10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year
ended February 28, 2003	Commission file no. 0-10823

BCT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	22-2358849
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification No.)

3000 NE 30th Place, Fifth Floor, Fort Lauderdale, Florida  33306

(Address of principal executive offices)                                 (Zip Code)

Registrant’s telephone number, including area code:         (954) 563-1224

Securities registered pursuant to Section 12 (b) of the Act:

NONE

Securities registered pursuant to Section 12 (g) of the Act:

COMMON STOCK, par value $.04 per share

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [    ] .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [    ] No [X]

The aggregate market value of Registrant’s voting stock held by non-affiliates of the Registrant, at May 27, 2003 was approximately $2,136,000.

The number of shares outstanding of Registrant’s Common Stock, par value $.04 per share, at May 27, 2003 was 5,121,471.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

This document consists of 44 pages.

The Index to exhibits begins on page 19.

Item 1.    Business

(a)    General

BCT International, Inc. (the “Company”) is a holding company with one direct wholly-owned subsidiary: Business Cards Tomorrow, Inc., a Florida corporation (“BCT”). BCT operates the Business Cards Tomorrow franchise system. Since its founding in 1975, the system has grown to include 82 “Business Cards Tomorrow Franchises” (the “Franchises”) specializing in thermography products, labels, rubber stamps and business announcements for resale by retail printing providers in 36 states and Canada.

The Company adopted a plan effective February 28, 1999 for the disposition of all Company owned Franchises. Under the plan, the Company intended to sell the three Company owned Franchises in fiscal 2000. All but the franchise located in Merrimack, New Hampshire were sold in fiscal 2000. In October 2000, the Company sold the Merrimack, New Hampshire franchise in exchange for a $150,000 promissory note. In January 2001, as a result of the purchaser’s default on its obligations to the Company, the Company took back the franchise, ceased operations of the franchise and liquidated the assets.

In fiscal 2003, the Company began operating a Company owned franchise in San Carlos, California. This franchise replaced a franchise in San Francisco, whose franchise agreement was terminated. In addition, the Company exercised its option to acquire an additional 37.15% interest in TBDS, Inc., the BCT franchise in Tampa, Florida. After exercising its option, the Company owns 56.15% of TBDS, Inc. and has taken over operation of the franchise.

BCT’s operations also include the Pelican Paper Products Division (“PPP”) which supplies paper products, press supplies and press parts to the BCT Franchises. The Company operates in three operating segments of a single industry. The segments include 1) operations as a franchisor of printing franchises, 2) sale of paper products and supplies to the BCT Franchises, and 3) other operations.

On May 28, 2003, the Company’s Board of Directors approved a definitive merger agreement pursuant to which the Company agreed to be acquired by Phoenix Group of Florida, Inc. (“Phoenix”) which is owned by William A. Wilkerson, the Company’s Chairman and Chief Executive Officer. Phoenix, together with its affiliates, including Mr. Wilkerson (the “Acquisition Group”), owns approximately 52.5% of the Company’s issued and outstanding common stock. Under the merger agreement each stockholder, other than the members of the Acquisition Group, will receive in cash $2.00 per share of common stock owned.

The Company entered into the merger agreement Following Board of Directors approval based in part upon the unanimous recommendation of a special committee comprised of non-management directors of the Company. The special committee has received an opinion from Capitalink, L.C. that the price of $2.00 per share is fair from a financial point of view to the stockholders other than the Acquisition Group.

Notwithstanding its recommendation and consistent with the terms of the merger agreement, if the special committee concludes that the failure to provide information to, or engage in discussions with any other parties interested in a possible acquisition of the Company, would be inconsistent with its fiduciary duties to the Company’s stockholders, the special committee may provide information to, and engage in discussions and negotiations with such interested parties. Under specified circumstances, the Company has the right to terminate the merger agreement and to enter into an agreement with a party proposing a competing transaction.

Completion of the transaction is subject to customary closing conditions, including stockholder approval. In addition, the merger agreement requires approval by the holders of a majority of the Company’s shares held by persons other than members of the Acquisition Group. The merger agreement does not include a financing contingency. See Certain Relationships and Related Transactions.

(b)    Narrative description of the business

Business Cards Tomorrow, Inc.

General

The Franchises typically operate through the placement of business card, stationery, rubber stamp and labels catalogs with commercial and retail “quick” printers, office superstores, forms brokers, office supply companies and stationers in the Franchises’ trade areas (collectively, the “Dealers”). The Dealers secure orders from their customers for thermographed printed products and other printed matter which are normally picked up daily by the Franchises’ route drivers, who also deliver products previously ordered. Thermography is a specialized printing process that gives a raised printing effect similar to engraving and requires specialized equipment and operating techniques which commercial printers, quick printers, office superstores and other retail dealers choose not to invest in. The Franchises specialize in the “fast turnaround” of their products, delivering many items, such as business cards, in one business day, with most products being delivered within two days of the date of order. Increasingly, the Franchises receive orders by fax and electronic communications via the Internet using Orderprinting.com^™, an Internet-based ordering system.

In January 1999, the Company introduced Orderprinting.com^™ which is targeted toward the print broker market. Orderprinting.com^™ consists of a custom web-based ordering system which allows end users to log-in to a personalized Internet site which has the end user company’s business card and business stationery product layouts. The end user selects the product and layout desired and enters the required employee and location information, previews the finished stationery product on-line and approves the order for processing. The order is transmitted electronically to the BCT Franchise that will process the order. In addition, the print broker associated with the end user is notified of the order via e-mail.

BCT supplies business stationery and rubber stamp and label catalogs to its Franchises and also sells them paper products featured in the catalogs through PPP. The catalogs are printed at the Company’s catalog printing facility which is located in the Company’s warehouse and paper conversion facility in Menasha, Wisconsin.

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PPP is a primary supplier of paper products for the BCT Franchises. PPP purchases raw paper directly from paper mills and paper brokers and utilizes the services of converters to convert the raw material to finished paper products. In addition, certain conversion functions are performed “in house”. PPP also performs converting and handling services for third parties. PPP utilizes three public storage facilities located strategically throughout the United States to house and ship out paper products to the Franchises.

BCT derives revenues from six principal sources: (i) royalties, which are based on a percentage of sales from the BCT Franchises; (ii) resale fees from the resale of operating Franchises; (iii) sales of paper products to franchisees; (iv) catalog and miscellaneous equipment and parts sales classified as printing sales; (v) interest income from financing franchise acquisitions (primarily resales) and receivables; and (vi) software licensing fees related to Orderprinting.com.

As of May 27, 2003, 82 BCT Franchises are in operation in 36 states and Canada (eight Franchises). In addition, one Company-owned BCT Satellite is in operation in Fort Myers, Florida. In August 2001, the Company reached agreement with the Franchise located in Buenos Aires, Argentina. Under the agreement, both parties released the other party from any further obligation under the then existing Franchise Agreement The current number of Franchises compares with 82 and 84 Franchises in operation on May 22, 2002 and May 25, 2001, respectively. The decrease in the number of franchises in fiscal 2002 is the result of the closing of one Franchise location and the agreement with the Buenos Aires Franchise described above. Total BCT system sales reached approximately $104,000,000, $101,000,000 and $107,000,000 for the fiscal years ended February 28, 2003, 2002 and 2001, an average of $1,268,000, $1,237,000 and $1,244,000, respectively, per Franchise.

BCT receives either a 5% or 6% royalty fee based on gross franchisee sales for original 15—25 year contracts. The royalty fee is dependent on the initial franchise agreement date. Generally, agreements dated through mid-1986 carry 5% royalties. Thereafter, the 6% royalty applies. Certain Franchises were granted a sliding scale of decreasing royalty rates based upon meeting specified quarterly sales plateaus in connection with the renewal of their franchise agreement. No franchise agreements are up for renewal in fiscal 2004. For fiscal years ended 2003, 2002, and 2001, continuing franchise royalties comprised approximately 27%, 28% and 27% of total revenue, respectively. PPP sales to the franchisees for fiscal years ended 2003, 2002, and 2001 were approximately 63%, 67%, and 69%, of total revenue, respectively.

Raw Materials

The primary raw materials of the BCT Franchises are paper products which are readily available from numerous industry suppliers. It is common practice within the paper industry to place minimum order levels when ordering specific materials. In addition, the need to maintain a complete stock of raw materials for all items listed in BCT’s catalogs requires significant continuing inventory investment. While BCT, through PPP, sells paper products to its Franchises, the Franchises are under no obligation to purchase these products from BCT and all such products are available from other suppliers.

The paper industry does suffer periodic shortages of specific paper products as well as price fluctuations caused by supply and demand changes, but these shortages and price fluctuations typically affect all similar types of printers in an industry such as “trade” thermographers and can generally be mitigated through the use of alternate supply sources in the industry and substitution with similar products. Any increases in the cost of paper from the mills is generally passed on to the Franchises. It is not considered by BCT as very likely that any of its Franchises would be out of operation for any significant period of time due to an unavailability of raw materials resulting from major supply or price changes in the paper industry.

Franchises

BCT’s franchise agreements with individual Franchises are typically for a 15-to-25 year period and are renewable for additional 10-year periods. The right to renew is contingent upon the Franchise not being in default under any material term of the franchise agreement. BCT may terminate a franchise agreement under certain circumstances where the Franchisee is in material default under the franchise agreement and has not cured such default(s) after notice from BCT. BCT’s existing franchise agreements with individual Franchises have an average remaining term of approximately 15 years. No Franchises come up for renewal in fiscal 2004, and in the subsequent 10 years, 16 Franchises come up for renewal.

In April 2003, the Company opened a Satellite to its Company-owned Tampa, Florida franchise in Ft. Myers, Florida. The Satellite consists of a storefront location which performs the customer service, typesetting and delivery function of a BCT without the production capabilities. Production for Ft. Myers is done in Tampa. The Company is exploring this concept as a means to better penetrate

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smaller franchise territories and as an alternative to a full production plant start-up. Production for other Satellite locations would be done by either a Company-owned Franchise or if a Satellite territory is purchased by an existing BCT Franchise, that Franchise would perform production.

Competition

The Company and its franchisees compete with other franchisors, franchisees and independent operators in the graphic arts industry. While the Company believes that its BCT franchise system is the leading supplier of thermographed business cards to printers throughout the United States, there can be no assurance that competitors will not imitate or improve upon the Company’s business strategy. BCT’s major national competitors are Regency Thermographers, Carlson Craft, and American Wholesale Thermographers, Inc.; however, BCT’s franchisees also compete with numerous local and regional operations. BCT’s franchisees compete primarily on the basis of turnaround time, quality and close customer contact and, more recently with Orderprinting.com^™ Internet technology.

Trade and Service Marks

The Company has received federal registration of the names “Business Cards Tomorrow”, “BCT International, Inc.”, “Orderprinting.com” and the BCT commercial logo, as well as the names and commercial marks for “Typesetting Express”, “Engraving Tomorrow”, “Thrift-T-Cards”, “Thermo-Rite” and “Rubber Stamps Tomorrow”.

Research and Development

The Company performs ongoing research and development, seeking improvements in the operating procedures and products of its Franchises and development of proprietary software. These activities are primarily done at the Company’s corporate headquarters. Also, the Company often requests individual franchisees to perform tests of various equipment, materials or techniques in an actual production environment. The Company has invested significant amounts in the research and development of Orderprinting.com^™, an Internet-based order entry and distribution system. Additional investment will be required to enhance the system and to provide for the increasing volume of orders being processed in this manner.

Government Regulation

The Federal Trade Commission has adopted rules relating to the sales of franchises and disclosure requirements to potential franchise purchasers. Additionally, various states have adopted laws regulating franchise sales and operations. As a franchisor, the Company is required to comply with these federal and state regulations and believes that it is not operating in violation of any of these regulations.

Employees

As of May 27, 2003, the Company has 42 employees, all of whom are located at either (i) the Company’s corporate headquarters in Fort Lauderdale, Florida, or (ii) the Company’s paper distribution warehouse and paper converting facility in Menasha, Wisconsin.

Financial Information Relating to Foreign and Domestic Operations

	February 28, 2003		February 28, 2002		February 28, 2001
Revenue:
Foreign operations	$	659,000	$	576,000	$	811,000
Domestic operations	$	19,156,000	$	17,431,000	$	18,618,000
Operating Profit:
Foreign operations	$	56,000	$	26,000	$	454,000
Domestic operations (1)	$	1,220,000	$	787,000	$	1,092,000
Identifiable Assets:
Foreign operations	$	285,000	$	299,000	$	309,000
Domestic operations	$	17,530,000	$	16,779,000	$	15,881,000

(1)  Amounts do not include losses from discontinued operations amounting to $31,000 for the fiscal year ended February 28, 2001.

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Item 2.    Properties

The Company’s corporate headquarters are located at 3000 NE 30th Place, Fifth Floor, Fort Lauderdale, Florida, and occupy approximately 7,500 square feet. The lease on this facility continues to October 2007 at a monthly rental of approximately $13,000.

The Company’s primary paper warehouse is located at 772 Specialists Avenue, Menasha, Wisconsin utilizing approximately 49,000 square feet. This facility also accommodates the Company’s printing and paper converting operations and is leased at a monthly rental of approximately $12,000 through January 2005.

The Company leases office/warehouse space located at 6201 Johns Road, Suite 3, for the Company-owned Franchise in Tampa, Florida, utilizing 7,200 square feet at a monthly rental of $4,900 through August 2007.

The Company leases office/warehouse space located at 837 Industrial, Unit A, for the Company-owned Franchise in San Carlos, California, utilizing 5,165 square feet at a monthly rental of $4,700 through July 14, 2004.

The Company leases 1,200 square feet in a retail strip center located at 1939 Park Meadows Drive, #5(E), Ft. Myers, Florida 33907, for the Company-owned Satellite location at a monthly rental of $1,050 through March 2006.

Management believes that existing warehouse facilities are adequate for the foreseeable future.

Item 3.    Legal Proceedings

No material matters.

Item 4.    Submission of Matters to a Vote of Securities Holders

No matters were submitted to a vote of securities holders, through the solicitation of proxies or otherwise, during the fiscal quarter ended February 28, 2003.

Item 5.    Market for Registrant’s Common Stock and Related Security Holder Matters

The Company’s Common Stock was traded on the NASDAQ National Market under the symbol “BCTI” until September 9, 2001 when it was de-listed for failure to meet minimum requirements for the market value of its public float. Since September 9, 2001 the Company’s Common Stock has traded on the OTC Bulletin Board.

The following table sets forth, for the quarters indicated, the high and low closing price for the Common Stock as reported on the NASDAQ National Market through September 9, 2001, and on the OTC Bulletin Board thereafter.

	Fiscal Quarters	High	Low
2002	First Quarter	$1.62	$0.93
	Second Quarter	$1.30	$0.71
	Third Quarter	$1.09	$0.50
	Fourth Quarter	$1.11	$1.02
2003	First Quarter	$1.11	$0.46
	Second Quarter	$0.93	$0.71
	Third Quarter	$0.90	$0.67
	Fourth Quarter	$1.07	$0.70
2004	First Quarter (through May 27, 2003)	$1.05	$0.91

On May 27, 2003, the closing price per share of Common Stock, as reported on the OTC Bulletin Board was $0.92.

There is currently no established public trading market for any securities of the Company other than the Common Stock.

The approximate number of holders of record of the Company’s Common Stock as of May 27, 2003 was 800.

During the fiscal years ended February 28, 2003, 2002, and 2001 no cash dividends were declared on the outstanding Common Stock. The Company has no plans to pay any dividends on the Common Stock.

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Item 6.    Selected Financial Data (000’s omitted, except per share data)

OPERATIONS
for the fiscal year ended:	Feb. 28, 2003		Feb. 28, 2002		Feb. 28, 2001			Feb. 29, 2000			Feb. 28, 1999
REVENUES:
Royalties and franchise fees	$	5,221	$	5,117	$	5,267		$	5,394		$	5,356
Paper and printing sales		12,019		12,068		13,424			13,881			12,817
Sales of franchises		4		99		46			27			87
Company-owned franchise revenues		1,802		—		—			—			—
Interest and other income		769		723		692			347			346
		19,815		18,007		19,429			19,649			18,606
EXPENSES:
Cost of paper and printing sales		10,410		10,592		11,605			11,574			10,939
Cost of Company-owned franchise revenues		448		—		—			—			—
Selling, general and administrative		7,403		6,376		6,455			6,619			4,290
Depreciation and amortization		278		226		232			189			186
		18,539		17,194		18,292			18,382			15,415
Income from continued operations before legal settlement and income taxes		1,276		813		1,137			1,267			3,191
Legal settlement		—		—		—			941			—
Income from continued operations before income taxes		1,276		813		1,137			2,208			3,191
Income tax provision		491		321		442			837			690
Income from continued operations		785		492		695			1,371			2,501
Discontinued operations (2):
Loss from Company owned Franchises operated under a plan of disposition, net of income tax benefit		—		—		(31	)		(357	)		(327	)
Net income	$	785	$	492	$	664		$	1,014		$	2,174
Earnings (loss) per common share:
Income from continued operations	$	.15	$	.10	$	.13		$	.26		$	.47
Loss from discontinued operations		—		—		(.01	)		(.07	)		(.06	)
Basic	$	.15	$	.10	$	.13		$	.19		$	.41
Income from continued operations	$	.15	$	.10	$	.13		$	.25		$	.45
Loss from discontinued operations		—		—		(.01	)		(.06	)		(.06	)
Diluted	$	.15	$	.10	$	.13		$	.19		$	.39
Total assets	$	17,835	$	17,078	$	16,190		$	17,321		$	15,235
Long-term debt	$	410	$	—	$	236		$	330		$	433
Preferred stock	$	—	$	—	$	—		$	—		$	60
Working capital	$	9,402	$	8,285	$	6,921		$	5,666		$	6,424
Stockholders’ equity (1)	$	15,541	$	14,756	$	14,284		$	13,756		$	12,892

(1) During the five fiscal years ended February 28, 2003, no cash dividends have been declared on the Common Stock outstanding.

(2) Discontinued operations are discussed in Note 2 to the Consolidated Financial Statements.

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

Our critical accounting policies are those which we believe require the most subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. A discussion of our critical accounting policies, the underlying judgments and uncertainties affecting their application and the likelihood that materially different amounts would be reported under different conditions or using different assumptions, is as follows:

Royalty Revenue

Royalty revenue is recorded based upon reports received from Franchises. Each month, an accrual is made for each Franchise for unreported sales. This accrual is calculated by taking the number of unreported weeks for each Franchise multiplied by the average of the previous six reported weeks’ sales for that Franchise. The risk exists that actual sales for the unreported weeks may materially differ from the average used to calculate the accrual. For the fiscal years 2003, 2002 and 2001 the end of year accruals for unreported royalties approximated $288,000, $286,000 and $398,000, respectively.

In addition, the Company evaluates the collectibility of royalties. When the Company determines, through payment history, knowledge of weak financial condition or other factors, that collectibility of royalties from a particular Franchise is doubtful, the Company ceases accruing royalties for the franchise until the Franchise is transitioned to new ownership or until payments become current. At the end of fiscal 2003, 2002 and 2001 the Company was not accruing royalties for two franchises. The Company has an active program to assist in remarketing franchises that are not meeting the expectations of the owner(s) or the Company.

Certain franchises are eligible for a rebate of royalties paid based upon meeting specific contractually established sales levels and other financial performance requirements. The Company records an accrual each month for estimated royalty rebates. There is a risk that actual results may vary from the amounts accrued due to variances in sales levels and or failure by the Franchise to meet financial performance requirements.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts when it is determined that the amount a Franchise owes the Company approaches the estimated value of the Franchise. In addition, provision is made when, in management’s judgment, there is significant risk that a Franchise will not be able to meet its obligations as they become due. There is a risk that the value, estimated by the Company, may vary materially from the actual value of the Franchise or that factors beyond the control of the Company may result in a Franchise ceasing operations unexpectedly, thus significantly decreasing the value of the Franchise.

Line of Credit Guarantee

In August 2001, the board of directors of the Company approved a guaranty of a $2 million bank line of credit for Phoenix Group of Florida, Inc., (Phoenix) a company owned by the Chairman, Chief Executive Officer and President (the Chairman) of the Company. This guarantee has been treated as a commitment and as such the possible liability of the Company is not reflected in the balance sheet of the Company. Phoenix is a Company formed to acquire shares of the Company’s common stock in anticipation of a going private transaction via a merger between the Company and Phoenix. As such, the primary asset of Phoenix consists of the common stock of the Company. The Company periodically evaluates the ability of Phoenix to meet its obligations under the line of credit agreement.

Fiscal 2003 Compared to Fiscal 2002

Total revenue for fiscal 2003 increased $1,808,000 or 10%. Royalties increased $104,000 or 2%. Paper and printing sales decreased $49,000 or 0.4%. Revenues of Company-owned franchises increased $1,802,000 or 100%. Revenues from sales of franchise decreased $95,000 or 96%. Interest and other income increased $46,000 or 6.4%.

Royalties increased from an increase in sales of the BCT network of franchises. Network sales increased $3,000,000 or 2.9% in fiscal 2003. The resulting increase in royalties was impacted by the acquisition of two Company-owned franchises in fiscal 2003. The Company does not recognize royalty revenue from Company-owned franchises.

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Paper and printing sales decreased primarily as a result of a decline in sales of label stock which resulted from the introduction of a new label catalog produced in conjunction with a new “outsource’ program in July 2002. Previously, certain franchises had produced labels in-house with Pelican Paper providing the label stock. Outsourcing requires a much lower initial investment by franchises.

Interest and other income increased as a result of an increase in the annual calendar year license fee for Orderprinting.com from $4,200 to $6,000 in January 2002. The increase in licensing fees was partially offset by a decrease in interest income which resulted from a decline in rates for overnight funds and the general maturity of the notes receivable portfolio.

Revenue from sales of franchises was lower in fiscal 2003 as there were no new sales or resales of franchises.

Cost of paper and printing sales as a percentage of paper and printing sales was 87%, 88% and 86%, respectively, for fiscal 2003, 2002 and 2001. Fluctuations in this percentage result primarily from changes in the sales mix. In addition, the Company recorded a reserve for obsolete inventory of $100,000 in fiscal 2003 ($175,000 and $30,000, respectively, in fiscal 2002 and 2001) relating to label catalog raw material and finished product and inventories of label stock, all made obsolete by the introduction of the new outsource label program.

Selling, general and administrative expenses represented 37%, 35% and 33% of total revenue, respectively, for fiscal 2003, 2002 and 2001. The increase in the fiscal 2003 percentage is primarily the result of the acquisition of two Company-owned franchises in fiscal 2003. During fiscal 2003, bad debt expense increased $180,000 or 13.8%. Selling, general and administrative expenses for BCT Tampa and BCT San Carlos amounted to $503,000 and $492,000, respectively. These increases were partially offset by a decrease in salaries and employee benefits of $430,000 or 13.5%, a decrease in research and development costs of $114,000 or 43% and a decrease in legal costs of $31,000 or 11%. Salaries and employee benefits were higher in fiscal 2002 as result of severance paid to the prior President and CEO and three other employees amounting to approximately $407,000. The higher legal costs in fiscal 2002 were primarily the result of the proposed merger of the Company with Phoenix Group of Florida, Inc. See Item 13. “Certain Relationships and Related Transactions.”

Fiscal 2002 Compared to Fiscal 2001

Total revenues for fiscal 2002 decreased $1,422,000, or 7%. Royalties decreased $150,000 or 3%. Paper and printing sales decreased $1,356,000 or 10%. These decreases were partially offset by an increase in interest and other income of $31,000 or 5% and an increase in revenue from sales of franchises of $53,000 or 115%.

Royalties decreased due to lower network sales which resulted from the loss of a national account in Canada at the end of fiscal 2001 and the failure of 3 franchises in the 3^rd and 4^th quarters of fiscal 2001. Paper and printing sales decreased in fiscal 2002 due to the decrease in network sales and due to strict enforcement of payment terms.

The Company recognized deferred revenue from the sale of a franchise in connection with the payoff of the related note receivable in November 2001. In addition, the Company reached agreement with the franchise in Buenos Aires, Argentina releasing each party of any further contractual obligations, which resulted in the recognition of revenue which was previously deferred due to the uncertainty of related support costs associated with the revenue. These factors resulted in higher revenue from sales of franchises in fiscal 2002.

Interest and other income increased due to an increase in fees charged to Franchises for use of Orderprinting.com. Franchises pay an annual license fee each calendar year. In 2001, the annual fee was $4,200 compared to $6,000 beginning in January 2002. In addition, interest income increased $27,000 or 7%.

Cost of paper and printing sales as a percentage of paper and printing sales was 88%, 86% and 83%, respectively, for fiscal 2002, 2001 and 2000. Fluctuations in this percentage result primarily from changes in the sales mix. In addition, the Company recorded a reserve for obsolete inventory of $175,000 in fiscal 2002 ($30,000 and $76,000, respectively, in fiscal 2001 and 2000) relating to label catalog raw material and finished product and inventories of label stock, all made obsolete by the introduction of a new outsource label program. Selling, general and administrative expenses represented 35%, 33% and 34% of total revenue, respectively for fiscal 2002, 2001 and 2000. The increase in the fiscal 2002 percentage is primarily the result of the decrease in total revenues in fiscal 2002. During fiscal 2002, expenses for research and development decreased $403,000 or 60% as the Company migrated from the use of outside programmers to an in-house programmer. In addition, bad debt expense decreased $152,000 or 10% and travel expense decreased by

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$81,000 or 45%. These decreases were offset by increases in (i) salaries and employee benefits of $307,000 or 11% which resulted from severance paid to the prior President and CEO and three other employees amounting to approximately $407,000 and (ii) an increase in legal and professional fees of $313,000 or 133%, primarily the result of the proposed merger of the Company with Phoenix Group of Florida, Inc. See Item 13. “Certain Relationships and Related Transactions.”

Liquidity and Capital Resources

The Company generated cash from continuing operations of $291,000 during the fiscal year ended February 28, 2003. The Company employed the cash generated to make capital expenditures of approximately $197,000, to increase inventory by $948,000 in anticipation of better margins and to make principal payments on debt of $614,000. The Company’s cash decreased $543,000 in fiscal 2003.

Included in cash are amounts received from national accounts on behalf of Franchises which are remitted to the Franchises weekly. The balance to be remitted amounted to $526,000 and $279,000 at February 28, 2003 and 2002, respectively.

The Company believes that internally generated funds will be sufficient to satisfy its working capital and capital expenditure requirements for the foreseeable future; however, there can be no assurance that external financing will not be needed. During fiscal 2003, the Company renewed a $2 million line of credit with a bank. No advances have been made on the line as of May 27, 2003.

It is the Company’s intention to reinvest cash generated from operations into financial assistance to the network in order to encourage replacement of outdated equipment and investment in new software and equipment to bring new products to the marketplace. Further, the Company will increase certain minimum order quantities from its paper suppliers in order to entice better pricing resulting in somewhat higher inventory levels in the future. In addition, as the volume of orders processed on Orderprinting.com continues to increase, significant future investment will be necessary to provide additional functionality and to support the increasing volume of transactions. Finally, the Company intends to retire its outstanding debt in fiscal 2003 which will reduce interest expense approximately $21,000.

At February 28, 2003, the Company has future obligations of the following:

Fiscal Year	Operating Leases		Long Term Debt		Total
2004	$	379	$	113	$	492
2005		348		322		670
2006		228		88		316
2007		230		—		230
2008		164		—		164
Totals	$	1,349	$	523	$	1,872

In August 2001, in connection with the $2 million bank loan to Phoenix (the “Loan”), the Company entered into an agreement with Phoenix and the Chairman providing the following conditions to the guarantee of the loan by the Company and its subsidiary BCT (which included a pledge of substantially all of the assets of the Company and BCT to secure the Loan): (i) the last year of the Chairman’s employment agreement with the Company was eliminated, so that the agreement would terminate on February 28, 2002; (ii) the Chairman and Phoenix, jointly and severally, agreed to (A) grant the Company an assignable one-year option to repurchase all of the shares of the Company’s common stock bought with the borrowed funds at the same price paid by Phoenix and (B) pay the Company’s expenses incurred in connection with the transaction, unless (1) the Chairman and/or Phoenix made an offer on or before September 30, 2001, to purchase for cash all of the Company’s shares held by public shareholders, and providing for a closing of that transaction on or before April 15, 2002 and (2) such transaction closes on terms deemed “fair” to the Company and its shareholders by the Special Committee, consisting of non-management directors of the Company; and (iii) the Company and Phoenix, jointly and severally, agreed to immediately reimburse the Company for all payments made pursuant to the corporate guaranty. As collateral for their reimbursement obligations, the Chairman and Phoenix granted the Company a first priority security interest in any and all shares of the Company’s common stock which Phoenix purchased with the borrowed funds and a subordinated security interest in the shares of the Company’s common stock already owned by Phoenix and pledged to the bank.

Page 8

Selected Quarterly Financial Data

Quarterly financial results were as follows: (000’s omitted, except per share data)

	Quarters Ended
	May 31			Aug. 31			Nov. 30			Feb. 28
Fiscal 2003
Revenues	$	4,840	(b)	$	4,415	(b)	$	4,842	(b)	$	4,952	(b)
Operating income		486			198			193			399
Net income	$	302		$	115		$	118		$	250
Earnings per share:
Basic	$	0.06		$	0.02		$	0.02		$	0.05
Diluted	$	0.06		$	0.02		$	0.02		$	0.05
Fiscal 2002
Revenues	$	4,804		$	4,529		$	4,390		$	4,284
Operating income (loss)		110			342			483			(122	)
Net income (loss)	$	67		$	209		$	291		$	(75	)(a)
Earnings per share:
Basic	$	0.01		$	0.04		$	0.06		$	(0.01	)
Diluted	$	0.01		$	0.04		$	0.06		$	(0.01	)

(a) The 4^th quarter loss was attributable to additional bad debt expense due to the unanticipated seizure of a franchise in January 2002.

(b) Quarterly revenues do not include the revenues of the 50% Company-owned Hawaii franchise whose results are reflected net above, but are consolidated elsewhere in this document for fiscal 2003.

Forward-Looking Information

Certain information contained in this annual report, particularly information regarding future economic performance and finances, plans and objectives of management, constitutes “forward-looking statements” within the meaning of the federal securities laws. In some cases, information regarding certain important factors that could cause actual results to differ materially from any forward-looking statement appear together with such statement. The following factors, in addition to other possible factors not listed, could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the wholesale printing industry, which is intense; changes in general economic conditions; technological changes; changes in customer tastes; legal claims; the continued ability of the Company and its franchisees to obtain suitable locations and financing for new Franchises as well as expansion of existing Franchises; governmental initiatives, in particular those relating to franchise regulation and taxation; and risk factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

The Company had no outstanding balances subject to market risk during the period covered by this report. The Company has a $2 million line of credit with a bank which bears interest at LIBOR + 2.35%.

Item 8.    Financial Statements and Supplementary Data

The financial statements and schedules listed in the accompanying Index to Consolidated Financial Statements and Schedules on page D-1 are filed as a part of this report.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Page 9

Item 10.    Directors and Executive Officers of the Registrant

Name	Age	Position	Date Elected Or Appointed
William Wilkerson	61	Chairman of the Board, Chief Executive Officer and President	January 1978
Michael R. Hull	49	Chief Financial Officer, Treasurer and Secretary	May 1996
John Galardi	65	Director	November 2000
Jeff Hewson	59	Director	October 1999
Henry A. Johnson	67	Director	February 1975
Philip Pisciotta	64	Director	June 2001

William Wilkerson has been Chairman of the Board and a Director of the Company since January 1986. He was Chief Executive Officer of the Company from May 1988 until October 1997. He was President and Chief Executive Officer of Business Cards Tomorrow, Inc. (a Florida corporation) from January 1978 to January 1982 and Chairman from January 1982 to January 1986. In February 2001, he was appointed Chief Executive Officer, and in May 2001 was appointed President as well.

Michael R. Hull joined the Company in May 1996 and became Vice President/Chief Financial Officer and Treasurer beginning May 31, 1996. Mr. Hull is a certified public accountant, a member of the Florida Institute of Certified Public Accountants and the American Institute of Certified Public Accountants and had previously worked in public accounting since 1985. Prior to joining the Company, Mr. Hull served as an audit senior manager with the accounting firm of Price Waterhouse LLP for three years.

John N. Galardi was formerly a Director of the Company from August 1990 to November 1995. He joined the Board again in November 2000. He has been a franchisor for more than 30 years and is the Chairman of the Board of Galardi Group, Inc., a restaurant holding company based in Newport Beach, California, which operates 350 fast food restaurants. In addition, Mr. Galardi is an investor in several other private businesses.

Jeff Hewson has over 30 years experience in the manufacture and distribution of office and computer supplies. In 1990 Mr. Hewson became President and Director of United Stationers Inc., a leading wholesale distributor of office and computer-related products. He retired as President of United Stationers at the end of 1995, but stayed on the United Stationers Board of Directors until November 1997. Mr. Hewson was also the master license franchisee for BCT Canada, which he successfully developed to nine (9) franchised plants which were sold back to the Company in 1989. Mr. Hewson currently serves as a director or consultant to numerous companies in the computer and office supplies industry.

Henry A. Johnson, founder of BCT, has been a Director of the Company since January 1986. Mr. Johnson was appointed Senior Vice President of the Company effective March 1, 2001. From January 1986 until October 1988, he was Senior Vice President/Operations of the Company. In February 1989, he accepted the additional responsibilities of Executive Vice President of BCT. Previously, he was Senior Vice President/Operations for Business Cards Tomorrow, Inc. (a Florida corporation), from January 1978. In March 1990, he retired from his position with BCT. Since March 1991, Mr. Johnson has owned and his family has operated a private printing business, Colorful Copies, located in Las Vegas, Nevada.

Philip Pisciotta became a Director of the Company in June 2001. Since 1986, he has been the CEO, Chairman and a major stockholder of The Cove Group, Denver, Colorado which operates two food processing facilities. He is a member of the Board of Directors of The Galardi Group.

Compliance with Section 16 (a) of the Exchange Act

The Company has reviewed the Forms 3 and 4 and amendments thereto furnished to it pursuant to SEC Rule 16a-3(e) during its most recent fiscal year and Form 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year. Based solely on such review, the Company is aware of no instances involving a late filing of a required Form by a person who, at any time during the fiscal year, was a director, officer or beneficial owner of more than 10% of the Company’s Common Stock.

Item 11.    Executive Compensation

( a )    Compensation Tables

The following tables set forth the compensation received for services by officers in all capacities to the Company during its fiscal years ended February 28, 2003, February 28, 2002 and February 28, 2001, by the executive officers of the Company as to whom the total salary and bonus in the most recent year exceeded $100,000.

Page 10

BCT International, Inc.

Summary Compensation Table

Fiscal Years 2003, 2002 and 2001

000’s omitted

Annual Compensation											Long-Term Compensation Awards
		Fiscal Year							Form of Payment
Name	Position		Salary			Bonus			Cash	Shares	Options
W.A. Wilkerson	Chairman of the Board, CEO and President	2003 2002 2001	$ $ $	465 327 327	(1)	$ $ $	133 65 —	(5)	$598 $392 $327	—   —   —	—   —     5	(2)
H.A. Johnson	Senior Vice-President and Director	2003 2002	$ $	200 142	(1) (3)	$ $	58 28	(5)	$258 $170	—   —	—   —
M.R. Hull	Chief Financial Officer, Secretary and Treasurer	2003 2002 2001	$ $ $	130 110 106	(4) (4) (4)	$ $ $	42 22 —	(5)	$172 $132 $106	—   —   —	—   —   —

(1) Salary for fiscal 2002 and 2001 includes a $12 car allowance.

(2) Options granted in fiscal 2001, all of which immediately vested.

(3) Salary for fiscal 2002 and 2001 includes a $12 car allowance.

(4) Salary for fiscal 2002 and 2001 includes a $6 car allowance.

(5) Bonus payments in fiscal 2003 include an annual bonus for fiscal 2002 results plus 3 quarterly payments related to fiscal 2003 results.

Page 11

BCT International, Inc.

Aggregated Option Exercises and Year-End

Option Values for Fiscal 2003

000’s omitted

Name	Position	Shares Acquired on Exercise #	Value Realized ($)	Number of Unexercised Options at 2/28/03 (#) Exercisable/ Unexercisable	Value of In-The-Money Options at 2/28/03 ($) Exercisable/ Unexercisable
W.A. Wilkerson	Chairman and Chief Executive Officer	—	$—	327 / 0	$0 / 0
H.A. Johnson	Senior Vice- President	—	$—	27 / 0	$0 / 0
M.R. Hull	Chief Financial Officer, Secretary and Treasurer	—	$—	10 / 5	$0 / 0

Page 12

BCT International, Inc.

Executive Management Compensation

Option Grants in Fiscal Year 2003

000’s omitted

Name	Position	Options Granted	% of Total Options Granted to Employees	Exercise Price	Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
						5% ($)	10% ($)

None

Page 13

(b)    Compensation of Directors

Outside directors of the Company receive director’s fees of $1,000 per month plus $1,000 for each Board of Directors meeting attended, $750 for each telephonic meeting and $750 for each committee meeting attended.

(c)    Employment Contracts

During fiscal 1993, the Compensation Committee approved a seven-year employment contract for Mr. Wilkerson for fiscal years beginning in fiscal 1994 providing for an annual salary of $225,000 in the first year, $275,000 in the next two years and $300,000 thereafter. In June 1997, Mr. Wilkerson’s contract was extended for an additional three-year term through fiscal 2003. The agreement called for minimum annual salary amounts of $300,000 during the employment term. In May 2000, the Compensation Committee increased Mr. Wilkerson’s fiscal 2001 minimum annual salary to $315,000. In August 2001, the Company guaranteed a $2 million bank line of credit for Phoenix Group of Florida, Inc., a company owned by Mr. Wilkerson. As a condition of the guaranty, Mr. Wilkerson’s employment contract was terminated effective February 28, 2002. In June 2002, the Board of Directors increased Mr. Wilkerson’s annual salary to $465,000, effective March 1, 2002. Mr. Wilkerson is currently employed without a contract. See Item 13 “Certain Relationships and Related Transactions.”

Effective March 1, 2001, the Company entered into a two-year employment agreement with Mr. Johnson. Under the agreement, Mr. Johnson served as Senior Vice President of the Company and earned an annual salary of $130,000 plus bonuses as determined by the Board and an annual car allowance of $12,000. In June 2002, the Board of Directors increased Mr. Johnson’s annual salary to $188,000. In December 2002, the Company entered into a severance agreement with Mr. Johnson providing that, in the event his employment is terminated by the Company within one year after a change in control of the Company or he resigns within one year after a change of control due to a material change in his duties or a reduction in his compensation and/or benefits, then he is entitled to receive his then current compensation and benefits, prior to any change, for a period of 12 months following the termination date. The severance agreement also provides that Mr. Johnson is entitled to require the Company to purchase any vested stock options held by him at a price equal to the difference between the market price and the exercise price at any time during the 12-month severance period. In February 2003, the Board of Directors appointed Mr. Johnson President of the Company and the Company entered into a two-year employment agreement with him effective March 1, 2003. Under the agreement, Mr. Johnson’s minimum annual salary is $220,000 in fiscal 2004 and $231,000 in fiscal 2005. In addition, Mr. Johnson is entitled to receive an annual car allowance of $12,000, plus certain incentive bonuses of up to 20% of his base salary based on achievement of performance targets set by the Board of Directors. In addition, Mr. Johnson is entitled to a 20% share of the Company’s excess bonus pool, which is to be funded with 10% of each dollar of pre-tax income generated by the Company in excess of the pre-tax income set in the fiscal 2005 budget. Mr. Johnson’s severance agreement remains in effect.

In December 2002, the Company entered into a severance agreement with Mr. Hull providing that, in the event his employment is terminated by the Company within one year after a change in control of the Company or he resigns within one year after a change of control due to a material change in his duties or a reduction in his compensation and/or benefits, then he is entitled to receive his then current compensation and benefits, prior to any change, for a period of 12 months following the termination date. The severance agreement also provides that Mr. Hull is entitled to require the Company to purchase any vested stock options held by him at a price equal to the difference between the market price and the exercise price at any time during the 12-month severance period. In February 2003, the Company entered into a two-year employment agreement with Mr. Hull effective March 1, 2003. Under the agreement, Mr. Hull’s minimum annual salary is $139,000 in fiscal 2004 and $145,950 in fiscal 2005. In addition, Mr. Hull is entitled to receive an annual car allowance of $6,000, plus certain incentive bonuses of up to 20% of his base salary based on achievement of performance targets set by the Board of Directors. In addition, Mr. Hull is entitled to a 20% share of the Company’s fiscal 2005 excess bonus pool. Mr. Hull’s severance agreement remains in effect.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of May 27, 2003, information with respect to the only persons known to the Company to be beneficial owners of more than 5% of the Company’s outstanding Common Stock, as well as the beneficial ownership of all directors and officers of the Company individually and all directors and officers as a group. Based on the information available to the Company, except as set forth in the accompanying footnotes, each person has sole investment and voting power with respect to the shares of common stock indicated. At May 27, 2003, 5,121,471 shares of Common Stock were outstanding, excluding treasury shares held for the account of the Company.

Page 14

Name	Number of Shares Beneficially Owned (1)		Percent of Outstanding Common Stock
Certain Beneficial Owners:
Paul D. Sonkin	503,067		9.82	%
Hummingbird Management, LLC.
(f/k/a Morningside Investors )
153 East 53rd Street, 55th Floor
New York, NY 10022
Officers and Directors:
William A. Wilkerson	3,017,782	(2)	55.38	%
Henry A. Johnson	96,007	(3)	1.86	%
Jeff Hewson	70,541	(4)	1.37	%
John Galardi	20,000	(5)	.39	%
Michael R. Hull	11,000	(6)	.21	%
Officers and Directors as a group (5 persons)	3,215,330	(7)	58	%

(1) This column sets forth shares of Common Stock which are deemed to be “beneficially owned” by the persons named in the table under Rule 13D-3 of the Securities and Exchange Commission (“SEC”).

(2) Includes 327,500 shares covered by currently exercisable stock options.

(3) Includes 27,500 shares covered by currently exercisable stock options.

(4) Includes 30,000 shares covered by currently exercisable stock options.

(5) Includes 20,000 shares covered by currently exercisable stock options.

(6) Includes 10,500 shares covered by currently exercisable stock options.

(7) Includes 415,500 shares covered by currently exercisable stock options.

Page 15

Item 13.    Certain Relationships and Related Transactions

In February 1996, a company of which Mr. Wilkerson, the Chairman of the Board and Chief Executive Officer, was a 50% shareholder, purchased the Honolulu, Hawaii franchise (the “Hawaii Franchise”) for a total purchase price of $400,000 plus accounts receivable and inventory. The purchase price was payable pursuant to a $325,000 promissory note, representing an assumption of the prior franchisee’s debt to the Company and a $108,000 promissory note representing the value of the inventory and accounts receivable acquired. The $325,000 note bore interest at 8% per year and required equal monthly payments of principal and interest for 10 years based on a 15-year amortization, with a balloon payment due at the end of 10 years. The $108,000 note bore interest at 8% per year and was payable in five years pursuant to equal monthly payments of principal and interest. During fiscal 1997, the Company advanced an additional $65,000 to the Hawaii Franchise in exchange for three promissory notes due February 28, 1997 bearing interest of 8% (the “$65,000 notes”). The Hawaii Franchise notes were secured by pledges of substantially all of the assets of the Hawaii Franchise, as well as the joint and several personal guarantees of the shareholders

In fiscal 1999, the Company advanced $167,000 to the owners of the Hawaii Franchise. Reserves were recorded by the Company on the accounts and notes receivable relating to the Hawaii Franchise. In May 2000, in order to further secure his obligations to the Company in connection with the Hawaii Franchise, Mr. Wilkerson pledged 100,000 shares of the Company’s Common Stock as collateral for those obligations.

As of May 2001, the Hawaii Franchise was 57 months behind on payments under the $325,000 note and 57 months behind on payments under the $108,000 note. No payments had been made on the $65,000 notes. Further, the Hawaii Franchise’s debt to the Company for paper purchases, royalties and other advances totaling $581,000 was more than 90 days past due. In May 2001, the Board of Directors approved the Company’s purchase of 50% of the Hawaii Franchise from Mr. Wilkerson’s partner in exchange for forgiveness of 50% of the principal amounts owed to the Company by the Hawaii Franchise ($566,000). In connection with the purchase, the Company realized a loss amounting to approximately $466,000, representing the excess of amounts forgiven over the fair market value of the assets acquired. This loss was specifically reserved for in a prior year. In connection with this transaction, the Company received a promissory note from Mr. Wilkerson for the remaining principal balance due the Company ($566,000). The note bears interest of 8% and requires monthly installments of principal and interest consisting of Mr. Wilkerson’s proportional share of the monthly cash flow of the business until May 25, 2006 when the remaining principal and accrued interest is due. During the fiscal year ended February 28, 2003, no payments were made under the note because the Hawaii Franchise failed to generate positive cash flow.

Effective May 8, 1999, the Company entered into a three-year employment agreement with Peter T. Gaughn, its President and Chief Executive Officer. The agreement provided for a base salary of $250,000 during the first year with minimum 5% salary increases thereafter. In addition, the agreement provided for incentive compensation equal to 2.5% of the Company’s pre-tax income, subject to a limit of $125,000 in fiscal 2000 and the base salary thereafter. Additionally, the agreement provided for the grant of options to purchase 400,000 shares of Common Stock at $2.25, of which 100,000 options vested immediately and the remainder were to vest in annual increments of 60,000 shares over the next five years. In addition, the agreement provided for the granting each year of options to purchase a number of shares of Common Stock equal to the amount of incentive compensation for that fiscal year divided by the market price of the Common Stock on the day preceding the payment of the incentive compensation. These options were to vest 25% immediately and 15% each year for five years thereafter.

Effective May 25, 2001, Mr. Gaughn’s employment with the Company was terminated without cause. As prescribed by Mr. Gaughn’s employment agreement, Mr. Gaughn received his $276,000 annual salary until May 2002. In addition, Mr. Gaughn was paid $39,000, representing the incentive compensation due him for fiscal 2001 and the first three months of fiscal 2002, and accrued vacation. The Company recorded a charge in operations for the previously unrecorded costs associated with the pay out of Mr. Gaughn’s employment agreement in the first quarter of fiscal 2002.

Page 16

Effective February 22, 2001, the Company entered into a two year oral consulting agreement with Jeffrey Hewson, a Director. Under the arrangement, Mr. Hewson is paid $3,500 monthly in addition to his monthly director fee, and is reimbursed for all related expenses. Pursuant to the agreement, Mr. Hewson is required to perform an operational review of the Company and provide management of the Company with a report on same and to assist management in developing and implementing the future strategic direction of the Company. In February 2003, the Board of Directors approved a two year extension of Mr. Hewson’s consulting agreement at a monthly rate of $5,000 plus expenses.

In May 2001, Mr. Wilkerson expressed to the Company’s board his interest in exploring the possibility of purchasing the shares of the Company’s common stock not already owned by him. On May 21, 2001, Mr. Wilkerson acquired the right to purchase 623,782 shares of the Company’s common stock at a price of $1.75 per share pursuant to an option agreement with Bill LeVine, a former director of the Company, as Trustee of the 1982 Bill and Bonnie LeVine Trust (the “LeVine Trust”). On June 19, 2001, the Company’s board appointed Jeffrey K. Hewson and Phillip M. Pisciotta, both independent directors, as members of a Special Committee to consider the terms and conditions of a possible future proposal for Mr. Wilkerson and persons affiliated with him to purchase the shares of the Company’s common stock not already owned by him. The Special Committee was authorized to engage legal counsel and a financial advisor at the Company’s expense, to consider the proposed offer from Mr. Wilkerson as well as any other bonafide offers made to the Company, to negotiate the definitive terms and conditions of any such transaction and to prepare and deliver to the Company’s board its presentation and recommendation on the appropriate course of action for the Company.

On August 9, 2001, the Company entered into an agreement with Mr. Wilkerson and Phoenix Group of Florida, Inc., (“Phoenix”) a Nevada corporation wholly-owned by Mr. Wilkerson and formed to hold the shares of the Company’s common stock beneficially owned by Mr. Wilkerson, providing the terms and conditions pursuant to which the Company would guarantee a $2 million bank loan to Phoenix, collateralized by a pledge of substantially all of the Company’s assets, which Phoenix and Mr. Wilkerson (the “Acquisition Group”) could use to acquire shares of the Company’s common stock with a view to acquiring all of the shares of the common stock not owned by the Acquisition Group. The Company agreed to guarantee the bank loan on the following terms and conditions:

(i) The last year of Mr. Wilkerson’s employment agreement with the Company was eliminated, so that the agreement would terminate on February 28, 2002;

(ii) Mr. Wilkerson and Phoenix, jointly and severally, agreed to (A) grant the Company an assignable one-year option to repurchase all of the shares of the Company’s common stock bought with the borrowed funds at the same price paid by Phoenix and (B) pay the Company’s expenses incurred in connection with the transaction, unless (1) Mr. Wilkerson and/or Phoenix made an offer on or before September 30, 2001, to purchase for cash, all of the Company’s shares held by public shareholders and provided for a closing of the transaction on or before April 15, 2002 (subject to extension to May 31, 2002 in the event of delays caused by a third party), with the option to run one year from the Acquisition Group’s failure to meet the applicable deadline; and (2) such transaction closes on terms deemed “fair” to the Company and its shareholders by the Special Committee; and

(iii) Mr. Wilkerson and Phoenix, jointly and severally, agreed to immediately reimburse the Company for all payments made pursuant to the guarantee.

As collateral for their reimbursement obligations, Wilkerson and Phoenix granted to the Company a first priority security interest in all shares of the Company’s common stock which Phoenix purchased with the borrowed funds and a subordinated security interest in the 935, 382 shares of the Company’s common stock already owned by Phoenix and pledged to the bank.

On August 29, 2001, Phoenix purchased an aggregate of 618,482 shares of the Company’s common stock from Steven N. Bronson and Catalyst Financial, LLC, at a price of $1.50 per share. On September 1, 2001, pursuant to the LeVine Trust option assigned by Wilkerson to Phoenix, Phoenix exercised the option and purchased the 623,782 shares held by the LeVine Trust at a purchase price of $1.75 per share. In connection with the exercise of the option, Phoenix made a payment of $45,484 to the LeVine Trust at the closing and Mr. Wilkerson executed a two-year promissory note in favor of the LeVine Trust for the balance of the aggregate exercise price of $1,046,134. Between August 20 and October 21, 2001, Phoenix purchased an aggregate of 454,036 shares of common stock from various shareholders in private transactions for an aggregate purchase price of $408,632 ($.90 per share). The funds used for these private purchases came from the proceeds of the bank loan.

Page 17

On September 20, 2001, Phoenix presented a written offer to purchase all of the Company’s shares not owned by Phoenix at a price of $.85 per share. On November 26, 2001, after two months of negotiations between Phoenix and the Special Committee and extensive financial analysis by Capitalink, LLC as financial advisor to the Special Committee, the board of directors of the Company approved a definitive merger agreement between the Company and Phoenix and Wilkerson providing for the Acquisition Group to purchase all of the shares of the Company’s outstanding common stock not owned by the Acquisition Group at a price of $1.13 per share. Prior to approving the merger agreement, the board received an opinion from Capitalink stating its belief that the proposed merger consideration was fair from a financial point of view to the Company’s stockholders other than the Acquisition Group.

On April 26, 2002, the Company and Phoenix entered into an agreement terminating the merger agreement. As of July 31, 2002, the Company has advanced, on Wilkerson’s behalf, payment of approximately $209,000 in legal fees incurred by the Acquisition Group in connection with the proposed merger.

On April 26, 2002, the Company and Phoenix agreed to extend to June 1, 2003, the expiration of the Company’s option to purchase from Phoenix 454,036 shares of the Company’s common stock at a price of $.90 per share and the Company’s option to purchase 618,482 shares at $1.50 per share.

In March 2003, Phoenix expressed to the Special Committee a renewed interest in purchasing all of the Company’s shares not owned by Phoenix. On May 28, 2003, after two months of negotiation between Phoenix and the Special committee and extensive financial analysis by Capitalink, the Board of Directors of the Company approved a definitive merger agreement between the Company and Phoenix and Wilkerson providing for the Acquisition Group to purchase all of the shares of the Company’s outstanding common stock not owned by the Acquisition Group at a price of $2.00 per share. Prior to approving the merger agreement, the Board received an opinion from Capitalink stating its belief that the proposed merger consideration was fair from a financial point-of-view to the Company’s stockholders other than the Acquisition Group. The increased price in the 2003 merger agreement was based on substantial improvements in the Company’s business and financial condition from November 2001 to May 2003.

Page 18

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Financial Statements and Financial Statement Schedules

See index to Financial Statements on page D1

(b) Reports of Form 8-K

No Reports on Form 8-K were filed during the quarter ended February 28, 2003.

(c) Exhibits

3.1	Certificate of Incorporation of the Company, as amended, as filed with the SEC as Exhibit 3.1 to the Company’s Report on Form 10-K for the fiscal year ended February 28, 1995, is incorporated herein by reference.
3.2	By-Laws of the Company, as amended, as filed with the SEC as Exhibit 3.2 to the Company’s report on Form 10-K for the fiscal year ended February 28, 1995, are incorporated herein by reference.
4.1	Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock, as filed with the SEC as Exhibit 4.1 to the Company’s report on Form 10-K for the fiscal year ended February 29, 1995, is incorporated herein by reference.
10.1	Employment Agreement dated March 1, 1993 between the Company and William A. Wilkerson, as filed with the SEC as Exhibit 10.4 to the Company’s report on Form 10-K for the fiscal year ended February 28, 1995, is incorporated herein by reference.
10.2	Amendment dated June 12, 1997 to employment agreement between the Company and William A. Wilkerson as filed with the SEC as Exhibit 10.2 to the Company’s report on Form 10-K for the fiscal year ended February 28, 1998 is incorporated herein by reference.
10.3	Agreement dated January 1, 1993 between Business Cards Tomorrow, Inc. and Hence/EDP, as filed with the SEC as Exhibit 10.5 to the Company’s report on Form 10-K for the fiscal year ended February 28, 1995, is incorporated herein by reference.
10.4	Asset Purchase Agreement dated February 23, 1996, between BCT and E.V. Antrim, Rosemary R. Antrim and William A. Wilkerson, as filed with the SEC as Exhibit 10.3 to the Company’s report on Form 10-K for the fiscal year ended February 28, 1997 is incorporated herein by reference.
10.5	Employment agreement between the Company and Peter T. Gaughn dated May 8, 1999, as filed with the SEC as exhibit 10.5 to the Company’s report on Form 10-K for the fiscal year ended February 28, 1999 is incorporated herein by reference.

Page 19

10.6	Stock pledge agreement between the Company and William A. Wilkerson dated May 30, 2000, as filed with the SEC as exhibit 10.7 to the Company’s report on Form 10-K for the fiscal year ended February 29, 2000 is incorporated herein by reference.
10.7	Employment agreement between the Company and Henry A. Johnson dated February 26, 2001 as filed with the SEC as Exhibit 10.8 to the Company’s report on Form 10-K for the fiscal year ended February 28, 2001 is incorporated herein by reference.
10.8	Agreement dated May 25, 2001 among Business Cards Tomorrow, Inc. and South Pacific Wholesale Printers, Inc., William A. Wilkerson, Val Antrim, and Rosemary Antrim as filed with the SEC as Exhibit 10.9 to the Company’s report on Form 10-K for the fiscal year ended February 28, 2001 is incorporated herein by reference.
10.9	Agreement dated August 15, 2001, among the Company, Business Cards Tomorrow, Inc., Phoenix Group of Florida, Inc. and William A. Wilkerson as filed as Exhibit 2.1 to Form 8-K filed on August 31, 2001 is incorporated herein by reference.
10.10	Definitive Merger Agreement between the Company and Phoenix Group of Florida, Inc. dated November 26, 2001 as filed as Exhibit 2.1 to Form 8-K filed on December 11, 2001 is incorporated herein by reference.
10.11	Agreement for termination of the Merger Agreement as filed as Exhibit 10.11 to Form 10-K filed on May 29, 2002 is incorporated herein by reference.
10.12	Severance agreement between the Company and Henry Johnson dated December 9, 2002.
10.13	Severance agreement between the Company and Michael R. Hull dated December 9, 2002.
10.14	Employment agreement between the Company and Henry A. Johnson dated March 1, 2003
10.15	Employment agreement between the Company and Michael R. Hull dated March 1, 2003.
10.16	Definitive Merger Agreement between the Company and Phoenix Group of Florida, Inc. dated May 29, 2003.
99.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

Page 20

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

		BCT INTERNATIONAL, INC.             (Registrant)
DATE:	May 29, 2003	By:	William A. Wilkerson
			William A. Wilkerson Chairman, Chief Executive Officer and Director
DATE:	May 29, 2003	By:	Michael R. Hull
			Michael R. Hull Vice President, Treasurer & Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated.

Jeff Hewson	Henry A. Johnson
Jeff Hewson Director	Henry A. Johnson Director
Date:    May 29, 2003	Date:    May 29, 2003
John Galardi	Philip Pisciotta
John Galardi Director	Philip Pisciotta Director
Date:    May 29, 2003	Date:    May 29, 2003

Page 21

I, William A. Wilkerson, certify that:

1. I have reviewed this annual report on Form 10-K of BCT International, Inc.

2. Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal control; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 29, 2003 /s/ WILLIAM A. WILKERSON William A. Wilkerson Chairman and Chief Executive Officer

Certification

I, Michael R. Hull, certify that:

1. I have reviewed this annual report on Form 10-K of BCT International, Inc.

2. Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

d. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

e. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

f. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

c. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal control; and

d. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 29, 2003	/s/ MICHAEL R. HULL
	Michael R. Hull Treasurer, Secretary and Chief Financial Officer

BCT INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

	Page Numbers
Financial Statements:
Report of Independent Certified Public Accountants	D-2
Consolidated Balance Sheets at February 28, 2003 and 2002	D-3
Consolidated Statements of Operations for the three fiscal years ended February 28, 2003	D-4
Consolidated Statements of Changes in Stockholders’ Equity for the three fiscal years ended February 28, 2003	D-5
Consolidated Statements of Cash Flows for the three fiscal years ended February 28, 2003	D-6 to D-7
Notes to Consolidated Financial Statements	D-8 to D-21
Schedules:
For the fiscal years ended February 28, 2003, 2002 and 2001:
II     Valuation and Qualifying Accounts	D-22
X     Supplementary Income Statement Information	D-23

All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

D-1

Page 22

Report of Independent Certified Public Accountants

To the Board of Directors and Stockholders

of BCT International, Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of BCT International, Inc. and its subsidiaries at February 28, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended February 28, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Fort Lauderdale, Florida

May 29, 2003

D-2

Page 23

BCT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(000’s omitted, except per share data)

	February 28, 2003			February 28, 2002
ASSETS
Current Assets:
Cash	$	4,276		$	4,819
Accounts and notes receivable, net		3,117			2,889
Inventory, net		2,735			1,887
Assets held for sale		85			105
Prepaid expense and other current assets		314			154
Deferred income taxes		406			419
Total current assets		10,933			10,273
Accounts and notes receivable, net		4,721			5,170
Property and equipment at cost, net		1,034			435
Deferred income taxes		919			970
Deposits and other assets		48			24
Trademark and other intangible assets, net		180			206
Total assets	$	17,835		$	17,078
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	901		$	432
Notes payable		113			560
Accrued liabilities		462			871
Deferred revenue		55			125
Total current liabilities		1,531			1,988
Deferred revenue		335			334
Notes payable, less current maturities		410			—
Total liabilities		2,276			2,322
Commitments and contingencies (Note 9)		—			—
Minority interest		18			—
Stockholders’ equity:
Common stock, $.04 par value, authorized 25,000, 5,828 shares issued		233			233
Paid in capital		12,605			12,605
Retained earnings		4,275			3,490
		17,113			16,328
Less:    Treasury stock, at cost, 707 shares		(1,572	)		(1,572	)
Total stockholders’ equity		15,541			14,756
Total liabilities and stockholders’ equity	$	17,835		$	17,078

The accompanying notes are an integral part of these consolidated financial statements.

D-3

Page 24

BCT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(000’s omitted, except per share data)

	For the Fiscal year ended February 28, 2003		For the Fiscal year ended February 28, 2002		For the Fiscal year ended February 28, 2001
Revenues:
Royalties and franchise fees	$	5,221	$	5,117	$	5,267
Paper and printing sales		12,019		12,068		13,424
Sales of franchises		4		99		46
Company-owned franchise revenues		1,802		—		—
Interest and other income		769		723		692
		19,815		18,007		19,429
Expenses:
Cost of paper and printing sales		10,410		10,592		11,605
Cost of Company-owned franchise revenues		448		—		—
Selling, general and administrative		7,403		6,376		6,455
Depreciation and amortization		278		226		232
		18,539		17,194		18,292
Income from continued operations before income taxes		1,276		813		1,137
Income tax provision		491		321		442
Income from continued operations		785		492		695
Discontinued operations:
Loss from Company owned Franchises operated under a plan of disposition, net of tax benefit of $0, $0, and $19, respectively		—		—		(31	)
Net income	$	785	$	492	$	664
Net income (loss) per common share
Income from continued operations	$	.15	$	.10	$	.13
Loss from discontinued operations		—		—		(.01	)
Basic	$	.15	$	.10	$	.13
Income from continued operations	$	.15	$	.10	$	.13
Loss from discontinued operations		—		—		(.01	)
Diluted	$	.15	$	.10	$	.13

The accompanying notes are an integral part of these consolidated financial statements.

D-4

Page 25

BCT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(000’s omitted)

	Common Stock
	Number of Shares	Par Value		Paid-In Capital		Retained Earnings		Treasury Stock			Total
Balance March 1, 2000	5,822	$	233	$	12,597	$	2,334	$	(1,408	)	$	13,756
Treasury stock purchases	—		—		—		—		(136	)		(136	)
Net income	—		—		—		664		—			664
Balance February 28, 2001	5,822		233		12,597		2,998		(1,544	)		14,284
Exercise of options	6		—		8		—		—			8
Treasury stock purchases	—		—		—		—		(28	)		(28	)
Net income	—		—		—		492		—			492
Balance February 28, 2002	5,828		233		12,605		3,490		(1,572	)		14,756
Net income	—		—		—		785		—			785
Balance February 28, 2003	5,828	$	233	$	12,605	$	4,275	$	(1,572	)	$	15,541

The accompanying notes are an integral part of these consolidated financial statements.

D-5

Page 26

BCT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(000’s omitted)

	For the Fiscal year ended February 28, 2003			For the Fiscal year ended February 28, 2002			For the Fiscal year ended February 28, 2001
Cash flows from operating activities:
Net income	$	785		$	492		$	664
Plus loss from discontinued operations		—			—			31
Income from continuing operations		785			492			695
Adjustments to reconcile income from continuing
operations to net cash provided by
operating activities:
Deferred income taxes		64			(143	)		(42	)
Depreciation and amortization		278			226			232
Provision for doubtful accounts		1,480			1,300			1,452
Provision for inventory obsolescence		100			175			30
Other adjustments		(16	)		4			31
Changes in assets and liabilities:
Accounts and notes receivable		(1,259	)		571			(615	)
Inventory		(948	)		290			(23	)
Prepaid expenses and other current assets		(184	)		(83	)		134
Accounts payable		469			(165	)		(514	)
Accrued liabilities		(409	)		468			(946	)
Deferred revenue		(69	)		125			(87	)
Net cash provided by continuing operations		291			3,260			347
Net cash used by discontinued operations		—			—			(31	)
Net cash provided by operating activities		291			3,260			316
Cash flows from investing activities:
Capital expenditures for property and equipment		(197	)		(162	)		(150	)
Increase in deposits		(23	)		—			(25	)
Net cash (used by) investing activities		(220	)		(162	)		(175	)
Cash flows from financing activities:
Treasury stock purchases and other		—			—			(136	)
Exercise of stock options and warrants		—			8			—
Repayments on borrowings		(614	)		(86	)		(112	)
Net cash (used by) financing activities		(614	)		(78	)		(248	)
Net (decrease) increase in cash and cash equivalents		(543	)		3,020			(107	)
Cash at beginning of year		4,819			1,799			1,906
Cash at end of year	$	4,276		$	4,819		$	1,799
Supplemental disclosures:
Interest paid during the year	$	21		$	34		$	41
Income taxes paid during the year	$	527		$	209		$	823

The accompanying notes are an integral part of these consolidated financial statements.

D-6

Page 27

BCT INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

(000’s omitted)

Noncash activities:

In July 2002, the Company entered into a capital lease in the amount of $231 for the equipment acquired to operate the Company-owned franchise in San Carlos, California.

In September 2002, the Company acquired a 37.15% interest in the BCT Tampa franchise, in addition to the 19% interest already held by it. No additional consideration was given in exchange for this acquisition.

In fiscal 2002, the Company became liable under a guarantee when a franchise defaulted on its obligations resulting in an increase in notes payable and long term receivables amounting to $324.

In March 2001, the Company received common stock of the Company (treasury stock) amounting to $28 from a franchise in exchange for amounts due the Company.

In May 2001, the Company purchased 50% of the Hawaii Franchise in exchange for forgiveness of 50% of the principal amounts owed to the Company by the Hawaii Franchise ($566). The Company realized a loss of approximately $466, representing the excess of amounts forgiven over the fair market value of the assets acquired.

The accompanying notes are an integral part of these consolidated financial statements

D-7

Page 28

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(000’s omitted, except per share data)

NOTE 1:    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

BCT International, Inc. (the “Company”), franchises wholesale thermography printing Franchises through its wholly-owned subsidiary, Business Cards Tomorrow, Inc. (BCT), for which it receives initial franchise fees and continuing royalties. BCT Franchises are located in 36 states and Canada.

In addition, BCT owns 100% of BCT San Carlos and 56.15% of BCT Tampa. As of February 28, 2002, BCT owned 50% of the franchise located in Honolulu, Hawaii which was held for sale. As of February 28, 2001 there were no franchises owned by BCT.

Principles of Consolidation and Discontinued Operations

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. The results of operations of franchises previously owned by the Company that were disposed of through a plan of disposition, included the losses through the dates of disposition and are included in discontinued operations. The results of operations of the 50% Company-owned (Hawaii), are included in the consolidated statement of operations in fiscal 2003. Prior to fiscal 2003 they were accounted for using the equity method.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates made by management in the accompanying financial statements relate to the accrual for unreported royalty sales and the allowance for doubtful accounts. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts and notes receivable (net of the allowance for doubtful accounts), accounts payable and notes payable approximate fair value as of February 28, 2003 and 2002.

Inventory

Inventory, consisting primarily of paper products, printing supplies and catalogs for sale to the franchises, is stated at the lower of cost (first in, first out method) or market. As of February 28, 2003 and 2002, the allowance for obsolete inventory was $80 and $82, respectively.

Property and Equipment

Property and equipment is recorded at cost. Depreciation is provided on the straight-line method over the estimated useful life of the asset. Leasehold improvements are amortized over the lives of the respective leases or the estimated useful lives of the improvements, whichever is shorter. Costs of major additions and improvements are capitalized and expenditures for maintenance and repairs which do not extend the life of the assets are expensed. Upon the sale or disposition of property and equipment, the cost and related accumulated depreciation is eliminated from the accounts, and any resultant gain or loss is credited or charged to operations.

Company Owned Franchises

Acquisitions of Company owned franchises have been accounted for as purchases. Operations of the businesses acquired have been included in the accompanying consolidated statements of operations from their respective dates of acquisition. The Company sold one Company owned franchise in fiscal 2001. On January 31, 2001, the Company took back this franchise, ceased operations of the franchise and liquidated the assets.

D-8

Page 29

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

Assets Held for Sale

Assets held for sale are carried at the lower of cost or market value.

Trademark and Other Intangible Assets

The trademark is amortized using the straight-line method over 17 years. Other intangible assets consist of the excess of purchase price over the fair value of the net assets acquired relating primarily to the acquisition of the Canadian franchise rights in fiscal 1994. The amortization period for the Canadian franchise rights is 19 years, which represented the remaining life of the franchise agreement acquired. As of February 28, 2003 and 2002, accumulated amortization of intangible assets amounted to $294 and $268, respectively.

In June 2001 SFAS No. 142, “Goodwill and Other Intangible Assets” was issued. SFAS No. 142 eliminates the amortization of goodwill and indefinite-lived intangible assets and requires an impairment review of both of these non-amortizable intangible assets annually, or when events or circumstances dictate. Identifiable intangible assets with a determinable useful life will continue to be amortized. The Company adopted SFAS 142 effective March 1, 2002. Upon initial application of SFAS No. 142, the Company did not identify impairment losses for intangible assets resulting from a transitional impairment test and as a result, the adoption of this standard did not have an effect on the Company’s financial position and results of operations.

Impairment of Long-Lived Assets and Identifiable Intangibles

The Company reviews long-lived assets and identifiable intangibles and reserves for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.

In August 2001, SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” was issued. SFAS No. 144 requires (1) the recognition and measurement of the impairment of long-lived assets to be held and used, and (2) the measurement of long-lived assets to be held for sale. The Company adopted SFAS 144 effective March 1, 2002. The adoption of this standard did not have a material effect on the financial position and results of operations of the Company.

Sales of Franchises

Revenue from the sales of individual franchises, including the initial equipment package, is recognized upon the opening of the related franchise and when all significant services or conditions relating to the sale have been substantially performed. When these criteria have not been met, then the net profit from the sale has been deferred and characterized as deferred revenue.

Continuing Franchise Royalties, Paper and Printing Revenues

Continuing franchise royalties and paper and printing revenues are recognized monthly when earned. Collectibility of these revenues is assessed on a regular basis. The allowance for doubtful accounts is established through a provision for losses charged to selling, general and administrative expense. Accounts receivable are charged off against the allowance for doubtful accounts when management believes that collectibility is unlikely. Management believes the allowance will be adequate to absorb probable losses in existing accounts and notes receivable that may become uncollectible. Certain franchise royalties are recorded on a cash basis when collection is determined by management to be uncertain. In fiscal 2003, 2002 and 2001, respectively, $110, $120 and $182 of royalties were not recorded as revenue due to uncertainty of collection.

Licensing Fees

The Company charges franchises an annual license for the use of Orderprinting.com, the Company’s Internet based ordering system. These fees are recognized over the term of the licensing agreement, (one year).

Income Taxes

The Company utilizes an asset and liability approach to accounting for income taxes that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax law or rates.

Earnings Per Common Share

Basic earnings per share equals net income available to common stockholders divided by the number of weighted average common shares outstanding. Diluted earnings per share includes potentially dilutive securities such as stock options, warrants and convertible securities.

D-9

Page 30

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

A reconciliation of the numerators and denominators of the basic and diluted earnings per share computations is illustrated below:

	2003		2002		2001
Income from continued operations	$	785	$	492	$	695
Loss from discontinued operations		—		—		(31	)
Basic earnings	$	785	$	492	$	664
Weighted average common shares—basic		5,121		5,123		5,214
Effect of stock options and warrants		—		—		21
Weighted average common shares—diluted		5,121		5,123		5,235

Cash

For the purposes of reporting cash flows, cash and cash equivalents include investments with original maturities of ninety days or less at purchase date. Included in cash at February 28, 2003 and 2002, respectively, are $520 and $279 representing amounts collected from national accounts which are due to franchises.

Stock Based Compensation

The Company measures compensation expense related to the grant of options to employees in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” under which compensation expense, if any, is generally based on the difference between the exercise price of an option, or the amount paid for an award, and the market price or fair value of the underlying common stock at the date of the award (See Note 7).

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value- recognition provisions of Financial Accounting Standards Board (FASB) Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation:

	Year Ended February 28, 2003			Year Ended February 28, 2002			Year Ended February 28, 2001
Net income:
As reported	$	785		$	492		$	664
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(16	)		(22	)		(59	)
Pro forma	$	769		$	470		$	605
Net income per share:
As reported     Basic	$	.15		$	.10		$	.13
Diluted	$	.15		$	.10		$	.13
Proforma         Basic	$	.15		$	.09		$	.12
Diluted	$	.15		$	.09		$	.12

D-10

Page 31

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

NOTE 2:    DISCONTINUED OPERATIONS

On February 28, 1999, the Company’s Board of Directors approved a decision to discontinue the operations comprising its Company owned franchises. The Company owned franchises included the 100% owned franchises in Delray Beach, Florida and Merrimack, New Hampshire and the 70% owned franchise in Louisville, Kentucky. During fiscal 2000 the Company sold the Delray Beach and Louisville franchises. Both transactions included the Company taking promissory notes equal to the respective sales price. Gains, if any, are recognized as payments are received. In September 2000, the Company sold the assets of the Merrimack New Hampshire franchise in exchange for a $150 promissory note. In January 2001, the Company reacquired the assets of the Merrimack franchise in exchange for foregiveness of the $150 promissory note. The Company ceased operating the franchise and liquidated the assets of the franchise.

The $31 loss from discontinued operations for the year ended February 28, 2001 is net of a $19 income tax generated by the loss.

Sales from these discontinued operations were $350 for the year ended February 28, 2001.

D-11

Page 32

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

NOTE 3:    ACCOUNTS AND NOTES RECEIVABLE

Accounts and notes receivable consist of the following:

	February 28, 2003			February 28, 2002
Franchise fees and royalties receivable	$	1,146		$	859
Paper sales receivable from franchisees		2,342			2,459
Notes receivable from sale of franchises, interest at 5% to 10.25%, due in monthly installments through 2014		3,372			3,907
Notes receivable due from franchisees, interest at 4.25% to 12%, payable in monthly installments through 2014		3,160			3,098
Other		659			715
		10,679			11,038
Less—allowance for doubtful accounts		(2,841	)		(2,979	)
		7,838			8,059
Less—amounts not expected to be collected within one year, net of $2,420 allowance for doubtful accounts ($2,722 in 2001)		(4,721	)		(5,170	)
	$	3,117		$	2,889

In the normal course of business, to meet the financing needs of its franchisees, the Company extends credit to its franchisees throughout the United States and Canada. Although the Company has a diversified receivable portfolio, a substantial portion of the franchisees’ ability to honor their commitments to the Company is reliant upon the economic stability of the market in the franchisee’s particular geographic area. The Company’s exposure to loss in the event of nonperformance by the franchisees is represented by the contractual amount of the accounts and notes receivables and the franchise equipment leases guaranteed by the Company (see Note 9). The Company controls the credit risk of its receivables through credit approvals, limits and monitoring procedures. The Company generally requires collateral or other security to support the receivables with credit risk.

At February 28, 2003, approximately $1,239 ($1,259 in 2002) of accounts and notes receivable, although currently due, are classified long term, based upon historic payment performance of the franchisees. A significant portion of the allowance for doubtful accounts relates to these accounts and notes receivable.

D -12

Page 33

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

At February 28, 2001, $485 of notes receivable, with an 8% interest rate per annum were related to the purchase of a franchise by South Pacific Wholesale Printers, Inc. (“SPWP”) The Chairman of the Board of the Company owns 50% of SPWP and was a guarantor of SPWP’s debt to the Company. Accounts receivable for paper and royalties from this Franchise as of February 28, 2001, amounted to $418. Reserves were recorded on the receivables relating to this Franchise. Revenues from the Hawaii Franchise amounted to $155 in fiscal 2001. On May 25, 2001, the Company purchased a 50% interest in South Pacific Wholesale Printers, Inc. from the Chairman’s partner in exchange for forgiveness of 50% of the principal amounts due to the Company by the Franchise, ($566). As a result of the purchase, the Company realized a loss of approximately $466 in fiscal 2002 representing the excess of amounts owed over the fair market value of the assets acquired. This loss was specifically reserved for at February 28, 2001. In connection with the purchase transaction, the Company received a promissory note from the Chairman for the remaining principal balance due the Company ($566). This note bears interest of 8% and is payable in monthly instalments equal to the Chairman’s proportionate share of the monthly cash flow of the Franchise until May 25, 2006 when the remaining principal and accrued interest is due. In May 2000, the Chairman pledged 100,000 shares of the Company’s Common Stock to secure his guarantee of SPWP’s debt to the Company. No payments were made on this note during the fiscal years ended February 28, 2003 and 2002. The Company recognized losses of $48 relating to the Hawaii franchise in fiscal 2002.

Provision for doubtful accounts for the years ended February 28, 2003, 2002 and 2001 was approximately $1,480, $1,300 and $1,452, respectively.

Interest income is recognized on accounts and notes receivable when it is received.

NOTE 4:    PROPERTY AND EQUIPMENT

Major classifications of property and equipment are as follows:

	February 28, 2003			February 28, 2002			Estimated useful lives (in years)
Leasehold improvements	$	73		$	45		5-7
Machinery and equipment		565			532		3-20
Furniture, fixtures and other equipment		234			230		5-10
Computers		930			878		3-5
Company-owned plant machinery & equipment		684			—		3-7
Other		198			184		3-5
		2,684			1,869
Less—accumulated depreciation and amortization		(1,650	)		(1,434	)
	$	1,034		$	435

NOTE 5:    SALES AND ACQUISITIONS OF COMPANY OWNED FRANCHISES

On September 19, 2002, the Company exercised its option to acquire an additional 37.15% interest in TBDS, Inc., the BCT franchise in Tampa, Florida. After exercising its option, the Company owns 56.15% of TBDS, Inc. Under the option agreement, as a result of the poor performance of the franchise, no further consideration was given for the additional ownership interest . The Company intends to operate the BCT Tampa franchise as a Company-owned franchise. The results of operations of TBDS, Inc. since September 19, 2002, a loss of $4, are included in the consolidated statement of operations.

On March 31, 2003, TBDS, Inc. sold certain assets to BCT Enterprises of Tampa, Inc., a wholly owned subsidiary of BCT, in exchange for the assumption of certain of TBDS, Inc.’s liabilities in the amount of $526. In addition, BCT assigned to TBDS, Inc. the rights to $181 of receivables from TBDS, Inc.’s minority shareholder. The Company has recorded this as a purchase and, consequently, the results of operations of BCT Enterprises of Tampa, Inc. will be included in the consolidated statement of operations.

On July 19, 2002, the Company began operating a Company owned franchise in San Carlos, California. This franchise replaced a franchise in San Francisco, whose franchise agreement was terminated. The Company entered into an agreement with the terminated franchise for the orderly transition of the franchise business to the new facility in exchange for forgiveness of amounts due to the

D-13

Page 34

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

Company of approximately $658. In addition, the Company was obligated and paid, as guarantor, amounts borrowed by the San Francisco franchise owner for the purchase of the franchise in the amount of $457. The results of operations of the San Carlos Franchise, since July 19, 2002, (a loss of $214) are included in the consolidated statement of operations for the fiscal year ended February 28, 2003.

NOTE 6:    NOTES PAYABLE

Notes payable consist of the following:

	February 28, 2003			February 28, 2002
Note payable to prior owner of Company owned franchise, monthly principal and interest payments of $2, interest at 8% per annum, through August 2004	$	—		$	50
Note payable relating to assumption of note guaranteed by the Company, monthly principal and interest payments of $6, interest at 10% per annum, through April 2008		—			324
Leases payable related for machinery and equipment at Company-owned franchises, monthly and quarterly payments through 2006		377			—
Notes payable relating to acquisitions, monthly payments of principal and interest at 8%		146			186
		523			560
Less - amounts expected to be repaid within 1 year		(113	)		(560	)
	$	410		$	—

The notes relating to acquisitions of $186 and the note due a prior owner of $50 were paid in full in May 2002. In February 2003, the Company paid the $324 note assumed in connection with a guarantee made by the Company.

In September 2001, the Company renewed a $2 million line of credit with a bank. The line of credit is collateralized by receivables and inventory and bears interest at LIBOR + 2.35%, interest is payable monthly. As of February 28, 2003, no advances have been made on this line.

In August 2001, in connection with the $2 million bank loan to Phoenix (the “Loan”), the Company entered into an agreement with Phoenix and the Chairman providing the following conditions to the guarantee of the loan by the Company and its subsidiary BCT (which included a pledge of substantially all of the assets of the Company and BCT to secure the Loan): (i) the last year of the Chairman’s employment agreement with the Company was eliminated, such that the agreement terminated on February 28, 2002; (ii) the Chairman and Phoenix, jointly and severally, agreed to (A) grant the Company an assignable one-year option to repurchase all of the shares of the Company’s common stock bought with the borrowed funds at the same price paid by Phoenix and (B) pay the Company’s expenses incurred in connection with the transaction, unless (1) the Chairman and/or Phoenix made an offer on or before September 30, 2001, to purchase for cash all of the Company’s shares held by public shareholders, and providing for a closing of that transaction on or before April 15, 2002 and (2) such transaction closes on terms deemed “fair” to the

D -14

Page 35

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

Company and its shareholders by the Special Committee, consisting of non-management directors of the Company; and (iii) the Company and Phoenix, jointly and severally, agreed to immediately reimburse the Company for all payments made pursuant to the corporate guaranty. As collateral for their reimbursement obligations, the Chairman and Phoenix granted the Company a first priority security interest in any and all shares of the Company’s common stock which Phoenix purchased with the borrowed funds and a subordinated security interest in the shares of the Company’s common stock already owned by Phoenix and pledged to the bank. As of February 28, 2003, approximately $1,999 was drawn on this line.

NOTE 7:    STOCKHOLDERS’ EQUITY

Stock Options

The Company has an employee stock option plan for certain employees. The plan is administered by a committee of two directors of the Company (the Committee) which determines who is eligible to participate, the number of shares for which options are to be granted and the amounts that may be exercised within a specified term. The option exercise price is generally established by the Committee at 100% of the fair market value of the Common Stock on the date the option is granted. All options granted during the fiscal years 2002 and 2001 were granted at an exercise price per share equal to the fair market value of the Company’s Common Stock on the date of grant. No options were granted in fiscal 2003. In accordance with the intrinsic value method for employee and director stock based awards, no compensation expense has been recognized. Employee options generally vest over five years and have a ten year term. At February 28, 2003, options for 305 shares were available for future grants.

A summary of stock option activity is as follows (share amounts in 000’s):

	Fiscal 2003				Fiscal 2002				Fiscal 2001
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	1,015		$	2.02	1,428		$	2.03	1,297		$	2.07
Granted	—			—	15			1.09	144			1.55
Exercised	—			—	(6	)		1.25	—			—
Cancelled	—			—	—			—	—			—
Expired	(201	)		2.19	(422	)		2.01	(13	)		1.25
Outstanding at end of year	814		$	1.94	1,015		$	2.02	1,428		$	2.03
Exercisable at end of year	796		$	1.94	967		$	2.01	1,051		$	2.00
Weighted average fair value of options granted during the year				n/a			$	63			$	.81

D-15

Page 36

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

A summary of stock options outstanding at February 28, 2003 is as follows (share amounts in 000’s):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding at February 28, 2003	Weighted Average Remaining Life (in years)	Weighted Average Exercise Price		Number Exercisable at February 28, 2003	Weighted Average Exercise Price
$1.09 to $1.88	564	1.8	$	1.75	551	$	1.76
$2.12 to $3.50	250	2.4	$	2.35	245	$	2.35
	814				796

Pursuant to SFAS No. 123, as amended by SFAS No. 148 “Accounting for Stock-Based Compensation Transition and Disclosure” the Company has elected to use the intrinsic value method of accounting for employee stock-based compensation awards. Accordingly, the Company has not recognized compensation expense for its non-compensatory employee stock option awards.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions for 2002 and 2001, respectively; a dividend yield of 0%, expected volatility from 42.7% to 78%, a risk free interest rate of from 4.5% to 6.5% and weighted average expected option term of 3.6 years. No options were granted during fiscal 2003.

D-16

Page 37

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

NOTE 8:    INCOME TAXES

The components of the provision (benefit) for income taxes for the years ended February 28, 2003 and 2002 and 2001 are as follows:

	2003		2002			2001
Current Provision:
Federal	$	370	$	402		$	422
State		57		62			62
Total current		427		464			484
Deferred provision		64		(143	)		(42	)
Income tax provision from continued operations		491		321			442
Income tax benefit from discontinued operations		—		—			(19	)
	$	491	$	321		$	423

The Company’s deferred income taxes are comprised of the following:

	February 28, 2003			February 28, 2002			February 28, 2001
Deferred income taxes—current:
Bad debt reserve	$	162		$	100		$	120
Capitalization of inventory cost		208			176			172
Accrued losses on discontinued operations		—			—			—
Inventory reserves		31			32			29
Other		5			111			—
Deferred income taxes—current	$	406		$	419		$	321
Deferred income taxes—non-current:
Bad debt reserve	$	909		$	1,062		$	893
Net operating loss carryovers		203			203			203
Deferred tax liabilities – Fixed assets		(60	)		(92	)		(2	)
Other		70			—			34
		1,122			1,173			1,128
Valuation allowance		(203	)		(203	)		(203	)
Deferred income taxes—non-current	$	919		$	970		$	925
Deferred income taxes—total	$	1,325		$	1,389		$	1,246

D-17

Page 38

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

Net operating loss carryforwards for Federal income tax purposes total approximately $539 at February 28, 2003, all of which will expire in 2005 and include certain limitations. Due to the limitations, the Company recorded a full valuation allowance related to this tax asset.

The difference between the statutory and effective tax rates are as follows:

	2003				2002				2001
	Amount		Rate		Amount		Rate		Amount		Rate
Tax provision at statutory rate	$	438	34	%	$	276	34	%	$	357	34	%
State income tax, net of federal benefit		44	3			28	3			37	3
Other		9	1			17	2			29	2
	$	491	38	%	$	321	39	%	$	423	39	%

NOTE 9:    COMMITMENTS AND CONTINGENCIES

The Company’s corporate offices, Company owned franchise locations, Wisconsin warehouse facility and office equipment are leased under non-cancelable lease agreements. The leases initially expire at various dates through 2007. There are provisions in the leases for rent increases based on cost of living increases under certain conditions.

The following are the approximate minimum annual non-cancelable rentals to be paid under the provisions of the leases, including the Company owned franchise classified as assets held for sale:

Fiscal Year	Lease Commitments
2004	$	379
2005		348
2006		228
2007		230
2008		164
	$	1,349

D-18

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BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

Rental expense approximated the following amounts for the corresponding periods:

For the year ended	Amount
February 28, 2003	$459
February 28, 2002	$347
February 28, 2001	$353

In March 1993, the Company entered into an employment agreement with the Chairman of the Board. The term of the employment contract is seven years. The agreement calls for minimum annual salary amounts during the term of this contract of $300. In June 1997, the employment agreement was extended for an additional 3 years at an annual salary of $300 through February 28, 2003. In May 2000, the compensation committee of the Board of Directors approved a 5% increase in the minimum salary to $315 for the duration of the agreement.

In fiscal 2002, the Board of Directors of the Company approved the Company’s guarantee of a $2 million bank line of credit for Phoenix Group of Florida, Inc., a company owned by the Chairman. The proceeds from the line of credit could be used by Phoenix to acquire shares of the Company’s common stock. The terms of the guarantee are the same as the terms of the line of credit. In connection with the guarantee, the Chairman’s employment agreement was terminated on February 28, 2002. In June 2002, the Board of Directors approved an increase in the Chairman’s annual base salary to $465.

In May 1999, the Company executed an employment agreement with the President and Chief Executive Officer of the Company. The initial term of the employment agreement was three years. The agreement called for minimum annual salary amounts during the initial three year term of $250, $262 and $276. In addition, the agreement provided for incentive compensation based upon pretax income of the Company, not to exceed $125 in fiscal 2000 and not to exceed the base salary, thereafter. Additionally, the agreement granted options to purchase 400 shares of Common Stock of the Company at $2.25, of which 100 vested immediately and the remainder was to vest 15% annually over the next 5 years. Further, the agreement provided for the granting each year of options to purchase shares of the Company’s Common Stock equal to the amount of the incentive compensation for that year divided by the market price of the Company’s stock on the day preceding the payment of the incentive compensation. These options were to vest 25% immediately and 15% each year for the five years, thereafter. In February 2001, the President and Chief Executive Officer was appointed President and Chief Operating Officer. Effective May 25, 2001, the President and Chief Operating Officer’s employment with the Company was terminated without cause. As prescribed by his employment agreement, the President and Chief Operating Officer received his $276 annual salary until May 2002. In addition, the President and Chief Operating Officer was paid $39, representing the incentive compensation due him for fiscal 2001 and for the first three months of fiscal 2002, and accrued vacation. The Company recorded a charge in operations for the previously unrecorded costs associated with the payout of the President and Chief Operating Officer’s employment agreement in the first quarter of fiscal 2002.

Effective March 1, 2001, the Company entered into a two-year employment agreement with the Company’s Senior Vice President. Under the agreement, the Senior Vice President of the Company will earn an annual salary of $130 plus an annual car allowance of $12 In addition, the agreement calls for 6 months severance in the event of termination for other than cause. In June 2002, the Board of Directors approved an increase in the annual compensation of the Senior Vice President to $200. Effective March 1, 2003, the Senior Vice President was appointed President of the Company by the Board of Directors who also approved a new two year employment agreement. Under the new agreement, the President will earn an annual salary of $220 in fiscal 2004 with a minimum 5% increase in fiscal 2005, plus an annual car allowance of $12, and is entitled to 12 months severance in the event of termination for other than cause.

Effective March 1, 2003, the Board of Directors entered into two year employment agreements with the Company’s Chief Financial Officer, Senior Vice President and Vice President of Pelican Paper. The agreements provide for fiscal year 2004 annual base salaries of $139, $165 and $120, respectively, with minimum 5% increases in fiscal 2005, plus annual car allowances of $6, and entitle each to 12 months severance in the event of termination for other than cause.

D-19

Page 40

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

NOTE 10:    SEGMENT INFORMATION

The Company’s four reportable segments are (1) Franchisor operations, (2) Pelican Paper Products, (3) Company-owned franchises and (4) Other operations

The accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies.” The Company evaluates the performance of its segments based on earnings before income taxes.

The Company is organized primarily on the basis of business activity units. The table below presents information on continuing operations for the years ended February 28,:

	Franchisor			Pelican Paper		Company- Owned Franchises			Other		Total
2003
Revenues	$	5,225		$	12,019	$	1,802		$	769	$	19,815
Cost of sales		—			10,410		448			—		10,858
Operating expenses		5,462			613		1,606			—		7,681
Income (loss) before income taxes	$	(237	)	$	996	$	(252	)	$	769	$	1,276
Assets	$	6,528		$	6,350	$	785		$	4,172	$	17,835
Depreciation and amortization	$	126		$	92	$	60		$	—	$	278
Income tax provision (benefit)	$	(91	)	$	383	$	(97	)	$	296	$	491
Capital expenditures	$	137		$	25	$	30		$	—	$	192
2002
Revenues	$	5,216		$	12,068				$	723	$	18,007
Cost of sales		—			10,592					—		10,592
Operating expenses		6,017			585					—		6,602
Income (loss) before income taxes	$	(801	)	$	891				$	723	$	813
Assets	$	7,652		$	5,108				$	4,318	$	17,078
Depreciation and amortization	$	122		$	104				$	—	$	226
Income tax provision (benefit)	$	(316	)	$	352				$	285	$	321
Capital expenditures	$	137		$	25				$	—	$	162
2001
Revenues	$	5,313		$	13,424				$	692	$	19,429
Cost of sales		—			11,605					—		11,605
Operating expenses		6,056			631					—		6,687
Income before income taxes	$	(743	)	$	1,188				$	692	$	1,137
Assets	$	4,960		$	6,995				$	4,235	$	16,190
Depreciation and amortization	$	133		$	99				$	—	$	232
Income tax provision	$	(289	)	$	462				$	269	$	442
Capital expenditures	$	84		$	66				$	—	$	150

D-20

Page 41

BCT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(000’s omitted, except per share data)

The following is sales information by geographic area for the years ended February 28:

	2003		2002		2001
United States	$	19,156	$	17,572	$	18,618
Canada		659		435		811
	$	19,815	$	18,007	$	19,429

All long-lived assets of the Company are domiciled in the United States.

NOTE 11:    RECENT ACCOUNTING PRONOUNCEMENTS

In April 2002, SFAS No. 145 “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” was issued. As applicable to the Company, SFAS No. 145 rescinds SFAS No. 4 which prescribed that any gain or loss associated with the early extinguishment of debt be classified as extraordinary. SFAS No. 145 requires that the factors prescribed by APB Opinion 30, “Reporting the Results of Operations—-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” be used to determine if the early retirement of debt will be classified as part of normal recurring operations or will be classified as extraordinary. The Company does not expect adoption of SFAS No. 145 to have a material impact on the Company’s financial statements.

On November 25, 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”. This interpretation clarifies the requirements of FASB Statement No. 5 Accounting for Contingencies”, relating to a guarantors accounting for, and disclosure of, the issuance of certain types of guarantees. The interpretation requires that upon issuance or modification of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. For guarantees included within the scope of FIN 45, issued prior to January 1, 2003, only disclosure requirements are applicable. The required disclosures under FIN 45 have been made by the Company as described in Note 9.

On January 17, 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities, an interpretation of ARB 51. The interpretation provides guidance on the identification of entities for which control is achieved through means other than through voting rights and how to determine when and which business enterprise should consolidate these entities. This new model for consolidation applies to an entity in which the equity investors do not have a controlling financial interest or the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, FIN 46 requires certain additional disclosures. Effective for financial statements issued after January 31, 2003, the Company determined FIN 46 will have no effect on the financial statements.

During 2002, the Company adopted the amended disclosure provisions of Statement of Financial Accounting Standards (“SFAS”) No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of SFAS 123 (“SFAS 148”). This standard provides additional transition guidance for those entities that elect to voluntarily adopt the accounting provisions of SFAS 123, Accounting for Stock Based Compensation. The standard also mandates certain new disclosures about the method of accounting for stock-based employee compensation and the effect of the method on the results of operations. See Notes 2 and 8.

D-21

Page 42

BCT INTERNATIONAL, INC.

                                                                                                                           SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

(000’s omitted)

Column A	Column B		Column C		Column D			Column E
			Additions
	Balance at beginning of year		Charged to costs and expenses		Deductions			Balance at end of year
For the year ended February 28, 2003
Allowance for doubtful accounts	$	2,979	$	1,480	$	(1,618	)	$	2,841
Allowance for obsolete inventory	$	82	$	100	$	(102	)	$	80
Deferred tax assets valuation allowance	$	203	$	—	$	—		$	203
For the year ended February 28, 2002
Allowance for doubtful accounts	$	2,597	$	1,300	$	(918	)	$	2,979
Allowance for obsolete inventory	$	75	$	175	$	(168	)	$	82
Deferred tax assets valuation allowance	$	203	$	—	$	—		$	203
For the year ended February 28, 2001
Allowance for doubtful accounts	$	2,454	$	1,452	$	(1,309	)	$	2,597
Allowance for obsolete inventory	$	74	$	30	$	(29	)	$	75
Deferred tax assets valuation allowance	$	203	$	—	$	—		$	203

D-22

Page 43

SCHEDULE X

BCT INTERNATIONAL, INC.

SUPPLEMENTARY INCOME STATEMENT INFORMATION

(000’s omitted)

Item	February 28, 2003	February 28, 2002	February 28, 2001
Advertising Costs	$17	$8	$—
Amortization of intangible assets	$26	$26	$26

D-23

Page 44

EX-10.12

                                                                   Exhibit 10.12

                                                 3000 N.E. 30th Place, 5th Floor
                                                 Fort Lauderdale, Florida 33306

                                                 (954) 563-1224
                                                 (954) 565-0742 FAX

BCT LETTERHEAD APPEARS HERE
Wholesale Printers to the Trade
- --------------------------------------

     November __, 2002


     Henry A. Johnson, Senior Vice President
     BCT International, Inc.
     3000 Northeast 30 Place, Fifth Floor
     Fort Lauderdale, Florida 33306

                     Re:     Henry A. Johnson/Severance

     Dear Hank:

             In accordance with the resolution passed by the Company's Board
     of Directors at the meeting held on October 10, 2002, this letter amends
     your rights upon termination of your employment with the Company and amends
     the second item of section 3 of the letter agreement between the Company
     and you dated February 23, 2001 by adding the following provisions:

             1.         In the event that there is a Change in Control of the
                   Company (as defined in the Company's 1995 Stock Option Plan)
                   and within one year of such Change of Control either (i) your
                   employment is terminated by the Company for any reason or
                   (ii) your duties are materially changed or your compensation
                   and/or benefits are reduced and you voluntarily terminate
                   your employment as a result of such change or reduction, then
                   your then current compensation and benefits, prior to any
                   change, shall continue for a period of 12 months beginning
                   the month following the month of your termination. This
                   compensation will be in addition to any accrued but unpaid
                   vacation or holiday time due you.

             2.         Additionally, at your option, you may elect to have the
                   Company purchase any vested stock options held by you at the
                   difference between the market price of the stock and the
                   exercise price for each such option, at any time during the
                   12 month severance period.

             Please confirm your agreement with the foregoing by signing in the
     space provided below.

                                        Very truly yours,


                                        /s/ John Galardi
                                        John Galardi
                                        Chairman, Compensation Committee

     Agreed and Accepted
     this 9 day of December, 2002
         ---       ---------

     /s/ Henry A. Johnson
     -------------------------
     Henry A. Johnson

EX-10.13

                                                                   Exhibit 10.13

                                                 3000 N.E. 30th Place, 5th Floor
                                                 Fort Lauderdale, Florida 33306

                                                 (954) 563-1224
                                                 (954) 565-0742 FAX

BCT LETTERHEAD APPEARS HERE
Wholesale Printers to the Trade
- --------------------------------------

     November __, 2002


     Michael R. Hull, Chief Financial Officer
     BCT International, Inc.
     3000 Northeast 30 Place, Fifth Floor
     Fort Lauderdale, Florida 33306

                     Re:     Michael R. Hull/Severance

     Dear Mike:

             In accordance with the resolution passed by the Company's Board
     of Directors at the meeting held on October 10, 2002, this letter amends
     your rights upon termination of your employment with the Company and amends
     the letter agreement between the Company and you dated November 6, 2000 by
     adding the following provisions:

             1.         In the event that there is a Change in Control of the
                   Company (as defined in the Company's 1995 Stock Option Plan)
                   and within one year of such Change of Control either (i) your
                   employment is terminated by the Company for any reason or
                   (ii) your duties are materially changed or your compensation
                   and/or benefits are reduced and you voluntarily terminate
                   your employment as a result of such change or reduction, then
                   your then current compensation and benefits, prior to any
                   change, shall continue for a period of 12 months beginning
                   the month following the month of your termination. This
                   compensation will be in addition to any accrued but unpaid
                   vacation or holiday time due you.

             2.         Additionally, at your option, you may elect to have the
                   Company purchase any vested stock options held by you at the
                   difference between the market price of the stock and the
                   exercise price for each such option, at any time during the
                   12 month severance period.

             Please confirm your agreement with the foregoing by signing in the
     space provided below.

                                        Very truly yours,


                                        /s/ John Galardi
                                        John Galardi
                                        Chairman, Compensation Committee

     Agreed and Accepted
     this 4th day of December, 2002
         ----        ---------

     /s/ Michael R. Hull
     ------------------------
     Michael R. Hull

EX-10.14

                                                                   Exhibit 10.14

                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
March, 2003, by and between BCT International, Inc., a Delaware corporation (the
Company), and Henry A. Johnson (the Executive).

     Whereas, the Company desires to secure the services of the Executive, and
the Executive desires to furnish such services to the Company upon the terms and
conditions set forth in this agreement.

     Now, therefore, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:

     1.       Employment - The Company agrees to employ the Executive and the
         Executive agrees to serve the Company, on the terms and subject to the
         conditions set forth herein.

     2.       Duties - During the term of this Agreement, the Executive shall be
         employed as President of the Company, shall diligently perform the
         duties of same as shall be assigned to him by the Board of Directors
         and the Company's Chief Executive Officer (CEO), and shall exercise
         such power and authority as may from time to time be delegated to him
         by the Board and the CEO, The Executive shall devote his full time
         attention to the business affairs of the Company, render such services
         to the best of his ability, and use his best efforts to promote the
         interests of the Company.

     3.       Term - The term of this Agreement and the employment of the
         Executive hereunder shall be for the fiscal years ending February 29,
         2004 and February 28, 2005, unless sooner terminated in accordance with
         the terms and conditions hereof.

     4.       Renewal - This Agreement shall be automatically renewed and
         extended for successive one-year terms unless either party gives
         written notice of non-renewal to the other party at least three months
         before the second anniversary date of the Agreement or the relevant
         anniversary date thereafter. If timely notice is given, this Agreement
         shall terminate upon the expiration of this Agreement or the then
         effective renewal term.

     5.       Compensation, Base salary - The Executive shall receive base
         salary at the following annual rates:

                   Fiscal 2004          $220,000.00
                   Fiscal 2005          $231,000.00

         The base salary shall be payable in equal installments consistent with
         the Company's normal payroll schedule, subject to applicable
         withholding and other taxes. If the term of this Agreement is renewed,
         the Executive shall



         be paid a base salary reflecting an increase of at least 5% over the
         base salary for the preceding year.

     6.       Incentive Compensation - In addition to the base salary, the
         Executive shall receive annual incentive compensation for each year of
         this Agreement as follows: In fiscal 2004, the Executive may receive
         incentive compensation equal to 20% of the Executive's base salary,
         10% upon the Company meeting its budget as approved by the Board of
         Directors, an 10% based upon the Executive operating his department
         within budget. This bonus is to be paid quarterly. In fiscal 2005, the
         Executive may receive incentive compensation equal to 20% of the
         Executive' base salary as in fiscal 2004. In addition, 10% of every
         dollar of pretax income generated by the Company in excess of the
         fiscal 2005 budget shall create an Excess Bonus Pool to which the
         Executive shall be entitled to a 20% share

     7.       Car allowance - The Executive shall be entitled to a car allowance
         of $1,000.00 per month.

     8.       Other Benefits - The Executive shall be entitled to all other
         benefits available to executive employees of the Company including, but
         not limited to 401k plan participation, section 125 cafeteria plan
         participation, health and dental insurance, life and disability
         insurance coverage.

     9.       Indemnification - The Company agrees to defend, indemnify and hold
         harmless the Executive for acts in his capacity as an officer and/or
         director to the fullest extent permitted by Delaware corporate law as
         of the date of this Agreement (or as such right of indemnity may be
         increased in the future). The Company agrees to advance on behalf of
         the Executive the reasonable costs of defending any action or
         investigation (including reasonable attorney's fees and expenses)
         arising from the Executive's performance of his duties under this
         Agreement.

     10.      Severance - Should the Executive's employment be terminated for
         any reason other than "cause" or the expiration of this Agreement, the
         Executive shall be entitled to receive his base salary for a period of
         12 months. In addition, Executive shall be entitled to receive the
         pro-rata portion of any incentive compensation accrued in favor of the
         Executive on the date Executive's employment is terminated for other
         than "cause". For the purposes of this Agreement, "cause" is defined
         as (1) a willful breach by the Executive of any material terms or
         provisions of this Agreement, or (2) commission by the Executive of an
         act or acts involving fraud, embezzlement, misappropriation, theft or
         dishonesty against the property or personnel of the Company. Should
         the Executive be terminated for "cause" the Company shall pay
         Executive the amount of accrued but unpaid base salary to the date of
         termination and the Company shall have no further liability under this
         Agreement.

     11.      PTO - The Executive shall be entitled to Four (4) weeks paid time
         off (PTO) each year. In the event of termination of the Executive for
         any




         reason, the Executive will be entitled to receive payment of his base
         salary for the accrued but unused portion of PTO as of the date of
         termination, in addition to any base salary and incentive compensation
         which may be due the Executive.

     12.      Restrictive Covenants.

              (a)   Non-competition. While employed by the Company and for one
         year thereafter, unless his employment is terminated by the Company
         without cause or upon expiration of the employment term (the
         Non-Competition Period), the Executive shall not, directly or
         indirectly, engage in or have any interest in any sole proprietorship,
         partnership, limited liability company, corporation or business or any
         other person or entity other than the Company, its subsidiaries or
         affiliates (whether as an employee, officer, director, partner, agent,
         security holder, creditor, consultant, franchisee or otherwise) that
         directly or indirectly engages in a business similar to the Company=s
         and/or its franchisees= then-existing business anywhere such business
         is then conducted by the Company and/or its franchisees (as may
         reasonably be determined by the Company to be the appropriate
         geographical market(s) for such products);

              (b)   Nondisclosure. The Executive shall not at any time divulge,
         communicate, or use to the detriment of the Company or for the benefit
         of any other person or persons, or misuse in any way, any confidential
         information pertaining to the business of the Company. For purposes
         hereof, "confidential information" means information, including but not
         limited to, technical or non-technical data, a formula, pattern,
         compilation, program, device, method, technique, drawing, process,
         financial data, or list of actual or potential customers or suppliers,
         that is both: (i) sufficiently secret to derive economic value, actual
         or potential, from not being generally known to other persons who can
         obtain economic value from its disclosure or use; and (ii) the subject
         of efforts that are reasonable under the circumstances to maintain its
         secrecy or confidentiality. The provisions of this Section 12.(b) shall
         not apply to information which is or shall become generally known to
         the public or the trade (except by reason of the Executive=s breach of
         his obligations hereunder), information which is or shall become
         available in trade or other publications (except by reason of the
         Executive=s breach of his obligations hereunder), and information which
         the Executive is required to disclose by order of a court of competent
         jurisdiction (but only to the extent specifically ordered by such court
         and, when reasonably possible, if the Executive shall give the Company
         prior notice of such intended disclosure so that it has the opportunity
         to seek a protective order if it deems appropriate);

              (c)   Non-solicitation of Employees and Customers. While employed
         by the Company and during the Non-competition Period thereafter, the
         Executive shall not, directly or indirectly, for himself or for any
         other person, firm, corporation, partnership, limited liability
         company, association or other entity, attempt to employ or enter into
         any contractual arrangement with any employee



         or former employee of the Company, unless such employee or former
         employee has not been employed by the Company for a period in excess
         of six months; and

              (d)   Books and Records. All books, records and accounts relating
         in any manner to the business, customers, suppliers or clients of the
         Company and all other documents, disks, software or other items
         containing confidential information relating to the Company, whether
         prepared by the Executive or otherwise coming into the Executive's
         possession, shall be the exclusive property of the Company and shall
         be returned immediately, together with any copies, to the Company on
         termination of the Executive's employment hereunder or on the
         Company's request at any time.

     13.      Entire Agreement - Except for the severance agreement relating to
         a change in control of the Company granted by the Board of Directors on
         November 24, 2002, this Agreement shall constitute the entire
         Agreement between the Executive and the Company and shall supersede
         all prior agreements, arrangements, understandings, both oral and in
         writing between the Executive and the Company. This Agreement may not
         be modified in any way unless by a written instrument signed by both
         the Company and the Executive.

     14.      Jurisdiction - This Agreement shall be governed by and construed
         in accordance with the laws of the State of Florida.


           IN WITNESS WHEREOF, the undersigned have executed this Agreement as
           of the date first written above:


                                           BCT International, Inc.


                                           By:    William A. Wilkerson
                                                  ---------------------
                                                  William A. Wilkerson, Chairman



                                           Executive



                                           Henry A. Johnson
                                           ----------------
                                           Henry A. Johnson

EX-10.15

                                                                   Exhibit 10.15

                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
March, 2003, by and between BCT International, Inc., a Delaware corporation (the
Company), and Michael R. Hull (the Executive).

     Whereas, the Company desires to secure the services of the Executive, and
the Executive desires to furnish such services to the Company upon the terms and
conditions set forth in this agreement.

     Now, therefore, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:

     1.       Employment - The Company agrees to employ the Executive and the
          Executive agrees to serve the Company, on the terms and subject to the
          conditions set forth herein.

     2.       Duties - During the term of this Agreement, the Executive shall be
          employed as Vice President, Chief Financial Officer, Secretary and
          Treasurer of the Company, shall diligently perform the duties of same
          as shall be assigned to him by the Board of Directors and the
          Company's Chief Executive Officer (CEO), and shall exercise such power
          and authority as may from time to time be delegated to him by the
          Board and the CEO, The Executive shall devote his full time attention
          to the business affairs of the Company, render such services to the
          best of his ability, and use his best efforts to promote the interests
          of the Company.

     3.       Term - The term of this Agreement and the employment of the
          Executive hereunder shall be for the fiscal years ending February 29,
          2004 and February 28, 2005, unless sooner terminated in accordance
          with the terms and conditions hereof.

     4.       Renewal - This Agreement shall be automatically renewed and
          extended for successive one-year terms unless either party gives
          written notice of non-renewal to the other party at least three months
          before the second anniversary date of the Agreement or the relevant
          anniversary date thereafter. If timely notice is given, this Agreement
          shall terminate upon the expiration of this Agreement or the then
          effective renewal term.

     5.       Compensation, Base salary - The Executive shall receive base
          salary at the following annual rates:

                    Fiscal 2004           $139,000.00
                    Fiscal 2005           $145,950.00

          The base salary shall be payable in equal installments consistent with
          the Company's normal payroll schedule, subject to applicable
          withholding and



          other taxes. If the term of this Agreement is renewed, the Executive
          shall be paid a base salary reflecting an increase of at least 5% over
          the base salary for the preceding year.

     6.       Incentive Compensation - In addition to the base salary, the
          Executive shall receive annual incentive compensation for each year of
          this Agreement as follows: In fiscal 2004, the Executive may receive
          incentive compensation equal to 20% of the Executive's base salary,
          10% upon the Company meeting its budget as approved by the Board of
          Directors, an 10% based upon the Executive operating his department
          within budget. This bonus is to be paid quarterly. In fiscal 2005, the
          Executive may receive incentive compensation equal to 20% of the
          Executive' base salary as in fiscal 2004. In addition, 10% of every
          dollar of pretax income generated by the Company in excess of the
          fiscal 2005 budget shall create an Excess Bonus Pool to which the
          Executive shall be entitled to a 20% share

     7.       Car allowance - The Executive shall be entitled to a car allowance
          of $500.00 per month.

     8.       Other Benefits - The Executive shall be entitled to all other
          benefits available to executive employees of the Company including,
          but not limited to 401k plan participation, section 125 cafeteria plan
          participation, health and dental insurance, life and disability
          insurance coverage.

     9.       Indemnification - The Company agrees to defend, indemnify and hold
          harmless the Executive for acts in his capacity as an officer and/or
          director to the fullest extent permitted by Delaware corporate law as
          of the date of this Agreement (or as such right of indemnity may be
          increased in the future). The Company agrees to advance on behalf of
          the Executive the reasonable costs of defending any action or
          investigation (including reasonable attorney's fees and expenses)
          arising from the Executive's performance of his duties under this
          Agreement.

     10.      Severance - Should the Executive's employment be terminated for
          any reason other than "cause" or the expiration of this Agreement, the
          Executive shall be entitled to receive his base salary for a period of
          12 months. In addition, Executive shall be entitled to receive the
          pro-rata portion of any incentive compensation accrued in favor of the
          Executive on the date Executive's employment is terminated for other
          than "cause". For the purposes of this Agreement, "cause" is defined
          as (1) a willful breach by the Executive of any material terms or
          provisions of this Agreement, or (2) commission by the Executive of an
          act or acts involving fraud, embezzlement, misappropriation, theft or
          dishonesty against the property or personnel of the Company. Should
          the Executive be terminated for "cause" the Company shall pay
          Executive the amount of accrued but unpaid base salary to the date of
          termination and the Company shall have no further liability under this
          Agreement.





     11.      PTO - The Executive shall be entitled to Four (4) weeks paid time
          off (PTO) each year. In the event of termination of the Executive for
          any reason, the Executive will be entitled to receive payment of his
          base salary for the accrued but unused portion of PTO as of the date
          of termination, in addition to any base salary and incentive
          compensation which may be due the Executive.

     12.      Restrictive Covenants.

              (a)   Non-competition. While employed by the Company and for one
          year thereafter, unless his employment is terminated by the Company
          without cause or upon expiration of the employment term (the
          Non-Competition Period), the Executive shall not, directly or
          indirectly, engage in or have any interest in any sole proprietorship,
          partnership, limited liability company, corporation or business or any
          other person or entity other than the Company, its subsidiaries or
          affiliates (whether as an employee, officer, director, partner, agent,
          security holder, creditor, consultant, franchisee or otherwise) that
          directly or indirectly engages in a business similar to the Company's
          and/or its franchisees' then-existing business anywhere such business
          is then conducted by the Company and/or its franchisees (as may
          reasonably be determined by the Company to be the appropriate
          geographical market(s) for such products);

              (b)   Nondisclosure. The Executive shall not at any time divulge,
          communicate, or use to the detriment of the Company or for the benefit
          of any other person or persons, or misuse in any way, any confidential
          information pertaining to the business of the Company. For purposes
          hereof, "confidential information" means information, including but
          not limited to, technical or non-technical data, a formula, pattern,
          compilation, program, device, method, technique, drawing, process,
          financial data, or list of actual or potential customers or suppliers,
          that is both: (i) sufficiently secret to derive economic value, actual
          or potential, from not being generally known to other persons who can
          obtain economic value from its disclosure or use; and (ii) the subject
          of efforts that are reasonable under the circumstances to maintain its
          secrecy or confidentiality. The provisions of this Section 12.(b)
          shall not apply to information which is or shall become generally
          known to the public or the trade (except by reason of the Executive's
          breach of his obligations hereunder), information which is or shall
          become available in trade or other publications (except by reason of
          the Executive's breach of his obligations hereunder), and information
          which the Executive is required to disclose by order of a court of
          competent jurisdiction (but only to the extent specifically ordered by
          such court and, when reasonably possible, if the Executive shall give
          the Company prior notice of such intended disclosure so that it has
          the opportunity to seek a protective order if it deems appropriate);

              (c)   Non-solicitation of Employees and Customers. While employed
          by the Company and during the Non-competition Period thereafter, the
          Executive shall not, directly or indirectly, for himself or for any
          other person, firm,



          corporation, partnership, limited liability company, association or
          other entity, attempt to employ or enter into any contractual
          arrangement with any employee or former employee of the Company,
          unless such employee or former employee has not been employed by the
          Company for a period in excess of six months; and

              (d)   Books and Records. All books, records and accounts relating
          in any manner to the business, customers, suppliers or clients of the
          Company and all other documents, disks, software or other items
          containing confidential information relating to the Company, whether
          prepared by the Executive or otherwise coming into the Executive's
          possession, shall be the exclusive property of the Company and shall
          be returned immediately, together with any copies, to the Company on
          termination of the Executive's employment hereunder or on the
          Company's request at any time.

     13.      Entire Agreement - Except for the severance agreement relating to
          a change in control of the Company granted by the Board of Directors
          on November 24, 2002, this Agreement shall constitute the entire
          Agreement between the Executive and the Company and shall supersede
          all prior agreements, arrangements, understandings, both oral and in
          writing between the Executive and the Company. This Agreement may not
          be modified in any way unless by a written instrument signed by both
          the Company and the Executive.

     14.      Jurisdiction - This Agreement shall be governed by and construed
          in accordance with the laws of the State of Florida.

           IN WITNESS WHEREOF, the undersigned have executed this Agreement as
           of the date first written above:


                                         BCT International, Inc.


                                         By:      William A. Wilkerson
                                                  --------------------
                                                  William A. Wilkerson, Chairman




                                         Executive


                                         Michael R. Hull
                                         ---------------
                                         Michael R. Hull

EX-10.16

                                                                   Exhibit 10.16









                          AGREEMENT AND PLAN OF MERGER






                            DATED AS OF May 29, 2003

                                      AMONG

            PHOENIX GROUP OF FLORIDA, INC., PHOENIX ACQUISITION CORP. and
                              WILLIAM A. WILKERSON

                           AND BCT INTERNATIONAL, INC.







                                               TABLE OF CONTENTS

                                                                                                              
ARTICLE I THE MERGER ..........................................................................................  2
         1.1 The Merger .......................................................................................  2
         1.2 Closing ..........................................................................................  2
         1.3 Effective Time of the Merger .....................................................................  2
         1.4 Effects of the Merger ............................................................................  3
         1.5 Certificate of Incorporation; Bylaws .............................................................  3
         1.6 Directors; Officers ..............................................................................  3

ARTICLE II CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY AND PAYMENT WITH RESPECT THERETO ..................  3
         2.1 Effect on Capital Stock ..........................................................................  3
         2.2 Delivery of Merger Consideration .................................................................  4
         2.3 Stock Options with Respect to Company Common Stock ...............................................  6

ARTICLE III REPRESENTATIONS AND WARRANTIES ....................................................................  6
         3.1 Representations and Warranties of the Company ....................................................  6
         3.2 Representations and Warranties of Wilkerson, Phoenix and Merger Sub .............................. 14

ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS .......................................................... 16
         4.1 Covenants of Company ............................................................................. 16
         4.2 Covenants of Wilkerson, Phoenix and Merger Sub ................................................... 19
         4.3 Competing Transactions ........................................................................... 19

ARTICLE V ADDITIONAL AGREEMENTS ............................................................................... 20
         5.1 Preparation of the Proxy Statement and Schedule 13E-3 ............................................ 20
         5.2 Stockholders' Meeting ............................................................................ 20
         5.3 Legal Conditions to Merger ....................................................................... 21
         5.4 Brokers or Finders ............................................................................... 21
         5.5 Indemnification; Directors' and Officers' Insurance .............................................. 21
         5.6 Shareholder Lists ................................................................................ 22
         5.7 Shareholder Litigation ........................................................................... 22
         5.8 Communication to Employees ....................................................................... 22
         5.9 Vote of the Acquisition Group .................................................................... 22
         5.10 Agreement with Respect to Certain Option Shares ................................................. 22

ARTICLE VI CONDITIONS PRECEDENT ............................................................................... 22
         6.1 Conditions to Each Party's Obligation To Effect the Merger ....................................... 22
         6.2 Conditions to Obligations of Wilkerson, Phoenix and Merger Sub ................................... 23
         6.3 Conditions to Obligations of Company ............................................................. 24

ARTICLE VII TERMINATION AND AMENDMENT ......................................................................... 25
         7.1 Termination ...................................................................................... 25





                                                                                                             
         7.2 Effect of Termination ..........................................................................   26
         7.3 Fees, Expenses and Other Payments ..............................................................   27
         7.4 Amendment ......................................................................................   28
         7.5 Extension; Waiver ..............................................................................   28

ARTICLE VIII GENERAL PROVISIONS .............................................................................   28
         8.1 Survival of Representations, Warranties and Agreements .........................................   28
         8.2 Notices ........................................................................................   28
         8.3 Certain Definitions ............................................................................   29
         8.4 Interpretation .................................................................................   31
         8.5 Counterparts ...................................................................................   32
         8.6 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership ............................   32
         8.7 Governing Law; Consent to Jurisdiction .........................................................   32
         8.8 Severability; No Remedy in Certain Circumstances ...............................................   32
         8.9 Publicity ......................................................................................   33
         8.10 Assignment ....................................................................................   33
         8.11 Adjustment ....................................................................................   33
         8.12 Headings ......................................................................................   33
         8.13 Waiver ........................................................................................   33
         8.14 Enforcement of Agreement ......................................................................   33

EXHIBIT A Certificate of Incorporation of Merger Sub ........................................................  A-1

EXHIBIT B Bylaws of Merger Sub ..............................................................................  B-1






     AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 29,
2003, among Phoenix Group of Florida, Inc., a Nevada corporation ("Phoenix"),
Phoenix Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Phoenix ("Merger Sub"), William A. Wilkerson ("Wilkerson") and BCT
International, Inc., a Delaware corporation (the "Company").

                                    RECITALS

     WHEREAS, Phoenix together with its affiliates, including Wilkerson, are the
beneficial owners of 2,690,282 shares of Common Stock, par value $.04 per share,
of the Company (the "Company Common Stock"), which represents approximately
52.6% of the outstanding shares of Company Common Stock (not including
outstanding shares held by the Company in its treasury or by its Subsidiaries).

     WHEREAS, Phoenix has proposed that Phoenix acquire (the "Acquisition") all
of the issued and outstanding shares of Company Common Stock not beneficially
owned (within the meaning of Rule 13d-3 of the Exchange Act (as defined below))
(the "Shares") by Phoenix, Merger Sub, Wilkerson or any other Affiliate (as
hereinafter defined), other than the Company, of Phoenix (collectively, the
"Acquisition Group").

     WHEREAS, in furtherance of the Acquisition, it is proposed that Merger Sub
shall be merged with and into the Company, with the Company continuing as the
surviving corporation (the "Merger"), in accordance with the General Corporation
Law of the State of Delaware (the "DGCL") and upon the terms and subject to the
conditions set forth herein.

     WHEREAS, a special committee of the Board of Directors of the Company (the
"Board"), consisting entirely of non-management directors of the Company who are
not Affiliates (as defined below) of the Acquisition Group (the "Independent
Committee"), was established for, among other purposes, the purpose of
evaluating the Acquisition and making a recommendation to the Board with regard
to the Acquisition.

     WHEREAS, the Independent Committee has received the opinion of Capitalink,
L.C. (the "Independent Advisor") an independent financial advisor to the
Independent Committee, which was selected by it, that, as of May 27, 2003, the
consideration to be received by the holders of Shares pursuant to the Merger is
fair to such holders from a financial point of view.

     WHEREAS, the Independent Committee, has, after consultation with the
Independent Advisor and independent legal counsel selected by the Independent
Committee, and in light of and subject to the terms and conditions set forth
herein, (i) determined that (x) the Merger Consideration (as defined below), is
fair to the holders of Shares and (y) the Merger is advisable and in the best
interests of the Company and the holders of Shares; (ii) approved, and declared
the advisability of, this Agreement and (iii) determined to recommend that the
Board and the stockholders of the Company vote to adopt this Agreement.



     WHEREAS, the Board, based on the unanimous recommendation and approval of
the Independent Committee, has, in light of and subject to the terms and
conditions set forth herein, (i) determined that (x) the Merger Consideration
(as defined below), is fair to the holders of Shares and (y) the Merger is
advisable and in the best interests of the Company and the holders of Shares;
(ii) approved, and declared the advisability of, this Agreement and (iii)
determined to recommend that the stockholders of the Company vote to adopt this
Agreement. The Board also has consulted with Mitrani, Rynor, Adamsky & Macaulay,
P.A., as counsel for the Company.

     WHEREAS, the respective boards of directors of Phoenix and Merger Sub have
approved this Agreement; and Phoenix as the sole stockholder of Merger Sub, has
adopted this Agreement.

     WHEREAS, the Company, Phoenix and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:

                                    ARTICLE I

                                   THE MERGER

     1.1   The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with
and into the Company at the Effective Time. At the Effective Time, the separate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall continue under the
name "BCT International, Inc."

     1.2   Closing. Unless this Agreement shall have been terminated pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
as promptly as practicable (and in any event within five business days)
following satisfaction or waiver of the conditions set forth in Article VI (the
"Closing Date"), at the offices of Adorno & Yoss, P.A., 2601 S. Bayshore Drive,
Suite 1600, Miami, Florida 33133, unless another date, time or place is agreed
to in writing by the parties hereto.

     1.3   Effective Time of the Merger. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the Surviving
Corporation shall file a certificate of merger conforming to the requirements of
Subchapter IX of the DGCL (the "Certificate of Merger") with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by the DGCL in connection with the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware, or such other time thereafter as is provided in the
Certificate of Merger in accordance with the DGCL (the "Effective Time").

                                       2



     1.4   Effects of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL.

     1.5   Certificate of Incorporation; Bylaws. (a) The certificate of
incorporation of Merger Sub which is attached as Exhibit A hereto, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law; provided that Article I of the
certificate of incorporation of the Surviving Corporation shall be amended by
the Certificate of Merger to read as follows: "The name of the corporation is:
BCT International, Inc."

           (b)  The bylaws of Merger Sub which are attached as Exhibit B hereto
shall be the bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.

     1.6   Directors;  Officers. (a) The directors of Merger Sub at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.

           (b)  The officers of Merger Sub at the Effective Time shall be
the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.

                                   ARTICLE II

          CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY AND PAYMENT
                              WITH RESPECT THERETO

     2.1   Effect on Capital Stock. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holder thereof:

           (a)  subject to Section 2.1(e), each Share issued and outstanding
immediately prior to the Effective Time, shall be converted into the right to
receive an amount in cash, without interest, equal to $2.00 (the "Merger
Consideration") in the manner provided in Section 2.2 hereof;

           (b)  each share of Company Common Stock issued and held in the
Company's treasury or held by any Subsidiary of the Company immediately prior to
the Effective Time, shall, by virtue of the Merger, cease to be outstanding and
shall be cancelled and retired without payment of any consideration therefor;

           (c)  each share of Company Common Stock held by any member of the
Acquisition Group immediately prior to the Effective Time shall remain
outstanding;

           (d)  each share of common stock, par value $.01 per share, of Merger
Sub ("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted

                                       3



into and become one fully paid and nonassessable share of common stock of the
SurvivingCorporation; and

           (e)  notwithstanding anything in this Agreement to the contrary, to
the extent provided by the DGCL, Phoenix will not make any payment of Merger
Consideration with respect to Shares held by any person (a "Dissenting
Stockholder") who elects to demand appraisal of such Dissenting Stockholder's
Shares and duly and timely complies with all the provisions of the DGCL
concerning the right of holders of Shares to require appraisal of their shares
("Dissenting Shares"), but such Dissenting Stockholders shall have the right to
receive such consideration as may be determined to be due such Dissenting
Stockholders pursuant to the laws of the State of Delaware. If, after the
Effective Time, a Dissenting Stockholder withdraws such Dissenting Stockholder's
demand for appraisal or fails to perfect or otherwise loses such Dissenting
Stockholder's right of appraisal, in any case pursuant to the DGCL, such
Dissenting Stockholder's Shares will be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration pursuant to
Section 2.1(a). The Company will give Phoenix (i) prompt notice of any demands
for appraisal of Dissenting Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company will not, without the prior written
consent of Phoenix, make any payment with respect to, or enter into any
negotiations or discussions or a binding settlement agreement or make an offer,
written or oral, to settle, any such demands.

     2.2   Delivery of Merger Consideration.

           (a)  Payment Agent. As of the Effective Time, Phoenix shall deposit,
or shall cause to be deposited, with a bank or trust company designated by
Phoenix and satisfactory to the Independent Committee (the "Payment Agent"), for
the benefit of the holders of Shares, for payment in accordance with this
Article II through the Payment Agent, the Merger Consideration to be paid in
respect of all Shares (such funds deposited with the Payment Agent, the "Payment
Fund").

           (b)  Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Payment Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"), the following documents: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Payment Agent and shall be in such form and have such other
provisions as Phoenix may reasonably specify); and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment with respect
thereto. Upon surrender of a Certificate for cancellation to the Payment Agent
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration payable with respect to the Shares represented by such Certificate
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. In the event that a holder has lost or
misplaced a Certificate, an affidavit of loss thereof (together with an
appropriate indemnity and/or bond if Phoenix so requires by notice in writing to
the holder of such Certificate) satisfactory in form and substance to the
Company's transfer agent and the Payment Agent shall accompany such letter of
transmittal in lieu of the applicable Certificate. In

                                       4



the event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, payment of the applicable Merger Consideration
may be made to a transferee if the Certificate representing such Shares is
presented to the Payment Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger Consideration
with respect thereto as contemplated by this Section 2.2. No interest shall
accrue or be paid to any beneficial owner of Shares or any holder of any
Certificate with respect to the Merger Consideration payable upon the surrender
of any Certificate.

           (c)  No Further Ownership Rights in the Shares. The Merger
Consideration paid with respect to the cancellation of Shares in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II,
subject to applicable law in the case of Dissenting Shares.

           (d)  Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the stockholders of the Company for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation for
payment of their claim for the Merger Consideration. Upon termination of the
Payment Fund pursuant to this subsection and upon delivery to the Surviving
Corporation of the balance thereof, the Surviving Corporation shall have the
right to invest any such amount delivered to it in its sole discretion.

           (e)  No Liability. If any Certificates shall not have been
surrendered prior to one year after the Effective Time (or immediately prior to
such earlier date on which the Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as hereinafter defined)), any cash or other property
payable in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
Notwithstanding the foregoing, none of the Surviving Corporation, Phoenix or the
Payment Agent shall be liable to any holder of a Certificate or the shares
represented thereby for any Merger Consideration delivered in respect of such
Certificate or the shares represented thereby to a public official pursuant to
any abandoned property, escheat or other similar law.

           (f)  Investment of Payment Fund. The Payment Agent shall invest any
cash included in the Payment Fund as directed by the Surviving Corporation, in
(i) obligations of or guaranteed by the United States, and (ii) certificates of
deposit, bank repurchase agreements and bankers' acceptances of any bank or
trust company organized under federal law or under the law of any state of the
United States or of the District of Columbia that has capital, surplus and
undivided profits of at least $500 million or in money market funds which are
invested substantially in such investments, none of

                                       5



which shall have maturities of greater than one year. Any interest or other
income resulting from such investments shall be paid to the Surviving
Corporation. The Surviving Corporation shall replace any net losses incurred by
the Payment Fund as a result of investments made pursuant to this Section
2.2(f).

           (g)  Withholding Rights. Phoenix or the Payment Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates or Shares represented
thereby such amounts (if any) as Phoenix or the Payment Agent is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Phoenix or the Payment Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by Phoenix or the
Payment Agent.

     2.3   Stock Options with Respect to Company Common Stock. The Company
shall take all actions necessary pursuant to the terms and provisions of any
outstanding options to acquire shares of Company Common Stock, to cause the
following: all outstanding options to acquire shares of Company Common Stock
granted under the 1995 Stock Option Plan (the "Company Stock Plan") or otherwise
(the "Company Stock Options") will terminate and expire as of the Effective
Time. The Company shall give written notice to the holders of all Company Stock
Options of the foregoing and each such Company Stock Option shall thereafter be
canceled. All actions required to be taken pursuant to this Section 2.3(a) with
respect to Company Stock Options has been, or prior to the Effective Time will
be, taken by the Company. Notwithstanding the foregoing no consideration shall
be paid with respect to Company Stock Options beneficially owned by Wilkerson.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     3.1   Representations and Warranties of the Company. The Company
represents and warrants to Phoenix and Merger Sub that, except as specifically
disclosed in the letter dated the date hereof and delivered by the Company to
Phoenix simultaneously with the execution and delivery of this Agreement (the
"Company Disclosure Letter"):

           (a)  Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties and assets makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on the Company. The Company has made available to Phoenix true
and complete copies of its certificate of incorporation and bylaws and the
certificate of incorporation and bylaws (or equivalent organizational documents)

                                       6



of each Subsidiary of the Company, each as amended to date. Such certificates of
incorporation, bylaws or equivalent organizational documents are in full force
and effect, and neither the Company nor any Subsidiary of the Company is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents.

           (b)  Subsidiaries. The Company owns, directly or indirectly, all of
the outstanding capital stock or other equity interests in each of its
Subsidiaries free and clear of any claim, lien, encumbrance, security interest
or agreement with respect thereto. Other than the capital stock or other
interests held by the Company in such Subsidiaries, neither the Company nor any
such Subsidiary owns any direct or indirect equity interest in any person,
domestic or foreign. All of the outstanding shares of capital stock in each of
its corporate Subsidiaries are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance with
applicable securities laws and regulations. There are no irrevocable proxies or
similar obligations with respect to such capital stock of such Subsidiaries and
no equity securities or other interests of any of its Subsidiaries are or may
become required to be issued or purchased by reason of any options, warrants,
rights to subscribe to, puts, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock or any other equity interest of any such Subsidiary,
and there are no agreements, contracts, commitments, understandings or
arrangements by which any such Subsidiary is bound to issue additional shares of
its capital stock or other equity interests, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or other equity
interests or securities convertible into or exchangeable for such shares or
other equity interests.

           (c)  Capital Structure. (i) The authorized capital stock of the
Company consists of 25,000,000 shares of Company Common Stock. As of the date
hereof, (A) 5,127,721 shares of Company Common Stock were outstanding, (B)
1,209,335 Company Stock Options were outstanding, each such option entitling the
holder thereof to purchase one share of Company Common Stock, (C) 1,209,335
shares of Company Common Stock are authorized and reserved for issuance upon the
exercise of outstanding Company Stock Options, and (D) 706,987 shares of Company
Common Stock were held by the Company in its treasury or by its Subsidiaries.

                (ii)  No bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt") of
the Company are issued or outstanding.

                (iii) All outstanding shares of the Company's capital stock
are validly issued, fully paid and non-assessable and free of preemptive rights
and were issued in compliance with applicable securities laws and regulations.
All shares of Company Common Stock subject to issuance upon the exercise of
Company Stock Options, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights and
will be issued in compliance with applicable securities laws and regulations.

                                       7



                (iv)  Except for this Agreement and the Company Stock Plan and
as set forth in the Company's annual report on Form10-K for the fiscal year
ended February 28, 2003, there are no options, warrants, calls, rights,
convertible securities, subscriptions, stock appreciation rights, phantom stock
plans or stock equivalents, or other rights, commitments or agreements of any
character to which the Company or any Subsidiary of the Company is a party or by
which it is bound obligating the Company or any Subsidiary of the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any Voting Debt of the Company or of any Subsidiary
of the Company or obligating the Company or any Subsidiary of the Company to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement for consideration per share of less than the Merger Consideration.
There are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries.

           (d)  Authority. (i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by the
stockholders of the Company, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, other than such approval by the
stockholders of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). The
affirmative vote at a duly called and held meeting of stockholders (the
"Stockholders' Meeting") of a majority of the outstanding shares of Company
Common Stock entitled to vote (the "Company Shareholder Approval") is the only
vote of the Company's stockholders necessary to approve this Agreement, the
Merger and the other transactions contemplated by this Agreement. The
Independent Committee has been duly authorized and constituted and the Board,
based on the approval and recommendation of the Independent Committee at a
meeting duly called and held, has (1) determined that (x) the Merger
Consideration is fair to the holders of Shares and (y) the Merger is advisable
and in the best interests of the Company and the holders of Shares, and (2)
approved and declared the advisability of this Agreement in accordance with the
provisions of the DGCL. The Independent Committee has received the written
opinion (the "Fairness Opinion") of the Independent Advisor to the effect that,
as of the date of this Agreement the Merger Consideration to be paid to holders
of Shares is fair to such holders from a financial point of view, and, as of the
date hereof, such Fairness Opinion has not been withdrawn.

                (ii)  Subject to compliance with the applicable requirements of
the Exchange Act and the filing of the Certificate of Merger as contemplated by
Section 1.3, the execution and delivery of this Agreement and the Certificate of
Merger, the consummation of the transactions contemplated hereby and thereby,
and compliance of the Company with any of the provisions hereof or thereof will
not breach, constitute an ultra vires act under, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or the loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on assets (any such breach, ultra
vires act, violation,

                                       8



default, right of termination, cancellation, acceleration, loss or creation, a
"Violation") pursuant to, (x) any provision of the certificate of incorporation
or bylaws of the Company or the governing instruments of any Subsidiary of the
Company or (y) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in paragraph
(iii) below or in the Company Disclosure Letter, any loan or credit agreement,
note, mortgage, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any Subsidiary of the
Company or their respective properties or assets except Violations under clause
(y) which would not be reasonably expected to have a Material Adverse Effect on
the Company.

                (iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the Company
or any Subsidiary of the Company in connection with the execution and delivery
of this Agreement and the Certificate of Merger by the Company, the consummation
by the Company of the transactions contemplated hereby and thereby, and
compliance of the Company with any of the provisions hereof or thereof, the
failure to obtain which would be reasonably expected to have a Material Adverse
Effect on the Company, except for (A) the filing with the Securities and
Exchange Commission (the "SEC") of (1) a Proxy Statement in definitive form
relating to the meeting of the Company's stockholders to be held in connection
with the Merger, (2) a Transaction Statement on Schedule 13E-3 (as hereinafter
defined) and (3) such other filings under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (B) the
filing of the Certificate of Merger as contemplated by Section 1.1 and
appropriate documents with the relevant authorities of states in which the
Company is qualified to do business, and (c) filings pursuant to the rules of
the OTC Bulletin Board System.

           (e)  SEC Documents. All the documents (other than preliminary
material) that the Company was required to file with the SEC for the past three
years including, without limitation, each report, schedule, registration
statement and definitive proxy statement filed by the Company (as such documents
have since the time of their filing been amended, the "Company SEC Documents"),
have been timely filed. As of their respective dates, (i) the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and (ii) none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as disclosed in the Company Disclosure Letter, the
consolidated financial statements of the Company included in the Company SEC
Documents (including, without limitation, the audited balance sheet and related
statements of operations, stockholders' equity and cash flows of the Company and
its Subsidiaries for the fiscal year ended February 28, 2003, as audited by
PricewaterhouseCoopers LLP (such balance sheet is referred to hereinafter as the
"Balance Sheet" and the Balance Sheet and related statements are referred to
hereinafter as the "Year-End Financial Statements")), complied in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with

                                       9



respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved and fairly present the consolidated financial positionof the Company
and its consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations, stockholders' equity and cash flows for the periods
then ended in accordance with GAAP. As of February 28, 2003, neither the Company
nor any of its Subsidiaries had any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by GAAP
to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto) and which were not reflected on the
Balance Sheet. Since February 28, 2003, except as and to the extent set forth in
the Company SEC Documents and except for liabilities or obligations incurred in
the ordinary course of business consistent with past practice and of
substantially the same character, type and magnitude as incurred in the past,
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be reasonably expected to have a Material Adverse Effect on the Company.
All agreements, contracts and other documents required to be filed as exhibits
to any of the Company SEC Documents have been so filed. No Subsidiary of the
Company is required to file any form, report or other document with the SEC.

           (f)  Information Supplied. None of the information included or
incorporated by reference in the Proxy Statement or the Schedule 13E-3 (other
than information concerning Wilkerson, Phoenix or Merger Sub provided in writing
by Phoenix or Merger Sub or their counsel specifically for inclusion or
incorporation by reference therein) will, at the date of mailing to stockholders
of the Company and at the time of the meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement and Schedule 13E-3 (except
for information concerning Wilkerson, Phoenix or Merger Sub provided in writing
by Wilkerson, Phoenix or Merger Sub or their counsel specifically for inclusion
or incorporation by reference therein) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.

           (g)  Absence of Certain Changes or Events. Except as contemplated by
this Agreement or as disclosed in the Company Disclosure Letter or in the
Company SEC Documents, since February 28, 2003, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course and
consistent with prior practice and there has not been any event, occurrence,
fact, condition, change, development or effect that has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.

           (h)  Compliance with Applicable Laws. The Company and its
Subsidiaries have been operating at all times in compliance with all applicable
laws and regulations, and are not in default or violation of any notes, bonds,
mortgages, indentures, contracts, agreements, leases, licenses, permits,
franchises, or other instruments or obligations to which the Company or any of
its Subsidiaries is a party or by which any of their property or assets is
bound, except where any such noncompliance, conflicts, defaults or violations
would not have a Material Adverse Effect on the Company. As of the date hereof,
no investigation by any Governmental Entity with respect to the Company or any
of its

                                       10



Subsidiaries is pending or, to the Company's best knowledge, threatened.

           (i)  Litigation. There are no material claims, actions, suits or
legal or administrative arbitrations or other proceedings or investigations
("Litigation") pending against the Company or any of its Subsidiaries, or, to
the Company's knowledge, threatened against or affecting the Company or any of
its Subsidiaries, or to which the Company or any of its Subsidiaries is a party,
before or by any Federal, foreign, state, local or other governmental or
non-governmental department, commission, board, bureau, agency, court or other
instrumentality, or by any private person or entity. There are no existing or,
to the best knowledge of the Company, threatened material orders, judgments or
decrees of any court or other Governmental Entity which specifically apply to
the Company, any of its Subsidiaries or any of their respective properties or
assets.

           (j)  Environmental. Except for any matters which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company, (i) the Company and each of its Subsidiaries is and at
all times has been in compliance with all applicable laws relating to
Environmental Matters; (ii) the Company and each of its Subsidiaries has
obtained, and is in compliance with, all permits, licenses or approvals required
by applicable laws for the use, storage, treatment, transportation, release,
emission and disposal of raw materials, by-products, wastes and other
substances, including, without limitation, hazardous substances and wastes, used
or produced by or otherwise relating to the operations of any of them; and (iii)
there are no past or present events, conditions, activities or practices that
would prevent compliance or continued compliance with any law or give rise to
any Environmental Liability. There are no claims either by any Governmental
Entity or any third party pending, or to the Company's knowledge, threatened,
against the Company or any of its Subsidiaries arising from any Environmental
Matter.

           (k)  Taxes. Each Tax Entity has timely filed all Tax Returns required
to be filed by any of them (subject to permitted extensions). All such Tax
Returns were true, correct and complete when filed, except for such instances
which individually or in the aggregate could not have a Material Adverse Effect
on the Company. All Taxes of each Tax Entity which are (i) shown as due on such
Tax Returns, (ii) otherwise due and payable or (iii) claimed or asserted by any
taxing authority to be due, have been paid, except for those Taxes being
contested in good faith and for which adequate reserves have been established in
the financial statements included in the Company SEC Documents in accordance
with GAAP. The Company does not know of any proposed or threatened Tax claims or
assessments which, if upheld, could individually or in the aggregate have a
Material Adverse Effect on the Company. Each Tax Entity has withheld and paid
over to the relevant taxing authority all Taxes required to have been withheld
and paid in connection with payments to employees, independent contractors,
creditors, shareholders or other third parties, except for such Taxes which
individually or in the aggregate could not have a Material Adverse Effect on the
Company. No material deficiencies for any Taxes have been proposed, asserted or
assessed against any Tax Entity that are not adequately reserved for, no audit
of any Tax Return of any Tax Entity is being conducted by a tax authority, and
no extension of the statute of limitations on the assessment of any taxes has
been granted to any Tax Entity and is currently in effect. For purposes of this
Agreement, (a) "Tax" (and, with correlative meaning, "Taxes") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding,

                                       11



alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty,imposed by any
Governmental Entity; (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax; and (c) "Tax Entity"
means the Company, each of the Company's Subsidiaries, and each consolidated,
combined, unitary or similar group of which the Company or any of its
Subsidiaries is now, or within the preceding eight (8) years has been, a member.

           (l)  Employee Benefit Plans. All employee benefit plans, compensation
arrangements and other benefit arrangements covering employees of the Company or
any of its subsidiaries (the "Company Benefit Plans") and all employee
agreements providing compensation, severance or other benefits to any employee
or former employee of the Company or any of its Subsidiaries which are not
disclosed in the Company SEC Documents and which exceed $50,000 per annum are
set forth in the Company Disclosure Letter. True and complete copies of the
Company Benefit Plans have been made available to Phoenix To the extent
applicable, the terms of the Company Benefit Plans comply in all material
respects with the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Code, and any Company Benefit Plan intended
to be qualified under Section 401(a) of the Code has received a determination
letter and, to the knowledge of the Company, continues to satisfy the
requirements for such qualification. Neither the Company nor any of its
Subsidiaries nor any ERISA Affiliate of the Company maintains, contributes to or
is obligated to contribute to or has maintained or contributed or been obligated
to contribute to in the past six (6) years to any benefit plan which is covered
by Title IV of ERISA or Section 412 of the Code or a "multi-employer plan"
within the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of the Code.
No Company Benefit Plan nor the Company nor any Subsidiary has incurred any
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA
or, to the knowledge of the Company, engaged in any transaction that would
reasonably be expected to result in any such liability or penalty. Each Company
Benefit Plan has been maintained and administered in compliance with its terms
and with ERISA and the Code to the extent applicable thereto, except for such
non-compliance which individually or in the aggregate would not have a Material
Adverse Effect on the Company. There is no pending or, to the knowledge of the
Company, anticipated or threatened, Litigation against or otherwise involving
any of the Company Benefit Plans and no Litigation (excluding claims for
benefits incurred in the ordinary course of Company Benefit Plan activities) has
been brought against or with respect to any such Company Benefit Plan. All
contributions required to be made as of the date hereof to the company Benefit
Plans have been made or provided for. Except as described in the Company SEC
Documents or as required by law, neither the Company nor any of its Subsidiaries
maintains or contributes to any plan or arrangement which provides or has any
liability to provide life insurance or medical or other employee welfare
benefits to any employee or former employee upon his retirement or termination
of employment, and neither the Company nor any of its Subsidiaries has ever
represented, promised or contracted (whether in oral or written form) to any
employee or former employee that such benefits would be provided. No Company
Benefit Plan is under investigation or audit by either the United States
Department of Labor or the Internal Revenue Service. Except as provided of in
this Agreement, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon

                                       12



the occurrence of any additional or subsequent events) constitute an event under
any benefit plan, policy, arrangement or agreement or any trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee. No payment
or benefit which will or may be made by the Company or any of its Subsidiaries
with respect to any employee of the Company or any of its Subsidiaries will
constitute an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.

           (m)  Section 203 of the DGCL and the Certificate of Incorporation.
The Board and the Independent Committee has approved the Merger and this
Agreement, and such approval is sufficient to comply with or render inapplicable
to the Merger and this Agreement, and the transactions contemplated by this
Agreement, the provisions of Section 203 of the DGCL. No other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or the transactions contemplated by this Agreement. No
provision of the certificate of incorporation, bylaws and/or other governing
instruments of the Company or any of its Subsidiaries would restrict or impair
the ability of Phoenix to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of the Company and any of its Subsidiaries
that may be acquired or controlled by Phoenix.

           (n)  Opinion of Financial Advisor. The Independent Committee has
received the opinion of the Independent Advisor dated as of May 27, 2003, to the
effect that, as of such date, the consideration to be received by the holders of
the Shares pursuant to this Agreement is fair to holders of the Shares from a
financial point of view, a signed copy of which opinion has been delivered to
Phoenix.

           (o)  Disclosure. No representation or warranty by the Company in this
Agreement, and no statement contained in any document, certificate, or other
writing furnished or to be furnished by the Company to Phoenix pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
taken as a whole, contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. To the best knowledge of the Company and its Affiliates
(but without having undertaken any inquiry specifically for the purpose of this
statement), there is no reason to believe that any of the representations or
warranties of Phoenix set forth in this Agreement are not true and correct in
all respects (ignoring for purposes of this statement any materiality or
Material Adverse Effect qualifications contained within individual
representations and warranties).

     3.2   Representations and Warranties of Wilkerson, Phoenix and Merger
Sub. Wilkerson, Phoenix and Merger Sub jointly and severally represent and
warrant to the Company as follows:

           (a)  Organization, Standing and Power. Each of Phoenix and Merger Sub
is a corporation, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, has all requisite power and
authority and all necessary governmental approvals

                                       13



to own, lease and operate its properties and to carry on its business as it is
now being conducted, and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Phoenix
or Merger Sub.

           (b)  Authority. (i) Phoenix and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Phoenix or Merger
Sub, as the case may be. This Agreement has been duly executed and delivered by
Wilkerson, Phoenix and Merger Sub and constitutes a valid and binding obligation
of Wilkerson, Phoenix or Merger Sub, as the case may be, enforceable in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).

                (ii)  Subject to compliance with the applicable requirements of
the Exchange Act and the filing of the Certificate of Merger, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not result in any Violation pursuant to (x) any provision of the
certificate of incorporation or bylaws of Phoenix, any provision of the
certificate of incorporation or bylaws of Merger Sub, or the governing
instruments of any other Subsidiary of Phoenix or (y) except as disclosed in the
letter dated the date hereof and delivered by Phoenix to the Company
simultaneously with the execution and delivery of this Agreement (the "Phoenix
Disclosure Letter") and subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
paragraph (iii) below or in the Phoenix Disclosure Letter, any loan or credit
agreement, note, mortgage, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Wilkerson,
Phoenix, Merger Sub or any other Subsidiary of Phoenix or their respective
properties or assets except Violations under clause (y) above which do not or
would not reasonably be expected to have a Material Adverse Effect on Phoenix.

                (iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Wilkerson, Phoenix, Merger Sub or any other Subsidiary of
Phoenix in connection with the execution and delivery of this Agreement by
Wilkerson, Phoenix and Merger Sub, the consummation by Wilkerson, Phoenix or
Merger Sub, as the case may be, of the transactions contemplated hereby, and
compliance by Wilkerson, Phoenix and Merger Sub with any of the provisions
hereof, the failure to obtain which would reasonably be expected to have a
Material Adverse Effect on Phoenix except for (A) such filings under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, including the filing of the Schedule 13E-3,
and (B) the filing of the Certificate of Merger as contemplated by Section 1.3
and appropriate documents with the relevant authorities of states in which
Phoenix and Merger Sub are qualified to do business.

                                       14



           (c)  Information Supplied. None of the information concerning
Wilkerson, Phoenix or Merger Sub provided by or on behalf of Phoenix or Merger
Sub specifically for inclusion or incorporation by reference in the Proxy
Statement or the Schedule 13E-3 will, at the date of mailing to stockholders and
at the times of the meetings of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

           (d)  Interim Operations of Merger Sub. Merger Sub was incorporated on
November 26, 2001, has engaged in no other business activities and has conducted
its operations only as contemplated hereby.

           (e)  Proceeds. Phoenix has sufficient funds available to pay the
Merger Consideration.

           (f)  Disclosure. No representation or warranty by Phoenix in this
Agreement, and no statement contained in any document, certificate, or other
writing furnished or to be furnished by Phoenix to the Company pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
taken as a whole, contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. To the best knowledge of Phoenix and its Affiliates (but
without having undertaken any inquiry specifically for the purpose of this
statement), there is no reason to believe that any of the representations or
warranties of the Company set forth in this Agreement are not true and correct
in all respects (ignoring for purposes of this statement any materiality or
Material Adverse Effect qualifications contained within individual
representations and warranties).

                                   ARTICLE IV

                    COVENANTS RELATING TO CONDUCT OF BUSINESS

     4.1   Covenants of Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or to the extent that Phoenix shall otherwise consent in
writing):

           (a)  Ordinary Course. The Company and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course and use
commercially reasonable efforts to preserve intact their present business
organizations, maintain their rights and preserve their relationships with
employees, officers, customers, suppliers and others having business dealings
with them. The Company and its Subsidiaries shall maintain in force all
insurance policies and Consents (as defined in Section 6.1) with respect to the
Company and its Subsidiaries and shall maintain all assets and properties of the
Company and its Subsidiaries in customary repair, order and condition,
reasonable wear and tear excepted. The Company shall not, nor shall it permit
any of its Subsidiaries

                                       15



to, (i) enter into any new material line of business or (ii) incur or commit to
any significant capital expenditures or any obligations or liabilities other
than capital expenditures and obligations or liabilities incurred or committed
to as disclosed in the Company Disclosure Letter. The Company and its
Subsidiaries will comply with all applicable laws and regulations wherever its
business is conducted, including without limitation the timely filing of all
reports, forms or other documents with the SEC required pursuant to the
Securities Act or the Exchange Act, except where such noncompliance would not be
reasonably expected to have a Material Adverse Effect on the Company.

           (b)  Dividends; Changes in Stock. The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall the Company propose to, (i) declare
or pay any dividends on or make other distributions in respect of any of its
capital stock, other than cash dividends payable by a Subsidiary of the Company
to the Company or one of its Subsidiaries, (ii) split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock.

           (c)  Issuance of Securities. The Company shall not, nor shall it
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any Voting Debt or any securities convertible into or exercisable for
(including any stock appreciation rights, phantom stock plans or stock
equivalents), or any rights, warrants or options to acquire, any such shares or
Voting Debt, or enter into any agreement with respect to any of the foregoing,
other than issuances of Company Common Stock pursuant to exercises of Company
Stock Options or Company Common Stock awards to directors listed in the Company
Disclosure Letter.

           (d)  Governing Documents. The Company shall not amend or propose to
amend, nor shall it permit any of its Subsidiaries to amend, their respective
certificates of incorporation, bylaws or other governing instruments.

           (e)  No Acquisitions. The Company shall not, nor shall it permit any
of its Subsidiaries to, (i) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, limited liability company, partnership, association or other
business organization or division thereof or (ii) other than in the ordinary
course of business, otherwise acquire or agree to acquire any assets which, in
the case of this clause (ii), are material, individually or in the aggregate, to
the Company.

           (f)  No Dispositions. The Company shall not, nor shall it permit any
of its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree
to sell, lease, encumber or otherwise dispose of any of its assets (including
capital stock of Subsidiaries), except as disclosed in the Company Disclosure
Letter and for dispositions in the ordinary course of business and consistent
with past practice and of substantially the same character, type and magnitude
as dispositions in the past.

                                       16



           (g)  Indebtedness. The Company shall not, nor shall it permit any of
its Subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants or rights
to acquire any long-term debt securities of the Company or any of its
Subsidiaries or guarantee any long-term debt securities of others or enter into
or amend any contract, agreement, commitment or arrangement with respect to any
of the foregoing, other than (x) in replacement for existing or maturing debt,
(y) indebtedness of any Subsidiary of the Company to the Company or to another
Subsidiary of the Company or (z) other borrowing under existing lines of credit
in the ordinary course of business consistent with prior practice and of
substantially the same character, type and magnitude as borrowings made in the
past or (ii) make any loans, advances or capital contributions to any person.

           (h)  Other Actions. The Company shall not, nor shall it permit any of
its Subsidiaries to, take any action that would, or might reasonably be expected
to, result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VI not being satisfied, or which
would adversely affect the ability of any of them to obtain any of the Requisite
Regulatory Approvals without imposition of a condition or restriction of the
type referred to in Section 6.2(e) and the Company shall, in the event of, or
promptly after the occurrence of, or promptly after obtaining knowledge of the
occurrence of or the impending or threatened occurrence of, any fact or event
which would cause or constitute a breach of any of the representations and
warranties set forth in this Agreement, the non-satisfaction of any of the
conditions to the Merger set forth in Article VI or the failure to obtain the
Requisite Regulatory Approvals, in each case at any time after the date hereof
and through the Closing Date, give detailed notice thereof to Phoenix, and the
Company shall use its best efforts to prevent or promptly to remedy such breach,
non-satisfaction or failure, as the case may be.

           (i)  Advice of Changes; Government Filings. The Company shall confer
on a regular basis with Phoenix, report on operational matters and promptly
advise Phoenix, orally and in writing, of any material change or event or any
change or event which would cause or constitute a material breach of any of the
representations, warranties or covenants of the Company contained herein. The
Company shall file all reports required to be filed by the Company with the SEC
between the date of this Agreement and the Effective Time and shall deliver to
Phoenix copies of all such reports promptly after the same are filed. The
Company shall cooperate with Phoenix in determining whether any filings are
required to be made with, or consents required to be obtained from, or fees or
expenses required to be paid to, any third party or Governmental Entity prior to
the Effective Time in connection with this Agreement or the transactions
contemplated hereby, and shall cooperate in making any such filings promptly and
in seeking to obtain timely any such consents and, subject to Phoenix's
approval, paying any such fees or expenses. The Company shall promptly provide
Phoenix with copies of all other filings made by the Company with any
Governmental Entity in connection with this Agreement, the Merger or the other
transactions contemplated hereby.

                                       17



           (j)  Accounting Methods. The Company shall not change its methods of
accounting in effect at March 1, 2003, except as required by changes in GAAP as
concurred in by the Company's independent auditors.

           (k)  Benefit Plans. During the period from the date of this Agreement
and continuing until the Effective Time, the Company agrees as to itself and its
Subsidiaries that it will not, without the prior written consent of Phoenix
except as set forth in the Company Disclosure Letter or contemplated by this
Agreement, (i) enter into, adopt, amend (except as may be required by law) or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between the Company or any of its Subsidiaries, on the one hand, and one
or more of its or their directors or officers, on the other hand, (ii) except
for normal increases in the ordinary course of business and consistent with past
practice and of substantially the same character, type and magnitude as
increases in the past that in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company or any of its
Subsidiaries, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares) or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing, or
(iii) enter into or renew any contract, agreement, commitment or arrangement
providing for the payment to any director, officer or employee of the Company or
any of its Subsidiaries of compensation or benefits contingent, or the terms of
which are materially altered, upon the occurrence of any of the transactions
contemplated by this Agreement.

           (l)  Tax Elections. Except in the ordinary course of business and
consistent with past practice and of substantially the same character, type and
magnitude as elections made in the past, the Company shall not make any material
tax election or settle or compromise any material federal, state, local or
foreign income tax claim or liability or amend any previously filed tax return
in any respect.

     4.2   Covenants of Wilkerson, Phoenix and Merger Sub. Except as expressly
contemplated by this Agreement, after the date hereof and prior to the Effective
Time, without the prior written consent of the Company:

           (a)  Other Actions. Neither Wilkerson, Phoenix nor Merger Sub shall,
nor shall Phoenix or Merger Sub permit any of their respective Subsidiaries to,
take any action that would, or might reasonably be expected to, result in any of
their or the Company's representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VI not being satisfied, or which
would adversely affect the ability of any of them or of the Company to obtain
any of the Requisite Regulatory Approvals without imposition of a condition or
restriction of the type referred to in Section 6.2(e). Without limiting the
generality of the foregoing, Phoenix and Wilkerson agree to vote all shares of
Company Common Stock as required by Section 5.9, below.

                                       18



           (b)  Government Filings. Phoenix shall cooperate with the Company in
determining whether any filings are required to be made with, or consents
required to be obtained from, any third party or Governmental Entity prior to
the Effective Time in connection with this Agreement or the transactions
contemplated hereby, and shall cooperate in making any such filings promptly and
in seeking to obtain timely any such consents. Phoenix shall promptly provide
the Company with copies of all other filings made by the Phoenix with any state
or Federal Governmental Entity in connection with this Agreement, the Merger or
the other transactions contemplated hereby.

     4.3   Competing Transactions. Nothing contained in this Agreement shall
prohibit the Company from, prior to the date of the Stockholder's Meeting (i)
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited written, bona fide proposal to the Company
with respect to a Competing Transaction which could reasonably be expected to
result in a Superior Proposal, if, (A) the failure to take such action would be
inconsistent with the Board's and the Independent Committee's fiduciary duties
to the Company's stockholders under applicable law, and (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person, the Company (x) provides reasonable notice to Phoenix to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person and (y) receives from such person a fully executed
confidentiality agreement, (ii) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer, or
(iii) failing to make or withdrawing or modifying its recommendation referred to
in Section 5.2, or recommending an unsolicited, bona fide proposal with respect
to a Competing Transaction which could reasonably be expected to result in a
Superior Proposal, following the receipt of such a proposal, if the failure to
take such action would be inconsistent with the Board's and the Independent
Committee's fiduciary duties to the Company's stockholders under applicable law.

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

     5.1   Preparation of the Proxy Statement and Schedule 13E-3. (a) The
Company shall as promptly as practicable prepare and file a proxy or information
statement relating to the Stockholders' Meeting (together with all amendments,
supplements and exhibits thereto, the "Proxy Statement") with the SEC and will
use its best efforts to respond to the comments of the SEC and to cause the
Proxy Statement to be mailed to the Company's stockholders at the earliest
practical time. The Company will notify Phoenix promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Phoenix with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders'"Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Phoenix reasonably objects. The Company hereby
consents to the inclusion in the

                                       19



Proxy Statement of the recommendation of the Board described in Section 5.2,
subject to any modification, amendment or withdrawal thereof, and represents
that the Independent Advisor has, subject to the terms of its engagement letter
with the Company, consented to the inclusion of references to its opinion in the
Proxy Statement.

           (b)  The Company, Phoenix, and Merger Sub shall together prepare and
file a Transaction Statement on Schedule 13E-3 (together with all amendments and
exhibits thereto, the "Schedule 13E-3") under the Exchange Act. Each of
Wilkerson, Phoenix and Merger Sub shall furnish all information concerning it,
its affiliates and the holders of its capital stock required to be included in
the Schedule 13E-3 and, after consultation with each other, shall respond
promptly to any comments made by the SEC with respect to the Schedule 13E-3.

     5.2   Stockholders' Meeting. The Company shall call the Stockholders'
Meeting to be held as promptly as practicable for the purpose of voting upon the
approval of this Agreement, the Merger and the other transactions contemplated
hereby. The Company will, through its Board and the Independent Committee,
recommend to its stockholders approval of such matters, unless the taking of
such action would be inconsistent with the Board's and the Independent
Committee's fiduciary duties to stockholders under applicable laws. The Company
shall, at the direction of Phoenix, solicit from Company stockholders entitled
to vote at the Stockholders' Meeting proxies in favor of such approval and shall
take all other action necessary or, in the judgment of Phoenix, helpful to
secure the vote or consent of such holders required by the DGCL or this
Agreement to effect the Merger. The Company shall coordinate and cooperate with
Phoenix with respect to the timing of such meeting.

     5.3   Legal Conditions to Merger. Each of the Company, Wilkerson and
Phoenix shall, and shall cause its Subsidiaries to, use all reasonable best
efforts (i) to take, or cause to be taken, all actions necessary to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and to consummate the transactions
contemplated by this Agreement, subject to the approval of stockholders of the
Company described in Section 6.1 (a), and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and of any other public or private
third party which is required to be obtained or made by such party or any of its
Subsidiaries in connection with the Merger and the transactions contemplated by
this Agreement; provided, however, that a party shall not be obligated to take
any action pursuant to the foregoing if the taking of such action or such
compliance or the obtaining of such consent, authorization, order, approval or
exemption is likely, in such party's reasonable opinion, (x) to be materially
burdensome to such party and its Subsidiaries taken as a whole or to impact in a
materially adverse manner the economic or business benefits of the transactions
contemplated by this Agreement so as to render uneconomic the consummation of
the Merger or (y) in the case of the Company, to result in the imposition of a
condition or restriction on the Company, the Surviving Corporation or any of
their respective Subsidiaries of the type referred to in Section 6.2(e). Each of
the Company and Phoenix will promptly cooperate with and furnish information to
the other in connection with any such burden suffered by, or requirement imposed
upon, any of them or any of their Subsidiaries in connection with the foregoing.

                                       20



     5.4   Brokers or Finders. Except as disclosed to the other party in
writing prior to the date hereof, each of Phoenix and the Company represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except the Independent Advisor, whose fees and expenses will be paid by the
Company in accordance with the Company's agreement with such firm (a copy of
which has been delivered by the Company to Phoenix prior to the date of this
Agreement), and each party agrees to indemnify the other party and hold the
other party harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such first party or its affiliates.

     5.5   Indemnification; Directors' and Officers' Insurance. (a) As of the
Effective Time, the certificate of incorporation of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in the certification of incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers, employees or agents of the Company. From and after the Effective Time,
for a period of six years, Phoenix and the Surviving Corporation, jointly and
severally, shall indemnify the directors and officers of the Company on terms no
less favorable than the provisions with respect to indemnification that are set
forth in the certificate of incorporation of the Company as of the Effective
Time. Phoenix and the Company agree that the directors, officers and employees
of the Company covered thereby are intended to be third party beneficiaries
under this Section 5.5 and shall have the right to enforce the obligations of
the Surviving Corporation and the Phoenix.

           (b)  The Surviving Corporation shall maintain in effect from the
Effective Time until their expiration the current policies of the directors' and
officers' liability insurance maintained by the Company.

     5.6   Shareholder Lists. The Company shall promptly upon request of
Phoenix, or shall cause its transfer agent to promptly, furnish Phoenix with
mailing labels containing the names and addresses of all record holders of
Company Common Stock and with security position listings of Company Common Stock
held in stock depositories, each as of the most recent practicable date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of Company Common Stock. The Company shall furnish Phoenix with such additional
information, including, without limitation, updated listings and computer files
of stockholders, mailing labels and security position listings, and such other
assistance as Phoenix or its agents may reasonably request.

     5.7   Shareholder Litigation. The Company shall give Phoenix the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that no such settlement shall
be agreed to without the Company's and Phoenix's consent, which shall not be

                                       21



unreasonably withheld.

     5.8   Communication to Employees. The Company and Phoenix will cooperate
with each other with respect to, and endeavor in good faith to agree in advance
upon the method and content of, all written or oral communications or disclosure
to employees of the Company or any of its Subsidiaries with respect to the
Merger and any other transactions contemplated by this Agreement. Upon
reasonable notice, the Company shall provide Phoenix access to the Company's and
its Subsidiaries' employees and facilities.

     5.9   Vote of the Acquisition Group. The Acquisition Group shall vote all
of its shares of Company Common Stock at the Stockholders' Meeting in accordance
with the vote of the majority of the outstanding shares of Company Common Stock,
not owned by any member of the Acquisition Group, entitled to vote at the
Stockholders' Meeting.

     5.10  Agreement with Respect to Certain Option Shares. Prior to the
Closing Date: (a) the members of the Acquisition Group shall not exercise any
outstanding options to acquire additional shares of Company Common Stock, or
otherwise acquire any additional shares of Company Common Stock; (b) the Company
will not exercise any option to acquire any shares of Company Common Stock from
any member of the Acquisition Group; and (c) if there is presented a Competing
Proposal or a proposal that the Special Committee determines to be a Superior
Proposal, Phoenix shall grant to the Independent Committee a proxy in the form
attached as Exhibit C to vote 454,036 of the shares of Company Common Stock
currently held by Phoenix (which are subject to an option held by the Company to
purchase such shares at an exercise price of $0.90 per share pursuant to that
certain Agreement dated August 9, 2001, as extended by that certain letter
agreement dated April 25, 2003).

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     6.1   Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect theMerger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:

           (a)  Stockholder Approval. The Company Shareholder Approval shall
have been obtained and the vote in favor of approval of this Agreement, the
Merger and the other transactions contemplated by this Agreement, of a majority
of the outstanding shares of Company Common Stock not owned by any member of the
Acquisition Group and entitled to vote thereon shall have been obtained.

           (b)  Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations or early
terminations of waiting periods imposed by, any Governmental Entity (all the
foregoing, "Consents") which are necessary for the consummation of the Merger
shall have been filed, occurred or been obtained (all such permits, approvals,
filings and

                                       22



consents and the lapse of all such waiting periods being referred to
as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect.

           (c)  No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any Governmental Entity seeking any of the foregoing be pending.
There shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal.

     6.2   Conditions to Obligations of Wilkerson, Phoenix and Merger Sub. The
obligations of Wilkerson, Phoenix and Merger Sub to effect the Merger are
subject to the satisfaction of the following conditions unless waived by
Wilkerson, Phoenix and Merger Sub:

           (a)  Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all respects as of the Effective Time as though made on or as of such time
(ignoring for purposes of this determination any materiality or Material Adverse
Effect qualifiers contained within individual representations and warranties),
except for (i) those representations and warranties that address matters only as
of a particular date or only with respect to a specific period of time which
need only be true and correct as of such date or with respect to such period,
(ii) such failures to be true and correct as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company and (iii) such failures to be true and correct that Wilkerson had actual
knowledge of as of the date of this Agreement.

           (b)  Performance of Obligations of Company. The Company shall have
performed and complied in all material respects with all obligations required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date, and Phoenix shall have received a certificate signed on behalf of
the Company by the President and Chief Executive Officer of the Company and by
the Chief Financial Officer of the Company to such effect.

           (c)  Appraisal Rights. Dissenting Shares shall constitute less than
25% of all shares of Company Common Stock outstanding immediately prior to the
Effective Time.

           (d)  Consents Under Agreements. The Company shall have obtained the
consent or approval of, except for those consents or approvals for which failure
to obtain such consents or approvals could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, each Person (other than the Requisite Regulatory Approvals) whose
consent or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company or any Subsidiary of the Company under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument.

                                       23



           (e)  Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any requirement upon
Phoenix, the Surviving Corporation or their respective Subsidiaries which would
so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement as to render uneconomic the
consummation of the Merger, or which would require Phoenix or any of its
Subsidiaries to dispose of any asset which is material to Phoenix prior to the
Effective Time.

           (f)  Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect with respect to the Company
and no facts or circumstances arising after the date of this Agreement shall
have occurred which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company.

           (g)  Proceedings. All proceedings to be taken on the part of the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Phoenix, and Phoenix shall have received copies of all such
documents and other evidences as Phoenix may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.

           (h)  No Action. No action, suit or proceeding shall have been
instituted, or shall be pending or threatened (i) seeking to restrain in any
material respect or prohibit the consummation of the Merger, (ii) seeking to
obtain from the Company, Phoenix or Merger Sub any damages which would
reasonably be expected to result in a Material Adverse Effect or (iii) seeking
to impose the restrictions, prohibitions or limitations referred to in
subsection (e) above.

     6.3   Conditions to Obligations of Company. The obligation of the Company
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by the Company:

           (a)  Representations and Warranties. The representations and
warranties of Wilkerson, Phoenix and Merger Sub set forth in this Agreement
shall be true and correct in all respects as of the Effective Time as though
made on or as of such time (ignoring for purposes of this determination any
materiality or Material Adverse Effect qualifiers contained within individual
representations and warranties), except for (i) those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and correct as of
such date or with respect to such period and (ii) such failures to be true and
correct as would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect on Phoenix.

           (b)  Performance of Obligations of Wilkerson, Phoenix and Merger Sub.
Wilkerson, Phoenix and Merger Sub shall have performed and complied in all
material respects with all obligations required to be performed by them under
this Agreement at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Phoenix by the President and Chief
Executive Officer of Phoenix or a Corporate Vice President of Phoenix, and by
the Senior

                                       24



Vice President and Chief Financial Officer of Phoenix or the Corporate Vice
President and Treasurer of Phoenix to such effect.

                                   ARTICLE VII

                            TERMINATION AND AMENDMENT

     7.1   Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:

           (a)  by mutual consent of Phoenix and the Company in a written
instrument, whether or not the Merger has been approved by the stockholders of
the Company;

           (b)  by Phoenix on behalf of itself, Wilkerson and Merger Sub, upon a
material breach of any representation, warranty, covenant or agreement on the
part of the Company set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue such that the conditions set
forth in Section 6.2, would be incapable of being satisfied by December 31, 2003
(or such later date as Phoenix may agree to in writing), in each case only if
Wilkerson did not have actual knowledge of, and did not cause, such breach or
untruth;

           (c)  by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Phoenix or Merger Sub set forth
in this Agreement, or if any representation or warranty of Phoenix or Merger Sub
shall have become untrue such that the conditions set forth in Section 6.3,
would be incapable of being satisfied by December 31, 2003;

           (d)  by either Phoenix or the Company, if any permanent injunction or
action by any Governmental Entity preventing the consummation of the Merger
shall have become final and non-appealable;

           (e)  by either Phoenix or the Company if the Merger shall not have
been consummated on or prior to December 31, 2003 (or such later date as may be
agreed to in writing by the Company and Phoenix) (other than due to the
circumstances described in Section 7.1(f) or the failure of the party seeking to
terminate this Agreement to perform its obligations under this Agreement
required to be performed at or prior to the Effective Time);

           (f)  by either Phoenix or the Company, if any approval of the
stockholders of the Company required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote at a
Stockholders' Meeting or at any adjournment thereof or by Phoenix if the
condition set forth in Section 6.2(c) is not satisfied; provided that if the
Acquisition Group has breached Section 5.9 hereof, Phoenix shall not have the
right to terminate this Agreement under this Section 7.1(f);

                                       25



           (g)  by Phoenix, if the Independent Committee or the Board shall have
(i) withdrawn, modified or changed its approval or recommendation of this
Agreement, the Merger or any of the other transactions contemplated herein in
any manner which is adverse to Phoenix or Merger Sub, or shall have resolved to
do the foregoing; or (ii) approved or have recommended to the stockholders of
the Company a Competing Transaction or a Superior Proposal, or entered into an
agreement with respect to a Competing Transaction or Superior Proposal, or shall
have resolved to do the foregoing;

           (h)  by Phoenix, if (i) a tender offer or exchange offer or a
proposal by a third party to acquire the Company or the Shares pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
offer or similar transaction shall have been commenced or publicly proposed
which contains a proposal as to price (without regard to the specificity of such
price proposal) and (ii) the Company shall not have made a recommendation to the
stockholders of the Company to reject such proposal within 10 business days of
its commencement or the date such proposal first becomes publicly disclosed, if
sooner;

           (i)  by the Company, if the Independent Committee and the Board
authorize the Company to enter into a written agreement with respect to a
Competing Transaction that the Independent Committee and the Board have
determined is a Superior Proposal; provided however, that, the Company shall not
terminate this Agreement pursuant to this Section 7.1(i) and enter into an
agreement for such a Competing Transaction until the expiration of five business
days following Phoenix's receipt of a written notice advising Phoenix that the
Company has received a Superior Proposal specifying the material terms and
conditions of such Superior Proposal (and including a copy thereof with all
accompanying written documentation) and identifying the Person making such
Superior Proposal. After providing such notice, the Company shall provide a
reasonable opportunity to Phoenix during such five business day period to make
such adjustments in the terms and conditions of this Agreement as would enable
Phoenix to proceed with the Merger on such adjusted terms.

     7.2   Effect of Termination. In the event of termination of this
Agreement and abandonment of the Merger by either the Company or Phoenix as
provided in Section 7.1, this Agreement shall forthwith terminate and there
shall be no liability or obligation on the part of Phoenix, Merger Sub,
Wilkerson or the Company or their respective officers or directors except with
respect to Sections 5.5 and 7.3; provided, however, that, subject to the
provisions of Section 8.8, nothing herein shall relieve any party of liability
for any breach hereof, except that in the event of a termination of this
Agreement, no party shall have any right to the recovery of expenses except as
provided in Section 7.3.

     7.3   Fees, Expenses and Other Payments. (a) Except as otherwise provided
in this Section 7.3, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, fees and disbursements of
counsel, financial advisors and accountants) shall be borne solely and entirely
by the party which has incurred such costs and expenses (with respect to such
party, its "Expenses").

                                       26



           (b)  The Company agrees that if this Agreement shall be terminated
pursuant to:

                (i)   Section 7.1(b) and such termination is the result of
material breach of any covenant, agreement, representation or warranty contained
herein, or Section 7.1(e) if the Agreement shall have been terminated by the
Company and in each such event at any time during the period commencing on the
date hereof and ending twelve months after the date of termination of this
Agreement, a Competing Transaction shall have been consummated or the Company
shall have entered into a definitive agreement providing for a Competing
Transaction;

                (ii)  Section 7.1(f) because the Agreement and the Merger shall
fail to receive the requisite vote for approval and adoption by the stockholders
of the Company at a meeting of the stockholders of the Company called to vote
thereon, and at the time of such meeting there shall exist a proposal with
respect to a Competing Transaction which either (x) the Board or the Independent
Committee has not publicly opposed or (y) is consummated, or a definitive
agreement with respect to which is entered into, at any time during the period
commencing on the date hereof and ending twelve months after the date of
termination of this Agreement; or

                (iii) Section 7.1(e), Section 7.1(g), Section 7.1(h) or
Section 7.1(i);

then in each such event the Company shall pay to Phoenix an amount equal to all
of Phoenix's reasonable Expenses incurred in connection with the transactions
contemplated hereby; provided, that in the event of a termination pursuant to
Section 7.1(e), such Expenses shall not exceed $125,000.00.

           (c)  The Company agrees that if this Agreement shall be terminated
pursuant to Section 7.1(d), then the Company shall pay to Phoenix an amount
equal to all of Phoenix's reasonable Expenses; provided that the Company shall
not be obligated to make any payment pursuant to this Section 7.3(c) if the
Company shall be obligated to make a payment to Phoenix pursuant to Section
7.3(b).

           (d)  Phoenix, Wilkerson and Merger Sub agree that if this Agreement
shall be terminated pursuant to Section 7.1(c), then they shall pay to the
Company an amount equal to its reasonable expenses.

           (e)  Any payment required to be made pursuant to this Section 7.3
shall be made as promptly as practicable but not later than five business days
after termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by Phoenix, except that any
payment to be made as the result of an event described in Section 7.3(b)(i) or
clause (y) of Section 7.3(b)(ii) shall be made as promptly as practicable but
not later than five business days after the date on which a Competing
Transaction shall have been consummated.

     7.4   Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors and the
Independent Committee, at any time before or after approval of the matters
presented in connection with the Merger by the stockholders

                                       27



of the Company or of Phoenix, but, after any such approval, no amendment shall
be made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.

     7.5   Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors and the Independent Committee, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

     8.1   Survival of Representations, Warranties and Agreements. The
representations and warranties made by the parties contained in this Agreement
and any other agreement delivered pursuant hereto or made in writing by or on
behalf of the parties shall not survive beyond the Effective Time.

     8.2   Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

           (a)  if to Wilkerson, Phoenix or Merger Sub, to:

                Phoenix Group of Florida, Inc.
                3000 Northeast 30th Place, Fifth Floor
                Fort Lauderdale, Florida 33306
                Attention: William A. Wilkerson
                Facsimile: 954-565-0742

                With a copy to:

                Adorno & Yoss, P.A.
                2601 South Bayshore Drive, Suite 1600
                Miami, Florida 33133
                Attention: Dennis J. Olle, Esq.
                Facsimile: 305-858-4777


                                       28



           (b)  if to the Company, to:

                BCT International, Inc.
                3000 Northeast 30th Place, Fifth Floor
                Fort Lauderdale, Florida  33306
                Attention: Jeffrey Hewson
                Facsimile: 954-565-0742

                With a copy to:

                Mitrani, Rynor, Adamsky & Macaulay, P.A.
                One Southeast Third Avenue
                Suite 2200
                Miami, Florida 33131
                Attention: Robert Macaulay
                Facsimile: 305-358-9617

     8.3   Certain Definitions. For purposes of this Agreement:

           (a)  an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;

           (b)  "Beneficially Own" or "Beneficial Ownership" with respect to any
securities, means having "beneficial ownership" of such securities in accordance
with the provisions of Rule 13d-3 under the Exchange Act. Without duplicative
counting of the same securities by the same holder, securities beneficially
owned by a person include securities beneficially owned by all other persons
with whom such person would constitute a group;

           (c)  "Competing Transaction" shall mean any of the following (other
than the transactions contemplated by this Agreement) involving the Company: (i)
any merger, consolidation, share exchange, exchange offer, business combination,
recapitalization, liquidation, dissolution or other similar transaction
involving the Company resulting in the Company's current shareholders owning
less than a majority of the capital stock of the surviving corporation in such
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets representing 20% or more of the total assets of the
Company and its Subsidiaries, in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 20% or more of the outstanding
Shares or the filing of a registration statement under the Securities Act in
connection therewith; (iv) any person or group acquiring Beneficial Ownership of
15% or more, or such person or group having increased its Beneficial Ownership
beyond 15%, of the outstanding Shares; or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing;

                                       29



           (d)  "Environmental Matters" shall mean any matter arising out of or
relating to pollution or protection of the environment, human safety or health,
or sanitation, including, without limitation, matters relating to food
preparation and handling, emissions, discharges, releases, exposures or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes including petroleum and its fractions, radiation, polychlorinated
byphenols, biohazards and all toxic agents of whatever type or nature into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes including petroleum and its fractions, radiation, biohazards
and all toxic agents of whatever type or nature. "Environmental Liability" means
any liability or obligation arising under any law or under any other theory of
law or equity (including, without limitation, any liability for personal injury,
property damage or remediation) arising from or relating to any Environmental
Matters.

           (e)  "ERISA Affiliate" shall mean any business or entity which is a
member of the same "controlled group of corporations," under "common control" or
an "affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, as required to be aggregated with the Company
under Section 414(o) of the Code, or is under "common control" with the Company,
within the meaning of Section 4001(a)(14) of ERISA, or any regulations
promulgated or proposed under any of the foregoing Sections.

           (f)  "Group" means two or more persons acting together for the
purpose of acquiring, holding, voting or disposing of any securities, which
persons would be required to file a Schedule 13D or Schedule 13G with the SEC as
a "person" within the meaning of Section 13(d)(3) of the Exchange Act if such
persons beneficially owned a sufficient amount of such securities to require
such a filing under the Exchange Act;

           (g)  "Material" with respect to any entity means an event, change or
effect which is material in relation to the condition (financial or otherwise),
properties, assets, liabilities, businesses or operations of such entity and its
Subsidiaries taken as a whole;

           (h)  "Material Adverse Effect" means, with respect to the Company or
Phoenix, any change, event or effect shall have occurred that, when taken
together with all other adverse changes, events or effects that have occurred
would or would reasonably be expected to (i) be materially adverse to the
business, assets, properties, results of operations or condition (financial or
otherwise) of such party and its Subsidiaries taken as a whole, or (ii) prevent
or materially delay the consummation, or increase the cost to Phoenix or Merger
Sub, of the Merger;

           (i)  "Person" means an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other legal entity;

           (j)  a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first

                                       30



person;

           (k)  "Superior Proposal" means any bona fide written proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all of the shares of Company Common Stock then outstanding or all or
substantially all of the assets of the Company and the assumption of the
liabilities and obligations of the Company to be followed by a pro rata
distribution of the sale proceeds to stockholders of the Company, that (i) is
not subject to any financing conditions or contingencies, (ii) provides holders
of Company Common Stock with per share consideration that the Independent
Committee determines in good faith, after receipt of advice of its financial
advisor, is more favorable from a financial point of view than the consideration
to be received by holders of Company Common Stock in the Merger, (iii) is
determined by the Independent Committee in its good faith judgment, after
receipt of advice of its financial advisor and outside legal counsel, to be
likely of being completed (taking into account all legal, financial, regulatory
and other aspects of the proposal, the Person making the proposal and the
expected timing to complete the proposal), (iv) does not, in the definitive
agreement, contain any "due diligence" conditions, and (v) has not been obtained
by or on behalf of the Company in violation of Section 4.3 hereof; and

           (l)  Any accounting term that is used in the context of describing or
referring to an accounting concept and that is not specifically defined herein
shall be construed in accordance with GAAP as applied in the preparation of the
financial statements of the Company included in the Company SEC Documents
(including, without limitation, the Year-End Financial Statements and the
Balance Sheet).

     8.4   Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
___________, 2003.

     8.5   Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

     8.6   Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof except for the letter agreement of April
25, 2003; and

                                       31



(b) except as provided in Sections 2.2, 2.3 and 5.5, is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
The parties hereby acknowledge that, except as hereinafter agreed to in writing,
no party shall have the right to acquire or shall be deemed to have acquired
shares of common stock of the other party pursuant to the Merger until
consummation thereof.

     8.7   Governing Law; Consent to Jurisdiction. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida
without regard to the principles of conflicts of laws thereof.

           (b)  Each of the parties hereto (i) consents to submit itself to the
exclusive personal jurisdiction of any Florida state court or any federal court
located in the State of Florida in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (ii)
agrees that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.

     8.8   Severability; No Remedy in Certain Circumstances. Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that any
term or provision hereof is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. Except as
otherwise contemplated by this Agreement, to the extent that a party hereto took
an action inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other competent
authority, such party shall incur no liability or obligation unless such party
did not in good faith seek to resist or object to the imposition or entering of
such order or judgment.

     8.9   Publicity. Except as otherwise required by any applicable law or
rules or regulations promulgated thereunder, so long as this Agreement is in
effect, neither the Company, Wilkerson nor Phoenix shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.

     8.10  Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.

                                       32



     8.11  Adjustment. All dollar amounts and share numbers set forth herein,
including without limitation the Merger Consideration, shall be subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Company Common Stock, between the
date of this Agreement and the Effective Time, to the extent appropriate.

     8.12  Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.

     8.13  Waiver. All waivers must be in writing. Except as provided in this
Agreement, no action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.

     8.14  Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.



                      [SIGNATURES BEGIN ON FOLLOWING PAGE]


                                       33




     IN WITNESS WHEREOF, Phoenix, Merger Sub, Wilkerson and the Company have
caused this Agreement, to be signed by their respective officers thereunto duly
authorized, all as of May 29, 2003.



                                PHOENIX GROUP OF FLORIDA, INC.



                                By: /s/ William A. Wilkerson
                                   ------------------------------------------
                                        William A. Wilkerson
                                        President



                                PHOENIX ACQUISITION CORP.



                                By: /s/ William A. Wilkerson
                                   ------------------------------------------
                                        William A. Wilkerson
                                        President



                                BCT INTERNATIONAL, INC.

                                By:    /s/ Jeffrey K. Hewson
                                      ---------------------------------------
                                Name:      Jeffrey K. Hewson
                                      ---------------------------------------
                                Title:     Director
                                      ---------------------------------------



                                    /s/ William A. Wilkerson
                                ---------------------------------------------
                                        William A. Wilkerson






                                       34

EX-99.1

                                                                    Exhibit 99.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BCT International, Inc. (the
"Company") on Form 10-Q of the period ended August 31, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the" Report"), I, William
A. Wilkerson, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:


     (1)  The Report fully complies with the requirements of Section 13(a) or 15
          (d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.



                                    /s/ William A. Wilkerson
                                    ----------------------------------
                                    William A. Wilkerson
                                    Chief Executive Officer
                                    May 29, 2003




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BCT International, Inc. (the
"Company") on Form 10-Q of the period ended August 31, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Michael
R. Hull, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:


     (1)  The Report fully complies with the requirements of Section 13(a) or 15
          (d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.



                                    /s/ Michael R. Hull
                                    ----------------------------------
                                    Michael R. Hull
                                    Chief Financial Officer
                                    May 29, 2003