UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________ To __________
Commission file number: 1-13858
BT OFFICE PRODUCTS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3245865
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(State of incorporation or organization) (IRS Employer Identification No.)
2150 E. Lake Cook Road
Buffalo Grove, Illinois 60089-1877
---------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
(847) 793-7500
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Class of Common Stock Shares Outstanding as of November 12, 1997
- ------------------------------------- ------------------------------------------
Common stock, par value $.01 per share 33,471,000
<PAGE>
BT Office Products International, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1997
Index of Information Included in Report
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9
Part II. Other Information 12
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<PAGE>
Part I. Financial Information
BT Office Products International, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
September 30 December 31
1997 1996
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 12,046 $ 20,163
Accounts receivable, less allowances of
$6,597 in 1997 and $4,915 in 1996 216,547 203,629
Other receivables 24,163 22,197
Inventories 113,743 119,370
Other current assets 26,241 26,647
---------- -----------
Total current assets 392,740 392,006
Other assets 29,154 29,045
Property, plant and equipment 142,017 129,898
Accumulated depreciation and amortization 60,780 51,483
---------- -----------
Net property, plant and equipment 81,237 78,415
Intangibles, net of accumulated amortization of
$51,089 in 1997 and $43,834 in 1996 224,537 243,353
---------- -----------
Total assets $ 727,668 $ 742,819
========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 28,067 $ 41,207
Accounts payable 132,820 123,306
Other current liabilities 69,140 73,548
---------- -----------
Total current liabilities 230,027 238,061
Long-term obligations 213,479 219,702
Other liabilities 14,592 16,404
Commitments and contingencies
Stockholders' equity:
Common stock 335 335
Additional paid-in capital 270,132 270,132
Retained earnings (deficit) 11,842 (118)
Cumulative translation adjustments (12,739) (1,697)
---------- -----------
Total stockholders' equity 269,570 268,652
---------- -----------
Total liabilities and stockholders' equity $ 727,668 $ 742,819
========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE>
<TABLE>
BT Office Products International, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three months ended Nine months ended
September 30 September 30
--------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 393,182 $ 354,871 $ 1,185,412 $ 1,036,584
Cost and expenses:
Costs of products sold 284,410 253,415 848,640 739,026
Selling and administrative expenses 94,614 87,593 284,988 252,480
Depreciation and amortization 3,801 3,639 11,876 9,840
Amortization of intangibles 2,618 2,545 7,920 7,402
------------ ----------- ------------- -------------
385,443 347,192 1,153,424 1,008,748
Operating income 7,739 7,679 31,988 27,836
Other income (expense):
Interest income and other 841 675 2,150 1,224
Interest expense (4,051) (3,349) (11,991) (8,931)
------------ ------------ ------------- -------------
(3,210) (2,674) (9,841) (7,707)
------------ ------------ ------------- -------------
Income before income taxes 4,529 5,005 22,147 20,129
Income tax expense 1,912 2,350 10,187 9,458
------------ ------------ ------------- -------------
Net income $ 2,617 $ 2,655 $ 11,960 $ 10,671
============ ============ ============= =============
Net income per share $ 0.08 $ 0.08 $ 0.36 $ 0.32
============ ============ ============= =============
Weighted-average number of
common and common
equivalent shares 33,596 33,578 33,513 33,759
============ ============ ============= =============
<FN>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
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<PAGE>
<TABLE>
BT Office Products International, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<CAPTION>
Nine months ended September 30
-------------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Operating Activities
Net income $ 11,960 $ 10,671
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 13,153 11,126
Amortization of intangibles 7,920 7,402
Other 2,842 1,515
Changes in operating assets and liabilities,
net of effects of business acquisitions:
Receivables (20,515) (6,096)
Inventories 2,099 (3,505)
Other current assets (749) (5,806)
Accounts payable and other current liabilities 7,534 2,876
-------------- ---------------
Net cash provided by operating activities 24,244 18,183
Investing activities
Purchases of property, plant and equipment (18,815) (17,869)
Acquisitions of businesses, less cash acquired (7,648) (44,046)
Other (946) (793)
-------------- ---------------
Net cash used for investing activities (27,409) (62,708)
Financing activities
Net repayments of notes payable (4,446) (1,362)
Net (repayments) borrowings under long-term obligations (84) 44,993
Proceeds from stock options exercised - 224
-------------- ---------------
Net cash provided by (used for) financing activities (4,530) 43,855
Effect of exchange rate changes on cash and cash equivalents (422) (68)
-------------- ---------------
Net decrease in cash and cash equivalents (8,117) (738)
Cash and cash equivalents at beginning of period 20,163 7,568
--------------- ---------------
Cash and cash equivalents at end of period $ 12,046 $ 6,830
=============== ===============
<FN>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
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<PAGE>
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Formation and Basis of Presentation
Prior to June 30, 1995, BT Office Products International, Inc. was a holding
company (the "Holding Company"), which owned and operated the U.S. office
products distribution business of N.V. Koninklijke KNP BT ("KNP BT") as well as
certain other KNP BT businesses which were unrelated to the U.S. office products
distribution business. On June 30, 1995, KNP BT and BT Office Products
International, Inc. effected a series of transactions (collectively, the
"Corporate 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."
The Corporate Reorganization included, among other things: (1) KNP BT's
contribution of the net assets of its European office products businesses and
one U.S. business to the Company, (2) the transfer of the Holding Company's
unrelated businesses to KNP BT, (3) a capital contribution of $118.0 million in
the form of an exchange of indebtedness of the Holding Company under interest
bearing advances by KNP BT for shares of common stock, (4) a stock split which
resulted in 23,400,000 shares issued and outstanding, and (5) the execution of
various agreements related to income tax matters, financing arrangements, and
shared services.
In July 1995, the Company completed the sale of 10 million shares of common
stock, at a price of $11.50 per share, in an initial public offering (the
"Offering"). After the Offering, KNP BT beneficially owned approximately 70% of
the Company's outstanding common stock.
The accompanying unaudited condensed consolidated financial statements present
information in accordance with generally accepted accounting principles for
interim financial information and applicable rules of Regulation S-X.
Accordingly, they do not include all information or footnotes required by
generally accepted accounting principles for complete financial statements.
Management believes the financial statements include all normal accrual
adjustments necessary for a fair presentation. Operating results for the three
month and nine month periods ended September 30, 1997 do not necessarily reflect
the results that may be expected for the full year. For further information,
refer to the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 financial statement presentation.
2. Business Acquisitions
In December 1996, the Company acquired the Vinborgen I Boras AB group of
companies ("Bjorsell"), an office products distributor in Sweden, in a purchase
transaction for approximately $41.5 million in cash, subject to adjustment as
provided in the purchase agreement. The transaction resulted in goodwill of
$30.5 million.
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<PAGE>
2. Business Acquisitions (Continued)
On December 31, 1996, the Company acquired Kuipers Centrum voor
Kantoorefficiency B.V. ("Kuipers"), an office products distributor in The
Netherlands, in a purchase transaction for approximately $22.0 million in cash,
subject to adjustment as provided in the purchase agreement. The transaction
resulted in goodwill of $15.4 million.
In July 1996, the Company acquired the two businesses comprising the Keller &
Roth Group, office products distributors in Germany, in a purchase transaction
for approximately $11.5 million in cash and the issuance of $3.2 million of
notes payable. The transaction resulted in goodwill of $11.1 million.
In July 1996, the Company assumed control of bax Burosysteme
Vertriebsgesellschaft mbH ("Bax"), an indirect wholly-owned subsidiary of KNP
BT. In October 1996, the Company completed the acquisition of Bax, an office
equipment distributor in Germany, by acquiring the shares of Bax from KNP BT for
approximately $9.8 million in cash. The excess purchase price over the net book
value of $3.6 million was charged to additional paid-in capital.
In addition, the Company acquired four other significant office products
businesses in the U.S., of which three were effective on January 1, 1996 and one
was effective on March 1, 1996, in purchase transactions for aggregate
consideration of $26.7 million, which included $25.9 million of cash and the
issuance of $0.8 million of notes payable. These transactions resulted in
goodwill of $22.9 million.
The pro forma unaudited results of operations for the nine month period ended
September 30, 1996, assuming the above-described acquisitions had been
consummated as of January 1, 1996 and translated at historical rates, are as
follows (in thousands, except per share amounts):
Nine months ended
September 30, 1996
-------------------
Sales $ 1,174,408
Net income 11,556
Net income per share 0.34
Weighted-average number of
common and common equivalent
shares 33,759
The Company also acquired other smaller office products and furniture businesses
in 1997 and 1996. These acquisitions did not have a significant impact on the
consolidated operating results for the nine month periods ended September 30,
1997 and 1996.
3. Long-term Obligations
On August 2, 1996, the Company entered into a five-year, non-amortizing, $250
million syndicated bank Competitive Advance and Revolving Credit Facility
Agreement (the "Bank Credit Agreement"). The Bank Credit Agreement, as amended
in December 1996 and May 1997, contains various loan covenants calculated
quarterly including a maximum leverage ratio based on total debt to pro forma
EBITDA (3.75 to 1 for each of the four quarter rolling periods ending on or
before March 31, 1998, and reducing to 3.25 to 1 in subsequent quarters), a
minimum EBITDA less capital expenditures to interest ratio, and a minimum net
worth requirement. In addition, under a change of control clause, an event of
default would occur if any person or group, other than KNP BT or its affiliates,
shall own more than 50% of the voting shares of the Company.
The Company also has a commitment of 70 million Netherlands Guilders
(approximately $35 million) available under its credit facility with an
affiliate of KNP BT, as modified (the "Affiliate Credit Agreement"), which
commitment is available through KNP BT Europcenter N.V. ("Europcenter") for
borrowings to be used for working capital needs and general corporate purposes,
including acquisitions, by the Company's European operations. Effective June
1997, the maturity date under the Affiliate Credit Agreement was extended to
July 1999 and certain of the Company's European subsidiaries committed to lend
funds representing positive balances in certain cash management accounts of up
to 20 million Netherland Guilders to Europcenter.
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<PAGE>
In June 1997, the Company entered into revolving lines of credit providing an
aggregate of $22.5 million to fund the Company's U.S. cash management
requirements. Amounts outstanding under such lines are payable on demand. Such
lines replaced the $15 million cash management facility formerly available under
the Affiliate Credit Agreement through KNP BT Finance (USA) Inc., an affiliate
of KNP BT. Effective June 1997, the Company also entered into a new cash
management agreement pursuant to which it in turn provides cash management
services to its U.S. divisions and subsidiaries and certain U.S. affiliates of
KNP BT.
4. Per Share Data
Net income per share is calculated by dividing net income by the
weighted-average number of common shares outstanding, adjusted for dilutive
common share equivalents attributed to outstanding options to purchase common
stock, if applicable.
5. Contingencies
The Company is involved in various legal actions arising in the normal course of
business. Management, after taking into consideration legal counsel's evaluation
of such actions, is of the opinion that the ultimate resolution of these matters
over and above previously established accruals will not have a material adverse
effect on the financial position, net cash flows or results of operations of the
Company.
6. Income Taxes
The difference between the effective income tax rate and the U.S. statutory tax
rate is primarily due to the effects of foreign and state income taxes and
non-deductible goodwill amortization.
In 1996, the Company acquired the outstanding shares of Bax. Bax had
approximately $64.0 million of net operating loss carryovers available at
September 30, 1997. A valuation allowance has been recorded against the deferred
tax asset relating to the tax net operating losses as a result of the
uncertainty of ultimate utilization.
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<PAGE>
BT Office Products International, Inc.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Net sales increased to $393.2 million in the third quarter of 1997 from $354.9
million in the comparable period last year, an increase of $38.3 million or
10.8%. The incremental impact of the Company's 1996 acquisitions accounted for
9.5% of the third quarter sales growth. Sales at the Company's existing
locations increased 4.8%, while foreign currency depreciation against the U.S.
dollar lowered sales by 3.5%. Net sales increased to $1,185.4 million in the
first nine months of 1997 from $1,036.6 million in the comparable period last
year, an increase of $148.8 million or 14.4%. The incremental impact of the
Company's 1996 acquisitions accounted for 12.5% of the sales growth in the first
nine months of 1997. Sales at the Company's existing locations accounted for
4.5%, while foreign currency depreciation against the U.S. dollar lowered sales
by 2.6%.
Net sales in the United States increased to $283.3 million in the third quarter
of 1997 from $276.2 million in the comparable period last year, an increase of
$7.1 million or 2.6%. Net sales in the United States increased to $850.5 million
in the first nine months of 1997 from $806.9 million in the comparable period
last year, an increase of $43.4 million or 5.4%. Sales at the Company's existing
locations grew 2.6% in the third quarter and 4.7% over the first nine months of
1997. The incremental impact of the Company's 1996 U.S. acquisitions, which
occurred in the first quarter of 1996, accounted for the remaining 0.7% of the
growth in the nine months ended September 30, 1997. The Company believes the
principal factors contributing to our internal growth were increased sales to
existing and new accounts and "add-on" acquisitions. Net sales in the United
States were negatively impacted by the softness in certain U.S. markets and
lower paper prices.
Net sales in Europe increased to $109.9 million in the third quarter of 1997
from $78.7 million in the comparable period last year, an increase of $31.2
million or 39.6%. Net sales in Europe increased to $334.9 million in the first
nine months of 1997 from $229.7 million in the comparable period last year, an
increase of $105.2 million or 45.8%. The incremental impact of the Company's
1996 acquisitions accounted for 43.0% and 53.7% of the European sales growth in
the third quarter and first nine months of 1997, respectively. Excluding the
effects of foreign currency depreciation against the U.S. dollar of 15.7% and
12.0%, sales growth at existing locations totaled 12.4% and 4.1% for the third
quarter and nine months ended September 30, 1997, respectively, compared to the
same periods last year. Most of the European sales growth experienced in the
third quarter was in Germany, principally as a result of two strategic add-on
acquisitions in the German market during the third quarter of 1997. The Company
believes that the internal growth continues to be negatively effected by the
continued softness in the German economy, where approximately 50% of the
Company's European sales originate.
Gross profit as a percentage of net sales was 27.7% in the third quarter of 1997
as compared to 28.6% in the comparable period last year. Gross profit as a
percentage of net sales was 28.4% for the first nine months of 1997 and 28.7%
for the comparable period last year. The decrease in the gross profit percentage
for both periods was attributable primarily to highly competitive market
conditions resulting in lower product margins particularly on paper and contract
furniture in the U.S., a shift in product mix in Europe, and a higher LIFO
charge associated with inventory cost increases in the United States.
Selling and administrative expenses as a percentage of net sales were 24.1% in
the third quarter of 1997 as compared to 24.7% in the comparable period last
year. Selling and administrative expenses as a percentage of net sales were
24.0% in the first nine months of 1997 as compared to 24.4% in the comparable
period last year. The current quarter includes a $2.0 million charge related
principally to the replacement of the former president and CEO and staff
reductions associated with the decision to outsource the print services in New
York. Excluding this charge, selling and administrative expenses as a percentage
of net sales would have been 23.6% and 23.9% for the three and nine month
periods ending September 30, 1997, respectively. The decreases in the third
quarter and first nine months were attributable to a higher U.S. sales level
with a relatively fixed administrative expense base, offset slightly by lower
selling prices on paper and related products in the United States and the
relative impact of higher operating expenses expressed as a percentage of net
sales from European operations.
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<PAGE>
Operating income as a percentage of net sales was 2.0% in the third quarter of
1997 as compared to 2.2% in the comparable period last year, but remained
consistent with the first nine months of 1996 at 2.7% for the first nine months
of 1997. In the U.S., operating income as a percentage of net sales in the third
quarter of 1997 and 1996 was 2.5%. For the first nine months of 1997, operating
income as a percentage of net sales in the United States of 3.3% exceeded the
3.1% of the comparable period last year. Operating income as a percentage of net
sales in Europe was 0.6% in the third quarter of 1997 as compared to 0.9% in the
comparable period last year, but remained consistent with the first nine months
of 1996 at 1.3% in the first nine months of 1997. The growth in operating income
reflects the effects of the Company's 1996 European acquisitions, which were
accretive to earnings, and cost containment as the Company rationalizes existing
operations and integrates acquisitions.
Interest expense, including affiliated interest expense, increased to $4.1
million in the third quarter of 1997 from $3.4 million in the comparable period
last year. Interest expense, including affiliated interest expense, increased to
$12.0 million in the first nine months of 1997 from $8.9 million in the
comparable period last year. The increases in the third quarter and the first
nine months were attributable to interest expense on debt associated with the
new acquisitions and capital investments in 1997 and 1996.
Net income decreased to $2.6 million in the third quarter of 1997 from $2.7
million in the comparable period last year. Net income increased to $11.9
million in the first nine months of 1997 from $10.7 million in the comparable
period last year. Net income during the third quarter includes a charge
associated with personnel reductions totaling $2.0 million. Excluding this
pretax charge, net income for the third quarter would have been $3.8 million or
$.11 per share. Increased operating income at existing operations, acquisitions,
and a lower effective tax rate were offset slightly by higher interest costs.
The effective income tax rate was approximately 46% for the first nine months of
1997 and 47% for the comparable period of 1996.
Liquidity and Capital Resources
Cash provided by operating activities in the first nine months of 1997 of $24.2
million was the result of $35.9 million of net income, depreciation,
amortization and other non-cash items offset by $11.7 million of net increases
in working capital mostly in accounts receivable. Significant cash requirements
in the first nine months of 1997 included $18.8 million for capital
expenditures, $7.6 million related to acquisitions of businesses and $4.5
million for net repayments of notes payable and long-term obligations.
On August 2, 1996, the Company entered into the five-year, non-amortizing, $250
million syndicated Bank Credit Agreement. The Bank Credit Agreement was used to
pay down existing debt owed to affiliates of the Company and is being used for
working capital needs and general corporate purposes, including acquisitions.
Total borrowings under the Bank Credit Agreement at September 30, 1997 were
$182.6 million. The most restrictive covenant in the Bank Credit Agreement
currently limits, and may in the future limit, the Company's ability to fully
utilize the available capacity remaining under the Bank Credit Agreement and
other credit facilities of the Company.
The Company believes that internally generated funds and borrowings under its
credit agreements will be sufficient to meet its presently anticipated cash
requirements for capital expenditures and working capital. The Company continues
to actively pursue acquiring established quality office products distributors in
the U.S. and Europe as an integral part of its long term strategy. The Company
anticipates significant future acquisition funding, to the extent required, will
necessitate obtaining additional debt and/or equity capital resources. The
Company continues to examine and evaluate several alternatives.
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<PAGE>
Other
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
No. 125 ("SFAS 125"), "Accounting for Transfers and Services of Financial Assets
and Extinguishments of Liabilities", which requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has incurred
and to derecognize financial assets when control has been surrendered in
accordance with the criteria provided in SFAS 125. The Company is in the
process of determining the impact of SFAS 125 on the financial statements.
In February 1997, the FASB issued Statement No. 128 ("SFAS 128"), "Earnings per
Share," which specifies the computation, presentation, and disclosure
requirements for earnings per share. SFAS 128, which is effective for periods
ending after December 15, 1997, is not expected to have a significant impact on
the Company's reported basic and diluted earnings per share.
In June 1997, the FASB issued Statement No. 130 ("SFAS 130"), "Reporting
Comprehensive Income" which establishes standards for reporting and display of
comprehensive income and its components. SFAS 130, which is effective for
financial statement periods beginning after December 15, 1997, is not expected
to have a significant impact on the Company's financial statement disclosures.
Also in June 1997, the FASB issued Statement No. 131 ("SFAS 131"), "Disclosure
about Segments of an Enterprise and Related Information" which requires the
reporting of selected segment information quarterly and entity-wide disclosures
about products and services, major customers, and the material countries in
which the entity holds assets and reports revenues. The Company intends to make
appropriate disclosures upon adoption of SFAS 131, which is effective for
financial statement periods beginning after December 15, 1997.
Forward Looking Statements
Various statements made within this Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Quarterly
Report on Form 10-Q constitute "forward looking statements" for purposes of the
Securities and Exchange Commission's "safe harbor" provisions under the Private
Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities
Exchange Act of 1934, as amended. Investors are cautioned that all forward
looking statements involve risks and uncertainties, including those detailed in
the Company's filings with the Securities and Exchange Commission. There can be
no assurance that actual results will not differ from the Company's
expectations. Factors which could cause materially different results include,
among others, uncertainties related to the introduction of the Company's
products and services; the successful completion and integration of
acquisitions; and competitive and general economic conditions.
-11-
<PAGE>
Part II. Other Information
BT Office Products International, Inc.
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Credit Agreement by and among the Company, the European
Subsidiaries from time to time party thereto, and KNP BT
Europcenter N.V.
10.2 Amended and Restated Cash Management Agreement
10.3 Employment Agreement for Richard C. Dubin
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
-12-
<PAGE>
BT Office Products International, Inc.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BT OFFICE PRODUCTS INTERNATIONAL, INC.
/s/ Francis J. Leonard
--------------------------------------------------------
Francis J. Leonard
Vice President-Finance and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Date: November 13, 1997
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<PAGE>
BT OFFICE PRODUCTS INTERNATIONAL, INC.
INDEX TO EXHIBITS
Filed with the Quarterly Report on Form 10-Q for the Quarterly
Period Ended September 30, 1997
Exhibit No. Description
10.1 Credit Agreement by and among the Company,the
European Subsidiaries from time to time party
thereto, and KNP BT Europcenter N.V.
10.2 Amended and Restated Cash Management Agreement
10.3 Employment Agreement for Richard C. Dubin
27.1 Financial Data Schedule
<PAGE>
CREDIT AGREEMENT
Dated as of June 16, 1997
This Credit Agreement (this "Agreement") is made and entered
into by and among BT OFFICE PRODUCTS INTERNATIONAL, INC., a Delaware corporation
("BTOPI"), the European Subsidiaries from time to time party hereto, and KNP BT
EUROPCENTER N.V., a Belgian joint stock company having its registered office at
Bodemstraat 11, Wellen, Belgium ("Europcenter") (with certain terms used and not
otherwise defined herein being defined in Section 8 hereof).
W I T N E S S E T H:
WHEREAS, BTOPI and KNP BT Antilliana N.V., a Netherlands
Antilles joint stock company ("Antilliana"), entered into a Credit Agreement
dated as of June 15, 1995, pursuant to which Antilliana agreed to make loans, or
to cause Europcenter to make loans, to BTOPI and its subsidiaries in accordance
with the terms thereof in an aggregate principal amount not in excess of
$200,000,000; and
WHEREAS, pursuant to the terms of an Assignment and
Modification Agreement dated June 26, 1996, KNP BT Finance (USA), Inc., a
Delaware corporation ("KNP BT Finance"), subsequently became a party to such
credit agreement (as so modified, the "Existing Credit Agreement") for the
purpose of making loans to BTOPI and its U.S. subsidiaries in an aggregate
principal amount not in excess of $155,000,000, with Antilliana continuing to be
committed to make, or to cause Europcenter to make, loans to BTOPI's European
subsidiaries in an aggregate principal amount not in excess of $45,000,000; and
WHEREAS, effective August 7, 1996, KNP BT Finance's commitment
under the Existing Credit Agreement was reduced to $15,000,000 and Antilliana's
commitment thereunder was reduced to $35,000,000; and
WHEREAS, as of the date hereof, no loans are outstanding to
KNP BT Finance or Antilliana under the Existing Credit Agreement and loans are
outstanding to Europcenter under the Existing Credit Agreement in the respective
principal amounts and currencies and from the respective European Subsidiaries
as borrowers as are indicated on Exhibit A attached hereto (the "Existing
Loans"); and
WHEREAS, as of the date hereof, certain European Subsidiaries
as indicated on Exhibit B attached hereto have invested positive balances in
cash management accounts with Europcenter's designated sweep account (the
"Existing Positive Balances"); and
WHEREAS, KNP BT Finance and Antilliana wish to terminate all
of their rights and obligations under the Existing Credit Agreement and BTOPI
and Europcenter wish to enter into this new Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Termination of Existing Credit Agreement. This Agreement
shall be effective from and after the date hereof and the Existing Credit
Agreement is hereby terminated and of no further force or effect. The Existing
Loans are hereby converted into Loans (as defined in Section 2 hereof) under
this Agreement from Europcenter to the respective European Subsidiaries as
indicated on Exhibit A attached hereto without any further action being
required. The Existing Positive Balances are hereby converted into Loans under
this Agreement from the respective European Subsidiaries as indicated on Exhibit
B attached hereto to Europcenter without any further action being required. By
executing the Acknowledgement on the signature page hereto, each of Antilliana
and KNP BT Finance acknowledges the termination of the Existing Credit Agreement
and that no amount is owed to such entity under the Existing Credit Agreement.
2. Cash Management Accounts; Commitments to Make Loans. (a)
Each of the European Subsidiaries and Europcenter shall establish an account or
accounts (each, a "Designated Account") at such bank or banks in European
countries as all of the parties shall agree (each, a "Sweep Bank," and,
collectively, the "Sweep Banks"). Each party shall give its Sweep Bank
instructions that, for value at the close of each Business Day, and subject to
the terms and conditions of this Agreement, (i) any net overdraft in the
Designated Account(s) of any such party other than Europcenter shall be covered
by a transfer from the Designated Account of Europcenter at its Sweep Bank to
the Designated Account of the party with the overdraft at its Sweep Bank and
(ii) any net positive balance in the Designated Account(s) of such party other
than Europcenter shall be transferred to the Designated Account of Europcenter,
in the case of either clause (i) or (ii), up to the limits as set forth in
Section 2(b) hereof.
(b) Any transfer pursuant to Section 2(a) hereof from Europcenter to any
European Subsidiary shall constitute a loan from Europcenter to such party, and
any transfer pursuant to Section 2(a) hereof from any European Subsidiary to
Europcenter shall constitute a loan from such party to Europcenter
(collectively, the "Loans"). Europcenter shall be obligated to make such Loans
hereunder from time to time during the period from the date hereof through the
Maturity Date in an aggregate unpaid principal amount (or Netherlands Guilder
Equivalent thereof) up to the Europcenter Commitment at the time of the making
of any Loan, with the commitment amount to each individual European Subsidiary
comprising part of the Europcenter Commitment being agreed to from time to time
among the parties hereto. The European Subsidiaries shall be obligated to make
such Loans hereunder in an aggregate unpaid principal amount (or Netherlands
Guilder Equivalent thereof) up to the European Subsidiaries Commitment at the
time of the making of any Loan, with the commitment amount to Europcenter from
each individual European Subsidiary comprising part of the European Subsidiaries
Commitment being agreed to from time to time among the parties hereto. Loans
may, at the option of the borrower, be disbursed in German Marks, British
Pounds, Netherlands Guilders, Swedish Kronor or in any other currency acceptable
to the lender (the currency in which any Loan is disbursed hereunder being
hereinafter referred to as the "Relevant Currency").
3. Interest. Each Loan shall bear interest on the outstanding
principal amount thereof until due at a rate per annum equal to, (i) in the case
of a Loan from Europcenter to a European Subsidiary, the Overdraft Rate as in
effect from time to time plus the applicable Margin, and (ii) in the case of a
Loan from a European Subsidiary to Europcenter, the Overdraft Rate as in effect
from time to time minus the applicable Margin. Interest shall be payable in the
Relevant Currency on each Interest Payment Date and when such Loan shall be due
(whether at maturity, by reason of prepayment or acceleration or otherwise), but
only to the extent then accrued on the amount then so due.
4. Repayment. The Loans shall mature and become due and
payable, and shall be repaid by the respective borrower, in full on the
Maturity Date. Each Loan shall be repaid in the Relevant Currency.
5. Commitment Fee; Reduction of Commitments. BTOPI shall pay
to Europcenter a commitment fee (the "Commitment Fee") at a rate per annum equal
to the Commitment Fee Percentage from time to time in effect on the daily unused
amount of the Europcenter Commitment for each day from the date hereof through
the Maturity Date, payable quarterly in arrears on each March 31, June 30,
September 30 and December 31 (with the first payment being due on December 31,
1997 for the period from the date hereof through December 31, 1997), on the
Maturity Date and on the date of any reduction of the Europcenter Commitment (to
the extent accrued and unpaid on the amount of the reduction). BTOPI may reduce
the Europcenter Commitment by giving Europcenter five Business Days' notice
(which shall be irrevocable) thereof, except that no partial reduction of the
Europcenter Commitment shall be in an amount less than NLG 5,000,000.
Europcenter may reduce the European Subsidiaries Commitment by giving BTOPI five
Business Days' notice (which shall be irrevocable) thereof, except that no
partial reduction of the European Subsidiaries Commitment shall be in an amount
less than NLG 5,000,000.
6. Termination. (a) This Agreement shall terminate prior to
the Maturity Date as to any party upon the first to occur of the following:
(i) any payment of interest due from such party pursuant
hereto shall not be made when and as due and in accordance
with the terms of this Agreement and such failure shall
continue for 14 days;
(ii) (A) such party shall fail to pay, in accordance with its
terms and when due and payable, any of the principal of or
interest on any of its indebtedness (other than amounts due
hereunder) or (B) the maturity of any such indebtedness shall,
in whole or in part, have been accelerated, or any such
indebtedness shall, in whole or in part, have been required to
be prepaid prior to the stated maturity thereof, in accordance
with the provisions governing such indebtedness, and in the
case of each of (A) and (B) such event shall not be cured
within 14 days;
(iii) (A) such party shall commence any case, proceeding or
action (x) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (y) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or such party shall make a general assignment for the
benefit of its creditors; or (B) there shall be commenced
against such party any case, proceeding or action of a nature
referred to in clause (A) above which (x) results in the entry
of an order for relief or any such adjudication or appointment
or (y) remains undismissed, undischarged or unbonded for a
period of 30 days; or (C) there shall be commenced against
such party any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its
assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 30 days from the entry
thereof; or (D) such party shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (A), (B)
or (C) above; or (E) such party shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay
its debts as they become due;
(iv) N.V. Koninklijke KNP BT shall at any time, directly or
indirectly, fail to own, beneficially, more than 50% of the
issued and outstanding share capital of BTOPI, in which case
this Agreement shall terminate as to all parties;
(v) BTOPI shall (A) cease to be a validly existing
corporation or (B) sell, lease, assign, transfer or otherwise
dispose of all or substantially all of its business and assets
to any Person (other than any European Subsidiary), in which
case this Agreement shall terminate as to all parties; or
(vi) the mutual written consent of the parties hereto.
(b) Upon any such termination as to any party, the principal
of and interest on any Loans outstanding to such party hereunder shall become
due and payable to the lender thereof and the Europcenter Commitment or
European Subsidiaries Commitment, as the case may be, to make Loans to such
party shall terminate as to such party.
7. Miscellaneous. (a) Except as otherwise expressly provided,
all notices, communications and materials to be given or delivered pursuant to
this Agreement shall be given or delivered in writing (which shall include
telecopy transmissions) at the respective addresses and telecopier numbers and
to the attention of the individuals or departments listed on the signature pages
of this Agreement or at such other address or telecopier or telephone number or
to the attention of such other individual or department as the party to which
such information pertains may hereafter specify. Notices, communications and
materials shall be deemed given or delivered when delivered or received at the
appropriate address or telecopy number to the attention of the appropriate
individual or department.
(b) Any term, covenant, agreement or condition of this
Agreement may be amended, and any right under this Agreement may be waived, if
such amendment or waiver is in writing and, in the case of an amendment, is
signed by all of the parties hereto and, in the case of a waiver, is signed
by the waiving party. Unless otherwise specified in such waiver, a waiver of
any right under this Agreement shall be effective only in the specific instance
and for the specific purpose for which given.
(c) None of the parties hereto may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
parties.
(d) This Agreement shall be construed in accordance with
and governed by the laws of Belgium (without giving effect to its choice of law
principles).
(e) Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by applicable law, each of the parties hereto hereby waives any
provision of applicable law that renders any provision of this Agreement
prohibited or unenforceable in any respect.
(f) This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto wereupon the same instrument.
(g) This Agreement embodies the entire agreement of the
parties relating to the subject matter hereof and supersedes all prior
agreements, representations and understandings, if any, relating to the subject
matter hereof.
(h) All of the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
8. Defined Terms. For the purposes of this Agreement, the
following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday or
other day on which the relevant Sweep Bank or Sweep Banks are authorized to
close.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Commitment Fee Percentage" shall mean on any date the
applicable percentage set forth below based upon the Consolidated Leverage Ratio
as set forth below:
Consolidated Leverage Ratio Commitment
Fee
Category 1 .125%
- ----------
Less than or equal to 2.0
Category 2 .175%
- ----------
Greater than 2.0 but less than or equal to 3.0
Category 3 .225%
- ----------
Greater than 3.0
Except as set forth below, the Consolidated Leverage Ratio utilized for purposes
of determining the Commitment Fee Percentage shall be that in effect as of the
last Financial Statement Date. Each change in the Commitment Fee Percentage
resulting from a change in the Consolidated Leverage Ratio shall be effective
with respect to all Europcenter Commitments outstanding on and after the date of
such change.
"Consolidated EBITDA" shall mean, for any period, Consolidated
Net Income for such period, plus, to the extent deducted in computing such
Consolidated Net Income and without duplication, (a) depreciation and
amortization expense, (b) Consolidated Interest Expense, (c) income tax expense
and (d) other non-cash charges, all as determined in accordance with GAAP
consistently applied, minus any non-cash income, if any, attributable to equity
investments in Persons other than the Subsidiaries of BTOPI.
"Consolidated Interest Expense" shall mean, for any period,
the gross interest expense of BTOPI and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied.
"Consolidated Leverage Ratio" shall mean, on any date, the
ratio of Consolidated Total Debt at such date to Consolidated EBITDA for the
period of the four consecutive fiscal quarters most recently ended as of such
date, adjusted on a pro forma basis to include the pre-acquisition results of
any Material Acquisitions during such period and to exclude the pre-divestiture
results of any Material Divestitures during such period.
"Consolidated Net Income" shall mean, for any period, the net
income (or loss) of BTOPI and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP consistently applied.
"Consolidated Total Debt" shall mean, as of any date, all Debt
of BTOPI and its Subsidiaries on such date, determined on a consolidated basis
in accordance with GAAP consistently applied.
"Debt" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all Debt of
others secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Debt secured thereby has been
assumed, (g) all Guarantees by such Person of Debt of others, (h) all Capital
Lease Obligations of such Person, and (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit,
letters of guaranty and bankers' acceptances. The Debt of any Person shall
include the Debt of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Debt provide that such Person is
not liable therefor.
"Europcenter Commitment" means 70,000,000 Netherlands
Guilders, as the same may be reduced from time to time pursuant to Section 5
hereof, or, as the context may require, the obligation of Europcenter to make
Loans in an aggregate unpaid principal amount not exceeding such amount.
"European Subsidiaries" means each subsidiary of BTOPI
organized under the laws of a European country that has executed a signature
page hereto and any other such subsidiary 99% of the issued and outstanding
common voting shares or interests of which are beneficially owned, directly or
indirectly, by BTOPI that may from time to time become a party to this Agreement
by executing an additional signature page to this Agreement.
"European Subsidiaries Commitment" means 20,000,000
Netherlands Guilders, as the same may be reduced from time to time pursuant to
Section 5 hereof, or, as the context may require, the obligation of the European
Subsidiaries to make Loans in an aggregate unpaid principal amount not exceeding
such amount.
"Exchange Rate" shall mean, when converting any amount
denominated in a currency other than Netherlands Guilders into Netherlands
Guilders, the rate determined in good faith by Europcenter at the close of
business in Brussels, Belgium, on the date as to which any determination thereof
is to be made, as the spot rate at which such currency is offered for sale to
Europcenter against delivery of Netherlands Guilders by Europcenter. If for any
reason the Exchange Rate for any currency cannot be calculated as provided
above, Europcenter shall calculate the Exchange Rate on such basis as it deems
fair and equitable.
"Financial Statement Date" shall mean the 90th day following
the end of the fourth fiscal quarter, and the 45th day following the end of each
other fiscal quarter, in each fiscal year of BTOPI.
"GAAP" shall mean U.S. generally accepted accounting
principles, applied on a consistent basis.
"Guarantee" of or by any Person (the "guarantor") shall mean
any obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Debt or other obligation of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation, direct or indirect, of the guarantor (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation or to purchase (or to advance or supply funds for the
purchase of) any security in order to effect the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Debt or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Debt or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support such
Debt or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Interest Payment Date" means the last Business Day of each
calendar month of each year.
"Lien" means, with respect to any property or asset (or any
income or profits therefrom) of any Person (in each case whether the same is
consensual or nonconsensual or arises by agreement, operation of law, legal
process or otherwise) (a) any mortgage, lien, pledge, attachment, levy or other
security interest of any kind thereupon or in respect thereof or (b) any other
arrangement, express or implied, under which the same is subordinated,
transferred, sequestered or otherwise identified so as to subject the same to,
or make the same available for, the payment or performance of any liability in
priority to the payment of the ordinary, unsecured liabilities of such Person.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Margin" means 1%.
"Material Acquisitions" shall mean, for any four quarter
period, operating units or entities acquired by BTOPI and its Subsidiaries
during such period, other than those acquired for consideration not greater than
$5,000,000 for any such operating unit or entity.
"Material Divestitures" shall mean, for any four quarter
period, operating units or entities disposed of by BTOPI and its Subsidiaries
during such period, other than those disposed of for consideration not greater
than $5,000,000 for any such operating unit or entity.
"Maturity Date" means July 16, 1999.
"Netherlands Guilder Equivalent" means, with respect to any
currency other than Netherlands Guilders, the amount of Netherlands Guilders
into which such currency could be converted at the Exchange Rate.
"Netherlands Guilders" and the symbol "NLG" mean lawful money of The
Netherlands.
"Overdraft Rate" means as of any day, the rate per annum
appearing for one calendar month interest periods as of 11:00 a.m. (local time
at the office of Europcenter) on the first business day of the month during
which such day occurs (i) with respect to any Loan in German Marks, on the FIBO
page of the Reuter Screen, (ii) with respect to any Loan in British Pounds, on
the LIBP page of the Reuter Screen, (iii) with respect to any Loan in
Netherlands Guilders, on the AIBO page of the Reuter Screen, (iv) with respect
to any Loan in Swedish Kronor, on the relevant page of the Reuter Screen and (v)
with respect to any other currency, the rate per annum appearing on the relevant
page of the Reuter Screen with respect to such currency. If two or more rates
appear on the relevant page of the Reuter Screen, the Overdraft Rate shall be
the arithmetic mean of such rates. If fewer than two rates appear, the Overdraft
Rate shall be the rate that appears.
"Person" means any individual, sole proprietorship,
corporation, partnership, trust, unincorporated organization, mutual company,
joint stock company, estate, union, employee organization, government or any
agency or political subdivision thereof.
"Subsidiary" means with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
voting power of the outstanding voting securities or interests is owned,
directly or indirectly, by such Person and one or more other Subsidiaries of
such Person.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers all as of the date
hereof.
BT OFFICE PRODUCTS
INTERNATIONAL, INC. 2150 E. Lake Cook Road
Buffalo Grove, Illinois 60089
Attention: Mr. Frank Leonard
By: /s/ Francis J. Leonard Tel: 847-793-7550
- --------------------------------- Fax: 847-808-8268
Name: Francis J. Leonard
Title: Vice President of Finance and
Cheif Financial Officer
KNP BT EUROPCENTER N.V. Bodemstraat 11, bus 1
3830 Wellen
Belgium
By: /s/ Frans Maurissen Attention: Mr. Frans Maurissen
- --------------------------------- Tel: 011 32 11 37 05 11
Name: Frans Maurissen Fax: 011 32 11 37 60 44
Title: Managing Director
KUIPERS CENTRUM VOOR
KANTOOREFFICIENCY BV Burg. Roelenweg 13
8021 EV Zwolle
The Netherlands
By: /s/ Hans Riezebeek
- ---------------------------------
Name: Hans Riezebeek P.O. Box 1196
Title: Director of Finance 8001 BD Zwolle
and Administration The Netherlands
Attention: Mr. Hans Riezebeek
Tel: 011-31-38-429 19 11
Fax: 011-31-38-421 98-08
VEENMAN OFFICE MANAGEMENT BV Lylantse Baan 11
2908 LG Capelle a/d IJssel
The Netherlands
By: /s/ T.J.M. van der Heyden
- ---------------------------------
Name: T.J.M. van der Heyde P.O. Box 1302
Title: Financial Controller 3000 BH Rotterdam
The Netherlands
Attention: Mr. Hans van der Heyden
Tel: 011-31-10-284 63 33
Fax: 011-31-10-284 61 62
BT OFFICE PRODUCTS
DEUTSCHLAND GMBH Schulze-Delitzsch Strasse 24-26
70565 Stuttgart (Vaihungen)
Germany
By: /s/ Hanno Heber
- ---------------------------------
Name: Hanno Heber P.O. Box 800240
Title: Manager-Finance 70502 Stuttgart
Germany
Attention: Mr. Hanno Heber
Tel: 011-49-711-78 62 00
Fax: 011-49-711-786 22 11
BIERBRAUER + NAGEL GMBH & CO KG
Schulze-Delitzsch Strasse 24-26
70565 Stuttgart (Vaihungen)
By: /s/ Hanno Heber Germany
- ---------------------------------
Name: Hanno Heber
Title: Manager-Finance P.O. Box 800240
70502 Stuttgart
Germany
Attention: Mr. Hanno Heber
Tel: 011-49-711-78 62 00
Fax: 011-49-711-78 62 11
<PAGE>
BVZ BUROVERSORGUNGSZENTRUM Schulze-Delitzsch Strasse 24-26
70565 Stuttgart (Vaihungen)
By: /s/ Hanno Heber Germany
- ---------------------------------
Name: Hanno Heber
Title: Manager-Finance P.O. Box 800240
70502 Stuttgart
Germany
Attention: Mr. Hanno Heber
Tel: 011-49-711-78 62 00
Fax: 011-49-711-786 22 11
CLASSIC OFFICE PRODUCTS GMBH Weserstrasse 4
60329 Frankfurt
Germany
By: /s/ Hanno Heber
- ---------------------------------
Name: Hanno Heber P.O. Box 160355
Title: Manager-Finance 60066 Frankfurt am Main
Germany
Attention: Mr. Hanno Heber
Tel: 011-49-711-78 62 00
Fax: 011-49-711-786 22 11
HARTMANN & CIE Weserstrasse 4
60329 Frankfurt
Germany
By: /s/ Hanno Heber
- ---------------------------------
Name: Hanno Heber P.O. Box 160355
Title: Manager-Finance 60066 Frankfurt am Main
Germany
Attention: Mr. Hanno Heber
Tel: 011-49-711-78 62 00
Fax: 011-49-711-786 22 11
BT OFFICE PRODUCTS SWEDEN AB Karrgatam 4
P.O. Box 1777
501 17 Boras
By: /s/ Jan Hasselberg
- --------------------------------- Swedem
Name: Jan Hasselberg Attention: Mr. Jan Hasselberg
Title: Finance and Administration Tel: 011-46-33-17 17 00
Fax: 011-46-33-13 32 34
BT OFFICE PRODUCTS EUROPE BV Hoogoorddreef 62
1101 BE Amsterdam ZO
The Netherlands
By: /s/ Peter van Alem
- --------------------------------
Name: Peter van Alem P.O. Box 22740
Title: Chief Financial Officer 1100 DE Amsterdam ZO
The Netherlands
Attention: Mr. Peter van Alem
Tel: 011-31-20-651 11 11
Fax: 011-31-20-691 93 69
VEENMAN KANTOORMACHINES BV Lylantste Baan 11
2908 LG Capelle a/d IJssel
The Netherlands
By: /s/ Hans van der Heyden
- --------------------------------
Name: Hans van der Heyden P.O. Box 1302
Title: Financial Controller 3000 BH Rotterdam
The Netherlands
Attention: Mr. Hans van der Heyden
Tel: 011-31-10-284 63 33
Fax: 011-31-10-284 61 62
REPRO COPIERS NEDERLAND BV Savannahweg 1
3542 AW Utrecht
The Netherlands
By: /s/ Hans van der Heyden
- ---------------------------------
Name: Hans van der Heyden P.O. Box 8600
Title: Financial Controller 3503 RP Utrecht
The Netherlands
Attention: Mr. Hans van der Heyden
Tel: 011-31-10-284 63 33
Fax: 011-31-10-284 61 62
<PAGE>
BT OFFICE PRODUCTS EUROPE C.V. Hoogoorddreef 62
1101 BE Amsterdam ZO
The Netherlands
By: /s/ Peter van Alem
- --------------------------------- Attention: Mr. Peter van Alem
Name: Peter van Alem Tel: 011-31-20-651 11 1
Title: Chief Financial Officer Fax: 011-31-20-691 93 69
BT OFFICE PRODUCTS NEDERLAND B.V. Hoogoorddreef 62
1101 BE Amsterdam ZO
The Netherlands
By: /s/ Peter van Alem
- --------------------------------- Attention: Mr. Peter van Alem
Name: Peter van Alem Tel: 011-31-20-651 11 11
Title: Chief Financial Officer Fax: 011-31-20-691 93 69
UKBEL B.V. Hoogoorddreef 62
1101 BE Amsterdam ZO
The Netherlands
By: /s/ Peter van Alem
- --------------------------------- Attention: Mr. Peter van Alem
Name: Peter van Alem Tel: 011-31-20-651 11 11
Title: Chief Financial Officer Fax: 011-31-20-691 93 69
BAX BUROSYSTEME VERTRIEBSGESELLSCHAFT M.B.H. P.O. Box 151
82213 Maisach b. Munchen
Germany
By: /s/ Hanno Heber
- --------------------------------- Attention: Mr. Hanno Heber
Name: Hanno Heber Tel: 011-49-711-78 62 00
Title: Manager-Finance Fax: 011-49-711-786 22 11
NETT + WURTH GMBH P.O. Box 1843
55388 Bingen
Germany
By: /s/ Hanno Heber
- ---------------------------------- Attention: Mr. Hanno Heber
Name: Hanno Heber Tel: 011-49-711-78 62 00
Title: Manager-Finance Fax: 011-49-711-786 22 11
(AS TO SECTION 1 OF THIS AGREEMENT)
ACKNOWLEDGED AND AGREED TO:
KNP BT ANTILLIANA N.V.
By: /s/ Andre W.M. Zwetsloot
- ----------------------------------
Name: Andre W.M. Zwetsloot
Title: Managing Director
KNP BT FINANCE (USA), INC.
By: /s/ Andre W.M. Zwetsloot
- ----------------------------------
Name: Andre W.M. Zwetsloot
Title: President
<PAGE>
Exhibit A
Existing Loans
Borrower Principal Amount
and Currency
----------------
The Netherlands
- -----------------------------------
Kuipers Centrum voor NLG 738,700.08
Kantoorefficiency BV
Veenman Office Management BV NLG 626,796.81
BT Office Products Europe BV NLG 300,556.68
Germany
- -----------------------------------
BT Office Products Deutschland GmbH DM 11,721,802.88
BVZ Buroversorgungszentrum DM 112,266.43
Classic Office Products GmbH DM 8,119,887.48
Hartmann & Cie DM 3,643,310.49
Sweden
- -----------------------------------
BT Office Products Sweden AB SEK 3,019,351.75
----------------
TOTAL COUNTERVALUE IN NLG 28,967,022.68
(Based on the June 16, 1997 Exchange Rate of local currencies to
NLG)
----------------
TOTAL COUNTERVALUE IN USD 14,868,772.74
(Based on the June 16, 1997 Exchange Rate of 1 NLG = .5133 USD)
<PAGE>
Exhibit B
Existing Positive Balances
European Subsidiary
BT Office Products Europe C.V.
UK Bel B.V.
Veenman kantoormachines BV
Repro Copiers Nederland BV
bax Burosysteme Vertriebsgesellschaft mbH
Nett + Wurth GmbH
AMENDED AND RESTATED
CASH MANAGEMENT AGREEMENT
This Amended and Restated Cash Management Agreement (this
"Agreement") is made and entered into as of June 16, 1997 by and among BT Office
Products International, Inc., a Delaware corporation ("BTOPI"), acting for
itself and each of its wholly-owned subsidiaries incorporated and doing business
in the United States (collectively, the "BTOPI Group"), Sengewald USA, Inc., a
Maryland corporation ("Sengewald"), and KNP BT USA Holdings, Inc., a Delaware
corporation ("Holdings").
W I T N E S S E T H:
WHEREAS, the BTOPI Group, Sengewald, KNP BT Antilliana N.V., a
Netherlands Antilles corporation ("Antilliana"), and KNP BT Finance (USA), Inc.,
a Delaware corporation ("KNP BT Finance"), are parties to the Cash Management
Agreement dated June 24, 1996, as modified by the Termination Agreement dated as
of April 27, 1997 terminating Astro-Valcour, Inc. and each of its wholly-owned
subsidiaries from such agreement (as so modified, the "Existing Agreement"); and
WHEREAS, pursuant to the Existing Agreement, the BTOPI Group,
Sengewald and Antilliana have been investing cash in their bank accounts with
KNP BT Finance and KNP BT Finance has been covering any overdrafts in their bank
accounts up to specified limits; and
WHEREAS, in connection with the anticipated dissolution of KNP
BT Finance and cessation of treasury operations of Antilliana, KNP BT Finance
and Antilliana wish to terminate their obligations under the Existing Agreement
and the BTOPI Group, Sengewald and Holdings wish to institute a new cash
management program under which cash will be invested with BTOPI and BTOPI will
cover overdrafts up to specified limits.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. This Agreement shall be effective from and after the date
hereof and the Existing Agreement is hereby terminated and of no further force
or effect. Each of the BTOPI Group and Sengewald acknowledges that any and all
amounts owing to it under the Existing Agreement have been paid in full. By
executing the Acknowledgement on the signature page hereto, each of KNP BT
Finance and Antilliana also acknowledges that the Existing Agreement is hereby
terminated and that any and all amounts owing to it under the Existing Agreement
have been paid in full.
2. Each of the parties to this Agreement shall establish an
account or accounts (each, a "Designated Account") at First National Bank of
Maryland or such other bank in the United States as all of the parties shall
agree (the "Sweep Bank"). Each party shall give the Sweep Bank instructions
that, for value at the close of each business day, any net positive balance in
the Designated Accounts of any of the parties other than BTOPI shall be
transferred to the Designated Account of BTOPI at the Sweep Bank and any net
overdraft in the Designated Accounts of any of the parties other than BTOPI
shall be covered by a transfer from the Designated Account of BTOPI to the
Designated Account of the party with the overdraft up to limits to be arranged
separately.
3. Any transfer to BTOPI shall constitute a loan from the
transferring party to BTOPI, and any transfer from BTOPI to another party shall
constitute a loan from BTOPI to that party.
4. On any positive balance transferred by another party to it,
BTOPI shall pay interest at the LIBO Rate (as hereinafter defined) minus .625%.
On any overdraft covered by a transfer of funds from BTOPI, the party receiving
the transfer shall pay interest to BTOPI at the LIBO Rate plus .625%. For
purposes of this Agreement, the term "LIBO Rate" shall mean, with respect to any
transfer of funds constituting a loan hereunder with a one (1) month interest
period, an interest rate per annum (rounded upwards, if necessary, to the next
1/100 of 1%) equal to the rate set by the Sweep Bank as the LIBO Rate as of
11:00 a.m. (local time at the principal office of the Sweep Bank) on the date of
such loan for deposits in Dollars and for a maturity comparable to such interest
period.
5. Interest due to or from BTOPI shall be accumulated for the
period through the end of each month or to the termination date of this
Agreement, as the case may be, and shall be paid for value not later than the
third day thereafter that banks are open for business at the location of the
Sweep Bank.
6. Not later than the day prior to the date when an interest
payment is due, BTOPI shall provide the party to receive or make such payment
with an accounting of interest earned and interest charged for the period to be
covered by such payment.
7. This Agreement shall terminate as to any party upon the
first to occur of the following:
(1) the expiration of thirty days following written notice by
such party (the "terminating party") to each other party to
this Agreement terminating this Agreement as to such
terminating party;
(2) any payment of interest due from such party pursuant
hereto shall not be made when and as due and in accordance
with the terms of this Agreement and such failure shall
continue for 14 days;
(3) (A) such party shall fail to pay, in accordance with its
terms and when due and payable, any of the principal of or
interest on any of its indebtedness (other than amounts due
hereunder) or (B) the maturity of any such indebtedness shall,
in whole or in part, have been accelerated, or any such
indebtedness shall, in whole or in part, have been required to
be prepaid prior to the stated maturity thereof, in accordance
with the provisions governing such indebtedness, and in the
case of each of (A) and (B) such event shall not be cured
within 14 days;
(4) (A) such party shall commence any case, proceeding or
action (x) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or
seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (y) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or such party shall make a general assignment for the
benefit of its creditors; or (B) there shall be commenced
against such party any case, proceeding or action of a nature
referred to in clause (A) above which (x) results in the entry
of an order for relief or any such adjudication or appointment
or (y) remains undismissed, undischarged or unbonded for a
period of 30 days; or (C) there shall be commenced against
such party any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its
assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 30 days from the entry
thereof; or (D) such party shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (A), (B)
or (C) above; or (E) such party shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay
its debts as they become due;
(5) the guaranty of a person guaranteeing the obligations of
such party hereunder shall cease, for any reason, to be in
full force and effect;
(6) N.V. Koninklijke KNP BT shall at any time, directly or
indirectly, fail to own, beneficially, more than 50% of the
issued and outstanding share capital of BTOPI, in which case
this Agreement shall terminate as to all parties;
(7) as to Sengewald or Holdings, N.V. Koninklijke KNP BT shall
at any time, directly or indirectly, fail to own,
beneficially, more than 50% of the issued and outstanding
share capital of Sengewald or Holdings, as the case may be; or
(8) the mutual written consent of the parties hereto.
8. By executing a copy of this Agreement as guarantor in the
space provided below, N.V. Koninklijke KNP BT hereby unconditionally guarantees
the obligations hereunder of Sengewald and Holdings.
9. Except as otherwise expressly provided, all notices,
communications and materials to be given or delivered pursuant to this Agreement
shall be given or delivered in writing (which shall include telecopy
transmissions) at the respective addresses and telecopier numbers and to the
attention of the individuals or departments listed on Exhibit A to this
Agreement or at such other address or telecopier or telephone number or to the
attention of such other individual or department as the party to which such
information pertains may hereafter specify. Notices, communications and
materials shall be deemed given or delivered when delivered or received at the
appropriate address or telecopy number to the attention of the appropriate
individual or department.
10. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
11. This Agreement embodies the entire agreement between the
parties hereto relating to the subject matter hereof and supersedes all prior
agreements, representations and understandings, if any, relating to the subject
matter hereof.
12. This Agreement shall governed by and construed in
accordance with the laws of the State of Delaware, USA, without giving effect to
any doctrine of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
BT OFFICE PRODUCTS INTERNATIONAL, INC.
By:/s/ Francis J. Leonard
--------------------------------------
Name: Francis J. Leonard
Title: Vice President of Finance and Chief Financial Officer
SENGEWALD USA, INC.
By: /s/ Hugo Barbas
--------------------------------------
Name: Hugo Barbas
Title: President
KNP BT USA HOLDINGS, INC.
By: /s/ Francis J. Leonard
--------------------------------------
Name: Francis J. Leonard
Title: Vice President
(AS TO SECTION 1 OF THIS AGREEMENT)
ACKNOWLEDGED AND AGREED TO:
KNP BT FINANCE (USA), INC.
By: /s/ Andre W.M. Zwetsloot
--------------------------------------
Name: Andre W.M. Zwetsloot
Title: President
KNP BT ANTILLIANA N.V.
By: /s/ Andre W.M. Zwetsloot
--------------------------------------
Name: Andre W.M. Zwetsloot
Title: Managing Director
<PAGE>
Guarantees of the Obligations Hereunder of:
Sengewald and Holdings:
N.V. KONINKLIJKE KNP BT
By: /s/ F.J. de Wit
--------------------------------------
Name: F.J. de Wit
Title: Chairman
By: /s/ R.W.J.M Bonnier
--------------------------------------
Name: R.W.J.M Bonnier
Title: Board Member
EXHIBIT A
BT Office Products Sengewald USA, Inc.
International, Inc. c/o N.V. Koninklijke KNP BT
2150 East Lake Cook Road, Suite 509 Museumplein 9
Buffalo Grove, Illinois 60089 1071 DJ Amsterdam
Attn: Chief Financial Officer P.O. Box 87654
Telecopier #: + 847-808-8268 The Netherlands
Attn: Director of Fiscal Affairs
Telecopier #: +011 31 20 574 7400
KNP BT USA Holdings, Inc.
c/o N.V. Koninklijke KNP BT
Museumplein 9
1071 DJ Amsterdam
P.O. Box 87654
The Netherlands
Attn: Director of Fiscal Affairs
Telecopier #: +011 31 20 574 7400
N.V. Koninklijke KNP BT
Museumplein 9
1071 DJ Amsterdam
P.O. Box 87654
The Netherlands
Attn: Director of Fiscal Affairs
Telecopier #: +011 31 20 574 7400
BT OFFICE PRODUCTS INTERNATIONAL, INC.
Riverwalk, Suite 590
2150 East Lake Cook Road
Buffalo Grove, IL 60089
August 11, 1997
Mr. Richard C. Dubin
512 Bonhomme Woods
St. Louis, MO 63132
Dear Richard:
This letter will confirm our mutual agreement regarding the terms and
conditions of your appointment to act as the Executive Vice President of BT
OFFICE PRODUCTS INTERNATIONAL, INC., a Delaware corporation (the "Company"), and
President, BT Office Products North America, of the Company. This letter
constitutes an agreement between you and the Company.
1. The term of your appointment (the "Term") with the Company shall
commence as of the date hereof and shall continue until December 31, 1999,
unless renewed or sooner terminated pursuant to the provisions set forth below.
During the Term, you will act as Executive Vice President of the Company and
President, BT Office Products North America, of the Company, reporting to the
Chief Executive Officer of the Company. In such capacity, you agree to perform
such services and duties as the Chief Executive Officer or the Board of
Directors of the Company may direct, consistent with your position as a senior
executive officer; notwithstanding the foregoing, in performing such services
and duties, you will not be required, without your consent, to relocate your
residence from the location which you now reside. You agree to serve the Company
in such capacity faithfully and to the best of your ability, on a full time
basis, and to diligently and competently perform your services and duties during
your appointment hereunder.
2. During the Term, you will be entitled to receive the following compensation
and benefits:
<PAGE>
(a) Your base salary will be at the rate of $325,000 per
annum, which shall be subject to applicable withholding taxes and authorized
deductions and payable in accordance with the payroll policies of the Company in
effect from time to time.
(b) For each year of the Term, you shall be eligible to
receive an annual bonus of up to sixty percent (60%) of your annual base salary
based on achievement of certain financial criteria and targets as determined
annually by the Company's Board of Directors. You will be entitled to earn an
annual bonus for the 1997 calendar year calculated on a pro rata basis in
accordance with the bonus plan in effect during the period of time you were
President, Midwest Region and President, BT Office Products North America,
respectively, provided, that such annual bonus shall not be less than the amount
you would have earned under your 1997 bonus plan for the Midwest Region.
Attachment A hereto sets forth the bonus criteria and targets relating to your
1997 bonus under this letter agreement.
(c) You will be entitled to receive such medial, paid
vacation, hospitalization and life insurance benefits as are provided generally
to employees of the Company in accordance with the personnel policies of the
Company in effect from time to time.
(d) You will be reimbursed for all reasonable and customary
business related expenses incurred by you in performing your duties hereunder,
upon receipt of reasonably itemized vouchers and documentation as required by
the Internal Revenue Code and Company policy.
(e) You will be entitled to an aggregate annual perk
allowance of $25,000 (taxable), which may be applied to, among other things, the
lease of a Company automobile(s), including the expenses of maintenance, fuel
and insurance, and annual membership fees and dues for country clubs and civic
organizations. Your annual perk allowance for the 1997 calendar year shall be an
amount equal to $19,167, less the amount previously charged to your perk
allowance during the period January 1 to August 11, 1997.
(f) So long as you do not move your permanent residence to
the greater Chicago area, you will receive a taxable housing allowance equal to
$50,000 per annum (prorated for the 1997 calendar year), payable in equal
installments at the same time base salary payments are made hereunder. In
addition, you will be entitled to a one-time, taxable settling-in allowance in
an amount equal to $25,000.
(g) In connection with your appointment hereunder, the
Company hereby grants to you an option to purchase a total of 75,000 shares of
the Company's common stock at an exercise price of $9 1/16 per share, pursuant
to the Company's 1995 Stock Option Plan and Stock Option Agreement, copies of
which are attached hereto as Attachment B.
(h) In addition to participating in a Company 401 (K) plan,
you shall be entitled to participate in a Supplemental Executive Retirement Plan
("SERP") for selected Company employees. For each completed year of the Term
during which you are an employee of the Company (except as set forth in
Paragraph 3 (a) (iv) below), the Company will credit your account under the SERP
in an amount equal to 11% of your base salary (the "SERP Payment"). The Company
will credit your account with such SERP Payment on a pro rata basis for the 1997
calendar year and for any partial year of the Term during which you are an
employee of the Company, except in the event that your appointment hereunder is
terminated by your written resignation from the Company pursuant to Paragraph 3
(b) (iii) (except a resignation following non-renewal as provided in Paragraph 3
(a) below), or by the Company for cause pursuant to Paragraph 3 (b) (iv).
3. (a) At the option of the Company, your appointment hereunder may be
renewed by the Company on the same terms set forth in this letter, subject to a
review of your base salary and renewal period, by giving you written notice of
renewal not later than December 31, 1998. At the time of such notice, your base
salary and renewal period shall be reviewed by the Company, and if the base
salary and renewal period proposed for the renewal of your appointment shall be
acceptable to you, your appointment hereunder shall be renewed and an
appropriate supplement to this letter shall be prepared and signed by you and
the Company to reflect such renewal. In the event that the Company shall not
give you such a notice of renewal on or before December 31, 1998 or if the new
proposed base salary (or the proposed renewal period) is not acceptable to you,
your appointment hereunder shall not be renewed and you shall be entitled to
terminate your appointment hereunder at any time during the remainder of the
last year of the initial Term upon thirty (30) days prior written notice to the
Company. In the event that you shall so terminate your appointment hereunder at
any time, you shall be entitled to receive the following as severance, which
shall be in lieu of any and all other severance plans and arrangements with the
Company; (i) continuation during the remainder of the eighteen (18) month period
following December 31, 1998 of your base salary, medical, hospitalization and
life insurance benefits (provided, however, your medical, hospitalization and
life insurance benefits shall be discontinued at such time as a new employer
shall provide you with substantially comparable benefits); (ii) payment of the
balance of your perk allowance during the remainder of the eighteen (18) month
period following December 31, 1998, payable in equal installments at the same
time base salary payments are made hereunder; (iii) payment of a bonus for the
last year of the initial Term equal to 1.5 times the average of your bonuses, if
any, earned for the last two years of service to the Company, such bonus to be
paid at the time your annual bonus hereunder would have been paid had you not
terminated your appointment hereunder; and (iv) payment of the balance of your
retirement plan contributions (i.e., 401 (K) and SERP) for the remainder of the
eighteen (18) month period following December 31, 1998, such payments to be made
at the same time, and to the same extent, as they would have been made had you
not terminated your appointment hereunder. The foregoing payments shall continue
notwithstanding your death or disability subsequent to such termination of
appointment. Furthermore, in the event that you shall so terminate your
appointment hereunder, you shall have no obligation to report for work with the
Company for the remainder of the Term or to seek employment elsewhere.
(b) In addition, your appointment hereunder shall terminate prior
to the end of the Term on the first to occur of: (i) your death; (ii) your
physical or mental disability (a "Disability") which Disability, based upon
medical or psychiatric advice from a doctor or doctors selected by the Company
and reasonably acceptable to you, prevents you from doing all material and
substantial duties of your position for a period of six (6) consecutive months
or for an aggregate of nine (9) months in any twelve (12) month period; (iii)
your written resignation from the Company on thirty (30) days prior written
notice; (iv) your discharge by the Company for cause; or (v) your termination by
the Company without cause upon written notice by the Company. For purposes of
this Paragraph, the term "cause" shall mean (A) a continuation of a default or
breach by you of your material obligations as outlined herein after receipt of a
written notice specifying such default or breach and expiration of thirty (30)
days without a cure of such default or breach, or (B) your misconduct,
dishonesty, insubordination or other act (excluding errors in judgment made in
good faith) which materially and adversely affects the Company's relationships
with its customers, suppliers or employees, as outlined in a written notice from
the Company specifying such misconduct, dishonest, insubordination or other act
and not cured within ten (10) days of receipt of such notice (it being
understood that no such ten (10) day grace period shall apply where the conduct
in question cannot, in the reasonable judgment of the Company, be cured by you).
In the event of your Disability, the base salary payable to you hereunder during
such period of Disability shall be reduced by the amounts you are eligible to
receive as disability benefits pursuant to the Company's long term disability
plan then in effect.
(c) In the event that your appointment hereunder is terminated by
your death, a Disability, your written resignation from the Company pursuant to
Paragraph 3 (b) (iii) (except a resignation following non-renewal as provided in
Paragraph 3 (a) above), or by the Company for cause pursuant to Paragraph 3 (b)
(iv), you shall be entitled to receive your earned and unpaid base salary
through the effective date of such termination and business expense
reimbursements in accordance with Paragraph 2 (d) hereof through the effective
date of such termination, and any other amounts due to you under this letter
agreement for the Term year immediately preceding the year in which such
termination occurred, which amounts are unpaid by the Company as of the date of
termination. In addition, in the event that your appointment hereunder is
terminated by your death or a Disability, you shall be entitled to receive any
unpaid perk allowance due pursuant to Paragraph 2 (e) hereof through the
effective date of termination and a bonus payment for the year during which such
termination occurs equal to the average of your bonuses, if any, earned for the
last two (2) years of service to the Company prior to such termination, prorated
to account for such partial year, such prorated bonus to be paid at the time
your annual bonus hereunder for such year would have been paid had the
termination of your appointment hereunder not occurred. Any options which have
been granted to you shall continue to be governed by the provisions of the Stock
Option Plan.
(d) In the event that the Company shall terminate your
appointment hereunder without cause pursuant to Paragraph 3 (b) (v) above, you
shall be entitled to receive the following as severance, which shall be in lieu
of any and all other severance plans and arrangements with the Company: (i)
continuation for a period of eighteen (18) months of your base salary, medical,
hospitalization and life insurance benefits (provided, however, your medical,
hospitalization and life insurance benefits shall be discontinued at such time
as a new employer shall provide you with substantially comparable benefits);
(ii) payment of your perk allowance for a period of eighteen (18) months,
payable in equal installments at the same time base salary payments are made
hereunder; (iii) payment of a bonus for each year remaining on the initial Term
equal to 1.5 times the average of your bonuses, if any, earned for the last two
(2) years of service to the Company prior to such termination, such bonus to be
paid at the time your annual bonus would have been paid had your appointment
hereunder not been terminated; and (iv) payment of the balance of your
retirement plan contributions (i.e., 401 (K) and SERP) for the remaining 18
month period following termination of employment, such payments to be made at
the same time, and to the same extent, as they would have been made had your
appointment hereunder not been terminated.
(e) Any amounts payable under Paragraphs 3 (a) or 3 (d) above
shall be subject to applicable withholding taxes and authorized deductions and
shall be payable in accordance with the payroll policies of the Company in
effect from time to time.
(f) If your employment with the Company is terminated for any
reason whatsoever, any and all sums advanced by the Company to you shall be
promptly repaid to the Company.
(g) Except as specifically provided in Paragraphs 3 (a) and 3 (d)
above, you shall not be entitled to severance in the event of termination of
your appointment hereunder for any reason.
4. (a) You recognize and acknowledge that the Company's marketing
methods, forms, customer lists, price schedules, pricing systems, product lists,
catalogues and similar proprietary information, as the same may exist from time
to time, to the extent that these marketing methods, forms, customer lists,
price schedules, pricing systems product lists, catalogues and similar
proprietary information are not publicly available, are valuable and unique
assets of the Company. You agree that you will not, at any time during or after
the Term, directly or indirectly, use any of the foregoing for your own purposes
or disclose any of the foregoing information or any part thereof (except in the
performance of your duties under this letter) to any person or entity for any
reason or purpose whatsoever. In the event of a breach, or threatened breach, by
you for the provisions of this Paragraph 4, the Company shall, in addition to
all other available remedies, be entitled to an injunction restraining you from
disclosing, in whole or in part, any of the foregoing information or from
rendering any services to any person or entity to whom the foregoing
information, in whole or in part, has been disclosed and/or threatened to be
disclosed.
(b) You hereby agree that any and all improvements, inventions,
discoveries, formulae, processes, methods, know-how, confidential data, trade
secrets and other proprietary information (collectively, "Work Product") within
the scope of the Business (as defined below) of the Company or any affiliate of
the Company which you may conceive or make or have conceived or made during your
appointment with the Company shall be and are the sole and exclusive property of
the Company, and that you shall, whenever requested to do so by the Company, at
its expense, execute and sign any and all applications, assignments or other
instruments and do all other things which the Company may deem necessary or
appropriate (i) in order to apply for, obtain, maintain, enforce or defend
letters patent, trademarks or copyrights in the United States or any foreign
country for any Work Product, or (ii) in order to assign, transfer, convey or
otherwise make available to the Company the sole and exclusive right, title and
interest in and to any Work Product.
5. (a) You acknowledge that, during the Term, you will gain valuable
and proprietary information regarding the Company and its respective operations
and customers. Accordingly, in consideration of the covenants and agreements of
the Company under this letter you convenant and agree that (i) during the Term,
you will not directly, or indirectly through any other person or entity, own,
operate, manage, join, control, participate in the ownership, management,
operation or control, of, or be paid or employed by or act as consultant, agent
or distributor for, any business entity or activity which is engaged in the
office products (including, without limitation, office furniture, office
equipment, office supplies, printing and advertising specialties) business of
the Company (the "Business"), and (ii) for a period of eighteen (18) months
after the termination of your employment with the Company for any reason, you
will not:
(A) directly, or indirectly through any other person or entity,
own, operate, manage, join, control, participate in the ownership,
management, operation or control of, or be paid or employed by or act as
consultant, agent or distributor for, any business entity or activity
which, in the reasonable judgment of the Company, is competitive with the
Business;
(B) directly, or indirectly through any other person or entity,
solicit any sales to or other business of any person or entity which,
during the Term, was a customer or an active prospect of the Company or
its affiliates in connection with the Business; or
(C) hire, or attempt to hire for employment or as an independent
sales representative, in any business enterprise or activity, any person
which is, or during the immediately preceding six (6) month period was,
an employee or independent sales representative of the Company or any of
its affiliates in connection with the Business.
The Company hereby acknowledges that you may have an ownership interest of up to
3% of the outstanding stock of one or more publicly traded companies.
(b) You acknowledge that the foregoing noncompetition covenant is a
fair and reasonable restriction, that such covenant is reasonably required for
the protection of the Company and that the consideration therefore is a fair and
adequate consideration, and that such covenant shall survive the termination of
this letter.
(c) You acknowledge that any breach or threatened or attempted breach
of any provision of this Paragraph 5 would cause irreparable harm to the Company
not compensable in money damages and that the Company and each of its affiliates
shall be entitled, in addition to all other-applicable remedies, to a temporary
and permanent injunction and a decree for specific performance of the terms of
this Paragraph 5 without being required to prove damages or furnish any bond or
other security.
(d) In the event that any provision of this Paragraph 5 is determined
to be invalid by any court or other entity of competent jurisdiction, the
provisions of this Paragraph 5 shall be deemed to have been amended, and the
parties hereto agree to execute all documents necessary to evidence such
amendment, so as to eliminate or modify any such invalid provision so as to
carry out the intent of this Paragraph 5 as far as possible and to render the
terms of this Paragraph 5 enforceable in all respects as so modified.
6. This letter and the obligations of the parties hereunder shall be
construed, governed and enforced in accordance with the laws of the State of
Missouri without giving effect to its rules regarding conflicts of law, and the
parties hereto expressly waive trial by jury in any judicial proceeding
involving, directly or indirectly, any matter in any way arising out of this
letter or out of the employment relationship between us.
7. This letter constitutes all of the understandings and agreements
existing between the parties hereto concerning the specific subject matter of
this letter and the rights and obligations created under it as of this date and
supersedes and replaces any and all other agreements, plans or arrangements
regarding the subject matter hereof.
8. This letter may not be amended, altered, modified, or otherwise
changed in any respect except by the written agreement of the parties. Any
waiver by any party of any breach of any provision of this letter shall not be a
waiver of any subsequent breach thereof or of any breach of any other provision
hereof.
9. The provisions of Paragraphs 3 (a), 3 (b), 3 (c), 3 (f), 4, 5 and 6
shall survive the expiration or termination of your employment with the Company
for any reason.
10. Any notice or other communication required or permitted under this
letter shall be effective only if it is in writing and delivered personally or
sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Company:
Vice President - Human Resources
2150 East Lake Cook Road
Riverwalk, Suite 590
Buffalo Grove, IL 60089
If to Mr. Richard C. Dubin:
512 Bonhomme Woods
St. Louis, MO 63132
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
This letter may be executed in several counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.
Kindly sign this letter where indicated to reflect your agreement to its terms.
BT OFFICE PRODUCTS INTERNATIONAL, INC.
By: /s/ Frans H.J. Koffrie
--------------------------------------
Frans H.J. Koffrie
Chief Executive Officer and President
ACKNOWLEDGED AND AGREED:
Richard C. Dubin
/s/ Richard C. Dubin
- --------------------------------
Richard C. Dubin
Attachments: 1997 Bonus Criteria and Targets
Stock Option Plan and Agreement
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from BT Office
Products International, Inc. Form 10-Q for the quarterly period ended September
30, 1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Sep-30-1997
<CASH> 12,046
<SECURITIES> 0
<RECEIVABLES> 223,144
<ALLOWANCES> (6,597)
<INVENTORY> 113,743
<CURRENT-ASSETS> 392,740
<PP&E> 142,017
<DEPRECIATION> (60,780)
<TOTAL-ASSETS> 727,668
<CURRENT-LIABILITIES> 230,027
<BONDS> 213,479
<COMMON> 335
0
0
<OTHER-SE> 269,235
<TOTAL-LIABILITY-AND-EQUITY> 727,668
<SALES> 393,182
<TOTAL-REVENUES> 393,182
<CGS> 284,410
<TOTAL-COSTS> 385,443
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,051
<INCOME-PRETAX> 4,529
<INCOME-TAX> 1,912
<INCOME-CONTINUING> 2,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,617
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
