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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For fiscal year ended November 30, 1996
COMMISSION FILE NUMBER 1-6018
TOKHEIM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
35-0712500
INDIANA (I.R.S. EMPLOYER I.D. NO.)
(STATE OF INCORPORATION)
46801
10501 CORPORATE DR., P.O. BOX 360 (ZIP CODE)
FORT WAYNE, INDIANA
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (219) 470-4600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
Common Stock, no par value........................ New York Stock Exchange
Preferred Stock Purchase Rights................... New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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 references in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of February 7, 1997, 7,945,474 shares of voting common stock were
outstanding. The aggregate market value of shares held by non-affiliates was
$70.9 million (based on the closing price of these shares on the New York
Stock Exchange on such date).
In addition, 793,160 shares of convertible preferred stock were held by the
Trustee of the Retirement Savings Plan for Employees of Tokheim Corporation
and subsidiaries. The liquidation value is $25 per share with an aggregate
liquidation value of $19.8 million. For a complete discussion regarding the
attributes of this preferred stock, see Item 5 on page 7.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
DOCUMENT FORM 10-K
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<S> <C>
Proxy Statement.................................. Part III, Item(s) 10-13
</TABLE>
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<PAGE>
TOKHEIM CORPORATION
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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PART I
<C> <S> <C>
Item 1. Business....................................................... 3
Item 2. Properties..................................................... 6
Item 3. Legal Proceedings.............................................. 7
Item 4. Submission of Matters to a Vote of Security Holders............ 7
PART II
Market for the Registrant's Common Equity and Related
Item 5. Stockholder Matters............................................ 7
Item 6. Selected Financial Data........................................ 9
Management's Discussion and Analysis of Financial Condition and
Item 7. Results of Operation........................................... 10
Item 8. Financial Statements and Supplementary Data.................... 15
Item 9. Disagreements on Accounting and Financial Disclosure........... 42
PART III
Item 10. Directors and Executive Officers of the Registrant............. 42
Item 11. Executive Compensation......................................... 43
Item 12. Security Ownership of Certain Beneficial Owners and Management. 43
Item 13. Certain Relationships and Related Transactions................. 44
PART IV
Exhibits, Financial Statement Schedules, and Reports on Form
Item 14. 8-K........................................................... 44
</TABLE>
2
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PART I
ITEM 1. BUSINESS.
(a) General:
Tokheim Corporation and its subsidiaries (the "Company") are engaged in the
design, manufacture and servicing of electronic and mechanical petroleum
dispensing marketing systems, including service station equipment, point-of-
sale (POS) control systems, and card- and cash-activated transaction systems
for customers around the world.
Sales of the Company's products can be affected by a variety of factors,
such as environmental regulations, retail petroleum construction, the price of
oil, interest rates, weather conditions, political stability in foreign
markets, and general economic conditions.
The information that follows should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related Notes
included elsewhere in this Form 10-K.
On September 6, 1996, the Company completed the acquisition of the petroleum
dispenser business ("Sofitam") of Sofitam S.A., a French corporation. The
Company purchased Sofitam's equity for $107.4 million, less Sofitam's debt of
$58.4 million and other adjustments. The transaction was financed by the
private placement of senior subordinated notes (which were subsequently
exchanged for registered senior subordinated Notes) and by the use of a
portion of a bank credit facility. The acquisition of Sofitam materially
impacted the financial position of the Company, increasing sales as well as
debt and leverage ratios.
Headquartered in France, Sofitam is the leading manufacturer and servicer of
petroleum dispensers in France and northern Africa, and a leading manufacturer
in southern Europe. This coverage complements Tokheim's recently-strengthened
positions in the U.S., the Asia Pacific and in eastern and central Europe. The
combination of Tokheim and Sofitam has thus created one of the world's largest
manufacturers and servicers of petroleum dispensing systems, with an ability
to provide its products and services globally. Management believes that the
Company's reach, expanded product offerings and customer relationships has
made it one of the strongest competitors in the industry.
The continuing improvement during 1996 in industry demand for petroleum
marketing equipment was driven by the development of emerging markets,
compliance with U.S. Federal Clean Air Act amendments requiring Stage II vapor
recovery, and the increased demand for automated equipment, including
dispenser payment terminals and point-of-sale systems. In addition, Tokheim's
operating performance continued to benefit from new product introductions,
strengthened distribution channels, increased international market
penetration, and cost-reduction programs which more than offset price
deterioration.
The Board of Directors approved a program to consolidate the Company's
existing European operations with those recently acquired from Sofitam. The
capital expenditures necessary to accomplish the European consolidation are
estimated to be $6.3 million over 1997 and 1998. In addition, the Company
expects to incur $9.7 million of cost to close redundant Sofitam operations.
Cost savings from this investment are expected to be realized over the next
two to three years. In 1996, the Company completed most of a $12.8 million
capital expenditure program at the Company's U.S. facilities, which the Board
of Directors authorized in 1995. The program, which was financed through
operating leases, made important improvements to plant productivity and
capacity, product design, and quality of both products and processes.
During the year, Tokheim achieved a quality milestone--ISO 9000
certification for all of Tokheim operations (excluding Sofitam) that were not
previously certified. This important accomplishment indicates the high quality
standards applied throughout Tokheim's operations and should help the Company
continue its expansion into markets recognizing this certification, especially
European markets.
3
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The International Standards Organization (ISO), in Geneva, Switzerland, was
founded in 1946 to develop a common set of standards in manufacturing, trade
and communications. It is composed of the national standards institutes and
organizations of 97 countries worldwide. First published in 1987, the
standards have been rapidly adopted by organizations in Europe, Asia, and
North America. In addition, there is a movement towards adoption by several
industries in the European Union, where ISO certification is now a
prerequisite to product certification. The standards have been endorsed by the
American Society of Quality Control, the European Standards Institutes, and
the Japanese Industrial Committee.
The standards are designed to: establish consistent language and
terminology; provide baseline quality practices that are accepted
internationally; and reduce the need for costly on-site supplier assessments.
The standards require: a standard language for documenting quality practices;
a system to track and manage evidence that these practices are instituted
throughout the organization; and a third-party auditing model to review,
certify, and maintain certification of organizations.
In this Report, forward-looking statements are made that are subject to
risks and uncertainties. Forward-looking statements include information
concerning possible or assumed future results of the Company, including
statements preceded by, followed by, or including the words "believes,"
"expects," "anticipates," or similar expressions. For those statements, the
Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
The following factors, in addition to those discussed elsewhere in this
Report, could affect the future results of the Company, and could cause those
results to differ materially from those expressed in the forward-looking
statements made herein: materially adverse changes in the economic conditions
in the market for petroleum dispensing equipment or for petroleum products; a
drop in retail petroleum service station construction; loss of several major
customers; environmental regulatory actions; failure to consolidate Sofitam as
anticipated, in terms of costs, benefits and timing; impairment of cash flows
from foreign subsidiaries; and competition from others in the petroleum
dispensing equipment market.
(b) Financial Information About Industry Segments:
In fiscal years 1996, 1995 and 1994, the Company had only one reportable
industry segment--manufacturing and sales of petroleum dispensing marketing
systems.
(c) Narrative Description of Business:
Petroleum Dispensing Equipment, Systems, and Services--This market is served
by: (a) Tokheim Corporation, United States; Tokheim Europe B.V., the
Netherlands; Tokheim and Gasboy of Canada Limited, Canada; Tokheim GmbH,
Germany; Tokheim Limited, the United Kingdom; and Tokheim South Africa
(Proprietary) Limited, South Africa; Sofitam Equipment, Sogen, and Sofitam
International located in France; and Sofitam International subsidiaries
located throughout Europe and Africa, which are involved in the design,
manufacture, and marketing of petroleum dispensing equipment and services,
point-of-sale systems, card- and cash-activated transaction systems, and
commercial dispensers, and (b) Gasboy International, Inc., United States,
which designs, manufactures, and distributes petroleum dispensing equipment
for the consumer, fleet, and commercial markets. Gasboy also designs and
manufactures vehicle fleet management and control systems and point-of-sale
terminals for dual purpose, retail, and fleet applications.
In 1996, 1995, and 1994, the petroleum industry accounted for all of the
Company's sales. Approximately 86%, 85%, and 83%, respectively, of the
Company's sales were derived from the sale of service station gasoline
dispensers, parts, accessories, and service contracts. These items are sold to
major oil companies for use at their own gasoline stations, and to independent
retail station owners through the Company's distributor and manufacturers'
representative organization.
International sales by foreign subsidiaries and exports from the U.S.
totaled approximately 47%, 38%, and 36% of consolidated net sales in 1996,
1995, and 1994, respectively. While risks attendant to operations in
4
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foreign countries vary widely from country to country, the Company is of the
opinion that, considered in the aggregate, the risks attendant to its
operations in foreign countries are not significantly greater than the risks
attendant to operations in the United States. The acquisition of Sofitam has
significantly extended the Company's international distribution network,
reducing its reliance on (and the risks from) third-party distributors.
Products are distributed in the United States by a sales organization which
operates from national account offices, district sales offices, petroleum
equipment firms, industrial suppliers, and distributors in major cities across
the United States. In areas outside the United States, product distribution is
accomplished by the International Division through foreign subsidiaries,
distributors, and special sales representatives. In addition to its widespread
sales organization, there are more than 1,400 trained field service
representatives acting as independent contractors, many of whom maintain
service parts inventory. The Company's Customer Service Division maintains a
Help Desk which is available 24 hours a day, 365 days a year, for immediate
response to service needs. Additionally, the Customer Service Division
maintains a continuing program of service clinics for personnel of customers
and distributors, both in the field and at the Company's training centers. The
business is somewhat seasonal, primarily relating to the construction season
and increased purchase activity by major oil companies toward the end of the
calendar year.
The market for the Company's products is highly competitive. The Company
competes with a number of companies, some of which may have greater sales and
assets than the Company. Domestically, the Company competes against four
manufacturers of service station dispensers. Internationally, the Company
competes against the same four domestic competitors plus several regional
competitors in Europe and the Far East.
Environmental regulations and service station automation are expected to
continue to impact favorably the future growth of the Company's business both
domestically and internationally. The Company's belief that environmental
regulations will have a favorable impact is based upon experience and
analysis. For example, a significant number of retail service stations across
the United States were impacted by Stage II Vapor Recovery Control regulations
effective in stages through 1996. A study of such regulations, done by an
independent consultant to the Company, indicated that while the majority of
service stations will retrofit existing dispensers, requiring purchase of a
retrofit kit from a dispenser manufacturer, a large number of older dispensers
will be replaced.
The dollar amount of backlog as of the end of fiscal year 1996 was
approximately $28.1 million, compared to approximately $21.0 million and $16.6
million at the end of fiscal years 1995 and 1994, respectively. The Company
expects that the entire backlog will be filled in fiscal year 1996. Backlog
amounts at any fiscal year-end are not an indicator of sales during the
forthcoming year. Factors impacting backlog levels at any point in time
include such events as the timing of purchases by the major oil companies,
announcements of price adjustments, sales promotions, and production delays.
These factors mitigate against comparisons of one period to another.
In fiscal 1996, no one customer accounted for as much as ten percent of the
Company's consolidated sales. The principal raw materials essential to the
Company's business are flat sheet steel, aluminum, copper tubing, iron
castings, and electronic components, all of which are available through
several competitive sources of supply.
The Company holds a number of patents, none of which is considered essential
to its overall operations. The Company relies primarily on its engineering,
production, marketing, and service capabilities to maintain its established
position within the industry. At November 30, 1996, the Company employed
approximately 3,400 persons at its various locations.
New Products--The Company spent approximately $15.9 million in 1996, $12.7
million in 1995, and $10.2 million in 1994 on activities related to the
support and improvement of existing products, manufacturing methods, the
development of new products, and other applied research and development.
Research and development projects are evaluated on cash payback and return on
investment.
During 1996, the Company introduced or implemented a number of new products.
The Company introduced debit card capability, in addition to existing credit
card capabilities, at the pump. These features allow a customer
5
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to use either a debit or credit card at the pump, including utilization of a
customer PIN (personal identification number) as part of a high security
system.
The Columbus Point-of-Sale (POS) system was recently implemented on the
Conoco network, and other networks will be added during 1997. Columbus offers
high-end functionality with mid-range affordability. It uses an Intel
Pentium(R) processor and an open architecture, Microsoft Windows(R) NT
operating system. Columbus features a user-friendly touch screen and allows
for full integration of other functions, such as back office, fuel tank
monitoring, and additional software integration tools.
During 1996, Gasboy, a wholly-owned subsidiary, introduced the TopKAT, a
low-cost card activation fuel management system that mounts directly on the
top of a single or twin dispenser, updating the dispenser's capabilities and
extending the dispenser's useful life.
Gasboy's new Model 9850 became the first high-speed, electronic, commercial
pump in the petroleum industry. This addition to Gasboy's extensive commercial
line gives the fleet operator a modern electronic pump capable of delivering
up to 50 gallons (180 liters) of fuel per minute.
The new inexpensive Model 8800 Series electronic models were developed for
the emerging dispenser markets in Africa, South America, and Southeast Asia.
The 8800 series offers a simple electronic register mounted in an explosion
proof chamber. The pump is also capable of manual operation on the event of a
power interruption.
A number of new products were introduced by the Company during 1995. Major
enhancements were made to the POS systems product line including introduction
of the Windows(R) PC-based Columbus system, an island payment terminal, a card
reader upgrade for the Multi-Modular Dispenser, a retrofit head for Tokheim
Convenience Systems. In 1996, the Tokheim Ruby POS system was installed on 20
major oil company networks.
Products introduced in the commercial and fleet market segments during 1995
included ASTRA, a unique electronic commercial dispenser with a remote display
designed specifically for the above-ground market; Fuel Point, a fully
automated fuel management system which captures vehicle identification and
odometer information at the dispenser nozzle; and Oilex, a fully automated oil
change device capable of changing the oil in a commercial truck in less than
ten minutes through a single connection.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales:
Financial information about foreign and domestic operations and export sales
for the years ended November 30, 1996, 1995, and 1994 is set forth in Item 8
of this Report in Note 15 to the Consolidated Financial Statements, captioned
"Geographical Segments."
ITEM 2. PROPERTIES.
The Company owns properties in: Fort Wayne, Indiana; Fremont, Indiana;
Washington, Indiana; Lansdale, Pennsylvania; Brighton, Ontario, Canada; Kya
Sand, Randburg, South Africa; Glenrothes, Scotland; Weilheim, Germany;
Grentheville, France; Falaise, France; Roche-Les-Beaupre, France; Friorg,
Switzerland; Scurzolengo, Italy; Casablanca, Morocco; Abidjan, Ivory Coast;
and Halstenbek, Germany. Tokheim owns an engineering and design center and a
corporate office building with an adjacent 116-acre tract of unimproved land
located north of Fort Wayne, Indiana. The Jasper, Tennessee and Atlanta,
Georgia facilities are currently being held for sale. The Company leases
properties in Tremblay, France; Asnieres, France; Solothurn, Switzerland; West
Sussex, United Kingdom; Volvoorde, Belgium; Barcelona, Spain; La Sourka,
Tunisia; Dakar, Senagal; Doula, Cameroon; Leiderdorp, the Netherlands; and
Hamburg, Germany. Management anticipates that the Company will have sufficient
capacity to meet future demand over the next several years. The Company
intends to sell or close several properties in fiscal 1997 and 1998 as part of
its European consolidation.
6
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ITEM 3. LEGAL PROCEEDINGS.
As more fully described in Item 8 of this Report in Note 19 to the
Consolidated Financial Statements, captioned "Contingent Liabilities", the
Company is defending various claims and legal actions, including environmental
and product liability actions, which are common to its operations. These legal
actions primarily involve claims for damages arising out of the Company's
manufacturing operations, the use of the Company's products, and allegations
of patent infringement.
In the opinion of the Company's management, amounts accrued for awards or
assessments in connection with environmental, product liability and other
legal matters are adequate, and ultimate resolution of these matters will not
have a material effect on the Company's consolidated financial position,
results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
The Company's common stock is traded on the New York Stock Exchange under
the symbol "TOK". The approximate number of record shareholders of the
Company's common stock as of November 30, 1996, was 7,000. No dividends were
paid on common stock in 1996, 1995, and 1994, in accordance with restrictive
covenants under the Company's loan agreements. The high-low sales prices for
the Company's common stock are set forth as follows:
QUARTERLY HIGH-LOW SHARE PRICES
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<CAPTION>
1996 1995
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SHARE PRICE SHARE PRICE
QUARTER HIGH-LOW HIGH-LOW
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<S> <C> <C>
1................................................ 9 1/2-6 1/8 9 5/8-7 1/4
2................................................ 10 3/4-8 3/4 9 1/4-7 1/2
3................................................ 10 -7 1/2 9 -6 1/2
4................................................ 9 7/8-8 1/2 7 1/4-6 5/8
</TABLE>
On July 10, 1989, the Company sold 960,000 shares of convertible cumulative
preferred stock to the Trust of the Company's Retirement Savings Plan (RSP) at
the liquidation value of $25 per share, or $24 million. The preferred shares
have a dividend rate of 7.75%. The Trustee, who holds the preferred shares,
may elect to convert each preferred share to one common share in the event of
redemption by Tokheim, certain consolidations or mergers of Tokheim, or a
redemption by the Trustee which is necessary to provide for distributions
under the RSP. A participant may elect to receive a distribution from the RSP
in cash or common stock. If redeemed by the Trustee, the Company is
responsible for purchasing the preferred shares at the $25 floor value. The
Company may elect to pay the redemption price in cash or an equivalent amount
of common stock. Due to the redemption characteristics of the stock, the
aggregate amount of future redemptions for the next five years cannot be
determined.
On August 23, 1996, the Company sold $100 million in aggregate principal
amount of its 11 1/2% senior subordinated Notes due 2006 in a private
placement pursuant to Rule 144A. The offering of the Notes was made in
connection with the Company's acquisition of Sofitam. The initial purchasers
of the Notes were BT Securities Corporation and First Chicago Capital Markets,
Inc., who in turn were to sell the Notes to Accredited Investors and Qualified
Institutional Buyers. The initial purchasers' discount on the transaction was
3.00%.
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On January 14, 1997, the Company completed an offer to exchange the original
Notes for its 11 1/2% Series B Senior Subordinated Notes due 2006 (the "New
Notes"). The terms of the New Notes are substantially similar in all material
respects to those of the original Notes, except that the New Notes are
registered under the Securities Act of 1933, as amended, and thus do not bear
legends restricting transfer. All of the original Notes were exchanged for New
Notes before the expiration of the exchange offer.
On January 22, 1997, the Board of Directors of the Company approved the
extension of the benefits afforded by the Company's then-existing rights plan
by adopting a new shareholder rights plan. The new plan, like its predecessor,
is intended to promote continuity and stability, deter coercive or partial
offers which will not provide fair value to all shareholders, and enhance the
Board's ability to represent all shareholders and thereby maximize shareholder
values.
Pursuant to the new Rights Agreement, dated as of January 22, 1997, by and
between the Company and Harris Bank and Trust Company, as Rights Agent, one
Right was issued for each outstanding share of common stock, without par
value, of the Company upon the expiration of the Company's existing rights
(February 9, 1997). Each of the new Rights entitle the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, without par value, at a price of $44.00 per
one-thousandth of a share. The Rights will not become exercisable, however,
unless and until, among other things, any person acquires 15% or more of the
outstanding common stock of the Company or the Board of Directors determines
that a person is an Adverse Person.
A person who beneficially owns 10% or more of the outstanding common stock
of the Company will be declared an Adverse Person if the Board of Directors
determines (a) that such beneficial ownership is intended to cause the Company
to repurchase the common stock beneficially owned by such person or to
pressure the Company to take action or enter into transactions intended to
provide such person with short-term financial gain that are not in the best
long-term interests of the Company and its shareholders or (b) such beneficial
ownership is causing or reasonably likely to cause a material adverse impact
on the Company to the detriment of the Company's shareholders, employees,
suppliers, customers or community. If a person acquires 15% or more of the
outstanding common stock of the Company or is declared an Adverse Person
(subject to certain conditions and exceptions more fully described in the
Rights Agreement), each Right will entitle the holder (other than the person
who acquired 15% or more of the outstanding common stock or is declared an
Adverse Person) to purchase common stock of the Company having a market value
equal to twice the exercise price of a Right. The new Rights are redeemable
under certain circumstances at $0.01 per Right and will expire, unless earlier
redeemed, on February 9, 2007.
The foregoing summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, a copy of which is incorporated by reference as Exhibit 4.1 to this
Report.
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ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data is not covered by the Independent
Accountant's Report, but should be read in conjunction with the Consolidated
Financial Statements and related Notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
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YEAR ENDED NOVEMBER 30,
------------------------------------------------
1996(A) 1995 1994 1993 1992
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STATEMENT OF OPERATIONS DATA:
Net Sales.................. $279,799 $221,573 $202,134 $172,306 $162,089
Operating income (loss)(B). 6,356 5,811 3,780 (2,324) (12,709)
Interest expense, net...... 7,191 3,319 2,806 3,443 4,169
Earnings (loss) from
continuing operations
before income taxes....... (1,229) 3,270 1,932 (5,745) (33,801)
Earnings (loss) from
continuing operations..... (2,009) 3,231 1,675 (5,867) (33,184)
Preferred stock dividends.. 1,543 1,580 1,617 1,663 1,790
Earnings (loss) from
continuing operations
applicable to common
stock(C).................. (3,552) 1,651 58 (7,530) (36,974)
Earnings (loss) from
continuing operations per
common share:
Primary.................... (0.45) 0.21 0.01 (1.09) (5.86)
Fully diluted.............. (0.45) 0.17 0.01 (1.09) (5.86)
BALANCE SHEET DATA (AT PERIOD
END):
Working capital............ $ 55,627 $ 50,353 $ 47,040 $ 32,346 $ 28,315
Property, plant and
equipment................. 41,010 28,558 27,425 29,004 32,851
Total assets............... 300,128 124,332 116,251 119,997 124,349
Total debt(D).............. 146,012 38,612 38,825 44,501 57,895
ESOP Preferred Stock, net.. 8,137 6,426 5,005 3,678 3,141
Common shareholders'
equity, net............... 17,678 23,797 22,857 32,894 28,241
OTHER DATA:
Cash flows from operating
activities................ 5,897 3,347 2,069 (5,039) 7,360
Cash flows for financing
activities................ (54,079) (4,910) (2,562) (76) 18,405
Cash flows from investing
activities................ 49,779 555 (5,063) (1,093) (24,543)
Capital expenditures....... 3,061 5,559 2,757 2,503 2,045
Depreciation and
amortization.............. 5,028 4,857 4,672 5,233 7,202
Interest expense and
preferred stock dividends. 9,336 5,168 4,675 5,475 6,812
EBITDA (as defined)(E)..... 17,842 14,126 10,230 2,931 (7,277)
</TABLE>
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(A) Fiscal year 1996 includes the balance sheet of Sofitam and three months of
operating activity since the date of acquisition. In addition, the
financial statements presented have been restated for an accounting change
in the method of valuing inventory, as more fully described in Item 8 of
this Report in Note 1 to the Consolidated Financial Statements, captioned
"Summary of Significant Accounting Policies."
(B) Operating income equals net sales less cost of sales, selling, general and
administrative expenses, merger and acquisition cost and other unusual
items, and depreciation and amortization.
(C) Excludes cumulative effect of change in method of accounting for
postretirement benefits other than pensions of $13,416 in the fiscal year
ended November 30, 1994.
(D) Total debt includes senior subordinated notes, long-term debt, current
maturities of long-term debt, notes payable bank, capitalized lease
obligations and the Guaranteed ESOP Obligation.
9
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(E) EBITDA (as used herein) represents earnings (loss) from continuing
operations before income taxes and cumulative effect of change in method
of accounting, net interest expense, depreciation and amortization, merger
and acquisition costs and other unusual items and minority interest.
Management uses EBITDA as a financial indicator of a Company's ability to
service debt, although the precise definition of EBITDA is subject to
variation among companies. EBITDA should not be construed as an
alternative to operating income or cash flows from operating activities
(as determined in accordance with generally accepted accounting
principles) and should not be construed as an indication of the Company's
operating performance or as a measure of liquidity. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
For additional information concerning the Company's historical cash flows,
see the Consolidated Statement of Cash Flows included elsewhere herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The continuing improvement during fiscal 1996 in industry demand for
petroleum marketing equipment was driven by the development of emerging
markets, compliance with U.S. Federal Clean Air Act amendments requiring Stage
II vapor recovery, and the demand for more automated equipment, including
dispenser payment terminals and point-of-sale systems. In addition, Tokheim's
operating performance continued to benefit from new product introductions,
strengthened distribution channels, increased international market
penetration, and cost-reduction programs which more than offset price
deterioration.
Results of operations in 1996, after merger and acquisition cost and other
unusual items of $6.5 million, were a loss of $2.0 million, or $0.45 per fully
diluted share, versus earnings of $3.2 million, or $0.17 per share, in 1995.
In 1994, the net loss amounted to $11.7 million, or $1.71 net loss per share.
Fiscal 1996 operating earnings were favorably impacted principally by a $58.2
million increase in sales (mostly from the Sofitam acquisition) and by
improved gross margins on product sales resulting from cost control measures,
new product introductions, and product mix improvements. Sofitam accounted for
$46.2 million of the 1996 sales.
Restructuring expenses relating to the Sofitam acquisition were $1,043 in
fiscal 1996. The expenses occurred due to excess and redundant manufacturing
and service operations. In 1997 and 1998, restructuring expenses charged to
operating expenses are expected to total $2,100. In addition, under liquidity
and capital resources, the Company describes additional financial commitments
relating to the restructuring following the Sofitam acquisition. Fiscal 1995
operating earnings were favorably impacted, mainly by a $19.4 million increase
in sales and improved gross margin on product sales.
Consolidated sales were $279.7 million in 1996, an increase of 26.3% from
$221.6 million in 1995 and an increase of 38.4% from 1994 sales of $202.1
million. In addition to the acquisition of Sofitam, the sales increase from
1995 to 1996 was due to unit volume increases. Both domestic and international
sales contributed to this gain. Domestic sales of petroleum dispensing
equipment and systems increased 7.6% from $137.5 million in fiscal 1995 to
$147.8 million in fiscal 1996. International sales were $132.0 million in
fiscal 1996, up 56.9% from fiscal 1995 sales of $84.1 million. 1995 domestic
sales increased $8.7 million, or 6.7%, from 1994, while international sales
increased $10.8 million, or 12.8%. These increases are attributable to sales
promotion efforts to penetrate new markets.
The gross margin on product sales for 1996 was 24.8%, up from the prior
year's 24.6%. The increase is due primarily to higher sales volume and
improvements in the Company's cost structure, offset, in part, by lower
prices. For similar reasons, the gross margin on product sales for 1995 had
increased from the 1994 level of 23.4%.
Selling, general, and administrative expenses as a percentage of net sales
were 18.5% in 1996, compared to 18.6% in 1995, and 18.8% in 1994. Selling,
general, and administrative expenses actually increased to $51.7 million from
$41.3 million in 1995, reflecting the expenses associated with the Sofitam
operations since the date of acquisition. However, the percentage decreased in
1996 because of the increase in sales following the Sofitam acquisition. The
decrease from 1994 to 1995 was due to cost reduction efforts and higher sales
levels.
The combined domestic and international operations incurred operating income
of $6.4 million in 1996 compared to $5.8 million in 1995 and $3.8 million in
1994.
10
<PAGE>
Net interest expense of $7.2 million in 1996 increased over 1995's interest
expense of $3.3 million, reflecting increased borrowings to finance the
acquisition of Sofitam. Interest expense in 1995 was $0.5 million greater than
1994, reflecting higher rates.
A net foreign currency exchange loss of $0.2 million incurred in fiscal 1996
was a change from a gain of $0.1 million in 1995. The loss was due principally
to the devaluation of the French franc against the U.S. dollar during the last
three months of the fiscal year, affecting intercompany accounts. A net foreign
currency exchange gain of $0.2 million was incurred in fiscal 1994. The
Company's long-term investment in foreign subsidiaries, when translated at
fiscal 1996 conversion rates, resulted in a translation adjustment reflected as
a reduction against shareholders' equity of $7.3 million in 1996 and $3.5
million in 1995. The adjustments represent principally the effect of changes
from the beginning to the end of the year in the current rate of exchange used
to translate the net assets, including certain intercompany amounts of foreign
subsidiaries. The majority of the 1996 adjustment is a result of long-term
loans to foreign affiliates, primarily in connection with the acquisition of
Sofitam.
Minority interest for 1996, which reflects minority shareholders in Sofitam
entities, was $0.4. No minority interest was recorded in either 1995 or 1994.
Income tax expense for 1996 was $0.8 million, an increase from $0.04 million
in 1995. The increase was due to income tax expense recorded in the newly-
acquired Sofitam subsidiaries. In addition, at the end of 1996, the Company has
not recorded a net deferred tax asset due largely to uncertainties associated
with the Company's future results of operations on a consolidated basis,
including the results of the newly acquired Sofitam. In 1997, the Company plans
to evaluate the likelihood that all or part of the deferred tax asset will be
realized through the generation of future taxable earnings, and, if so, the net
deferred tax asset will be adjusted. See Note 14 to the Consolidated Financial
Statements for additional information about the Company's income tax position
at November 30, 1996.
Fully diluted results of operations, after merger and acquisition cost and
other unusual items of $6.5 million, were a loss $0.45 per share in 1996 versus
1995 earnings per share of $0.17, and a 1994 net loss of $1.71 per share after
accounting change. The weighted average shares outstanding used in computing
fully-diluted earnings per share were 7,981,000 in 1996, 9,820,000 in 1995, and
7,801,000 in 1994. For fiscal years 1996 and 1994, fully diluted earnings per
share is considered to be the same as primary earnings per share, since the
effect of certain potentially dilutive securities would be antidilutive.
In fiscal 1995, the Company sold a non-core product line and related assets.
Net proceeds from the sale were $0.5 million, and a net gain of $0.5 million
was realized. The gain has been included in other income, net in the statement
of earnings and retained earnings.
No dividends were paid on common stock during fiscal years 1994 through 1996
in accordance with restrictive covenants under the Company's loan agreement.
The number of shareholders as of November 30, 1996 was approximately 7,000.
Inflation has not had a significant impact on the Company's results of
operations.
LITIGATION AND ENVIRONMENTAL MATTERS
Claims have been brought against the Company and its subsidiaries for various
legal matters. In addition, the Company's operations are subject to
international, federal, state, and local environmental laws and regulations.
Additional information is set forth in Item 8 of this Report in Note 19 to the
Consolidated Financial Statements, captioned "Contingent Liabilities."
11
<PAGE>
OTHER
During fiscal 1996, the Company changed its method of valuing domestic
inventories from the last-in, first-out (LIFO) method to the first-in, first-
out (FIFO) method. The change was made because the Company had begun to
realize and expects to continue to experience cost reductions as a result of
technological improvements in its manufacturing process. The Company believes
that the FIFO method is preferable to the LIFO method as the change conforms
the inventories of domestic and foreign subsidiaries to the same cost method,
inventories are reflected in the Company's balance sheet at their most recent
value; and revenues are better matched with expenses. Also the FIFO method is
the predominant method used in the industry in which the Company operates.
This change in the method of valuing inventories has been applied
retroactively, and comparative amounts for the two prior periods presented
have been restated to apply the FIFO method. The change was applied as of the
beginning of 1994, increasing inventories, as previously reported, by $2,932,
at December 1, 1993, and increasing retained earnings from $22,829 to $25,761
at that date.
In the first quarter of 1994, the Company adopted a mandatory noncash
accounting change pursuant to Statement of Financial Accounting Standards
(SFAS) No. 106, which governs accounting for non-pension retiree benefit
costs. SFAS No. 106 requires companies to project the future cost of providing
retiree medical, dental, and life insurance benefits and to recognize that
cost as benefits are earned during the employee's career. Tokheim's
actuarially-determined liability was $13.4 million. The Company elected to
record that amount as a one-time, noncash accounting adjustment versus the
alternative of amortizing the amount over a period not to exceed 20 years. At
November 30, 1996, the Company's accrual was $16.9 million. Adoption of the
new accounting standard had no cash flow effect, nor did it represent a change
with respect to previous fiscal years in the benefit levels provided to
employees.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" is effective for the year ending November
30, 1997. This statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. In the opinion of
management, this statement is not expected to materially impact the Company's
financial position or results of operations.
SFAS No. 123, "Accounting for Stock-Based Compensation," is effective for
the year ending November 30, 1997. This statement encourages, but does not
require, companies to recognize compensation expense for grants of stock,
stock options, and other equity instruments based on a fair value method of
accounting. Companies that choose not to adopt the new expense recognition
rules of SFAS No. 123 will continue to apply the existing accounting rules of
Accounting Principles Board Opinion (APBO) No. 25, but will be required to
provide pro forma disclosure of the compensation expense determined under the
fair value provisions of SFAS No. 123, if material. APBO No. 25 requires that
there be no recognition of compensation expense for the stock-based
compensation arrangements provided by the Company, where the exercise price is
equal to or greater than the market price at the date of grant. The Company
expects to continue to follow the accounting provisions of APBO No. 25 for
stock-based compensation and to furnish the pro forma disclosures required
under SFAS No. 123, if material.
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," is effective for the year ending November
30, 1998. In the opinion of management, this statement will not have a
material impact on the Company's financial position or results of operations.
American Institute of Certified Public Accountants Statement of Position No.
96-1, "Environmental Remediation Liabilities," is effective for the year
ending November 30, 1998. Management has not yet determined the impact that
adoption of this statement will have on the Company's financial position or
results of operations, but does not anticipate that material liabilities will
need to be recorded in addition to those already provided for under the
provisions of generally accepted accounting principles as prescribed by SFAS
No. 5, "Accounting for Contingencies."
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has available to it a variety of sources of liquidity and
capital resources, both internal and external. These resources provide funds
required for current operations, interest payments, debt retirement, capital
expenditures, and other requirements.
On August 23, 1996, the Company sold $100 million in aggregate principal
amount of its 11 1/2% senior subordinated Notes due 2006 in a private
placement pursuant to Rule 144A. The offering of the Notes was made in
connection with the Company's acquisition of Sofitam.
On September 3, 1996, Tokheim entered into an $80 million bank credit
agreement with five domestic and international banks for a six-year term. This
facility allows the Company to borrow in several currencies. The Company has
pledged as collateral principally all of its assets, including intercompany
notes, receivables and intangibles such as patents and trademarks. The
facility includes numerous covenants, including maintaining minimum levels of
earnings and interest coverage, and restrictions on capital expenditures and
rentals. The Company must be in compliance with the terms and conditions of
the facility before making interest and principal payments on the senior
subordinated Notes. Availability of credit under the bank agreement is subject
to borrowing base requirements and compliance with the facility's covenants.
The Company was in full compliance with all covenants as of November 30, 1996.
Cash provided from operations was $5.9 million in 1996, compared to $3.3
million in 1995 and $2.1 million in 1994. 1996 cash flow from operations was
enhanced by improved collection of receivables and increased accrued expenses.
The increases in 1995 and 1994, in each case relative to the previous year,
reflect an increase in operating earnings and continued improvement in working
capital management.
The Company's investing activities are generally for capital expenditures,
which amounted to $3.1 million in 1996, $5.6 million in 1995, and $2.8 million
in 1994. In addition, 1996 activities reflected the acquisition of Sofitam.
The Company purchased Sofitam for $52.1 million, net of cash acquired. In
1996, the Company received proceeds from sales of property, plant, and
equipment of $1.1 million versus $0.6 million and $0.2 million in 1995 and
1994, respectively. At November 30, 1996, no significant contractual
commitments existed for future capital expenditures. The Company plans,
however, to consolidate its European operations, as described in detail
elsewhere in this Report.
Financing activities in 1996 reflect the impact of the Sofitam acquisition.
The $100 million raised through the sale of senior subordinated Notes was used
to make payments of $32.3 million of term debt and to cover debt issuance
costs of $11.5 million. Financing activities in 1995 were limited to normal
business transactions. Financing activities in 1994 primarily resulted in a
$5.7 million reduction in debt, which aggregated $38.8 million at November 30,
1994 versus $44.5 million at November 30, 1993. Peak short-term borrowings
were $35.5 million in 1996, $19.9 million in 1995, and $18.4 million in 1994.
The weighted average interest rate for short-term borrowings was approximately
8.8% in 1996, 8.6% in 1995, and 8.1% in 1994. Preferred stock dividends paid
were $1.5 million, $1.6 million, and $1.6 million in 1996, 1995, and 1994,
respectively.
Cash and cash equivalents at November 30, 1996 aggregated $0.1 million
versus $3.0 million at November 30, 1995. This decrease is due primarily to
use of most of the Company's cash reserves to pay down $17.7 million of the
amount outstanding under the credit facility at November 30, 1996. Working
capital at November 30, 1996 increased $5.3 million principally due to the
Sofitam acquisition. The Company's current ratio at November 30, 1996 and 1995
was 1.5 and 2.3, respectively.
The Company has guaranteed loans to its Retirement Savings Plan in the
amounts of $12.0 million and $14.6 million at November 30, 1996 and 1995,
respectively. The Company has guaranteed a $25 per share value for its
convertible preferred stock. At conversion, the Company is responsible for any
difference between the market value of the underlying common stock and the $25
guaranteed value of the preferred stock.
Total interest-bearing debt as a percent of equity for 1996 was 565.6%
compared to 200.1% for 1995. The increase in 1996 is primarily due to an
increase in debt following the acquisition of Sofitam, a decrease in
13
<PAGE>
retained earnings, and an increase in the currency reserve offset by a
decrease in Guaranteed Employees' Stock Ownership Plan Obligation, and a
reduction in common treasury stock.
In conjunction with the Sofitam acquisition, the Company expects to incur
the following commitments: the Company will spend $9.8 million to close
redundant Sofitam operations in Europe. This expenditure will be charged
against the acquisition accruals. The Company will also spend $6.3 million for
capital assets to expand the Normandy, France plant and upgrade information
systems. Finally, the Company anticipates incurring expenses of $2.1 million
against operating income to close certain existing operations.
The Company anticipates making between $2.0 million and $3.0 million in
capital expenditures for existing operations. The Company intends to complete
improvements to the paint line at its Fort Wayne, Indiana plant for $4.8
million, which were approved by the Board of Directors in 1995.
Beyond the current year, the substantial credit available on the bank
facility ($51.6 million at year end) should meet working capital and liquidity
needs in the future. Moreover, the Company has experienced strong internal
cash flow in the first three months of 1997, having made a $5.1 million
interest payment on the senior subordinated notes from cash flow without
resorting to the bank facility.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995, AND 1994
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net sales........................................ $279,733 $221,573 $202,134
Cost of sales, exclusive of items listed below... 210,223 166,974 154,839
Selling, general, and administrative expenses.... 51,667 41,251 38,023
Depreciation and amortization.................... 5,028 4,857 4,672
Merger and acquisition cost and other unusual
items........................................... 6,459 2,680 820
-------- -------- --------
Operating profit................................. 6,356 5,811 3,780
Interest expense (net of interest income of $602,
$269, and $252, respectively)................... 7,191 3,319 2,806
Foreign currency (gain) loss..................... 159 (143) (172)
Minority interest in subsidiaries................ 393 -- --
Other income, net................................ (158) (635) (786)
-------- -------- --------
Earnings (loss) before income taxes and
cumulative effect of change in accounting....... (1,229) 3,270 1,932
Income taxes..................................... 780 39 257
-------- -------- --------
Earnings (loss) before cumulative effect of
change in accounting............................ (2,009) 3,231 1,675
Cumulative effect of change in accounting........ (13,416)
-------- -------- --------
Net earnings (loss).............................. (2,009) 3,231 (11,741)
Preferred stock dividends ($1.94 per share)...... (1,543) (1,580) (1,617)
-------- -------- --------
Earnings (loss) applicable to common stock....... (3,552) 1,651 (13,358)
Retained earnings, beginning of year............. 12,815 12,024 25,761
Treasury stock transactions...................... (23) (860) (379)
-------- -------- --------
Retained earnings, end of year................... $ 9,240 $ 12,815 $ 12,024
======== ======== ========
Earnings (loss) per common share:
Primary
Before cumulative effect of change in method of
accounting.................................... $ (0.45) $ 0.21 $ 0.01
Cumulative effect of change in method of
accounting.................................... -- -- (1.72)
-------- -------- --------
Net earnings (loss)............................ $ (0.45) $ 0.21 $ (1.71)
======== ======== ========
Weighted average shares outstanding............ 7,981 7,911 7,801
======== ======== ========
Fully diluted
Before cumulative effect of change in method of
accounting.................................... $ (0.45) $ 0.17 $ 0.01
Cumulative effect of change in method of
accounting.................................... -- -- (1.72)
-------- -------- --------
Net earnings (loss)............................ $ (0.45) $ 0.17 $ (1.71)
======== ======== ========
Weighted average shares outstanding............ 7,981 9,820 7,801
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995, AND 1994
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss).............................. $ (2,009) $ 3,231 $(11,741)
Adjustments to reconcile net earnings (loss) to
net cash provided from operations:
Cumulative effect of change in method of
accounting for postretirement benefits other
than pensions.................................. -- -- 13,416
Depreciation and amortization................... 5,028 4,857 4,672
Gain on sale of property, plant, and equipment.. (59) (436) (23)
Deferred income taxes........................... (251) (33) (903)
Changes in assets and liabilities, net of assets
acquired and liabilities assumed:
Receivables, net................................ 2,363 (6,140) (1,260)
Inventories..................................... (2,626) 89 (113)
Prepaid expenses................................ 2,187 (877) 229
Accounts payable................................ (1,425) 1,648 (3,694)
Accrued expenses................................ 4,249 2,132 2,486
U.S. and foreign income taxes................... (912) (349) 55
Other........................................... (648) (775) (1,054)
-------- ------- --------
Net cash provided from operations................ 5,897 3,347 2,069
-------- ------- --------
Cash Flows From Investing and Other Activities:
Acquisition of Sofitam, net of cash acquired..... (52,105) -- --
Property, plant, and equipment additions......... (3,061) (5,559) (2,757)
Proceeds from sale of property, plant and
equipment....................................... 1,087 649 195
-------- ------- --------
Net cash used in investing and other activities.. (54,079) (4,910) (2,562)
-------- ------- --------
Cash Flows From Financing Activities:
Proceeds from senior subordinated notes.......... 100,000 -- --
Proceeds from term debt.......................... 490 2,122 485
Payments on term debt............................ (32,290) (819) (3,889)
Net increase (decrease) notes payable, banks..... (5,044) 559 (522)
Debt issuance cost............................... (11,506) -- --
Proceeds from issuance of common stock........... 42 -- 49
Treasury stock, net.............................. (370) 273 431
Preferred stock dividends........................ (1,543) (1,580) (1,617)
-------- ------- --------
Net cash provided from (used in) financing
activities...................................... 49,779 555 (5,063)
-------- ------- --------
Effect of Translation Adjustment on Cash.......... (4,482) 41 392
-------- ------- --------
Cash and Cash Equivalents:
Decrease in cash................................. (2,885) (967) (5,163)
Beginning of year................................ 2,966 3,933 9,097
-------- ------- --------
End of year...................................... $ 81 $ 2,966 $ 3,934
======== ======= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 81 $ 2,966
Accounts receivable, less allowance for doubtful accounts
of $3,752 and $1,150, respectively........................ 94,402 45,649
Inventories:
Raw materials and supplies................................ 30,689 5,840
Work in process........................................... 33,080 27,344
Finished goods............................................ 11,145 4,911
-------- --------
74,914 38,095
Prepaid expenses........................................... 5,056 3,188
-------- --------
Total current assets..................................... 174,453 89,898
Property, plant, and equipment, at cost:
Land and land improvements.................................. 4,982 3,311
Buildings and building improvements......................... 29,867 22,716
Machinery and equipment..................................... 64,473 57,138
Construction in progress.................................... 1,285 2,867
-------- --------
100,607 86,032
Less accumulated depreciation............................ 59,597 57,474
-------- --------
41,010 28,558
-------- --------
Other tangible assets........................................ 3,836 3,150
Goodwill, net................................................ 62,692 --
Other non-current assets and deferred charges, net........... 18,137 2,726
-------- --------
Total assets............................................. $300,128 $124,332
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
<CAPTION>
RESTATED
-----------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 81 $ 2,966
Accounts receivable, less allowance for doubtful accounts
of $3,752 and $1,150, respectively........................ 94,402 45,649
Inventories:
Raw materials and supplies............................... 30,689 5,840
Work in process.......................................... 33,080 27,344
Finished goods........................................... 11,145 4,911
-------- --------
74,914 38,095
Prepaid expenses........................................... 5,056 3,188
-------- --------
Total current assets................................... 174,453 89,898
Property, plant, and equipment, at cost:
Land and land improvements................................. 4,982 3,311
Buildings and building improvements........................ 15,386 22,716
Machinery and equipment.................................... 52,892 57,138
Construction in progress................................... 1,285 2,867
-------- --------
74,545 86,032
Less accumulated depreciation.............................. 33,535 57,474
-------- --------
41,010 28,558
-------- --------
Other tangible assets........................................ 3,836 3,150
Goodwill, net................................................ 62,692 --
Other non-current assets and deferred charges................ 18,137 2,726
-------- --------
Total assets................................................. $300,128 $124,332
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt..................... $ 4,447 $ 351
Notes payable to banks................................... 7,168 2,364
Accounts payable......................................... 53,593 18,689
Accrued expenses......................................... 53,618 18,141
-------- --------
Total current liabilities............................. 118,826 39,545
Senior subordinated notes................................. 100,000 --
Long-term debt, less current maturities................... 22,402 21,321
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation............................................... 11,995 14,576
Post-retirement benefit liability......................... 16,051 13,882
Minimum pension liability................................. 3,248 3,868
Other long-term liabilities............................... 342 110
Deferred income taxes..................................... 524 807
Minority Interest......................................... 925 --
-------- --------
274,313 94,109
-------- --------
Redeemable convertible preferred stock, at liquidation
value of $25 per share, 1,700 shares authorized, 960
shares issued............................................ 24,000 24,000
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation............................................... (11,692) (13,790)
Treasury stock, at cost, 167 and 151 shares, respectively. (4,171) (3,784)
-------- --------
8,137 6,426
-------- --------
Preferred stock, no par value; 3,300 shares authorized and
unissued................................................. -- --
Common stock, no par value; 30,000 shares authorized,
7,954 shares issued...................................... 19,452 19,409
Guaranteed Employers' Stock Ownership Plan (RSP)
obligation............................................... (303) (786)
Minimum pension liability................................. (3,248) (3,868)
Foreign currency translation adjustments.................. (7,271) (3,542)
Retained earnings......................................... 9,240 12,815
-------- --------
17,870 24,028
Treasury stock, at cost, 11 and 13 shares, respectively... (192) (231)
-------- --------
17,678 23,797
-------- --------
Total liabilities and shareholders' equity............ $300,128 $124,332
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1996 AND 1995
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
<CAPTION>
RESTATED
------------------
1996 1995
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.................... $ 4,447 $ 351
Notes payable to banks.................................. 7,168 2,364
Accounts payable........................................ 53,593 18,689
Accrued expenses........................................ 53,618 18,141
-------- --------
Total current liabilities............................. 118,826 39,545
Senior subordinated notes................................. 100,000 --
-------- --------
Long-term debt, less current maturities................... 22,402 21,321
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation............................................... 11,995 14,576
Post-retirement benefit liability......................... 16,051 13,882
Minimum pension liability................................. 3,248 3,868
Other long-term liabilities............................... 342 110
Deferred income taxes..................................... 524 807
Minority Interest......................................... 925 --
-------- --------
274,313 94,109
-------- --------
Redeemable convertible preferred stock, at liquidation
value of $25 per share, 1,700 shares authorized, 960
shares issued............................................ 24,000 24,000
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation............................................... (11,692) (13,790)
Treasury stock, at cost, 167 and 151 shares, respectively. (4,171) (3,784)
-------- --------
8,137 6,426
-------- --------
Preferred stock, no par value; 3,300 shares authorized and
unissued................................................. -- --
Common stock, no par value; 30,000 shares authorized,
7,954 shares issued...................................... 19,452 19,409
Guaranteed Employers' Stock Ownership Plan (RSP)
obligation............................................... (303) (786)
Minimum pension liability................................. (3,248) (3,868)
Foreign currency translation adjustments.................. (7,271) (3,542)
Retained earnings......................................... 9,240 12,815
-------- --------
17,870 24,028
Treasury stock, at cost, 11 and 13 shares, respectively... (192) (231)
-------- --------
17,678 23,797
-------- --------
Total liabilities and shareholders' equity............ $300,128 $124,332
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations--Tokheim Corporation and its subsidiaries are
principally engaged in the design, manufacture and servicing of electronic and
mechanical petroleum dispensing marketing systems, including service station
equipment, point-of-sale control systems, and card-and cash-activated
transaction systems for customers around the world. The Company markets its
products through subsidiaries located throughout the world. The Company has
major facilities in the United States, France, Canada, Germany, The
Netherlands, Scotland, and South Africa.
Principles of Consolidation--The Consolidated Financial Statements include
the accounts of Tokheim Corporation and its wholly- and majority-owned
subsidiaries (the "Company"). In addition, Bennett Sauser S.A., a 47%-owned
subsidiary in which the Company can directly influence a controlling financial
interest, has been consolidated. The Consolidated Financial Statements include
100% of the assets and liabilities of these subsidiaries, with the ownership
interest of minority participants recorded as "Minority interest" in the
Consolidated Balance Sheet. All significant intercompany accounts and
transactions have been eliminated in consolidation. On September 6, 1996, the
Company acquired the petroleum dispenser business ("Sofitam") of Sofitam,
S.A., which is included in the Consolidated Financial Statements since that
date. (See Note 2).
Translation of Foreign Currency--The financial position and results of
operations of the Company's foreign subsidiaries are measured using local
currency as the functional currency. Revenues and expenses of such
subsidiaries have been translated into U.S. dollars at average exchange rates
prevailing during the period. Assets and liabilities have been translated at
the rates of exchange at the balance sheet date. Translation gains and losses
are deferred as a separate component of shareholders' equity, unless there is
a sale or liquidation of the underlying foreign investments. Aggregate foreign
currency transaction gains and losses are included in determining earnings.
Risks and Uncertainties--Because of its diversity, the Company believes that
the risk of loss from non-insurable events in any one country would not have a
material adverse affect on the Company's operations as a whole. The Company is
not dependent on any single customer, group of customers, market, geographic
area or supplier of materials, labor or services. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts
reported in the Consolidated Financial Statements and accompanying notes. The
more significant areas requiring the use of management's estimates relate to
allowances for obsolete inventory and uncollectible receivables, warranty
claims, sales commissions, environmental and product liabilities,
postretirement pension, and other employee benefits, valuation allowances for
deferred tax assets, future obligations associated with the Company's
restructuring, future cash flows associated with assets, and useful lives for
depreciation and amortization. Actual results could differ from these
estimates, making it reasonably possible that a change in certain of these
estimates could occur in the near term. Financial instruments which
potentially subject the Company to concentrations of credit risk consist
principally of cash and trade receivables. The Company places its cash with
high credit quality financial institutions. At times, cash in banks may exceed
FDIC insurance limits. Concentration of credit risk with respect to trade
receivables is minimal due to the Company's large customer base and ongoing
control procedures, which monitor the credit worthiness of customers.
Fair Value of Financial Instruments--The fair value of cash and cash
equivalents, trade receivables, and accounts payable approximates the carrying
value because of the short-term maturities of these financial instruments.
The interest rate on the Company's bank debt and short-term notes payable
fluctuates with current market rates. Consequently, the carrying value of the
bank debt and short-term notes payable approximates the market prices for the
same or similar issues in future periods. The estimated fair value of the
Company's senior subordinated Notes was approximately equal to the carrying
value at November 30, 1996, since the Notes were recently issued and not
traded in the open market until December 1996.
19
<PAGE>
The fair value of the Company's convertible cumulative preferred stock,
which is held in the Trust of the Company's Retirement Savings Plan,
approximates the carrying value, as such stock is not traded in the open
market, and the value at conversion is equal to a fixed redemption value in
cash or equivalent amounts of common stock.
Inventory Valuation--Inventories are valued at the lower of cost and market.
Cost is determined using the first-in, first-out (FIFO) method (see accounting
change note below).
Accounting Change--During fiscal 1996, the Company changed its method of
valuing domestic inventories from the last-in, first-out (LIFO) method to the
first-in, first-out (FIFO) method. The change was made because the Company had
begun to realize and expects to continue to experience cost reductions as a
result of technological improvements in its manufacturing process. The Company
believes that the FIFO method is preferable to the LIFO method as the change
conforms the inventories of domestic and foreign subsidiaries to the same cost
method, inventories are reflected in the Company's balance sheet at their most
recent value; and revenues are better matched with expenses. Also the FIFO
method is the predominant method used in the industry in which the Company
operates. This change in the method of valuing inventories has been applied
retroactively, and comparative amounts for the two prior periods presented
have been restated to apply the FIFO method. The change was applied as of the
beginning of 1994, increasing inventories, as previously reported, by $2,932,
at December 1, 1993, and increasing retained earnings from $22,829 to $25,761
at that date.
The effect of the accounting change on income for the years ended November
30, 1995 and 1994 is as follows (see also quarterly financial information Note
13):
<TABLE>
<CAPTION>
1995 1994
------ --------
<S> <C> <C>
Net income (loss), as previously reported.................... $2,876 $(11,554)
Increase to income or loss................................... 355 (187)
------ --------
Net income (loss) after change............................... $3,231 $(11,741)
====== ========
<CAPTION>
PER SHARE BASIS: (SEE ALSO STATEMENT OF EARNINGS AND RETAINED
EARNINGS)
- -------------------------------------------------------------
<S> <C> <C>
Primary...................................................... $ 0.05 $ (0.02)
Fully diluted................................................ $ 0.04 $ (0.02)
</TABLE>
The effect of the accounting change on earnings for the year ended November
30, 1996, was to increase the net loss by $186 or $0.02 per share on a primary
and fully diluted basis.
There was no tax effect from the accounting change for the three years
presented in the statement of earnings and retained earnings due to the
Company's domestic tax position and net operating loss carryforwards. The tax
effects of the accounting change did not impact net income or retained
earnings because the Company's net deferred tax asset increased or decreased
with the corresponding changes in the offsetting valuation allowance.
Property and Depreciation--Depreciation of plant and equipment is determined
generally on a straight-line basis over the estimated useful lives of the
assets. Upon retirement or sale of assets, the cost of the disposed assets and
related accumulated depreciation are removed from the accounts and any
resulting gain or loss is credited or charged to income. These gains and
losses are accumulated and shown as a component of other expense, net in the
statement of earnings and retained earnings. Buildings are generally
depreciated over 40 years. Machinery and equipment are depreciated over
periods ranging from five to ten years.
Software, and Research and Development Costs--Amortization of capitalized
software development costs is provided over the estimated economic useful life
of the software product on a straight-line basis, generally three years.
Unamortized software costs included in other non-current assets were $479 and
$543 at November 30, 1996 and 1995, respectively. The amounts amortized and
charged to expense in 1996, 1995, and 1994 were $163, $109, and $220,
respectively.
20
<PAGE>
All other product development expenditures are charged to research and
development expense in the period incurred. These expenses amounted to
$15,909, $12,746, and $10,239 in 1996, 1995, and 1994, respectively. In 1996
the Company entered into a non-cancelable technology and licensing agreement
related to vapor recovery. Under the terms of the agreement, the Company is
obligated to pay $825 in each of 1997 and 1998 for the use of this technology.
Goodwill and Other Intangible Assets--Goodwill is amortized on a straight-
line basis over 40 years. The Company will continue to review whether the
facts and circumstances indicate that the remaining estimated useful life of
goodwill may warrant revision or that the carrying amount may not be
recoverable, using profitability projections to assess whether future
operating income on a non-discounted basis is likely to exceed the
amortization over the remaining life of the goodwill. The amount amortized and
charged to expense in 1996 was approximately $420.
Other non-current assets and deferred charges consist primarily of debt
issuance costs. These costs are amortized over the terms of the related debt
agreements on a straight-line basis, periods ranging from six to ten years.
Amortization included in interest expense at November 30, 1996 and 1995 was
$401 and $504, respectively. During 1996, the Company wrote-off approximately
$233 of deferred debt issuance costs and capitalized approximately $11,506 of
costs incurred in connection with the refinancing of the Company's preexisting
debt and issuance of senior subordinated Notes for the acquisition of Sofitam.
Advertising and Promotion--All costs associated with advertising and product
promotion are expensed in the period incurred. These expenses amounted to
$2,268, $1,579, and $1,544 in 1996, 1995, and 1994, respectively.
Income Taxes--The provision for income taxes includes federal, foreign,
state and local income taxes currently payable and taxes deferred because of
temporary differences between the financial statement and the tax basis of
assets and liabilities. No additional U.S. income taxes or foreign withholding
taxes have been provided on earnings of foreign subsidiaries which are
expected to be reinvested indefinitely. Additional income and withholding
taxes are provided, however, on planned repatriations of foreign earnings.
(See Note 14).
In the first quarter of 1994, the Company adopted a mandatory noncash
accounting change pursuant to Statement of Financial Accounting Standards
(SFAS) No. 106, which governs accounting for non-pension retiree benefit
costs. SFAS No. 106 requires companies to project the future cost of providing
retiree medical, dental, and life insurance benefits and to recognize that
cost as benefits are earned during the employee's career. Tokheim's
actuarially-determined liability was $13.4 million. The Company elected to
record that amount as a one-time noncash accounting adjustment versus the
alternative of amortizing the amount over a period not to exceed 20 years. At
November 30, 1996, the Company's accrual was $16.9 million. Adoption of the
new accounting standard had no cash flow effect, nor did it represent a change
with respect to previous fiscal years in the benefit levels provided to
employees.
Accounting Pronouncements--SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" is effective
for the year ending November 30, 1997. This statement requires that long-lived
assets and certain identifiable intangibles to be held and used by an entity
be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be fully recoverable. In
the opinion of management, this statement is not expected to materially impact
the Company's financial position or results of operations.
21
<PAGE>
SFAS No. 123, "Accounting for Stock-Based Compensation," is effective for
the year ending November 30, 1997. This statement encourages, but does not
require, companies to recognize compensation expense for grants of stock,
stock options, and other equity instruments based on a fair value method of
accounting. Companies that choose not to adopt the new expense recognition
rules of SFAS No. 123 will continue to apply the existing accounting rules of
Accounting Principles Board Opinion (APBO) No. 25, but will be required to
provide pro forma disclosure of the compensation expense determined under the
fair value provisions of SFAS No. 123, if material. APBO No. 25 requires that
there be no recognition of compensation expense for the stock-based
compensation arrangements provided by the Company, where the exercise price is
equal to or greater than the market price at the date of grant. The Company
expects to continue to follow the accounting provisions of APBO No. 25 for
stock-based compensation and to furnish the pro forma disclosures required
under SFAS No. 123, if material.
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," is effective for the year ending November
30, 1998. In the opinion of management, this statement will not have a
material impact on the Company's financial position or results of operations.
American Institute of Certified Public Accountants Statement of Position No.
96-1, "Environmental Remediation Liabilities," is effective for the year
ending November 30, 1998. Management has not yet determined the impact that
adoption of this statement will have on the Company's financial position or
results of operations, but does not anticipate that material liabilities will
need to be recorded in addition to those already provided for under the
provisions of generally accepted accounting principles as prescribed by SFAS
No. 5, "Accounting for Contingencies."
Product Warranty Costs--Anticipated costs related to product warranty are
expensed in the period of sales.
Cash Flows--For purposes of the statement of cash flows, the Company
considers all highly liquid investments purchased with an initial maturity of
90 days or less to be cash equivalents. At November 30, 1996, $566 of cash was
restricted for the purchase of minority interest shares related to the
acquisition of Sofitam. This amount is included in "Other tangible assets" on
the balance sheet.
Supplemental disclosures of cash flow information:
Cash paid during the year for:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------ ------
<S> <C> <C> <C>
Interest.............................................. $ 4,918 $3,060 $2,441
Income taxes.......................................... 1,013 976 894
Noncash transactions primarily related to the issuance
of treasury stock in settlement of Retirement Savings
Plan distributions................................... 23 976 612
Noncash adjustments to certain assets and liabilities
in connection with the settlement of the corporate
reorganization....................................... -- 383 224
Liabilities assumed................................... 113,776 -- --
Deferred merger and acquisition cost.................. 9,799 -- --
</TABLE>
Reclassifications--Certain prior year amounts in these financial statements
have been reclassified to conform with current year presentation.
2. ACQUISITION
On September 6, 1996, the Company acquired the petroleum dispenser business
("Sofitam") of Sofitam S.A., for $107,400. The acquisition was financed
through the issuance of $100,000 in aggregate principal amount of 11 1/2%
senior subordinated Notes due 2006, and by an $80,000 revolving credit
facility. Sofitam, which is based in Paris, France, designs and manufactures
products that are similar to those produced by the Company. Sofitam's
operations are included in the Company's African and European geographical
segments.
22
<PAGE>
The acquisition has been accounted for as a purchase, and Sofitam's
financial results have been included in the Consolidated Financial Statements
since the date of acquisition. The purchase price has been allocated to assets
acquired and liabilities assumed based on estimated fair market values at the
date of acquisition. The purchase price exceeded the fair value of net assets
acquired by $63,113. This amount is recognized as goodwill and is being
amortized on a straight-line basis over 40 years. The amount amortized and
charged to expense in 1996 was approximately $420.
Included in the $63,113 goodwill amount are certain costs the Company
believes will be spent to close down redundant operations in connection with
the reorganization and rationalization of Sofitam's operations. The table
below summarizes the deferred costs included in goodwill and accrued expenses
as they relate to the redundancy plan for Sofitam. The amounts do not include
costs associated with consolidation of previously-existing Tokheim
subsidiaries, which will be expensed as incurred, nor do these costs benefit
production in future periods. (See Note 3).
<TABLE>
<CAPTION>
ITEM AMOUNT DESCRIPTION
- ---- ------ -----------
<S> <C> <C>
Employee termination
benefits............... $6,651 Approximately 300 employees (principally at 2 locations)
Asset write-off and
disposal cost.......... 2,108 Up to 10 locations
Other plant closing
cost................... 1,040 Leases and other contract terminations
------
$9,799
======
</TABLE>
In 1996, the Company charged $1,043 of restructuring expenses associated
with the Company's plan for merging the operations of Tokheim and Sofitam.
These items were charged to operating expenses as "Merger and acquisition cost
and other unusual items." The Company estimates future non-accruable
restructuring charges related to the merger plan at approximately $2,000 in
fiscal year 1997. In addition, normal operating charges associated with the
plan, which will be expensed as incurred, are estimated at $2,100 in total for
fiscal years 1997 and 1998.
The following unaudited pro forma information summarizes consolidated
results of operations of Tokheim and Sofitam as if the acquisition had
occurred at the beginning of 1996 and 1995. These unaudited pro forma results
have been prepared for comparative purposes only and include certain
adjustments, such as additional amortization expense as a result of goodwill
and other intangible assets, and increased interest expense on acquisition
debt. They do not purport to be indicative of the results of operation which
actually would have resulted had the combination been in effect on December 1,
1994 or 1995, or the future results of operations of the consolidated
entities. The Company is in the process of closing several manufacturing,
sales, service and administrative operations in Europe, consolidating these
operations into its administrative center in Tremblay, France and into its
manufacturing facility in Normandy, France. Anticipated efficiencies from the
merger of Tokheim and Sofitam are not fully determinable and therefore have
been excluded from the amounts included in the pro forma summary presented
below.
<TABLE>
<CAPTION>
UNAUDITED
YEARS ENDED
NOVEMBER 30,
------------------
(IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS) 1996 1995
- ----------------------------------------------- -------- --------
<S> <C> <C>
Revenues.................................................... $413,143 $399,023
Merger and acquisition cost and other unusual items......... 6,459 4,294
Net income (loss)........................................... (4,999) (5,208)
Net income (loss) per common share.......................... (0.82) (0.86)
</TABLE>
Merger and acquisition cost and other unusual items included in pro forma
net loss for 1996 and 1995 was $6,459 and $4,294, respectively. The $4,294
figure represents a one-time charge to prepare Sofitam for sale.
23
<PAGE>
3. MERGER AND ACQUISITION COST AND OTHER UNUSUAL ITEMS
At November 30, 1996, the Company had identified expenses brought about by
the acquisition of Sofitam, costs associated with the restructuring of the
Company, pending and settled litigation, and policy adjustments above and
beyond the normal recurring amounts. These cost have been aggregated and shown
as a single operating line item, "Merger and acquisition cost and other
unusual items," in the Statement of Earnings and Retained Earnings.
Merger and acquisition cost/Restructuring--During 1996, the Company
implemented several corporate realignment initiatives, including work force
reductions and reorganization of its domestic and international operations
related to the consolidation of Sofitam. In addition, during 1995, the Company
reorganized its European operations to improve manufacturing and service
efficiencies and to reduce cost. Amounts charged to operations for the years
ended November 30, 1996 and 1995 approximated $2,035 and $842, respectively.
Litigation/Other--During 1996, the Company settled claims related to prior
divestitures and to the termination of an exclusive sales representative
agreement with a foreign distributor. The Company also accrued and charged to
operations the potential adverse outcome of a Pension Benefit Guaranty
Corporation inquiry with respect to a terminated benefit plan payout in 1991.
In 1995 and 1994 the Company settled two environmental related matters in the
amounts of $300 and $650, respectively. In addition, the Company incurred
charges in 1996, 1995, and 1994 in connection with customer satisfaction
programs relating to previously-sold dispensers. Total amounts charged to
operations relating to litigation/other for fiscal years 1996, 1995, and 1994
were $4,680, $1,838, and $820, respectively
The above costs, although not uncommon to the Company's industry, are
considered by management to be significant in size and nature, and warrant
separate disclosure. Amounts within the Consolidated Statement of Earnings and
Retained Earnings have been reclassified for all periods presented, including
the quarterly financial information in Note 13, to reflect the
reclassification of these cost for 1995 and 1994, to "Merger and acquisition
cost and other unusual items."
4. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred acquisition cost...................................... $ 9,799 --
Salaries, wages, and commissions............................... 9,240 $ 4,308
Compensated absences........................................... 6,833 3,480
Warranty....................................................... 5,193 2,821
Retirement benefits and profit sharing......................... 4,659 1,403
Interest....................................................... 3,294 418
Employee payroll taxes......................................... 3,091 132
Taxes (sales, VAT, and other).................................. 2,924 972
Legal and professional......................................... 2,393 1,783
Deferred revenue............................................... 1,989 309
Other.......................................................... 4,203 2,515
------- -------
$53,618 $18,141
======= =======
</TABLE>
5. NOTES PAYABLE TO BANKS
Notes payable to banks represent short-term borrowings under domestic and
foreign lines of credit. At November 30, 1996, aggregate amounts outstanding
under these lines were $23,300. $16,144 of this amount has been classified as
long-term debt since the Company has the ability (under the terms of the
agreement) and the
24
<PAGE>
intent to finance these obligations beyond one year. Domestic and foreign
credit lines totaled approximately $75,311, of which $52,011 was unused at
November 30, 1996. The weighted average annual interest rate was 8.8% for
fiscal 1996. The range of domestic and foreign rates at November 30, 1996 was
8.2% to 10.0% and 4.4% to 6.7%, respectively.
On September 3, 1996 the parent Company (the "Parent") and certain of its
French subsidiaries (the "French Borrowing Subsidiaries") entered into a six-
year $80,000 credit facility (the "Bank Credit Agreement"). The agreement
consists of a working capital/letter of credit facility in the amount of
$67,768 (the "Credit Agreement") and an Employee Stock Ownership plan
assignment facility in the amount of $12,232 (the "ESOP Credit Agreement").
The Credit Agreement can be drawn down by the Parent and/or the French
Borrowing Subsidiaries if they are in compliance with a borrowing base
limitation. The borrowing base is calculated on specified percentages of
eligible receivables and inventories and is determined independently for the
Parent and the French Borrowing Subsidiaries. The unused portion of this
commitment is subject to a commitment fee ranging from 0.375% to 0.5%,
depending on the aggregate leverage ratio of the Parent and the French
Borrowing Subsidiaries. The Credit Agreement permits borrowings in U.S.
dollars, French francs, British pounds sterling, German deutsche marks and
other currencies which are freely available and convertible into U.S. dollars.
At November 30, 1996, the aggregate amount outstanding under the Credit
Agreement was $16,144. This amount has been classified as long-term debt,
since the Company has the ability under the terms of the agreement, which
expires on September 3, 2002, and the intent, to finance these obligations
beyond one year.
The ESOP Credit Agreement was used to assign existing indebtedness of the
Parent and the Tokheim Employee Stock Ownership Plan (the "ESOP"). The unused
portion of the ESOP Credit Agreement can not be reclaimed as part of the
Credit Agreement, nor can any amounts be re-borrowed by the Parent or the
French Borrowing Subsidiaries. The principal amount outstanding at November
30, 1996 aggregated to $11,692 and is amortized over the remaining life of the
pre-existing agreement. (See Note 7, captioned "Term Debt and Guaranteed
Employees' Stock Ownership Plan (RSP) Obligation").
Indebtedness of the Parent under the Bank Credit Agreement is collateralized
by (i) a first perfected security interest in and lien on certain of the real
and personal assets of the Parent (including claims against subsidiaries to
which the Parent has made an intercompany loan) and each of the Parent's
direct and indirect wholly-owned United States subsidiaries, (ii) a pledge of
100% of the stock of the Parent's direct and indirect wholly-owned United
States subsidiaries, (iii) a pledge of 65% of the stock of the French holding
company, and (iv) a guarantee by all of the Parent's direct and indirect
wholly-owned United States subsidiaries. Indebtedness of the French Borrowing
Subsidiaries under the Bank Credit Agreement is collateralized by (i) a first
perfected security interest in certain of the real and personal assets of the
French Borrowing Subsidiaries, the Parent and all of the Parent's direct and
indirect wholly-owned United States subsidiaries, (ii) a pledge of 100% of the
stock of the French Borrowing Subsidiaries, and (iii) a guarantee by the
Parent, the French holding company, and all of the Parent's direct and
indirect wholly-owned United States subsidiaries. Any lien on the real
property in France will be limited to the fair market value of such property.
Indebtedness under the Bank Credit Agreement bears interest based (at the
applicable borrower's option) upon (i) the Base Rate in the case of U.S.
dollar-denominated loans (defined as the higher of the applicable prime rate
and the federal funds rate plus 0.5%) plus an applicable margin based upon the
Company's leverage ratio (with a range of 0.5% to 1.75%) or (ii) the
applicable Eurocurrency rate for one, two, three, or six months, plus an
applicable margin based upon the Company's leverage ratio (with a range of
1.50% to 2.75%). The Bank Credit Agreement contains customary provisions
relating to yield protection, availability and capital adequacy. In the event
of an occurrence and the continuation of a default, the agent or the bank may
increase the interest rate payable to the otherwise applicable rate plus 2%.
The Bank Credit Agreement requires the Company to meet certain consolidated
financial tests, including minimum levels of consolidated net worth, minimum
levels of consolidated EBITDA (as defined), minimum
25
<PAGE>
consolidated interest coverage, maximum consolidated leverage ratio and
minimum consolidated fixed charge coverage ratio. The Bank Credit Agreement
also contains certain covenants common to such agreements, which among other
things, limit the incurrence of additional indebtedness and guarantees,
dividends, transactions with affiliates, significant asset sales, investments
and acquisitions, mergers and consolidations, prepayments and amendments to
other indebtedness, liens and encumbrances and other matters customarily
restricted in such agreements.
The Bank Credit Agreement contains events of default, including payment
defaults, breaches of representation and warranties, covenant defaults, cross
default to certain other indebtedness, certain events of bankruptcy and
insolvency, ERISA defaults, a change in control default, judgment defaults and
failure of any guaranty or security agreement supporting the Bank Credit
Agreement to be in full force and effect.
In 1995, the aggregate amount outstanding under revolving credit agreements
was $19,064, of which $16,700 was classified as long-term debt since the
Company had the ability, under the terms of the agreement, and at that time
the intent, to finance these obligations beyond one year. The weighted average
annual interest rate was 8.6% for fiscal 1995. The range of domestic and
foreign rates at November 30, 1995 was 7.1% to 9.8%.
6. SENIOR SUBORDINATED NOTES
During 1996 the Company issued senior subordinated Notes (Notes) to finance
the acquisition of Sofitam.
The aggregate principal amount of the Notes, which mature on August 1, 2006
is $100 million. Interest on the Notes accrues at the rate of 11 1/2% per
annum and is payable semi-annually in cash on each February 1 and August 1
commencing on February 1, 1997, to the registered holders at the close of
business on the January 15 and July 15 immediately preceding the applicable
interest payment date.
The Notes are general unsecured obligations of the Company, subordinate in
right of payment to all existing and future senior debt of the Company,
including the Company's obligations under the Bank Credit Agreement, and to
all indebtedness and other obligations of the Company's subsidiaries. Evidence
of default under the Bank Credit Agreement could prevent payment of principal
and interest on the Notes.
The Notes are redeemable, at the Company's option, in whole at any time or
in part from time to time, on and after August 1, 2001, upon not less than 30
nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof), if redeemed during the
twelve-month period commencing on August 1 of the year set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of
redemption.
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001........................................................... 105.750%
2002........................................................... 103.833%
2003........................................................... 101.917%
2004 and thereafter............................................ 100.000%
</TABLE>
On or prior to August 1, 1999, the Company may, at its option, use the net
cash proceeds of one or more public equity offerings to redeem up to an
aggregate of 35% of the principal amount of the Notes originally issued at the
following redemption prices (expressed as percentages of the principal amount
thereof), if redeemed during the twelve-month period ending on August 1 of the
year set forth below, plus, in each case, accrued and unpaid interest thereon,
if any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1997........................................................... 111.500%
1998........................................................... 109.857%
1999........................................................... 108.214%
</TABLE>
26
<PAGE>
To effect the foregoing redemption with the proceeds of any public equity
offering, the Company must make such redemption not more than 120 days after
the consummation of any such public equity offering.
The indenture under which the Notes are issued provides that, upon the
occurrence of a "Change of Control," each Note holder will have the right to
require that the Company purchase all or a portion of the holder's Notes at a
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest to the date of purchase.
The indenture also contains restrictions common to such agreements,
including among others: limitation on incurrence of additional indebtedness;
limitation on restricted payments; limitation on asset sales; limitation on
dividend and other payment restrictions affecting subsidiaries; limitation on
preferred stock of subsidiaries; limitation on liens, merger, consolidation
and sale of assets; and limitations on transactions with affiliates.
7. TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN (RSP) OBLIGATION
Term debt at November 30, 1996 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
0.0% Belgian government note, maturing $25, due in quarterly
installments switching to $25, due in annual installments
through 1999 (a)............................................. $ 129 $ --
3.5% German bonds, maturing $46, due in semiannual
installments through 1998 (a)................................ 184 292
5.0% to 9.6% notes payable, maturing $561 to $992, due in
annual installments through 1997 (a)......................... 1,553 --
8.1% notes payable, maturing $7 to $12, due in semiannual
installments through
2001 (a)..................................................... 85 --
11.0% notes payable, maturing $1 to $27, due in quarterly
installments through
2006 (a)..................................................... 327 --
11.5% notes payable, maturing $53 to $66, due in quarterly
installments through
1998 (a)..................................................... 346 --
12.0% to 15.0% notes payable, maturing $15 to $26, due in
quarterly installments through 2002 (a)...................... 879 --
14.3% notes payable, maturing $4 to $7, due in monthly
installments through
2000 (a)..................................................... 223 --
18.5% note payable, maturing $6, due in monthly installments
through 1999 (a)............................................. 153 253
10.5% to 12.5% capital lease obligations, maturing $1 to $4,
in annual installments through 2000 (a)...................... 3,300 --
9.15% capital lease obligation, maturing $280 to $543, in
annual installments through 2004 (a)......................... 3,230 --
Credit Agreement, variable rate, due 2002, rates ranging from
8.18% to 10.0% at November 30, 1996 (b)...................... 16,144 --
Other......................................................... 296 259
Industrial Revenue Bonds, variable rate, paid in full during
1996, rate of 4.1% at
November 30, 1995 (a)........................................ -- 4,000
Capital lease obligations, variable rate, maturing $1 each,
due in monthly installments through 1996, rate of 18.5% at
November 30, 1995 (a)........................................ -- 168
Revolving credit facility, variable rate, refinanced in 1996,
rates ranging from 8.8% to 9.8% at November 30, 1995 (c)..... -- 16,700
------- -------
26,849 21,672
Less: Current maturities...................................... 4,447 351
------- -------
$22,402 $21,321
======= =======
</TABLE>
27
<PAGE>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation at November 30,
1996 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate, maturing $550 to $760 quarterly through 2001,
rate of 7.013% at November 30, 1996 (b)...................... $11,692 $13,790
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate maturing $303 annually through 1997, rate of
8.075% at November 30, 1996 (b).............................. 303 786
------- -------
$11,995 $14,576
======= =======
</TABLE>
- --------
(a) Aggregate cost of plant and equipment pledged as collateral under revenue
bonds and lease obligations is $13,258
(b) Per the Bank Credit Agreement as described in Note 5, the term obligation
matures on September 3, 2002.
(c) Per the domestic revolving credit agreement as described in Note 5. This
agreement was paid in full through utilization of proceeds from the
Company's existing Bank Credit Agreement.
Aggregate scheduled maturities of the above term debt and Guaranteed
Employees' Stock Ownership Plan (RSP) obligation during the ensuing five years
approximate $7,013, $4,679, $3,775, $3,521, and $2,146 respectively.
8. OPERATING LEASES
The Company leases certain manufacturing and office equipment, vehicles, and
office and warehousing space under operating leases. These leases generally
expire in periods ranging from one to eight years.
In 1996 the Company executed various operating leases for manufacturing
equipment. The leases are effective for a term of eight years with interest
rates ranging from 9.7% to 10.4% and monthly rentals ranging from $3 to $72.
The leases contain early purchase options based on estimated fair market
value. The options are exercisable at the Company's discretion beginning in
the fifth and seventh years.
In 1995 the Company leased a CAD/CAM system. The lease is effective for a
term of three years with an interest rate of 12% and monthly rentals ranging
from $55 to $65. The lease contains a fair market value purchase option at the
end of the lease term.
Amounts charged to expenses under operating leases in 1996, 1995, and 1994
were $2,835, $1,986, and $1,077, respectively. Future minimum rental payments
under noncancelable operating leases during the ensuing five years approximate
$3,030, $1,984, $1,592, $1,472, and $1,458.
9. STOCK OPTION PLANS
The Company has three separate Stock Option Plans, as outlined below:
1992 Stock Incentive Plan (SIP)
The Plan contains both incentive stock options (ISOs) and non-qualified
stock options (NSOs). The price of each share under this Plan for an ISO or
NSO shall not be less than the fair market value of Tokheim Common Stock on
the date the option is granted.
Options granted under the SIP become exercisable at the rate of
approximately 25% of the total options granted per year, beginning one year
after the grant date. All options expire within ten years from the date on
which they were granted.
In addition, the SIP provides for the granting of Stock Appreciation Rights
(SARs) and Restricted Stock Awards (RSAs). At November 30, 1996 no SARs or
RSAs had been granted.
1982 Incentive Stock Option Plan (ISOP) and 1982 Unqualified Stock Option
Plan (USOP)
Effective January 21, 1992, no additional shares could be granted under
these plans. All options expire within ten years from the date on which they
were granted.
28
<PAGE>
The price of each share under the ISOP was not less than fair market value of
Tokheim Common Stock on the date the option was granted, and under the USOP was
not less than 85% of the fair market value of Tokheim Common Stock on the date
the option was granted.
Options granted under the respective plans during 1996, 1995, and 1994, are
as follows:
<TABLE>
<CAPTION>
1992 STOCK INCENTIVE PLAN
-------------------------
YEAR OF GRANT ISO NSO
------------- -------------- ------------
<S> <C> <C>
1996......................................... 45,000 --
1995......................................... 35,000 --
1994......................................... 19,000 --
</TABLE>
The following table sets forth the status of all outstanding options at
November 30, 1996:
<TABLE>
<CAPTION>
EXERCISABLE IN
OPTION PRICE OPTIONS THE NEXT ONE TOTAL OPTIONS
PER SHARE EXERCISABLE TO FOUR YEARS OUTSTANDING
------------ ----------- -------------- -------------
<S> <C> <C> <C>
$20.0000........................ 23,550 -- 23,550
$12.3750........................ 3,000 -- 3,000
$12.2500........................ 500 -- 500
$11.9375........................ 4,500 4,500 9,000
$ 9.3750........................ 11,250 3,750 15,000
$ 9.0000........................ -- 2,000 2,000
$ 8.8800........................ 90,870 -- 90,870
$ 8.5000........................ 3,750 11,250 15,000
$ 7.8750........................ 15,000 -- 15,000
$ 7.7500........................ 30,000 -- 30,000
$ 7.1250........................ -- 43,000 43,000
$ 6.8750........................ 15,000 -- 15,000
$ 6.8125........................ 137,968 52,366 190,334
------- ------- -------
335,388 116,866 452,254
======= ======= =======
</TABLE>
Transactions in stock options under these plans are summarized as follows:
<TABLE>
<CAPTION>
SHARES
UNDER
OPTION PRICE RANGE
------- --------------
<S> <C> <C> <C>
Outstanding, November 30, 1993................... 565,728 $ 6.81- $20.00
Granted.......................................... 19,000 $10.75- $11.94
Exercised........................................ (29,950) $ 6.81- $ 8.88
Canceled or expired.............................. (12,250) $ 8.88- $20.00
-------
Outstanding, November 30, 1994................... 542,528 $ 6.81- $20.00
Granted.......................................... 35,000 $ 8.50
Exercised........................................ --
Canceled or expired.............................. (95,187) $ 6.81- $20.00
-------
Outstanding, November 30, 1995................... 482,341 $ 6.81- $20.00
Granted.......................................... 45,000 $ 7.13- $ 9.00
Exercised........................................ (5,000) $ 8.75
Canceled or expired.............................. (70,087) $ 6.81- $20.00
-------
Outstanding, November 30, 1996................... 452,254 $ 6.81- $20.00
=======
<CAPTION>
SHARES
-------
<S> <C> <C> <C>
Reserved for options:
November 30, 1994.............................. 98,550
November 30, 1995.............................. 95,462
November 30, 1996.............................. 98,774
</TABLE>
29
<PAGE>
10. COMMON AND PREFERRED STOCK
Changes in common stock and common treasury stock are shown below:
<TABLE>
<CAPTION>
COMMON COMMON
STOCK TREASURY STOCK
--------- ---------------
SHARES AMOUNT SHARES AMOUNT
--------- ------- ------- ------
<S> <C> <C> <C> <C>
Balance, November 30, 1993............... 7,942,000 $19,594 191,000 $3,403
Shares purchased......................... -- -- -- 3
Stock options exercised.................. 7,000 (184) (22,000) (405)
Redemption of preferred stock............ -- -- (48,000) (852)
Employee termination benefits............ -- -- (13,000) (230)
Other.................................... -- -- (2,000) (32)
--------- ------- ------- ------
Balance, November 30, 1994............... 7,949,000 19,410 106,000 1,887
Redemption of preferred stock............ -- -- (59,000) (1,057)
Employee termination benefits............ -- -- (24,000) (427)
RSP Diversification...................... -- -- (8,000) (139)
Other.................................... -- (1) (2,000) (33)
--------- ------- ------- ------
Balance, November 30, 1995............... 7,949,000 19,409 13,000 231
Stock options exercised.................. 5,000 43 -- --
Employee termination benefits............ -- -- (1,000) (11)
Other.................................... -- -- (1,000) (28)
--------- ------- ------- ------
Balance, November 30, 1996............... 7,954,000 $19,452 11,000 $ 192
========= ======= ======= ======
</TABLE>
Changes in preferred stock and preferred treasury stock are shown below:
<TABLE>
<CAPTION>
PREFERRED
PREFERRED STOCK TREASURY STOCK
--------------- ---------------
SHARES AMOUNT SHARES AMOUNT
------- ------- ------- ------
<S> <C> <C> <C> <C>
Balance, November 30, 1993.................. 960,000 $24,000 112,000 $2,789
Shares redeemed............................. -- -- 22,000 562
RSP Contributions........................... -- -- (4,000) (89)
------- ------- ------- ------
Balance, November 30, 1994.................. 960,000 24,000 130,000 3,262
Shares redeemed............................. -- -- 29,000 720
RSP Contributions........................... -- -- (8,000) (198)
------- ------- ------- ------
Balance, November 30, 1995.................. 960,000 24,000 151,000 3,784
Shares redeemed............................. -- -- 31,000 771
RSP Contributions........................... -- -- (15,000) (384)
------- ------- ------- ------
Balance, November 30, 1996.................. 960,000 $24,000 167,000 $4,171
======= ======= ======= ======
</TABLE>
On July 10, 1989, the Company sold 960,000 shares of convertible cumulative
preferred stock to the Trust of the Company's Retirement Savings Plan (RSP) at
the liquidation value of $25 per share or $24,000. The preferred shares have a
dividend rate of 7.75%. The Trustees, who hold the preferred shares, may elect
to convert each preferred share to one common share in the event of redemption
by Tokheim, certain consolidations or mergers of Tokheim, or a redemption by
the Trustees which is necessary to provide for distributions under the RSP. A
participant may elect to receive a distribution from the RSP in cash or common
stock. If redeemed by the Trustees, the Company is responsible for purchasing
the preferred shares at the $25 floor value. The Company may elect to pay the
redemption price in cash or an equivalent amount of common stock. Due to the
redemption characteristics of the stock, the aggregate amount of future
redemptions for the next five years cannot be determined. See Note 17 to the
Consolidated Financial Statements, captioned "Retirement Plan Cost," for
further discussions on the preferred stock.
30
<PAGE>
11. EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of shares
outstanding during each year and the assumed exercise of dilutive employees'
stock options, less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of the Company's common stock.
The following table presents information necessary to calculate earnings
(loss) per share for fiscal years ended November 30, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
PRIMARY
-------------------------
RESTATED
----------------
1996 1995 1994
------- ------ --------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding...................... 7,939 7,893 7,801
Share equivalents................................. 42 18 --
------- ------ --------
Adjusted outstanding.............................. 7,981 7,911 7,801
======= ====== ========
Net earnings (loss):
Before cumulative effect of change in method of
accounting....................................... $(2,009) $3,231 $ 1,675
Cumulative effect of change in method of
accounting....................................... -- -- (13,416)
------- ------ --------
Net earnings (loss)............................... (2,009) 3,231 (11,741)
Preferred stock dividends......................... (1,543) (1,580) (1,617)
------- ------ --------
Earnings (loss) applicable to common stock........ $(3,552) $1,651 $(13,358)
======= ====== ========
Net earnings (loss) per common share:
Before cumulative effect of change in method of
accounting....................................... $ (0.45) $ 0.21 $ 0.01
Cumulative effect of change in method of
accounting....................................... -- -- (1.72)
------- ------ --------
Net earnings (loss)............................... $ (0.45) $ 0.21 $ (1.71)
======= ====== ========
</TABLE>
For 1996 and 1994, fully diluted earnings per share is considered to be the
same as primary earnings per share, since the effect of certain potentially
dilutive securities would be antidilutive.
<TABLE>
<CAPTION>
FULLY DILUTED
-------------------------
RESTATED
----------------
1996 1995 1994
------- ------ --------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding...................... 7,939 7,893 7,801
Share equivalents................................. 42 18 --
Weighted conversion of preferred stock............ -- 1,909 --
------- ------ --------
Adjusted outstanding.............................. 7,981 9,820 7,801
======= ====== ========
Net earnings (loss):
Before cumulative effect of change in method of
accounting....................................... $(2,009) $3,231 $ 1,675
Cumulative effect of change in method of
accounting....................................... -- -- (13,416)
------- ------ --------
Net earnings (loss)............................... (2,009) 3,231 (11,741)
Incremental RSP expense........................... (1,543) (1,580) (1,617)
------- ------ --------
Earnings (loss) applicable to common stock........ $(3,552) $1,651 $(13,358)
======= ====== ========
Net earnings (loss) per common share:
Before cumulative effect of change in method of
accounting....................................... $ (0.45) $ 0.17 $ 0.01
Cumulative effect of change in method of
accounting....................................... -- -- (1.72)
------- ------ --------
Net earnings (loss)............................... $ (0.45) $ 0.17 $ (1.71)
======= ====== ========
</TABLE>
31
<PAGE>
12. FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Consolidated foreign currency translation adjustments are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Foreign currency translation adjustments, beginning of
year................................................. $(3,542) $(3,543)
Current year adjustments.............................. (3,729) 1
------- -------
Foreign currency translation adjustments, end of year. $(7,271) $(3,542)
======= =======
</TABLE>
The adjustments represent principally the effect of changes from the
beginning to the end of the year in the current rate of exchange translating
the net assets, including certain intercompany amounts of foreign
Subsidiaries. The majority of the 1996 adjustment is a result of long-term
loans to foreign affiliates, principally to execute the acquisition of
Sofitam.
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
During the fourth quarter of fiscal year 1996, the Company changed its
inventory valuation method to first-in, first-out for those inventories
previously accounted for under the last-in, first-out method. As such, all
previously reported quarterly financial information for fiscal years 1996 and
1995 has been restated.
Restated quarterly financial information for 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996
------------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER (A) TOTAL (A)
------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales................ $49,548 $57,620 $59,044 $113,521 (D) $279,733
Cost of products sold
(B)..................... 37,805 43,547 45,221 83,650 210,223
Net earnings (loss)...... (613) 486 (37)(C) (1,845)(E) (2,009)
Earnings (loss) per
share:
Primary:
Net earnings (loss).. (0.13) 0.01 (0.05) (0.28) (0.45)
Fully dilutive:
Net earnings (loss).. (0.13) 0.01 (0.05) (0.28) (0.45)
Earnings (loss) impact of
inventory valuation
change.................. $ 55 $ (50) $ 75 $ (266) $ (186)
</TABLE>
- --------
(A) Includes the results of operations for the three-month period ended
November 30, 1996, of Sofitam.
(B) Includes product development expenses and excludes depreciation and
amortization.
(C) Includes approximately $254 charged to operations for employee termination
benefits related to corporate restructuring brought on by the acquisition
and $669 for a litigation settlement.
(D) Sales of petroleum dispenser equipment have historically been seasonal.
Approximately 30% of Tokheim's annual net sales volume is recorded in the
fourth quarter of its fiscal year, with no significant variation among the
other three quarters. Amounts include approximately $46,228 of sales from
Sofitam.
(E) Includes approximately $387 charged to operations for employee termination
benefits related to corporate restructuring brought on by the acquisition,
$455 for various other acquisition charges, $780 for product/service exit
and $866 of accruals for a legal settlement and a possible adverse outcome
related to Pension Benefit Guaranty Corporation inquiries.
32
<PAGE>
<TABLE>
<CAPTION>
1995
------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net sales..................... $45,845 $54,127 $52,935 $68,666(C) $221,573
Cost of products sold (A)..... 36,324 40,464 40,487 49,699 166,974
Net earnings (loss)........... (1,273) 616 (851)(B) 4,739(D) 3,231
Earnings (loss) per share:
Primary:
Net earnings (loss)....... (0.21) 0.03 (0.16) 0.55 0.21
Fully dilutive:
Net earnings (loss)....... (0.21) 0.02 (0.16) 0.43 0.17
Earnings (loss) impact of
inventory valuation change... $ 90 $ 90 $ 90 $ 85 $ 355
</TABLE>
- --------
(A) Includes product development expenses and excludes depreciation and
amortization.
(B) Includes $500 nonrecurring operating expense in connection with developing
and implementing an earnings improvement plan for the Company's
international operations.
(C) Sales of petroleum dispenser equipment have historically been seasonal.
Approximately 30% of the Company's annual net sales volume is recorded in
the fourth quarter of its fiscal year, with no significant variation among
the other three quarters.
(D) Includes a net gain of $500 on the sale of a non-core product line and
related assets.
14. INCOME TAXES
The Company accounts for income taxes using the provisions of SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires recognition of deferred
tax liabilities and assets for the expected future tax consequences of events
that have been included in the Company's financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is established to
reduce the deferred tax assets when it is considered "more likely than not"
that some portion or all of the deferred tax assets will not be realized.
Tokheim Corporation acquired Sofitam, a French based Company, and its
subsidiaries, also foreign-based companies, on September 6, 1996. Included in
current foreign income tax provision is $904 and in current foreign income tax
payable is $(258) that relates to Sofitam and its subsidiaries.
Earnings (loss) before provision for (benefit from) income taxes consist of
the following:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Domestic....................................... $ (542) $ 8,946 $ 6,269
Foreign........................................ (687) (5,676) (4,337)
------- ------- -------
$(1,229) $ 3,270 $ 1,932
======= ======= =======
</TABLE>
Income tax provision (benefit) consist of the following:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Current:
Federal............................................ $(460) $(272) $ --
State.............................................. 277 249 673
Foreign............................................ 906 132 409
Deferred:
Foreign............................................ 57 (70) (825)
----- ----- -----
Total tax provision.............................. $ 780 $ 39 $ 257
===== ===== =====
</TABLE>
33
<PAGE>
A reconciliation of the reported tax expense (benefit) from continuing
operations and the amount computed by applying the statutory United States
federal income tax rate of 35% for November 30, 1996, 1995 and 34% for
November 30, 1994 to earnings before income taxes is as stated below. This
information has been restated for 1995 and 1994 to account for the change in
the method of valuing inventories from the LIFO method to the FIFO method as
more fully disclosed in Note 2.
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- -------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)...... $ (430) $ 1,144 $ 657
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax
benefit..................................... 180 162 444
Tax effect of dividends paid on stock held in
Retirement Savings Plan (RSP)............... (540) (553) (550)
Settlement of prior income tax returns and
adjustments to prior year accruals.......... (111) (572) 326
Difference in foreign and U.S. tax rates..... (78) (6) (104)
Change in book method of valuing inventories. -- -- 933
Increase (decrease) in valuation allowance... 316 (2,250) (2,425)
Earnings with no current tax benefit/(expense):
Domestic..................................... -- -- --
Foreign...................................... 1,201 1,985 1,089
Repatriation of foreign earnings............. 125 41 (162)
Miscellaneous items, net..................... 117 88 49
------ ------- -------
Provision (benefit)............................ $ 780 $ 39 $ 257
====== ======= =======
</TABLE>
The components of the deferred tax assets and liabilities as of November 30,
1996, 1995, and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Gross deferred tax assets:
Accounts receivable.......................... $ 215 $ 187 $ 322
Employee compensation & benefit accruals..... 7,107 6,198 5,949
Workers' compensation and other claims....... 242 153 215
Other........................................ 14 58 184
Warranty accrual............................. 1,032 946 818
EPA accrual.................................. 322 315 307
Net operating loss carryforwards............. 7,137 9,430 12,171
Alternative Minimum Tax credit............... 331 295 5
Valuation allowance.......................... (14,885) (14,569) (16,819)
-------- -------- --------
Total deferred tax asset................... $ 1,515 $ 3,013 $ 3,152
======== ======== ========
Gross deferred tax liabilities:
Property, plant and equipment................ 1,158 1,425 1,479
Pension assets............................... 524 253 151
Inventory.................................... (707) (867) 1,134
Investment in property....................... 214 214 208
Foreign earnings not permanently invested.... 327 202 161
Foreign exchange............................. 235 236 236
Export sales provision....................... 288 623 574
-------- -------- --------
Total deferred tax liability............... 2,039 3,820 3,943
-------- -------- --------
Net deferred tax liability..................... $ (524) $ (807) $ (791)
======== ======== ========
</TABLE>
34
<PAGE>
For domestic federal income tax purposes, the Net Operating Loss (NOL)
carryover amounts to $20,378, which will expire from 2006 to 2008. For
purposes of the Alternative Minimum Tax (AMT), the NOL carryover is $10,570
and the credit carryforward is $331.
15. GEOGRAPHICAL SEGMENTS
As a result of the acquisition of Sofitam and realignment of the Company in
1996, geographical segment information for 1995 and 1994 has been restated.
Amounts included in "Other" in prior year financial statements have been
reclassified to "North America." In addition, Merger and acquisition cost and
other unusual items have been accounted for in the originating segment.
Domestic and foreign operations information for 1996, 1995, and 1994 is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Net sales--unaffiliated customers:
North America............................ $ 147,763 $137,470 $128,819
Export................................... 38,541 36,238 28,848
Europe................................... 80,370 37,068 35,234
Other.................................... 13,059 10,797 9,233
--------- -------- --------
$ 279,733 $221,573 $202,134
========= ======== ========
Inter-area sales eliminations:
North America............................ $ 9,471 $ 10,778 $ 9,917
========= ======== ========
Europe................................... $ 1,100 $ 47 $ 202
========= ======== ========
Other.................................... $ 510 -- --
========= ======== ========
Operating income (loss):
North America............................ $ 494 $ 8,812 $ 5,613
Europe................................... 2,649 (4,232) (2,971)
Other.................................... 633 165 141
Adjustments and eliminations............. 2,580 1,066 997
--------- -------- --------
$ 6,356 $ 5,811 $ 3,780
========= ======== ========
Identifiable assets:
North America............................ $ 215,939 $121,044 $111,748
Europe................................... 177,689 22,914 25,189
Other.................................... 14,955 7,025 6,339
Adjustments and eliminations............. (108,455) (26,651) (27,025)
--------- -------- --------
$ 300,128 $124,332 $116,251
========= ======== ========
</TABLE>
The Company's foreign operations are located in Canada; Belgium; France;
Germany; Italy; Spain; Switzerland; the Netherlands; the United Kingdom;
Cameroon; Ivory Coast; Morocco; Senegal; South Africa; and Tunisia. Transfers
between geographical areas are at cost plus an incremental amount intended to
provide a reasonable profit margin to the selling enterprises. Amounts
relating to foreign operations included in the consolidated financial
statements are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Working capital........................... $ 31,567 $ 14,717 $ 14,828
Property, plant, and equipment (net) and
other.................................... 83,059 5,997 5,717
Noncurrent liabilities.................... (104,988) (12,666) (6,683)
--------- -------- --------
Net foreign assets...................... $ 9,638 $ 8,048 $ 13,862
========= ======== ========
Net loss of foreign operations............ $ (1,512) $ (5,620) $ (4,438)
========= ======== ========
</TABLE>
35
<PAGE>
16. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year....................... $1,150 $1,295 $1,267
Beginning balance from Sofitam................... 2,928 -- --
Charged to operations............................ 667 367 291
Uncollectible accounts written off, less
recoveries...................................... (900) (519) (278)
Foreign currency translation adjustments (93) 7 15
------ ------ ------
Balance, end of year........................... $3,752 $1,150 $1,295
====== ====== ======
</TABLE>
17. RETIREMENT PLAN COST
The Company has several retirement plans covering most of its employees,
including certain employees in foreign countries. Charges to operations for
the cost of the Company's retirement plans, including the Retirement Savings
Plan (RSP), were $3,052 in 1996, $3,054 in 1995, and $2,421 in 1994.
Defined Benefit Plans (U.S.)--The Company maintains two noncontributory
defined benefit pension plans which cover certain union employees. The
Company's funding to the plans is equal to the minimum contribution required
by the Internal Revenue Code. The benefits are based upon a fixed benefit rate
and years of service. Future benefits under these plans were frozen as of
December 31, 1990. The participants under these plans became eligible to
participate in the Retirement Savings Plan (RSP) beginning January 1, 1991.
The following table sets forth the aggregate defined benefit plans' funded
status and amounts reflected in the accompanying consolidated balance sheets
as of November 30, 1996 and 1995:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
-------------- ----------------
1996 1995 1996 1995
------ ------ ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested.................................. $1,592 $1,599 $10,046 $10,226
Non-vested.............................. 89 57 703 769
------ ------ ------- -------
Accumulated benefit obligations......... $1,681 $1,656 $10,749 $10,995
====== ====== ======= =======
Projected benefit obligations............. $1,681 $1,656 $10,749 $10,995
Plan assets at fair value, principally
common stocks, bonds, and GIC funds,
including $555 in 1996 and $409 in 1995
of the Company's common stock............ 1,967 1,924 8,424 7,325
------ ------ ------- -------
Plan assets in excess of (less than)
projected benefit obligations............ 287 268 (2,325) (3,670)
Unrecognized net loss..................... 520 516 3,360 4,002
Unrecognized net assets at December 1,
1991 and 1990 being recognized over 15
years.................................... (231) (260) (112) (134)
Adjustment required to recognize minimum
liability................................ -- -- (3,248) (3,868)
------ ------ ------- -------
Prepaid pension cost (pension liability)
recognized in the consolidated balance
sheet.................................... $ 576 $ 524 $(2,325) $(3,670)
====== ====== ======= =======
The net periodic pension expense amounts were based on actuarial assumptions
as follows:
<CAPTION>
1996 1995 1996 1995
------ ------ ------- -------
<S> <C> <C> <C> <C>
Discount rate on plan liabilities......... 7.00% 7.00% 7.00% 7.00%
Rate of return on plan assets............. 8.00% 8.00% 8.00% 8.00%
</TABLE>
36
<PAGE>
In accordance with Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions," the Company has recorded an additional
minimum pension liability for the under funded plan of $3,248 and $3,868 at
November 30, 1996 and 1995, respectively, representing the excess of unfunded
accumulated benefit obligations over previously recorded pension cost
liabilities.
The net periodic pension cost of U.S. defined benefit plans for 1996, 1995,
and 1994 includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -----
<S> <C> <C> <C>
Interest cost on
projected benefit
obligations............ $ 842 $ 857 $ 849
Return on plan assets... (1,204) (1,138) 82
Net amortization and
deferral............... 619 558 (625)
------- ------- -----
Net periodic pension
expense................ $ 257 $ 277 $ 306
======= ======= =====
</TABLE>
Defined Benefit Plans (Foreign)--Certain Sofitam companies have defined
benefit plans covering all of their employees. These plans provide for lump-
sum benefit payments upon retirement unless employment is terminated prior to
retirement age. The following table sets forth the funded status of these
defined benefit plans as of the most recent date for which this information
was available:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------
<S> <C>
Projected benefit obligation............................ $ 3,451
Plan assets at fair value............................... --
Projected benefit obligation in excess of plan assets... 3,451
Unrecognized transition obligation...................... (1,063)
Unrecognized actuarial gains/(losses)................... (398)
-------
Pension liability..................................... $ 1,990
=======
</TABLE>
The discount rate used in determining the actuarial present value of
projected benefit obligations was 7% for 1995.
The information presented above was not available as of November 30, 1996.
An actuarial valuation performed as of August 31, 1996 was used to estimate
the pension liability for Sofitam's defined benefit plans as of November 30,
1996. This liability was estimated to be approximately $2,356. The net
periodic pension cost for Sofitam's defined benefit plans for the three month
period ended November 30, 1996 was estimated at $120.
The Company's other foreign retirement plans are an insignificant portion of
the Company's total retirement plans and are not required to report to certain
governmental agencies. These plans do not otherwise determine actuarial value
of accumulated plan benefits and are omitted from the above table.
Defined Contribution Plan (U.S.)--The RSP covers substantially all U.S.
employees of Tokheim. Through the RSP, employee ownership of the Company is
increased approximately 11%. The RSP includes a common stock ESOP and a
preferred stock ESOP, which provide a retirement contribution of 1.5% of
salary to all employees in the plan and a matching contribution of at least
two-thirds of the first 6% of employee contributions. The matching
contribution can increase to 150% of the first 6% of contributions, depending
on the performance of the Company.
The Accounting Standards Division of the American Institute of Certified
Public Accountants issued Statement of Position (SOP) 93-6, Employers'
Accounting for Employee Stock Ownership Plans, in November 1993. As allowed by
that statement, the Company has elected to continue its current practices,
which are based
37
<PAGE>
on SOP 76-3 and subject to consensuses of the Emerging Issues Task Force of the
Financial Accounting Standards Board. Dividends paid on ESOP shares are
considered outstanding for earnings per share computations. Preferred ESOP
shares which have not been allocated to participants' accounts are assumed to
be outstanding based on the stated conversion ratio of one-for-one. Preferred
ESOP shares which have been allocated to participants' accounts are included in
the computation of earnings per share based on the weighted average market
value of the Company's common stock relative to the $25 liquidation value of
the preferred stock. The number of allocated preferred ESOP shares and common
ESOP shares at November 30, 1996 was 410,515 and 127,494, respectively. 362,112
preferred shares and 10,150 common shares were held in suspense by the ESOPs at
November 30, 1996. At November 30, 1996, the value of the shares allocated to
participants was $11,410,956.
The number of preferred shares in the RSP at November 30, 1996 and 1995 was
793,160 and 808,620, respectively, at a cost of $25 per share. The number of
common shares in the RSP at November 30, 1996 and 1995 was 137,645 and 145,545,
respectively, at an average cost of $18.22 and $21.09 per share. The dividend
yield on the preferred stock is 7.75%, and the conversion rate is one share of
preferred stock to one share of common stock. Each year, approximately 8% of
the preferred stock held by the plan is allocated to participants' accounts.
The Company has guaranteed the RSP loans as described in Note 7. A like amount
entitled "Guaranteed Employees' Stock Ownership Plan (RSP) obligation" is
recorded as a reduction of shareholders' equity. As the Company makes
contributions to the RSP, these contributions, plus the dividends paid on the
Company's preferred and common stock held by the RSP, are used to repay the
loans. As the principal amounts of the loans are repaid, the "Guaranteed
Employees' Stock Ownership Plan (RSP) obligation" in the equity and liability
sections of the balance sheet is reduced accordingly. Company contributions in
excess of dividends are allocated to interest and compensation expense on a
basis proportional to the required debt service on RSP loans. Amounts allocated
to interest expense were $715, $832, and $746, for 1996, 1995, and 1994,
respectively.
The table below sets forth the interest expense, the amounts contributed to
the RSP (excluding preferred stock dividends), and the amount of dividends on
preferred stock used for debt service by the RSP:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Interest expense incurred by the Plan Trust(s) on
RSP debt........................................... $1,075 $1,265 $1,367
Company contributions to the RSP.................... 2,541 2,300 1,719
Dividends on preferred stock used for debt service
by the RSP......................................... 1,543 1,580 1,617
</TABLE>
18. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides defined benefit postretirement health and life insurance
benefits to most of its U.S. employees. Covered employees become eligible for
these benefits at retirement, after meeting minimum age and service
requirements. Effective December 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This statement
requires that the costs of future benefits be accrued during an employee's
active working career. The cost of providing these benefits was previously
recognized as claims were incurred. The Company continues to fund benefits on a
pay-as-you-go basis, with some retirees paying a portion of the costs.
The Company recorded the discounted value of expected future benefits earned
as of December 1, 1993 as a cumulative effect of accounting change. This one-
time, noncash accounting change resulted in a charge to earnings of $13,416, or
$1.72 per share. Due to the Company's net operating loss carry forward position
(see Note 11), the Company established a valuation allowance to offset the
deferred tax asset created by this charge to operations.
38
<PAGE>
The accumulated postretirement benefit obligation as of November 30, 1996 and
1995 consisted of unfunded obligations related to the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Retirees and dependents.................................. $ 8,220 $ 8,333
Fully eligible active plan participants.................. 1,088 1,114
Other active plan participants........................... 7,742 5,631
------- -------
Total accumulated postretirement benefit obligation.... 17,050 15,078
Unrecognized net gain (loss)............................. (1,531) (309)
------- -------
Accrued postretirement benefit cost...................... 15,519 14,769
Less current portion..................................... (895) (887)
------- -------
$14,624 $13,882
======= =======
</TABLE>
Net postretirement benefit cost for 1996 and 1995 includes the following
components:
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Service cost.............................................. $ 603 $ 422
Interest cost on accumulated postretirement benefit
obligation............................................... 1,108 1,034
Amortization (gain) loss.................................. -- (25)
------ ------
Net postretirement benefit cost........................... $1,711 $1,431
====== ======
</TABLE>
The assumptions used to develop the net postretirement benefit expense and
the present value of benefit obligations are as follows:
<TABLE>
<CAPTION>
1996 1995
----- ------
<S> <C> <C>
Discount rate................................................ 7.00% 7.00%
Health care cost trend rate for the next year................ 9.00% 10.00%
</TABLE>
The health care cost trend rate used to value the accumulated postretirement
benefit obligation is assumed to decrease gradually to an ultimate rate of 5%
in 2005. A 1% increase in this annual trend rate would increase the accumulated
postretirement benefit obligation as of November 30, 1996 by approximately
$2,454 and the combined service and interest components of the annual net post-
retirement health care cost by approximately $295.
19. CONTINGENT LIABILITIES
The Company is defending various claims and legal actions which are common to
its operations. These legal actions primarily involve claims for damages
arising out of the Company's manufacturing operations, including environmental
actions, product liability matters, one allegation of patent infringement, and
various contract and employment matters.
Environmental Matters--Total amounts included in accrued expenses related to
environmental matters were $878 and $872 at November 30, 1996 and 1995,
respectively. The Company has been designated as a "potentially responsible
party" (PRP), in conjunction with other parties, in four governmental actions
associated with hazardous waste sites falling under the Comprehensive
Environmental Response Compensation and Liability Act (CERCLA). Such actions
seek recovery of certain clean-up costs. Dates on which the Company received
notice as a PRP range from January 1988 to January 1992. The Company has
attempted, where possible,
39
<PAGE>
to develop a reasonable estimate of the cost or range of costs which may accrue
from these actions. Likewise, the Company has attempted, where possible, to
assess the likelihood of an unfavorable outcome to the Company as a result of
these actions. Legal counsel has been retained to assist the Company in making
these determinations, and clean-up costs are accrued when an unfavorable
outcome is determined to be probable and a reasonable estimate can be made.
The Company is a "de minimis" party in one of the sites mentioned above.
During 1996, the Company paid less than $3 in expenses for this matter.
During 1995, the Company settled two actions with the Environmental
Protection Agency (EPA). One matter the Company settled for $627 as part of a
global settlement with other PRPs, and the Company recorded the liability in
full at November 30, 1994. The Company is still awaiting court approval of the
settlement before it can pay its portion. In the other action, the Company
settled as a participating generator as part of a global settlement. The
Company provided a letter of credit in the amount of $148 to cover its
projected future costs. In 1996, this letter of credit was reduced to $43. This
action is still pending with respect to EPA oversight costs and potential
natural resource damages owed to the State of Indiana. Management believes that
the letter of credit of $43 is adequate to cover any future cost relating to
this matter.
With respect to the fourth site, the Company has proven to the EPA that it
should not be a responsible party, and should be dismissed from this action.
The Company is also involved in one lawsuit with respect to environmental
liabilities under an indemnity provision of a sale agreement concerning the
sale of the die casting facility of a former subsidiary to a third party. The
Company is negotiating with the other party to settle this matter to avoid
litigation expenses.
Product Liability and Other Matters--The Company is subject to various other
legal actions arising out of the conduct of its business, including actions
relating to product liability, one patent infringement claim, and claims for
damages alleging violations of federal, state, or local statutes or ordinances
dealing with civil rights, equal pay, and sex discrimination. Total amounts
included in accrued expenses related to these actions were $382 and $156 at
November 30, 1996 and 1995, respectively. In addition, during 1996, the Company
settled various product liability and other matters, with aggregate settlement
charges of approximately $875.
In the opinion of the Company's management, amounts accrued for awards or
assessments in connection with these matters at this time are adequate, and the
ultimate resolution of environmental, product liability, and other legal
matters will not have a material effect on the Company's consolidated financial
position, results of operations, or cash flows. The Company is not able to
estimate accurately the additional loss or range of loss that is reasonably
possible, in addition to the amounts accrued. The Company reassesses these
matters as new facts and cases are brought to management's attention.
Subsequent to November 30, 1996, the Company received a jury verdict against
it in the amount of $350 with respect to an equal pay act and sex
discrimination claim. The Company believes the jury verdict award is contrary
to the law and will appeal this award. Accordingly, an accrued expense has not
been recorded for the $350.
40
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Shareholders and Directors, Tokheim Corporation:
We have audited the accompanying consolidated balance sheets of Tokheim
Corporation and Subsidiaries as of November 30, 1996 and 1995, and the related
consolidated statements of earnings and retained earnings, and cash flows for
each of the three years in the period ended November 30, 1996. These
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tokheim
Corporation and Subsidiaries as of November 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1996, in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for inventories in 1996.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
January 24, 1997
41
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS OF THE REGISTRANT
The information required by this Item is set forth on pages 1 through 4 in
the Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders,
which information is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to item 401 of Regulation S-K, the following information is
presented herein in lieu of presenting such information in a definitive Proxy
Statement to be filed as described under Part III.
The names, ages, and positions of all of the executive officers of the
Company are listed below, along with their business experience during the past
five years. Officers are appointed annually by the Board of Directors at the
meeting of Directors immediately following the Annual Meeting of Shareholders.
There are no family relationships among any of the officers of the Company,
nor any arrangement or understanding between any such officer and any other
person pursuant to which he was elected as an officer.
<TABLE>
<CAPTION>
NAME, AGE, AND POSITION BUSINESS EXPERIENCE DURING PAST 5 YEARS
----------------------- ---------------------------------------
<S> <C>
DOUGLAS K. PINNER, 56 Joined Tokheim as President and Chief Executive
Chairman of the Board, Officer in 1992; elected Chairman and Chief Ex-
President & Chief Executive ecutive Officer in 1996. During the last five
Officer years was also President and Chief Executive of
Slater Steels, Fort Wayne Specialty Alloys.
GERALD H. FRIELING, JR., 66 Elected Vice Chairman of the Board in 1996; dur-
Vice Chairman of the Board ing the last 5 years, also served as Chairman
and Chief Executive Officer of the Company.
JOHN A. NEGOVETICH, 51 Elected President, Tokheim North America in
President, Tokheim North 1996; joined Tokheim as Vice President and
America and Acting Chief Fi- Chief Financial Officer in 1995; during the
nancial Officer last 5 years, also served as Vice President,
Finance, Chief Financial Officer and Director
of Ardco, Inc. and as Vice President, Finance,
Hawker Siddeley, Inc.
JACQUES ST.-DENIS, 39 Joined Tokheim in November 1993 as Manager of
President and Directeur Gen- Export Operations; subsequently promoted to
eral of Tokheim Sofitam Vice President, International, President
Tokheim International, and upon completion of
the Sofitam acquisition, President and
Director--Generale of Tokheim-Sofitam, and its
subsidiaries.
CONDELL B. ELLIS, 64 Elected Senior Vice President, North America
Senior Vice President, North Sales & Marketing in 1996; during the last 5
America Sales & Marketing years, also served as Vice President, Domestic
Sales; served as Vice President, Sales of
CANMAX; served in various executive sales offi-
cer positions of Tokheim Corporation; and
as Vice President, Sales, Wayne Division of
Dresser Industries, Inc.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, AND POSITION BUSINESS EXPERIENCE DURING PAST 5 YEARS
----------------------- ---------------------------------------
<S> <C>
TERRY M. FULMER, 53 Elected Senior Vice President, Global Manufac-
Senior Vice President, turing/
Global Operations in 1996; during the last 5 years,
Manufacturing/Operations also served as Vice President, Global Manufac-
turing; Vice President, Corporate Operations
and Planning; Vice President, Corporate Plan-
ning; General Manager, Small Pumps Division;
and Manager of Manufacturing, Newbern Plant of
the Company.
ARTHUR C. PREWITT, 55 Elected Vice President, Technology and Venture
Vice President, Technology Development in 1995; during the last five
and Venture Development years, also served as Vice President, Technolo-
gy; Vice President, Corporate Engineering and
Marketing; and Vice President, Product Engi-
neering, of the Company; and as Manager, Tech-
nical Products of Gilbarco, Inc.
NORMAN L. ROELKE, 47 Elected Vice President, Secretary and General
Vice President, Secretary Counsel in 1995; during the last 5 years, also
and General Counsel served as Vice President and General Counsel
and as Corporate Counsel of the Company.
SCOTT A. SWOGGER, 44 Elected Vice President, Quality Systems in 1995;
Vice President, Quality Sys- during the last 5 years, also served as Direc-
tems tor, Quality Assurance, of the Company; Corpo-
rate Quality Engineer and Senior Quality Engi-
neer of DePuy, Inc.; and as Senior Manager,
Quality Assurance of Tokheim Corporation.
JOHN M. TOMLINSON, 47(1) During the last five years, served in the capac-
ity as a turnaround and international business
consultant. Previously, served in senior level
positions for Alliance Ceramic Products and
Genonex Corporation.
</TABLE>
- --------
(1) Mr. Tomlinson joined the Company in December 1996. It is the intention of
the Board of Directors to elect him Vice President, Finance and Chief
Financial Officer immediately following the Annual Meeting of Shareholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive (and certain other) officers, and persons who own more
than 10% of the Company's common stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Directors, officers, and greater-than-10% shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on review of copies of such forms furnished to
the Company, or written representations that no Form 5s were required, the
Company believes that during fiscal year 1995, all Section 16(a) filing
requirements applicable to its Directors, officers and greater-than-10%
shareholders were held in compliance.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth on pages 4 through 6 in
the Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders,
which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth on pages 9 through 11 in
the Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders,
which information is incorporated herein by reference.
43
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is set forth on pages 9 through 11 in
the Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders,
which information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
1. FINANCIAL STATEMENTS:
Included as outlined in Item 8 of Part II of this Report:
<TABLE>
<S> <C>
Consolidated Statement of Earnings and Retained Earnings for
each of the three years in the period ended November 30, 1996.. Page 15
Consolidated Statement of Cash Flows for each of the three years
in the period ended November 30, 1996.......................... Page 16
Consolidated Balance Sheet as of November 30, 1996, and 1995.... Page 17
Notes to Consolidated Financial Statements...................... Page 19
Independent Accountants Report.................................. Page 41
</TABLE>
2. SUPPLEMENTAL DATA AND FINANCIAL STATEMENT SCHEDULES:
Included as outlined in Item 8 of Part II of this Report:
<TABLE>
<S> <C>
Quarterly Financial Information (unaudited) in Note 13 to the
Consolidated Financial Statements............................... Page 32
</TABLE>
3(a). EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
2 Option Agreement, dated as of May 7, 1996, between the
Registrant and Sofitam S.A. (incorporated by reference to
the Registrant's Current Report on Form 8-K, File No. 001-
6018, dated September 23, 1996).
3.1 Restated Articles of Incorporation of the Registrant, as
amended, as filed with the Indiana Secretary of State on
February 5, 1997.
3.2 Bylaws of the Registrant, as restated on July 12, 1995
(incorporated by reference to the Registrant's Annual Re-
port on Form 10-K/A, for the year ended November 30, 1995,
filed November 20, 1996).
4.1 Rights Agreement, dated as of January 22, 1997, between
the Registrant and Harris Trust and Savings Bank, as
Rights Agent (incorporated by reference to the Regis-
trant's Current Report on Form 8-K, File No. 1-6018, dated
February 6, 1997).
4.2 Indenture, dated as of August 23, 1996, between the Regis-
trant and Harris Trust and Savings Bank, as Trustee (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, File No. 96-633231, dated September 23,
1996).
4.3 Credit Agreement, dated as of September 3, 1996, among the
Registrant, certain subsidiaries of the Registrant (the
"Borrowing Subsidiaries"), certain banks (the "Lenders")
and NBD Bank, N.A. ("Agent") (incorporated by reference to
the Registrant's Current Report on Form 8-K, File No. 96-
633231, dated September 6, 1996).
</TABLE>
44
<PAGE>
<TABLE>
<C> <S> <C>
10.1 Tokheim Corporation 1992 Stock Incentive Plan, established
December 15, 1992 (incorporated by reference to the Regis-
trant's Registration Statement on Form S-8, File No.
33-52167, dated February 4, 1994).
10.2 Retirement Savings Plan for Employees of Tokheim Corpora-
tion and Subsidiaries (incorporated by reference to Amend-
ment No. 1 to the Registrant's Registration Statement on
Form S-8, File No. 33-29710, dated August 1, 1989).
10.3 Tokheim Corporation 1996 Key Management Incentive bonus
Plan (incorporated by reference to the Registrant's Report
on Form 10-Q/A, for the quarter ended February 29, 1996,
filed November 20, 1996).
10.4 Employment Agreement, dated December 17, 1996, between the
Registrant and Douglas K. Pinner.
10.5 Employment Agreement, dated December 17, 1996, between the
Registrant and John A. Negovetich.
10.6 Employment Agreement, dated December 17, 1996, between the
Registrant and C.B. Ellis, Jr.
10.7 Employment Agreement, dated December 17, 1996, between the
Registrant and Terry M. Fulmer.
10.8 Employment Agreement, dated December 17, 1996, between the
Registrant and Arthur C. Prewitt.
10.9 Employment Agreement, dated December 17, 1996, between the
Registrant and Jacques St-Denis.
10.10 Employment Agreement, dated January 1, 1997, between the
Registrant and Norman L. Roelke.
10.11 Employment Agreement, dated January 1, 1997, between the
Registrant and Scott A. Swogger.
10.12 Employment Agreement, dated December 17, 1996, between the
Registrant and John M. Tomlinson.
18 Preferability accounting letter from Coopers & Lybrand
L.L.P. on the change to first-in, first-out (FIFO) from
last-in, first-out (LIFO) for purposes of inventory calcu-
lation.
21 List of the Subsidiaries of the Registrant.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule.
</TABLE>
(b) REPORTS ON FORM 8-K
On September 23, 1996, the Company filed a Current Report on Form 8-K to
report the Company's acquisition of Sofitam. The required financial
statements and interim pro form information, which were unavailable at that
time, were filed on November 20, 1996, on a subsequent Form 8-K/A.
45
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Tokheim Corporation
/s/ Douglas K. Pinner
By: _________________________________
Douglas K. Pinner
Chairman of the Board, President,
Chief Executive Officer and
Director
February 28, 1997
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Douglas K. Pinner Chairman of the Board, February 28, 1997
____________________________________ President and Chief
Douglas K. Pinner Executive Officer and
Director
/s/ John A. Negovetich President, Tokheim, North February 28, 1997
____________________________________ America and Acting Chief
John A. Negovetich Financial Officer
/s/ Gerald H. Frieling, Jr. Vice Chairman of the Board February 28, 1997
____________________________________ and Director
Gerald H. Frieling, Jr.
/s/ Walter S. Ainsworth Director February 28, 1997
____________________________________
Walter S. Ainsworth
/s/ Robert M. Akin, III Director February 28, 1997
____________________________________
Robert M. Akin, III
/s/ James K. Baker Director February 28, 1997
____________________________________
James K. Baker
/s/ Bernard D. Cooper Director February 28, 1997
____________________________________
Bernard D. Cooper
/s/ Richard W. Hansen Director February 28, 1997
____________________________________
Richard W. Hansen
/s/ Dr. Winfred M. Phillips Director February 28, 1997
____________________________________
Dr. Winfred M. Phillips
/s/ Ian M. Rolland Director February 28, 1997
____________________________________
Ian M. Rolland
</TABLE>
46
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------- ---
<C> <S> <C>
2 Option Agreement, dated as of May 7, 1996, between the
Registrant and Sofitam S.A. (incorporated by reference to
the Registrant's Current Report on Form 8-K, File No. 001-
6018, dated September 23, 1996).
3.1 Restated Articles of Incorporation of the Registrant, as
amended, as filed with the Indiana Secretary of State on
February 5, 1997.
3.2 Bylaws of the Registrant, as restated on July 12, 1995
(incorporated by reference to the Registrant's Annual Report
on Form 10-K/A, for the year ended November 30, 1995, filed
November 20, 1996).
4.1 Rights Agreement, dated as of January 22, 1997, between the
Registrant and Harris Trust and Savings Bank, as Rights
Agent (incorporated by reference to the Registrant's Current
Report on Form 8-K, File No. 1-6018, dated February 6,
1997).
4.2 Indenture, dated as of August 23, 1996, between the
Registrant and Harris Trust and Savings Bank, as Trustee
(incorporated by reference to the Registrant's Current
Report on Form 8-K, File No. 96-633231, dated September 23,
1996).
4.3 Credit Agreement, dated as of September 3, 1996, among the
Registrant, certain subsidiaries of the Registrant (the
"Borrowing Subsidiaries"), certain banks (the "Lenders") and
NBD Bank, N.A. ("Agent") (incorporated by reference to the
Registrant's Current Report on Form 8-K, File No. 96-633231,
dated September 6, 1996).
10.1 Tokheim Corporation 1992 Stock Incentive Plan, established
December 15, 1992 (incorporated by reference to the
Registrant's Registration Statement on Form S-8, File No.
33-52167, dated February 4, 1994).
10.2 Retirement Savings Plan for Employees of Tokheim Corporation
and Subsidiaries (incorporated by reference to Amendment No.
1 to the Registrant's Registration Statement on Form S-8,
File No. 33-29710, dated August 1, 1989).
10.3 Tokheim Corporation 1996 Key Management Incentive bonus Plan
(incorporated by reference to the Registrant's Report on
Form 10-Q/A, for the quarter ended February 29, 1996, filed
November 20, 1996).
10.4 Employment Agreement, dated December 17, 1996, between the
Registrant and Douglas K. Pinner.
10.5 Employment Agreement, dated December 17, 1996, between the
Registrant and John A. Negovetich.
10.6 Employment Agreement, dated December 17, 1996, between the
Registrant and C.B. Ellis, Jr.
10.7 Employment Agreement, dated December 17, 1996, between the
Registrant and Terry M. Fulmer.
10.8 Employment Agreement, dated December 17, 1996, between the
Registrant and Arthur C. Prewitt.
10.9 Employment Agreement, dated December 17, 1996, between the
Registrant and Jacques St-Denis.
10.10 Employment Agreement, dated January 1, 1997, between the
Registrant and Norman L. Roelke.
10.11 Employment Agreement, dated January 1, 1997, between the
Registrant and Scott A. Swogger.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------- ---
<C> <S> <C>
10.12 Employment Agreement, dated December 17, 1996, between the
Registrant and John M. Tomlinson.
11 Statement re: Computation of Per Share Earnings.
18 Preferability accounting letter from Coopers & Lybrand
L.L.P. on the change to first-in, first-out (FIFO) from
last-in, first-out (LIFO) for purposes of inventory
calculation.
21 List of the Subsidiaries of the Registrant.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule.
</TABLE>
<PAGE>
Exhibit 3.1
RESTATED ARTICLES OF INCORPORATION
OF
TOKHEIM CORPORATION
------------------------
Tokheim Corporation (hereinafter referred to as the "Corporation"), having
duly elected to be governed by IC 23-1-18 through IC 23-1-54 (except for IC
23-1-18-3, IC 23-1-21 and IC 23-1-53-3) effective April 10, 1986, and desiring
to amend and restate its Articles of Incorporation effective the date of filing
hereof with the office of the Indiana Secretary of State, pursuant to the
provisions of the Indiana Business Corporation Law (hereinafter referred to as
the "Corporation Law"), submits the following Restated Articles of
Incorporation:
ARTICLE I
Name
The name of the Corporation is Tokheim Corporation.
ARTICLE II
Purposes and Powers
Section 2.1. Purposes of the Corporation. The purposes for which the
Corporation is formed are (a) to engage in the general business of manufacturing
and selling any and all devices, appliances and/or articles of every kind and
description, for whatever purpose or use and of whatever material or substance
made, and to carry on such activities of every kind or nature as may be allied
or incidental to such general business and (b) to engage in the transaction of
any or all lawful business for which corporations may now or hereafter be
incorporated under the Corporation Law.
Section 2.2. Powers of the Corporation. The Corporation shall have (a) all
powers now or hereafter authorized by or vested in corporations pursuant to the
provisions of the Corporation Law, (b) all powers now or hereafter vested in
corporations by common law or any other statute or act and (c) all powers
authorized by or vested in the Corporation by the provisions of these Restated
Articles of Incorporation or by the provisions of its Bylaws as from time to
time in effect.
ARTICLE III
Term of Existence
The period during which the Corporation shall continue is perpetual.
1
<PAGE>
ARTICLE IV
Registered Office and Agent
The street address of the Corporation's registered office at the time
of adoption of these Restated Articles of Incorporation is 1602 Wabash Avenue,
Fort Wayne, Indiana 46803 and the name of its Resident Agent at such office at
the time of adoption of these Restated Articles of Incorporation is Randolph J.
Straka.
ARTICLE V
Shares
Section 5.1. Authorized Classes and Number of Shares. The total
number of shares which the Corporation has authority to issue shall be
35,000,000 shares, consisting of 30,000,000 common shares (the "Common Shares")
and 5,000,000 special shares (the "Special Shares"). The Corporation's shares do
not have any par or stated value, except that, solely for the purpose of any
statute or regulation imposing any tax or fee based upon the capitalization of
the Corporation, each of the Corporation's shares shall be deemed to have a par
value of $1.00 per share.
Section 5.2. General Terms of All Shares. The Corporation shall
have the power to acquire (by purchase, redemption or otherwise), hold, own,
pledge, sell, transfer, assign, reissue, cancel or otherwise dispose of the
shares of the Corporation in the manner and to the extent now or hereafter
permitted by the laws of the State of Indiana (but such power shall not imply an
obligation on the part of the owner or holder of any share to sell or otherwise
transfer such share to the Corporation), including the power to purchase, redeem
or otherwise acquire the Corporation's own shares, directly or indirectly, and
without pro rata treatment of the owners or holders of any class or series of
shares, unless, after giving effect thereto, the Corporation would not be able
to pay its debts as they become due in the usual course of business or the
Corporation's total assets would be less than its total liabilities (and without
regard to any amounts that would be needed, if the Corporation were to be
dissolved at the time of the purchase, redemption or other acquisition, to
satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those of the holders of the shares of the
Corporation being purchased, redeemed or otherwise acquired, unless otherwise
expressly provided with respect to a series of Special Shares in the provisions
of these Restated Articles of Incorporation adopted by the Board of Directors
pursuant to Section 5.5 hereof describing the terms of such series). Shares of
the Corporation purchased, redeemed or otherwise acquired by it shall constitute
authorized but unissued shares, unless prior to any such purchase, redemption or
other acquisition, or within thirty (30) days thereafter, the Board of Directors
adopts a resolution providing that such shares constitute authorized and issued
but not outstanding shares.
2
<PAGE>
The Board of Directors of the Corporation may dispose of, issue and
sell shares in accordance with, and in such amounts as may be permitted by, the
laws of the State of Indiana and the provisions of these Restated Articles of
Incorporation and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or approval by any shareholders of
the Corporation. Shares may be disposed of, issued and sold to such persons,
firms or corporations as the Board of Directors may determine, without any
preemptive or other right on the part of the owners or holders of other shares
of the Corporation of any class or kind to acquire such shares by reason of
their ownership of such other shares.
When the Corporation receives the consideration specified in a
subscription agreement entered into before incorporation, or for which the Board
of Directors authorized the issuance of shares, as the case may be, the shares
issued therefor shall be fully paid and nonassessable.
The Corporation shall have the power to declare and pay dividends or
other distributions upon the issued and outstanding shares of the Corporation,
subject to the limitation that a dividend or other distribution may not be made
if, after giving it effect, the Corporation would not be able to pay its debts
as they become due in the usual course of business or the Corporation's total
assets would be less than its total liabilities (and without regard to any
amounts that would be needed, if the Corporation were to be dissolved at the
time of the dividend or other distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
of the holders of shares receiving the dividend or other distribution, unless
otherwise expressly provided with respect to a series of Special Shares in the
provisions of these Restated Articles of Incorporation adopted by the Board of
Directors pursuant to Section 5.5 hereof describing the terms of such series).
The Corporation shall have the power to issue shares of one class or series as a
share dividend or other distribution in respect of that class or series or one
or more other classes or series.
Section 5.3 Voting Rights of Shares.
(a) Common Shares. Except as otherwise provided by the Corporation Law
and subject to such shareholder disclosure and recognition procedures (which may
include voting prohibition sanctions) as the Corporation may by action of its
Board of Directors establish, the Common Shares have unlimited voting rights and
each outstanding Common Share shall, when validly issued by the Corporation,
entitle the record holder thereof to one vote at all shareholders' meetings on
all matters submitted to a vote of the shareholders of the Corporation.
(b) Special Shares. Except as required by the Corporation Law or by
the provisions of these Restated Articles of Incorporation adopted by the Board
of Directors pursuant to Section 5.5 hereof describing the terms of Special
Shares or a series thereof, the holders of Special Shares shall have no voting
rights or powers. Special Shares shall, when validly issued by the Corporation,
entitle the record holder thereof to vote as and on such matters, but only as
3
<PAGE>
and on such matters, as the holders thereof are entitled to vote under the
Corporation Law or under the provisions of these Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section 5.5 hereof
describing the terms of Special Shares or a series thereof (which provisions may
provide for special, conditional, limited or unlimited voting rights, including
multiple or fractional votes per share, or for no right to vote, except to the
extent required by the Corporation Law) and subject to such shareholder
disclosure and recognition procedures (which may include voting prohibition
sanctions) as the Corporation may by action of the Board of Directors establish.
Section 5.4. Other Terms of Common Shares. The Common Shares shall be
equal in every respect insofar as their relationship to the Corporation is
concerned, but such equality of rights shall not imply equality of treatment as
to redemption or other acquisition of shares by the Corporation. Subject to the
rights of the holders of any outstanding Special Shares issued under Section 5.5
hereof, the holders of Common Shares shall be entitled to share ratably in such
dividends or other distributions (other than purchases, redemptions or other
acquisitions of shares by the Corporation), if any, as are declared and paid
from time to time on the Common Shares at the discretion of the Board of
Directors. In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, after payment shall have been made
to the holders of the Special Shares of the full amount to which they shall be
entitled under this Article V, the holders of Common Shares shall be entitled,
to the exclusion of the holders of the Special Shares of any and all series, to
share, ratably according to the number of shares of Common Shares held by them,
in all remaining assets of the Corporation available for distribution to its
shareholders.
Section 5.5. Other Terms of Special Shares.
(a) Special Shares may be issued from to time in one or more series,
each such series to have such distinctive designation and such preferences,
limitations and relative voting and other rights as shall be set forth in these
Restated Articles of Incorporation. Subject to the requirements of the
Corporation Law and subject to all other provisions of these Restated Articles
of Incorporation, the Board of Directors of the Corporation may create one or
more series of Special Shares and may determine the preferences, limitations and
relative voting and other rights of one or more series of Special Shares before
the issuance of any shares of that series by the adoption of an amendment to the
Restated Articles of Incorporation that specifies the terms of the series of
Special Shares. All shares of a series of Special Shares must have preferences,
limitations and relative voting and other rights identical with those of other
shares of the same series and, if the description of the series set forth in
these Restated Articles of Incorporation so provides, no series of Special
Shares need have preferences, limitations or relative voting or other rights
identical with those of any other series of Special Shares.
4
<PAGE>
Before issuing any shares of a series of Special Shares, the Board of
Directors shall adopt an amendment to these Restated Articles of Incorporation,
which shall be effective without any shareholder approval or other action that
sets forth the preferences, limitations and relative voting and other rights of
the series, and authority is hereby expressly vested in the Board of Directors,
by such amendment:
(i) To fix the distinctive designation of such series and the number
of shares which shall constitute such series, which number may be increased
or decreased (but not below the number of shares thereof then outstanding)
from time to time by action of the Board of Directors;
(ii) To fix the voting rights of such series, which may consist of
special, conditional, limited or unlimited voting rights, including
multiple or fractional votes per share, or no right to vote (except to the
extent required by the Corporation Law);
(iii) To fix the dividend or distribution rights of such series and
the manner of calculating the amount and time for payment of dividends or
distributions, including, but not limited to:
(A) the dividend rate, if any, of such series;
(B) any limitations, restrictions or conditions on the payment
of dividends or other distributions, including whether dividends or
other distributions shall be noncumulative or cumulative or partially
cumulative and, if so, from which date or dates;
(C) the relative rights of priority, if any, of payment of
dividends or other distributions on shares of that series in relation
to Common Shares and shares of any other series of Special Shares;
and
(D) the form of dividends or other distributions, which may be
payable at the option of the Corporation, the shareholder or another
person (and in such case to prescribe the terms and conditions of
exercising such option), or upon the occurrence of a designated event
in cash, indebtedness, stock or other securities or other property,
or in any combination thereof,
and to make provisions, in the case of dividends or other distributions
payable in stock or other securities, for adjustment of the dividend or
distribution rate in such events as the Board of Directors shall determine;
(iv) To fix the price or prices at which, and the terms and
conditions on which, the shares of such series may be redeemed or
converted, which may be:
(A) at the option of the Corporation, the shareholder or
another person or upon the occurrence of a designated event;
(B) for cash, indebtedness, securities, or other property or
any combination thereof; and
5
<PAGE>
(C) in a designated amount or in an amount determined in
accordance with a designated formula or by reference to extrinsic
data or events;
(v) To fix the amount or amounts payable upon the shares of such
series in the event of any liquidation, dissolution or winding up of the
Corporation and the relative rights of priority, if any, of payment upon
shares of such series in relation to Common Shares and shares of any other
series of Special Shares; and to determine whether or not any such
preferential rights upon dissolution need be considered in determining
whether or not the Corporation may make dividends, repurchases or other
distributions;
(vi) To determine whether or not the shares of such series shall be
entitled to the benefit of a sinking fund to be applied to the purchase or
redemption of such series and, if so entitled, the amount of such fund and
the manner of its application;
(vii) To determine whether or not the issue of any additional shares
of such series or of any other series in addition to such series shall be
subject to restrictions in addition to restrictions, if any, on the issue
of additional shares imposed in the provisions of these Restated Articles
of Incorporation fixing the terms of any outstanding series of Special
Shares theretofore issued pursuant to this Section 5.5 and, if subject to
additional restrictions, the extent of such additional restrictions; and
(viii) Generally to fix the other preferences or rights, and any
qualifications, limitations or restrictions of such preferences or rights,
of such series to the full extent permitted by the Corporation Law;
provided, however, that no such preferences, rights, qualifications,
limitations or restrictions shall be in conflict with these Restated
Articles of Incorporation or any amendment hereof.
(b) Special Shares of any series that have been redeemed (whether through
the operation of a sinking fund or otherwise) or purchased by the Corporation,
or which, if convertible, have been converted into shares of the Corporation of
any other class or series, may be reissued as a part of such series or of any
other series of Special Shares, subject to such limitations (if any) as may be
fixed by the Board of Directors with respect to such series of Special Shares in
accordance with subsection (a) of this Section 5.5.
ARTICLE VI
Directors
Section 6.1. Number. The Board of Directors at the time of adoption of
these Restated Articles of Incorporation is composed of nine (9) members, and
the number of Directors shall be fixed by the By-Laws and may be changed from
time to time by amendment to the By-Laws, provided, however, that the number of
Directors fixed in the By-Laws shall not be less than nine (9) nor more than
thirteen (13). If the By-Laws do not specify the number of Directors, the Board
of Directors shall be composed of nine (9) members. The Board of Directors shall
be divided into two (2) or three (3) groups (with each group containing one-half
(1/2) or one-third
6
<PAGE>
(1/3) of the total, as near as may be) whose terms of office expire at different
times, as provided in the By-Laws.
Notwithstanding the first sentence of this Section 6.1, any amendment to
the By-Laws that would affect any increase in the number of Directors over such
number as then in effect or any elimination or modification of the groups or
terms of office of the Directors as the By-Laws then in effect may provide,
shall also be approved by the affirmative vote of a majority of the entire
number of Directors of the Corporation who then qualify as Continuing Directors
with respect to all Related Persons (as such terms are defined for purposes of
Article VIII hereof).
Section 6.2. Qualifications. Directors need not be shareholders of the
Corporation or residents of this or any other state in the United States.
Section 6.3. Vacancies. Vacancies occurring in the Board of Directors shall
be filled in the manner provided in the By-Laws or, if the By-Laws do not
provide for the filling of vacancies, in the manner provided by the Corporation
Law. The By-Laws may also provide that in certain circumstances specified
therein, vacancies occurring in the Board of Directors may be filled by vote of
the shareholders at a special meeting called for that purpose or at the next
annual meeting of shareholders.
Section 6.4. Liability of Directors. A Director's responsibility to the
Corporation shall be limited to discharging his duties as a Director, including
his duties as a member of any Committee of the Board of Directors upon which he
may serve, in good faith, with the care an ordinarily prudent person in a like
position would exercise under similar circumstances, and in a manner the
Director reasonably believes to be in the best interests of the Corporation, all
based on the facts then known to the Director.
In discharging his duties, a Director is entitled to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, if prepared or presented by:
(a) One (1) or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants or other persons as to matters the
Director reasonably believes are within such person's professional or expert
competence; or
(c) A Committee of the Board of which the Director is not a member if the
Director reasonably believes the Committee merits confidence;
but a Director is not acting in good faith if the Director has knowledge
concerning the matter in question that makes reliance otherwise permitted by
this Section 6.4 unwarranted. A Director may, in considering the best interests
of the Corporation, consider the effects of any action on shareholders,
employees, suppliers and customers of the Corporation, and communities in which
offices or other facilities of the Corporation are located, and any other
factors the Director considers pertinent.
7
<PAGE>
A Director shall not be liable for any action taken as a Director, or any
failure to take any action, unless (a) the Director has breached or failed to
perform the duties of the Director's office in compliance with this Section 6.4,
and (b) the breach or failure to perform constitutes willful misconduct or
recklessness.
Section 6.5. Removal of Directors. Any or all of the members of the Board
of Directors may be removed, with or without cause, only at a meeting of the
shareholders called for that purpose, by the affirmative vote of the holders of
outstanding shares representing at least seventy-five percent (75%) of all the
votes then entitled to be cast at an election of Directors.
Section 6.6. Election of Directors by Holders of Special Shares. The
holders of one (1) or more series of Special Shares may be entitled to elect all
or a specified number of Directors, but only to the extent and subject to
limitations as may be set forth in the provisions of these Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section 5.5 hereof
describing the terms of the series of Special Shares.
ARTICLE VII
Provisions for Regulation of Business and
Conduct of Affairs of Corporation
Section 7.1. Meetings of Shareholders. Meetings of the shareholders of the
Corporation shall be held at such time and at such place, either within or
without the State of Indiana, as may be stated in or fixed in accordance with
the By-Laws of the Corporation and specified in the respective notices or
waivers of notice of any such meetings.
Section 7.2. Special Meetings of Shareholders. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by the
Corporation Law, may be called at any time by the Board of Directors or the
person or persons authorized to do so by the By-Laws and shall be called by the
Board of Directors if the Secretary of the Corporation receives one (1) or more
written, dated and signed demands for a special meeting, describing in
reasonable detail the purpose or purposes for which it is to be held, from the
holders of shares representing at least twenty-five percent (25%) of all the
votes entitled to be cast on any issue proposed to be considered at the proposed
special meeting. If the Secretary receives one (1) or more proper written
demands for a special meeting of shareholders, the Board of Directors may set a
record date for determining shareholders entitled to make such demand.
Section 7.3. Meetings of Directors. Meetings of the Board of Directors of
the Corporation shall be held at such place, either within or without the State
of Indiana, as may be authorized by the By-Laws and specified in the respective
notices or waivers of notice of any such meetings or otherwise specified by the
Board of Directors. Unless the By-Laws provide otherwise (a) regular meetings of
the Board of Directors may be held without notice of the date,
8
<PAGE>
time, place or purpose of the meeting and (b) the notice for a special meeting
need not describe the purpose or purposes of the special meeting.
Section 7.4. Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or shareholders, or of any
committee of such Board, may be taken without a meeting, if the action is taken
by all members of the Board or all shareholders entitled to vote on the action,
or by all members of such committee, as the case may be. The action must be
evidenced by one (1) or more written consents describing the action taken,
signed by each Director, or all the shareholders entitled to vote on the action,
or by each member of such committee, as the case may be, and, in the case of
action by the Board of Directors or a committee thereof, included in the minutes
or filed with the corporate records reflecting the action taken or, in the case
of action by the shareholders, delivered to the Corporation for inclusion in the
minutes or filing with the corporate records. Action taken under this Section
7.4 is effective when the last director, shareholder or committee member, as the
case may be, signs the consent, unless the consent specifies a different prior
or subsequent effective date, in which case the action is effective on or as of
the specified date. Such consent shall have the same effect as a unanimous vote
of all members of the Board, or all shareholders, or all members of the
committee, as the case may be, and may be described as such in any document.
Section 7.5. Bylaws. The Board of Directors shall have the exclusive power
to make, alter, amend or repeal, or to waive provisions of, the Bylaws of the
Corporation by the affirmative vote of a majority of the entire number of
Directors at the time, except as expressly provided in Section 6.1 hereof and as
provided by the Corporation Law. All provisions for the regulation of the
business and management of the affairs of the Corporation not stated in these
Restated Articles of Incorporation shall be stated in the Bylaws. The Board of
Directors may adopt Emergency Bylaws of the Corporation and shall have the
exclusive power (except as may otherwise be provided therein) to make, alter,
amend or repeal, or to waive provisions of, the Emergency Bylaws by the
affirmative vote of both (a) a majority of the entire number of Directors at the
time and (b) a majority of the entire number of Directors who then qualify as
Continuing Directors with respect to all Related Persons (as such terms are
defined for purposes of Article VIII hereof).
Section 7.6. Interest of Directors.
(a) A conflict of interest transaction is a transaction with the
Corporation in which a Director of the Corporation has a direct or indirect
interest. A conflict of interest transaction is not voidable by the Corporation
solely because of the Director's interest in the transaction if any one (1) of
the following is true:
(i) The material facts of the transaction and the Director's interest
were disclosed or known to the Board of Directors or a Committee of the Board of
Directors and the Board of Directors or Committee authorized, approved, or
ratified the transaction.
9
<PAGE>
(ii) The material facts of the transaction and the Director's
interest were disclosed or known to the shareholders entitled to vote and
they authorized, approved, or ratified the transaction.
(iii) The transaction was fair to the Corporation.
(b) For purposes of this Section 7.6, a Director of the Corporation
has an indirect interest in a transaction if:
(i) Another entity in which the Director has material
financial interest or in which the Director is a general partner is party
to the transaction; or
(ii) Another entity of which the Director is a director,
officer, or trustee in a party to the transaction and the transaction is,
or is required to be, considered by the Board of Directors of the
Corporation.
(c) For purposes of Section 7.6(a)(i), a conflict of interest
transaction is authorized, approved, or ratified if it receives the affirmative
vote of a majority of the Directors on the Board of Directors (or on the
Committee) who have no direct or indirect interest in the transaction vote to
authorize, approve or ratify the transaction, a quorum shall be deemed present
for the purpose of taking action under this Section 7.6. The presence of, or a
vote cast by, a Director with a direct or indirect interest in the transaction
does not affect the validity of any action taken under Section 7.6(a)(i), if the
transaction is otherwise authorized, approved or ratified as provided in such
subsection.
(d) Shares owned by or voted under the control of a Director who has
a direct or indirect interest in the transaction, and shares owned by or voted
under the control of an entity described in Section 7.6(b), may be counted in a
vote of shareholders to determine whether to authorize, approve or ratify a
conflict of interest transaction under Section 7.6(a)(ii).
Section 7.7. Nonliability of Shareholders. Shareholders of the
Corporation are not personally liable for the acts or debts of the Corporation,
nor is private property of shareholders subject to the payment of corporate
debts.
Section 7.8. Indemnification of Officers, Directors and Other
Eligible Persons.
(a) Every Eligible Person, as a matter of right, shall be indemnified
by the Corporation against all Liability and reasonable Expense that may be
incurred by such Eligible Person in connection with or resulting from any Claim,
(i) if such Eligible Person is Wholly Successful with respect
to the Claim, or
(ii) if not Wholly Successful, then if such Eligible Person is
determined, as provided in either Section 7.8(f) or 7.8(g), with respect to
the Claim, or any count, issue or matter of the Claim, to have acted in
good faith; and he reasonably believed: (A) in the case of conduct in his
official capacity with the Corporation, that his conduct was in its best
interests, and (B) in all other cases, that his conduct was at least not
opposed to
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its best interests; and, in the case of any Claim of a criminal nature, he
either (A) had reasonable cause to believe his conduct was lawful, or (B)
had no reasonable cause to believe his conduct was unlawful.
The termination of any Claim, by judgment, order, settlement (whether
with or without court approval), or conviction or upon a plea of guilty or of
nolo contendere, or its equivalent, shall not be determinative nor create a
presumption that an Eligible Person did not meet the standards of conduct set
forth in clause (ii) of this subsection (a). The actions of an Eligible Person
with respect to an employee benefit plan subject to the Employee Retirement
Income Security Act of 1974 shall be deemed to have been taken in what the
Eligible Person reasonably believed to be the best interests of the Corporation
or at least not opposed to its best interests if the Eligible Person reasonably
believed he was acting in conformity with the requirements of such Act or he
reasonably believed his actions to be in the interests of the participants in or
beneficiaries of the plan.
(b) The term "Claim" as used in this Section 7.8 shall include every
pending, threatened or completed claim, action, suit or proceeding and all
appeals thereof (whether brought by or in the right of this Corporation, any
other corporation, partnership, joint venture, trust, enterprise, organization,
association, governmental agency, person or otherwise), civil, criminal,
administrative or investigative, formal or informal, in which an Eligible Person
may become or is threatened to become involved, as a party or otherwise: (i) by
reason of his being or having been an Eligible Person or (ii) by reason of any
action taken or not taken by him in his capacity as an Eligible Person, whether
or not he continued in such capacity at the time such Liability or Expense shall
have been incurred, and further whether or not the action taken or not taken
antedated the adoption of this Section 7.8.
(c) The term "Eligible Person" as used in this Section 7.8 shall mean
every person (and the estate, heirs, executors, administrators, and personal
representatives of such person) who is or was a Director or officer of the
Corporation or a Director or officer of the Corporation who is or was serving at
the request of the Corporation as a director, officer, employee, agent or
fiduciary of another foreign or domestic corporation, partnership, joint
venture, trust employee benefit plan or other organization or entity, whether
for profit or not. An Eligible Person shall also be considered to have been
serving an employee benefit plan at the request of the Corporation if his duties
to the Corporation also imposed duties on, or otherwise involved services by,
him to the plan or to participants in or beneficiaries of the plan.
(d) The terms "Liability" and "Expense" as used in this Section 7.8
shall include, but shall not be limited to, amounts of judgments, fines or
penalties against (including excise taxes assessed with respect to an employee
benefit plan), and amounts paid in settlement by or on behalf of, an Eligible
Person, attorney fees, accountant fees, investment banker fees, and any other
professional fees, disbursements, travel, expert witness fees, and any other
expense reasonably incurred in defense of any Claim.
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(e) The term "Wholly Successful" as used in this Section 7.8 shall
mean:
(i) Termination of any claim against the Eligible Person in
question without a finding of liability against him, or guilt in a criminal
Claim against him;
(ii) Approval by a court of a settlement of any Claim, with a
concurrent approval by the court of indemnification pursuant to this
Section 7.8; or
(iii) The expiration of the applicable statute of limitations
regarding the Claim.
(f) Every Eligible Person claiming indemnification hereunder (other
than one who has been Wholly Successful with respect to any Claim) shall be
entitled to indemnification if a disinterested person or persons selected by the
Board of Directors (the "Referee") shall determine that such Eligible Person
has met the standards of conduct set forth in Section 7.8(a)(ii). In the event
an Eligible Person is found to be entitled to indemnification pursuant to the
preceding sentence, the Referee shall also determine the reasonableness of the
Eligible Person's Expenses. The Eligible Person claiming indemnification shall,
if requested, appear before the Referee, answer questions that the Referee deems
relevant and shall be given ample opportunity to present to the Referee evidence
upon which he relies for indemnification. The Corporation shall, at the request
of the Referee, make available facts, opinions or other evidence in any way
relevant to the Referee's determination that are within the possession or
control of the Corporation. The Referee shall not incur any liability as a
result of his decision.
(g) If an Eligible Person claiming indemnification pursuant to
Section 7.8(f) is found not to be entitled thereto, or if the Board of Directors
fails to select a Referee under Section 7.8(f) within a reasonable amount of
time following a written request of an Eligible Person for the selection of a
Referee, or if the Referee fails to make a determination under Section 7.8(f)
within a reasonable amount of time following the selection of the Referee, the
Eligible Person may apply for indemnification with respect to a Claim or any
count, issue or matter of a Claim to any court of competent jurisdiction,
including a court in which the Claim is pending against the Eligible Person. On
receipt of an application, the court, after giving notice to the Corporation,
may order indemnification if it determines either that:
(i) The Eligible Person is entitled to indemnification with
respect to the Claim because such Eligible Person met the standards of
conduct set forth in Section 7.8(a)(ii); or
(ii) The Eligible Person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not
the Eligible Person has met the standard of conduct set forth in Section
7.8(a)(ii).
If the court determines that the Eligible Person is entitled to indemnification,
the court shall also determine the reasonableness of the Eligible Person's
Expenses.
(h) The rights of indemnification provided in this Section 7.8 shall
not be exclusive and shall be in addition to any rights to which any Eligible
Person may otherwise be entitled
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under any statute, agreement, resolution of the Board of Directors of the
Corporation or otherwise. Irrespective of the provisions of this Section 7.8,
the Board of Directors may, at any time and from time to time:
(i) Approve indemnification of any Eligible Person to the full
extent permitted by the provisions of applicable law at the time in effect,
whether on account of past or future transactions; and
(ii) Authorize the Corporation to purchase and maintain
insurance on behalf of any Eligible Person against any Liability asserted
against him or Liability or Expense incurred by him in any such capacity,
or arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such Liability or Expense.
(i) Expenses incurred by an Eligible Person with respect to any
Claim may be advanced by the Corporation (by action of the Board of Directors,
whether or not a disinterested quorum exists) prior to the final disposition
thereof upon receipt of any undertaking by or on behalf of the recipient to
repay such amount unless he is determined to be entitled to indemnification.
(j) In the event the Claim is the result of any action taken, any
action not taken or any alleged breach of duty or obligation by the Board of
Directors related to a proposed or actual tender offer for shares of
the Corporation; change in control of the Corporation; merger, business
combination or consolidation in which the Corporation is a party; or the
election of Directors of the Corporation, the Expense incurred by an Eligible
Person with respect to such Claim shall as a matter of right be advanced to the
Eligible Person by the Corporation prior to final disposition of such Claim if:
(i) The Eligible Person furnishes the Corporation a written
affirmation of the Eligible Person's good faith belief that he has met the
standard of conduct described in clause (ii) of Section 7.8(a); and
(ii) The Eligible Person furnishes the Corporation a written
undertaking, executed personally or on his behalf, to repay the advance if
it is ultimately determined that the Eligible Person did not meet such
standard of conduct.
(k) The indemnification provisions of this Section 7.8 shall be
deemed to be a contract between the Corporation and each Eligible Person.
(l) The provisions of this Section 7.8 shall be applicable to all
acts or failures to act occurring prior to the adoption of this Section 7.8 or
during the term of this Section 7.8 irrespective of when the Claim relating to
the occurrence is made or commenced.
(m) The Board of Directors shall have power on behalf of the
Corporation to grant indemnification in a manner consistent with this Section
7.8 to any person other than an Eligible Person to such extent as the Board of
Directors may from time to time and at any time determine.
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(n) If any provision of this Section 7.8 is adjudged to be beyond the
powers of the Corporation under the Indiana Business Corporation Law, as
amended, or any other applicable law, then such identification shall
nevertheless remain available, but shall be limited, amended or construed only
to the extent necessary to be within the powers of the Corporation under the
Indiana Business Corporation Law, as amended, or any other applicable law, and
such indemnification so limited, amended or construed shall be available and
provided pursuant to this Section 7.8.
ARTICLE VIII
Approval of Business Combinations
Section 8.1. Supermajority Vote. Except as provided in Section 8.2
hereof, neither the Corporation nor its Subsidiaries, if any, shall become a
party to any Business Combination with a Related Person without the prior
affirmative vote at a meeting of the Corporation's shareholders:
(a) Of not less than seventy-five percent (75%) of all the votes
entitled to be cast by the holders of the outstanding shares of all classes of
Voting Stock of the Corporation considered for purposes of this Article VIII as
a single class, and
(b) Of an Independent Majority of Shareholders.
Such favorable votes shall be in addition to any shareholder vote which would be
required without reference to this Section 8.1 and shall be required
notwithstanding the fact that no vote may be required, or that some lesser
percentage may be specified by law or elsewhere in these Restated Articles of
Incorporation or the By-Laws of the Corporation or otherwise.
Section 8.2. Exceptions. The provisions of Section 8.1 hereof shall
not apply to a Business Combination if:
(a) The Continuing Directors of the Corporation by not less than a
seventy-five percent (75%) vote:
(i) Have expressly approved a memorandum of understanding with
the Related Person with respect to the Business Combination prior to the
time that the Related Person became a Related Person and the Business
Combination is effected on substantially the same terms and conditions as
are provided by the memorandum of understanding; or
(ii) Have otherwise approved the Business Combination (this
provision is incapable of satisfaction unless there is at least one
Continuing Director); or
(b) The Business Combination is solely between the Corporation and
another corporation, one hundred percent (100%) of the Voting Stock of
which is owned directly or indirectly by the Corporation.
Section 8.3. Definitions. For purposes of this Article VIII:
(a) A "Business Combination" means:
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(i) The sale, exchange, lease, transfer or other disposition
to or with a Related Person or any Affiliate or Associate of such Related
Person by the Corporation or any Subsidiaries (in a single transaction or a
Series of Related Transactions) of all or substantially all, or any
Substantial Part, of its or their assets or business (including, without
limitation, securities issued by a Subsidiary, if any);
(ii) The purchase, exchange, lease or other acquisition by the
Corporation or any Subsidiaries (in a single transaction or a Series of
Related Transactions) of all or substantially all, or any Substantial Part,
of the assets or business of a Related Person or any Affiliate or Associate
of such Related Person;
(iii) Any merger or consolidated of the Corporation or any
Subsidiary thereof into or with a Related Person or any Affiliate or
Associate of such Related Person or into or with another Person which,
after such merger or consolidation, would be an Affiliate or an Associate
of a Related Person, in each case irrespective of which Person is the
surviving entity in such merger or consolidation;
(iv) Any reclassification of securities, recapitalization or
other transaction (other than a redemption in accordance with the terms of
the security redeemed) which has the effect, directly or indirectly, of
increasing the proportionate amount of shares of Voting Stock of the
Corporation or any Subsidiary thereof which are Beneficially Owned by a
Related Person, or any partial or complete liquidation, spin-off or split-
up of the Corporation or any Subsidiary thereof; provided, however, that
this Section 8.3(a)(iv) shall not relate to any transaction that has been
approved by a majority of the Continuing Directors; or
(v) The acquisition upon the issuance thereof of Beneficial
Ownership by a Related Person of shares of Voting Stock or securities
convertible into shares of Voting Stock or any voting securities or
securities convertible into voting securities of any Subsidiary of the
Corporation, or the acquisition upon the issuance thereof of Beneficial
Ownership by a Related Person of any rights, warrants or options to acquire
any of the foregoing or any combination of the foregoing shares of Voting
Stock or voting securities of a Subsidiary, if any.
(b) A "Series of Related Transactions" shall be deemed to include
not only a series of transactions with the same Related Person but also a series
of separate transactions with a Related Person or any Affiliate or Associate of
such Related Person.
(c) A "Person" shall mean any individual, firm, corporation or
other entity and any partnership, syndicate or other group.
(d) "Related Person" shall mean any Person (other than the
Corporation or any Subsidiary of the Corporation or the Continuing Directors,
singly or as a group) who or that at any time described in the last sentence of
this first paragraph of this subsection (d):
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(i) Is the Beneficial Owner, directly or indirectly, of more
than ten percent (10%) of the voting power of the outstanding shares of
Voting Stock and who has not been the Beneficial Owner, directly or
indirectly, of more than ten percent (10%) of the voting power of the
outstanding shares of Voting Stock for a continuous period of two years
prior to the date in question; or
(ii) Is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question (but not
continuously during such two-year period) was the Beneficial Owner,
directly or indirectly, of ten percent (10%) or more of the voting power of
the then outstanding shares of Voting Stock; or
(iii) Is an assignee of or has otherwise succeeded to any shares
of the Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Related Person, if such assignment or succession shall have occurred
within the meaning of the Securities Act of 1933, as amended.
A Related Person shall be deemed to have acquired a share of the Corporation at
the time when such Related Person became the Beneficial Owner thereof. For the
purposes of determining whether a Person is the Beneficial Owner of ten percent
(10%) or more of the voting power of the then outstanding Voting Stock, the
outstanding Voting Stock shall be deemed to include any Voting Stock that may be
issuable to such Person pursuant to a right to acquire such Voting Stock and
that is therefore deemed to be Beneficially Owned by such Person pursuant to
Section 8.3(e)(ii)(A). A person who is a Related Person at:
(i) The time any definitive agreement relating to a Business
Combination is entered into;
(ii) The record date for the determination of shareholders
entitled to notice of and to vote on a Business Combination; or
(iii) The time immediately prior to the consummation of a
Business Combination shall be deemed a Related Person.
A Related Person shall not include the Board of Directors of the
Corporation acting as a group. In addition, a Related Person shall not include
any Person who possesses more than ten percent (10%) of the voting power of the
outstanding shares of Voting Stock of the Corporation at the time of filing
these Restated Articles of Incorporation.
(e) A Person shall be a "Beneficial Owner" of any shares of Voting
Stock:
(i) Which such Person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) Which such Person or any of its Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of
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conversion rights, exchange rights, warrants or options, or otherwise, or
(B) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) Which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Voting Stock.
(f) An "Affiliate" of, or a person Affiliated with, a specific Person,
means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
(g) The term "Associate" used to indicate a relationship with any Person,
means:
(i) Any corporation or organization (other than this Corporation or
a majority-owned Subsidiary or this Corporation) of which such Person is an
officer or partner or is, directly or indirectly, the Beneficial Owner of
five percent (5%) or more of any class of equity securities;
(ii) Any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee
or in a similar fiduciary capacity;
(iii) Any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person; or
(iv) Any investment company registered under the Investment Company
Act of 1940, as amended, for which such Person or any Affiliate of such
Person serves as investment advisor.
(h) "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of Related Person set forth in
Section 8.3(d) hereof, the term "Subsidiary" shall mean only a corporation of
which a majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(i) "Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is not associated with the Related Person and
was a member of the Board prior to the time that the Related Person became a
Related Person, and any successor of a Continuing Director who is not associated
with the Related Person and is recommended to succeed a Continuing Director by
not less than two-thirds of the Continuing Directors then on the Board.
(j) "Independent Majority of Shareholders" shall mean the holders of the
outstanding shares of Voting Stock representing a majority of all the votes
entitled to be cast by all shares of Voting Stock other than shares Beneficially
Owned or controlled, directly or indirectly, by a Related Person.
(k) "Voting Stock" shall mean all outstanding shares of capital stock of
the Corporation or another corporation entitled to vote generally on the
election of Directors, and each
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reference to a proportion of shares of Voting Stock shall refer to such
proportion of the votes entitled to be cast by such shares.
(l) "Substantial Part" means properties and assets involved in any single
transaction or a Series of Related Transactions having an aggregate fair market
value of more than ten percent (10%) of the total consolidated assets of the
Person in question as determined immediately prior to such transaction or Series
of Related Transactions.
Section 8.4. Director Determinations. A majority of the Continuing
Directors shall have the power to determine for the purposes of this Article
VIII, on the basis of information known to them:
(a) The number of shares of Voting Stock of which any Person is the
Beneficial Owner;
(b) Whether a Person is an Affiliate or Associate of another;
(c) Whether a Person has an agreement, arrangement or understanding with
another as to the matters referred to in the definition of "Beneficial Owner";
(d) Whether the assets subject to any Business Combination constitute a
Substantial Part;
(e) Whether two or more transactions constitute a Series of Related
Transactions; and
(f) Such other matters with respect to which a determination is required
under this Article VIII.
Section 8.5. Nonmonetary Factors in Acquisition Proposals. In connection
with the exercise of its judgment in determining what is in the best interests
of the Corporation and its shareholders when evaluating a proposal by another
person or persons to acquire some material part or all of the business or
properties of the Corporation (whether by merger, consolidation, purchase of
assets, stock reclassification or recapitalization, spin-off, liquidation or
otherwise) or to acquire some material part or all of the stock of the
Corporation (whether by a tender or exchange offer or some other means), the
Board of Directors of the Corporation shall, in addition to considering the
adequacy of the consideration to be paid in connection with any such
transaction, consider all of the following factors and any other factors that it
deems relevant:
(a) The social and economic effects of the transaction on the Corporation
and its subsidiaries and their employees, customers, creditors and communities
in which the Corporation and its subsidiaries operate or are located;
(b) The business and financial condition and earnings prospects of the
acquiring person or persons, including, but not limited to, debt service and
other existing or likely financial obligations of the acquiring person or
persons and their affiliates and associates, and the possible effect of such
conditions upon the Corporation and its subsidiaries and the communities in
which the Corporation and its subsidiaries operate or are located; and
(c) The competence, experience, and integrity of the acquiring person or
persons and its or their management and affiliates and associates.
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Section 8.6. Amendment of Article VIII or Certain Other Provisions. Any
amendment, change or repeal of this Article VIII, or of Sections 6.1, 6.5, 7.2,
7.5, 9.2 or 9.3, or any other amendment of these Restated Articles of
Incorporation which would have the effect of modifying or permitting
circumvention of this Article VIII or such other provisions of these Restated
Articles of Incorporation, shall require the affirmative vote, at a meeting of
shareholders of the Corporation:
(a) Of at least seventy-five percent (75%) of the votes entitled to be
cast by the holders of the outstanding shares of all classes of Voting Stock of
the Corporation considered for purposes of this Article VIII as a single class;
and
(b) Of an Independent Majority of Shareholders;
provided, however, that this Section 8.6 shall not apply to, and such vote shall
not be required for, any such amendment, change or repeal recommended to
shareholders by the favorable vote of not less than seventy-five percent (75%)
of the Directors who then qualify as Continuing Directors with respect to all
Related Persons and any such amendment, change or repeal so recommended shall
require only the vote, if any, required under the applicable provisions of the
Corporation Law.
Section 8.7. Fiduciary Obligations Unaffected. Nothing in this Article
VIII shall be construed to relieve any Related Person from any fiduciary duty
imposed by law.
Section 8.8. Article VIII Nonexclusive. The provisions of this Article
VIII are nonexclusive and are in addition to any other provisions of law or
these Restated Articles of Incorporation or the By-Laws of the Corporation
relating to Business Combinations, Related Persons or similar matters.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Amendment or Repeal. Except as otherwise expressly provided
for in these Restated Articles of Incorporation, the Corporation shall be
deemed, for all purposes, to have reserved the right to amend, alter, change or
repeal any provision contained in these Restated Articles of Incorporation to
the extent and in the manner now or hereafter permitted or prescribed by
statute, and all rights herein conferred upon shareholders are granted subject
to such reservation.
Section 9.2. Redemption of Shares Acquired in Control Share Acquisitions.
If and whenever the provisions of IC 23-1-42 apply to the Corporation, it is
authorized to redeem its securities pursuant to IC 23-1-42-10.
Section 9.3. Election to be Subject to Five-Year Freeze Statute. Unless
the Corporation's By-Laws provide that it elects not be governed by IC 23-1-43,
the Corporation elects to have the provisions of IC 23-1-43 apply to it
regardless of whether or not it has a class of
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voting securities registered with the Securities and Exchange Commission under
Section 12 of the Securities Exchange Act of 1934.
Section 9.4. Captions. The captions of the Articles and Sections of these
Restated Articles of Incorporation have been inserted for convenience of
reference only and do not in any way define, limit, construe or describe the
scope or intent of any Article or Section hereof.
ARTICLE X
Terms of ESOP Convertible Voting Preferred Stock
The designation, preferences, limitations and relative voting and other
rights of the first series of the authorized Special Shares of the Corporation
in addition to those set forth elsewhere in these Restated Articles of
Incorporation which are applicable to all series of Special Shares are hereby
fixed as follows:
Section 10.1. Designation and Amount; Special Purpose Restricted Transfer
Issue.
(a) The shares of such series shall be designated as "ESOP Convertible
Voting Preferred Stock" ("ESOP Preferred Stock") and the number of shares
constituting such series shall be 1,700,000.
(b) Shares of ESOP Preferred Stock shall be issued only to Fort Wayne
National Bank, Lincoln National Bank and Trust Company of Fort Wayne, and Summit
Bank, as trustees (the "Trustee") of the Retirement Savings Plan for Employees
of Tokheim Corporation and Subsidiaries (the "Plan"). All references to the
holder of shares of ESOP Preferred Stock shall mean the Trustee or any successor
trustee under the Plan. In the event of any transfer of record ownership of
shares of ESOP Preferred Stock to any person other than any successor trustee
under the Plan, the shares of ESOP Preferred Stock so transferred, upon such
transfer and without any further action by the Corporation or the holder
thereof, shall be automatically converted into shares of Common Shares on the
terms otherwise provided for the conversion of shares of ESOP Preferred Stock
into shares of Common Shares pursuant to Section 10.5 hereof and no such
transferee shall have any of the preferences, limitations and relative voting
and other rights, ascribed to shares of ESOP Preferred Stock hereunder but,
rather, only the powers and rights pertaining to the Common Shares into which
such shares of ESOP Preferred Stock shall be so converted. In the event of such
a conversion, the transferee of the shares of ESOP Preferred Stock shall be
treated for all purposes as the record holder of the shares of Common Shares
into which such shares of ESOP Preferred Stock have been automatically converted
as of the date of such transfer. Certificates representing shares of ESOP
Preferred Stock shall bear a legend to reflect the foregoing provisions.
Notwithstanding the foregoing provisions of this paragraph (b) of Section 10.1,
shares of ESOP Preferred Stock:
(i) May be converted into shares of Common Shares as provided by
Section 10.5 hereof and the shares of Common Shares issued upon such
conversion may be transferred by the holder thereof as permitted by law;
and
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(ii) Shall be redeemable by the Corporation upon the terms and
conditions provided by Sections 10.6, 10.7 and 10.8 hereof.
Section 10.2. Dividends and Distributions.
(a) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of ESOP Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available
therefor, cash dividends ("Preferred Dividends") in an amount per share equal to
$1.9375 per share per annum, and no more, payable quarterly in arrears,
one-fourth on the first day of March, June, September, and December of each year
(each a "Dividend Payment Date") commencing on September 1, 1989, to holders of
record at the start of business on such Dividend Payment Date. In the event
that any Dividend Payment shall fall on any day other than a "Business Day" (as
hereinafter defined), the dividend payment due on such Dividend Payment Date
shall be paid on the Business Day immediately preceding such Dividend Payment
Date. Preferred Dividends shall begin to accrue on outstanding shares of ESOP
Preferred Stock from the date of issuance of such shares of ESOP Preferred
Stock. Preferred Dividends shall accrue on a daily basis whether or not the
Corporation shall have earnings or surplus at the time, but Preferred Dividends
accrued after issuance on the shares of ESOP Preferred Stock for any period less
than a full quarterly period between Dividend Payment Dates shall be computed on
the basis of a 360-day year of 12 30-day months. Accrued but unpaid Preferred
Dividends shall cumulate as of the Dividend Payment Date on which they first
become payable, but not interest shall accrue on accumulated but unpaid
Preferred Dividends.
(b) So long as any shares of ESOP Preferred Stock shall be outstanding, no
dividend shall be declared or paid or set apart for payment on any other series
of stock ranking on a parity with the ESOP Preferred Stock as to dividends,
unless there shall also be or have been declared and paid or set apart for
payment on the ESOP Preferred Stock, dividends for all dividend payment periods
of the ESOP Preferred Stock ending on or before the Dividend Payment Date of
such parity stock, ratably in proportion to the respective amounts of dividends
accumulated and unpaid through such dividend period on the ESOP Preferred Stock
and accumulated and unpaid on such parity stock through the dividend payment
period on such parity stock next preceding such Dividend Payment Date. In the
event that full cumulative dividends on the ESOP Preferred Stock have been
declared and paid or set apart for payment when due, the Corporation shall not
declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption or
other retirement of any other class of stock or series thereof of the
Corporation ranking, as to dividends or as to distributions in the event of a
liquidation, dissolution or windup of the Corporation, junior to the ESOP
Preferred Stock until full cumulative dividends on the ESOP Preferred Stock
shall have been paid or declared and set apart for payment; provided, however,
that the foregoing shall not apply to (i) any dividend payable solely in any
shares of any stock ranking, as to dividends and as to distributions in the
event of a liquidation, dissolution or windup of the Corporation, junior to
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the ESOP Preferred Stock or (ii) the acquisition of shares of any stock
ranking, as to dividends or as to distributions in the event of a liquidation,
dissolution or windup of the Corporation, junior to the ESOP Preferred Stock
in exchange solely for shares of any other stock ranking, as to dividends and as
to distributions in the event of a liquidation, dissolution or windup of the
Corporation, junior to the ESOP Preferred Stock.
Section 10.3. Voting Rights. The holders of shares of ESOP Preferred
Stock shall have the following voting rights:
(a) The holders of ESOP Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the shareholders of the Corporation, voting
together with the holders of Common Shares as one class. The holder of each
share of ESOP Preferred Stock shall be entitled to a number of votes equal to
the number of shares of Common Shares into which such share of ESOP Preferred
Stock could be converted on the record date for determining the shareholders
entitled to vote, rounded to the nearest one-tenth of a vote; it being
understood that whenever the "Conversion Price" (as defined in Section 10.5
hereof) is adjusted as provided in Section 10.9 hereof, the voting rights of the
ESOP Preferred Stock shall also be similarly adjusted.
(b) Except as otherwise required by law or set forth herein, holders of
ESOP Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders of
Common Shares as set forth herein) for the taking of any corporate action;
provided, however, that the vote of at least 66-2/3% of the outstanding shares
of ESOP Preferred Stock, voting separately as a series, shall be necessary to
adopt any alteration, amendment or repeal of any provision of these Restated
Articles of Incorporation of the Corporation, as amended (including any such
alteration, amendment or repeal effected by any merger or consolidation in which
the Corporation is the surviving or resulting corporation), if such amendment,
alteration or repeal would alter or change the preferences, limitations, or
relative voting or other rights of the shares of ESOP Preferred Stock so as to
affect them adversely.
Section 10.4. Liquidation, Dissolution or Windup.
(a) Upon any voluntary or involuntary liquidation, dissolution or windup
of the Corporation, the holders of ESOP Preferred Stock shall be entitled to
receive out of assets of the Corporation which remain after satisfaction in full
of all valid claims of creditors of the Corporation and which are available for
payment to shareholders, and subject to the rights of the holders of any stock
of the Corporation ranking senior to or on a parity with the ESOP Preferred
Stock in respect of distributions upon liquidation, dissolution or windup of the
Corporation, before any amount shall be paid or distributed among the holders of
Common Shares or any other shares ranking junior to the ESOP Preferred Stock in
respect of distributions upon liquidation, dissolution or windup of the
Corporation, liquidating distributions in the amount of $25.00 per share, plus
an amount equal to all accrued and unpaid dividends thereon to the date fixed
for distribution, and no more. If upon any liquidation, dissolution or windup of
the
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<PAGE>
Corporation, the amounts payable with respect to the ESOP Preferred Stock and
any other stock ranking as to any such distribution on a parity with the ESOP
Preferred Stock are not paid in full, the holders of the ESOP Preferred Stock
and such other stock shall share ratably in any distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled. After payment of the full amount to which they are entitled as
provided by the foregoing provisions of this paragraph 10.4(a), the holders of
shares of ESOP Preferred Stock shall not be entitled to any further right or
claim to any of the remaining assets of the Corporation.
(b) Neither the merger or consolidation of the Corporation with or into
any other corporation, nor the merger or consolidation of any other corporation
with or into the Corporation, nor the sale, lease, exchange or other transfer of
all or any portion of the assets of the Corporation, shall be deemed to be a
dissolution, liquidation or windup of the affairs of the Corporation for
purposes of this Section 10.4, but the holders of the ESOP Preferred Stock shall
nevertheless be entitled in the event of any such merger or consolidation to the
rights provided by Section 10.8 hereof.
(c) Written notice of any voluntary or involuntary liquidation,
dissolution or windup of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to holders of
ESOP Preferred Stock in such circumstances shall be payable, shall be given by
first-class mail, postage prepaid, mailed not less than twenty (20) days prior
to any payment date stated therein, to the holders of ESOP Preferred Stock, at
the address shown on the books of the Corporation or any transfer agent for the
ESOP Preferred Stock.
Section 10.5. Conversion into Common Shares.
(a) A holder of shares of ESOP Preferred Stock shall be entitled, at any
time prior to the close of business on the date fixed for redemption of such
shares pursuant to Sections 10.6, 10.7 and 10.8 hereof, to cause any or all of
such shares to be converted into shares of Common Shares, initially at a
conversion rate equal to the ratio of $25.00 to the amount which initially shall
be $25.00 and which shall be adjusted as hereinafter provided (and, as so
adjusted, is hereinafter sometimes referred to as the "Conversion Price") (that
is, a conversion rate initially equivalent to one share of Common Shares for
each share of ESOP Preferred Stock so converted, which is subject to adjustment
as the Conversion Price is adjusted as hereinafter provided).
(b) Any holder of shares of ESOP Preferred Stock desiring to convert such
shares into shares of Common Shares shall surrender the certificate or
certificates representing the shares of ESOP Preferred Stock being converted,
duly assigned or endorsed for transfer to the Corporation (or accompanied by
duly executed stock powers relating thereto), at the principal executive office
of the Corporation or the offices of the transfer agent for the ESOP Preferred
Stock or such office or offices in the continental United States of an agent for
conversion as may from time to time be designated by notice to the holders of
the ESOP Preferred Stock by the Corpora-
23
<PAGE>
tion or the transfer agent for the ESOP Preferred Stock, accompanied by written
notice of conversion. Such notice of conversion shall specify (i) the number of
shares of ESOP Preferred Stock to be converted and the name or names in which
such holder wishes the certificate or certificates for Common Shares and for any
shares of ESOP Preferred Stock not to be so converted to be issued and (ii) the
address to which such holder wishes delivery to be made of such new certificates
to be issued upon such conversion.
(c) Upon surrender of a certificate representing a share or shares of
ESOP Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery (with receipt to be acknowledged) or by first class mail, postage
prepaid, to the holder thereof or to such holder's designee, at the address
designated by such holder, a certificate or certificates for the number of
shares of Common Shares to which such holder shall be entitled upon conversion.
In the event that there shall have been surrendered a certificate or
certificates representing shares of ESOP Preferred Stock, only part of which are
to be converted, the Corporation shall issue and deliver to such holder or such
holder's designee a new certificate or certificates representing the number of
shares of ESOP Preferred Stock which shall not have been converted.
(d) The issuance by the Corporation of shares of Common Shares upon a
conversion of shares of ESOP Preferred Stock into shares of Common Shares made
at the option of the holder thereof shall be effective as of the earlier of (i)
the delivery to such holder or such holder's designee of the certificates
representing the shares of Common Shares issued upon conversion thereof or (ii)
the commencement of business on the second business day after the surrender of
the certificate or certificates for the shares of ESOP Preferred Stock to be
converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto) as provided herein.
On and after the effective day of conversion, the person or persons entitled to
receive the Common Shares issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Shares, but no
allowance or adjustment shall be made in respect of dividends payable to holders
of Common Shares in respect of any period prior to such effective date. The
Corporation shall not be obligated to pay any dividends which shall have been
declared and shall be payable to holders of shares of ESOP Preferred Stock on a
Dividend Payment Date if such Dividend Payment Date for such dividend is
subsequent to the effective date of conversion of such shares.
(e) The Corporation shall not be obligated to deliver to holders of
ESOP Preferred Stock any fractional share or shares of Common Shares issuable
upon any conversion of such shares of ESOP Preferred Stock, but in lieu thereof
may make a cash payment in respect thereof in any manner permitted by law.
(f) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Shares, solely for issuance upon the
conversion of shares of ESOP Preferred Stock as herein provided, free from any
preemptive rights, such number of shares of Common Shares as shall from time to
time be issuable upon the conversion of all the shares of ESOP
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<PAGE>
Preferred Stock then outstanding. Nothing contained herein shall preclude the
Corporation from issuing shares of Common Shares held in its treasury upon the
conversion of shares of ESOP Preferred Stock into Common Shares pursuant to the
terms hereof. The Corporation shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all requirements
as to registration or qualification of the Common Shares, in order to enable the
Corporation lawfully to issue and deliver to each holder of records of ESOP
Preferred Stock such number of shares of its Common Shares as shall from time to
time be sufficient to effect the conversion of all shares of ESOP Preferred
Stock then outstanding and convertible into shares of Common Shares.
SECTION 10.6. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) The ESOP Preferred Stock shall be redeemable, in whole or in part, at
the option of the Corporation at any time after December 1, 1989, or at any time
after the date of issuance, if permitted by paragraph (d) of this Section 10.6,
at the following redemption prices per share:
<TABLE>
<CAPTION>
During the Twelve-Month Period Price Per
Beginning December 1 Share
-------------------- -----
<S> <C>
1989 $26.94
1990 26.75
1991 26.55
1992 26.36
1993 26.17
1994 25.97
1995 25.78
1996 25.59
1997 25.39
1998 25.20
</TABLE>
and thereafter at $25.00 per share, plus, in each case, an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption. Payment
of the redemption price shall be made by the Corporation in cash or shares of
Common Shares, or a combination thereof, as permitted by paragraph (f) of this
Section 10.6. From and after the date fixed for redemption, dividends on shares
of ESOP Preferred Stock called for redemption will cease to accrue, such shares
will no longer be deemed to be outstanding and all rights in respect of such
shares of the Corporation shall cease, except the right to receive the
redemption price. If less than all of the outstanding shares of ESOP Preferred
Stock are to be redeemed, the Corporation shall either redeem a portion of the
shares of each holder determined pro rata based on the number of shares held by
each holder or shall select the shares to be redeemed by lot, as may be
determined by the Board of Directors of the Corporation.
(b) Unless otherwise required by law, notice of redemption will be sent to
the holders of ESOP Preferred Stock at the address shown on the books of the
Corporation or any transfer agent for the ESOP Preferred Stock by first class
mail, postage prepaid, mailed not less than
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<PAGE>
twenty (20) days nor more than sixty (60) days prior to the redemption date.
Each such notice shall state: (i) the redemption date; (ii) the total number of
shares of the ESOP Preferred Stock to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) the conversion rights of the shares to
be redeemed, the period within which conversion rights may be exercised, and the
Conversion Price and number of shares of Common Shares issuable upon conversion
of a share of ESOP Preferred Stock at the time. Upon surrender of the
certificate for any shares so called for redemption and not previously converted
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the date fixed for redemption and at the
redemption price set forth in this Section 10.6.
(c) In the event of a change in the federal tax law of the United States of
America which has the effect of precluding the Corporation from claiming any of
the tax deductions for dividends paid on the ESOP Preferred Stock when such
dividends are used as provided under Section 404(k)(2) of the Internal Revenue
Code of 1986, as amended and in effect on the date shares of ESOP Preferred
Stock are initially issued, the Corporation may, in its sole discretion and
notwithstanding anything to the contrary in paragraph (a) of this Section 10.6,
elect to redeem any or all of such shares for the amount payable in respect of
the shares upon liquidation of the Corporation pursuant to Section 10.4 hereof.
(d) Notwithstanding anything to the contrary in paragraph (a) of this
Section 10.6, the Corporation may elect to redeem any or all of the shares of
ESOP Preferred Stock at any time on or prior to December 1, 1989, on the terms
and conditions set forth in paragraphs (a) and (b) of this Section 10.6, if the
last reported sales price, regular way, of a share of Common Shares, as reported
on the New York Stock Exchange Composite-Tape, or, if the Common Shares is not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which such stock is listed or admitted to
trading or, if the Common Shares is not listed or admitted to trading on any
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or, if Common Shares is not quoted on such National Market System, the average
of the closing bid and asked prices in the over-the-counter market as reported
by NASDAQ, for at least twenty (20) trading days within a period of thirty (30)
consecutive trading days ending within five (5) days of the notice of
redemption, equals or exceeds one hundred fifty percent (150%) of the Conversion
Price (giving effect in making such calculation to any adjustments required by
Section 10.9 hereof).
(e) In the event that the Plan is terminated in accordance with its terms,
and notwithstanding anything to the contrary in paragraph (a) of this Section
10.6, the Corporation
26
<PAGE>
shall, as soon thereafter as practicable, call for redemption all then
outstanding shares of ESOP Preferred Stock for the amount payable in respect of
the shares upon liquidation of the Corporation pursuant to Section 10.4 hereof.
(f) The Corporation, at its option, may make payment of the redemption
price required upon redemption of shares of ESOP Preferred Stock in cash or in
shares of Common Shares, or in a combination of such shares and cash, any such
shares of Common Shares to be valued for such purposes at their Fair Market
Value (as defined in paragraph (f) of Section 10.9 hereof).
Section 10.7. Other Redemption Rights. Shares of ESOP Preferred Stock shall
be redeemed by the Corporation except to the extent prohibited by law for shares
of Common Shares, or if the Corporation so elects, in cash, or a combination of
such shares and cash, any such shares of Common Shares to be valued for such
purpose as provided by paragraph (f) of Section 10.6, at a redemption price of
$25.00 per share plus accrued and unpaid dividends thereon to the date fixed for
redemption, at the option of the holder, at any time and from time to time upon
notice to the Corporation given not less than five (5) business days prior to
the date fixed by the holder in such notice for such redemption, upon
certification by such holder to the Corporation that redemption is necessary for
such holder to provide for distributions required to be made to participants
under, or to satisfy an investment election provided to participants in
accordance with, the Plan, or any successor plan.
Section 10.8. Consolidation, Merger, etc.
(a) In the event that the Corporation shall consummate any consolidation or
merger or similar business combination, pursuant to which the outstanding shares
of Common Shares are by operation of law exchanged solely for or changed,
reclassified or converted solely into stock of any successor or resulting
corporation (including the Corporation) that constitutes "qualifying employer
securities" with respect to a holder of ESOP Preferred Stock within the meaning
of Section 4975(e)(8) of the Internal Revenue Code of 1986, as amended, and
Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as
amended, or any successor provisions of law, and, if applicable, for a cash
payment in lieu of fractional shares, if any, the shares of ESOP Preferred Stock
of such holder shall, in connection with such consolidation, merger or similar
business combination, be assumed by and shall become preferred stock of such
successor or resulting corporation, having in respect of such corporation,
insofar as possible, the same powers, preferences and relative, participating,
optional or other special rights (including the redemption rights provided by
Sections 10.6, 10.7 and 10.8 hereof), and the qualifications, limitations or
restrictions thereon, that the ESOP Preferred Stock had immediately prior to
such transaction, except that after such transaction each share of the ESOP
Preferred Stock shall be convertible, otherwise on the terms and conditions
provided by Section 10.5 hereof, into the number and kind of qualifying employer
securities so receivable by a holder of the number of shares of Common Shares
into which such shares of ESOP Preferred Stock could have been converted
immediately prior to such transaction; provided, however, that if by virtue of
the structure of
27
<PAGE>
such transaction, a holder of Common Shares is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by the holders of the
ESOP Preferred Stock, then the shares of ESOP Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the holders of Common
Shares, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in kind) receivable by a holder of
the number of shares of Common Shares into which such shares of ESOP Preferred
Stock could have converted immediately prior to such transaction if such holder
of Common Shares failed to exercise any rights of election to receive any kind
or amount of stock, securities, cash or other property (other than such
qualifying employer securities and a cash payment, if applicable, in lieu of
fractional shares) receivable upon such transaction (provided that, if the kind
or amount of qualifying employer securities receivable upon such transaction is
not the same for each nonelecting share, then the kind and amount so receivable
upon such transaction for each nonelecting share shall be the kind and amount so
receivable per share by the plurality of the nonelecting shares). The rights of
the ESOP Preferred Stock as preferred stock of such successor or resulting
corporation shall successively be subject to adjustment pursuant to Section 10.9
hereof after any such transaction as nearly equivalent as practicable to the
adjustment provided for by such Section prior to such transaction. The
Corporation shall not consummate any such merger, consolidation or similar
transaction unless all then outstanding shares of ESOP Preferred Stock be
assumed and authorized by the successor or resulting corporation as aforesaid.
(b) In the event that the Corporation shall consummate any consolidation or
merger or similar business combination, pursuant to which the outstanding shares
of Common Shares are by operation of law exchanged for or changed, reclassified
or converted into other stock or securities or cash or any other property, or
any combination thereof, other than any such consideration which is constituted
solely of qualifying employer securities (as referred to in paragraph (a) of
this Section 10.8) and cash payments, if applicable, in lieu of fractional
shares, outstanding shares of ESOP Preferred Stock shall, without any action on
the part of the Corporation or any holder thereof (but subject to paragraph (c)
of this Section 10.8), be automatically converted by virtue of such merger,
consolidation or similar transaction immediately prior to such consummation into
the number of shares of Common Shares into which such shares of ESOP Preferred
Stock could have been converted at such time so that each share of ESOP
Preferred Stock shall, by virtue of such transaction and on the same terms as
apply to the holders of Common Shares, be converted into or exchanged for the
aggregate amount of stock, securities, cash or other property (payable in like
kind) receivable by a holder of the number of shares of Common Shares into which
such shares of ESOP Preferred Stock could have been converted immediately prior
to such transaction; provided, however, that if by virtue of the structure of
such transaction, a holder of Common Shares is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practi-
28
<PAGE>
cably be made by the holders of the ESOP Preferred Stock, then the shares of
ESOP Preferred Stock, by virtue of such transaction and on the same terms as
apply to the holders of Common Shares, be converted into or exchanged for the
aggregate amount of stock, securities, cash or other property (payable in kind)
receivable by a holder of the number of shares of Common Shares into which such
shares of ESOP Preferred Stock could have been converted immediately prior to
such transaction if such holder of Common Shares failed to exercise any rights
of election as to the kind or amount of stock, securities, cash or other
property receivable upon such transaction (provided that, if the kind or amount
of stock, securities, cash or other property receivable upon such transaction is
not the same for each nonelection share, then the kind and amount of stock,
securities, cash or other property receivable upon such transaction for each
nonelecting share shall be the kind and amount so receivable per share by a
plurality of the nonelecting shares).
(c) In the event the Corporation shall enter into any agreement providing
for any consolidation or merger or similar business combination described in
paragraph (b) of this Section 10.8, then the Corporation shall as soon as
practicable thereafter (and in any event at least ten (10) Business Days before
consummation of such transaction) give notice of such agreement and the material
terms thereof to each holder of ESOP Preferred Stock and each such holder shall
have the right to elect, by written notice to the Corporation, to receive, upon
consummation of such transaction (if and when such transaction is consummated),
from the Corporation or the successor of the Corporation, in redemption and
retirement of such ESOP Preferred Stock, a cash payment equal to the amount
payable in respect of shares of ESOP Preferred Stock upon liquidation of the
Corporation pursuant to Section 10.4 hereof. No such notice of redemption shall
be effective unless given to the Corporation prior to the close of business on
the fifth business day prior to consummation of such transaction, unless the
Corporation or the successor of the Corporation shall waive such prior notice,
but any notice of redemption so given prior to such time may be withdrawn by
notice of withdrawal given to the Corporation prior to the close of business on
the fifth Business Day prior to consummation of such transaction.
Section 10.9 Anti-dilution Adjustments.
(a) In the event the Corporation shall, at any time or from time to time
while any of the shares of the ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution in respect of the Common Shares in shares of
Common Shares, (ii) subdivide the outstanding shares of Common Shares, or (iii)
combine the outstanding shares of Common Shares into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Corporation (including a recapitalization effected by a merger or consolidation
to which Section 10.8 hereof does not apply) or otherwise, the Conversion Price
in effect immediately prior to such action shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which is the number of shares
of Common Shares outstanding immediately before such event, and the denominator
of which is the number of shares of Common Shares outstanding immediately after
29
<PAGE>
such event. An adjustment made pursuant to this paragraph 10.9(a) shall be given
effect, upon payment of such a dividend or distribution, as of the record date
for the determination of stockholders entitled to receive such dividend or
distribution (on a retroactive basis and in the case of a subdivision or
combination shall become effective immediately as of the effective date thereof.
(b) In the event the Corporation shall, at any time or from time to time
while any of the shares of ESOP Preferred Stock are outstanding, issue to
holders of shares of Common Shares as a dividend or distribution, including by
way of a reclassification of shares on a recapitalization of the Corporation,
any right or warrant to purchase shares of Common Shares (but not including as
such a right or warrant any security convertible into or exchangeable for shares
of Common Shares) at a purchase price per share less than the Fair Market Value
(as hereinafter defined) of a share of Common Shares on the date of issuance of
such right or warrant, then, subject to the provisions of paragraphs (d) and (e)
of this Section 10.9, the Conversion Price shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Shares outstanding immediately before such issuance of rights
or warrants plus the number of shares of Common Shares which could be purchased
at the Fair Market Value of a share of Common Shares at the time of such
issuance for the maximum aggregate consideration payable upon exercise in full
of all such rights or warrants, and the denominator of which shall be the number
of shares of Common Shares outstanding immediately before such issuance of
rights or warrants plus the maximum number of shares of Common Shares that could
be acquired upon exercise in full of all such rights and warrants.
(c) In the event the Corporation shall, at any time or from time to time
while any of the shares of ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution (as hereinafter defined) in respect of the Common
Shares, whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation (including a recapitalization or
reclassification effected by a merger or consolidation to which Section 10.8
hereof does not apply) or effect a Pro Rata Repurchase (as hereinafter defined)
of Common Shares, the Conversion Price in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall, subject to paragraphs
(d) and (e) of this Section 10.9, be adjusted by multiplying such Conversion
Price by the fraction the numerator of which is (i) the product of (x) the
number of shares of Common Shares outstanding immediately before such
Extraordinary Distribution or Pro Rata Repurchase multiplied by (y) the Fair
Market Value of a share of Common Shares on the day before the ex-dividend date
with respect to an Extraordinary Distribution which is paid in cash and on the
distribution date with respect to an Extraordinary Distribution which is paid
other than in cash, or on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata Repurchase, or on
the date of purchase with respect to any Pro Rata Repurchase which is not a
tender offer, as the case may be, minus (ii) the Fair Market Value of the
Extraordinary Distribution or the aggregate purchase price of the Pro Rata
Repur-
30
<PAGE>
chase, as the case may be, and the denominator of which shall be the product of
(a) the number of shares of Common Shares outstanding immediately before such
Extraordinary Dividend or Pro Rata Repurchase minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Shares repurchased by the Corporation
multiplied by (b) the Fair Market Value of a share of Common Shares on the day
before the ex-dividend date with respect to an Extraordinary Distribution which
is paid in cash and on the distribution date with respect to an Extraordinary
Distribution which is paid other than in cash, or on the applicable expiration
date (including all extensions thereof) of any tender offer which is a Pro Rata
Repurchase or on the date of purchase with respect to any Pro Rata Repurchase
which is not a tender offer, as the case may be. The Corporation shall send each
holder of ESOP Preferred Stock (i) notice of its intent to make any dividend or
distribution and (ii) notice of any offer by the Corporation to make a Pro Rata
Repurchase, in each case at the same time as, or as soon as practicable after,
such offer is first communicated (including by announcement of a record date in
accordance with the rules of any stock exchange on which the Common Shares is
listed or admitted to trading) to holders of Common Shares. Such notice shall
indicate the intended record date and the amount and nature of such dividend or
distribution, or the number of shares subject to such offer for a Pro Rata
Repurchase and the purchase price payable by the Corporation pursuant to such
offer, as well as the Conversion Price and the number of shares of Common Shares
into which a share of ESOP Preferred Stock may be converted at such time.
(d) Notwithstanding any other provisions of this Section 10.9, the
Corporation shall not be required to make any adjustment to the Conversion Price
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Conversion Price. Any lesser adjustment shall be carried
forward and shall be made no later than the time of, and together with, the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least one percent
(1%) in the Conversion Price.
(e) If the Corporation shall make any dividend or distribution on the
Common Shares or issue any Common Shares, other capital stock or other security
of the Corporation or any rights or warrants to purchase or acquire any such
security, which transaction does not result in an adjustment to the Conversion
Price pursuant to the foregoing provisions of this Section 10.9, the Board of
Directors of the Corporation shall consider whether such action is of such a
nature that an adjustment to the Conversion Price should equitably be made in
respect of such transaction. If in such case the Board of Directors of the
Corporation determines that an adjustment to the Conversion Price should be
made, an adjustment shall be made effective as of such date, as determined by
the Board of Directors of the Corporation. The determination of the Board of
Directors of the Corporation as to whether an adjustment to the Conversion Price
should be made pursuant to the foregoing provisions of this paragraph 10.9(e)
and, if so, as to what adjustment should be made and when, shall be final and
binding on the Corporation and all share-
31
<PAGE>
holders of the Corporation. The Corporation shall be entitled to make such
additional adjustments in the Conversion Price, in addition to those required by
the foregoing provisions of this Section 10.9, as shall be necessary in order
that any dividend or distribution in shares of capital stock of the Corporation,
subdivision, reclassification or combination of shares of stock of the
Corporation or any recapitalization of the Corporation shall not be taxable to
the holders of the Common Shares.
(f) As used herein, the following definitions shall apply:
"Business Day" shall mean each day that is not a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Current Market Price" of publicly traded shares of Common Shares or any
other class of Capital Stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price, regular way, or, in
the event that no sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in either case as reported on the New
York Stock Exchange Composite Tape or, if such security is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which such security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
NASDAQ National Market System or, if such security is not quoted on such
National Market System, the average of the closing bid and asked prices on each
such day in the over-the-counter market as reported by NASDAQ or, if bid and
asked prices for such security on each such day shall not have been reported
through NASDAQ, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in such security selected for such purpose by the Board of Directors of the
Corporation or a committee thereof, in each case, on each trading day during the
Adjustment Period. "Adjustment Period" shall mean the period of five (5)
consecutive trading days preceding, and including, the date as of which the Fair
Market Value of a security is to be determined. The "Fair Market Value" of any
security which is not publicly traded or of any other property shall mean the
fair value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the Corporation or a
committee thereof, or, if no such investment banking or appraisal firm is in
good faith judgment of the Board of Directors or such committee available to
make such determination, as determined in good faith by the Board of Directors
of the Corporation or such committee.
"Extraordinary Distribution" shall mean any dividend or other distribution
to holders of Common Shares (effected while any of the shares of ESOP Preferred
Stock are outstanding) (i) of cash, where the aggregate amount of such cash
dividend or distribution, together with the amount of all cash dividends and
distributions made during the preceding period of 12 months, when combined with
the aggregate amount of all Pro Rata Repurchases (for this purpose, including
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only that portion of the aggregate purchase price of such Pro Rata
Repurchase which is in excess of the Fair Market Value of the Common Shares
repurchased as determined on the applicable expiration date (including all
extensions thereof) of any tender offer or exchange offer which is a Pro
Rata Repurchase, or the date of purchase with respect to any other Pro Rata
Repurchase which is not a tender offer or exchange offer made during such
period), exceeds fifteen percent (15%) of the aggregate Fair Market Value
of all shares of Common Shares outstanding on the day before the ex-
dividend date with respect to such Extraordinary Distribution which is paid
in cash and on the distribution date with respect to an Extraordinary
Distribution which is paid other than in cash, and/or (ii) of any shares of
capital stock of the Corporation (other than shares of Common Shares),
other securities of the Corporation (other than securities of the type
referred to in paragraph (b) or (c) of this Section 10.9), evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of any subsidiary of the Corporation) or any combination
thereof. The Fair Market Value of an Extraordinary Distribution for
purposes of paragraph (d) of this Section 10.9 shall be equal to the sum of
the Fair Market Value of such Extraordinary Distribution plus the amount of
any cash dividends which are not Extraordinary Distributions made during
such 12-month period and not previously included in the calculation of an
adjustment pursuant to paragraph (d) of this Section 10.9.
"Fair Market Value" shall mean, as to shares of Common Shares or any
other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the average of the Current Market Prices
of such shares or securities for each day of the Adjustment Period.
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by
the Corporation of any right or warrant to purchase or acquire shares of
Common Shares (including any security convertible into or exchangeable for
shares of Common Shares) shall mean the remainder of:
(i) The product of the Fair Market Value of a share of Common
Shares on the day preceding the first public announcement of such
issuance, sale or exchange multiplied by the maximum number of shares
of Common Shares which could be acquired on such date upon the exercise
in full of such rights and warrants (including upon the conversion or
exchange of all such convertible or exchangeable securities), whether
or not exercisable (or convertible or exchangeable) at such date, minus
(ii) The aggregate amount payable pursuant to such right or
warrant to purchase or acquire such maximum number of shares of Common
Shares;
provided, however, that in no event shall the Non-Dilutive Amount be less
than zero. For purposes of the foregoing sentence, in the case of a
security convertible into or exchangeable for shares of Common Shares, the
amount payable pursuant to a right or warrant to purchase or acquire shares
of Common Shares shall be the Fair Market Value of such security on the
date of the issuance, sale or exchange of such security by the Corporation.
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"Pro Rata Repurchase" shall mean any purchase of shares of Common Shares by
the Corporation or any subsidiary thereof, whether for cash, shares of capital
stock of the Corporation, other securities of the Corporation, evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of a subsidiary of the Corporation), or any combination
thereof, effected while any of the shares of ESOP Preferred Stock are
outstanding, pursuant to any tender offer or exchange offer subject to Section
13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Shares; provided, however, that no purchase
of shares by the Corporation, or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For purposes of this
paragraph 10.9(f), shares shall be deemed to have been purchased by the
Corporation or any subsidiary thereof "in open market transactions" if they have
been purchased substantially in accordance with the requirements of Rule 10b-18
as in effect under the Exchange Act, on the date shares of ESOP Preferred Stock
are initially issued by the Corporation or on such other terms and conditions as
the Board of Directors of the Corporation or a committee thereof shall have
determined are reasonably designed to prevent such purchases from having a
material effect on the trading market for the Common Shares.
(g) Whenever an adjustment to the Conversion Price and the related
voting rights of the ESOP Preferred Stock is required hereunder, the
Corporation shall forthwith place on file with the transfer agent for the Common
Shares and the ESOP Preferred Stock, and with the Secretary of the Corporation,
a statement signed by two officers of the Corporation stating the adjusted
Conversion Price determined as provided herein and the resulting conversion
ratio, and the voting rights (as appropriately adjusted), of the ESOP Preferred
Stock. Such statement shall set forth in reasonable detail such facts as shall
be necessary to show the reason and the manner of computing such adjustment,
including any determination of Fair Market Value involved in such computation.
Promptly after each adjustment to the Conversion Price and the related voting
rights of the ESOP Preferred Stock, the Corporation shall mail a notice thereof
and of the then prevailing conversion ratio to each holder of shares of the ESOP
Preferred Stock.
Section 10.10 Ranking; Retirement of Shares.
(a) The ESOP Preferred Stock shall rank senior to the Common Shares as to
the payment of dividends and the distribution of assets on liquidation,
dissolution and windup of the Corporation, and, unless otherwise provided in
these Restated Articles of Incorporation of the Corporation, as the same may be
amended, relating to a subsequent series of Preferred Stock of the Corporation,
the ESOP Preferred Stock shall rank junior to all subsequent series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or windup.
(b) Any shares of ESOP Preferred Stock acquired by the Corporation by
reason of the conversion or redemption of such shares as provided herein, or
otherwise so acquired, shall be
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retired as shares of ESOP Preferred Stock and restored to the status of
authorized but unissued shares of Special Shares of the Corporation,
undesignated as to series, and may thereafter be reissued as part of a new
series of such Special Shares as permitted by law.
Section 10.11. Miscellaneous.
(a) All notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon the earlier of receipt thereof
or three (3) business days after the mailing thereof if sent by registered mail
(unless first-class mail shall be specifically herein permitted for such notice)
with postage prepaid, addressed: (i) if to the Corporation, to its office at
10501 Corporate Drive, Fort Wayne, Indiana 46845 (Attention: Secretary), or to
the transfer agent for the ESOP Preferred Stock, or other agent of the
Corporation designated as permitted herein or (ii) if to any holder of the ESOP
Preferred Stock or Common Shares, as the case may be, to such holder at the
address of such holder as listed in the stock record books of the Corporation
(which may include the records of any transfer agent for the ESOP Preferred
Stock or Common Shares, as the case may be) or (iii) to such other address as
the Corporation or any such holder, as the case may be, shall have designated by
notice similarly given.
(b) The term "Common Shares" as used in this Resolution means the
Corporation's Common Shares, as the same exists at the date of filing the
Amendment to these Restated Articles of Incorporation relating to the ESOP
Preferred Stock. In the event that, at any time as a result of an adjustment
made pursuant to Section 10.9, the holder of any shares of the ESOP Preferred
Stock upon thereafter surrendering such shares for conversion, shall become
entitled to receive any shares or other securities of the Corporation other than
shares of Common Shares, the Conversion Price in respect of such other shares or
securities so receivable upon conversion of shares of ESOP Preferred Stock shall
thereafter be adjusted, and shall be subject to further adjustment from time to
time, in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Shares contained in Section 10.9 hereof, and
the provisions of Sections 10.1 through 10.8, 10.10 and 10.11 hereof with
respect to the Common Shares shall apply on like or similar terms to any such
other shares or securities.
(c) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of ESOP Preferred Stock or shares of Common Shares or other securities issued on
account of ESOP Preferred Stock pursuant hereto or certificates representing
such shares or securities. The Corporation shall not, however, be required to
pay any such tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of ESOP Preferred Stock or Common Shares or other
securities in a name other than that in which the shares of ESOP Preferred Stock
with respect to which such shares or other securities are issued or delivered
were registered, or in respect of any payment to any person with respect to any
such shares or securities other than a payment, to the registered holder
thereof, and shall not be required to make any such issuance, delivery or
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payment unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid or is not payable.
(d) In the event that a holder of shares of ESOP Preferred Stock shall not
by written notice designate the name in which shares of Common Shares to be
issued upon conversion of such shares should be registered or to whom payment
upon redemption of shares of ESOP Preferred Stock should be made or the address
to which the certificate or certificates representing such shares, or such
payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such ESOP Preferred
Stock as shown on the records of the Corporation and to send the certificate or
certificates representing such shares, or such payment, to the address of such
holder shown on the records of the Corporation.
(e) Unless otherwise provided in these Restated Articles of Incorporation,
as the same may be amended, of the Corporation, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation or
windup or otherwise made upon the shares of ESOP Preferred Stock and any other
stock ranking on a parity with the ESOP Preferred Stock with respect to such
dividend or distribution shall be pro rata, so that amounts paid per share on
the ESOP Preferred Stock and such other stock shall in all cases bear to each
other the same ratio that the required dividends, distributions or payments, as
the case may be, then payable per share on the shares of the ESOP Preferred
Stock and such other stock bear to each other.
(f) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the ESOP Preferred Stock. Upon any such appointment
or discharge of a transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of ESOP Preferred
Stock.
ARTICLE XI
PREFERENCES AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
The voting powers, preferences and relative, participating, optional
and other special rights of the shares of Series A Junior Participating
Preferred Stock, and the qualifications, limitations or restrictions thereof,
are as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 30,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Special Shares ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, if and as declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the last day of February, May, August and November in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $0.01
or (b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in Common Shares or a subdivision of
the outstanding Common Shares (by reclassification or otherwise), declared on
the Common Shares, without par value, of the Corporation (the "Common Shares")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Participating Preferred
Stock. In the event the Corporation shall at any time after January 22, 1997
(the "Rights Declaration Date") (i) declare any dividend on Common Shares
payable in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii)
combine the outstanding Common Shares into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Shares
(other than a dividend payable in Common Shares); provided that, in the event no
dividend or distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $0.01 per share on the Series A
Junior Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. If the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine
the outstanding Common Shares into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
Common Shares shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
(6) quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Special Shares (including
holders of the Series A Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect two (2) Directors.
(ii) During any default period, such voting right of the holders
of Series A Junior Participating Preferred Stock may be exercised initially
at a special meeting called pursuant to subparagraph (iii) of this Section
3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the
right of the holders of any other series of Special Shares, if any, to
increase, in certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent (10%) in number of Special
Shares outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Shares shall not affect the exercise by the
holders of Special Shares of such voting right. At any meeting at which the
holders of Special Shares shall exercise such voting right initially during
an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such right is
exercised at an annual meeting, to elect two (2) Directors. If the number
which may be so elected at any special meeting does not amount to the
required number, the holders of the Special Shares shall have the right to
make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of
the Special Shares shall have exercised their right to elect Directors in
any default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders
of Special Shares as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Special Shares shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of Special Shares outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Special Shares,
which meeting shall thereupon be called by the Chief Executive Officer, any
President, a Vice-President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Special Shares
are entitled to vote pursuant to this Paragraph (C)(iii) shall be given to
each holder of record of Special Shares by mailing a copy of such notice to
him or her at his or her last address as the same appears on the books of
the Corporation. Such meeting shall be called for a time not earlier than
20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of Special Shares outstanding. Notwithstanding the provisions
of this Paragraph (C)(iii), no such special meeting shall be called during
the period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common Shares, and
other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of Directors until the holders of
Special Shares shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Special Shares shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in Paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this Paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Special Shares as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Special
Shares as a class shall terminate and (z) the number of Directors shall be
such number as may be provided for in the Restated Articles of
Incorporation or by-laws irrespective of any increase made pursuant to the
provisions of Paragraph (C)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or in
the Restated Articles of Incorporation or by-laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Shares as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued Special Shares and may be reissued as part of a new
series of Special Shares to be created by resolution or resolutions of the Board
of Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Shares shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(C) below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares) (such number in clause
(ii), the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and Common
Shares, respectively, holders of Series A Junior Participating Preferred Stock
and holders of Common Shares shall receive their ratable and proportionate share
of the remaining assets to be distributed in the ratio of the Adjustment Number
to 1 with respect to such Preferred Stock and Common Shares, on a per share
basis, respectively.
(B) If, however, there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Special Shares, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Shares.
(C) If the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of shares of Common Shares that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the Common Shares are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A
Junior Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each Common Share is changed or exchanged. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Junior Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
Section 8. Redemption. The shares of Series A Junior Participating
Preferred Stock shall be redeemable at a price equal to the product of (a) the
current market price of the Common Shares and (b) the Adjustment Number.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Special Shares
as to the payment of dividends and the distribution of assets, unless the terms
of any such series shall provide otherwise.
Section 10. Amendment. The Restated Articles of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holders fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
36
<PAGE>
Exhibit 10.4
[LOGO OF TOKHEIM]
EMPLOYMENT AGREEMENT
--------------------
FOR PRESIDENT, CEO & CHAIRMAN OF THE BOARD
------------------------------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 17th day
of DECEMBER, 1996, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and DOUGLAS K. PINNER (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date forward for an indefinite period and until such time as it may be
terminated by one or more of the parties, it being expressly recognized that
either party may terminate this Agreement, with cause, upon the giving of a
written notice to the other, and in such event, the parties shall each be
entitled only to such continuing rights as may be provided in this Agreement or
as may otherwise be available to them in law or equity. In the event Employee
is terminated without cause, Employee shall be entitled to severance pay equal
to thirty-six (36) months of the Employee's base monthly salary.
This severance, however, will end prior to the thirty-six (36) months should the
Employee find other employment.
2. The Employee shall serve in the capacity of President, CEO & Chairman
of the Board.
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<PAGE>
The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Thirty One
Thousand Six Hundred Sixty-Six Dollars and Sixty-Seven Cents ($31,666.67). The
Base Pay will be reviewed annually. Such Base Pay will be payable in such semi-
monthly or monthly installments as is consistent with the policy of the Company
in such matters. The Employee shall also be eligible for the officer's bonus
program, a copy of which has been supplied to the Employee.
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<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (I) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (I) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days written notice, shall be subject to the following express provision:
If such termination shall occur as a result of notice given by either party
within thirty-six (36) months of any of the events described in (I), (ii), (iii)
or (iv) of this Paragraph above, then upon the effective date of termination,
the Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (I) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive as direct
severance pay, bonuses during the subsequent twenty-four (24) months on the same
dates that he would otherwise have been entitled to them had his employment
continued; provided, however, that the amount of such bonuses shall not be
contingent upon any matters arising after the date of termination, but shall on
an annual basis be equal to the average annual sum paid in bonuses to the
Employee during the last
5
<PAGE>
three (3) bonus periods preceding his termination, or the average annual bonuses
of such lesser bonus periods if his employment was for less than three (3) bonus
periods prior to termination. In the event that during any part of such twenty-
four (24) month period, the executive officer's activities involved returning
the corporation to profitability which limited bonus potential, the bonus shall
be paid for such twenty-four month period as if the company had been profitable.
To the extent the twenty-four (24) months shall expire in the middle of a bonus
period, then for such partial year, the Employee shall be entitled to that
percentage of the average annual bonus that the partial year bears to a total
year, and he shall be paid any remaining and unpaid bonus amounts due him at the
expiration of said twenty-four (24) month period. In the event the Employee is
terminated within said 36 month period, severance shall be payable. In the event
the Employee shall die during any period in which payments shall be due
hereunder, the balance of any salary and bonus payments shall be paid to the
Employee's estate within six (6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall immediately be paid a
lump sum amount equal to the value of any unvested shares of restricted stock as
if all restrictions had been removed the day preceding the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
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<PAGE>
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (I) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute pay-
7
<PAGE>
ments", as defined in Section 280G of the Internal Revenue Code, and/or if such
payments would result in the Employee suffering an excise tax or other
extraordinary tax upon the receipt thereof, the Company shall make such
additional payments to the Employee as shall be necessary to cause the net
after-tax benefit to the Employee to be the same as would have been the case had
there been no excise or extraordinary tax applied to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
8
<PAGE>
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the
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<PAGE>
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than that specifically
waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By
-----------------------------------
Walter S. Ainsworth
Chairman, Compensation Committee
ATTEST:
- -----------------------------
Its
--------------------------
"the Company"
-----------------------------------
Douglas K. Pinner
President, CEO & Chairman of the Board
"the Employee"
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Exhibit 10.5
[LOGO OF TOKHEIM]
EMPLOYMENT AGREEMENT
--------------------
FOR PRESIDENT, TOKHEIM NORTH AMERICA
------------------------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 17th day of
DECEMBER, 1996, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and JOHN A. NEGOVETICH (hereinafter "the
Employee"), which Agreement shall be deemed to replace any and all previously
existing Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date forward for an indefinite period and until such time as it may be
terminated by one or more of the parties, it being expressly recognized that
either party may terminate this Agreement, with cause, upon the giving of a
written notice to the other, and in such event, the parties shall each be
entitled only to such continuing rights as may be provided in this Agreement or
as may otherwise be available to them in law or equity. In the event Employee is
terminated without cause, Employee shall be entitled to severance pay equal to
twelve (12) months of the Employee's base monthly salary. This severance,
however, will end prior to the twelve (12) months should the Employee find other
employment.
2. The Employee shall serve in the capacity of PRESIDENT, TOKHEIM NORTH
AMERICA.
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The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Seventeen
Thousand Five Hundred Dollars and 00/100 ($17,500.00). The Base Pay will be
reviewed annually. Such Base Pay will be payable in such semi-monthly or monthly
installments as is consistent with the policy of the Company in such matters.
The Employee shall also be eligible for the officer's bonus program, a copy of
which has been supplied to the Employee.
3
<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written shall be subject to the following express provision: If such
termination shall be initiated by the Company within thirty-six (36) months of
any of the events described in (i), (ii), (iii) or (iv) of this Paragraph; or if
such termination shall be initiated by the employee within thirty-six (36)
months of any of the events described in (i), (ii), (iii), (iv) of this
Paragraph, and any one of the following also occurs; (a) a change of the Chief
Executive Officer, (b) change of job, (c) change of salary, or (d) move of job
responsibilities to a distance greater than fifty (50) miles from the current
office location, then upon the effective date of termination, the Employee shall
be entitled to the termination benefits set forth in this Paragraph 7 in
addition to any other termination rights which may have accrued to him during
his employment; provided, however, that the following provisions with respect to
direct severance pay (i.e., salary and bonus payments) shall be exclusive and
shall replace any other rights of the Employee to direct severance payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months shall
expire in the middle of a bonus period, then for such partial year, the Employee
shall be entitled to that percentage of the average annual bonus that the
partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee shall
die during any period in which payments shall be due hereunder, the balance of
any salary and bonus payments shall be paid to the Employee's estate within six
(6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
6
<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
7
<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
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<PAGE>
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By
------------------------------
Douglas K. Pinner,
Chairman, President & CEO
ATTEST:
- ---------------------------- "the Company"
Its
------------------------
------------------------------
John A. Negovetich
President, Tokheim North America
"the Employee"
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<PAGE>
TOKHEIM EXHIBIT 10.6
EMPLOYMENT AGREEMENT
--------------------
FOR VICE PRESIDENTS
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 17th day of
DECEMBER, 1996, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and C. B. ELLIS, JR. (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date until November 30, 1998 and until such time as it may be terminated by
one or more of the parties, it being expressly recognized that either party may
terminate this Agreement, with cause, upon the giving of a written notice to the
other, and in such event, the parties shall each be entitled only to such
continuing rights as may be provided in this Agreement or as may otherwise be
available to them in law or equity. In the event Employee is terminated without
cause, Employee shall be entitled to severance pay equal to the unexpired
portion of the agreement. This severance, however, will end prior to the
unexpired portion of the agreement should the Employee find other employment.
2. The Employee shall serve in the capacity of SENIOR VICE PRESIDENT,
NORTH AMERICA SALES & MARKETING.
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<PAGE>
The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Thirteen
Thousand Three Hundred Thirty-Three Dollars and Thirty-Four Cents ($13,333.34).
The Base Pay will be reviewed annually. Such Base Pay will be payable in such
semi-monthly or monthly installments as is consistent with the policy of the
Company in such matters. The Employee shall also be eligible for the officer's
bonus program, a copy of which has been supplied to the Employee.
3
<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written notice shall be subject to the following express provision:
If such termination shall be initiated by the Company within thirty-six (36)
months of any of the events described in (i), (ii), (iii) or (iv)of this
Paragraph; or if such termination shall be initiated by the employee within
thirty-six (36) months of any of the events described in (i), (ii), (iii), (iv)
of this Paragraph, and any one of the following also occurs; (a) a change of the
Chief Executive Officer, (b) change of job,(c) change of salary, or (d) move of
job responsibilities to a distance greater than fifty (50) miles from the
current office location, then upon the effective date of termination, the
Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months shall
expire in the middle of a bonus period, then for such partial year, the Employee
shall be entitled to that percentage of the average annual bonus that the
partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee shall
die during any period in which payments shall be due hereunder, the balance of
any salary and bonus payments shall be paid to the Employee's estate within six
(6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
6
<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
7
<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
9
<PAGE>
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of Indiana,
and its validity, interpretation, performance and enforcement shall be governed
by the laws of said State.
17. This Agreement shall supercede the Consulting Agreement dated the 1st
of April, 1996, between Employee and Company, and that the Employee and the
Company shall enter into a Consulting Agreement from December 1, 1998 through
November 30, 2000 at $50,000 per year.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By ________________________________
Douglas K. Pinner
Chairman, President and CEO
ATTEST:
"the Company"
_____________________________
Its _________________________
___________________________________
C. B. Ellis, Jr.
Senior VP, North America Sales & Marketing
"the Employee"
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<PAGE>
Exhibit 10.7
[LOGO OF TOKHEIM]
EMPLOYMENT AGREEMENT
--------------------
FOR VICE PRESIDENTS
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 17TH day of
DECEMBER, 1996, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and TERRY M. FULMER (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date forward for an indefinite period and until such time as it may be
terminated by one or more of the parties, it being expressly recognized that
either party may terminate this Agreement, with cause, upon the giving of a
written notice to the other, and in such event, the parties shall each be
entitled only to such continuing rights as may be provided in this Agreement or
as may otherwise be available to them in law or equity. In the event Employee
is terminated without cause, Employee shall be entitled to severance pay equal
to twelve (12) months of the Employee's base monthly salary. This severance,
however, will end prior to the twelve (12) months should the Employee find other
employment.
2. The Employee shall serve in the capacity of SENIOR VICE PRESIDENT,
GLOBAL MANUFACTURING/OPERATIONS.
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<PAGE>
The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Fourteen
Thousand Five Hundred Eighty-Three Dollars and Thirty-Four Cents ($14,583.34).
The Base Pay will be reviewed annually. Such Base Pay will be payable in such
semi-monthly or monthly installments as is consistent with the policy of the
Company in such matters. The Employee shall also be eligible for the officer's
bonus program, a copy of which has been supplied to the Employee.
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B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
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said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written notice shall be subject to the following express provision:
If such termination shall be initiated by the Company within thirty-six (36)
months of any of the events described in (i), (ii), (iii) or (iv) of this
Paragraph; or if such termination shall be initiated by the employee within
thirty-six (36) months of any of the events described in (i), (ii), (iii), (iv)
of this Paragraph, and any one of the following also occurs; (a) a change of the
Chief Executive Officer, (b) change of job, (c) change of salary, or (d) move of
job responsibilities to a distance greater than fifty (50) miles from the
current office location, then upon the effective date of termination, the
Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months
shall expire in the middle of a bonus period, then for such partial year, the
Employee shall be entitled to that percentage of the average annual bonus that
the partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee
shall die during any period in which payments shall be due hereunder, the
balance of any salary and bonus payments shall be paid to the Employee's estate
within six (6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
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<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
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<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
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<PAGE>
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
TOKHEIM CORPORATION
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By ________________________________
Douglas K. Pinner
Chairman, President and CEO
ATTEST:
_____________________________ "the Company"
Its _________________________
___________________________________
Terry M. Fulmer
Senior VP, Global Manufacturing/Operations
"the Employee"
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<PAGE>
Exhibit 10.8
[LOGO OF TOKHEIM]
EMPLOYMENT AGREEMENT
--------------------
FOR VICE PRESIDENTS
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 17TH day of
DECEMBER, 1996, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and ARTHUR C. PREWITT (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date forward for an indefinite period and until such time as it may be
terminated by one or more of the parties, it being expressly recognized that
either party may terminate this Agreement, with cause, upon the giving of a
written notice to the other, and in such event, the parties shall each be
entitled only to such continuing rights as may be provided in this Agreement or
as may otherwise be available to them in law or equity. In the event Employee is
terminated without cause, Employee shall be entitled to severance pay equal to
twelve (12) months of the Employee's base monthly salary. This severance,
however, will end prior to the twelve (12) months should the Employee find other
employment.
2. The Employee shall serve in the capacity of VICE PRESIDENT, TECHNOLOGY
AND VENTURE DEVELOPMENT.
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<PAGE>
The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Twelve
Thousand Eighty-Three Dollars and Thirty-Four Cents ($12,083.34). The Base Pay
will be reviewed annually. Such Base Pay will be payable in such semi-monthly or
monthly installments as is consistent with the policy of the Company in such
matters. The Employee shall also be eligible for the officer's bonus program, a
copy of which has been supplied to the Employee.
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<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written notice shall be subject to the following express provision:
If such termination shall be initiated by the Company within thirty-six (36)
months of any of the events described in (i), (ii), (iii) or (iv) of this
Paragraph; or if such termination shall be initiated by the employee within
thirty-six (36) months of any of the events described in (i), (ii), (iii), (iv)
of this Paragraph, and any one of the following also occurs; (a) a change of the
Chief Executive Officer, (b) change of job, (c) change of salary, or (d) move of
job responsibilities to a distance greater than fifty (50) miles from the
current office location, then upon the effective date of termination, the
Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months shall
expire in the middle of a bonus period, then for such partial year, the Employee
shall be entitled to that percentage of the average annual bonus that the
partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee shall
die during any period in which payments shall be due hereunder, the balance of
any salary and bonus payments shall be paid to the Employee's estate within six
(6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
6
<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
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<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
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by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By
-------------------------------------
Douglas K. Pinner
Chairman, President and CEO
ATTEST:
- ----------------------------- "the Company"
Its
-------------------------
-------------------------------------
Arthur C. Prewitt
VP, Technology/Venture Development
"the Employee"
11
<PAGE>
Exhibit 10.9
[LOGO OF TOKHEIM]
EMPLOYMENT AGREEMENT
--------------------
President and Directeur General
-------------------------------
of Tokheim Sofitam.
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), effective this
17th day of DECEMBER, 1996, by and between TOKHEIM CORPORATION, an Indiana
corporation (hereinafter "the Company"), and JACQUES ST-DENIS (hereinafter "the
Employee"), which Agreement shall be deemed to replace any and all previously
existing Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set
forth, it is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee
agrees to serve the Company, on a full-time basis in the capacity hereinafter
designated and upon the terms hereinafter specified. Said employment shall
continue from this date forward for an indefinite period and until such time as
it may be terminated by one or more of the parties, it being expressly
recognized that either party may terminate this Agreement, with cause, upon the
giving of a written notice to the other, and in such event, the parties shall
each be entitled only to such continuing rights as may be provided in this
Agreement or as may otherwise be available to them in law or equity. In the
event Employee is terminated without cause, Employee shall
1
<PAGE>
be entitled to severance pay equal to twelve (12) months of the Employee's base
monthly salary. This severance, however, will end prior tothe twelve (12)
months should the Employee find other employment.
2. The Employee shall serve in the capacity of President and
Directeur General of Tokheim Sofitam.
The Employee shall have such duties and responsibilities and shall
supply such services in the carrying out of such duties and responsibilities as
the Company, through the Board of Directors, the duly appointed Committees of
the Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights
in the tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service
2
<PAGE>
marks, logos, copyrights, patents or other matters which are properly the
property of the Company.
4. The Employee shall, during the term of employment, use his best
efforts and exercise his utmost diligence to protect and safeguard the
confidential information of the Company, including, but not limited to, trade
secrets, know-how, product formulas, recipes, methods, procedures, processes,
devices, apparatuses, materials or other matters which are confidential to the
Company. The Employee further agrees that he shall not, during the term of
employment or thereafter, personally use or disclose to others information which
shall be confidential to the Company, except as such use or disclosure may be
required during the course of employment with the Company or as may be consented
to by the Company.
5. The Employee agrees that during the term of his employment, any
and all inventions and discoveries, whether or not patentable, which the
Employee may conceive or make, either alone or in conjunction with others and
related or in any way connected with the business of the Company, shall be the
sole and exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term
3
<PAGE>
of employment, trademarks, tradenames, service marks, trade styles, logos,
emblems, labels, slogans and writings, whether or not copyrighted, originated by
the Employee, alone or in conjunction with others, and related or in any way
connected with the business of the Company, shall be the sole and exclusive
property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of
Fourteen Thousand Five Hundred Eighty-Three Dollars and Thirty-Four Cents
($14,583.34). The Base Pay will be reviewed annually. Such Base Pay will be
payable in such semi-monthly or monthly installments as is consistent with the
policy of the Company in such matters. The Employee shall also be eligible for
the officer's bonus program, a copy of which has been supplied to the Employee.
B. The Employee shall be granted participation in all employee
benefit plans applicable to executive officers of the Company, including, but
not limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or
4
<PAGE>
eliminating or adding to them as they shall from time to time deem appropriate
and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the
Employee shall be granted, upon his termination from the Company, such rights as
may be available to him pursuant to any plan or plans hereinabove referred to,
and, in addition thereto, any termination benefits accorded terminated
executives, consistent with any existing policy or practice of the Company with
respect to such termination. In the event there shall be no such policy or
practice with respect to termination, then such termination benefits, if any, as
may be deemed appropriate to the Board of Directors, its duly appointed
Committees or such other Executive Officers as may be directed by the Board to
act in such matters.
7. In the event there shall occur (i) a merger, consolidation or
other combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by said party of one or more representatives to the Board of
Directors, (iii) the acquisition, subsequent to the date of this Agreement,
directly or indirectly, by any person, entity or group of persons of ownership
of the power to vote in excess of fifty percent (50%) of the voting securities
of the Company, whether or not followed by the election by said party or parties
of one or more representatives to the Board of Directors or (iv) any other
event, including, but not limited to, the matters set forth in (i) through (iii)
above which shall have the effect of vesting effective control of the business
and affairs of the Company in a person, entity or group of persons other or
different than the present stockholders of the Company, or which shall have the
effect of causing a change in management of the
5
<PAGE>
Company, then and in that event, the right of the Company and the Employee to
unilaterally terminate this employment upon thirty (30) days' written notice
shall be subject to the following express provision: If such termination shall
be initiated by the Company within thirty-six (36) months of any of the events
described in (i), (ii), (iii) or (iv) of this Paragraph; or if such termination
shall be initiated by the employee within thirty-six (36) months of any of the
events described in (i), (ii), (iii), (iv) of this Paragraph, and any one of the
following also occurs; (a) a change of the Chief Executive Officer, (b) change
of job, (c) change of salary, or (d) move of job responsibilities to a distance
greater than fifty (50) miles from the current office location, then upon the
effective date of termination, the Employee shall be entitled to the termination
benefits set forth in this Paragraph 7 in addition to any other termination
rights which may have accrued to him during his employment; provided, however,
that the following provisions with respect to direct severance pay (i.e., salary
and bonus payments) shall be exclusive and shall replace any other rights of the
Employee to direct severance payments:
A. The Employee shall be entitled to receive the greater of 299.99%
of the base salary or twice the employees total compensation at the same rate at
which it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive as direct
severance pay, bonuses during the subsequent twenty-four (24) months on the same
dates that he would otherwise have been entitled to them had his employment
continued; provided, however, that the amount of such bonuses shall not be
contingent upon any matters arising after the date of termination, but shall on
an annual basis be equal to the average annual sum paid in bonuses to the
Employee during the last three (3) bonus periods preceding his termination, or
the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the
6
<PAGE>
event that during any part of such twenty-four (24) month period, the executive
officer's activities involved returning the corporation to profitability which
limited bonus potential, the bonus shall be paid for such twenty-four month
period as if the company had been profitable. To the extent the twenty-four
(24) months shall expire in the middle of a bonus period, then for such partial
year, the Employee shall be entitled to that percentage of the average annual
bonus that the partial year bears to a total year, and he shall be paid any
remaining and unpaid bonus amounts due him at the expiration of said twenty-four
(24) month period. In the event the Employee is terminated within said 36 month
period, severance shall be payable in a single lump sum. In the event the
Employee shall die during any period in which payments shall be due hereunder,
the balance of any salary and bonus payments shall be paid to the Employee's
estate within six (6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal
to the value of any outstanding stock options which by their terms cannot be
exercised the day following the Employee's termination of employment (the value
of each option shall be equal to the average of the high and low price of a
share of stock, as quoted on the composite transactions table covering
transactions on the New York Stock Exchange on the first date that the stock was
traded on that Exchange which next precedes the date the Employee's employment
terminated minus the stock option's exercise price). The Executive shall
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company
7
<PAGE>
on terms comparable to the benefits provided by the Company to the Employee in
such matters as of the date of the event referenced in (i) through (iv) of this
Paragraph 7 above; provided, that any severance payments provided for
hereinabove shall be reduced by the amount of any disability benefits paid
pursuant to this Paragraph 7B for the period that such disability payments shall
continue; and, provided further, that notwithstanding anything hereinabove set
forth, any medical, life and disability benefits shall terminate automatically
at any time that the Employee shall secure and begin alternate employment. The
employee may elect in writing at the time of severance to receive the cash value
of any or all of these benefits in lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, and if the
twenty-four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older
at the time of any termination governed by the terms of this Paragraph 7, then
all benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
F. It is expressly understood and agreed that if the receipt or the
right to receive all or any part of the payments contemplated by this Paragraph
7, either alone or with
8
<PAGE>
other payments, which the Employee has received or has the right to receive from
the Company and which are "parachute payments" within the meaning of Section
280G of the Internal Revenue Code, as amended, would result in some or all of
the payments contemplated by this Paragraph 7 or the parachute payments being
"excess parachute payments", as defined in Section 280G of the Internal Revenue
Code, and/or if such payments would result in the Employee suffering an excise
tax or other extraordinary tax upon the receipt thereof, the Company shall make
such additional payments to the Employee as shall be necessary to cause the net
after-tax benefit to the Employee to be the same as would have been the case had
there been no excise or extraordinary tax applied to such payments.
G. In the event the Employee shall be required to employ counsel or
bring suit to enforce any of the terms or conditions of this Paragraph 7 and
shall be successful in securing enforcement of any of such terms and conditions,
the Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon
the Employee the right to continue in the employ of the Company as an executive
or in any other capacity.
9. All payments provided under this Agreement shall be paid in cash
from the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind
9
<PAGE>
or a fiduciary relationship, between the Company and the Employee or any other
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall
be assignable by the Employee, his beneficiaries or legal representatives,
without the Company's prior written consent; provided however, that nothing in
this Paragraph shall preclude the Employee from designating a beneficiary to
receive any benefit payable hereunder upon his death, or the executors,
administrators or other legal representatives of the Employee or his estate from
assigning any rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, communication, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of
the Employee and the Company and their respective permitted successors and
assigns. In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All
10
<PAGE>
references herein to the Company refer with equal force and effect to any
corporate or other successor of the Company which acquires, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement
not held so invalid, and each such other provision shall to the full extent
consistent with law continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
11
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Employee has signed this Agreement, all as of the day and
year first above written.
TOKHEIM CORPORATION
By ________________________________
Douglas K. Pinner,
Chairman, President & CEO
ATTEST:
"the Company"
_____________________________
Its _________________________
_________________________________
Jacques St-Denis
President and Directeur General
of Tokheim Sofitam.
"the Employee"
12
<PAGE>
EXHIBIT 10.10
[TOKHEIM LOGO]
EMPLOYMENT AGREEMENT
--------------------
FOR VICE PRESIDENTS
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 1ST day of
JANUARY, 1997, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and NORMAN L. ROELKE (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date forward for an indefinite period and until such time as it may be
terminated by one or more of the parties, it being expressly recognized that
either party may terminate this Agreement, with cause, upon the giving of a
written notice to the other, and in such event, the parties shall each be
entitled only to such continuing rights as may be provided in this Agreement or
as may otherwise be available to them in law or equity. In the event Employee is
terminated without cause, Employee shall be entitled to severance pay equal to
twelve (12) months of the Employee's base monthly salary. This severance,
however, will end prior to the twelve (12) months should the Employee find other
employment.
2. The Employee shall serve in the capacity of VICE PRESIDENT, SECRETARY &
GENERAL COUNSEL.
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<PAGE>
The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Eleven
Thousand Two Hundred Fifty Dollars and No Cents ($11,250.00). The Base Pay
will be reviewed annually. Such Base Pay will be payable in such semi-monthly
or monthly installments as is consistent with the policy of the Company in such
matters. The Employee shall also be eligible for the officer's bonus program, a
copy of which has been supplied to the Employee.
3
<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written notice shall be subject to the following express provision:
If such termination shall be initiated by the Company within thirty-six (36)
months of any of the events described in (i), (ii), (iii) or (iv)of this
Paragraph; or if such termination shall be initiated by the employee within
thirty-six (36) months of any of the events described in (i), (ii), (iii), (iv)
of this Paragraph, and any one of the following also occurs; (a) a change of the
Chief Executive Officer, (b) change of job,(c) change of salary, or (d) move of
job responsibilities to a distance greater than fifty (50) miles from the
current office location, then upon the effective date of termination, the
Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months shall
expire in the middle of a bonus period, then for such partial year, the Employee
shall be entitled to that percentage of the average annual bonus that the
partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee shall
die during any period in which payments shall be due hereunder, the balance of
any salary and bonus payments shall be paid to the Employee's estate within six
(6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
6
<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
7
<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other
segregation of assets shall be made to assure payment. The Employee shall have
no right, title or interest whatever in or to any investments which the Company
may make to aid the Company in meeting its obligations hereunder. Nothing
contained in this Agreement, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind or a fiduciary
relationship, between the Company and the Employee or any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
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<PAGE>
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of Indiana,
and its validity, interpretation, performance and enforcement shall be governed
by the laws of said State.
TOKHEIM CORPORATION
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By ________________________________
Douglas K. Pinner
Chairman, President and CEO
ATTEST:
_____________________________ "the Company"
Its _________________________
___________________________________
Norman L. Roelke
VP, Secretary & General Counsel
"the Employee"
11
<PAGE>
Exhibit 10.11
[LOGO OF TOKHEIM]
EMPLOYMENT AGREEMENT
--------------------
FOR VICE PRESIDENTS
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 1ST day of
JANUARY, 1997, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and SCOTT A. SWOGGER (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set forth, it
is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees to
serve the Company, on a full-time basis in the capacity hereinafter designated
and upon the terms hereinafter specified. Said employment shall continue from
this date forward for an indefinite period and until such time as it may be
terminated by one or more of the parties, it being expressly recognized that
either party may terminate this Agreement, with cause, upon the giving of a
written notice to the other, and in such event, the parties shall each be
entitled only to such continuing rights as may be provided in this Agreement or
as may otherwise be available to them in law or equity. In the event Employee is
terminated without cause, Employee shall be entitled to severance pay equal to
twelve (12) months of the Employee's base monthly salary. This severance,
however, will end prior to the twelve (12) months should the Employee find other
employment.
2. The Employee shall serve in the capacity of VICE PRESIDENT, QUALITY
SYSTEMS.
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<PAGE>
The Employee shall have such duties and responsibilities and shall supply
such services in the carrying out of such duties and responsibilities as the
Company, through the Board of Directors, the duly appointed Committees of the
Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in the
tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best efforts
and exercise his utmost diligence to protect and safeguard the confidential
information of the Company, including, but not limited to, trade secrets, know-
how, product formulas, recipes, methods, procedures, processes, devices,
apparatuses, materials or other matters which are confidential to the Company.
The Employee further agrees that he shall not, during the term of employment or
thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and all
inventions and discoveries, whether or not patentable, which the Employee may
conceive or make, either alone or in conjunction with others and related or in
any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Nine
Thousand Five Hundred Eighty-Three Dollars and Thirty-Four Cents ($9,583.34).
The Base Pay will be reviewed annually. Such Base Pay will be payable in such
semi-monthly or monthly installments as is consistent with the policy of the
Company in such matters. The Employee shall also be eligible for the officer's
bonus program, a copy of which has been supplied to the Employee.
3
<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written notice shall be subject to the following express provision:
If such termination shall be initiated by the Company within thirty-six (36)
months of any of the events described in (i), (ii), (iii) or (iv)of this
Paragraph; or if such termination shall be initiated by the employee within
thirty-six (36) months of any of the events described in (i), (ii), (iii), (iv)
of this Paragraph, and any one of the following also occurs; (a) a change of the
Chief Executive Officer, (b) change of job, (c) change of salary, or (d) move of
job responsibilities to a distance greater than fifty (50) miles from the
current office location, then upon the effective date of termination, the
Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months shall
expire in the middle of a bonus period, then for such partial year, the Employee
shall be entitled to that percentage of the average annual bonus that the
partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee shall
die during any period in which payments shall be due hereunder, the balance of
any salary and bonus payments shall be paid to the Employee's estate within six
(6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
6
<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
7
<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
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<PAGE>
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By ________________________________
Douglas K. Pinner
Chairman, President and CEO
ATTEST:
_____________________________ "the Company"
Its _________________________
___________________________________
Scott A. Swogger
VP, Quality Systems
"the Employee"
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<PAGE>
EXHIBIT 10.12
TOKHEIM
EMPLOYMENT AGREEMENT
--------------------
FOR VICE PRESIDENTS
-------------------
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement"), dated this 17TH
day of DECEMBER 1996, by and between TOKHEIM CORPORATION, an Indiana corporation
(hereinafter "the Company"), and JOHN M. TOMLINSON (hereinafter "the Employee"),
which Agreement shall be deemed to replace any and all previously existing
Employment Agreements between the parties.
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to be so employed, all upon the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises hereinafter set
forth, it is mutually agreed as follows:
1. The Company agrees to employ the Employee, and the Employee agrees
to serve the Company, on a full-time basis in the capacity hereinafter
designated and upon the terms hereinafter specified. Said employment shall
continue from this date forward for an indefinite period and until such time as
it may be terminated by one or more of the parties, it being expressly
recognized that either party may terminate this Agreement, with cause, upon the
giving of a written notice to the other, and in such event, the parties shall
each be entitled only to such continuing rights as may be provided in this
Agreement or as may otherwise be available to them in law or equity. In the
event Employee is terminated without cause, Employee shall be entitled to
severance pay equal to twelve (12) months of the Employee's base monthly salary.
This severance, however, will end prior to the twelve (12) months should the
Employee find other employment.
2. The Employee shall serve in the capacity of VICE PRESIDENT, CHIEF
FINANCIAL OFFICER.
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<PAGE>
The Employee shall have such duties and responsibilities and shall
supply such services in the carrying out of such duties and responsibilities as
the Company, through the Board of Directors, the duly appointed Committees of
the Board, the Chief Executive Officer of the Company or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct,
and said parties shall be free to alter or amend the position, responsibilities,
duties or services to be performed by the Employee in such manner as to them
shall be deemed to be in the best interests of the Company. During the term of
employment, the Employee shall devote his best efforts and skills to the
business interests of the Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with the
Company's business, or which may in any way interfere with his employment,
without the consent of the Company.
3. The Employee hereby recognizes the Company's proprietary rights in
the tangible and intangible property of the Company and acknowledges that
notwithstanding the relationship of employment, the Employee will not obtain or
acquire through such employment any personal property rights in any of the
property of the Company, including, but not limited to, any writings,
communications, manuals, documents, instruments, contracts, agreements, files,
literature, data, technical information, know-how secrets, formulas, products,
methods, procedures, processes, devices, apparatuses, trademarks, tradenames,
trade styles, service marks, logos, copyrights, patents or other matters which
are properly the property of the Company.
4. The Employee shall, during the term of employment, use his best
efforts and exercise his utmost diligence to protect and safeguard the
confidential information of the Company, including, but not limited to, trade
secrets, know-how, product formulas, recipes, methods, procedures, processes,
devices, apparatuses, materials or other matters which are confidential to the
Company. The Employee further agrees that he shall not, during the term of
employment or thereafter, personally use or
2
<PAGE>
disclose to others information which shall be confidential to the Company,
except as such use or disclosure may be required during the course of employment
with the Company or as may be consented to by the Company.
5. The Employee agrees that during the term of his employment, any and
all inventions and discoveries, whether or not patentable, which the Employee
may conceive or make, either alone or in conjunction with others and related or
in any way connected with the business of the Company, shall be the sole and
exclusive property of the Company. The Employee shall, without further
compensation or consideration, but at the expense of the Company, and as and
when requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and of foreign countries for said inventions and discoveries, and in order to
assign and convey to the Company, or to the Company's nominee the sole and
exclusive right, title and interest in and to said inventions, discoveries or
any applications or patents thereon. As promptly as known or possessed by the
Employee, the Employee shall disclose to the Company all information with
respect to said inventions and discoveries. The Employee further agrees that
during the term of employment, trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted, originated by the Employee, alone or in conjunction with others,
and related or in any way connected with the business of the Company, shall be
the sole and exclusive property of the Company.
6. The Employee shall be entitled to compensation as follows:
A. The Employee shall be entitled to a monthly base salary of Fifteen
Thousand Dollars and No Cents ($15,000.00). The Base Pay will be reviewed
annually. Such Base Pay will be payable in such semi-monthly or monthly
installments as is consistent with the policy of the Company in such matters.
The Employee shall also be eligible for the officer's bonus program, a copy of
which has been supplied to the Employee.
3
<PAGE>
B. The Employee shall be granted participation in all employee benefit
plans applicable to executive officers of the Company, including, but not
limited to, medical plans, disability plans, life insurance plans, savings
plans, stock option plans and such other plans as may from time to time be made
available and applicable to the Employee, consistent with the policies of the
Company and the terms and conditions of such plans. Nothing herein shall be
deemed to alter the terms and conditions of such plans or the policy of the
Company with respect thereto, and nothing herein shall be deemed to entitle the
Employee to any rights therein which would not otherwise be made available to
the Employee pursuant to the implementations of such plans in accordance with
the terms, conditions and provisions set forth therein. It shall be further
understood that nothing herein shall prevent the Company, through its Board of
Directors, the duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
any of the aforesaid plans or eliminating or adding to them as they shall from
time to time deem appropriate and in the interests of the Company.
C. Except as may otherwise be expressly provided herein, the Employee
shall be granted, upon his termination from the Company, such rights as may be
available to him pursuant to any plan or plans hereinabove referred to, and, in
addition thereto, any termination benefits accorded terminated executives,
consistent with any existing policy or practice of the Company with respect to
such termination. In the event there shall be no such policy or practice with
respect to termination, then such termination benefits, if any, as may be deemed
appropriate to the Board of Directors, its duly appointed Committees or such
other Executive Officers as may be directed by the Board to act in such matters.
7. In the event there shall occur (i) a merger, consolidation or other
combination of the Company with or into any other corporation, (ii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of twenty percent (20%) of the voting securities of the Company followed
by the election by
4
<PAGE>
said party of one or more representatives to the Board of Directors, (iii) the
acquisition, subsequent to the date of this Agreement, directly or indirectly,
by any person, entity or group of persons of ownership of the power to vote in
excess of fifty percent (50%) of the voting securities of the Company, whether
or not followed by the election by said party or parties of one or more
representatives to the Board of Directors or (iv) any other event, including,
but not limited to, the matters set forth in (i) through (iii) above which shall
have the effect of vesting effective control of the business and affairs of the
Company in a person, entity or group of persons other or different than the
present stockholders of the Company, or which shall have the effect of causing a
change in management of the Company, then and in that event, the right of the
Company and the Employee to unilaterally terminate this employment upon thirty
(30) days' written notice shall be subject to the following express provision:
If such termination shall be initiated by the Company within thirty-six (36)
months of any of the events described in (i), (ii), (iii) or (iv)of this
Paragraph; or if such termination shall be initiated by the employee within
thirty-six (36) months of any of the events described in (i), (ii), (iii), (iv)
of this Paragraph, and any one of the following also occurs; (a) a change of the
Chief Executive Officer, (b) change of job,(c) change of salary, or (d) move of
job responsibilities to a distance greater than fifty (50) miles from the
current office location, then upon the effective date of termination, the
Employee shall be entitled to the termination benefits set forth in this
Paragraph 7 in addition to any other termination rights which may have accrued
to him during his employment; provided, however, that the following provisions
with respect to direct severance pay (i.e., salary and bonus payments) shall be
exclusive and shall replace any other rights of the Employee to direct severance
payments:
A. The Employee shall be entitled to receive the greater of 299.99% of the
base salary or twice the employees total compensation at the same rate at which
it existed at the date of the event referenced in (i) through (iv) of this
Paragraph 7 above. The Employee shall further be entitled to receive
5
<PAGE>
as direct severance pay, bonuses during the subsequent twenty-four (24) months
on the same dates that he would otherwise have been entitled to them had his
employment continued; provided, however, that the amount of such bonuses shall
not be contingent upon any matters arising after the date of termination, but
shall on an annual basis be equal to the average annual sum paid in bonuses to
the Employee during the last three (3) bonus periods preceding his termination,
or the average annual bonuses of such lesser bonus periods if his employment was
for less than three (3) bonus periods prior to termination. In the event that
during any part of such twenty-four (24) month period, the executive officer's
activities involved returning the corporation to profitability which limited
bonus potential, the bonus shall be paid for such twenty-four month period as if
the company had been profitable. To the extent the twenty-four (24) months shall
expire in the middle of a bonus period, then for such partial year, the Employee
shall be entitled to that percentage of the average annual bonus that the
partial year bears to a total year, and he shall be paid any remaining and
unpaid bonus amounts due him at the expiration of said twenty-four (24) month
period. In the event the Employee is terminated within said 36 month period,
severance shall be payable in a single lump sum. In the event the Employee shall
die during any period in which payments shall be due hereunder, the balance of
any salary and bonus payments shall be paid to the Employee's estate within six
(6) months of the date of his death.
B. The Employee shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be exercised
the day following the Employee's termination of employment (the value of each
option shall be equal to the average of the high and low price of a share of
stock, as quoted on the composite transactions table covering transactions on
the New York Stock Exchange on the first date that the stock was traded on that
Exchange which next precedes the date the Employee's employment terminated minus
the stock option's exercise price). The Executive shall
6
<PAGE>
immediately be paid a lump sum amount equal to the value of any unvested shares
of restricted stock as if all restrictions had been removed the day preceding
the Change of Control;
C. In addition to the continuation of his base salary and bonus as
provided above, the Employee shall further be entitled for twenty-four (24)
months following termination to receive medical insurance, life insurance and
disability insurance benefits from the Company on terms comparable to the
benefits provided by the Company to the Employee in such matters as of the date
of the event referenced in (i) through (iv) of this Paragraph 7 above; provided,
that any severance payments provided for hereinabove shall be reduced by the
amount of any disability benefits paid pursuant to this Paragraph 7B for the
period that such disability payments shall continue; and, provided further, that
notwithstanding anything hereinabove set forth, any medical, life and disability
benefits shall terminate automatically at any time that the Employee shall
secure and begin alternate employment. The employee may elect in writing at the
time of severance to receive the cash value of any or all of these benefits in
lieu of coverage.
D. If the Employee shall be fifty (50) years of age or older at the time
of any termination governed by the terms of this Paragraph 7, and if the twenty-
four (24) months of continued salary and bonus shall expire prior to the
Employee's sixtieth (60th) birthday, then the Employee shall additionally be
entitled to receive his base salary and bonus from the date of expiration of the
twenty-four (24) months until the date of his sixtieth (60th) birthday at one-
half (1/2) the rate of salary and bonus payable to him during the first twenty-
four (24) months following his termination.
E. If the Employee shall be sixty-three (63) years of age or older at the
time of any termination governed by the terms of this Paragraph 7, then all
benefits provided for above shall run not for a period of twenty-four (24)
months as hereinabove set forth, but rather for that number of months occurring
between the date of termination and the date of the Employee's sixty-fifth
(65th) birthday and all benefits otherwise running for twenty-four (24) months
shall run for that period of time.
7
<PAGE>
F. It is expressly understood and agreed that if the receipt or the right
to receive all or any part of the payments contemplated by this Paragraph 7,
either alone or with other payments, which the Employee has received or has the
right to receive from the Company and which are "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, as amended, would result
in some or all of the payments contemplated by this Paragraph 7 or the parachute
payments being "excess parachute payments", as defined in Section 280G of the
Internal Revenue Code, and/or if such payments would result in the Employee
suffering an excise tax or other extraordinary tax upon the receipt thereof, the
Company shall make such additional payments to the Employee as shall be
necessary to cause the net after-tax benefit to the Employee to be the same as
would have been the case had there been no excise or extraordinary tax applied
to such payments.
G. In the event the Employee shall be required to employ counsel or bring
suit to enforce any of the terms or conditions of this Paragraph 7 and shall be
successful in securing enforcement of any of such terms and conditions, the
Employee shall be entitled to all reasonable expenses, including, but not
limited to, attorneys' fees incurred in such enforcement efforts.
8. Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an executive or
in any other capacity.
9. All payments provided under this Agreement shall be paid in cash from
the general funds of the Company and no special or separate fund shall be
established and no other segregation of assets shall be made to assure payment.
The Employee shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship, between the Company and the Employee or
any other
8
<PAGE>
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
10. The Company may withhold from any benefits payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
11. Neither this Agreement or any right or interest hereunder shall be
assignable by the Employee, his beneficiaries or legal representatives, without
the Company's prior written consent; provided however, that nothing in this
Paragraph shall preclude the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or the executors, administrators
or other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
12. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, communication, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors and assigns.
In the event the Company merges or consolidates with or into any other
corporation or corporations or sells or otherwise transfers substantially all
its assets to another corporation, the provisions of this Agreement shall be
binding upon and inure to the benefit of the corporation surviving or resulting
from the merger or consolidation or to which such assets are sold or
transferred. All references herein to the Company refer with equal force and
effect to any corporate or other successor of the Company which acquires,
directly or indirectly,
9
<PAGE>
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
14. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provisions of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15. If, for any reason, any provisions of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
16. This Agreement has been executed and delivered in the State of
Indiana, and its validity, interpretation, performance and enforcement shall be
governed by the laws of said State.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed this Agreement, all as of the day and year first
above written.
TOKHEIM CORPORATION
By________________________________
Douglas K. Pinner
Chairman, President and CEO
ATTEST:
_____________________________ "the Company"
Its _________________________
________________________________
John M. Tomlinson
VP, Chief Financial Officer
"the Employee"
11
<PAGE>
EXHIBIT 11
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11)--EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995, AND 1994.
Primary earnings per share are based on the weighted average number of shares
outstanding during each year and the assumed exercise of dilutive employees'
stock option, less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of the Company's common stock.
The following table presents information necessary to calculate earnings per
share for the fiscal years ended November 30, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
PRIMARY
--------------------------
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding..................... 7,939 7,893 7,801
Share equivalents................................ 42 18 --
------- ------- --------
Adjusted outstanding............................. 7,981 7,911 7,801
======= ======= ========
Net earnings (loss):
Before cumulative effect of change in method of
accounting...................................... $(2,009) $ 3,231 $ 1,675
Cumulative effect of change in method of
accounting...................................... -- -- (13,416)
------- ------- --------
Net earnings (loss).............................. (2,009) 3,231 (11,741)
Less preferred stock dividend.................... (1,543) (1,580) (1,617)
------- ------- --------
Earnings (loss) applicable to common stock....... $(3,552) $ 1,651 $(13,358)
======= ======= ========
Net loss per common share:
Before cumulative effect of change in method of
accounting...................................... $ (0.45) $ 0.21 $ 0.01
Cumulative effect of change in method of
accounting...................................... -- -- (1.72)
------- ------- --------
Net earnings (loss) per common share............. $ (0.45) $ 0.21 $ (1.71)
======= ======= ========
</TABLE>
For 1996 and 1994 fully diluted earnings per share is considered to be the
same as primary earnings per share, since the effect of certain potentially
dilutive securities would be antidilutive
<TABLE>
<CAPTION>
FULLY DILUTED
--------------------------
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding..................... 7,939 7,893 7,801
Share equivalents................................ 44 18 60
Weighted conversion of preferred stock........... 1,863 1,909 1,362
------- ------- --------
Adjusted outstanding............................. 9,846 9,820 9,223
======= ======= ========
Net earnings (loss):
Before cumulative effect of change in method of
accounting...................................... $(2,009) $ 3,231 $ 1,675
Cumulative effect of change in method of
accounting...................................... -- -- (13,416)
------- ------- --------
Net earnings (loss).............................. (2,009) 3,231 (11,741)
Incremental compensation expense................. (1,543) (1,580) (1,617)
------- ------- --------
Earnings (loss) applicable to common stock....... $(3,552) $ 1,651 $(13,358)
======= ======= ========
Net loss per common share:
Before cumulative effect of change in method of
accounting...................................... $ (0.36) $ 0.17 $ 0.01
Cumulative effect of change in method of
accounting...................................... -- -- (1.45)
------- ------- --------
Net earnings (loss) per common share............. $ (0.36) $ 0.17 $ (1.44)
======= ======= ========
</TABLE>
<PAGE>
EXHIBIT 18
February 28, 1997
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, Indiana 46845
Gentlemen:
We are providing this letter to you for inclusion as an exhibit to your Form
10-K filing pursuant to item 601 of Regulation S-K.
We have read management's justification for the change in accounting from
the last-in, first-out (LIFO) method of valuing inventories to the first-in,
first-out (FIFO) method contained in the Company's Form 10-K for the year
ended November 30, 1996. Based on our reading of the data and discussions with
Company officials of the business judgment and business planning factors
relating to the change, we believe management's justification to be
reasonable. Accordingly, in reliance on management's determination as regards
elements of business judgment and business planning, we concur that the newly
adopted accounting principle described above is preferable in the Company's
circumstances to the method previously applied.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
<PAGE>
EXHIBIT 21
Subsidiaries
<TABLE>
<CAPTION>
Subsidiary Tokheim % Jurisdiction of F/S Information
Name Ownership Incorporation Included By
------------------------------------------ --------- ------------------ ---------------
<S> <C> <C> <C>
Tokheim Sales B.V. (B) 100.00% The Netherlands Consolidated
Tokheim Investment Corporation (A) 100.00% Texas - USA Consolidated
Sunbelt Hose and Petroleum Equipment, Inc. (B) 100.00% Georgia - USA Consolidated
Tokheim Automation Corporation (A) 100.00% Texas - USA Consolidated
Envirotronic Systems, Inc. (A) 100.00% Indiana - USA Consolidated
Gasboy International, Inc. (B) 100.00% Pennsylvania - USA Consolidated
Tokheim and Gasboy of Canada Limited (C) 100.00% Ontario - Canada Consolidated
Tokheim Europe B.V. (B) 100.00% The Netherlands Consolidated
Tokheim GmbH (A) 100.00% Germany Consolidated
Tokheim South Africa (Proprietary) Limited (D) 100.00% South Africa Consolidated
Tokheim Properties (Proprietary) Limited (D) 100.00% South Africa Consolidated
Tokheim Limited (B) 100.00% United Kingdom Consolidated
Sofitam - Tokheim S.A. (B) 100.00% France Consolidated
Sofitam Equipment S.A. (E) 100.00% France Consolidated
Sogen S.A. (F) 100.00% France Consolidated
Sam Satam (F) 99.80% France Consolidated
Sofitam International S.A. (F) 100.00% France Consolidated
Parke Penrhyn (G) 100.00% Switzerland Consolidated
Sofitam N.V. (H) 100.00% Belgium Consolidated
Haar Menstenik GmbH (G) 40.00% Germany Consolidated
Sofitam Tanktechnik GmbH (G) 100.00% Germany Consolidated
Sofitam Iberica (G) 99.81% Spain Consolidated
Bennett Fimac (G) 60.00% Italy Consolidated
Cocitam S.A. (G) 98.75% Ivory Coast Consolidated
Bennett Sauser S.A. (I) 47.14% Switzerland Consolidated
Sofitam Pump Services (G) 51.34% United Kingdom Consolidated
Matam S.A. (G) 49.94% Morocco Consolidated
Cottam Sarl (G) 100.00% Tunisia Consolidated
Socatam S.A. (G) 99.91% Cameroon Consolidated
Cosetam S.A. (G) 98.93% Senegal Consolidated
Excelsior S.A. (F) 20.00% France Equity Method
Serip S.A. (F) 10.00% France Equity Method
Outelec (F) less than 1.00% France Equity Method
</TABLE>
A) Directly owned by Tokheim Corporation.
B) Directly owned by Tokheim Corporation subsidiary Tokheim Investment
Corporation, or directors' qualifying shares.
C) Directly owned 65% by Tokheim Corporation subsidiary Tokheim Investment
Corporation and 35% by Tokheim Corporation subsidiary Gasboy
International, Inc.
D) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim and
Gasboy of Canada Limited.
E) Directly owned by Tokheim Corporation's indirect subsidiary Sofitam -Tokheim
S.A.
F) Directly owned by Tokheim Corporation's indirect subsidiary Sofitam
Equipment S.A.
G) Directly owned by Tokheim Corporation's indirect subsidiary Sofitam
International S.A.
H) Directly owned 66.67% by Tokheim Corporation's indirect subsidiary Sofitam
International S.A. and 33.33% by Tokheim Corporation's indirect subsidiary
Parke Penrhyn.
I) Directly owned 44.76% by Tokheim Corporation's indirect subsidiary Parke
Penrhyn and 2.38% by Tokheim Corporation's indirect subsidiary Sofitam
International S.A.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Tokheim Corporation on Form S-8 (file No. 1-6018) of our report dated
January 24, 1997, on our audits of the consolidated financial statements of
Tokheim Corporation and subsidiaries as of November 30, 1996 and 1995, and for
the years ended November 30, 1996, 1995, and 1994, which report is included in
this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
February 28, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Tokheim Corporation's November 30, 1996, annual financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000098559
<NAME> TOKHEIM CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<CASH> 81
<SECURITIES> 0
<RECEIVABLES> 98,154
<ALLOWANCES> 3,752
<INVENTORY> 74,914<F1>
<CURRENT-ASSETS> 174,453
<PP&E> 120,325<F2>
<DEPRECIATION> 79,315
<TOTAL-ASSETS> 300,128
<CURRENT-LIABILITIES> 118,826
<BONDS> 100,000
<COMMON> 18,957<F4>
8,137<F3>
0
<OTHER-SE> (1,279)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 300,128
<SALES> 279,733
<TOTAL-REVENUES> 279,733
<CGS> 210,223<F6>
<TOTAL-COSTS> 210,223<F6>
<OTHER-EXPENSES> 6,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,191
<INCOME-PRETAX> (1,229)
<INCOME-TAX> 780
<INCOME-CONTINUING> (2,009)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,009)
<EPS-PRIMARY> (0.45)
<EPS-DILUTED> (0.45)
<FN>
<F1> Represents gross inventory net of loss reserves.
<F2> Represents gross PP&E.
<F3> Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$11,692 and treasury stock of $4,171.
<F4> Represents common stock of $19,452 less Guaranteed ESOP of $303 and
treasury stock of $192.
<F5> Represents retained earnings of $9,240 less minimum pension liability of
$3,248 and foreign currency translation adjustments of $7,271.
<F6> Includes product development expenses and excludes depreciation and
amortization.
</FN>
</TABLE>
