; and

3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.

The close of business on May 15, 1996 has been fixed as the record date for
determining the stockholders entitled to notice of and to vote at the Meeting.
All holders of record of common stock of the Company at that date are entitled
to vote at the Meeting or any adjournment or postponement thereof.

By Order of the Board of Directors,

/s/ John J. McKiernan
---------------------------
John J. McKiernan Secretary

Buffalo Grove, Illinois
May 24, 1996

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE
MEETING. RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON OR
TO ATTEND THE ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU
CANNOT ATTEND. IF YOU HOLD SHARES IN MORE THAN ONE NAME, OR IF YOUR STOCK IS
REGISTERED IN MORE THAN ONE WAY, YOU MAY RECEIVE MORE THAN ONE COPY OF THE
PROXY MATERIAL. IF SO, PLEASE SIGN AND RETURN EACH OF THE PROXY CARDS THAT
YOU RECEIVE SO THAT ALL OF YOUR SHARES MAY BE VOTED.

<PAGE>
BT OFFICE PRODUCTS INTERNATIONAL, INC.
2150 EAST LAKE COOK ROAD
BUFFALO GROVE, IL 60089-1877
(847) 793-7500
-------------------------
PROXY STATEMENT
-------------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BT Office Products International, Inc.
(the "Company") for use at the Annual Meeting of Stockholders (the "Meeting")
to be held at the Drake Hotel, 140 East Walton Place, Chicago, Illinois 60611
on June 25, 1996, at 10:00 a.m., and at any postponements or adjournments
thereof. This Proxy Statement and the related proxy card are first being
mailed to stockholders on or about May 24, 1996.

Only holders of record of the Company's common stock, par value $.01 per
share (the "Common Stock"), as of the close of business on May 15, 1996 (the
"Record Date"), will be entitled to notice of, and to vote at, the Meeting.
As of the Record Date, there were 33,400,000 shares of Common Stock issued
and outstanding, each of which is entitled to one vote. There is no other
class of voting securities issued and outstanding. The presence in person or
by proxy of the holders of a majority of the outstanding shares of Common
Stock will be necessary to constitute a quorum for the transaction of
business at the Meeting.

All shares represented by properly executed proxies will be voted in
accordance with the instructions indicated thereon unless such proxies
previously have been revoked. If any proxies do not contain voting
instructions, the shares represented by such proxies will be voted FOR the
election of the nominees for director listed below and FOR the ratification
of the appointment of Coopers & Lybrand L.L.P. as the Company's independent
auditors for the fiscal year ending December 31, 1996. It is not anticipated
that any matters other than those set forth in this Proxy Statement will be
brought before the Meeting. If any other matters properly come before the
Meeting, the shares represented by all properly executed proxies will be
voted in accordance with the judgment of the persons named on such proxies.
Shares abstaining, and shares held in street name as to which a broker has
not voted on some matters but has voted on other matters ("Broker
Non-Votes"), will be included in determining whether a quorum exists at the
Meeting. Approval of each matter specified in the Notice of Meeting requires
the affirmative vote of a majority of shares of Common Stock present in
person or by proxy at the Meeting entitled to vote thereon. Stockholders may
not cumulate their votes. In determining whether a proposal specified in the
Notice of Meeting has received the requisite number of affirmative votes,
abstentions and Broker Non-Votes will have the same effect as votes against
the proposal.

Any stockholder who executes and delivers a proxy may revoke it at any
time prior to its exercise at the Meeting by (1) delivering to the Secretary
of the Company a duly executed proxy bearing a later date; (2) filing a
written notice of revocation with the Secretary of the Meeting; or (3)
appearing at the Meeting and voting in person.

In addition to solicitations by mail, some directors, officers and
employees of the Company may solicit proxies for the Meeting personally or by
telephone or telegram without extra remuneration therefor. The Company will
also provide persons, firms, banks and corporations holding shares in their
names or in the names of nominees, which in either case are beneficially
owned by others, with proxy materials for transmittal to such beneficial
owners and will reimburse such record owners for their expenses in doing so.
The costs of soliciting proxies will be borne by the Company.

<PAGE>
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROXY STATEMENT HAS BEEN DELIVERED, UPON THE WRITTEN
REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT
SCHEDULE, THAT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1995. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO BT OFFICE PRODUCTS INTERNATIONAL, INC., 2150 E. LAKE COOK ROAD,
BUFFALO GROVE, ILLINOIS 60089-1877 (TELEPHONE NUMBER: (847) 793-7500),
ATTENTION: MR. JOHN J. MCKIERNAN, SECRETARY.

ELECTION OF DIRECTORS

NOMINEES

The Board of Directors has nominated seven persons for election as
directors of the Company at the Meeting, each to serve until the 1997 Annual
Meeting of Stockholders of the Company and until his successor shall have
been duly elected and qualified. All of the nominees are currently serving as
directors of the Company. Klaas de Kluis, who is currently the Chairman of
the Board of Directors, and Robert F.W. van Oordt, who is also currently a
director, are retiring from the Board of Directors and accordingly are not
standing for reelection.

Each nominee has consented to be named in this Proxy Statement and to
serve if elected. If, prior to the Meeting, any nominee should become
unavailable to serve for any reason, the shares represented by all properly
executed proxies will be voted for such alternate individual as shall be
designated by the Board of Directors, unless the Board of Directors shall
determine to reduce the number of directors pursuant to the By-laws of the
Company.

Certain information regarding each nominee is set forth below, including
such individual's age and principal occupations, a brief account of business
experience during at least the last five years, other directorships currently
held and the year in which the individual was first elected a director of the
Company.

FRANK J. DE WIT, age 56, a member of the Company's Board of Directors
since February 1995 and the Chairman of the Executive Board of KNP BT since
May 1996, was Deputy Chairman of the Executive Board of KNP BT from March
1993 to April 1996 and was Chairman of the Board of Management of N.V.
Koninklijke KNP ("KNP"), a predecessor of NV Koninklijke KNP BT ("KNP BT"),
from January 1983 to March 1993. Mr. de Wit currently serves as a member of
the Supervisory Board of AEGON N.V. (a Netherlands insurance company), a
member of the Supervisory Board of Societe Generale de Banque (a Belgium
banking company) and a member of the Supervisory Board of Koninklijke
Nijverdal-Ten Cate nv (a Netherlands textile manufacturing company).

RUDOLF A.J. HUYZER, age 54, has served as a member of the Company's Board
of Directors since December 1990 and as President and Chief Executive Officer
of the Company since April 1995. Mr. Huyzer has also been a member of the
Executive Board of the Distribution Group of KNP BT since January 1996. He
previously served as President of the Office Products Division of KNP BT,
which division was responsible for administering KNP BT's office products
distribution businesses in the United States and Europe, since 1990, and
prior to that as President of the then combined Paper Merchanting and Office
Products Division of KNP BT since 1988. Prior to joining KNP BT, Mr. Huyzer
was a member of the Executive Board of Wegener N.V., a Netherlands
publishing, printing and distribution company from 1985 to 1988.

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ROB W.J.M. BONNIER, age 53, a member of the Company's Board of Directors
since February 1995, has also served as a member of the Executive Board of
KNP BT since March 1993. From January 1983 to March 1993, Mr. Bonnier was a
member of the Board of Management of KNP. In addition, Mr. Bonnier is a
member of the Supervisory Board of each of NV Koninklijke Sphinx Gustavsberg
(a Netherlands porcelain manufacturing company), Gelderse Papiergroep N.V. (a
Netherlands paper manufacturing company) and Alpinvest NV (a Netherlands
venture capital firm) and a member of the Council of the Amsterdam Stock
Exchange.

KARL M. VON DER HEYDEN, age 59, has served as a member of the Company's
Board of Directors since February 1996. Mr. von der Heyden has been a senior
advisor to the Clipper Group, a private merchant bank, since August 1994. Mr.
von der Heyden also currently serves as a member of the Board of Directors of
Federated Department Stores, Inc., Trizec Corporation Ltd., Cadbury Schweppes
plc and The Country Baskets Index Fund, Inc. He previously served as
President and Chief Executive Officer of Metallgesellschaft Corp. from August
1993 through July 1994 and, prior thereto, as Co-Chairman and Co-Chief
Executive Officer of RJR Nabisco from March 1993 through June 1993 and as
Chief Financial Officer of RJR Nabisco from June 1989 through June 1993.

LORRENCE T. KELLAR, age 58, has served as a member of the Company's Board
of Directors since January 1996. Mr. Kellar has been a Vice President--Real
Estate of K-Mart Corporation since May 1996. Mr. Kellar also currently serves
as a member of the Board of Directors of the Multi-Color Corporation and as a
trustee of the Bartlett Management Trust, a mutual fund investment company.
He previously served as Group Vice President of Kroger Co. from 1986 to April
1996 and as a member of the Board of Directors of the U.S. Shoe Corporation
from May 1986 to May 1995.

FRANS H.J. KOFFRIE, age 44, a member of the Company's Board of Directors
since January 1996, has also served as a member of the Executive Board of KNP
BT since March 1993 and as a director of Buhrmann-Tetterode International
B.V. since May 1995. He previously served as a member of the Executive Board
of the VRG Groep N.V. from April 1990 to March 1993.

JAMES B. MILLER, age 65, has served as a member of the Company's Board of
Directors since February 1995. Mr. Miller was Chairman of the Board, Chief
Executive Officer and the majority shareholder of Miller Business Systems,
Inc., a contract stationer based in Arlington, Texas and the predecessor of
BT Miller Business Systems, Inc. ("BT Miller"), from January 1972 until the
acquisition of Miller Business Systems, Inc. by the Company in November 1992.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL NOMINEES
FOR DIRECTOR.

The Board of Directors met five times during the period from January 1 to
December 31, 1995 ("Fiscal 1995"). No incumbent director during Fiscal 1995
attended fewer than 75 percent of the aggregate of: (1) the total number of
meetings of the board of directors (held during the period for which he has
been a director); and (2) the total number of meetings held by all committees
of the board on which he served (during the periods that he served).

The Board has three standing committees. The principal responsibilities of
each of the standing committees and the members of such committees are set
forth below.

1. AUDIT COMMITTEE. The Audit Committee: (i) makes recommendations to the
Board as to the independent accountants to be appointed by the Board;
(ii) reviews with the independent accountants the scope of their
examinations; (iii) receives the reports of the independent accountant
for the purpose of reviewing and considering questions relating to
their examination and such reports; (iv) reviews, either directly or
indirectly or through independent accountants,

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<PAGE>
the internal accounting and auditing procedures of the Company; (v)
reviews related party transactions; and (vi) performs such other
functions as may be assigned to it from time to time by the Board. The
Audit Committee currently consists of Messrs. Kellar and von der
Heyden. The Audit Committee was established on January 25, 1996 and,
accordingly, did not have any meetings in Fiscal 1995.

2. COMPENSATION COMMITTEE. The Compensation Committee: (i) oversees
compensation policies for executive officers of the Company; (ii)
approves salaries and bonuses for such officers; and (iii) administers
the Company's 1995 Stock Option Plan. The Compensation Committee
currently consists of Messrs. Kellar, de Kluis and von der Heyden. The
Compensation Committee was established on January 25, 1996 and,
accordingly, did not have any meetings in Fiscal 1995.

3. EXECUTIVE COMMITTEE. The Executive Committee has the authority to
exercise all of the powers of the Board of Directors, with the
exception of those powers which may only be exercised by the Board of
Directors in accordance with the Delaware General Corporation Law. The
Executive Committee currently consists of Messrs. de Kluis and Huyzer.
The Executive Committee did not formally meet during Fiscal 1995.

The Board of Directors does not have a nominating committee.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company receive an annual fee of
$20,000 for their service on the Board and the Chairman of the Board of
Directors receives an annual fee of $30,000. Directors who are employees of
the Company do not receive a fee for attending such meetings. All directors
are reimbursed for expenses incurred in attending meetings.

EXECUTIVE OFFICERS

The Board of Directors appoints the Company's executive officers. Certain
information concerning the Company's executive officers is set forth below,
except that information concerning Mr. Huyzer is set forth above under
"Election of Directors."

JOHN J. MCKIERNAN, age 58, has served as the Company's Vice
President--Finance and Administration and Chief Financial Officer since
January 1995 and as Secretary of the Company since April 1995. Prior to his
appointment to those positions, he served principally as the Vice
President--Finance and Administration for Unisource, the paper products
distribution subsidiary of Alco Standard Corporation, from May 1982 until
June 1994. Mr. McKiernan is a certified public accountant.

HOWARD L. BROWN, age 50, has served as Regional President, Northeast
Region of the Company since January 1995, as a Vice President of the Company
since April 1995, and as the Chief Executive Officer of BT Summit Office
Products, Inc. ("BT Summit") from October 1987 through December 1994. Mr.
Brown was the President and majority stockholder of Summit Office Supply,
Inc., a contract stationer based in New York City serving the New York
metropolitan area and the predecessor of BT Summit, from 1975 until the
acquisition of a controlling interest in Summit Office Supply, Inc. by the
Company in September 1987.

RICHARD C. DUBIN, age 55, has served as Regional President, Midwest-West
Region of the Company since January 1995, as a Vice President of the Company
since April 1995, and as the President of BT Buschart Office Products, Inc.
("BT Buschart") from April 1990 through December 1994. Mr. Dubin

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was the President of Buschart Office Products, Inc., a contract stationer
serving the St. Louis metropolitan area and the predecessor of BT Buschart,
from September 1981 until the acquisition of Buschart Office Products, Inc.
by the Company in April 1990.

DAVID KIRSHNER, age 56, has served as Regional President, Great Lakes
Region of the Company since January 1995, as a Vice President of the Company
since April 1995, and as the President of BT Publix Office Products, Inc.
("BT Publix") from June 1986 through December 1994. Mr. Kirshner was the Vice
President of Publix Office Supplies, Inc., a contract stationer serving the
Chicago metropolitan area and the predecessor of BT Publix, from 1975 until
June 1986 and the President of Publix Office Supplies, Inc. from June 1986
until the acquisition of Publix Office Supplies, Inc. by the Company in April
1990.

MICHAEL J. MILLER, age 40, has served as Regional President,
South-Southeast Region of the Company since January 1995, as a Vice President
of the Company since April 1995, and as the President of BT Miller from
November 1992 through December 1994. Mr. Miller was the President and a
stockholder of Miller Business Systems, Inc., the predecessor of BT Miller,
from November 1985 until the acquisition of Miller Business Systems, Inc. by
the Company in November 1992.

JANHEIN H. PIETERSE, age 44, has served as Regional President, BT Office
Products Europe since July 1995, as a Vice President of the Company since
April 1995, and prior thereto had served as the President--European
Operations of the Office Products Division since January 1995. He previously
served as the President of the Copier Division of KNP BT from April 1994 to
December 1994. From October 1992 to March 1994, Mr. Pieterse served as the
President of Trimbach B.V., a solid board packaging manufacturing company.
From August 1991 to September 1992, he served as the Managing Director of a
group of packaging manufacturing companies of KNP BT. From January 1989 to
July 1991, Mr. Pieterse was the Managing Director of all operating companies
in Australia and New Zealand of Koninklijke Van Ommeren N.V., a Netherlands
shipping/tanker company, and from 1986 to 1988, he served as the President of
the worldwide airfreight network of such company.

Mr. Michael Miller is the son of Mr. James Miller. There are no other
family relationships among any of the directors or executive officers of the
Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

REORGANIZATION

On June 30, 1995, KNP BT and KNP BT USA, Inc., the holding company of KNP
BT's United States operations (the "Holding Company"), effected the series of
transactions described below (collectively, the "Reorganization") in order to
reorganize the legal ownership of various of their businesses and to
recapitalize the ongoing office products distribution business which now
constitutes the Company. Prior to the Reorganization, the Holding Company had
operated KNP BT's U.S. office products distribution business (through its
ownership of its U.S. office products companies) as well as certain packaging
manufacturing businesses in the United States (the "Packaging Businesses")
and certain other activities which are unrelated to the U.S. office products
distribution business. Through various directly-and indirectly-held non-U.S.
subsidiaries, KNP BT had operated: (1) Hartmann & Cie GmbH & Co. KG, a
contract stationer based in Frankfurt, Germany ("Hartmann"), including
Classic Burobedarf Vertriebs GmbH, the company that operates the Classic
licensing business ("Classic"); (2) Wurth Burobedarf + Organisation GmbH, a
contract stationer based in Bingen, Germany ("Wurth"); (3) Georg Steinmetz
GmbH, a contract stationer based in Worms, Germany ("Steinmetz"); (4) BVZ
Buroversorgungszentrum GmbH, a company that operates a modern 65,000 square
foot distribution center located near Frankfurt, Germany ("BVZ," and,
together with Hartmann, Wurth, and

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Steinmetz, "Hartmann/Wurth"); (5) Veenman Kantoormachines BV, Repro Copiers
Nederland BV, Direct Dealer Services BV and Veenman Office Management BV
(collectively, the "Veenman Group"), which group is engaged in the
distribution of copiers, office machines and related services and supplies,
and office products in The Netherlands; (6) Copygraphic plc, a contract
stationer based in London, England ("Copygraphic"); (7) Bierbrauer + Nagel
GmbH & Co KG and certain related companies, an office products and computer
supplies dealer in Stuttgart, Germany ("B+N," and, together with the Veenman
Group, Copygraphic and Hartmann/Wurth, the "European Businesses"); and (8)
Kelly Paper Company, a wholesale cash and carry printing paper and supplies
business primarily for small commercial printers in California, Arizona and
Nevada ("Kelly Paper").

In effecting the Reorganization, KNP BT transferred to the Holding Company
all of the ownership interest in the European Businesses and Kelly Paper and
made a capital contribution of $118.0 million to the Holding Company (the
"Capital Contribution"). The Holding Company transferred the Packaging
Businesses and certain other assets and liabilities not related to the
ongoing operations of the office products distribution business to KNP BT. As
a result of the Reorganization, the Company is now the owner, either directly
or indirectly through its subsidiaries, of all of the office products
distribution businesses formerly operated by KNP BT's Office Products
Division.

RELATIONSHIP WITH KNP BT

Prior to the initial public offering of 10,000,000 shares of Common Stock
of the Company on the New York Stock Exchange on July 19, 1995 (the
"Offering"), KNP BT, through its ownership of all of the Common Stock of the
Company, had the ability to elect the Company's Board of Directors and to
control the direction and policies of the Company and the outcome of any
matter requiring stockholder approval, including mergers, consolidations and
the sale of all or substantially all of the assets of the Company, and to
prevent or cause a change of control of the Company. Following the Offering,
KNP BT, together with Buhrmann-Tetterode International B.V., a wholly-owned
subsidiary of KNP BT ("BTIBV"), owns approximately 70% of the outstanding
Common Stock of the Company and continues to have sufficient voting power to
elect the Company's Board of Directors and control such matters.

In the normal course of business, the Office Products Division, on the one
hand, and KNP BT and its other affiliates (including the Packaging
Businesses), on the other hand, have from time to time entered into various
business transactions and agreements, and the Company and its subsidiaries
and KNP BT and its affiliates may enter into additional material transactions
in the future. The following is a summary of each of the material agreements
that the Company and KNP BT entered into in connection with the Offering as
well as all material transactions between the Company and KNP BT and its
other subsidiaries since January 1, 1995. Unless otherwise expressly
indicated, such transactions were not necessarily conducted on an arm's
length basis. Certain of the transactions are evidenced by agreements which
are summarized below.

In connection with Mr. Huyzer's relocation from The Netherlands to the
United States in September 1994, the Company advanced Mr. Huyzer $l,017,928
for the purchase of a residence in the Chicago area. The note evidencing the
advance provides that interest is payable quarterly and will accrue at a rate
of 7.25% per annum beginning on November 6, 1994 with respect to $915,428 of
the principal amount thereof and beginning on January 1, 1995 with respect to
the balance of the principal amount. A required principal payment of $17,928
was made on January 1, 1995. Principal is repayable in quarterly installments
beginning in September 1996 and thereafter until September 2024. As of May
13, 1996, the aggregate principal amount outstanding under such note was
$1,000,000.

CREDIT FACILITIES

INTEREST BEARING ADVANCES. Prior to the Offering, the Company maintained
short-term credit facilities through KNP BT Antilliana NV, an affiliate of
KNP BT ("Antilliana"), and KNP BT

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Europcenter NV, an affiliate of KNP BT ("Europcenter," and, together with
Antilliana and the other financing affiliates of KNP BT, "KNP BT Lender"),
for its acquisitions and working capital requirements. The aggregate
principal amount outstanding under such facilities was $96.6 million as of
June 30, 1995 (after giving effect to the Capital Contribution). The average
interest rate on amounts outstanding under such facilities was 9.0% for the
six months ended June 30, 1995. The amount outstanding under such facilities
at the time of the Offering was reduced by $42.3 million of the net proceeds
received from the Offering of $98.5 million (after underwriting discounts and
commissions and costs related to the Offering and the Reorganization) ("Net
Proceeds"). The remaining balance was converted into loans under the Credit
Agreement that became effective upon the completion of the Offering.

ACQUISITION ADVANCES. KNP BT Lender made non-interest bearing advances to
the Company in 1994 and 1995 to finance all of the Company's acquisitions in
such years prior to the Offering. Such advances amounted to approximately
$65.8 million prior to the Offering. These advances were repaid in full with
a portion of the Net Proceeds from the Offering.

CREDIT AGREEMENT. Under the Credit Agreement, Antilliana has agreed to
lend the Company directly or through an affiliate up to $200 million for
financing of acquisitions, capital expenditures and general corporate
purposes. Under the multi-currency facility, revolving loans in U.S. Dollars
will bear interest at the prime rate and revolving loans in German Marks,
British Pounds and Netherlands Guilders will bear interest at 1.00% over the
applicable interbank rate as determined therein. Term loans in U.S. Dollars,
German Marks, British Pounds and Netherlands Guilders will bear interest at
.75% over the applicable interbank rate as determined therein. The Credit
Agreement contains certain reporting obligations and restrictive covenants
which impose limitations with respect to, among other things, incurrence of
liens and dispositions of assets. The Credit Agreement also contains certain
events of default, the most significant of which includes KNP BT's failure to
own, beneficially and of record, more than 50% of the issued and outstanding
share capital of the Company. The Credit Agreement provides for a reduction
of the commitment and the outstanding borrowings thereunder in July 1997 to
no more than $100 million and for the termination of the facility in July
1998. The Company has agreed to pay an annual commitment fee of .35% of the
daily unused amount of the commitment under the Credit Agreement. Under the
Credit Agreement, the Company is obligated to compensate Antilliana for any
tax withholding that may be imposed by applicable tax treaties. The tax
withholding rate in the U.S. tax treaty with the Netherlands Antilles is due
to change on July 1, 1996 from 0% to 30%. At December 31, 1995, the Company
had outstanding loans for its U.S. operations through The Netherlands
Antilles of $74.8 million. The Company is exploring other financing
alternatives to reduce or avoid the effect of the foregoing change in tax
withholding rate.

REGISTRATION RIGHTS

Pursuant to the terms of a registration rights agreement (the
"Registration Rights Agreement") among the Company, KNP BT and BTIBV, which
agreement became effective upon completion of the Offering in July 1995, each
of BTIBV and KNP BT has the right to require the Company to register for
public offering and sale all or a portion of the Common Stock held by it from
time to time (subject to certain limitations) on a maximum of four occasions
(and, if pursuant to a short-form registration statement, if available, on an
unlimited number of occasions). In addition, during the term of the
Registration Rights Agreement, each of BTIBV and KNP BT has the right to
participate in any registration of Common Stock initiated by the Company,
subject to certain limitations. The Company will pay all out-of-pocket
expenses of any such registrations, including reasonable fees and expenses of
one counsel for BTIBV and KNP BT, and will indemnify BTIBV and KNP BT and
their respective officers and directors against certain liabilities,
including liabilities under the federal securities laws, in connection
therewith. Each of BTIBV and KNP BT will pay all underwriting discounts and

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commissions applicable to shares of Common Stock sold by it pursuant to any
such registrations. The rights of BTIBV and KNP BT under the Registration
Rights Agreement are transferable to any affiliate of KNP BT.

TAX MATTERS

The Company, KNP BT and certain of KNP BT's affiliates entered into a tax
matters agreement in connection with the Reorganization and the Offering (the
"Tax Matters Agreement") whereby KNP BT will indemnify the Company for any
taxes and any related interest, penalties or other additions to tax ("Taxes")
arising in any taxable year in respect of the Packaging Businesses and their
disposition in the Reorganization and any Taxes arising in any year with
respect to certain other operations that were disposed of by the Company
prior to the Offering. Under the Tax Matters Agreement, KNP BT will also
indemnify the Company to the extent of any Taxes relating to its office
products distribution operations prior to the Reorganization in excess of
certain thresholds specified in the agreement. The computation of any
increase in Taxes and any resulting liability for indemnity payments will be
determined after giving effect to the tax adjustment otherwise giving rise to
indemnification and to any other net refunds of Taxes to which indemnity is
provided to that indemnified party.

The Tax Matters Agreement also provides for the treatment of such matters
as allocating overlap period Taxes, return preparation, refunds, audits and
controversies with tax authorities, sharing information and resolving
controversies between parties.

Prior to the Reorganization, the Company and certain of its subsidiaries,
as well as the Packaging Businesses, had comprised the consolidated United
States federal income tax group for returns filed by KNP BT. For periods
following the Reorganization, the Company will no longer be a part of KNP
BT's consolidated United States federal income tax returns, and will file a
consolidated United States Federal income tax return for itself and its
subsidiaries.

INTELLECTUAL PROPERTY

Pursuant to a license agreement between KNP BT and the Company, which
became effective upon the completion of the Offering in July 1995, KNP BT has
granted a royalty-free, perpetual license to the Company and its subsidiaries
to use the name "BT" along with KNP BT's logo in connection with the
Company's office products distribution businesses. However, the license to
use such logo terminates upon the change of control of the Company or upon
the occurrence of certain other events.

SERVICES

KNP BT and its subsidiaries have provided services to the Company and its
subsidiaries, including certain financial and treasury services, as well as
insurance, tax, legal and human resource services. In connection with such
services, the Company has paid fees to KNP BT. The Company has also provided
certain support services to KNP BT and its affiliates (including the
Packaging Businesses).

The Company and KNP BT entered into an Intercompany Services Agreement for
the continuing provision of such services, which agreement became effective
upon completion of the Offering in July 1995. The agreement has a one-year
term and thereafter automatically renews for successive one year periods
unless earlier terminated by either party. Such agreement provides for fees
to be paid at rates determined on the basis of costs calculated in a manner
not inconsistent with past practices, if any, but no greater than the good
faith estimate of the fee that would be charged by an independent third
party. At any time during the term of the agreement, the Company or KNP BT
may request that KNP BT or the Company, as the case may be, provide
additional or different services or cease providing one or more services then
being provided.

8
<PAGE>
The Company uses office space provided by KNP BT for certain of its
executive officers and employees in KNP BT's headquarters in Amsterdam. Since
July 1995, the Company has reimbursed KNP BT at market rates for the cost of
such space.

GUARANTIES

KNP BT has guaranteed certain obligations of the Company, including
obligations under various leases for real property and equipment. KNP BT
continues to maintain its outstanding guaranties and to provide certain
additional guaranties pursuant to the terms of an agreement for credit
support (the "Agreement for Credit Support") with the Company and certain of
its subsidiaries, which agreement became effective upon the completion of the
Offering in July 1995. Subject to the terms and conditions of the Agreement
for Credit Support, KNP BT agreed to provide from time to time until January
31, 1996, directly or through one of its affiliates, guaranties of certain
obligations of the Company and one or more such subsidiaries up to an
aggregate principal amount of all such guaranteed obligations outstanding of
$50.0 million, of which $15.8 million was outstanding at December 31, 1995.
Each of the Company and such subsidiaries will reimburse any amounts paid by
KNP BT under any guaranty made by KNP BT under the Agreement for Credit
Support. The Company and such subsidiaries have agreed to pay a guaranty fee
to KNP BT of .25% per annum of (i) up to a maximum of $50.0 million through
January 31, 1996, and (ii) thereafter, the daily aggregate principal amount
of the guaranteed obligations outstanding for each day through the earlier of
the repayment of such obligations and the release of KNP BT with respect to
all guaranties. The Agreement for Credit Support contains certain events of
default which include KNP BT's failure to own, beneficially and of record,
more than 50% of the issued and outstanding share capital of the Company
(provided, however, that KNP BT is obligated under the Credit Agreement to
give 45 days' notice to the Company of its intention to so reduce its
ownership of the Company's share capital).

SALES TO AND PURCHASES FROM AFFILIATES

The Company has sold office products and related services to affiliates of
KNP BT. Such transactions generally were effected on terms comparable to
those available in transactions with unaffiliated parties. Revenue from such
transactions amounted to approximately $1,413,000 for Fiscal 1995. In
addition, the Company has occasionally purchased certain products from KNP BT
and its other affiliates (including the Packaging Businesses) for resale.
Such purchases totalled approximately $8,567,000 for Fiscal 1995. The Company
expects to continue to engage in similar affiliated party transactions on
generally the same basis as it would engage in such transactions with
unaffiliated third parties.

LEASE

The Veenman Group leases one of its facilities from an affiliate of KNP BT
under an operating lease that expires on September 30, 1999. Rental expense
under such lease was $648,000 in 1995. Future annual minimum lease payments
are $673,000.

EXECUTIVE COMPENSATION

Set forth below is information concerning the Company's compensation of its
chief executive officer and the other four most highly compensated executive
officers of the Company.

Prior to the Reorganization, the Company's business was operated through the
Office Products Division of KNP BT. In anticipation of the Reorganization, Mr.
Huyzer, who had acted as President of the Office Products Division, became
President and Chief Executive Officer of the Company in April 1995.

9
<PAGE>
The following table summarizes the compensation paid or accrued by KNP BT
for services rendered in all capacities to the Office Products Division
during 1994 and by the Company during 1995 to Mr. Huyzer and each of the
other four most highly compensated executive officers of the Company
(collectively, including Mr. Huyzer, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
AWARDS PAYOUTS
------------- --------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(2) OPTIONS(#)(3) LTIP PAYOUTS COMPENSATION
- ----------------------- -------- ------------- -------------- ---------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rudolf A.J. Huyzer ... 1995 $500,000 $ 50,000(4) -- 200,000 -- $ 4,186(5)
President and Chief 1994 365,744(6) 194,506 434,189(7) -- -- --(8)
Executive Officer

Howard L. Brown ....... 1995 350,000 -- -- 105,000 -- 36,386(9)
Vice President and 1994 288,000 330,000(10) -- -- -- 29,804(11)
Regional President,
Northeast Region

Michael J. Miller .... 1995 250,000 -- -- 70,000 -- 28,000(12)
Vice President and 1994 186,538 56,100 -- -- $62,500(13) 41,144(14)
Regional President,
South-Southeast Region

Richard C. Dubin ...... 1995 250,000 -- -- 70,000 -- 25,000(15)
Vice President and 1994 150,000 45,000 -- -- 58,000(16) 56,961(17)
Regional President,
Midwest-West Region

David Kirshner ........ 1995 250,000 -- -- 70,000 -- 27,772(18)
Vice President and 1994 194,468 31,816 -- -- -- 87,672(19)
Regional President,
Great Lakes Region
<FN>
- -----------------------------------------------------------------------------
(1) The Company became a reporting company under the Securities Exchange Act
of 1934, as amended, in July 1995 and is not required to provide
information for any period prior to fiscal 1994.

(2) With respect to each of the Named Executive Officers other than as
indicated for Mr. Huyzer in 1994, the aggregate amount of perquisites
and other personal benefits, securities or property received was less
than either $50,000 or 10% of the total annual salary and bonus reported
for such officer.

(3) All of the options were granted pursuant to the Company's 1995 Stock
Option Plan. See "Employee Benefit Plans--1995 Stock Option Plan."

(4) Guaranteed payment pursuant to the terms of Mr. Huyzer's employment
agreement. See "Employment Agreements."

(5) Consists of employer matching contributions to the Company's 401(k)
plan. In addition, Mr. Huyzer was granted options to purchase 10,000
shares of KNP BT stock on May 4, 1995, representing approximately 1% of
the total number of options granted to KNP BT employees for 1995. The
exercise price of the options is NLG 37.90 (or $23.69 based on the
December 31, 1995 exchange rate of NLG 1 = $.625 (the "1995 Exchange
Rate")). The options expire on May 3, 1999. The potential realizable
values of Mr. Huyzer's options granted in 1995 at assumed annual rates
of stock price appreciation over the option terms of 5% and 10%,
respectively, were $51,047 and $109,934. The foregoing 5% and 10%
assumed annual rates of compound stock price appreciation over the term
of the options are set forth in accordance with rules and regulations of
the Securities and Exchange Commission and do not represent the
Company's estimate of KNP BT's stock price appreciation or a projection
by the Company of KNP BT's future stock prices.

(6) $247,855 of this amount was paid in Netherlands guilders throughout 1994
and has been translated to U.S. dollars based upon the December 30, 1994
exchange rate of NLG 1 = $.5761 (the "1994 Exchange Rate").

(7) This amount includes: $240,000 for an allowance to accommodate the
higher cost of housing in the United States; $146,198 for a settling-in
allowance to accommodate Mr. Huyzer's move; $8,373 for fringe benefits;
and $20,631 for certain disability coverage. Such amount also includes
$4,321 for an expense account and $14,666 for an auto allowance, which
amounts were paid in Netherlands guilders and have been translated at
the 1994 Exchange Rate.
10
<PAGE>
(8) Mr. Huyzer was granted options to purchase 10,000 shares of KNP BT stock
on May 9, 1994, representing approximately 1% of the total number of
options granted to KNP BT employees for 1994. The exercise price of the
options is NLG 37.90 ($23.69 based on the 1995 Exchange Rate). The
options expire on May 8, 1998. The potential realizable values of Mr.
Huyzer's options granted in 1994 at assumed annual rates of stock price
appreciation over the option terms of 5% and 10%, respectively, were
$51,047 and $109,934. The foregoing 5% and 10% assumed annual rates of
compound stock price appreciation over the term of the options are set
forth in accordance with rules and regulations of the Securities and
Exchange Commission and do not represent the Company's estimate of KNP
BT's stock price appreciation or a projection by the Company of KNP BT's
future stock prices.

(9) Consists of employer matching contributions to the Company's 401(k) plan
of $1,386 and a payment of $35,000 in lieu of participation in the
Company's SERP.

(10) Includes special bonus payment of $150,000 received in June 1995 with
respect to the year 1994 pursuant to the terms of Mr. Brown's employment
agreement.

(11) Consists of employer matching contributions to the Company's 401(k) plan
of $1,004 and a payment of $28,800 in lieu of participation in the
Company's SERP.

(12) Consists of employer matching contributions to the Company's 401(k) plan
of $3,000 and accruals under the Company's SERP of $25,000. See
"Employee Benefit Plans--Supplemental Executive Retirement Plan."

(13) Payment received in December 1995, attributable to the years 1994 and
1993. See "Long-Term Incentive Plan."

(14) Consists of employer matching contributions to the Company's 401(k) plan
of $3,000 and accruals under the Company's SERP of $38,144 with respect
to the period from 1992 through 1994, of which $17,500 is attributable
to 1994. See "Employee Benefit Plans--Supplemental Executive Retirement
Plan."

(15) Consists of employer matching contributions to the Company's 401(k) plan
of $660 and accruals under the Company's SERP of $24,340. See "Employee
Benefit Plans--Supplemental Executive Retirement Plan."

(16) Payment received in March 1996, attributable to the years 1994 and 1993.
See "Long-Term Incentive Plan."

(17) Consists of employer matching contributions to the Company's 401(k) plan
of $1,618 and accruals under the Company's SERP of $55,343 with respect
to the period from 1992 through 1994, of which $14,912 is attributable
to 1994. See "Employee Benefit Plans--Supplemental Executive Retirement
Plan."

(18) Consists of employer matching contributions to the Company's 401(k) plan
of $2,772 and accruals under the Company's SERP of $25,000. See
"Employee Benefit Plans--Supplemental Executive Retirement Plan."

(19) Consists of employer matching contributions to the Company's 401(k) plan
of $2,645 and accruals under the Company's SERP of $85,026 with respect
to the period from 1991 through 1994, of which $19,184 is attributable
to 1994. See "Employee Benefit Plans--Supplemental Executive Retirement
Plan."
</FN>
</TABLE>

11
<PAGE>
OPTION GRANTS IN FISCAL 1995

The following table sets forth certain information concerning individual
grants of options to purchase Common Stock made by the Company during Fiscal
1995 to each of the Named Executive Officers.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR

<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
NAME AND POSITION ----------------- -----------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
GRANTED(#)(1) FISCAL 1995(2) ($ PER SHARE) DATE 5% 10%
- ----------------------- ------------- ---------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rudolf A.J. Huyzer ... 200,000 17.0% 11.50 07/18/05 $1,446,700 $3,666,200
President and Chief
Executive Officer

Howard L. Brown ....... 105,000 9.0% 11.50 07/18/05 759,517 1,924,755
Vice President and
Regional President,
Northeast Region

Michael J. Miller .... 70,000 6.0% 11.50 07/18/05 506,345 1,283,170
Vice President and
Regional President,
South-Southeast Region

Richard C. Dubin ...... 70,000 6.0% 11.50 07/18/05 506,345 1,283,170
Vice President and
Regional President,
Midwest-West Region

David Kirshner ........ 70,000 6.0% 11.50 07/18/05 506,345 1,283,170
Vice President and
Regional President,
Great Lakes Region
<FN>
- ----------------------------------------------------------------------------
(1) All of the options were granted pursuant to the Company's 1995 Stock
Option Plan. See "Employee Benefit Plans--1995 Stock Option Plan." The
options are exercisable in accordance with the following vesting schedule:

(a) as to fifty percent (50%) of the number of shares covered by the
option, after the completion of one (1) year of continuous service
from the grant date;

(b) as to twenty-five percent (25%) of the number of shares covered by
the option, after the completion of two (2) years of continuous
service from the grant date; and

(c) as to the remaining twenty-five percent (25%) of the number of shares
covered by the option, after the completion of three (3) years of
continuous service from the grant date.

(2) The total number of options granted in 1995 pursuant to the 1995 Stock
Option Plan was 1,183,000. In addition, an option to purchase 20,000 shares
of the Company's Common Stock was granted in 1995 to a former employee of
the Company pursuant to a separate agreement on substantially the same
terms, including, without limitation, the exercise price and vesting
schedule, as the options granted to the Named Executive Officers pursuant to
the Company's 1995 Stock Option Plan.

(3) The 5% and 10% assumed annual rates of compound stock price appreciation
over the term of the options are computed in accordance with rules and
regulations of the Securities and Exchange Commission and do not represent
the Company's estimate of stock price appreciation or a projection by the
Company of future stock prices. The 5% and 10% assumed rates of appreciation
would result in the price of the Company's Common Stock increasing to
approximately $18.75 and $29.875 per share, respectively.
</FN>
</TABLE>

12
<PAGE>
The following table summarizes the aggregated option exercises by the
Named Executive Officers in Fiscal 1995 and the year-end values of
unexercised options.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND
FISCAL 1995 YEAR-END OPTION VALUES(1)

<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED DECEMBER 31, 1995 AT DECEMBER 31, 1995
NAME AND POSITION ON EXERCISE VALUE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- -------------- --------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Rudolf A.J. Huyzer ... -- -- 30,000/0(2) $ 41,250/0
President and Chief 0/200,000(3) 0/900,000
Executive Officer

Howard L. Brown ....... -- -- 5,000/0(2) 0/0
Vice President and 0/105,000(3) 0/472,500
Regional President,
Northeast Region

Michael J. Miller .... -- -- 0/70,000(3) 0/315,000
Vice President and
Regional President,
South-Southeast Region

Richard C. Dubin ...... -- -- 7,000/0(2) 13,250/0
Vice President and 0/70,000(3) 0/315,000
Regional President,
Midwest-West Region

David Kirshner ........ -- -- 5,000/0(2) 0/0
Vice President and 0/70,000(3) 0/315,000
Regional President,
Great Lakes Region
<FN>
- -----------------------------------------------------------------------------
(1) Dollar amounts have been translated from Netherlands guilders based upon
the December 31, 1995 exchange rate of NLG 1 = $.625.

(2) Share numbers refer to shares of KNP BT.

(3) Share numbers refer to shares of the Company.
</FN>
</TABLE>

LONG-TERM INCENTIVE PLAN

The Company maintained a long-term incentive compensation plan for certain
of its executive officers, which plan was terminated for years after 1994
effective December 31, 1994. The plan's participants, including Messrs.
Dubin, Kirshner and M. Miller, were eligible to receive payments to be
determined by the Company based on the attainment of certain financial
targets. Pursuant thereto, Mr. M. Miller received a payment of $62,500 in
December 1995 and Mr. Dubin received a payment of $58,000 in March 1996, in
each case attributable to the years 1994 and 1993.

COMPENSATION OF DIRECTORS

13
<PAGE>
EMPLOYMENT AGREEMENTS

The Company and KNP BT have entered into an agreement with Mr. Huyzer,
effective as of September 1, 1994, pursuant to which Mr. Huyzer serves as
President and Chief Executive Officer of the Company. Such employment
agreement is for an initial term of two (2) years to be followed by
successive terms of one (1) year, unless the parties agree not to renew the
agreement or the agreement is otherwise terminated in accordance with its
terms. Pursuant to the agreement, Mr. Huyzer will receive an annual base
salary of $500,000, an annual bonus of up to 80% of his base salary based on
the achievement of certain annual performance targets, but in no event less
than 10% of base salary during the initial term of the agreement, and certain
perquisites and other benefits. In addition, Mr. Huyzer would receive
long-term disability insurance in an amount equal to 100% of his deemed
equivalent Dutch base salary for the first 24 months of disability and 80% of
his deemed equivalent Dutch base salary for the months thereafter. Mr. Huyzer
is eligible to participate in the KNP BT Directors Pension Plan (the "KNP BT
Pension Plan"). Under the KNP BT Pension Plan, KNP BT pays the employer's
contribution. Mr. Huyzer's pensionable salary under the KNP BT Pension Plan
is set at Netherlands guilders NLG 600,000 (USD $375,000) as of January 1,
1996 and such amount will be reviewed periodically for potential adjustments
in light of base salary developments for comparable jobs in The Netherlands.
Under such plan, Mr. Huyzer's retirement age is set at sixty-two years.

In addition, in the event of a change in control of the Company or if Mr.
Huyzer's employment with the Company is terminated by the Company without
cause or terminates due to his disability, as the case may be, Mr. Huyzer
will be repatriated to The Netherlands at KNP BT's expense and either (i)
shall be employed by KNP BT in a comparable job for a period of twenty-four
months after such repatriation or (ii) shall be paid a severance payment by
KNP BT equal to the total of Mr. Huyzer's base salary and bonus compensation
for a period up to the last twenty-four months that he was employed. In
addition, in either case, Mr. Huyzer will be entitled to a pension based upon
employment up to the age of sixty-two.

The Company has entered into employment agreements with Messrs. Brown,
Dubin, Kirshner and M. Miller, effective as of January 1, 1995, pursuant to
which they serve as Regional Presidents of, respectively, the Northeast
Region, the Midwest-West Region, the Great Lakes Region and the
South-Southeast Region. Each of these agreements is for a term of four years
unless renewed or sooner terminated in accordance with its terms.

Pursuant to such agreements, each of Messrs. Brown, Dubin, Kirshner and M.
Miller receives an annual base salary, an annual bonus of up to 50% of his
base salary based on achievement of certain financial criteria and personal
targets and certain perquisites and other benefits. Mr. Brown receives an
additional amount equal to 10% of his base salary in lieu of participation in
the Company's Supplemental Executive Retirement Plan. See "Employee Benefits
Plans--Supplemental Executive Retirement Plan." Pursuant to the terms of his
employment agreement, Mr. Brown also received a special bonus of $150,000 in
1995 with respect to the year 1994.

If the employment of Messrs. Brown, Dubin, Kirshner or M. Miller is
terminated due to death, disability, resignation (other than following
non-renewal by the Company in the final year of the initial

14
<PAGE>
term as provided in the agreements) or for cause, such person is entitled to
receive earned and unpaid base salary through the effective date of
termination, business expense reimbursements, and all other amounts due but
unpaid to such person for the year immediately preceding the year in which
such termination occurs. In addition, if the employment of Messrs. Brown,
Dubin, Kirshner or M. Miller is terminated due to death or disability, such
person is entitled to receive any unpaid perquisite allowance and a prorated
bonus payment for the year during which such termination occurs.

If the employment of Messrs. Brown, Dubin, Kirshner or M. Miller is
terminated by the Company without cause or by the resignation of such person
(following non-renewal by the Company in the final year of the initial term
as provided in the agreements), such person shall be entitled to continuation
for the remainder of the initial term of base salary, full benefits,
perquisite allowance, retirement plan contributions and payment of a bonus
for each year remaining in the initial term.

Each such employment agreement contains a covenant not to compete with the
Company. The covenant applies during the term of employment plus a period of
eighteen months after the termination of employment with the Company.

KNP BT PENSION PLANS

Mr. Huyzer participates in certain retirement programs offered by KNP BT,
including the Average Indexed Salary Module plan ("AIS"), applicable to all
KNP BT employees in The Netherlands, and the Elective Contribution Module
("ECM") and Flexible Retirement Module ("FRM") plans. ECM is applicable to
KNP BT employees whose annual base salary exceeds $87,750. Benefits from all
of these programs are paid from contributions of KNP BT. Mr. Huyzer will
receive an estimated annual age 65 retirement benefit of $25,760 (with annual
adjustments) from AIS based upon his annual adjusted base salary up to
$87,750 and annual contributions by KNP BT of $6,905 (indexed) and an accrued
benefit as of December 31, 1995 of $13,518. ECM provides benefits in addition
to AIS in the form of an account balance which will be converted to an
annuity when the employee reaches age 65. The estimated ECM benefit which
will have accrued for the account of Mr. Huyzer at age 65 is $802,239 plus
interest, based upon continuing annual contributions by KNP BT of $34,448
(indexed) and an accrued benefit as of December 31, 1995 of $359,249. The FRM
provides a supplemental benefit for employees who retire between the ages of
60 and 65. Mr. Huyzer will receive an estimated account balance of $321,925
plus interest (which will be converted to an annuity upon his retirement),
based upon annual contributions of KNP BT of $31,577 (indexed). As of
December 31, 1995, the account balance is $127,167. The FRM is also composed
of an accrued benefit as of December 31, 1995 of $61,425, based upon annual
contributions by KNP BT of $13,163 (indexed). If he retires at age 65, these
two benefits under the FRM will be added to the benefits received by Mr.
Huyzer from AIS and ECM. Mr. Huyzer's contributions to the KNP BT retirement
programs totalled $25,209 as of December 31, 1995. All of the foregoing
amounts have been converted into U.S. dollars based upon the December 31,
1995 exchange rate of NLG 1 = $.625.

EMPLOYEE BENEFIT PLANS

1995 STOCK OPTION PLAN

DESCRIPTION OF THE PLAN.

The Company's 1995 Stock Option Plan (the "Plan") is intended to further
the Company's policy of encouraging ownership of Common Stock by key
employees and to provide incentives for such persons. The Plan is expected to
benefit the Company and its shareholders by enabling the Company to attract
and retain highly qualified persons and by rewarding key employees for their
contribution toward increasing the value of the Common Stock.

15
<PAGE>
A total of 4,188,000 shares of authorized but unissued Common Stock has
been reserved for issuance under the Plan upon the exercise of options,
subject to adjustment in the event of a stock split, stock dividend or other
change in the Common Stock. In lieu of unissued shares, the Company, at its
discretion, may transfer, upon the exercise of options, reacquired shares or
shares bought in the open market for the purposes of the Plan. If any options
terminate for any reason or expire without having been exercised in full, the
shares of Common Stock not purchased under such options will be available for
issuance under the Plan.

The administrator of the Plan (the "Administrator") was the Company's
Board of Directors until January 25, 1996, when the Board of Directors
appointed the Compensation Committee to be the Administrator. Subject to the
provisions of the Plan, the Administrator has authority to make all
determinations deemed necessary or advisable for the administration of the
Plan, including, without limitation: (a) to grant options, subject to the
terms and conditions of the option agreement approved by the Administrator
and in conformity with the Plan; (b) to determine the purchase price of the
Common Stock covered by each option, the persons to whom, and the time or
times at which options shall be granted, whether such options shall be
"incentive stock options" ("ISOs") intended to satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
non-qualified stock options ("NQOs"), or both, and the number of shares of
Common Stock to be covered by each option; (c) to interpret the Plan; (d) to
prescribe, amend and rescind rules and regulations relating to the Plan; (e)
to determine the terms of particular option agreements; (f) with the consent
of the respective optionee, to modify or amend any option agreement; (g) to
execute on behalf of the Company any instrument required to effectuate the
grant of an option; (h) to accelerate the exercise date of any option; and
(i) to ensure satisfaction of any withholding tax obligation in connection
with any option. The Administrator's determination on the foregoing matters
is deemed conclusive.

The purchase price of the Common Stock covered by each option is
determined by the Administrator, but may not be less than 90% (100%, or in
certain events 110%, in the case of an ISO) of the fair market value of the
Common Stock on the date of the grant of the option. The term of each option
may be for such period as the Administrator shall determine, but not more
than ten years (or five years in the case of certain ISOs) from the date of
grant and may be subject to earlier termination under certain circumstances.
The purchase price of the shares as to which an option is exercised must be
paid in full at the time of exercise in cash or, if permitted by the
Administrator, by delivery of shares of Common Stock. The vesting schedule,
if any, for options is determined by the Administrator and set forth in each
option agreement, as applicable. Options are not transferable otherwise than
by will, by the laws of descent and distribution or pursuant to a "qualified
domestic relations order" (as defined in Section 414(p) of the Code), and an
option may be exercised, during the lifetime of the optionee, only by such
optionee or his legal representative, as the case may be. Options generally
must be exercised within ninety days following termination of service (or
three years, in the case of death or disability), but in no event after the
expiration of the term of the option.

Unless the Plan has been previously terminated, no option may be granted
after the tenth anniversary of the adoption of the Plan. The Board of
Directors may at any time prior to such date terminate the Plan or make such
modification or amendment of the Plan as it shall deem advisable; provided,
however, that no amendment may be made, without the approval of the
shareholders of the Company, except as provided in the Plan in respect of a
change in capitalization, which would (i) increase the maximum number of
shares for which options may be granted under the Plan, (ii) amend the
requirements as to the class of persons eligible to receive options or (iii)
materially increase the benefits accruing to optionees under the Plan.

The Plan provides that in the event of a "change of control" (as
hereinafter defined) other than in connection with a "pooling transaction"
(as hereinafter defined), the options shall, subject to the

16
<PAGE>
provisions of the Plan in respect of a change in capitalization, remain
outstanding and shall become exercisable by the optionee upon the terms and
conditions of the Plan and the option agreement between the respective
optionee and the Company; provided, however, that the Administrator may, in
its discretion, take one or more of the following actions in connection with
a "change of control" (other than a "pooling transaction"): (i) permit the
acquiror to assume the obligations of the Company under the Plan on the same
or better terms as those granted under the Plan; (ii) declare that any or all
options shall terminate as of a date to be fixed by the Administrator and
give the respective optionees the right to exercise such option or options
prior to such date; (iii) declare that any or all options shall terminate as
of a date to be fixed by the Administrator and may require that the
respective optionees surrender all or a portion of their unexercised options
for cancellation by the Company prior to such date and receive (a) the cash,
securities or other consideration he would have received had he been entitled
to exercise, and had he exercised, such option or options immediately prior
to such "change of control" and had he disposed of his shares issuable upon
such exercise in connection with such change of control, minus (b) an amount
of cash or fair market value of securities or other such consideration equal
to the exercise price of such options; and/or (iv) declare that, upon the
exercise of any or all options after a "change of control" in accordance with
the provisions of the Plan, the respective optionee shall be entitled to
receive only the cash, securities or other consideration he would have been
entitled to receive had he been entitled to exercise, and had he exercised,
such option immediately prior to such "change of control" and had he disposed
of his option shares in connection with such "change of control."

The Plan further provides that if, during the term of one or more options,
there shall occur a "change of control" which is intended to qualify as a
"pooling of interests" for accounting and financial reporting purposes (a
"Pooling Transaction"), it shall be a condition to the effectiveness of such
"change of control" transaction that the acquiror agree to assume the
obligations of the Company under the Plan on the same or better terms as
those granted under the Plan.

For the purposes of the Plan, a "change of control" is defined as (i) a
merger or consolidation of the Company with or into another corporation which
is not an affiliate of the Company or a recapitalization or reorganization of
the Company where, immediately upon the consummation of such merger,
consolidation, reorganization or recapitalization, the persons who were the
shareholders of the Company immediately prior to such merger, consolidation,
reorganization or recapitalization do not immediately thereafter own more
than 50% of the total voting power of the merged, consolidated, reorganized
or recapitalized company's voting securities entitled to vote generally in
the election of directors; (ii) the sale of all or substantially all of the
assets of the Company to another person or entity which is not an affiliate
of the Company; or (iii) the acquisition by any person, entity or "group"
(excluding, for this purpose, the Company, any affiliate of the Company, or
any employee benefit plan of the Company or of any affiliate of the Company
which acquires beneficial ownership of voting securities of the Company), as
defined in the Plan, of "beneficial ownership" as defined in the Plan of
either 50% or more of the then outstanding shares of Common Stock or 50% or
more of the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors.

FEDERAL TAX CONSEQUENCES.

The following discussion is only a brief summary of the U.S. Federal
income tax aspects of options granted under the Plan based on such tax laws
in effect on the date hereof. This summary is not intended to be exhaustive,
and does not describe a number of special tax rules that could apply in
certain circumstances (I.E., alternative minimum tax). State, local and
foreign income tax consequences are not discussed, and may vary from locality
to locality.

The grant of ISOs or NQOs will not result in taxable income for the
optionee at the time the option is granted and the Company will not be
entitled to a deduction at that time.

17
<PAGE>
In general, an optionee will be subject to tax for the year of exercise of
an NQO on the amount of ordinary income equal to the difference between the
purchase price and the fair market value of the Common Stock received at the
time of such exercise. The Company will be entitled to a deduction in a
corresponding amount. Income tax withholding requirements apply upon
exercise. The optionee's tax basis in the Common Stock acquired on exercise
will be equal to the purchase price plus the amount of ordinary income
subject to tax upon such exercise. Upon subsequent disposition of the Common
Stock, the holder will realize capital gain or loss, long-term or short-term,
depending upon the length of time the holder held the Common Stock received
upon the option exercise.

If an optionee exercises an NQO by delivery of already-owned Common Stock
as payment of the purchase price, no gain or loss will be recognized with
respect to the Common Stock so delivered and the optionee will be subject to
tax on an amount of ordinary income equal to the difference between the
purchase price and the fair market value of the Common Stock received at the
time of such exercise. As is the case of exercise by delivering cash, the
Company will be entitled to a deduction equal to the amount of ordinary
income recognized by the optionee where the exercise involves delivery of
already-owned Common Stock. The optionee's tax basis in the Common Stock
acquired on exercise equivalent in number to the Common Stock surrendered
will be the same as the optionee's tax basis in the surrendered Common Stock
and the tax basis in the additional Common Stock obtained by the option
exercise will be equal to the amount of compensation income realized. For
purposes of determining long-term or short-term capital gain, the holding
period of the Common Stock equivalent in number to the Common Stock
surrendered will include the holding period of the surrendered Common Stock
while the additional Common Stock acquired on exercise will have a holding
period that starts on the exercise date.

In general, the exercise of an ISO will not result in income for the
optionee if the optionee (i) does not dispose of the Common Stock within two
years after the date of grant or one year after the acquisition of the Common
Stock upon exercise and (ii) is an employee of the Company or a subsidiary of
the Company from the date of option grant until three months before the
exercise date. If these requirements are met, the tax basis of the Common
Stock upon later disposition will be the purchase price. Any gain will be
taxed to the holder as long-term capital gain and the Company will not be
entitled to a deduction. The excess of the fair market value on the exercise
date over the purchase price is an item of tax preference, potentially
subject to the alternative minimum tax.

If an optionee exercises an ISO by delivery of already-owned Common Stock
as payment of the purchase price and at the date of exercise the requirements
of clauses (i) and (ii) in the immediately preceding paragraph are satisfied,
no gain or loss will be recognized with respect to the Common Stock so
delivered. Furthermore, the optionee's tax basis in the Common Stock acquired
on exercise equivalent in number to the Common Stock surrendered will be the
same as the optionee's tax basis in the surrendered Common Stock and the tax
basis in the additional Common Stock obtained by the option exercise will be
equal to zero. For purposes of determining long-term or short-term capital
gain, the holding period of the Common Stock equivalent in number to the
Common Stock surrendered will include the holding period of the surrendered
Common Stock while the additional Common Stock acquired on exercise will have
a holding period that commences on the exercise date.

If an optionee disposes of the Common Stock acquired upon exercise prior
to the expiration of either of the holding periods described in clause (i)
above, the optionee will recognize ordinary income and the Company will be
entitled to a corresponding deduction equal to the lesser of (a) the fair
market value of the Common Stock on the exercise date minus the purchase
price or (b) the amount realized on disposition minus the purchase price. Any
gain in excess of the amount of the ordinary income portion will be taxable
as long-term or short-term capital gain depending upon the length of time the
Common Stock was held after exercise.

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<PAGE>
The following table summarizes the aggregate number of option grants as of
May 13, 1996 under the Plan. Each option is exercisable for one share of Common
Stock, which had a market value of $19.625 per share as of May 13, 1996.

STOCK OPTIONS GRANTED PURSUANT TO THE 1995 STOCK OPTION PLAN

OPTIONS PURSUANT
NAME AND POSITION TO THE PLAN
- ------------------------------------------------------------- -----------------

Rudolf A.J. Huyzer
President and Chief Executive Officer 200,000

Howard L. Brown
Vice President and Regional President, Northeast Region 105,000

Michael J. Miller
Vice President and Regional President, South-Southeast Region 70,000

Richard C. Dubin
Vice President and Regional President, Midwest-West Region 70,000

David Kirshner
Vice President and Regional President, Great Lakes Region 70,000

Current Executive Officers as a Group 655,000

Current Non-employee Directors as a Group -0-

All other employees as a group 528,000

Total options granted pursuant to the Plan 1,183,000

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Certain executive officers of the Company participate in the Company's
Supplemental Executive Retirement Plan (the "SERP"), which provides
supplemental non-qualified retirement benefits to participants. The SERP
requires the Company to credit annually to the participant's account an
amount equal to a percentage of such participant's annual compensation as
determined by the Company. For each year prior to January 1, 1995 during
which an amount is deemed to be held in a participant's account, his account
is credited with interest at a rate equal to that of thirty-year U.S.
Treasury securities as of the end of that year. From and after 1995, a
participant's account is treated as if deemed to be invested in investment
vehicles available to such participant under the 401(k) plan and credited
annually with income, expenses, gains and losses from such deemed
investments.

A "grantor trust" under Section 677 of the Code may be established under the
SERP. In the event of a "change-in-control" (as defined in the SERP), the
Company is obliged to transfer amounts equal to the accounts under the SERP to
the trust. Assets in the trust, at all times, are subject to claims of the
general creditors of the grantor of such trust.

Upon a participant's termination of employment with the Company for any
reason other than "cause" (as defined in the SERP), such participant is entitled
to receive the entire value of his account. Payment under the SERP is made
either in a lump sum or in monthly installments over a period of no more than
five years, as elected by the participant. The SERP also allows participants to
designate beneficiaries to receive their SERP benefits in the event of death.

Amounts accrued in 1994 and 1995 under the SERP for the Named Executive
Officers are reported in the Summary Compensation Table above. See
"--Executive Compensation."

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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

GENERAL

The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") was established by the Board on January 25, 1996 and
Messrs. de Kluis and Kellar were appointed to serve thereon. Upon his election
to the Board on February 19, 1996, Mr. von der Heyden was appointed to serve on
the Compensation Committee. The Compensation Committee oversees compensation
policies for executive officers of the Company, approves salaries and bonuses
for such officers and administers the Company's 1995 Stock Option Plan. Such
functions were performed by a committee consisting of Messrs. de Kluis, van
Oordt and de Wit (with the Board of Directors as a whole administering the 1995
Stock Option Plan) for 1995 since the Compensation Committee had not yet been
established and, accordingly, this report is presented by Messrs. de Kluis, van
Oordt and de Wit rather than by the Compensation Committee.

Prior to the Offering on July 19, 1995, the Company was a wholly-owned
subsidiary of KNP BT. In connection with the Offering and in order to assess the
compensation practices of the Company's competitors and of similarly sized
companies, the Company during 1995 retained the services of William M. Mercer,
Incorporated, a national compensation consulting firm, to consult with it
regarding its compensation policies and in connection therewith to analyze the
executive officer compensation practices of comparative companies both within
and outside of the office products industry.

EXECUTIVE COMPENSATION PHILOSOPHY

The Company's compensation philosophy is to seek to compensate its executive
officers in a manner designed to motivate such officers to increase stockholder
value. In furtherance of this goal, the Compensation Committee determines
compensation packages for the Company's executive officers based upon individual
and Company performance as well as upon competitive factors. Competitive
compensation practices are determined by reference to a group of six office
products companies as well as a broader group of distribution and wholesale
companies. The principal components of the Company's executive officer
compensation program are base salary, annual incentive bonus and stock options.
Each of the Company's executive officers also receives additional forms of
compensation as described above in the Summary Compensation Table and the
footnotes thereto and under the headings "Employment Agreements" and "Employee
Benefit Plans."

BASE SALARY

Base salaries for the Company's executive officers are subject to annual
review for potential adjustment, consistent with the terms of applicable
employment agreements, based upon several factors, including individual
performance, base salary levels for comparable positions at comparable companies
and the Company's performance. In determining salary adjustments for the
Company's executive officers (other than Mr. Huyzer) for 1995, the committee
relied in part on Mr. Huyzer's evaluations and recommendations concerning each
officer's responsibilities for 1995 and, where applicable, performance during
1994. Salaries for the Named Executive Officers were increased in 1995 by an
average of approximately 38% over 1994 levels, due to a significant increase in
the responsibilities of such officers resulting from the Company's
reorganization, and in recognition of individual performance and competitive
market movements.

ANNUAL INCENTIVE

The Company's executive officers are eligible to receive annual cash
incentive awards (generally of up to fifty percent (50%) of annual base salary)
based upon individual performance, the performance of the operating region for
which such officer has primary responsibility, where applicable, and the

20
<PAGE>
Company's overall operating results. Target levels for such performance were set
by the committee at the beginning of 1995. The Company did not achieve the
minimum performance level required to generate awards to the Named Executive
Officers in 1995. Therefore, other than the contractual guaranteed payment to
Mr. Huyzer described above under the heading "Employment Agreements," no annual
incentive awards were paid to the Named Executive Officers based on 1995
performance. Target performance would have placed the Named Executive Officers'
total annual cash compensation (salary plus annual incentive) at approximately
the median of the competitive market. Due to the absence of annual incentive
payments for 1995, total annual cash compensation was generally below such
median.

STOCK OPTIONS

Compensation through increases in the value of the Company's equity is a key
component of the Company's compensation program for executive officers. The
Company's 1995 Stock Option Plan adopted in connection with the Offering (the
"Plan") is designed to retain key employees including executive officers and to
align a significant portion of their financial interests with those of the
Company's stockholders in the long-term appreciation of the Company's stock.
Options granted under the Plan have such vesting and exercise periods as the
Compensation Committee may determine. In determining the number of options to be
granted to an executive officer under the Plan, the Compensation Committee
considers such officer's position, level of responsibility within the Company,
the officer's existing equity holdings, the potential reward to the officer if
the stock appreciates in value, the incentives to retain the officer's services
to the Company, the competitiveness of the officer's overall compensation
arrangements and the officer's individual performance. Based upon a review of
such factors, the Board in connection with the Offering granted to Mr. Brown
options to purchase 105,000 shares of the Company's Common Stock and granted to
each of Messrs. Dubin, Kirshner and M. Miller options to purchase 70,000 shares
of the Company's Common Stock. In each case, the exercise price of the options
granted was equal to the Offering price, representing the fair market value of
the Common Stock as of the grant date. The committee anticipates that future
option grants will be made annually by the Compensation Committee in order to
continue to foster equity ownership by the Company's executive officers and to
provide them with competitive levels of equity-based incentive compensation.

CHIEF EXECUTIVE OFFICER'S COMPENSATION

In determining Mr. Huyzer's compensation, the Board considered similar
factors to those used in determining compensation of the other executive
officers. The Board also considered Mr. Huyzer's importance in the Company's
achievement of its strategic objectives, including the consummation of
acquisitions and the Offering, and his contributions toward the overall growth
of the Company. A greater percentage of Mr. Huyzer's overall compensation
compared with that of the other executive officers is subject to consistent,
positive long-term performance of the Company, including profitability and
return to shareholders. Pursuant to the terms of his employment agreement, Mr.
Huyzer received a base salary of $500,000 for 1995 and he was eligible to
receive a bonus of up to eighty percent (80%) of such base salary. As described
above, Mr. Huyzer's bonus award for 1995 was limited to $50,000, as guaranteed
in his employment agreement, due to the fact that the Company did not meet the
minimum performance level required to generate a greater award. In connection
with the Offering, Mr. Huyzer was granted options under the Plan to purchase
200,000 shares of the Company's Common Stock at the Offering price. Although he
is a member of the Board of Directors, Mr. Huyzer did not participate in the
committee's and Board's determinations concerning his compensation, including
the granting of stock options to him.

TAX DEDUCTIBILITY

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
Company's federal income tax deduction for certain executive compensation in
excess of $1 million paid to named executive officers. The Company believes its
current compensation programs meet the requirements to

21
<PAGE>
qualify for compensation to be deductible for federal income tax purposes. In
the future, it is the Company's intent to modify, when necessary, compensation
plans for the Company's executive officers so that the Company's federal tax
deduction is maximized. Because the Company believes that the use of prudent
judgment in determining pay levels is in the best interests of the Company and
its shareholders, under some circumstances it may determine to pay amounts of
compensation that may not be fully deductible. However, the Company reserves the
right to use prudent judgment in establishing compensation policies to attract
and retain qualified executives to manage the Company and to reward such
executives for outstanding performance, while taking into consideration the
financial impact of such actions on the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors was established on
January 25, 1996 and, accordingly, did not deliberate on executive compensation
matters during Fiscal 1995. Such functions were performed by a committee
consisting of Messrs. de Kluis, van Oordt and de Wit for Fiscal 1995. No
executive officer of the Company served as: (i) a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
one of whose executive officers served on the Board of Directors of the Company;
(ii) a director of another entity, one of whose executive officers served on the
Board of Directors of the Company; or (iii) a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) or another entity,
one of whose executive officers served as a director of the Company.

COMPANY PERFORMANCE

The chart below compares the Company's Common Stock performance with the
performance of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index") and a Peer Group Index by valuing the changes in common stock prices
from July 19, 1995 (the date that the Company's Common Stock began trading on
the New York Stock Exchange) through December 31, 1995 plus reinvested
dividends. The Securities and Exchange Commission requires that a company create
a peer group index with which to compare its own stock performance (if a
published peer group index does not exist) by selecting a grouping of companies
that includes companies whose lines of business are similar to its own. Since a
Peer Group Index does not exist for the market in which the Company operates, a
peer group was created using the following office products companies: Boise
Cascade Office Products Corporation, Corporate Express, Inc., U.S. Office
Products Company, OfficeMax, Inc., Office Depot, Inc., Staples, Inc. and Viking
Office Products, Inc. The chart below assumes in each case an initial investment
of $100.00 on July 19, 1995 plus reinvestment of dividends, with the Peer Group
Index investment weighted on the basis of market capitalization at July 19,
1995.

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<PAGE>
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURNS

[LINE GRAPH]

7/19/95 12/31/95
------- --------

BT Office Products International, Inc. 100 139

S&P 500 100 111

PEER GROUP 100 109

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

Prior to the Offering, all of the Common Stock of the Company was
beneficially owned by KNP BT. KNP BT is principally engaged in the distribution
and sale of paper, the sale of graphic and information systems, the manufacture
of paper and packaging products and, through the Company, the distribution of
office products. KNP BT had net sales in 1995 of NLG 15.0 billion ($9.3 billion)
and at the end of 1995 employed over 26,000 persons worldwide in more than 30
countries. KNP BT is headquartered in Amsterdam. KNP BT is the resulting
corporation from the merger of KNP, BT and VRG in March 1993. The Office
Products Division of BT became a part of the Office Products Division of KNP BT
as a result of such merger.

By virtue of its beneficial ownership of a majority of the outstanding shares
of the Company's Common Stock, KNP BT is in a position to control substantially
all corporate transactions requiring the

23
<PAGE>
vote of a majority of stockholders, including election of the entire Board of
Directors, as well as merger and consolidation proposals, without the
concurrence of other stockholders, and thereby is in a position to control the
Company. In connection with the Offering, KNP BT and certain of its affiliates
entered into various transactions and agreements with the Company which govern
certain ongoing relationships, including an intercompany services agreement and
a credit facility agreement, between the Company and KNP BT and its affiliates.

KNP BT is the beneficial owner of 23,400,000 shares of Common Stock, or
approximately 70% of the issued and outstanding shares of Common Stock.
Approximately 26% of such shares are held of record by Buhrmann-Tetterode
International B.V., a wholly-owned subsidiary of KNP BT ("BTIBV"), and the
balance is held of record by KNP BT. The address for KNP BT and BTIBV is
Paalbergweg 2, 1105 AG Amsterdam ZO, P.O. Box 23456, 1100 DZ Amsterdam Z0, The
Netherlands.

The following table sets forth as of May 13, 1996 certain information
regarding the beneficial ownership of the Common Stock (i) by each person who is
known by the Company to own beneficially more than 5% of the Common Stock, (ii)
by each current director and Named Executive Officer of the Company and (iii) by
all executive officers and directors of the Company as a group. Except as
otherwise indicated below, each of the persons named in the table has sole
voting and investment power with respect to the securities beneficially owned.

PERCENTAGE OF
NUMBER OF SHARES COMMON STOCK
OF COMMON STOCK BENEFICIALLY
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED(1)
- ------------------------------------------ ------------------- --------------
NV Koninklijke KNP BT .................... 23,400,000 70.1
Klaas de Kluis ........................... 8,700 *
Rudolf A.J. Huyzer ....................... 208,700(2) *
Robert F.W. van Oordt .................... 4,300 *
Frank J. de Wit .......................... 4,300 *
Rob W.J.M. Bonnier ....................... 4,300 *
James B. Miller .......................... 22,000 *
Frans H.J. Koffrie ....................... -- --
Lorrence T. Kellar ....................... 1,000 *
Karl von der Heyden ...................... -- --
Howard L. Brown .......................... 155,000(3) *
Michael J. Miller ........................ 70,000(4) *
Richard C. Dubin ......................... 70,000(4) *
David Kirshner ........................... 73,000(4) *
All Directors and Executive Officers as a
Group (15 persons) ..................... 764,600(5) 2.3
- ------------------
(1) An asterisk denotes beneficial ownership of 1% or less of the Common
Stock.

(2) Includes 200,000 options granted under the 1995 Stock Option Plan.

(3) Includes 105,000 options granted under the 1995 Stock Option Plan.

(4) Includes 70,000 options granted under the 1995 Stock Option Plan.

(5) Includes 655,000 options granted under the 1995 Stock Option Plan.

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<PAGE>
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS

Upon recommendation of the Audit Committee, the Board of Directors on
May 14, 1996 replaced Ernst & Young LLP, who served as the Company's independent
auditors for the fiscal year ended December 31, 1995, and appointed Coopers &
Lybrand L.L.P. as the Company's independent auditors for the fiscal year ending
December 31, 1996. The Board of Directors is requesting ratification of such
appointment by the Company's shareholders.

Representatives of both Ernst & Young LLP and Coopers & Lybrand L.L.P. are
expected to be present at the Meeting and will have the opportunity to make a
statement, if they so desire, and are expected to be available to respond to
appropriate questions from those attending such Meeting.

Ernst & Young LLP's reports on the financial statements of the Company for
the fiscal years ended December 31, 1995 and 1994 did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles.

In connection with the audits of the Company's financial statements for each
of the two fiscal years ended December 31, 1995 and 1994, and in the subsequent
interim period, there were no disagreements with Ernst & Young LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope and procedures which, if not resolved to the satisfaction of
Ernst & Young LLP would have caused Ernst & Young LLP to make reference to the
matter in their report.

In a letter to the Company dated January 30, 1996, Ernst & Young LLP advised
the Company that based on the status of the audit it noted no material
weaknesses in the Company's internal controls. In March 1996, the Company
discovered certain irregularities at the New York Division involving
misstatements in the reporting of gross profit margins and operating expenses as
well as concealment in the accounting records of a theft of Company assets.
Ernst & Young LLP advised the Company in a letter dated April 5, 1996 that a
material weakness in internal controls existed at the New York Division,
relating to such irregularities. The irregularities led to the Company's
reduction of previously reported unaudited operating income for 1995 and the
Company's restatement of operating income for 1994.

On March 26, 1996, the Audit Committee discussed the foregoing irregularities
with Ernst & Young LLP and authorized the Company's legal counsel, Winthrop,
Stimson, Putnam & Roberts, to investigate the irregularities and pursue
recoveries. Based on the Company's internal investigation and the preliminary
results of such counsel's investigation, the Company believes that the
discovered irregularities were due primarily to the misconduct of a few
individuals at a single unit. Key financial management personnel at the New York
Division were suspended from their duties and the Company has hired new
personnel and is in the process of hiring additional new personnel at such unit.

The Company has authorized Ernst & Young LLP to respond fully to any
inquiries of Coopers & Lybrand L.L.P. concerning the foregoing internal control
issues.

COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons holding more than 10
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership, reports of changes in ownership and annual reports of

25
<PAGE>
ownership of Common Stock and other equity securities of the Company. Such
directors, officers, and ten-percent stockholders are also required to furnish
the Company with copies of all such filed reports.

Based solely upon a review of the copies of such reports furnished to the
Company, or representations that no reports were required, the Company believes
that all of its directors, executive officers and 10% shareholders complied with
all filing requirements under Section 16(a) in 1995.

STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING

Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings, consistent with regulations adopted by
the Securities and Exchange Commission. Proposals to be considered for inclusion
in the Proxy Statement for the 1997 annual meeting must be received by the
Company at its principal executive offices not later than January 24, 1997.
Proposals should be directed to the attention of the Secretary, BT Office
Products International, Inc., 2150 East Lake Cook Road, Buffalo Grove, Illinois
60089-1877.

By Order of the Board of Directors,

John J. McKiernan
Secretary

Buffalo Grove, Illinois
May 24, 1996

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<PAGE>
FORM OF PROXY
BT OFFICE PRODUCTS INTERNATIONAL, INC.
2150 EAST LAKE COOK ROAD
RIVERWALK, SUITE 590
BUFFALO GROVE, ILLINOIS 60089
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Rudolf A.J. Huyzer and John J. McKiernan as
Proxies, each with the power of substitution, and hereby authorizes each of them
to represent and to vote, as designated below, all the shares of common stock,
par value $.01 per share, of BT Office Products International, Inc. (the
"Company") held of record by the undersigned on May 15, 1996 at an Annual
Meeting of Stockholders of the Company to be held on June 25, 1996 or any
adjournment or postponement thereof.

1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY
BELOW (EXCEPT AS MARKED TO VOTE FOR ALL NOMINEES
TO THE CONTRARY BELOW) [ ] LISTED BELOW [ ]

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)

NOMINEES: (EACH TO SERVE UNTIL THE 1997 ANNUAL MEETING OF STOCKHOLDERS AND
UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED)

FRANK J. DE WIT, RUDOLF A.J. HUYZER, ROB W.J.M. BONNIER,
KARL M. VON DER HEYDEN, LORRENCE T. KELLAR, FRANS H.J. KOFFRIE, JAMES B.
MILLER

2. TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.

[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN

3. TO CONSIDER AND ACT UPON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

(SEE OTHER SIDE)

<PAGE>
(CONTINUED FROM OTHER SIDE)

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.

-----------------------------------
NAME (PLEASE PRINT)

-----------------------------------
NAME OF CORPORATION (IF APPLICABLE)

(BY)
----------------------------------
SIGNATURE

(DATE)----------------------------- , 1996
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE PROVIDE THE FULL NAME OF THE
CORPORATION AND THE SIGNATURE OF THE
AUTHORIZED OFFICER SIGNING ON ITS BEHALF.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY TO THE COMPANY.