UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File number 0-20078
THE PEAK TECHNOLOGIES GROUP, INC.
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-3028807
- -------------------------------- -------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
600 Madison Avenue, 26th Floor, New York, New York 10022
- --------------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-832-2833
-----------------
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 preceeding 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
----- -----
The number of shares outstanding of the issuer's Common Stock, $.01 par
value, was 9,305,722 as of May 7, 1997.
THE EXHIBIT INDEX IS FOUND ON PAGE 11
<PAGE> 2.
THE PEAK TECHNOLOGIES GROUP, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
- -------------------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations for the
Three Months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for
the Three Months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation 7
PART II. OTHER INFORMATION
- --------------------------------
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE> 3.
THE PEAK TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------------------------------------
Current assets:
Cash $ 530 $ 789
Accounts receivable, less
allowances for doubtful
accounts and sales returns of
$1,518 in 1997 and $1,952 in 1996 36,792 38,924
Inventories 27,732 28,380
Refundable income tax 781 1,371
Deferred tax asset 9,137 8,182
Prepaid expenses and other
current assets 2,710 2,536
----------- ------------
Total current assets 77,682 80,182
Furniture, equipment and
leasehold improvements 11,168 11,416
Less accumulated depreciation 4,599 4,485
----------- ------------
6,569 6,931
Customer list, less accumulated
amortization of $1,882 in 1997
and $1,802 in 1996 1,192 1,273
Non-competition agreements, less
accumulated amortization of
$1,112 in 1997 and $933 in 1996 1,808 1,987
Cost in excess of fair value of
net assets acquired, less
accumulated amortization of
$4,586 in 1997 and $4,204 in 1996 44,989 45,352
Deferred tax asset 121 244
Other assets 551 433
----------- ------------
$132,912 $136,402
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 21,887 $ 25,557
Other accrued liabilities 11,071 11,537
Deferred income - maint. contracts 12,144 10,922
----------- ------------
Total current liabilities 45,102 48,016
Long-term debt 25,408 24,928
Other liabilities 2,372 3,388
Commitments and contingencies - -
Stockholders' equity
Preferred stock, $.01 par value;
authorized 2,000,000 shares; none
issued and outstanding - -
Treasury stock, 8,250 shares held in treasury (132) -
Common stock, $.01 par value;
authorized 15,000,000 shares; issued
and outstanding shares of 9,305,722
in 1997 and 9,290,906 in 1996 93 93
Capital in excess of par 66,269 65,966
Retained deficit (6,200) (5,989)
----------- ------------
Total stockholders' equity 60,030 60,070
----------- ------------
$132,912 $136,402
=========== ============
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4.
THE PEAK TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Sales:
Equipment and Systems $ 43,327 $ 40,858
Maintenance 10,567 8,374
-------- --------
53,894 49,232
Cost of Sales:
Equipment and Systems 30,711 27,370
Maintenance 5,115 4,309
-------- --------
35,826 31,679
Gross Profit 18,068 17,553
Selling, general, engineering
and administrative expenses 17,732 14,101
Amortization of intangibles 534 300
--------- --------
Income (loss) from operations (198) 3,152
Other expenses:
Interest expense, net 538 110
Amortization of debt
issuance costs 6 13
--------- --------
544 123
--------- --------
Income (loss) before income taxes (742) 3,029
Provision for income taxes 222 1,228
--------- --------
Net income (loss) $ (964) $ 1,801
========= ========
Per share data:
Net income (loss) $ (0.10) $ 0.20
========= ========
Average common shares outstanding 9,287 9,181
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5.
THE PEAK TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (964) $1,801
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,130 688
Accounts receivable 2,132 (2,784)
Inventories 648 (1,150)
Income taxes (242) 1,066
Accounts payable and accrued liabilities (4,136) 1,804
Prepaid expenses and other current assets (174) (1,726)
Deferred income - maintenance contracts 1,222 1,253
Other assets and liabilities (304) (896)
-------- --------
Net cash provided by (used in)
operating activities (688) 56
Cash flows from investing activities:
Capital expenditures (226) (790)
Purchase of business - (4,592)
-------- --------
Net cash used in investing activities (226) (5,382)
Cash flows from financing activities:
Borrowing under revolving loans, net 480 5,181
Capital contribution and issuance of stock 171 268
-------- --------
Net cash provided by financing activities 655 5,449
Net increase (decrease) in cash (259) 123
Cash at beginning of the period 789 311
-------- --------
Cash at end of the period $ 530 $ 434
======== ========
Supplemental disclosure of cash flow information:
Cash paid during period for:
Income taxes $ 336 $ 13
======== ========
Interest $ 550 $ 105
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6.
THE PEAK TECHNOLOGIES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments (which consist of
only normal, recurring adjustments) necessary for a fair presentation of the
financial position and results of operations as of and for the periods
presented.
2. Primary earnings per share are computed by using the weighted average
number of common stock and dilutive common share equivalents outstanding
in the application of the treasury stock method. Primary and fully-diluted
earnings per share are identical.
3. Inventories are stated primarily at the lower of cost (first-in, first-out)
or market and consist of the following:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
(In thousands)
Equipment:
Components $ 4,585 $ 5,063
Finished goods 13,402 13,687
Maintenance Parts 9,745 9,630
----------------- -----------------
$27,732 $28,380
</TABLE>
4. SUBSEQUENT EVENT
On April 23, 1997, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement"), among the Company, Moore U.S.A. Inc.,
a Delaware corporation ("Parent"), and Kirkwood Acquisition Corp., a
Delaware corporation and an indirect wholly-owned subsidiary of Parent
("Sub").
On April 29, 1997, pursuant to the terms of the Merger Agreement,
Sub commenced a tender offer for all outstanding shares of common stock of
the Company ("Shares"), at a purchasing price of $18.00 per Share net to the
seller in cash (the "Offer"). The obligation of Sub to accept for payment, and
pay for, any Shares pursuant to the Offer is subject to certain conditions,
including, but not limited to (i) there having been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares that
would constitute a majority of the outstanding Shares (determined on a fully-
diluted basis for all outstanding stock options and any other rights to acquire
Shares) and (ii) any waiting period under the HSR Act (as defined in the
Merger Agreement) and the German Competition Act (as defined in the
Merger Agreement) applicable to the purchase of Shares pursuant to the Offer
having expired or been terminated. Early termination of the waiting period
under the HSR Act was granted on May 6, 1997. The Offer is currently
scheduled to expire May 27, 1997.
The Merger Agreement further provides that, following the
expiration of the Offer and subject to the satisfaction or waiver of certain
conditions (i) all of the issued and outstanding Shares (other than shares
canceled pursuant to the Merger Agreement and any Shares the holders of
which have exercised appraisal rights under Delaware law) will be converted
into the right to receive in the Merger $18.00 per Share (or any greater amount
paid per Share in the Offer) in cash, and (ii) Sub will be merged with and
into the Company (the "Merger") with the Company to continue as the surviving
corporation.
In connection with the Merger Agreement, on April 23, 1997, the
Company and ChaseMellon Shareholder Services, as Rights Agent (the
"Rights Agent"), entered into an amendment (the "Rights Amendment") to the
Rights Agreement, dated as of March 28, 1997, by and between the Company
and the Rights Agent (the "Rights Agreement"), having the effect of
exempting the events and transactions contemplated by the Merger Agreement
from the Rights Agreement.
<PAGE> 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth certain income statement data expressed as a
percentage of net sales and the percentage change of such item compared
to the corresponding prior period. The discussion and analysis set forth
below is affected by acquisitions occurring throughout the periods
presented. Reference is made to the Company's 1996 10-K, for detailed
discussion and analysis of the Company's financial condition and results of
operations for the periods covered by that report.
<TABLE>
<CAPTION>
% of Net Sales
----------------------------- % Increase/
Three Months Ended March 31, (Decrease)
----------------------------- ----------------
1997 1996 1996 to 1997
------ ------ ----------------
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 9.4%
Cost of Sales 66.5 64.3 13.1
------ ------
Gross Profit 33.5 35.7 2.9
Selling, General, Engineering
and Administrative Expenses 32.9 28.7 25.7
Amortization of Intangibles 1.0 0.6 78.0
------ ------
Income (loss) from Operations (0.4) 6.4 N/M
Interest and Other Expenses, net 1.0 0.2 N/M
------ ------
Income (loss) before Income Taxes (1.4) 6.2 N/M
====== ======
<FN>
N/M - Not Meaningful
</TABLE>
Results of Operations
March 31, 1997 Compared to March 31, 1996
- -----------------------------------------
Net sales for the three months ended March 31, 1997 increased to
$53,894,000 from $49,232,000 in the first quarter of 1996, an
increase of 9.4%. Equipment and systems sales increased by 6.0%
to $43,327,000 and maintenance service sales increased 26.2% to
$10,567,000 during the first quarter of 1997 compared to the first
quarter of 1996. Sales and results of operations of the 1996
acquisitions of Combitrading, Syntest, Acquidata, Barcode Systems
and SASS Computer are included with the Company's from the date
of acquisition. The equipment and systems sales increase resulted
from revenue generated from operations acquired during 1996 and the
increase in maintenance service revenues resulted from increased
U.S. maintenance revenue as well as revenue generated from operations
acquired in 1996.
<PAGE> 8.
The Company's gross profit margin for the three months ended
March 31, 1997, was 33.5% compared to 35.7% for the same
period of 1996. For the three months ended March 31, 1997,
equipment and systems margins were 29.1% compared to 33.0%
for the same period of 1996. Maintenance service margins
increased to 51.6% for the three months ended March 31, 1997
compared to 48.5% for the three months ended March 31, 1996.
Equipment and systems margins were lower primarily as a result
of lower gross profit margins in Peak's European operations,
while maintenance service margin increased from the Company's
continued focus on providing its customers with comprehensive
after sale service.
Selling, general, engineering, and administrative ("SGE&A")
expense were 32.9% of net sales for the three months ended
March 31, 1997 compared to 28.7% for the first quarter of 1996.
The increase was a result of higher SGE&A expenses relative
to sales in the Company's European operations. The Company
continues implementing its restructuring plan which was
announced in the fourth quarter of 1996. This plan, which
will be completed by the end of 1997, is designed to reduce
expense levels to be in line with revenue expectations.
Interest and other expenses were $544,000 at March 31, 1997
compared to $123,000 at March 31, 1996 as a result of
increased borrowing related primarily to the 1996 acquisitions.
The Company's loss before income taxes was $964,000 in the first
quarter of 1997 compared to income before income taxes of
$3,029,000 in the first quarter of 1996.
Liquidity and Capital Resources
The Company's current ratio was 1.7 to 1 at both March 31, 1997
and December 31, 1996. As of March 31, 1997, working capital
was $32,580,000. As of March 31, 1997, the Company's long-
term revolving loan facility with a bank had an outstanding
balance of $25,408,000 with an available borrowing of
approximately $6,592,000. Amounts available under the
Company's $32,000,000 loan facilities and funds generated from
operations have been the Company's primary source of liquidity,
which the Company believes will be sufficient to fund present
cash needs.
As the Company continues to implement its restructuring plan,
which it began during the fourth quarter of 1996, it incurred
approximately $1,060,000 in payments during the first quarter
of 1997 related to the restructuring plan. At March 31, 1997,
approximately $2,540,000 of the restructuring charge had not
been utilized.
<PAGE> 9.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibit filed as part of this report is as follows:
Exhibit 2.1 - Agreement and Plan of Merger, dated as of April 23, 1997,
by and among Moore U.S.A. Inc., Kirkwood Acquisition Corp. and The
Peak Technologies Group, Inc. (filed as Exhibit 2 to the Company's
Current Report on Form 8-K filed with the Commission on April 25, 1997)
Exhibit 10.1 - Executive Employment Agreement dated January 8, 1997
between The Peak Technologies Group, Inc. and Howard Cohen.
Exhibit 10.2 - Letter Agreement dated February 1, 1997 between
The Peak Technologies Group, Inc. and Mr. Gregory Thomas. (filed
as Exhibit (c) (4) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on
April 29, 1997)
Exhibit 10.3 - Letter Agreement dated February 1, 1997 between
The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed
as Exhibit (c) (5) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on
April 29, 1997)
Exhibit 10.4 - Consulting Agreement dated February 1, 1997 between
The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed
as Exhibit (c) (6) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on
April 29, 1997)
Exhibit 27 - Financial Data Schedule - March 31, 1997 Financial
Data Schedule
(b) The reports on Form 8-K filed as part of this report are as follows:
On April 25, 1997, the Company filed a Current Report on Form 8-K
(Item 5) related to the merger.
<PAGE> 10.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
THE PEAK TECHNOLOGIES GROUP, INC.
- ----------------------------------
(Registrant)
DATED: May 9, 1996 By: /s/ Edward A. Stevens
-------------------------
EDWARD A. STEVENS
Executive Vice President,
Chief Financial Officer
<PAGE> 11.
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
- ------- -----------
10.1 Executive Employment Agreement dated January 8, 1997
between The Peak Technologies Group, Inc. and Howard Cohen.
10.2 Letter Agreement dated February 1, 1997 between
The Peak Technologies Group, Inc. and Mr. Gregory Thomas. (filed
as Exhibit (c) (4) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on
April 29, 1997)
10.3 Letter Agreement dated February 1, 1997 between
The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed
as Exhibit (c) (5) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on
April 29, 1997)
10.4 Consulting Agreement dated February 1, 1997 between
The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed
as Exhibit (c) (6) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on
April 29, 1997)
27 March 31, 1997 Financial Data Schedule
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered as of this 8th day
of January, 1997, by and between The Peak Technologies
Group, Inc., ("Peak") a Delaware corporation with its
headquarters in Columbia, Maryland, and Howard S. Cohen
("Executive"), a resident of Illinois, and together
referred to as the parties.
1. Duties and Term.
A. Peak engages Executive as President and Chief
Operating Officer of Peak for a term of two (2) years (the
"Term"), commencing with the above date, and successive
terms of one (1) year each beginning automatically at the end
of the Term, to perform those duties customarily performed by
a President and Chief Operating Officer and those set forth in
the "Offer Letter", attached hereto and made a part hereof, and
reporting to Peak's Chairman and Chief Executive Officer
("CEO"). Executive shall also perform those additional duties
which may reasonably be specified by the CEO and Peak's
Board of Directors, from time to time, consistent with his
position as a senior executive. During the term of this
Agreement, Executive shall be included as part of the
management slate of directors recommended to the
shareholders for election to Peak' Board of Directors.
B. As a condition and during the term of his
employment Executive agrees to the following: (i) commence
his employment, full-time, no later than March 1, 1997 or such
earlier date as agreed to by the parties; (ii) devote his full
business time to the business and affairs of Peak and work
exclusively for Peak, and (iii) maintain a duty of loyalty and
care to Peak as an officer and director of Peak, as those terms
are defined in law and pursuant to this Agreement.
C. Executive may not engage in any other
remunerative work, provided, however, that Peak recognizes
that Executive may desire to write, speak and serve on boards
of directors, which may be done with the prior written approval
of the CEO, and which approval shall not be unreasonably
withheld. Executive represents and warrants that he has not
entered into any prior agreements, investments or commitments
which would in any manner limit his work, effort or activity on
behalf of and while employed by Peak.
2. Compensation and Benefits. The compensation and
benefits for Executive through the Term are set forth in the
Offer Letter and this Agreement. A portion of the Executive's
compensation, as determined in Executive's sole discretion,
will be deferred and placed in trust, in accordance with
applicable laws and regulations and Peak's 401(k) plan. The
compensation includes: (i) a "Severance Agreement", the form
of which is attached hereto, and which will provide
compensation and benefits for Executive in the event of a
change in control in Peak and providing for, among other
things, up to three (3) years of severance pay; (ii) insurance
coverage through all applicable insurance provided by Peak,
including, but not limited to, Director and Officer Liability
Insurance at the limits provided for officers and directors of
Peak and a full indemnity by Peak up to the limits allowed
under Delaware law; (iii) an initial grant of fifty-thousand
(50,000) stock options for Peak common stock; and, (iv) an
annual grant of additional stock options compatible with other
executives of the company and in accordance with Peak's
policies, and in all cases in the absolute discretion of the Board
of Directors. Peak further agrees as to (iii) and (iv) that Section
6(ii) of Peak's Stock Option Plan shall not apply to Executive
or any stock options issued to him and that Peak hereby agrees
to the registration of all stock issued to Executive within a
reasonable time after exercise of such options, and subject to
regulatory limitations, if any.
3. Termination by Executive.
A. Executive may terminate this Agreement any
time, other than for "Good Reason" as defined herein, upon one
hundred and twenty (120) days written notice to Peak, or in the
event of death or total disability (deemed voluntary
termination).
B. Executive may also terminate this Agreement at
any time, upon giving ninety (90) day notice, for "Good
Reason" which includes: (i) failure of Peak seek the
nomination of Executive to the Board of Directors within six
(6) months after Executive commences his employment; (ii)
failure of the officers to report to Executive; (iii) any reason
described as "Good Reason" in Section 1.6 of the Severance
Agreement I; (iv) a change of control as described in the
Severance Agreement I; and, (v) default by Peak in any of its
material obligations hereunder and failure to cure such default
in a reasonable period of time after receiving notice from
Executive.
4. Termination by Peak.
A. Peak may terminate this Agreement without
cause upon sixty (60) days written notice to Executive.
B. Peak may terminate this Agreement without
notice, at any time, for "Good Cause", which includes, but is
not limited to: (i) breach of the covenants contained in Sections
6, 7, 8 and 10 of this Agreement; (ii) willful gross malfeasance
resulting in material injury or loss to Peak; (iii) acts on behalf
of Peak as a result of which Executive is charged with a
criminal offense involving moral turpitude, dishonesty or
breach of trust; (iv) conviction of a felony or plea of guilty or
plea of guilty or no lo contendere with respect to a felony; and,
(v) breach of the duty of an officer or director imposed by law
or statute that involves an intentional, bad faith act that results
in material loss or injury to Peak.
C. Termination of this Agreement for any reason
whatsoever shall not preclude executive from receiving any
base salary, bonus or other benefit accrued through the date of
termination, and shall not affect any accrued amount due and
payable to Executive under the Severance Agreement I.
5. Executive's Severance Benefits Upon Termination.
A. If Executive is terminated by Peak for reasons
other than termination for Good Cause, during the Term and
any renewal term, or Executive leaves Peak for Good Reason,
during the Term and any renewal term, Executive shall be
entitled to the following: (i) the balance of his salary payable
under the terms of this Agreement plus twelve (12) additional
months of salary as severance, both amounts payable semi-
monthly and subject to all applicable taxes; (ii) payment of
$300,000.00, and a prorated payment of $300,000.00 divided
by the number of months, or partial months, worked by
Executive, both amounts payable semi-monthly and subject to
all applicable taxes; (iii) the vesting of all stock options as of
the date of termination; and, (iv) payment of fifteen percent
(15%) of his base salary, or up to $45,000 toward out-
placement services; and (v) continuation of payment for
premiums on all health and medical insurance for eighteen (18)
months, or so long as Executive remains eligible for such
insurance.
B. If Executive terminates his employment during
the Term or any renewal term, for other than Good Reason, and
does not accept or engage in employment with a third party or
entity, and does not otherwise violate any other terms of this
Agreement or any post-employment agreements or covenants,
Executive shall be entitled to the following: (i) the balance of
his salary under this Agreement, plus twelve (12) additional
months of severance, both payable semi-monthly and subject to
all applicable taxes; and, (ii) the vesting of all stock options.
C. Severance payments and benefits provided for
in this Agreement and the Offer Letter are conditioned upon
Executive's continued compliance with this Agreement and all
post-employment covenants and agreements. If Peak wishes to
withhold payment, it must first commence enforcement of this
Agreement through the filing of a civil suit or criminal
complaint, then all payments provided for hereunder shall be
paid to and held by a court of competent jurisdiction or placed
in a mutually agreed upon escrow account, until such
proceeding has been resolved.
6. Return of Peak's Property and Non-Disclosure of Non-
Public Information.
A. Upon termination of his employment with Peak
for any reason, Executive shall return to Peak all records, data,
plans, customer lists, computer programs and related
documentation or other documents or materials of any nature
which are in his possession or control which he obtained from
Peak or compiled or produced for Peak during his employment
and any and all copies thereof, which shall include all
confidential information as defined above.
B. Executive agrees that he will not retain copies of
any Peak's documents or materials and will not disclose, reveal
or make available to, or inform any other person, firm,
corporation, partnership or other association of the names and
addresses of customers, information about prices charged to
customers, Peak's operating and sales techniques and methods,
or any other confidential proprietary information concerning
Peak, or any documents or information which contain or are
derived from confidential proprietary information concerning
Peak, its products, pricing, margins, vendor relationships,
contracts, stock, personnel, systems, software, policies or
techniques and methods of operation, provided, however, that
Executive shall disclose any information required or compelled
in any legal or judicial proceeding or otherwise in the public
domain through sources other than Executive, and shall notify
Peak of such legal or judicial proceeding in a reasonable time
prior to complying with such request or subpoena, so that Peak
may seek to protect its interests and information as necessary.
7. Covenant Not to Compete or Solicit. Executive
covenants and agrees that during his employment and for a
period of one (1) year following the later of: (i) the termination
of his employment, or (ii) the date set for the commencement
of his severance payments, and so long as Peak continues to
pay all severance benefits when due and Peak has not
undergone a "Change in Control" as defined in Severance
Agreement I, Executive will not for himself, or in conjunction
with any other person, firm, partnership, corporation or other
form of business organization or arrangement, whether as a
principal, agent, director, officer, manager, trustee,
representative, executive or consultant, for whatever reason,
directly or indirectly do any of the following:
A. Work for any competitor of Peak, or seek or
accept employment with any of Peak's clients if such
employment is in the same area, field and scope of products
and services which Peak sells or provides;
B. Solicit or accept any business from any person
or entity who, at the time of, or any time during the twelve
months preceding such termination, was an active account or
was actively solicited by Peak according to the books and
records of Peak, provided, however, that nothing herein shall
prohibit him from transacting business with any such person
during such period if the business he solicits is not competitive
with services or products offered, furnished to, licensed or sold
by Peak to such person or entity;
C. Cause or assist anyone or any entity to solicit
the purchase of any product or service by any of Peak's clients
of the sort provided by Peak to the client, or the sort Peak was
seeking an opportunity to supply or request or cause any of
Peak's clients, vendors or suppliers to cancel or terminate any
business relationship with Peak;
D. Request or cause any employee of Peak to
terminate employment with Peak or permit any employee of
Peak to be solicited to leave the employ of Peak.
8. Post Employment Affiliations and Restrictions.
Executive covenants and agrees that during his employment
and for a period of one (1) year following the later of: (i) the
termination of his employment; or, (ii) or the date set for
commencement of his severance payments, and so long as Peak
continues to pay all severance benefits when due and Peak has
not undergone a "Change in Control" as defined in Severance
Agreement I, Executive will not for himself, or in conjunction
with any other person, firm, partnership, corporation or other
form of business organization or arrangement, whether as a
principal, agent, director, officer, manager, trustee,
representative, Executive or consultant, directly or indirectly
develop, refine, modify or in any way be connected with or
give advice or consultation concerning software which is
trademarked, copyrighted, owned and/or proprietary to Peak,
and cannot be purchased in routine retail transactions.
9. Scope of Restrictions. If the scope of any restriction
contained in this Agreement is too broad to permit enforcement
of such restriction to its full extent, then such restriction shall
be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to
enforced such restriction. Executive acknowledges and agrees
that the covenants contained herein are necessary for the
protection of Peak's legitimate business interests and are
reasonable in scope and content.
10. Prohibition Against Use and Disclosure of Proprietary
or Confidential Information. Executive shall not use or divulge
to anyone for any reason any of the trade secrets or other
proprietary, secret, or other confidential information of Peak or
its clients, or any information which contains or is derived from
proprietary, secret or other confidential information, either
during his employment or after his termination for any reason,
provided, however, that Executive shall disclose any
information required or compelled in any legal or judicial
proceeding or otherwise in the public domain through sources
other than Executive, and shall notify Peak of such legal or
judicial proceeding in a reasonable time prior to complying
with such request or subpoena, so that Peak may seek to protect
its interests and information as necessary.
11. List of Competing Companies. Executive agrees that
prior to terminating his employment with Peak, and as a
condition of receiving any severance payments provided for
hereunder, Peak may supplement the list of competitive
companies attached hereto which Peak, in its sole discretion,
deems competitors and for and with whom Executive shall not
be employed in any manner whatsoever.
12. Remedies of Peak.
A. Executive agrees that he is able to engage in
other businesses for the purpose of earning a livelihood and
that the restrictive covenants in the Agreement will not
interfere with his ability to engage in other businesses.
Executive agrees that breach of the covenants and limitation in
this Agreement will cause irreparable harm to Peak in that
money damages will not amount to adequate compensation for
the breach, and he agrees that injunctive relief is appropriate to
prevent the continuation of such breach by Executive without
the necessity of proof of actual damage.
B. In the event of a breach as described in A above,
or a breach by Peak resulting in the filing of a lawsuit by
Executive against Peak in a court of competent jurisdiction, the
prevailing party shall be responsible for the other party's
reasonable legal fees, as ordered by a court of competent
jurisdiction, arbitrator, mediator, or agreed to by the parties,
provided, however, such fees will be limited to the equal of the
Executive's base annual income for the last year of
employment.
C. The parties agrees that the restrictive covenants
contained herein are reasonable in the sense that they are
necessary to protect Peak in its legitimate business interests.
D. This Agreement in no way affects Executive's
right to engage in any business not competitive with Peak.
Remedies set forth in this Agreement shall be in addition to
and not in limitation of any other remedies, including money
damages, which Peak might have, legal or equitable.
13. No Waivers. Any waiver by any of the parties hereto of
a breach of any of the provisions of this Agreement by any
other party shall not operate or be construed as a waiver by the
other parties of any of the rights and privileges of said parties
hereunder or of any subsequent breach.
14. Prohibition Against Assignment. Executive's rights
under this Agreement may not be assigned, except to a solvent
associated company, or as may be agreed by the parties in
writing.
15. Severability and Binding Nature of Agreement. The
parties hereto agree that the clauses of the Agreement are
severable and should any clause be declared invalid, it shall not
effect the validity of the remaining provisions of this
Agreement. The parties agree that the provisions hereof shall
be binding upon their successors in interest, heirs, next of kin,
personal representatives and assigns.
16. Entire Agreement. This Agreement, Offer Letter and
Attachments, Tier I Relocation Package, and Severance
Agreement I constitute the final and entire agreement between
the parties and no party shall be bound by any terms,
conditions, statements, warranties, or representations, oral or
written, not contained herein and no term or provision hereof
(including the terms and provisions of this paragraph) may be
altered, amended or modified in any way except by a writing
signed by all parties.
17. Governing Law. This Agreement shall be governed and
interpreted pursuant to the laws of the state of Maryland for all
purposes, and without regard to choice of law rules.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day, month and year first above
written.
The Peak Technologies Group, Inc. Executive
/s/ Nicholas R.H. Toms /s/ Howard S. Cohen
- ----------------------------- --------------------------
Nicholas R. H. Toms, Howard S. Cohen,
Chairman and Chief President and Chief
Executive Officer Operating Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCH 31, 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 530
<SECURITIES> 0
<RECEIVABLES> 36,792
<ALLOWANCES> 1,518
<INVENTORY> 27,732
<CURRENT-ASSETS> 77,682
<PP&E> 11,168
<DEPRECIATION> 4,599
<TOTAL-ASSETS> 132,912
<CURRENT-LIABILITIES> 45,102
<BONDS> 25,408
0
0
<COMMON> 93
<OTHER-SE> 59,937
<TOTAL-LIABILITY-AND-EQUITY> 132,912
<SALES> 53,894
<TOTAL-REVENUES> 53,894
<CGS> 35,826
<TOTAL-COSTS> 35,826
<OTHER-EXPENSES> 18,272
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 538
<INCOME-PRETAX> (742)
<INCOME-TAX> 222
<INCOME-CONTINUING> (964)
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