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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, 1997
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:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, no par value........................ New York Stock Exchange
Preferred Stock Purchase Rights................... New York Stock Exchange
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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 4, 1998, 8,295,523 shares of voting common stock were
outstanding. The aggregate market value of shares held by non-affiliates was
$153.9 million (based on the closing price of these shares on the New York
Stock Exchange on such date).
DOCUMENTS INCORPORATED BY REFERENCE
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DOCUMENT FORM 10-K
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Proxy Statement.................................... Part III, Items 10-13
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TOKHEIM CORPORATION
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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PAGE
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PART I
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Item 1. Business.......................................................... 3
Item 2. Properties........................................................ 7
Item 3. Legal Proceedings................................................. 7
Item 4. Submission of Matters to a Vote of Security Holders............... 7
PART II
Item 5. Market For The Registrant's Common Equity and Related Shareholder
Matters.................................................................. 8
Item 6. Selected Financial Data........................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 10
Item 8. Financial Statements and Supplementary Data....................... 16
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................... 48
PART III
Item 10. Directors and Executive Officers of the Registrant............... 48
Item 11. Executive Compensation........................................... 48
Item 12. Security Ownership of Certain Beneficial Owners and Management... 48
Item 13. Certain Relationships and Related Transactions................... 48
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.. 49
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PART I
ITEM 1. BUSINESS.
(a) General:
Tokheim Corporation and its subsidiaries ("Tokheim" or the "Company") is one
of the world's largest manufacturers and servicers of electronic and
mechanical petroleum dispensing systems. These systems include petroleum
dispensers and pumps, retail automation systems including point-of-sale
("POS") systems, dispenser payment or "pay-at-the-pump" terminals, replacement
parts and upgrade kits. As a result of its acquisition (the "Sofitam
Acquisition") of the petroleum dispenser business ("Sofitam") of Sofitam S.A.
in September 1996, Tokheim has positioned itself as a global competitor in the
petroleum dispenser business, with the ability to provide both products and
services to customers in over 80 countries. Tokheim is a leading supplier of
petroleum dispensing systems in the United States, France, Canada, Mexico and
Africa, and has strong market positions in Italy, the United Kingdom, Germany
and Spain. The Company also has operations established in Asia, eastern Europe
and Latin America.
The Company was organized as the Tokheim Manufacturing Company in Cedar
Rapids, Iowa in 1901. In 1918, Tokheim was purchased by a group of businessmen
and was moved to Fort Wayne, Indiana where it was incorporated in Indiana
under the name Tokheim Oil Tank and Pump Company. The present name was adopted
in December 1953.
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. Unless otherwise noted, references to
years in this Report are to the Company's fiscal years ended November 30th.
In December 1997, the Company acquired Management Solutions, Inc. ("MSI").
MSI develops and distributes retail automation systems (including POS
software), primarily for the convenience store, petroleum dispensing and fast
food service industries. The Company paid MSI's stockholders an initial amount
of $12.0 million. The Company is also obligated to make contingent payments of
up to $13.2 million over the next three years based upon MSI's performance.
The $13.2 million consists of $8.0 million of additional purchase price, $2.6
million related to a non-compete agreement, and $2.6 million of additional
employee compensation. The Company borrowed funds for the initial purchase
price under the Company's bank credit facility (the "Bank Credit Facility").
As part of the transaction, the Company entered into an employment
relationship with Arthur S. Elston, the president of MSI, pursuant to which he
will oversee Tokheim's retail automation systems business.
Certain statements contained in this Report, including, without limitation,
statements containing the words "believes," "anticipates," "expects" and words
of similar import, constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any
future results, performance or achievements, expressed or implied, by such
forward-looking statements. Such factors include, among others, the following:
loss of key members of management; increases in interest rates or the
Company's cost of borrowing or a default under any material debt agreement;
inability to achieve future sales levels or other operating results;
fluctuation in foreign currency valuation; unavailability of funds for capital
expenditures or research and development; changes in customer spending levels
and demand for new products; changes in governmental, environmental or other
regulations, especially as they may affect the capital expenditures of the
Company's customers; failure of the Company to comply with governmental
regulations; inability of the Company to successfully make and integrate
acquisitions; adverse publicity; contingent liabilities and other claims
asserted against the Company; competition; loss of significant customers or
suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans;
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business disruptions; inability to protect technology or to integrate new
technologies quickly into new products; claims relating to intellectual
property infringement; changes in general economic conditions; and other
factors referenced in this Report. Certain of these factors are discussed in
more detail elsewhere in this Report, including, without limitation, under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and in the Consolidated Financial Statements and
related notes. Given these uncertainties, investors are cautioned not to place
undue reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to announce publicly the result of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
(b) Financial Information About Industry Segments:
In 1997, 1996 and 1995, the Company had only one reportable industry
segment--the design, manufacture and servicing of petroleum dispensing
systems.
(c) Narrative Description of Business:
PRINCIPAL PRODUCTS AND SERVICES
The Company's principal product offerings include petroleum dispensers and
pumps, retail automation systems including POS systems, dispenser payment or
"pay-at-the-pump" terminals, replacement parts and upgrade kits. Petroleum
dispensers and pumps transfer fuel from storage tanks to vehicles or portable
containers. Dispensers include meters, which measure the quantity of fuel
pumped and transfer the information to calculators which determine a sales
price. Retail automation systems control in-store and at-the-pump fuel sales,
pump activation and credit card transactions, monitor inventory, transmit data
to a central management system and perform other management functions. Pay-at-
the-pump terminals automate customer payment at the pump with cash and
credit/debit cards. Upgrade kits permit owners to upgrade a dispenser's
capabilities and functionality without incurring the cost of replacing the
entire dispenser. The Company also offers services for its products through
authorized service representatives and Company-owned facilities.
In 1997, 1996 and 1995, the petroleum industry accounted for all of the
Company's sales. Approximately 89%, 86% and 85%, respectively, of the
Company's sales were derived from the sale of retail service station gasoline
dispensers, parts, accessories, and service contracts.
Markets
The Company's products are sold primarily to retail service station
operators and commercial customers which fall into seven categories.
Major Oil Companies ("MOCs")--MOCs are typically large multinational
companies that are vertically integrated with retail operations in developed
and emerging markets. They sell "branded" products and typically have standard
station formats, including dispenser design and proprietary credit card
networks.
National Oil Companies ("nationals")--A national is an oil company that
operates exclusively (or almost exclusively) in a single national market
(other than the United States). Most nationals are, or until recently were,
state-owned. In recent years, a number of nationals have been privatized or
have relinquished their monopolies over the local retail petroleum markets.
Independent Oil Companies ("independents")--Independents are usually
U.S. companies that sell "branded" products regionally rather than nationally.
They typically have station and dispenser designs which are standardized,
similar to MOCs.
Jobbers--Jobbers are independent service station owners that operate
under the brand of a MOC. A station owned by a jobber looks substantially the
same as one owned by a MOC, selling MOC-branded products and using standard
MOC station layouts. Most jobbers own multiple stations. Some jobbers work
exclusively with one MOC, while others have multiple partners. Moreover,
jobbers can change their MOC
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affiliation within the contractual limitations between the jobber and the MOC.
Usually, jobbers are not required to purchase their petroleum dispensing
equipment from the same manufacturers as their affiliated MOC.
Convenience Store Stations--Convenience store stations are petroleum
retailers which receive over 50% of their revenues from merchandise rather
than from petroleum products. A significant number of convenience store
stations are owned by MOCs. The Company's convenience store customers also
include national or regional operators as well as small, local businesses.
Hypermarkets--The Company is the leading supplier to French
hypermarkets. The hypermarket is a retailing format pioneered in France, with
a growing presence in the rest of Europe. A hypermarket is similar to a strip
mall in the United States, with a supermarket as the anchor retailer.
Hypermarkets typically offer competitively-priced, private label petroleum
products to attract customers. In France, more than 50% of retail petroleum
sales are through hypermarkets.
Commercial Customers--The commercial market is characterized by
companies whose fuel consumption needs justify maintaining internal fueling
capabilities, such as truck fleets and municipalities. Through its Gasboy
subsidiary, Tokheim is the leading supplier of fuel dispensing equipment to
the U.S. commercial market.
Sales and Distribution
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 a
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 in most markets. Additionally, the customer service
division maintains a continuing program of service clinics for customers,
authorized service representatives and distributors, both in the field and at
the Company's training centers.
In recent years, MOCs and nationals have been moving toward granting
national, regional and global contracts or "tenders" and toward creating
alliances and preferred supplier relationships with suppliers. The Company
believes that its acquisition of Sofitam, which increased its global sales and
services capabilities, positions it positively in response to this trend.
NEW PRODUCTS; RESEARCH AND DEVELOPMENT
The Company continually seeks to enhance its existing product lines to offer
increased functionality in new or existing products and has dedicated research
and engineering staffs. Tokheim spent approximately $18.3 million, $15.9
million and $12.7 million in 1997, 1996, and 1995, respectively, to improve
existing products and manufacturing methods, develop new products, and pursue
other applied research and development. The Company has also begun to form
partnerships with the MOCs to develop products that meet their specific needs
and with electronics and software development companies to develop advanced
technologies.
In 1997, Tokheim began market testing of Radio Frequency Identification
("RFID") technology. Similar to the drive-through payment system at toll
booths in major metropolitan areas, this technology automatically charges a
consumer's account, which a sensor on the dispenser reads from either a
microchip key ring tag or a microchip window decal. By eliminating the need to
pay for fuel with cash or credit cards, the system speeds gas purchases, both
increasing consumer convenience and enabling stations to fuel more cars in
less time. The technology also permits service station owners to gather
information about consumer buying habits to improve marketing techniques, such
as promotion of food, car washes and other items on pump-mounted displays.
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Tokheim's RFID system is compatible with all POS systems and with other
manufacturer's dispensers (as an upgrade). Tokheim has entered into an
agreement with Micron Communications to further develop its RFID systems.
RAW MATERIALS
The principal raw materials essential to the Company's business are flat
sheet steel, aluminum, copper tubing, iron castings, and electronic, POS and
computer components, all of which are available through several competitive
sources of supply. The Company has not experienced any difficulty in obtaining
these materials or products.
PATENTS, LICENSES AND TRADEMARKS
The Company has filed patent applications on its technologies for RFID, a
new metering device and virtual classrooms. The Company also holds other
patents, none of which is considered essential to its overall operations. The
Company entered into a license agreement, effective as of December 1, 1997,
pursuant to which, the Company will pay a $3 million fixed royalty fee,
payable in 12 quarterly installments, plus earned royalties for the use of a
patented vapor recovery system and certain vapor recovery improvements, an
electronic blender and a printed receipt severing device. See Item 3, "Legal
Proceedings" and Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
SEASONALITY
Sales of petroleum dispenser equipment have historically been seasonal,
primarily due to the construction season and seasonal MOC purchasing which
typically is highest at the end of the calendar year. Historically,
approximately 30% of Tokheim's annual net sales volume has been recorded in
the fourth quarter of its fiscal year, with no significant variation among the
other three quarters. The acquisition of Sofitam has diminished such
seasonality, with the 1997 fourth quarter representing 27% of consolidated
annual sales. See Note 12 to the Consolidated Financial Statements, "Quarterly
Financial Information (unaudited)."
WORKING CAPITAL PRACTICES
There are no special inventory requirements or credit terms extended to
customers that would have a material adverse affect on the Company's working
capital.
DEPENDENCY ON A SINGLE CUSTOMER
No single customer accounted for 10% or more of the Company's consolidated
sales in 1997, 1996 or 1995.
BACKLOG
The Company's backlog of firm orders as of the end of 1997 was approximately
$26.2 million, compared to approximately $28.1 million at the end of 1996. The
Company expects that the entire backlog will be filled in 1998. The Company
believes that its backlog is not necessarily an indicator of sales during the
forthcoming year because the average length of the backlog is not very long
(four to six weeks of shipments). Factors affecting backlog levels include the
timing of purchases by MOCs, announcements of price adjustments, sales
promotions, and production delays. The effect of these factors limits the
usefulness of comparing backlogs in different periods.
COMPETITION
The market for petroleum dispensing equipment is competitive and sensitive
to new product introductions and pricing pressure. Intense competition has
significantly reduced the average price on the Company's products over the
past few years. The Company competes principally against Gilbarco, Inc. (a
division of GEC, Plc),
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Wayne (a division of Dresser Industries, Inc.), Schlumberger Limited,
Tankanlagen Salzkotten GmbH, Scheidt & Bachmann GmbH and Tatsuno Corporation.
Measured in industry sales, the Company believes that it is one of the largest
global manufacturers of petroleum dispensing equipment.
The Company believes that the principal methods of competition include
price, product quality, service, technology and the ability to provide
products globally. The Company believes that its strengths include: (1) its
global presence, which allows it to satisfy the demands of companies seeking
regional or global suppliers; (2) its production of high quality, customized
products; (3) its strong service-provider network; (4) its application of new
technologies into products; and (5) its focus on its core business. Several of
the Company's competitors are subsidiaries or divisions of much larger
corporations, however, and may have significantly greater financial, technical
and marketing resources than the Company.
ENVIRONMENTAL REGULATIONS
The Company's operations and properties are subject to a variety of complex
and stringent federal, state and local laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission,
release, discharge and disposal of certain materials, substances and wastes,
the remediation of contaminated soil and groundwater, and the health and
safety of employees. The Company does not believe that compliance with any
existing environmental regulations will result in material capital
expenditures or have a material adverse effect on the Company's financial
condition or results of operations. Environmental regulations also tend to
affect the Company's customers, increasing their spending and their demand for
the Company's products as they attempt to remain in compliance. See Note 18 to
the Consolidated Financial Statements, "Contingent Liabilities."
EMPLOYEES
As of November 30, 1997, the Company employed approximately 2,903 people
worldwide.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales:
Financial information about foreign and domestic operations and export sales
for 1997, 1996, and 1995 is set forth in Note 14 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; Fribourg, Switzerland; Scurzolengo, Italy; Abidjan,
Ivory Coast; and Halstenbek, Germany. The Company leases properties in:
Greenwood Village, Colorado; Mexico City, Mexico; Tremblay, France;
Casablanca, Morocco; Solothurn, Switzerland; West Sussex, United Kingdom;
Vilvoorde, Belgium; Barcelona, Spain; La Soukra, Tunisia; Dakar, Senegal;
Douala, Cameroon; Leiderdorp, the Netherlands, and Hamburg, Germany. The
majority of the Company's manufacturing operations are concentrated in six
cities: Fort Wayne, Indiana; Washington, Indiana; Lansdale, Pennsylvania;
Grentheville, France; Kya Sand, Randburg, South Africa; and Glenrothes,
Scotland. The Company believes that it has sufficient production capacity to
meet demand over the next several years. The Company also owns an engineering
and design center and a corporate office building in Fort Wayne, Indiana.
Other than the Colorado facility, which is for software development, the
remaining properties owned or leased by the Company are primarily for
warehouse space or sales and service. The Company is currently holding for
sale facilities in Falaise, France, Jasper, Tennessee and Atlanta, Georgia, as
well as a 109-acre tract of unimproved land located in Fort Wayne, Indiana.
ITEM 3. LEGAL PROCEEDINGS.
As more fully described in Note 18 to the Consolidated Financial Statements,
"Contingent Liabilities," the Company is defending various claims and legal
actions, including claims under the U.S. Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA") and other environmental actions.
These legal actions involve primarily claims for damages arising out of the
Company's manufacturing operations,
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product liability and various contractual and employment issues. Management
believes that the outcome of such pending claims will not, individually or in
the aggregate, have a material adverse effect on the Company's financial
condition or results of operations. For further details, see Note 18 to the
Consolidated Financial Statements, "Contingent Liabilities."
The Company was a defendant in litigation filed by Gilbarco, Inc.
("Gilbarco"), which alleged infringement of patents on its vapor recovery
system and certain vapor recovery improvements, blender, printed receipt
severing and filter housing. Gilbarco also alleged violation of the North
Carolina Fair Practice Claims Act. Gilbarco is seeking injunctions and treble
unspecified damages. The Company, in addition to asserting other defenses, has
counterclaimed with an antitrust claim. The lawsuit was filed on August 3,
1995 and took place in federal court in the Middle District of North Carolina.
The parties have signed a settlement agreement which includes a nonexclusive,
worldwide license to use the disputed technology. The agreement settles all
outstanding issues related to the litigation. See Item 1 under the caption
"Patents, Licenses and Trademarks." On February 13, 1998, the court entered a
consent judgment approving the settlement.
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, no par value (the "Common Stock"), is traded on
the New York Stock Exchange under the symbol "TOK." The high and low sales
prices for the Common Stock for 1996 and 1997 are set forth as follows:
QUARTERLY HIGH-LOW SHARE PRICES
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HIGH LOW
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YEAR ENDED NOVEMBER 30, 1996
First Quarter........................................... $ 9 1/2 $ 6 1/8
Second Quarter.......................................... 10 3/4 8 3/4
Third Quarter........................................... 10 7 1/2
Fourth Quarter.......................................... 10 8 1/2
YEAR ENDED NOVEMBER 30, 1997
First Quarter........................................... $ 9 7/8 $ 7 1/4
Second Quarter.......................................... 10 1/8 8
Third Quarter........................................... 14 3/8 9 3/4
Fourth Quarter.......................................... 18 13/16 13 3/8
</TABLE>
The Company has not declared or paid dividends on the Common Stock in recent
years. Currently, the Company does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future. The Bank Credit Facility and the
indenture governing the 11 1/2% Senior Subordinated Notes also restrict the
payment of dividends.
The number of Common Stock shareholders of record on February 4, 1998, was
approximately 7,200. On February 12, 1998, the closing price of the Common
Stock, as reported on the New York Stock Exchange, was $17.25 per share.
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ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 and the Consolidated Financial Statements and related
notes in Item 8.
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)
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YEAR ENDED NOVEMBER 30,
------------------------------------------------
1997 1996(A) 1995 1994 1993
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STATEMENT OF OPERATIONS DATA:
Net sales.................. $385,469 $279,733 $221,573 $202,134 $172,306
Operating profit (loss)(B). 20,645 6,356 5,811 3,780 (2,324)
Interest expense, net...... 16,451 7,191 3,319 2,806 3,443
Earnings (loss) before
income taxes(C)........... 5,197 (1,229) 3,270 1,932 (5,745)
Earnings (loss)(C)......... 3,980 (2,009) 3,231 1,675 (5,867)
Preferred stock dividends.. 1,512 1,543 1,580 1,617 1,663
Earnings (loss) applicable
to common stock(C)........ 2,468 (3,552) 1,651 58 (7,530)
Earnings (loss) per common
share(C):
Primary.................... 0.31 (0.45) 0.21 0.01 (1.09)
Weighted average number of
shares outstanding........ 8,083 7,981 7,911 7,801 6,940
Fully diluted.............. 0.27 (0.45) 0.17 0.01 (1.09)
Weighted average number of
shares outstanding........ 9,067 7,981 9,500 7,801 6,940
BALANCE SHEET DATA (AT PERIOD
END):
Working capital............ $ 41,650 $ 54,356 $ 50,353 $ 47,040 $ 32,346
Property, plant and
equipment................. 41,966 41,010 28,558 27,425 29,004
Total assets............... 290,619 309,861 124,332 116,251 119,997
Total debt(D).............. 130,405 146,012 38,612 38,825 44,501
ESOP preferred stock, net.. 9,853 8,137 6,426 5,005 3,678
Common shareholders'
equity, net............... 10,618 17,678 23,797 22,857 32,894
OTHER DATA:
Cash flows from operating
activities................ 21,202 5,897 3,347 2,069 (5,039)
Cash flows for investing
activities................ (10,394) (54,079) (4,910) (2,562) (76)
Cash flows from financing
activities................ (11,795) 57,016 754 (5,063) (1,093)
Capital expenditures....... 11,154 3,061 5,559 2,757 2,503
Depreciation and
amortization.............. 9,232 5,028 4,857 4,672 5,233
Interest expense and
preferred stock dividends. 18,800 9,336 5,168 4,675 5,475
EBITDA (as defined)(E)..... 34,767 17,842 14,126 10,230 2,931
</TABLE>
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(A) 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 Note 1 to the
Consolidated Financial Statements, "Summary of Significant Accounting
Policies."
(B) Operating profit equals net sales less cost of sales, selling, general and
administrative expenses, merger and acquisition costs and other unusual
items, and depreciation and amortization.
(C) Amounts for 1997 exclude $1,886 of extraordinary loss from debt
extinguishment. Amounts for 1994 exclude the cumulative effect of change
in method of accounting for postretirement benefits other than pensions of
$13,416.
(D) Total debt includes senior subordinated notes, long-term debt, current
maturities of long-term debt, notes payable bank, capitalized lease
obligations and the guarantee of certain debt incurred by the Company's
Employee Stock Ownership Plan (the "ESOP") to purchase Tokheim preferred
stock, the dividends of which are used by the ESOP to service such debt
(the "Guaranteed ESOP Obligation").
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(E) EBITDA as used in this Report represents earnings (loss) from continuing
operations before income taxes, extraordinary loss or debt extinguishment
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 the 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" under Item 7 for a discussion of
liquidity. For additional information concerning the Company's historical
cash flows, see the Consolidated Statement of Cash Flows included
elsewhere herein under Item 8.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
The Company's petroleum dispensing systems are designed for and sold
principally to owners of retail service stations, which include major oil
companies ("MOCs"), national oil companies ("nationals"), independent owners
operating under a MOC brand ("jobbers"), independent oil companies
("independents"), convenience store stations, hypermarkets and other
retailers, and to commercial customers. In 1997, approximately 89% of
Tokheim's net sales were to retail operators, and approximately 11% of net
sales were to commercial customers, such as municipalities and truck fleets.
Unless otherwise noted, references herein to years are to the Company's fiscal
years ended November 30th. In the United States, Canada and western Europe,
demand is driven by new, more convenient products, such as credit/debit card
readers, and by environmental regulations, such as those requiring vapor
recovery systems and more secure underground storage tanks. In emerging
markets, such as eastern Europe, Africa and southeast Asia, economic growth is
promoting vehicle use and infrastructure development, which increase the
demand for fuel and fuel dispensers. Deregulation of local markets and
privatization of state-owned oil companies have created additional growth
opportunities in Central and South America.
The market for petroleum dispensing equipment is competitive and sensitive
to new product introductions and pricing pressure. Intense competition has
significantly reduced the average price on the Company's products over the
past few years.
Beginning in 1992, the Company initiated an aggressive program to
consolidate manufacturing operations, enhance manufacturing efficiency,
redesign existing products and divest non-core businesses. In addition, since
the Sofitam acquisition, the Company has begun to implement a plan to combine
manufacturing facilities, integrate product lines, re-engineer the
manufacturing process and eliminate general and administrative redundancies.
The Company is continually looking for opportunities to redesign its products
and manufacturing processes to increase efficiency.
The Company has entered into a licensing agreement, effective as of December
1, 1997 (the "Licensing Agreement"). Under the terms of the Licensing
Agreement, the Company will pay a $3.0 million fixed royalty fee, payable in
12 quarterly installments, plus earned royalties on patented devices used in
Company products until the patents expire. The Company expects that these
earned royalties will total approximately $1.1 million in 1998, based on
projected sales. These licensing expenses may offset in part savings from the
Company's restructuring efforts.
The Company acquired Sofitam in September 1996 for $107.4 million less
certain adjustments. The Company's 1996 financial statements include three
months of Sofitam operations, and the 1997 financial statements include a full
year of Sofitam operations. A comparison of sales in 1997 versus 1996 of
entities that have been part of Tokheim since before the acquisition are not
meaningful because certain sales made by these entities were conducted through
Sofitam in 1996 and 1997.
10
<PAGE>
International sales by foreign subsidiaries and exports from the U.S.
totaled approximately 64%, 47%, and 38% of consolidated net sales in 1997,
1996, and 1995, respectively. The acquisition of Sofitam has significantly
extended the Company's international distribution network, reducing its
reliance on U.S. domestic sales.
Sales of petroleum dispenser equipment have historically been seasonal,
primarily due to the construction season and MOC purchasing which typically is
highest at the end of the calendar year. Historically, approximately 30% of
Tokheim's annual net sales volume has been recorded in the fourth quarter of
its fiscal year, with no significant variation among the other three quarters.
The acquisition of Sofitam has diminished such seasonality, with the 1997
fourth quarter representing 27% of consolidated annual sales. Because of the
Company's relatively low profit margins, the relatively higher sales in the
fourth quarter have translated into a disproportionately high contribution to
the Company's annual earnings. See Note 12 to the Consolidated Financial
Statements.
In December 1997, the Company acquired Management Solutions, Inc. ("MSI").
MSI develops and distributes retail automation systems (including POS
systems), primarily for the convenience store, petroleum dispensing and fast
food service industries. The Company paid MSI's stockholders an initial amount
of $12.0 million. The Company is also obligated to make contingent payments of
up to $13.2 million over the next three years based upon MSI's performance.
The $13.2 million consists of $8.0 million of additional purchase price, $2.6
million related to a non-compete agreement, and $2.6 million of additional
employee compensation. The Company borrowed funds for the initial purchase
price under the Bank Credit Facility.
RESULTS OF OPERATIONS
Consolidated sales for 1997 were $385.5 million, an increase of 37.8% from
1996 sales of $279.7 million. Substantially all of this increase was due to
the inclusion of a full year of Sofitam's results in 1997 compared to three
months of Sofitam's results in 1996. These increases were offset by the impact
of a decline in revenues due to a decline in foreign currency exchange rates.
Sales for 1997 would have been $20.9 million higher if average exchange rates
of European and African currencies had remained the same as in 1996.
Consolidated sales of $279.7 million in 1996 represented an increase of 26.3%
from $221.6 million in 1995. The increase was due principally to the inclusion
of three months of Sofitam's operations as well as unit volume increases. Both
domestic and international sales contributed to this gain in sales.
The gross margin (defined as net sales less cost of sales divided by net
sales) for 1997 was 26.3%, up from 24.8% in 1996 and 24.6% in 1995. The
increase from 1996 to 1997 is due to (i) the inclusion of Sofitam at higher
margin levels for a full year, (ii) personnel reductions and related cost
savings, (iii) reduction of warranty expense in North America, and (iv) the
results of concentrated efforts to improve manufacturing efficiencies
globally. Cost reductions were offset somewhat by decreasing sales prices. The
1996 increase over 1995 was achieved by higher sales volume and improvements
in the Company's cost structure, offset, in part, by lower sales prices.
Selling, general and administrative expenses as a percentage of net sales
were 17.7% in 1997, compared to 18.5% in 1996 and 18.6% in 1995. Such expenses
increased to $68.2 million in 1997 compared to $51.7 million in 1996 and $41.3
million in 1995. The 1997 expense increase over 1996 is largely attributable
to a full year of Sofitam expenses. These increases were offset by a program
implemented by the Company in 1997 to improve efficiency and reduce personnel,
which translated into lower total compensation cost.
Net interest expense increased in 1997 to $16.5 million from $7.2 million in
1996, reflecting a full year's interest expense on the Company's 11 1/2%
Senior Subordinated Notes due 2006 (the "Notes") issued to finance the
acquisition of Sofitam. Interest expense for 1997 is net of interest income of
$0.8 million, which includes $0.5 million of interest on tax refunds. The
increase in interest expense of $3.3 million in 1996 compared to 1995 reflects
approximately three months of interest on the Notes.
11
<PAGE>
A net foreign currency exchange loss of less than $0.1 million was incurred
in 1997 versus a loss of $0.2 million incurred in 1996 and a gain of $0.1
million in 1995. The 1997 loss was due principally to the decline of the
French franc against the U.S. dollar and was partially offset by a foreign
currency gain of $0.5 million on the sale of a foreign currency option
contract.
Other income, net was $1.4 million in 1997 compared to $0.2 million in 1996.
This increase is partly due to gains on the sale of property, plant and
equipment that were $0.4 million greater in 1997 than 1996 and to the
inclusion of Sofitam's other income for the full year. In addition, other
income in 1996 of $0.2 million includes $0.3 million of expense for a
litigation settlement of a nonoperating nature. In 1995, the Company sold a
non-core product line and related assets that resulted in a net gain of $0.5
million.
Income tax expense for 1997 was $1.2 million, an increase from $0.8 million
in 1996. The increase was due to higher income, offset by utilization of net
operating loss carryforwards and adjustments of prior year's taxes and
refunds. At the end of 1997, the Company recorded a net deferred tax asset of
$14.9 million, which was offset in full by a valuation allowance due largely
to uncertainties associated with the Company's ability to fully use these tax
benefits. The Company is continuing to evaluate the likelihood that all or
part of the deferred tax asset will be realized through the generation of
future taxable earnings. If, in the future, the Company is able to generate
sufficient levels of taxable income, the valuation allowance will be adjusted
accordingly. See Note 13 of the Consolidated Financial Statements for
additional information concerning the Company's income tax position at
November 30, 1997.
Earnings before extraordinary loss on debt extinguishment in 1997 were $4.0
million, or $0.27 per fully diluted common share, compared with a loss of $2.0
million or $0.45 loss per fully diluted common share in 1996. Earnings in 1995
were $3.2 million, or $0.17 per fully diluted common share. Earnings in 1997
included merger and acquisition costs and other unusual items of $3.5 million,
compared to $6.5 million in 1996 and $2.7 million in 1995.
In 1997, the Company incurred a $1.9 million extraordinary loss, or $0.21
loss per fully diluted common share, as a result of the open-market purchase
and retirement of $10.0 million in aggregate principal amount of the Notes.
This loss includes $1.4 million of premiums paid to purchase the Notes and
$0.5 million representing the write-off of a proportionate share of the
original unamortized deferred issuance costs. See further discussions under
"--Liquidity and Capital Resources" and Note 6 to the Consolidated Financial
Statements, "Senior Subordinated Notes."
Inflation has not had a significant impact on the Company's results of
operations.
The Company is a party to various legal matters, and its operations are
subject to federal, state, and local environmental laws and regulations. For
further details, see Note 18 to the Consolidated Financial Statements,
"Contingent Liabilities."
During 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 did not have a material impact on earnings from operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company has available to it various internal and external sources of
liquidity and capital resources. These resources provide funds required for
current operations, interest payments, debt retirement, capital expenditures
and other requirements. Working capital at November 30, 1997 was $41.7 million
compared to $54.4 million on November 30, 1996. The Company's current ratio
was 1.4 at November 30, 1997 and 1996.
In September 1996, Tokheim entered into the Bank Credit Facility, an $80
million revolving credit facility 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 substantially all of its
assets, including intercompany
12
<PAGE>
notes and receivables and intangibles. The facility includes numerous
covenants, including minimum levels of earnings and interest coverage and
restrictions on capital expenditures, rentals and dividend payments. The
Company must be in compliance with the terms and conditions of the facility
before making interest and principal payments on the Notes. The Company had
$33.1 million available under the Bank Credit Facility as of November 30,
1997. Subsequent to November 30, 1997, the Company borrowed an additional
$12.0 million to fund the MSI acquisition. Availability of revolving credit
under this facility is subject to borrowing base requirements and compliance
with covenants as described in Note 5 to the Consolidated Financial
Statements, "Notes Payable to Banks." The Company was in full compliance with
all covenants as of November 30, 1997.
In August 1996, the Company sold $100 million in aggregate principal amount
of the Notes in a private placement pursuant to Rule 144A. The offering of the
Notes was made in connection with the Company's acquisition of Sofitam. In
January 1997, the Company completed an offer to exchange the original Notes
for registered notes. The terms of the registered Notes are similar in all
material respects to those of the original Notes, except that the registered
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 before the expiration of the exchange offer. During the fourth
quarter of 1997, the Company used proceeds from the Bank Credit Facility to
purchase $10.0 million in aggregate principal amount of the Notes on the open-
market at an aggregate price of $11.4 million, plus accrued interest.
Cash provided from operations was $21.2 million in 1997 compared to $5.9
million in 1996 and $3.3 million in 1995. The increase in 1997 was achieved
primarily through improved earnings, reductions in receivables and inventory,
and an increase in accounts payable. The improved cash flow is the result of
continued efforts to increase the efficiency of the two consolidated
businesses (Sofitam and Tokheim) and improved working capital management. Cash
flow from operations in 1996 was enhanced by improved receivables collection
and increased accrued expenses.
The Company's French subsidiaries participate, as needed, in a customary
practice of selling traits (selling accounts receivable without recourse) to
financial institutions. Under this arrangement, the subsidiaries present
traits to financial institutions and receive 95% of the face value in the form
of short-term loans. These loans bear interest at a variable rate, which was
3.8% at November 30, 1997. When the subsidiaries receive payment from the
customers, they remit 95% of the amount received back to the financial
institutions plus the accrued interest. The amount outstanding at November 30,
1997 was approximately $3.6 million. The Company did not sell traits prior to
1997.
The Company's capital expenditures amounted to $11.2 million in 1997, $3.1
million in 1996 and $5.6 million in 1995. The increase in 1997 relates
primarily to capital requirements for implementing both the consolidation plan
for Sofitam and improvements at the Company's Fort Wayne, Indiana
manufacturing facility. At November 30, 1997, no significant contractual
commitments existed for future capital expenditures. The Company expects to
commit approximately $8.0 million for capital expenditures during 1998.
In connection with the continued implementation of the Sofitam consolidation
plan, the Company expects to incur a number of charges. During 1997, the
Company charged $3.2 million against the acquisition accrual recorded for
estimated costs necessary to realign the Sofitam operations in Europe and to
close redundant operations. This realignment also resulted in $1.7 million of
charges against operating income in 1997. With respect to the consolidation,
the Company anticipates charging $7.3 million against the remaining
acquisition accrual during the next eighteen to twenty-four months. The
Company also expects to charge $0.1 million and $1.6 million in 1998 and 1999,
respectively, against operating income for the realignment. See Notes 2 and 3
to the Consolidated Financial Statements for additional information concerning
the Company's consolidation plan.
As part of the MSI acquisition, the Company is obligated to make contingent
payments of up to $13.2 million over the next 3 years based on MSI's
performance. The $13.2 million consists of $8.0 million of additional purchase
price, $2.6 million related to a non-compete agreement, and $2.6 million of
additional employee compensation. See Note 19 to the Consolidated Financial
Statements, "Subsequent Events."
13
<PAGE>
The Company has guaranteed loans to the ESOP in the amounts of $9.4 million
and $11.7 million at November 30, 1997 and 1996, respectively. The Trustee,
who holds the ESOP Preferred Stock, 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 that is
necessary to provide for distributions under the Company's Retirement Savings
Plan. A participant may elect to receive a distribution from the Plan in cash
or common stock. If redeemed by the Trustee, the Company is responsible for
purchasing the preferred stock at the $25 floor value. The Company may elect
to pay the redemption price in cash or an equivalent amount of common stock.
Preferred stock dividends paid were $1.5 million, $1.5 million, and $1.6
million in 1997, 1996, and 1995, respectively. See Note 16 to the Consolidated
Financial Statements, "Retirement Plan Cost."
The Company also satisfies various capital needs through operating leases
for machinery and equipment, computer systems, vehicles and other items.
Expenses related to such leases aggregated approximately $4.9 million in 1997.
See Note 8 to the Consolidated Financial Statements for further additional
information concerning commitments related to leases.
The Company is completing the initial phase of assessment and is developing
a project plan of tasks, resources, time schedules and estimated costs to
replace or upgrade those computer programs which are not year 2000 compliant.
This initiative includes activities to test and certify all Company-wide
business systems, infrastructure, and internal and external products and
services. Based on preliminary estimates, the Company expects to spend a total
of approximately $1.7 million in 1998 and 1999 to modify its computer
information systems enabling proper processing of transactions relating to the
year 2000 and beyond. The Company continues to evaluate appropriate courses of
corrective action, including replacement of certain systems whose associated
cost would be recorded under capital or operating leases.
The Company's long-term investments and long term loans to foreign
subsidiaries, when translated at 1997 conversion rates, resulted in a
translation adjustment that is reflected as a reduction to shareholders'
equity of $18.0 million in 1997 and $7.3 million in 1996. The adjustments
represent the effect of changes in the current rate of exchange from the
beginning to the end of the year used in translating the net assets of foreign
subsidiaries, including certain long-term intercompany loans of foreign
subsidiaries, into U.S. dollar amounts. The majority of the 1997 and 1996
adjustments are the result of translating long-term loans to foreign
affiliates which were established to complete the acquisition of Sofitam.
In summary, the Company believes that it has adequate financial resources,
both from internal and external sources, to meet its liquidity needs over the
next 12 months. The Company may consider other methods of raising capital,
such as the issuance of debt or equity securities in a public offering as its
needs require.
NEW ACCOUNTING PRONOUNCEMENTS
The Company has considered the impact that accounting pronouncements
recently issued by the Financial Accounting Standards Board and American
Institute of Certified Public Accountants will have on the Consolidated
Financial Statements as of November 30, 1997. None of the pronouncements that
have been issued but not yet adopted by the Company is expected to have a
material impact on the Company's financial position, results of operations or
cash flows. See Note 1 to the Consolidated Financial Statements for additional
information regarding recently issued accounting pronouncements.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996, AND 1995
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net sales........................................ $385,469 $279,733 $221,573
Cost of sales, exclusive of items listed below... 283,932 210,223 166,974
Selling, general, and administrative expenses.... 68,167 51,667 41,251
Depreciation and amortization.................... 9,232 5,028 4,857
Merger and acquisition costs and other unusual
items........................................... 3,493 6,459 2,680
-------- -------- --------
Operating profit................................. 20,645 6,356 5,811
Interest expense (net of interest income of $837,
$602 and $269, respectively).................... 16,451 7,191 3,319
Foreign currency (gain) loss..................... 48 159 (143)
Minority interest in subsidiaries................ 394 393 --
Other income, net................................ (1,445) (158) (635)
-------- -------- --------
Earnings (loss) before income taxes and
extraordinary loss.............................. 5,197 (1,229) 3,270
Income taxes..................................... 1,217 780 39
-------- -------- --------
Earnings (loss) before extraordinary loss........ 3,980 (2,009) 3,231
Extraordinary loss on debt extinguishment........ (1,886) -- --
-------- -------- --------
Net earnings (loss).............................. 2,094 (2,009) 3,231
Preferred stock dividends ($1.94 per share)...... (1,512) (1,543) (1,580)
-------- -------- --------
Earnings (loss) applicable to common stock....... $ 582 $ (3,552) $ 1,651
======== ======== ========
Earnings (loss) per common share:
Primary
Before extraordinary loss...................... $ 0.31 $ (0.45) $ 0.21
Extraordinary loss on debt extinguishment...... (0.23) -- --
-------- -------- --------
Net earnings (loss)............................ $ 0.07 $ (0.45) $ 0.21
======== ======== ========
Weighted average number of shares outstanding.. 8,083 7,981 7,911
======== ======== ========
Fully diluted
Before extraordinary loss...................... $ 0.27 $ (0.45) $ 0.17
Extraordinary loss on debt extinguishment...... (0.21) -- --
-------- -------- --------
Net earnings (loss)............................ $ 0.06 $ (0.45) $ 0.17
======== ======== ========
Weighted average number of shares outstanding.. 9,067 7,981 9,500
======== ======== ========
</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, 1997, 1996, AND 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss).............................. $ 2,094 $ (2,009) $ 3,231
Adjustments to reconcile net earnings (loss) to
net cash provided from operating activities:
Extraordinary loss on debt extinguishment....... 1,886 -- --
Depreciation and amortization................... 9,232 5,028 4,857
Gain on sale of property, plant, and equipment.. (408) (59) (436)
Deferred income taxes........................... (139) (251) (33)
Changes in assets and liabilities (net of
effects of the acquisition in 1996):
Receivables, net............................... 4,254 2,363 (6,140)
Inventories.................................... 5,975 (2,626) 89
Prepaid expenses............................... (2,001) 5,987 (877)
Accounts payable............................... 5,116 (1,425) 1,648
Accrued expenses............................... (3,395) 4,249 2,132
U.S. and foreign income taxes.................. 12 (912) (349)
Other.......................................... (1,424) (4,448) (775)
-------- -------- -------
Net cash provided from operating activities...... 21,202 5,897 3,347
-------- -------- -------
Cash Flows From Investing Activities:
Acquisition of Sofitam, net of cash acquired..... -- (52,105) --
Property, plant, and equipment additions......... (11,154) (3,061) (5,559)
Proceeds from sale of property, plant and
equipment....................................... 760 1,087 649
-------- -------- -------
Net cash used in investing activities............ (10,394) (54,079) (4,910)
-------- -------- -------
Cash Flows From Financing Activities:
Proceeds from senior subordinated notes.......... -- 100,000 --
Redemption of senior subordinated notes.......... (10,000) -- --
Proceeds from term debt.......................... -- 490 2,122
Payments on term debt and other.................. (3,747) (32,290) (819)
Net increase (decrease) notes payable, banks..... 1,770 (5,044) 559
Net increase in cash overdraft................... 1,874 7,237 199
Debt issuance costs.............................. -- (11,506) --
Proceeds from issuance of common stock........... 1,706 42 --
Treasury stock, net.............................. (496) (370) 273
Premiums paid on debt extinguishment............. (1,390) -- --
Preferred stock dividends........................ (1,512) (1,543) (1,580)
-------- -------- -------
Net cash provided from (used in) financing
activities...................................... (11,795) 57,016 754
-------- -------- -------
Effect of Translation Adjustments on Cash......... (2,389) (4,482) 41
-------- -------- -------
Increase (decrease) in cash...................... (3,376) 4,352 (768)
Cash and Cash Equivalents:
Beginning of year................................ 9,814 5,462 6,230
-------- -------- -------
End of year...................................... $ 6,438 $ 9,814 $ 5,462
======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1997 AND 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 6,438 $ 9,814
Accounts receivable, less allowance for doubtful accounts
of $1,392 and $904, respectively.......................... 83,011 94,402
Inventories:
Raw materials and supplies............................... 29,427 30,689
Work in process.......................................... 27,514 33,080
Finished goods........................................... 7,406 11,145
-------- --------
64,347 74,914
Prepaid expenses........................................... 6,705 5,056
-------- --------
Total current assets..................................... 160,501 184,186
Property, plant and equipment, at cost:
Land and land improvements................................. 4,669 4,982
Buildings and building improvements........................ 26,924 29,867
Machinery and equipment.................................... 70,068 64,473
Construction in progress................................... 4,514 1,285
-------- --------
106,175 100,607
Less accumulated depreciation............................ 64,209 59,597
-------- --------
41,966 41,010
Assets held for sale......................................... 7,825 --
Other tangible assets........................................ 1,359 3,836
Goodwill, net................................................ 62,695 62,692
Other non-current assets and deferred charges, net........... 16,273 18,137
-------- --------
Total assets............................................. $290,619 $309,861
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1997 AND 1996
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt..................... $ 2,391 $ 4,447
Notes payable to banks................................... 98 7,168
Cash overdrafts.......................................... 10,575 9,733
Accounts payable......................................... 54,597 53,593
Accrued expenses......................................... 51,190 54,889
-------- --------
Total current liabilities.............................. 118,851 129,830
Senior subordinated notes.................................. 90,000 100,000
Long-term debt, less current maturities.................... 28,487 22,402
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation................................................ 9,429 11,995
Post-retirement benefit liability.......................... 14,378 14,780
Minimum pension liability.................................. 2,173 3,248
Other long-term liabilities................................ 5,169 342
Deferred income taxes...................................... 342 524
Minority Interest.......................................... 1,319 925
-------- --------
270,148 284,046
-------- --------
Commitments and contingencies (Note 19)
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................................................ (9,429) (11,692)
Treasury stock, at cost, 189 and 167 shares, respectively.. (4,718) (4,171)
-------- --------
9,853 8,137
-------- --------
Preferred stock, no par value; 3,300 shares authorized and
unissued.................................................. -- --
Common stock, no par value; 30,000 shares authorized, 8,232
and 7,954 shares issued, respectively..................... 21,158 19,452
Guaranteed Employers' Stock Ownership Plan (RSP)
obligation................................................ -- (303)
Minimum pension liability.................................. (2,173) (3,248)
Foreign currency translation adjustments................... (18,048) (7,271)
Retained earnings.......................................... 9,821 9,240
-------- --------
10,758 17,870
Treasury stock, at cost, 9 and 11 shares, respectively..... (140) (192)
-------- --------
10,618 17,678
-------- --------
Total liabilities and shareholders' equity............. $290,619 $309,861
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK FOREIGN
-------------------- GUARANTEED MINIMUM CURRENCY TOTAL COMMON
OUTSTANDING TREASURY ESOP PENSION TRANSLATION RETAINED SHAREHOLDERS'
AMOUNT AMOUNT OBLIGATION OBLIGATION ADJUSTMENTS EARNINGS EQUITY
----------- -------- ---------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 30,
1994 $ 19,410 $(1,887) $(1,242) $ (1,906) $ (3,543) $12,024 $ 22,856
Other.................. (1) 33 -- -- -- -- 32
Redemption of preferred
stock................. -- 1,057 -- -- -- -- 1,057
Employee termination
benefits.............. -- 427 -- -- -- -- 427
RSP diversification.... -- 139 -- -- -- -- 139
Decrease in guaranteed
ESOP obligation....... -- -- 456 -- -- -- 456
Minimum pension
liability adjustment.. -- -- -- (1,962) -- -- (1,962)
Foreign currency
translation
adjustments........... -- -- -- -- 1 -- 1
Net earnings........... -- -- -- -- -- 3,231 3,231
Treasury stock
transactions.......... -- -- -- -- -- (860) (860)
Preferred stock
dividends............. -- -- -- -- -- (1,580) (1,580)
-------- ------- ------- -------- --------- ------- --------
BALANCE AT NOVEMBER 30,
1995 $$19,409 $ (231) $ (786) $ (3,868) $ (3,542) $12,815 $ 23,797
Stock options
exercised............. 43 -- -- -- -- -- 43
Employee termination
benefits.............. -- 11 -- -- -- -- 11
Other.................. -- 28 -- -- -- -- 28
Decrease in guaranteed
ESOP obligation....... -- -- 483 -- -- -- 483
Minimum pension
liability adjustment.. -- -- -- 620 -- -- 620
Foreign currency
translation
adjustments........... -- -- -- -- (3,729) -- (3,729)
Net loss............... -- -- -- -- -- (2,009) (2,009)
Treasury stock
transactions.......... -- -- -- -- -- (23) (23)
Preferred stock
dividends............. -- -- -- -- -- (1,543) (1,543)
-------- ------- ------- -------- --------- ------- --------
BALANCE AT NOVEMBER 30,
1996 $ 19,452 $ (192) $ (303) $ (3,248) $ (7,271) $ 9,240 $ 17,678
Stock options
exercised............. 1,706 -- -- -- -- -- 1,706
Other.................. -- 52 -- -- -- -- 52
Decrease in guaranteed
ESOP obligation....... -- -- 303 -- -- -- 303
Minimum pension
liability adjustment.. -- -- -- 1,075 -- -- 1,075
Foreign currency
translation
adjustments........... -- -- -- -- (10,777) -- (10,777)
Net earnings........... -- -- -- -- -- 2,094 2,094
Treasury stock
transactions.......... -- -- -- -- -- (1) (1)
Preferred stock
dividends............. -- -- -- -- -- (1,512) (1,512)
-------- ------- ------- -------- --------- ------- --------
BALANCE AT NOVEMBER 30,
1997 $ 21,158 $ (140) $ (2,173) $ (18,048) $ 9,821 $ 10,618
======== ======= ======= ======== ========= ======= ========
</TABLE>
The accompanying notes are an integral part of the financial statements
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation--The Consolidated Financial Statements include
the accounts of Tokheim Corporation and its wholly- and majority-owned
subsidiaries (the "Company"). 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. In September 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).
Nature of Operations--The Company engages principally 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 and has major facilities in the United States, France,
Canada, Germany, Scotland, and South Africa.
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 complete liquidation of the underlying foreign investments.
Aggregate foreign currency transaction gains and losses are included in
determining net earnings.
Risks and Uncertainties--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,
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 United States 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 $98,316 at November 30, 1997, based on
a quoted market price of 109.24%.
20
<PAGE>
The fair value of the Company's convertible preferred stock, which is held
in the Trust of the Company's Retirement Savings Plan ("RSP"), 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.
In 1997, the Company entered into a foreign currency option contract
covering six bi-annual interest payments. During 1997, after selling one
contract, the Company sold the benefit side of the remaining five payments and
recognized a gain of $0.5, but retained the downside exposure. The floor is
set at 5.30 French francs to a U.S. dollar. As of November 30, 1997, the
French franc was 5.91 to a U.S. dollar.
Inventory Valuation--Inventories are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Accounting Change--During 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.
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. Buildings are generally depreciated over 40 years.
Machinery and equipment are depreciated over periods ranging from five to ten
years. Expenditures for normal repairs and maintenance are charged to expense
as incurred. Expenditures for improving or rebuilding existing assets which
extend the useful life of the assets are capitalized. Costs incurred to
address the year 2000 are expensed when incurred except for expenditures for
hardware, software and other system-related equipment. The Company is
currently holding for sale facilities in Falaise, France, Jasper, Tennessee
and Atlanta, Georgia, as well as a 109-acre tract of unimproved land located
in Fort Wayne, Indiana. Such assets are recorded at the lower of cost or net
realizable value.
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 $1,089
and $479 at November 30, 1997 and 1996, respectively. The amounts amortized
and charged to expense in 1997, 1996 and 1995 were $260, $163 and $109,
respectively.
All other product development expenditures are charged to research and
development expense in the period incurred. These expenses amounted to
$18,284, $15,909 and $12,746 in 1997, 1996 and 1995, respectively.
Goodwill and Other Intangible Assets--Goodwill is amortized on a straight-
line basis over 40 years. The Company will continue to review facts and
circumstances to determine whether the remaining estimated useful life of
goodwill warrants revision or whether 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 amounts amortized
and charged to expense in 1997 and 1996 were approximately $1,490 and $420,
respectively. Accumulated amortization of goodwill at November 30, 1997 and
1996 was $1,910 and $420, respectively.
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 with periods ranging from six to ten
years. Amortization of these deferred charges included in interest expense at
November 30, 1997, 1996 and 1995 was $1,623, $401, and $504, respectively.
During 1997, the Company charged $496 of deferred bond issuance costs to
extraordinary loss on debt extinguishment. This amount represents the write-
off of a proportionate share of the original unamortized deferred issuance
cost in connection with the issuance of the senior subordinated notes for the
acquisition of Sofitam. During 1996, the Company wrote-off approximately
21
<PAGE>
$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. Accumulated amortization of
other non-current assets and deferred charges at November 30, 1997 and 1996
was $2,520 and $401, respectively.
Advertising and Promotion--All costs associated with advertising and product
promotion are expensed in the period incurred. These expenses amounted to
$2,687, $2,268 and $1,579 in 1997, 1996 and 1995, respectively.
Income Taxes--The Company accounts for income taxes under the liability
method in accordance with Statement of Financial Accounting Standards (SFAS)
No. 109 "Accounting for Income Taxes." The provision for income taxes includes
federal, foreign, state and local income taxes currently payable as well as
deferred taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled. If it is more
likely than not that some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized. No additional U.S. income taxes
or foreign withholding taxes have been provided on accumulated earnings of
foreign subsidiaries approximating $21,700 which are expected to be reinvested
indefinitely. Additional income and withholding taxes are provided, however,
on planned repatriations of foreign earnings. (See Note 13).
New Accounting Pronouncements--SFAS No. 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," was adopted
in 1997. This statement requires that long-lived assets and certain
identifiable intangible assets that are 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. This
statement did not have an impact on the Company's consolidated financial
statements as it did not reflect a change in the Company's practices with
respect to reviewing assets for impairment and accounting for assets to be
disposed of.
The Company adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," in 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. The Company has elected not to adopt the new expense
recognition provisions of SFAS No. 123 and will continue to apply the existing
accounting provisions of Accounting Principles Board Opinion (APBO) No. 25.
APBO No. 25 does not require recognition of compensation expense for the
stock-based compensation arrangements provided by the Company where the
exercise price is equal to the market price at the date of grant. The Company
has provided the required pro forma disclosure of the compensation expense
determined under the fair value provisions of SFAS No. 123 in Note 9, "Stock
Option Plans."
SFAS No. 128, "Earnings per Share," is effective for the first quarter of
1998. This statement establishes standards for computing and presenting
earnings per share ("EPS"). SFAS No. 128 simplifies the standards for
computing EPS previously codified in APBO No. 15, "Earnings per Share," and
makes them comparable to international EPS standards. This statement requires
the replacement of primary EPS with basic EPS and a dual presentation of basic
and diluted EPS on the face of the statement of earnings for all entities with
a complex capital structure. Restatement of prior-period EPS data presented is
required. The Company does not expect basic or diluted EPS as calculated under
SFAS No. 128 to differ significantly from primary or fully diluted EPS as
calculated pursuant to APBO No. 15. See Note 11 for additional information on
EPS, including a pro forma calculation of weighted average shares outstanding
and EPS calculated under SFAS No. 128 for the year ended November 30, 1997.
SFAS No. 129, "Disclosure of Information about Capital Structure," is
effective for the year ending November 30, 1998. SFAS No. 131 "Disclosures
about Segments of an Enterprise and Related Information," are effective for
the year ending November 30, 1999. In the opinion of management, these
statements will not have a material impact on the Company's financial
position, results of operations or cash flows. SFAS No. 130 "Reporting
Comprehensive Income," is effective for the year ending November 30, 1999. Due
to the significance of the foreign currency translation adjustments recorded
in 1997 and 1996, comprehensive income would have been significantly lower
than net income and resulted in a loss for both years.
22
<PAGE>
American Institute of Certified Public Accountants (AICPA) Statements of
Position (SOP) No. 96-1 "Environmental Remediation Liabilities," and No. 97-2
"Software Revenue Recognition," are effective for the year ending November 30,
1998. SOP No. 96-1 provides guidance for recognizing, measuring and disclosing
environmental remediation liabilities. SOP 97-2 supersedes SOP 91-1 and
provides more specific guidance on revenue recognition related to software
products. In the opinion of the Company, the adoption of these statements will
not have a material impact on the Company's financial position, results of
operations or cash flows.
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.
Supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- ------
<S> <C> <C> <C>
Cash paid during the year for interest............... $15,204 $ 4,918 $3,060
Cash paid during the year for income taxes........... 921 1,013 976
Noncash transactions primarily related to the
issuance of treasury stock in settlement of RSP
distributions....................................... 1 23 976
Noncash adjustments to certain assets and liabilities
in connection with the settlement of the corporate
reorganization...................................... -- -- 383
Liabilities assumed in the acquisition............... -- 113,776 --
Accrued merger and acquisition costs................. 9,799
</TABLE>
Reclassifications--Certain prior year amounts in these financial statements
have been reclassified to conform with the current year presentation.
2. ACQUISITION
In September 1996, the Company acquired Sofitam for $107.4 million less
certain adjustments. Sofitam is the leading designer, manufacturer and
servicer of petroleum dispensers in France and northern Africa, and has a
strong market position in southern Europe. The transaction was financed by the
sale of $100 million in aggregate principal amount of 11 1/2% senior
subordinated notes due 2006 (the "Notes") and by the Company's bank credit
facility (the "Bank Credit Facility").
During 1997, the Company adjusted goodwill and related acquisition accrued
liabilities originally recorded in connection with the acquisition of Sofitam.
These adjustments were recorded in connection with a more precise allocation
of the Sofitam purchase price performed during 1997.
The table below summarizes the acquisition liabilities as they relate to the
consolidation 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 they reflect costs expected to provide benefits
in future periods. The Company expects the consolidation plan to be completed
by 1999. (See Note 3 for additional information regarding the Company's
consolidation plan.)
<TABLE>
<CAPTION>
NOVEMBER 30, 1996 ADJUSTMENTS
ORIGINAL TO CHARGED TO
ACQUISITION ACQUISITION ACQUISITION NOVEMBER 30, 1997
ITEM ACCRUAL ACCRUAL ACCRUAL REMAINING BALANCE
- ---- ----------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Employee termination
benefits (A)........... $6,651 $(186) $2,341 $4,124
Asset write-off and
disposal cost (B)...... 2,108 183 59 2,232
Other plant closing cost
(C).................... 1,040 700 799 941
------ ----- ------ ------
$9,799 $ 697 $3,199 $7,297
====== ===== ====== ======
</TABLE>
- --------
(A) Approximately 300 employees
(B) Up to 10 locations
(C) Leases and other contract terminations
23
<PAGE>
In 1997 and 1996, the Company charged operations $1,736 and $1,043,
respectively, for restructuring expenses associated with the Company's plan
for merging the operations of Tokheim and Sofitam. These costs were included
in "Merger and acquisition costs and other unusual items" in the Consolidated
Statement of Earnings. The Company estimates future non-accruable
restructuring charges related to the consolidation plan to be approximately
$125 in 1998 and $1,515 in 1999. In addition, normal operating charges
associated with the plan will be expensed as incurred.
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 Grentheville, 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,
------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues.................................................... $406,173 $399,023
Merger and acquisition costs and other unusual items........ 6,459 4,294
Net loss.................................................... (5,242) (5,208)
Net loss per common share................................... (0.85) (0.86)
</TABLE>
3. MERGER AND ACQUISITION COSTS AND OTHER UNUSUAL ITEMS
For the years ended November 30, 1997, 1996 and 1995, the Company identified
expenses brought about by the acquisition of Sofitam, costs associated with
the restructuring of the Company, pending and settled litigation, and warranty
policy adjustments above and beyond normal recurring amounts. These costs are
shown in aggregate as a single operating line item, "Merger and acquisition
costs and other unusual items," on the Consolidated Statement of Earnings.
Merger and acquisition costs/Restructuring--During 1997 and 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 matters
described above for the years ended November 30, 1997, 1996 and 1995
approximated $1,736, $2,035 and $842, respectively.
Litigation/Other--During 1997, the Company settled a claim brought against
it directly associated with the purchase of Sofitam related to a personnel
matter that resulted in an adverse outcome against the Company. The Company
also favorably settled a claim that involved a former supplier, which resulted
in the reversal of an accrued liability which had been charged to "Merger and
acquisition costs and other unusual items" in 1996. In addition, during 1997
the Company recorded a charge for an impaired asset related to license
technology (see also Note 18). In 1996 the Company settled claims related to a
prior distributor, and a foreign distributor to extinguish an exclusive sales
representative agreement. The Company also accrued and charged to operations
for the potential adverse outcome in a Pension Benefit Guarantee Corporation
inquiry with respect to a terminated benefit plan payout dated back to 1991.
In 1995 the Company settled an environmental related matter in the amount of
$300. In addition, the Company incurred charges in 1996 and 1995 related to
customer satisfaction
24
<PAGE>
programs relating to dispensers sold in prior years. Amounts charged to
operations relating to litigation/other for 1997, 1996, and 1995, were $1,757,
$4,424, and $1,838, respectively.
The above costs, although not uncommon to the Company's industry, are
considered by the Company to be attributable to the purchase and consolidation
of Sofitam or otherwise significant enough in size and nature to warrant
separate disclosure.
4. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Sofitam integration............................................ $ 7,297 $ 9,799
Compensated absences........................................... 7,087 6,833
Salaries, wages, and commissions............................... 6,076 9,240
Retirement benefits and profit sharing......................... 5,921 5,930
Interest....................................................... 3,755 3,294
Warranty....................................................... 3,742 5,193
Legal and professional......................................... 3,102 2,393
Employee payroll taxes......................................... 2,708 3,091
Deferred revenue............................................... 2,453 1,989
Taxes (sales, VAT, and other).................................. 2,434 2,924
Other.......................................................... 6,615 4,203
------- -------
$51,190 $54,889
======= =======
</TABLE>
5. NOTES PAYABLE TO BANKS
On September 3, 1996 the parent Company (the "Parent") and certain of its
French subsidiaries (the "French Borrowing Subsidiaries") entered into the
six-year $80,000 Bank Credit Facility. The facility 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").
Notes payable to banks represent short-term borrowings under domestic and
foreign lines of credit. At November 30, 1997, the aggregate amount
outstanding under these lines was $24,188, of this amount, $24,090 has been
classified as long-term debt because the Company has the ability (under the
terms of the facility) and the intent to finance these obligations beyond one
year. Domestic and foreign lines of credit totaled approximately $85,371, of
which $61,182 was unused at November 30, 1997. The weighted average annual
interest rate for these lines of credit was 7.6% for 1997. The range of
domestic and foreign rates at November 30, 1997 was 6.9% to 9.0% and 4.8% to
7.5%, respectively.
At November 30, 1996, the aggregate amount outstanding under these lines of
credit was $23,300, of which $16,144 has been classified as long-term debt
(for reasons described above). 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 for these lines of credit was 8.8% for
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.
At November 30, 1995, the aggregate amount outstanding under revolving
credit agreements was $19,064, of which $16,700 was classified as long-term
debt (for reasons described above). 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%.
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
25
<PAGE>
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.
The Credit Agreement expires on September 3, 2002.
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 cannot be reclaimed as part of the Credit
Agreement, nor can any amounts be re-borrowed by the Parent or the French
Borrowing Subsidiaries. Principal amounts outstanding at November 30, 1997 and
1996 were $9,429 and $11,692, respectively, and are 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 and domestic borrowing subsidiaries under the
Bank Credit Facility 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 and, (ii) a pledge of 100% of the stock of the
Parent's direct and indirect wholly-owned United States Subsidiaries and,
(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 Facility 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 and, (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 Facility will bear 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 Facility 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 Facility requires the Company to meet certain consolidated
financial tests, including minimum leverage of consolidated net worth, minimum
level of consolidated EBITDA as defined, minimum consolidated interest
coverage, maximum consolidated leverage ratio and minimum consolidated fixed
charge coverage ratio. The Bank Credit Facility also contains certain
covenants common to such agreements, which among other things, prohibit the
payments of dividends, limits the incurrence of additional indebtedness and
guarantees, 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 Facility contains events of default, including payment
defaults, breach 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
Facility to be in full force and effect.
26
<PAGE>
Based on the Company's monthly borrowing base calculations, it had $33.1
million available under the Bank Credit Facility as of November 30, 1997. An
additional $9.0 million is available to the Company under the facility if it
meets the borrowing base requirements. Subsequent to year end the Company
borrowed an additional $12.0 million to fund the acquisition of Management
Solutions Inc.
The Company's French subsidiaries participate, as needed, in a customary
practice of selling traits (selling accounts receivable without recourse) to
financial institutions. Under this arrangement, the subsidiaries present
traits to financial institutions and receive 95% of the face value in the form
of short-term loans. These loans bear interest at a variable rate, which was
3.8% at November 30, 1997. When the subsidiaries receive payment from the
customers, they remit 95% of the amount received back to the financial
institutions plus the accrued interest. The amount outstanding at November 30,
1997 was approximately $3.6 million. The Company did not sell traits prior to
1997.
6. SENIOR SUBORDINATED NOTES
In August 1996 the Company issued Notes with an aggregate principal amount
of $100,000, maturing on August 1, 2006, to finance the acquisition of
Sofitam. 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 to the
registered holders at the close of business on January 15 and July 15
immediately preceding the applicable interest payment date.
During the fourth quarter of 1997, the Company used proceeds from its Bank
Credit Facility to purchase $10,000 face value of Notes. The Company purchased
these Notes on the open market at an aggregate price of $11,390 plus accrued
interest and recorded an extraordinary loss of $1,886. This amount includes
$1,390 of premiums paid to repurchase the Notes and $496 representing the
write-off of a proportionate share of the original unamortized deferred
issuance costs.
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 Facility, 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>
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
27
<PAGE>
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, 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
0.0% Belgian government note, maturing $16, due in quarterly
installments switching to $19, due in annual installments
through 1999 (a).............................................. $ 93 $ 129
3.5% German bonds, maturing $40, due in semiannual installments
through 1998 (a).............................................. 80 184
8.1% notes payable, maturing $8 to $18, due in semiannual
installments through
2001 (a)...................................................... 160 85
11.5% notes payable, maturing $41 to $73, due in quarterly
installments through
1998 (a)...................................................... 405 346
15.0% notes payable, maturing $15 to $19, due in quarterly
installments through 2002 (a)................................. 372 879
14.3% notes payable, maturing $4 to $7, due in monthly
installments through
2000 (a)...................................................... 149 223
20.25% note payable, maturing $4 to $6, due in monthly
installments through 1999 (a)................................. 94 153
6.0% to 20.25% capital lease obligations, maturing $7 to $84,
in annual installments through 2000 (a)....................... 2,564 3,300
9.15% capital lease obligation, maturing $271 to $475, in
annual installments through 2004 (a).......................... 2,559 3,230
Credit Agreement, variable rate, due 2002, rates ranging from
5.0% to 7.2% at November 30, 1997 (b)......................... 24,090 16,144
Other.......................................................... 312 296
5.0% to 9.6% notes payable, maturing $561 to $992, due in
annual installments through 1997 (a).......................... -- 1,553
11.0% notes payable, maturing $1 to $27, due in quarterly
installments through
2006 (a)...................................................... -- 327
------- -------
30,878 26,849
Less: Current maturities....................................... 2,391 4,447
------- -------
$28,487 $22,402
======= =======
</TABLE>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation at November 30,
1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
------ -------
<S> <C> <C>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate, maturing $593 to $760 quarterly through 2001,
rate of 6.27% at November 30, 1997 (b)....................... $9,429 $11,692
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate maturing $303 annually through 1997, rate of
8.075% at November 30, 1996 (b).............................. -- 303
------ -------
$9,429 $11,995
====== =======
</TABLE>
- --------
(a) Aggregate cost of plant and equipment pledged as collateral under revenue
bonds and lease obligations is $11,133.
(b) Per the Bank Credit Facility as described in Note 5, the term obligation
matures on September 3, 2002.
28
<PAGE>
Aggregate scheduled maturities of the above term debt, excluding Guaranteed
ESOP Obligation which is funded through preferred stock dividends, during the
ensuing five years approximate $2,391, $1,663, $742, $535, and $543
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.
During 1997, the Company entered into a thirty-six month operating lease
agreement for computer hardware and software to replace existing financial and
manufacturing applications for one of its domestic subsidiaries. The lease has
current monthly lease payments of $27 that are expected to increase to $61 per
month at completion of the project. In 1996 the Company executed various
operating leases for manufacturing equipment effective for a term of eight
years and monthly rentals ranging from $3 to $72.
Amounts charged to expense for operating leases in 1997, 1996 and 1995 were
$4,853, $2,835, and $1,986, respectively. Future minimum rental payments under
noncancelable operating leases during the ensuing five years aggregate $3,352,
$3,208, $2,906, $1,551, $1,408 and $22 thereafter.
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 Corporation 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, 1997, there were no
SARs and 42,500 RSAs 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.
The price of each share under the ISOP was not less than fair market value
of Tokheim Corporation Common Stock on the date the option was granted, and
under the USOP was not less than 85% of the fair market value of the stock on
the date the option was granted.
Options granted under the respective plans during 1997, 1996, and 1995, are
as follows:
<TABLE>
<CAPTION>
1992 STOCK INCENTIVE PLAN
---------------------------
YEAR OF GRANT ISO NSO RSA
------------- ---------- ----------------
<S> <C> <C> <C>
1997........................................ 468,000 -- 42,500
1996........................................ 45,000 -- --
1995........................................ 35,000 -- --
</TABLE>
29
<PAGE>
The following table sets forth the status of all outstanding options at
November 30, 1997:
<TABLE>
<CAPTION>
EXERCISABLE IN TOTAL OPTIONS
OPTION PRICE OPTIONS THE NEXT ONE AUTHORIZED AND
PER SHARE EXERCISABLE TO FOUR YEARS OUTSTANDING
------------ ----------- -------------- --------------
<S> <C> <C> <C>
$20.0000....................... 16,575 -- 16,575
$18.1250....................... -- 20,000 20,000
$12.2500....................... 500 -- 500
$11.9375....................... 6,750 2,250 9,000
$ 9.3750....................... 6,500 -- 6,500
$ 9.0000....................... 500 1,500 2,000
$ 8.8800....................... 57,820 -- 57,820
$ 8.6880....................... -- 380,000 380,000
$ 8.5000....................... 7,500 7,500 15,000
$ 7.9380....................... -- 28,000 28,000
$ 7.8750....................... 15,000 -- 15,000
$ 7.1250....................... 8,250 32,250 40,500
$ 6.8750....................... 15,000 -- 15,000
$ 6.8125....................... 20,587 20,587
------- ------- -------
154,982 471,500 626,482
======= ======= =======
</TABLE>
335,388 and 310,140 options were exercisable as of November 30, 1996 and 1995
respectively.
The weighted average exercise price was $9.10 and the weighted average
remaining contractual life was 7.15 years for all outstanding options as of
November 30, 1997.
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, 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
Granted.......................................... 468,000 $7.94- $ 8.69
Exercised........................................ (235,547) $6.81- $ 9.38
Canceled or expired.............................. (58,225) $6.81- $20.00
--------
Outstanding, November 30, 1997................... 626,482 $6.81- $20.00
========
<CAPTION>
SHARES
--------
<S> <C> <C> <C>
Reserved for the granting of new options:
November 30, 1995................................ 95,462
November 30, 1996................................ 98,774
November 30, 1997................................ 133,274
</TABLE>
30
<PAGE>
Effective December 1, 1996, the Company adopted the disclosure-only
provisions of SFAS No. 123. Accordingly, no compensation cost has been
recognized for the existing stock option plans under the provisions of this
statement. The Company continues to account for stock options at their
intrinsic value under the provisions of APBO No. 25, which is allowed under
SFAS No. 123. Under APBO No. 25, because the option terms are fixed and the
exercise price of employee stock options equals the market price on the date
of grant, no compensation expense is recorded. Had compensation cost for the
Company's stock option plan been determined based on the fair value at the
grant date, consistent with the provisions of SFAS No. 123, the Company's net
earnings would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
1997 1996
----------------- -----------------
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Earnings (loss) before extraordinary
loss and estimated fair value of the
year's option grants................... $ 3,980 $ 3,980 $(2,009) $(2,009)
Estimated fair value of the year's
option grants.......................... -- (308) -- (30)
------- ------- ------- -------
Earnings (loss) before extraordinary
loss................................... 3,980 3,672 (2,009) (2,039)
Extraordinary loss on debt
extinguishment......................... (1,886) (1,886) -- --
------- ------- ------- -------
Net earnings (loss)..................... $ 2,094 $ 1,786 $(2,009) $(2,039)
======= ======= ======= =======
Preferred stock dividends ($1.94 per
share)................................. $(1,512) $(1,512) $(1,543) $(1,543)
Earnings (loss) applicable to common
stock.................................. $ 582 $ 274 $(3,552) $(3,582)
Earnings (loss) per common share:
Primary
Before extraordinary loss........... $ 0.31 $ 0.26 $ (0.45) $ (0.45)
Extraordinary loss on debt
extinguishment..................... (0.23) (0.23) -- --
------- ------- ------- -------
Net earnings (loss)................. $ 0.07 $ 0.03 $ (0.45) $ (0.45)
======= ======= ======= =======
Weighted average number of shares
outstanding........................ 8,083 8,083 7,981 7,981
======= ======= ======= =======
Fully diluted
Before extraordinary loss........... $ 0.27 $ 0.24 $ (0.45) $ (0.45)
Extraordinary loss on debt
extinguishment..................... (0.21) (0.21) -- --
------- ------- ------- -------
Net earnings (loss)................. $ 0.06 $ 0.03 $ (0.45) $ (0.45)
======= ======= ======= =======
Weighed average number of shares
outstanding........................ 9,067 9,067 7,981 7,981
======= ======= ======= =======
</TABLE>
For purposes of pro forma disclosures, the estimated fair value of the options
(stock-based compensation) is amortized to expense on a straight-line basis
over the options' vesting period. The pro forma information above only
includes the effects of 1997 and 1996 grants. As such, the impacts are not
necessarily indicative of the effects on reported net income of future years.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996:
<TABLE>
<CAPTION>
ASSUMPTIONS 1997 1996
----------- ------- -------
<S> <C> <C>
Dividend yield.......................................... -- --
Risk free interest rate................................. 6.38% 5.29%
Expected life of options................................ 5 years 5 years
Expected volatility..................................... 38.76% 39.91%
Estimated fair value of options granted per share....... $8.61 $7.21
</TABLE>
31
<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, 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
Stock options exercised.................. 278,000 1,706 -- --
Shares purchased......................... -- -- 8,000 105
Other.................................... -- -- (10,000) (157)
--------- ------- ------- ------
Balance, November 30, 1997............... 8,232,000 $21,158 9,000 $ 140
========= ======= ======= ======
</TABLE>
Changes in redeemable convertible preferred stock and related treasury stock
are shown below:
<TABLE>
<CAPTION>
PREFERRED
PREFERRED STOCK TREASURY STOCK
--------------- ---------------
SHARES AMOUNT SHARES AMOUNT
------- ------- ------- ------
<S> <C> <C> <C> <C>
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
Shares redeemed............................. -- -- 48,000 1,197
RSP Contributions........................... -- -- (26,000) (650)
------- ------- ------- ------
Balance, November 30, 1997.................. 960,000 $24,000 189,000 $4,718
======= ======= ======= ======
</TABLE>
On July 10, 1989, the Company sold 960,000 shares of redeemable convertible
preferred stock (the "Preferred Stock") to the Trust of the Company's RSP at
the liquidation value of $25 per share or $24,000. The Preferred Stock has a
dividend rate of 7.75%. The Trustees who hold the Preferred Stock 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 Stock 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 16 for
further discussions on the Company's Preferred Stock.
11. EARNINGS PER SHARE
Primary earnings (loss) per share is 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.
32
<PAGE>
In addition to the primary earnings per share computation, the fully diluted
earnings per share computation assumes conversion of the Company's Preferred
Stock into common stock and further adjusts net earnings for the additional
ESOP compensation expense resulting from the absence of the Preferred Stock
dividends available to fund the ESOP.
The following table presents the share information necessary to calculate
earnings (loss) per share for fiscal years ended November 30, 1997, 1996, and
1995:
<TABLE>
<CAPTION>
PRIMARY
-----------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Shares outstanding:
Weighted average outstanding................................ 8,044 7,939 7,893
Share equivalents........................................... 39 42 18
----- ----- -----
Adjusted outstanding........................................ 8,083 7,981 7,911
===== ===== =====
<CAPTION>
FULLY DILUTED
-----------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Shares outstanding:
Weighted average outstanding................................ 8,044 7,939 7,893
Share equivalents........................................... 77 42 18
Weighted conversion of preferred stock...................... 946 -- 1,589
----- ----- -----
Adjusted outstanding........................................ 9,067 7,981 9,500
===== ===== =====
</TABLE>
The AICPA issued 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 accounting practices for the ESOP which
are based on SOP 76-3 and subject to consensuses of the Emerging Issues Task
Force of the Financial Accounting Standards Board. Dividends paid on Preferred
Stock are deducted for EPS computations and Preferred Stock that has not been
allocated to participants' accounts is assumed to be outstanding based on the
stated conversion ratio of one-for-one. Preferred Stock that has been
allocated to participants' accounts is included in the computation of EPS
based on the period-end closing price or the weighted average market value of
the Company's common stock relative to the $25 liquidation value of the
Preferred Stock. The number of unallocated shares of Preferred Stock at
November 30, 1997 and 1995 were 295,750 and 454,601, respectively. The number
of allocated shares of Preferred Stock at November 30, 1997 and 1995 were
488,947 and 365,843, respectively. The allocated shares of Preferred Stock
were converted using $18.813 at November 30, 1997 and $8.047 at November 30,
1995.
For 1996, fully diluted earnings per share is considered to be the same as
primary earnings per share, since the effect of common stock equivalents and
certain potentially dilutive securities would be antidilutive.
As stated in Note 1, the Company will be required to retroactively adopt the
provisions of SFAS No. 128 when it reports its operating results for the
quarter ended February 28, 1998. In addition, during 1998, the Company will
convert its preferred shares at a one-to-one ratio instead of the pro rated
approach described above. This change is due to the Company having the ability
and intent to make ESOP distributions in cash instead of in the Company's
common stock which has been the historical practice as described above. The
weighted average number of common shares outstanding for 1997 calculated under
the provisions of SFAS No. 128 are 8,042 for basic and 9,005 for diluted. EPS
for 1997 calculated pursuant to SFAS No. 128 is $0.07 for basic and $0.06 for
diluted.
33
<PAGE>
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1997
-------------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales............... $92,024 $95,857 $91,781 $105,807 $385,469
Cost of products sold
(A).................... 70,391 70,379 68,667 74,495 283,932
Earnings before
extraordinary item..... 126 1,210 152 2,493 3,980
Extraordinary loss on
debt extinguishment.... -- -- -- (1,886) (1,886)
Net earnings............ 126(B) 1,210(C) 152 (D) 607 (E) 2,094
Earnings (loss) per
share:
Primary:
Before extraordinary
item................. (0.03) 0.10 (0.03) 0.26 0.31
Extraordinary loss on
debt extinguishment.. -- -- -- (0.23) (0.23)
Net earnings (loss)... (0.03) 0.10 (0.03) 0.03 0.07
Fully dilutive:
Before extraordinary
item................. (0.03) 0.08 (0.03) 0.23 0.27
Extraordinary loss on
debt extinguishment.. -- -- -- (0.20) (0.21)
Net earnings (loss)... (0.03) 0.08 (0.03) 0.03 0.06
</TABLE>
- --------
(A) Includes product development expenses and excludes depreciation and
amortization.
(B) Includes $500 of interest income recorded on specified loss liability tax
claims.
(C) Increase attributable to (i) high sales levels and reduced manufacturing
costs due to the consolidation of manufacturing facilities in France and
(ii) a reduction of Company personnel in the U.S., which translated into a
reduction of the postretirement benefit liability.
(D) Includes a $530 gain on the sale of foreign currency option agreements.
(E) Includes an income adjustment in the amount of $955, increasing goodwill
for a materials supply contract between Sofitam and a previously
affiliated company. This amount was offset by a $894 charge recorded for
licensed technology that was determined to have minimal value.
<TABLE>
<CAPTION>
1996
---------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER(A) TOTAL
------- ------- ------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net sales................. $49,548 $57,620 $59,044 $113,521 $279,733
Cost of products sold (B). 37,805 43,546 45,222 83,650 210,223
Net earnings (loss)....... (613) 486 (37)(C) (1,845)(D) (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)
</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 resulting from the acquisition
of Sofitam and $669 related to a litigation settlement.
(D) Includes approximately $387 charged to operations for employee termination
benefits related to corporate restructuring resulting from the acquisition
of Sofitam, $455 for various other acquisition charges, $780 for
product/service exit costs and $866 for a legal settlement and a possible
adverse outcome related to Pension Benefit Guaranty Corporation inquiries.
34
<PAGE>
13. INCOME TAXES
Earnings (loss) before income taxes and extraordinary loss consists of the
following:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------- -------
<S> <C> <C> <C>
Domestic......................................... $4,209 $ (542) $ 8,946
Foreign.......................................... 988 (687) (5,676)
------ ------- -------
$5,197 $(1,229) $ 3,270
====== ======= =======
</TABLE>
Income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
1997 1996 1995
------ ----- -----
<S> <C> <C> <C>
Current:
Federal............................................ $ 240 $(460) $(272)
State.............................................. 311 277 249
Foreign............................................ 652 906 132
Deferred:
Foreign............................................ 14 57 (70)
------ ----- -----
Total tax provision.............................. $1,217 $ 780 $ 39
====== ===== =====
</TABLE>
A reconciliation of the reported tax expense (benefit) and the amount
computed by applying the statutory U.S. federal income tax rate of 35% to
earnings (loss) before income taxes and extraordinary loss is as stated below.
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)....... $1,819 $ (430) $ 1,144
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax benefit. 202 180 162
Tax effect of dividends paid on stock held in
the RSP...................................... (529) (540) (553)
Adjustments to prior year accruals and
refunds...................................... (600) (111) (572)
Difference in foreign and U.S. tax rates...... (99) (78) (6)
Increase (decrease) in valuation allowance
before effect of stock options and
Extraordinary loss........................... (525) 316 (2,250)
Foreign losses with no current tax benefit: 1,016 1,201 1,985
Repatriation of foreign earnings.............. -- 125 41
Miscellaneous items, net...................... (67) 117 88
------ ------ -------
Provision at effective tax rate................. $1,217 $ 780 $ 39
====== ====== =======
</TABLE>
The components of the deferred tax assets and liabilities as of November 30,
1997 and 1996 are as stated below. The tax benefit of $660 related to the
extraordinary loss on the debt extinguishment has been fully offset by an
increase in the valuation allowance.
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable.................................... $ 346 $ 215
Employee compensation and benefit accruals............. 6,733 7,107
Workers' compensation and other claims................. 603 242
Other.................................................. 24 14
Warranty accrual....................................... 978 1,032
Environmental liability................................ 232 322
Net operating loss carryforwards....................... 8,634 7,137
Alternative minimum tax credit......................... 378 331
Valuation allowance.................................... (14,907) (14,885)
-------- --------
Total deferred tax asset............................. $ 3,021 $ 1,515
======== ========
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Gross deferred tax liabilities:
Property, plant and equipment......................... $ 1,322 $ 1,158
Pension assets........................................ 700 524
Inventory............................................. 476 (707)
Investment in property................................ 207 214
Foreign earnings not permanently invested............. 327 327
Foreign exchange...................................... 28 235
Export sales provision................................ 303 288
-------- --------
Total deferred tax liability........................ 3,363 2,039
-------- --------
Net deferred tax liability.............................. $ (342) $ (524)
======== ========
</TABLE>
For U.S. federal income tax purposes, the net operating loss ("NOL")
carryover amounts to $24,669 which will expire from 2006 to 2008. For purposes
of the Alternative Minimum Tax ("AMT"), the NOL carryover is $10,561 and the
credit carryforwards total $378. During 1997, $1,500 of the NOL was used.
At November 30, 1997, the Company recorded a net deferred tax asset of $14.9
million, which was offset in full by a valuation allowance due largely to
uncertainties associated with the Company's ability to fully use these tax
benefits. The Company is continuing to evaluate the likelihood that all or
part of the deferred tax asset will be realized through the generation of
future taxable earnings. If, in the future, the Company is able to generate
sufficient levels of taxable income, the valuation allowance will be adjusted
accordingly.
36
<PAGE>
14. GEOGRAPHICAL SEGMENTS
Domestic and foreign operations information for 1997, 1996, and 1995 is as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Net sales--unaffiliated customers:
North America........................... $ 139,928 $ 147,763 $137,470
Export.................................. 46,529 38,541 36,238
Europe.................................. 176,402 80,370 37,068
Africa.................................. 22,610 13,059 10,797
--------- --------- --------
$ 385,469 $ 279,733 $221,573
========= ========= ========
Inter-area sales eliminations:
North America........................... $ 8,432 $ 9,471 $ 10,778
========= ========= ========
Europe.................................. $ 3,660 $ 1,100 $ 47
========= ========= ========
Africa.................................. $ 286 $ 510 --
========= ========= ========
Operating income (loss):
North America........................... $ 5,557 $ 494 $ 8,812
Europe.................................. 10,259 2,649 (4,232)
Africa.................................. 1,444 633 165
Adjustments and eliminations............ 3,385 2,580 1,066
--------- --------- --------
$ 20,645 $ 6,356 $ 5,811
========= ========= ========
Identifiable assets:
North America........................... $ 207,209 $ 216,989 $121,044
Europe.................................. 169,110 186,372 22,914
Africa.................................. 14,448 14,955 7,025
Adjustments and eliminations............ (100,148) (108,455) (26,651)
--------- --------- --------
$ 290,619 $ 309,861 $124,332
========= ========= ========
</TABLE>
The Company's foreign operations are located in: Canada; Belgium; France;
Germany; Italy; Spain; Switzerland; the Netherlands; 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.
37
<PAGE>
15. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year....................... $ 904 $1,150 $1,295
Sofitam acquisition adjustments.................. 350 -- --
Charged to operations............................ 192 667 367
Uncollectible accounts written off, less
recoveries...................................... (34) (900) (519)
Foreign currency translation adjustments......... (20) (13) 7
------ ------ ------
Balance, end of year........................... $1,392 $ 904 $1,150
====== ====== ======
</TABLE>
16. RETIREMENT PLAN COST
The Company has several retirement plans covering most employees, including
certain employees in foreign countries. Charges to operations for the cost of
the Company's retirement plans, including the RSP, were $2,625, $3,052 and
$3,054 in 1997, 1996 and 1995, respectively.
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, at which time the plans' participants became eligible to
participate in the RSP.
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, 1997 and 1996:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
-------------- ----------------
1997 1996 1997 1996
------ ------ ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested................................. $1,470 $1,592 $ 9,624 $10,046
Non-vested............................. 80 89 662 703
------ ------ ------- -------
Accumulated benefit obligations........ $1,550 $1,681 $10,286 $10,749
====== ====== ======= =======
Projected benefit obligations............ $1,550 $1,681 $10,286 $10,749
Plan assets at fair value, principally
common stocks, bonds, and guaranteed
investment contracts, including $1,160
and $555 for 1997 and 1996,
respectively, of the Company's common
stock................................... 2,149 1,968 9,477 8,424
------ ------ ------- -------
Plan assets in excess of (less than)
projected benefit obligations........... 599 287 (809) (2,325)
Unrecognized net loss.................... 238 520 2,262 3,360
Unrecognized net assets at December 1,
1991 and 1990 being recognized over 15
years................................... (202) (231) (89) (112)
Adjustment required to recognize minimum
liability............................... -- -- (2,173) (3,248)
------ ------ ------- -------
Prepaid pension cost (pension liability)
recognized in the consolidated balance
sheet................................... $ 635 $ 576 $ (809) $(2,325)
====== ====== ======= =======
</TABLE>
38
<PAGE>
The net periodic pension expense amounts were based on the following
actuarial assumptions:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
------------- -------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Discount rate on plan liabilities................ 7.25% 7.00% 7.25% 7.00%
Rate of return on plan assets.................... 8.00% 8.00% 8.00% 8.00%
</TABLE>
The Company has recorded an additional minimum pension liability for the
underfunded plan of $2,173 and $3,248 at November 30, 1997 and 1996,
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 1997, 1996,
and 1995 includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Interest cost on projected benefit obligations... $ 844 $ 842 $ 857
Return on plan assets............................ (1,739) (1,204) (1,138)
Net amortization and deferral.................... 1,056 619 558
------- ------- -------
Net periodic pension expense..................... $ 161 $ 257 $ 277
======= ======= =======
</TABLE>
Defined Benefit Plans (Foreign)--Certain French Sofitam subsidiaries offer
unfunded defined benefit plans that cover all employees and provide lump-sum
benefit payments upon retirement unless employment is terminated prior to
retirement age. The following table sets forth the actuarial valuation
information required to be presented under U.S. GAAP for 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Actuarial present value of accumulated plan benefits
Vested................................................. -- --
Non-vested............................................. $ 2,178 $ 2,115
------- -------
Accumulated benefit obligations........................ 2,178 2,115
Effect of future salary increases...................... 1,086 1,187
======= =======
Projected benefit obligation........................... $ 3,264 $ 3,302
Plan assets at fair value -- --
------- -------
Funded status.......................................... (3,264) (3,302)
Amortization of unrecognized net transition obligation. 692 909
Unrecognized net (gain) loss........................... 324 136
------- -------
Prepaid pension cost (pension liability)............... $(2,248) $(2,257)
======= =======
The net periodic pension expense amounts were based on
the following actuarial assumptions:
*Discount rate........................................... 6.00% 6.58%
*Salary growth percentage................................ 3.50% 4.00%
The net periodic pension cost of the foreign defined
benefit plans includes the following components:
Service cost............................................. $ 222 $ 207
Interest cost on projected benefit obligation............ 201 219
Amortization............................................. 114 120
------- -------
Net periodic pension cost.............................. $ 537 $ 546
======= =======
Pension liability recognized in the balance sheet:
Accrued pension........................................ $(2,257)
Allowances paid during the year........................ 285
1997 net periodic pension cost......................... (537)
-------
Accrued pension........................................ $(2,509)
=======
</TABLE>
- --------
* In France
39
<PAGE>
The information presented above was calculated based on actuarial valuations
of the plans as of August 31, 1997 and 1996, which approximates that as of
November 30, 1997 and 1996, respectively. The Company's other foreign
retirement plans represent an insignificant portion of the Company's total
retirement plans.
Defined Contribution Plan (U.S.)--The RSP covers substantially all U.S.
employees of Tokheim and includes a common and preferred stock ESOP, which
provide a retirement contribution of 2% (of salary) for factory and office
employees, and 1.5% for all other participants 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. See Note 11 for a
discussion of the Company's accounting for the ESOP pursuant to SOP 76-3.
The number of shares of Preferred Stock in the RSP at November 30, 1997 and
1996 was 793,160 and 771,263 respectively, at a cost of $25 per share. The
number of common shares in the RSP at November 30, 1997 and 1996 was 137,645
and 25,305, respectively, at an average cost of $18.22 and $17.14 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 $631, $715, and $832 for
1997, 1996 and 1995 respectively.
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Interest expense incurred by the Plan Trust(s) on
RSP debt........................................... $ 710 $1,075 $1,265
Company contributions to the RSP.................... 2,464 2,541 2,300
Dividends on preferred stock used for debt service
by the RSP......................................... 1,512 1,543 1,580
</TABLE>
17. 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. The Company continues to fund benefits on a pay-as-you-
go basis, with some retirees paying a portion of the costs.
The accumulated postretirement benefit obligation as of November 30, 1997
and 1996 consisted of unfunded obligations as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Retirees and dependents.................................. $ 6,890 $ 8,220
Fully eligible active plan participants.................. 708 1,088
Other active plan participants........................... 4,588 7,742
------- -------
Total accumulated postretirement benefit obligation.... 12,186 17,050
Unrecognized net gain (loss)............................. 3,092 (1,531)
------- -------
Accrued postretirement benefit cost...................... 15,278 15,519
Less current portion..................................... (900) (739)
------- -------
$14,378 $14,780
======= =======
</TABLE>
40
<PAGE>
Net postretirement benefit cost for 1997, 1996 and 1995 includes the
following components:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Service cost........................................ $ 323 $ 603 $ 422
Interest cost on accumulated postretirement benefit
obligation......................................... 860 1,108 1,034
Amortization (gain) loss............................ -- -- 25
------ ------ ------
Net postretirement benefit cost..................... $1,183 $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>
1997 1996
----- -----
<S> <C> <C>
Discount rate................................................. 7.25% 7.00%
Health care cost trend rate for the next year................. 6.50% 9.00%
</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
4.5% in 2005. A 1% increase in this annual trend rate would increase the
accumulated postretirement benefit obligation as of November 30, 1997 by
approximately $1,500 and the combined service and interest components of the
annual net post-retirement health care cost by approximately $180.
18. 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, patent infringement, product liability matters and various contract
and employment matters.
Environmental Matters--The Company's operations and properties are subject
to a variety of complex and stringent federal, state, and local laws and
regulations, including those governing the use, storage, handling, generation,
treatment, emission, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater,
and the health and safety of employees. As such, the nature of the Company's
operations exposes it to the risk of claims with respect to such matters.
There can be no assurance that material costs or liabilities will not be
incurred in connection with such claims. Based upon its experience to date,
the Company believes that the future cost of compliance with existing
environmental laws and regulations, and liability for known environmental
claims pursuant to such laws and regulations, will not have a material adverse
effect on the Company's business, financial condition or results of
operations. However, future events, such as new information, changes in
existing laws and regulations or their interpretation, and more vigorous
enforcement policies of regulatory agencies, may give rise to additional
expenditures or liabilities that could be material.
The U.S. Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), also known as the "Superfund" law, imposes liability, without
regard to fault or the legality of the original conduct, on certain classes of
persons with respect to the release of a "hazardous substance" into the
environment. These persons include the owner or operator of the disposal site
or sites where the release occurred and companies that disposed of or arranged
for the disposal of the hazardous substances found at the site. Persons who
are or were responsible for releases of hazardous substances under CERCLA may
be subject to joint and several liability for the costs of cleaning up the
releases and for damages to natural resources. It is not uncommon for
neighboring landowners and other third parties to file claims for personal
injury or property damages allegedly caused by the hazardous substances
released into the environment. In addition, where the Company has sold
properties used in its prior manufacturing operations, it may have contractual
obligations to the new owner to remediate environmental contamination on the
site arising from prior operations.
41
<PAGE>
The Company also generates or has in the past generated waste, including
hazardous waste, that is subject to the federal Reserve Conservation and
Recovery Act ("RCRA") and comparable state statutes. The U.S. Environmental
Protection Agency ("EPA") and various state agencies have promulgated
regulations that limit the disposal options for certain hazardous and
nonhazardous waste. Such regulations may also require corrective action with
respect to contamination of facilities caused by the past handling of
industrial waste.
The Company has been named as a potentially responsible party ("PRP") under
CERCLA or similar state Superfund laws at three sites: the Fort Wayne
Reduction Site in Fort Wayne, Indiana; the Moyer Landfill Site in
Collegeville, Pennsylvania; and the I. Jones Recycling Site in Fort Wayne,
Indiana. The Company believes that the clean ups at these three sites are
largely complete and that the Company has paid, or has currently accrued on
its balance sheet sufficient funds to pay, any liabilities it may have
associated with the clean up of these sites. The Company also owns or leases,
and has in the past owned or leased, numerous properties that for many years
have been used in industrial and manufacturing operations. Although the
Company has in the past utilized operating and disposal practices that were
standard for the industry at the time, hazardous substances may have been
disposed of or released on or under the properties owned or leased by the
Company, or on or under other locations where such wastes have been taken for
disposal. The Company currently owns a facility near Atlanta, Georgia that was
previously used to refurbish gasoline dispensers. As part of this operation,
chlorinated solvents were inadvertently released to the soil and groundwater
through the facility septic system. Migration of these releases has caused
solvent concentrations above background levels in the groundwater under an
adjacent residential property. The Company has completed the cleanup of this
release under the oversight of the Georgia Environmental Protection Division
of the Georgia Department of Natural Resources, and is currently monitoring
the property to ensure that additional cleanup work is not necessary.
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.
Negotiations with the other party to settle this matter to avoid litigation
expenses ceased when the other party could not show its expenses were a direct
result of environmental matters related to the indemnity agreement. Discovery
is now being conducted in this matter.
Total amounts included in accrued expenses related to environmental matters
were $990 and $878 at November 30, 1997 and 1996, respectively. 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 government approved this settlement in late 1997, and
the Company paid one-half of the settlement amount in December 1997. The
remaining half is due in 12 months. The Company is pursuing recovery of these
amounts from its insurance carriers. 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. Settlement negotiations are
ongoing with respect to the natural resource damages. The matter regarding EPA
oversight costs is on appeal to the U.S. Court of Appeals for the 7th Circuit.
Management believes that the letter of credit of $43 is adequate to cover any
future cost to the Company relating to this matter.
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, 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 $1,330 and $382 at November 30, 1997 and 1996,
respectively. The Company is also seeking to recover in excess of $1.0 million
from its former outside legal firm for malpractice in handling a litigation
matter for the Company. In addition the Company appealed a jury verdict of
$350 with respect to an equal pay act and sexual discrimination claim to the
7th U.S. Court of Appeals. The Company is awaiting a decision in this matter.
In addition, during 1997, the
42
<PAGE>
Company settled various product liabilities, patent infringement and other
matters with aggregate settlement charges of approximately $150.
The Company was a defendant in litigation filed by Gilbarco, Inc.
("Gilbarco"), which alleged infringement of patents on its vapor recovery
system and certain vapor recovery improvements, blender, printed receipt
severing and filter housing. Gilbarco also alleged violation of the North
Carolina Fair Practice Claims Act. Gilbarco sought injunctions and treble
unspecified damages. The Company, in addition to asserting other defenses,
counterclaimed with an antitrust claim. The lawsuit was filed on August 3,
1995 and took place in federal court in the Middle District of North Carolina.
The parties have signed a settlement agreement to license the disputed
technology (the "Licensing Agreement"), effective as of December 1, 1997. The
Licensing Agreement settles all outstanding issues related to the litigation,
and on February 13, 1998, the court entered a consent judgment regarding the
settlement. Under the License Agreement, the Company will pay a $3 million
fixed royalty fee, payable in 12 quarterly installments, plus earned royalties
for the use of the licensed technology. These royalties are estimated to total
approximately $1.1 million annually.
In the opinion of the Company, 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.
19. SUBSEQUENT EVENTS
In December 1997, the Company acquired MSI, a Colorado corporation. MSI
develops and distributes retail automation systems (including POS software),
primarily for the convenience store stations, petroleum dispensing and fast
food service industries. The Company paid the MSI shareholders an initial
amount of $12.0 million. The Company is also obligated to make contingent
payments of up to $13.2 million over the next 3 years based upon MSI's
performance. The $13.2 million consists of $8.0 million of additional purchase
price, $2.6 million related to a non-compete agreement, and $2.6 million of
additional employee compensation. The $12.0 million amount was funded through
the Company's existing Bank Credit Facility. The Company is in the process of
valuing MSI's assets, which consist principally of in-process research and
development, software and other intangibles. The Company estimates that it
will incur a charge of approximately $5.9 million in the first quarter of 1998
for the write off of in-process research and development costs.
20. SHAREHOLDER RIGHTS PLAN
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. 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 upon the expiration of the Company's then-
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 Preferred Stock 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 or the Board of Directors of the Company determines that a person is an
Adverse Person.
A person who beneficially owns 10% or more of the outstanding Common Stock
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 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 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.
43
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Shareholders and Directors, Tokheim Corporation:
We have audited the accompanying consolidated balance sheet of Tokheim
Corporation and Subsidiaries as of November 30, 1997 and 1996, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended November 30, 1997. These financial
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, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1997, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
January 23, 1998
44
<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
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the caption
"Election of Directors" in the Company's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year. The information
concerning delinquent filers pursuant to Item 405 of Regulation S-K is
incorporated herein by reference from the material contained under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance" under the caption
"Stock Ownership" in the Company's definitive proxy statement to be filed with
the Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the close of the fiscal year.
EXECUTIVE OFFICERS
The following table sets forth certain information and ages as of February
12, 1998 regarding each of Tokheim's executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Douglas K. Pinner..... 57 Chairman of the Board, President and
Chief Executive Officer
John A. Negovetich.... 52 Executive Vice President, Finance and Administration
Norman L. Roelke...... 48 Vice President, Secretary and General Counsel
Jacques St. Denis..... 40 Executive Vice President, Operations
Scott A. Swogger...... 45 President, Tokheim U.S.
</TABLE>
Douglas K. Pinner has been President and Chief Executive Officer of Tokheim
since 1992, a Director since 1993 and Chairman of the Board since 1996.
Previously, he was President of Slater Steels Fort Wayne Specialty Alloys, a
wholly-owned subsidiary of Slater Industrial of Toronto, which manufactures
stainless steel bar.
John A. Negovetich has been Executive Vice President, Finance and
Administration since 1998 and Chief Financial Officer since 1995. From 1996 to
1998, Mr. Negovetich was President, Tokheim North America. From 1993 to 1995,
Mr. Negovetich was Vice President, Finance, Chief Financial Officer and a
member of the Board of Ardco, Inc. From 1987 to 1992, he served as Vice
President and Chief Financial Officer of Hawker-Siddeley Investments, Inc.
Norman L. Roelke has been Vice President and General Counsel of Tokheim
since 1994 and Secretary since 1995. From 1987 to 1994, Mr. Roelke served as
the Company's Corporate Counsel.
Jacques St. Denis has been Executive Vice President, Operations since 1998.
From 1996 to 1998, he served as President and Director General of Tokheim-
Sofitam S.A. (the Company subsidiary that was formerly Sofitam). During 1996,
he served as Vice President, Tokheim International. From 1995 to 1996, Mr. St.
Denis was Director of Export and International Operations for the Company.
From 1994 to 1995, he was Tokheim's Director of Marketing, and from 1993 to
1994, he was Director of Worldwide Services. Previously, Mr. St. Denis served
as Managing Director of European Operations, and National Sales and Marketing
Director, USA, for Babson Brothers Company.
45
<PAGE>
Scott A. Swogger has been President, Tokheim U.S., since 1997. From 1995 to
1997, he served as Vice President, Quality Systems. From 1994 to 1995, he was
Tokheim's Director of Quality Assurance. Previously, he served as the
Company's Senior Manager of Quality Assurance.
ITEM 11. EXECUTIVE COMPENSATION.
The information required under this item is incorporated herein by reference
from the material contained under the caption "Executive Compensation" in the
Company's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required under this item is incorporated herein by reference
from the material contained under the caption "Stock Ownership" in the
Company's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required under this item is incorporated herein by reference
from the material contained under the caption "Relationship with Affiliates"
in the Company's definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120 days
after the close of the fiscal year.
46
<PAGE>
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 for each of the three years in
the period ended November 30, 1997................................. Page 15
Consolidated Statement of Cash Flows for each of the three years in
the period ended November 30, 1997................................. Page 16
Consolidated Balance Sheet as of November 30, 1997, and 1996....... Page 17
Consolidated Statement of Shareholders' Equity..................... Page 19
Notes to Consolidated Financial Statements......................... Page 20
Independent Accountants' Report.................................... Page 44
2. SUPPLEMENTAL DATA AND FINANCIAL STATEMENT SCHEDULES:
Included as outlined in Item 8 of Part II of this Report:
Quarterly Financial Information (unaudited) in Note 12 to the
Consolidated Financial Statements................................. Page 34
</TABLE>
47
<PAGE>
3(a). EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
2 Stock Purchase Agreement, dated as of December 29, 1997
between the Registrant and Arthur S. ("Rusty") Elston,
Ronald H. Elston, Eric E. Burwell and Curt E. Burwell (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, dated December 31, 1997).
3.1 Restated Articles of Incorporation of the Registrant, as
amended, as filed with the Indiana Secretary of State on
February 5, 1997 (incorporated by reference to the Regis-
trant's Annual Report on Form 10-K/A for the year ended
November 30, 1996).
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, filed February 23,
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, filed 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") (the "Credit Agreement") (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, filed September 6, 1996).
4.4 Amendment No. 1 to Credit Agreement, dated as of May 15,
1997.
4.5 Amendment No. 2 to Credit Agreement, dated as of June 30,
1997.
4.6 Amendment No. 3 to Credit Agreement, dated as of September
25, 1997.
4.7 Amendment No. 4 to Credit Agreement, dated as of December
29, 1997.
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 10, 1997, between the
Registrant and Douglas K. Pinner.
10.5 Employment Agreement, dated December 23, 1997, between the
Registrant and John A. Negovetich.
10.6 Employment Agreement, dated December 23, 1997, between the
Registrant and Jacques St- Denis.
10.7 Employment Agreement, dated December 23, 1997, between the
Registrant and Norman L. Roelke.
10.8 Employment Agreement, dated December 23, 1997, between the
Registrant and Scott A. Swogger.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
10.9 Technology License Agreement, effective as of December 1,
1997, between Registrant and Gibarco, Inc.
10.10 Tokheim Corporation 1997 Incentive Plan.
10.11 Employment Agreement, dated December 31, 1997, between
Management Solutions, Inc. and Arthur S. Elston.
11 Statement Regarding Computation of Per Share Earnings.
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 January 15, 1998, the Company filed a Current Report on Form 8-K to
report the Company's acquisition of MSI. The required financial statements and
interim pro form information, which were unavailable at that time, were filed
on February 13, 1998 on a Form 8-K/A.
49
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Tokheim Corporation
/s/ Douglas K. Pinner
By: _________________________________
Douglas K. Pinner
Chairman of the Board, President,
Chief Executive Officer and
Director
February 9, 1998
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND 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 9, 1998
____________________________________ President and Chief
Douglas K. Pinner Executive Officer and
Director
/s/ John A. Negovetich Executive Vice President, February 9, 1998
____________________________________ Finance and Administration
John A. Negovetich
/s/ Gerald H. Frieling, Jr. Vice Chairman of the Board February 9, 1998
____________________________________ and Director
Gerald H. Frieling, Jr.
/s/ Walter S. Ainsworth Director February 9, 1998
____________________________________
Walter S. Ainsworth
/s/ Robert M. Akin, III Director February 9, 1998
____________________________________
Robert M. Akin, III
/s/ James K. Baker Director February 9, 1998
____________________________________
James K. Baker
/s/ B. D. Cooper Director February 9, 1998
____________________________________
B. D. Cooper
/s/ Richard W. Hansen Director February 9, 1998
____________________________________
Richard W. Hansen
/s/ Dr. Winfred M. Phillips Director February 9, 1998
____________________________________
Dr. Winfred M. Phillips
/s/ Iam M. Rolland Director February 9, 1998
____________________________________
Ian M. Rolland
</TABLE>
50
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
2 Stock Purchase Agreement, dated as of December 29, 1997
between the Registrant and Arthur S. ("Rusty") Elston,
Ronald H. Elston, Eric E. Burwell and Curt E. Burwell (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, dated December 31, 1997).
3.1 Restated Articles of Incorporation of the Registrant, as
amended, as filed with the Indiana Secretary of State on
February 5, 1997 (incorporated by reference to the Regis-
trant's Annual Report on Form 10-K/A for the year ended
November 30, 1996).
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, filed February 23,
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, filed 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") (the "Credit Agreement") (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, filed September 6, 1996).
4.4 Amendment No. 1 to Credit Agreement, dated as of May 15,
1997.
4.5 Amendment No. 2 to Credit Agreement, dated as of June 30,
1997.
4.6 Amendment No. 3 to Credit Agreement, dated as of September
25, 1997.
4.7 Amendment No. 4 to Credit Agreement, dated as of December
29, 1997.
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 10, 1997, between the
Registrant and Douglas K. Pinner.
10.5 Employment Agreement, dated December 23, 1997, between the
Registrant and John A. Negovetich.
10.6 Employment Agreement, dated December 23, 1997, between the
Registrant and Jacques St- Denis.
10.7 Employment Agreement, dated December 23, 1997, between the
Registrant and Norman L. Roelke.
10.8 Employment Agreement, dated December 23, 1997, between the
Registrant and Scott A. Swogger.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------- ---
<C> <S> <C>
10.9 Technology License Agreement, effective as of December 1,
1997, between Registrant and Gilbarco, Inc.
10.10 Tokheim Corporation 1997 Incentive Plan.
10.11 Employment Agreement, dated December 31, 1997, between
Management Solutions, Inc. and Arthur S. Elston.
11 Statement Regarding Computation of Per Share Earnings.
21 List of the Subsidiaries of the Registrant.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule.
</TABLE>
<PAGE>
EXHIBIT 4.4
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Dated as of May 15, 1997
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT ("Amendment") is made as of May 15,
1997 by and among TOKHEIM CORPORATION, an Indiana corporation (the "Company"),
certain of the Company's Subsidiaries listed on the signature pages hereof (the
"Other Borrowers"), the financial institutions listed on the signature pages
hereof (the "Lenders") and NBD BANK, N.A., in its individual capacity as a Bank
and as agent (the "Agent") on behalf of the Lenders under that certain Credit
Agreement dated as of September 3, 1996 by and among the Company, the Other
Borrowers, the Lenders and the Agent (as amended, the "Credit Agreement").
Defined terms used herein and not otherwise defined herein shall have the
meaning given to them in the Credit Agreement.
WITNESSETH
WHEREAS, the Company, the Other Borrower, the Lenders and the Agent are
parties to the Credit Agreement;
WHEREAS, the Company has requested that the Lenders amend the Credit
Agreement in certain respects; and
WHEREAS, the Lenders and the Agent are willing to amend the Credit
Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company, the Other Borrowers, the Lenders and the Agent have agreed to the
following amendments to the Credit Agreement.
1. Amendments to Credit Agreement. Effective as of May 15, 1997 and
subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement is hereby amended as follows:
1.1 Article of the Credit Agreement is hereby amended by amending the
definition of "EBITDA" to delete the reference to "the first two fiscal
quarters" in clause (x) and substitute therefor "the first five fiscal
quarters".
1.2 Section 6.9 of the Credit Agreement is hereby amended by adding
the following language at the end thereof.
"(ix) Sales or discounting of "traits" (within the meaning of French
law) or similar post-dated checks without recourse in the ordinary course of
business."
2. Conditions of Effectiveness. This Amendment shall become effective and
be deemed effective as of May 15, 1997, if, and only if, the Agent shall have
received each of the following:
(a) duly executed originals of this Amendment from the Company, the
Other Borrowers and the Required Lenders; and
<PAGE>
(b) such other documents, instruments and agreements as the Agent may
reasonably request.
3. Representations and Warranties of the Company. The Company and the Other
Borrowers hereby represent and warrant as follows:
(a) This amendment and the Credit Agreements as previously executed
and as amended hereby, constitute legal, valid and binding obligations of the
Company and the Other Borrower and are enforceable against the Company
and the Other Borrowers in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Company and the
Other Borrowers hereby reaffirm all covenants, representations and warranties
made in the Credit Agreement, to the extent the same are not amended hereby, and
agree that all such covenants, representations and warranties shall be deemed to
have been remade as of the effective date of this Amendment.
4. Reference to the Effect on the Credit Agreement
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," or words of like import shall mean and be a reference to the Credit
Agreement "herein" dated as of September 3, 1996, as amended previously and as
amended hereby.
(b) Except as specifically amended above, the Credit Agreement dated
as of September 3, 1996 and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full force and
effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent or any of the Lenders, nor constitute a waiver of
any provision of the Credit Agreement or any other documents, instruments and
agreements executed and/or delivered in connection therewith.
5. Costs and Expenses. The Company agrees to pay all reasonable costs,
fees and out-of-pocket expenses (including attorneys' fees and expenses charged
to the Agent) incurred by the Agent in connection with the preparation,
execution and enforcement of this Amendment.
6. Governing Law. This amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflict of law
provisions) of the State of Illinois.
7. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
2
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.
TOKHEIM CORPORATION
By: /s/ John Tomlinson
--------------------------------
Title: CFO
-----------------------------
SOGEN S.A., as a Borrower
By: /s/ John A. Negovitch
--------------------------------
Title: Director
-----------------------------
SOFITAM INTERNATIONAL S.A.,
as a Borrower
By: /s/ John A. Negovitch
--------------------------------
Title: Director
-----------------------------
SOFITAM EQUIPEMENT S.A.,
as a Borrower
By: /s/ John A. Negovitch
--------------------------------
Title: Director
-----------------------------
NBD BANK, N.A., as a Lender, an Issuing
Lender, a Swing Line Lender and as Agent
By: /s/ Robert Minardo
--------------------------------
Title: Vice President
-----------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
LONDON BRANCH, as a Lender with respect
to the French Borrowing Subsidiaries
By: /s/ A. A. Stevenson
--------------------------------
Title: Vice President
-----------------------------
3
<PAGE>
CREDIT LYONNAIS, CHICAGO BRANCH,
as a Lender
By: /s/ Matthew Kirat
--------------------------------
Title: Vice President
-----------------------------
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ Peter J. Dancy
--------------------------------
Title: Vice President
-----------------------------
BANK OF MONTREAL, LONDON BRANCH,
as a Lender with respect to the French
Borrowing Subsidiaries
By: /s/ Colin Ferguson
--------------------------------
Title: Director
-----------------------------
BANK OF AMERICA NT & SA (formerly
Bank of America Illinois), as a Lender
By: /s/ June Courtney
--------------------------------
Title: Vice President
-----------------------------
BANK OF AMERICA NT & SA, LONDON
BRANCH, as a Lender with respect to the
French Borrowing Subsidiaries
By: /s/ Jean-Paul Monier
--------------------------------
Title: Vice President
-----------------------------
SOCIETE GENERALE, as a Lender
By: /s/ C. Steven Coffman
--------------------------------
Title: Assistant Treasurer
-----------------------------
4
<PAGE>
Exhibit 4.5
AMENDMENT NO. 2 TO CREDIT AGREEMENT
Dated as of June 30, 1997
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT ("Amendment") is made as of
June 30, 1997 by and among TOKHEIM CORPORATION, an Indiana corporation (the
"Company"), certain of the Company's Subsidiaries listed on the signature pages
hereof (the "Other Borrowers"), the financial institutions listed on the
signature pages hereof (the "Lenders") and NBD BANK, N.A., in its individual
capacity as a Bank and as agent (the "Agent") on behalf of the Lenders under
that certain Credit Agreement dated as of September 3, 1996 by and among the
Company, the Other Borrowers, the Lenders and the Agent (as amended, the "Credit
Agreement"). Defined terms used herein and not otherwise defined herein shall
have the meaning given to them in the Credit Agreement.
WITNESSETH
WHEREAS, the Company, the Other Borrower, the Lenders and the Agent
are parties to the Credit Agreement;
WHEREAS, the Company has requested that the Lenders amend the Credit
Agreement in certain respects; and
WHEREAS, the Lenders and the Agent are willing to amend the Credit
Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company, the Other Borrowers, the Lenders and the Agent have agreed to the
following amendments to the Credit Agreement.
1. Amendments to Credit Agreement. Effective as of June 30, 1997 and
subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement is hereby amended as follows:
1.1. Article I of the Credit Agreement is hereby amended by amending
the definition of "Eligible Inventory" to insert "or Tokheim and Gasboy of
Canada Limited or Tokheim Limited" immediately after "the Borrowers or Domestic
Guarantors" in each of the three places in which it appears.
1.2 Article I of the Credit Agreement is hereby amended by amending
the definition of "Eligible Receivables" to insert "or Tokheim and Gasboy of
Canada Limited or Tokheim Limited" immediately after "Domestic Guarantors" in
each of the three places in which it appears and immediately after the phrase
"Domestic Guarantor" in the one place it appears in such definition.
1.3 Article I of the Credit Agreement is hereby amended by amending
the definition of "French Borrowing Base" to delete subsection (ii) now
contained therein and to substitute therefor the following:
<PAGE>
"(ii) eighty-five percent (85%) of the Gross Amount of Eligible
Receivables owed to Tokheim and Gasboy of Canada Limited or Tokheim
Limited and subject to security documents acceptable to the Agent plus
(iii) the lesser of (A) $6,000,000 and (B) fifty percent (50%) of the
Gross Amount of Eligible Inventory owned by either Tokheim and Gasboy
of Canada Limited or Tokheim Limited and subject to security documents
acceptable to the Agent."
1.4 Article I of the Credit Agreement is hereby amended by amending
the definition of "Gross Amount of Eligible Inventory" to delete the term
"French Borrowing Subsidiaries" now contained therein and to substitute therefor
the following:
"Tokheim and Gasboy of Canada Limited and Tokheim Limited".
1.5 Article I of the Credit Agreement is hereby amended by amending
the definition of "Gross Amount of Eligible Receivables" to insert "or Tokheim
and Gasboy of Canada Limited or Tokheim Limited" immediately after "French
Borrowing Subsidiaries" in subsection (b) thereof.
1.6 Section 6.30 of the Credit Agreement is hereby amended by adding
the following at the end thereof:
"except that the Company may purchase Senior Subordinated Notes in the
original principal amount of up to $15,000,000 provided the aggregate
amount paid for such Senior Subordinated Notes does not exceed
$18,000,000."
2. Conditions of Effectiveness. This Amendment shall become effective and
be deemed effective as of June 30, 1997, if, and only if, the Agent shall have
received each of the following:
(a) duly executed originals of this Amendment from the Company, the
Other Borrowers and the Required Lenders; and
(b) such other documents, instruments and agreements as the Agent may
reasonably request.
3. Representations and Warranties of the Company. The Company and the
Other Borrowers hereby represent and warrant as follows:
(a) This Amendment and the Credit Agreement as previously executed
and amended and as amended hereby, constitute legal, valid and binding
obligations of the Company and the Other Borrowers and are enforceable against
the Company and the Other Borrowers in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Company and the
Other Borrowers hereby reaffirm all covenants, representations and warranties
made in the Credit Agreement, to the extent the same are not amended hereby, and
agree that all such covenants, representations and warranties shall be deemed to
have been remade as of the effective date of this Amendment.
4. Reference to the Effect on the Credit Agreement.
2
<PAGE>
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Credit Agreement dated as of September 3, 1996, as amended previously and as
amended hereby.
(b) Except as specifically amended above, the Credit Agreement dated
as of September 3, 1996 and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full force and
effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent or any of the Lenders, nor constitute a waiver of
any provision of the Credit Agreement or any other documents, instruments and
agreements executed and/or delivered in connection therewith.
5. Costs and Expenses. The Company agrees to pay all reasonable costs,
fees and out-of-pocket expenses (including attorneys' fees and expenses charged
to the Agent) incurred by the Agent in connection with the preparation,
execution and enforcement of this Amendment.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflict of law provisions)
of the State of Illinois.
7. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
3
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.
TOKHEIM CORPORATION
By: /s/ John Tomlinson
------------------------------
Title: Chief Financial Officer
---------------------------
SOGEN S.A., as a Borrower
By: /s/ John A. Negovitch
------------------------------
Title: Director
---------------------------
SOFITAM INTERNATIONAL S.A.,
as a Borrower
By: /s/ John A. Negovitch
------------------------------
Title: Director
---------------------------
SOFITAM EQUIPEMENT S.A.,
as a Borrower
By: /s/ John A. Negovitch
------------------------------
Title: Director
---------------------------
NBD BANK, N.A., as a Lender, an Issuing
Lender, a Swing Line Lender and as Agent
By: /s/ Robert Minardo
------------------------------
Title: Vice President
---------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
LONDON BRANCH, as a Lender with respect
to the French Borrowing Subsidiaries
By: /s/ A. A. Stevenson
------------------------------
Title: Vice President
---------------------------
4
<PAGE>
CREDIT LYONNAIS, CHICAGO BRANCH,
as a Lender
By: /s/ Mathew Kirat
------------------------------
Title: Vice President
---------------------------
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ Jeffrey C. Nicholson
------------------------------
Title: Vice President
---------------------------
BANK OF MONTREAL, LONDON BRANCH,
as a Lender with respect to the French
Borrowing Subsidiaries
By:
------------------------------
Title:
---------------------------
BANK OF AMERICA ILLINOIS, as a Lender
By: /s/ June Courtney
------------------------------
Title: Vice President
---------------------------
BANK OF AMERICA NT & SA, LONDON
BRANCH, as a Lender with respect to the
French Borrowing Subsidiaries
By: /s/ Jean-Paul Monier
------------------------------
Title: Vice President
---------------------------
SOCIETE GENERALE, as a LenderBy:
By: /s/ C. Steve Coffman
------------------------------
Title: Assistant Treasurer
---------------------------
5
<PAGE>
Exhibit 4.6
AMENDMENT NO. 3 TO CREDIT AGREEMENT
Dated as of September 25, 1997
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT ("Amendment") is made as of
September 25, 1997 by and among TOKHEIM CORPORATION, an Indiana corporation
(the "Company"), certain of the Company's Subsidiaries listed on the signature
pages hereof (the "Other Borrowers"), the financial institutions listed on the
signature pages hereof (the "Lenders") and NBD BANK, N.A., in its individual
capacity as a Bank and as agent (the "Agent") on behalf of the Lenders under
that certain Credit Agreement dated as of September 3, 1996 by and among the
Company, the Other Borrowers, the Lenders and the Agent (as amended, the "Credit
Agreement"). Defined terms used herein and not otherwise defined herein shall
have the meaning given to them in the Credit Agreement.
WITNESSETH
WHEREAS, the Company, the Other Borrowers, the Lenders and the Agent
are parties to the Credit Agreement;
WHEREAS, the Company has requested that the Lenders amend the Credit
Agreement in certain respects; and
WHEREAS, the Lenders and the Agent are willing to amend the Credit
Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company, the Other Borrowers, the Lenders and the Agent have agreed to the
following amendments to the Credit Agreement.
1. Amendments to Credit Agreement. Effective as of September 25, 1997
and subject to the satisfaction of the conditions precedent set forth in Section
2 below, the Credit Agreement is hereby amended as follows:
1.1. Section 6.9 of the Credit Agreement is hereby amended by adding
the following new subsection (ix) at the end thereof:
"(ix) the sale of the stock of the Subsidiary of Sofitam
Equipement to which Sofitam Equipement contributed its Bulk Meter
business."
1.2 Section 6.17 of the Credit Agreement is hereby amended by adding
the following new subsection (vii) at the end thereof:
"(vii) acquisitions which satisfy all of the following
conditions:
(a) all acquisitions permitted by this subsection 6.17
(vii) shall require the Company or any of its Subsidiary to
pay (or assume
<PAGE>
Indebtedness) an aggregate amount for all such acquisitions
not in excess of $5,000,000 or the Equivalent Amount
thereof;
(b) no Default or Unmatured Default shall have occurred and
be continuing at the time of the closing of any such
acquisition or would result therefrom;
(c) the business being acquired is substantially similar,
related or incidental to the business of the Company and its
Subsidiaries;
(d) the acquisition is consummated pursuant to a negotiated
acquisition agreement on a non-hostile basis;
(e) any additional Collateral Documents considered
appropriate by the Agent are executed by the applicable
Person and, if appropriate, filed;
(f) prior to any such acquisition, the Company shall
deliver to the Agent (i) a certificate demonstrating to the
satisfaction of the Agent that after giving effect to the
acquisition on a pro forma basis, the Company and its
Subsidiaries will be in compliance with the financial
covenants in the Credit Agreement and (ii) such other
information as the Agent shall reasonably request."
2. Conditions of Effectiveness. This Amendment shall become effective and
be deemed effective as of September 25, 1997, if, and only if, the Agent shall
have received each of the following:
(a) duly executed originals of this Amendment from the Company, the
Other Borrowers and the Required Lenders;
(b) payment of an amendment fee of $5,000 to each of the Lenders
(other than The First National Bank of Chicago, London Branch, Bank of
Montreal, London Branch and Bank of America NT & SA, London Branch) that
executes this amendment and delivers its signature page to the Agent on or
before September 25, 1997; and
(c) such other documents, instruments and agreements as the Agent may
reasonably request.
3. Representations and Warranties of the Company. The Company and the
Other Borrowers hereby represent and warrant as follows:
(a) This Amendment and the Credit Agreement as previously executed
and amended and as amended hereby, constitute legal, valid and binding
obligations of the Company and the Other Borrowers and are enforceable against
the Company and the Other Borrowers in accordance with their terms.
2
<PAGE>
(b) Upon the effectiveness of this Amendment, the Company and the
Other Borrowers hereby reaffirm all covenants, representations and warranties
made in the Credit Agreement, to the extent the same are not amended hereby, and
agree that all such covenants, representations and warranties shall be deemed to
have been remade as of the effective date of this Amendment.
4. Reference to the Effect on the Credit Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Credit Agreement dated as of September 3, 1996, as amended previously and as
amended hereby.
(b) Except as specifically amended above, the Credit Agreement dated
as of September 3, 1996 and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full force and
effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent or any of the Lenders, nor constitute a waiver of
any provision of the Credit Agreement or any other documents, instruments and
agreements executed and/or delivered in connection therewith.
5. Costs and Expenses. The Company agrees to pay all reasonable costs,
fees and out-of-pocket expenses (including attorneys' fees and expenses charged
to the Agent) incurred by the Agent in connection with the preparation,
execution and enforcement of this Amendment.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflict of law provisions)
of the State of Illinois.
7. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
3
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.
TOKHEIM CORPORATION
By: /s/ John A. Negovetich
--------------------------------
Title: President & CFO
-----------------------------
SOGEN S.A., as a Borrower
By: /s/ John A. Negovetich
--------------------------------
Title: Director
-----------------------------
SOFITAM INTERNATIONAL S.A.,
as a Borrower
By: /s/ John A. Negovetich
--------------------------------
Title: Director
-----------------------------
SOFITAM EQUIPEMENT S.A.,
as a Borrower
By: /s/ John A. Negovetich
--------------------------------
Title: Director
-----------------------------
4
<PAGE>
CREDIT LYONNAIS, CHICAGO BRANCH,
as a Lender
By: /s/ Sandra E. Horwitz
--------------------------------
Title: Senior Vice President
-----------------------------
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ Peter Krawchuk
--------------------------------
Title: Vice President
------------------------------
BANK OF MONTREAL, LONDON BRANCH,
as a Lender with respect to the French
Borrowing Subsidiaries
By: /s/ Colin Ferguson
--------------------------------
Title: Director
-----------------------------
BANK OF AMERICA NT & SA (formerly
Bank of America Illinois), as a Lender
By: /s/ Jean-Paul Monier
--------------------------------
Title: Vice President
-----------------------------
5
<PAGE>
Exhibit 4.7
AMENDMENT NO. 4 TO CREDIT AGREEMENT
Dated as of December 29, 1997
THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT ("Amendment") is made as of
December 29, 1997 by and among TOKHEIM CORPORATION, an Indiana corporation (the
"Company"), certain of the Company's Subsidiaries listed on the signature pages
hereof (the "Other Borrowers"), the financial institutions listed on the
signature pages hereof (the "Lenders") and NBD BANK, N.A., in its individual
capacity as a Bank and as agent (the "Agent") on behalf of the Lenders under
that certain Credit Agreement dated as of September 3, 1996 by and among the
Company, the Other Borrowers, the Lenders and the Agent (as amended, the "Credit
Agreement"). Defined terms used herein and not otherwise defined herein shall
have the meaning given to them in the Credit Agreement.
WITNESSETH
WHEREAS, the Company, the Other Borrowers, the Lenders and the Agent
are parties to the Credit Agreement;
WHEREAS, the Company has requested that the Lenders amend the Credit
Agreement in certain respects; and
WHEREAS, the Lenders and the Agent are willing to amend the Credit
Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company, the Other Borrowers, the Lenders and the Agent have agreed to the
following amendments to the Credit Agreement.
1. Amendments to Credit Agreement. Effective as of December 29, 1997 and
subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement is hereby amended as follows:
1.1 Section 2.1.1(iii) of the Credit Agreement is hereby amended by
adding the following language at the end of the first sentence thereof:
"plus at any time between December 29, 1997 and June 30, 1998
$12,000,000 to the extent that the French Borrowing Base exceeds the
aggregate amount of all outstanding Loans and Swing Loans made to the
French Borrowing Subsidiaries together with all outstanding L/C
Obligations to the French Borrowing Subsidiaries (calculated without
duplication) by not less than $12,000,000 or the Dollar Amount
thereof."
1.2 Section 6.14 of the Credit Agreement is hereby amended by adding
the following at the end thereof:
<PAGE>
"Promptly after the Company's acquisition thereof, Management
Solutions, Inc. will guaranty the Obligations pursuant to a guaranty
substantially identical to those previously executed by the Guarantor
Subsidiaries."
1.3 Section 6.17 of the Credit Agreement is hereby amended by adding
the following new subsection (viii) at the end thereof:
"(viii) the acquisition of Management Solutions, Inc."
2. Conditions of Effectiveness. This Amendment shall become effective and
be deemed effective as of December 29, 1997, if, and only if, the Agent shall
have received each of the following:
(a) duly executed originals of this Amendment from the Company, the
Other Borrowers and the Required Lenders;
(b) payment of the fee as provided in the Agent's letter to the
Lenders dated December 19, 1997; and
(c) such other documents, instruments and agreements as the Agent may
reasonably request.
3. Representations and Warranties of the Company. The Company and the
Other Borrowers hereby represent and warrant as follows:
(a) This Amendment and the Credit Agreement as previously executed
and amended and as amended hereby, constitute legal, valid and binding
obligations of the Company and the Other Borrowers and are enforceable against
the Company and the Other Borrowers in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Company and the
Other Borrowers hereby reaffirm all covenants, representations and warranties
made in the Credit Agreement, to the extent the same are not amended hereby, and
agree that all such covenants, representations and warranties shall be deemed to
have been remade as of the effective date of this Amendment.
4. Reference to the Effect on the Credit Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Credit Agreement dated as of September 3, 1996, as amended previously and as
amended hereby.
(b) Except as specifically amended above, the Credit Agreement dated
as of September 3, 1996 and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full force and
effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent or any of
2
<PAGE>
the Lenders, nor constitute a waiver of any provision of the Credit Agreement or
any other documents, instruments and agreements executed and/or delivered in
connection therewith.
5. Costs and Expenses. The Company agrees to pay all reasonable costs,
fees and out-of-pocket expenses (including attorneys' fees and expenses charged
to the Agent) incurred by the Agent in connection with the preparation,
execution and enforcement of this Amendment.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflict of law provisions)
of the State of Illinois.
7. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. Counterparts. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.
TOKHEIM CORPORATION
By: /s/ William D. Shank
-----------------------------------
Title: Vice President
--------------------------------
SOGEN S.A., as a Borrower
By: /s/ John A. Negovitch
-----------------------------------
Title: Director
--------------------------------
SOFITAM INTERNATIONAL S.A.,
as a Borrower
By: /s/ John A. Negovitch
-----------------------------------
Title: Director
--------------------------------
SOFITAM EQUIPEMENT S.A.,
as a Borrower
By: /s/ John A. Negovitch
-----------------------------------
Title: Director
--------------------------------
3
<PAGE>
NBD BANK, N.A., as a Lender, an Issuing
Lender, a Swing Line Lender and as Agent
By: /s/ John Otteson
-----------------------------------
Title: Vice President
--------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
LONDON BRANCH, as a Lender with respect
to the French Borrowing Subsidiaries
By:
-----------------------------------
Title:
--------------------------------
CREDIT LYONNAIS, CHICAGO BRANCH,
as a Lender
By: /s/ Sandra E. Horwitz
-----------------------------------
Title: Senior Vice President
--------------------------------
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ Peter Krawchuk
-----------------------------------
Title: Vice President
--------------------------------
BANK OF MONTREAL, LONDON BRANCH,
as a Lender with respect to the French
Borrowing Subsidiaries
By:
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA NT & SA (formerly Bank of
America Illinois) as a Lender
By: /s/ Paul A. O'Mara
-----------------------------------
Title: Senior Vice President
--------------------------------
BANK OF AMERICA NT & SA, LONDON
BRANCH, as a Lender with respect to the
French Borrowing Subsidiaries
By: /s/ P. Marechal
-----------------------------------
Title: Vice President
--------------------------------
SOCIETE GENERALE, as a Lender
By: /s/
-----------------------------------
Title: Vice President
--------------------------------
4
<PAGE>
[LOGO] EXHIBIT 10.4
EMPLOYMENT AGREEMENT
for CORPORATE OFFICERS
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 10TH day of
DECEMBER, 1997, by and between Tokheim Corporation, an Indiana Corporation
("Company") and DOUGLAS K. PINNER ("Employee").
RECITALS
A. Company acknowledges and recognizes the value of Employee's services
and deems it necessary and desirable to retain Employee's full-time services.
B. Employee and Company desire to embody the terms and conditions of
Employee's employment in a written agreement which will supersede all prior
employment agreements, whether written or oral.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
EMPLOYMENT. Company agrees to employ Employee, and the Employee agrees to
serve Company, on a full time basis in the capacity of CHAIRMAN, PRESIDENT &
CEO, subject to the terms and conditions of this Agreement.
1. TERM. Employee's employment shall commence on the effective date of
this Agreement and continue for an indefinite period and until such
time as it may be terminated by one or both of the parties as provided
below.
2. DUTIES.
2.1 During the term of this Agreement, Employee shall have such
duties and responsibilities and shall supply such services in the carrying
out of such duties and responsibilities as Company, through its Board of
Directors ("Board"), any duly appointed Committee of the Board, the Chief
Executive Officer of the Company (the "Chief Executive Officer"), or such
other Executive Officers as may be designated by the Board, shall, from
time to time, direct. Company specifically retains the right to alter or
amend the position, responsibilities, duties or services to be performed by
Employee in such manner as to it shall be deemed in the best interests of
Company. During the term of
<PAGE>
employment, Employee shall devote his best efforts and skills to the
business interests of Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with
Company's business, or which may in any way interfere with his employment,
without the consent of Company.
2.2 Employee agrees that, during the term of his employment, any and
all inventions and discoveries, whether or not patentable, which Employee
may conceive or make (collectively, "Inventions"), either alone or in
conjunction with others and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, promptly
execute and assign any and all applications, assignments and other
instruments which Company shall deem necessary in order to apply for and
obtain letters patent of the United States and foreign countries for any
Inventions, and in order to assign and convey to Company, or to Company's
nominee the sole and exclusive right, title and interest in and to any
Inventions or any applications or patents thereon. As promptly as known or
possessed by Employee, Employee shall disclose to Company all information
with respect to any Invention. Employee further agrees that, during the
term of employment, any trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted (collectively, "Marks"), originated by Employee, alone or in
conjunction with others, and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, take all
action necessary to register or otherwise perfect Company's interest in and
to any Marks.
3. COMPENSATION. During the term of this Agreement, Company shall
compensate Employee for his services as follows:
3.1 Employee shall be entitled to a monthly base salary of
$33,583.34 (the "Base Salary"). Base Salary will be reviewed
periodically. Base Salary shall be payable in semi-monthly or monthly
installments, in accordance with the policy of Company at the time of
such payments.
3.2 Employee shall be eligible for such officer's bonus program
as may from time to time be made available and applicable to Employee.
Provided, however, that nothing in this Agreement shall prevent
Company, through its Board, any duly appointed Committees of the Board
or such other Executive Officers of the Company as the Board may
designate, from altering or amending the terms, eligibility, or other
provisions of the officers bonus program, or from eliminating or
adding any other bonus programs as it shall from time to time deem
appropriate and in the interests of Company.
3.3 Employee shall be granted participation in all employee
benefit plans applicable to Employee's position with Company,
including, but not limited to, medical plans, disability plans, life
insurance plans, savings plans, stock option
2
<PAGE>
plans and such other plans as may from time to time be made available
and applicable to Employee (collectively, "Plans"), consistent with
the policies of Company and the terms and conditions of the Plans.
Nothing in this Agreement shall be deemed to alter the terms and
conditions of any Plans or the policy of Company with respect to any
Plans, and nothing in this Agreement shall be deemed to entitle
Employee to any rights in any Plan which would not otherwise be made
available to Employee pursuant to the terms, conditions and provisions
of the Plans. Further, nothing in this Agreement shall prevent
Company, through its Board, any duly appointed Committees of the Board
or such other Executive Officers of the Company as the Board may
designate, from altering or amending the terms, eligibility, or other
provisions of the Plan, or from eliminating or adding any other Plan
as it shall from time to time deem appropriate and in the interests of
Company.
3.3.1 Except as may otherwise be expressly provided,
Employee shall be granted, upon termination of this Agreement,
such rights as may be available to him pursuant to any Plan or
Plans then in effect.
4. TERMINATION. Either Company or Employee may terminate this Agreement
upon providing written notice to the other.
4.1 By the Company. In the event this Agreement is terminated with
cause (as defined below), Employee shall be entitled to no severance pay
and 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.
4.1.1 With Cause. For purposes of this Agreement, the
termination of this Agreement shall be deemed to have been made with
cause only upon the occurrence of one or more of the following
circumstances:
4.1.1.1 Employee engages in any breach of fiduciary duty,
act of dishonesty, or theft involving Company;
4.1.1.2 Employee is convicted of a felony;
4.1.1.3 Employee discloses Confidential Information in
violation of section 7, below, or competes with Company
in violation of section 8, below;
4.1.1.4 Employee refuses or fails to carry out the duties
which may have been assigned to him; or
4.1.1.5 Employee continues to violate any written Company
policy after written notice by Company of the violation.
3
<PAGE>
4.1.2 Without Cause. In the event Company terminates this
Agreement without cause, Employee shall be entitled to severance pay
equal to 36 months of Employee's Base Salary in effect at the time of
the termination, payable at the same interval as his salary at the
time of the termination.
4.1.2.1 Employee shall have no obligation to mitigate
damages by seeking other employment.
4.1.2.2 The right to severance pay under this section
shall vest upon notice of termination and shall not be
affected by Employee's subsequent death or disability.
4.2 By Employee. In the event Employee terminates this Agreement,
Employee shall be entitled to no severance pay and shall be entitled only
to such other rights as may be provided in this Agreement or as may
otherwise be available to him in law or equity.
4.3 Death or disability. In the event Employee dies or becomes
permanently disabled during the term of this Agreement or any extension of
it, this Agreement shall terminate upon the date of such death or permanent
disability. In the event this Agreement terminates by Employee's death or
disability, Company shall pay Employee's pro-rata Base Salary through the
termination date, and Employee shall be entitled to no severance pay.
Notwithstanding anything to the contrary, in the event this Agreement
terminates as a result of Employee's death or disability, Employee shall be
entitled to such continuing benefits as may be provided in any Plan or by
law.
5. RETURN OF COMPANY PROPERTY. Upon termination of this Agreement for any
reason, Employee shall immediately surrender to Company, in the same condition
as existed prior to termination of this Agreement, all property of Company in
his possession or control, including Confidential Information (as defined
below), computers, files, and any other property owned by Company. Employee and
Company acknowledge and agree that the damages suffered as a result of the
breach of this section would be difficult to ascertain. Accordingly, the
parties agree that Company shall be entitled to liquidated damages in the amount
of $5,000 in the event of a breach by Employee of this section.
6. CHANGE IN CONTROL.
6.1 Benefits payable. Notwithstanding anything in this Agreement to
the contrary, Employee shall be entitled to the termination benefits set forth
below if this Agreement is terminated by a "Triggering Event." The benefits set
forth below shall be in addition to any other benefits which may have accrued to
Employee during the term of employment; provided, however, that the provisions
regarding direct severance pay shall be exclusive and shall replace any other
rights of Employee to direct severance payments as set forth in section 5.
6.1.1 Triggering Event. For purposes of this Agreement, a
Triggering Event shall be deemed to have occurred if:
4
<PAGE>
6.1.1.1 there is a Change in Control (as defined below); and
6.1.1.2 within 36 months after the Change in Control:
(a) Company terminates this Agreement without cause, or
(b) (1) Employee terminates this Agreement, and
(2) in combination with the Change in Control
there has been one or more of the following:
(i) a material change of Employee's job
responsibilities,
(ii) a greater than 20% reduction of Employee's
Base Salary or benefits, or
(iii) the relocation of Employee's primary office
location to a distance greater than 50 miles
from the current office location.
6.1.2 Change in Control. As used in this Agreement, a "Change in Control"
shall be deemed to have occurred if there has been one or more of
the following:
6.1.2.1 any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended [the
"Exchange Act"]), other than a trustee or fiduciary holding
securities under an employee benefit plan of Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Company representing
twenty percent (20%) or more of the combined voting power of
Company's then outstanding voting securities;
6.1.2.2 there is a merger or consolidation of Company in
which Company is not the surviving corporation; or
6.1.2.3 the business or businesses of Company for which Employee's
services are principally performed is disposed of by Company
pursuant to a partial or complete liquidation of Company, a sale of
assets (including stock of a subsidiary) of Company, or otherwise.
6.2 Benefits. In the event this Agreement is terminated by a
Triggering Event, Employee shall be entitled to the following:
5
<PAGE>
6.2.1 Severance pay in an amount equal to 299% of Employee's
"annualized includible compensation for the base period," within the
meaning of section 280(G), of the Internal Revenue Code, as amended.
Notwithstanding anything herein to the contrary, any amounts payable
pursuant to this subparagraph shall be reduced by the amount of any
disability benefits paid to Employee.
6.2.1.1 Payments under this section shall be made over 36
months in the same interval as Employee's salary as the time of
termination of this Agreement.
6.2.1.2 Employee shall have no obligation to mitigate damages
by seeking other employment.
6.2.2 Medical insurance, life insurance and disability insurance
benefits from Company on terms comparable to the benefits provided by Company to
Employee as of the date of the termination of this Agreement for 36 months or
until Employee shall begin alternative employment.
6.2.3 Deferred Compensation. Employee, as a participant in the
Company's Deferred Compensation Plan, shall receive a payment equal to, but not
less than, the Company match said Employee received in the year prior to the
takeover, or a full year prior to Employee's termination, whichever is later.
6.3 Notwithstanding anything herein to the contrary, in the event
Company reasonably determines that any payment or benefit provided under
this section is an "excess parachute payment" within the meaning of section
280(G) of the Internal Revenue Code, as amended, Company shall be entitled
to limit the total of all payments or compensation to Employee to the
maximum amount payable by Company that would not constitute such "excess
parachute payment."
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, Confidential Information is defined as trade secrets (as defined in
Indiana Code 24-2-3-2, as amended), software programs, customer reports,
customer lists, vendor reports, vendor lists, and other information regarding
customers and vendors utilized by Company in the course of its business, and any
information regarding Company's present or future business plans.
7.1 Employee acknowledges his position with Company will expose
Employee to certain Confidential Information of Company; and that
Confidential Information constitutes a valuable, special and unique asset
of Company's business. Employee will not, during or at any time after the
term of his employment, disclose any Confidential Information acquired by
Employee during his employment, to any person, firm, corporation,
association, or other entity for any purpose, or use Confidential
Information for any purpose, other than for the performance of services for
Company.
6
<PAGE>
7.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section, Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction, including reasonable attorney's fees. Company shall also be
permitted to pursue any other available remedies available for such breach
or threatened breach, including the recovery of damages, costs and
attorney's fees from Employee.
7.3 Employee acknowledges that all Confidential Information is the
sole and exclusive property of Company. Employee shall surrender
possession of all Confidential Information, including documents, computers,
software, disks, tape or video recording, or any other written, recorded,
or graphic matter, however produced or reproduced, containing Confidential
Information to Company upon any suspension or termination of Employee's
employment. If, after the suspension or termination of Employee's
employment, Employee becomes aware of any Confidential Information in his
possession, Employee shall immediately surrender possession of the
Confidential Information to Company.
8. RESTRICTIVE COVENANT. For purposes of this Agreement, "Competing
Business" is defined as Gilbarco, Wayne, Schlumberge, Bennett, and Tatsuno, and
their respective affiliates and subsidiaries, both domestic and international,
and any other company engaged in the petroleum dispensing manufacturing business
or point of sale equipment business related to petroleum dispensing.
8.1 Employee hereby covenants and agrees that, for the greater of 36
months after termination of this Agreement, or such time as Employee is
receiving any severance pay from Company (the "Restricted Period") Employee
will not, directly or indirectly own, manage, operate, control, be
controlled by, participate in, be employed by, or be connected in any
manner with the ownership, management, operation or control of any
Competing Business. Employee further covenants and agrees that he will not
during the Restricted Period contact or attempt to contact, either directly
or indirectly, any customers of Company as they may exist at the time of
termination of Employee's employment for the purpose of soliciting such
customer's business for or on behalf of any Competing Business. Employee
specifically acknowledges and agrees that Company's business is
international in scope and that the restriction as contained in this
section is intended to cover activity by Employee both domestically and
internationally. Employee further stipulates, covenants and agrees that a
reasonable geographic restriction, as that term is used and defined by
Indiana law, on Employee's activity's under this section is the entire
world.
8.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section , Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction, including reasonable attorney's fees. Company shall also be
permitted to pursue any other
7
<PAGE>
available remedies available for such breach, including the recovery of
damages, costs and attorney's fees from Employee.
8.3 If a court of competent jurisdiction or any arbitrator determines
that any provision or restriction in this section is unreasonable or
unenforceable, the court or arbitrator shall modify such restriction or
provision so that the agreement then becomes an enforceable restriction of
the activities of Employee.
9. FORFEITURE OF BENEFITS. In the event Employee is breaching his
obligations under either section 7 or section 8 of this Agreement, Employee
shall forfeit all future payments or compensation payable or provided by
Company.
10. NO CONTINUING OBLIGATION. Employee acknowledges and agrees that this
Agreement does not grant Employee the right to continue as an Employee of
Company as an executive or in any other capacity.
11. NO TRUST ESTABLISHED. All payments provided under this Agreement
shall be paid in cash from the general funds of Company and no separate or
special fund has been or shall be established and no segregation of assets has
been or shall be made to assure payment. Employee shall have no right, title or
interest in or to any investments or other assets which Company may acquire or
obtain to assist in meeting its obligations under this Agreement. 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 Company and Employee or any other person. The right of any
person to receive payments from Company under this Agreement shall be no greater
than the rights of a general unsecured creditor of Company.
12. TAXES, ETC. Company may withhold from any payments or benefits
provided under this Agreement:
12.1 all federal, state, city or other taxes as required pursuant to
any law or governmental regulation or ruling; and
12.2 any amounts owed by Employee to Company for any reason at the
time of the termination of this Agreement.
13. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable
by Employee without Company's prior written consent; provided, however, that
nothing in this paragraph shall preclude Employee from designating a beneficiary
to receive any benefit payable upon his death, or preclude Employee's executors,
administrators or other legal representatives of his estate from assigning any
rights hereunder to the person or persons entitled thereto. Further, 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.
8
<PAGE>
14. ARBITRATION. Employee and Company recognize and agree that the
arbitration of disputes provides mutual advantages in terms of facilitating the
fair and expeditious resolution of disputes. In consideration of these mutual
advantages, the parties agree as follows:
14.1 Scope of Arbitration. The parties will submit to arbitration,
in accordance with these provisions, any and all disputes either party
may have arising from or related to this Agreement, and any other
disputes between the parties arising from or related to their
employment relationship, including but not limited to, any disputes
regarding alleged common law tort violations or violations of state or
federal statutory rights. The parties further agree that the
arbitration process set forth below shall be the exclusive means for
resolving all disputes made subject to arbitration but that no
arbitrator shall have authority to determine whether disputes fall
within the scope of these arbitration provisions.
14.2 Governing Law. Employee and Company agree that the
interpretation and enforcement of the arbitration provisions of this
Agreement, including any right to appeal, shall be governed by the
Indiana Uniform Arbitration Act, I.C. 34-4-2-1, et seq.
14.3 Time Limits on Submitting Disputes. Employee and Company
acknowledge and agree that one of the objectives of this arbitration
provision is to resolve disputes expeditiously, as well as fairly, and
that it is the obligation of both parties, to those ends, to raise any
disputes subject to arbitration under this Agreement in an expeditious
manner. Accordingly, the parties agree to waive all statutes of
limitations that might otherwise be applicable, and agree further
that, as to any dispute subject to arbitration pursuant to this
Agreement, notice of a demand for arbitration must be provided to the
other party:
14.3.1 In the event of a dispute arising out of a termination
of this Agreement, within 6 months of the date of termination;
14.3.2 In the event of a breach of section or section of
this Agreement, within 4 months after the Chief Executive Officer
has actual knowledge of the breach; or
14.3.3 In the event of any other dispute, within 3 months
after the dispute arises.
Failure to demand arbitration on claims within these time limits is
intended to, and shall to the furthest extent permitted by law, be a waiver and
release with respect to such claims, and, in the absence of a timely submitted
written demand for arbitration, an arbitrator has no authority to resolve the
disputes or render an award.
14.4 Availability of Provisional Relief. Notwithstanding anything herein
to the contrary, nothing in this section shall prevent Company or Employee from
obtaining injunctive
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relief from a court of competent jurisdiction to enforce the obligations of
sections and for which either party may require provisional relief pending a
decision on the merits by the arbitrator.
14.5 American Arbitration Association Rules Apply as Modified Herein. Any
arbitration of disputes shall be conducted under the Model Employment Procedures
of the American Arbitration Association (AAA), as modified in this Agreement.
14.6 Invoking Arbitration. Either party may invoke the arbitration
procedures described in this Agreement by written notice of a demand for
arbitration (an "Arbitration Notice"). An Arbitration Notice shall contain a
statement of the matter to be arbitrated in sufficient detail to establish the
timeliness of the demand. The parties shall then have 10 business days within
which they may identify a mutually agreeable arbitrator. After the 10-day
period has expired, the parties shall prepare and submit to the AAA a joint
submission, with each party to contribute half of the appropriate administrative
fee. In their submission to the AAA, the parties shall either designate a
mutually acceptable arbitrator or request a panel of arbitrators from the AAA
according to the procedure described in section , below.
14.7 Arbitrator Selection. In the event the parties cannot agree upon an
arbitrator within 10 business days after the Arbitration Notice is received,
their joint submission to the AAA shall request a panel of seven arbitrators
from the joint Labor and Commercial Arbitration Panels who are practicing
attorneys with professional experience in the field of labor and/or employment
law and the parties shall attempt to select an arbitrator from the panel
according to AAA procedures. If the parties remain unable to select an
arbitrator, they shall request from AAA a panel of three comparably qualified
arbitrators from which the AAA shall reject the least preferred candidate of
each party and select the candidate with the highest joint ranking of the
parties.
In the event of the death or disability of an arbitrator, the parties shall
select a new arbitrator as provided above. The substitute arbitrator shall have
the power to determine the extent to which he or she shall act on the record
already made in arbitration.
14.8 Prehearing Procedures. Upon accepting assignment as arbitrator, the
arbitrator shall promptly conduct a preliminary hearing at which each party
shall be entitled to submit a brief statement of their respective positions, and
at which the arbitrator shall establish a timetable for prehearing activities
and the conduct of the hearing, and may address initial requests from the
parties for prehearing disclosure of information. At the preliminary hearing
and/or thereafter, the arbitrator shall have the discretion and authority to
order, upon request or otherwise, the prehearing disclosure of information to
the parties. Such disclosure may include, without limitation, production of
requested documents, exchange of witness lists and summaries of the testimony of
proposed witnesses, and examination by deposition of potential witnesses, to the
end that information disclosure shall be conducted in the most expeditious and
cost-effective manner possible, and shall be limited to that which is relevant
and for which each party has a substantial, demonstrable need. The arbitrator
shall further have the authority, upon request or otherwise, to conference with
the parties or their designated representatives concerning any matter, and to
set or modify timetables for all aspects of the arbitration proceeding.
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The arbitrator may award either party its reasonable attorney's fees
and costs, including reasonable expenses associated with production of witnesses
or proof, upon a finding that the other party (a) engaged in unreasonable delay,
(b) failed to comply with the Arbitrator's discovery order, or (c) failed to
comply with requirements of confidentiality hereunder. The arbitrator shall also
have the authority, upon request or otherwise, to entertain and decide motions
for prehearing judgment.
14.9 Stenographic Record. There shall be a stenographic record of
the arbitration hearing, unless the parties agree to record the proceedings by
other reliable means. The costs of recording the proceedings shall be borne
equally by the parties.
14.10 Location. Unless otherwise agreed by the parties, arbitration
hearings shall take place in Fort Wayne, Allen County, Indiana at a mutually
agreeable place or, if no agreement can be reached, at a place designated by the
AAA.
14.11 The Hearing. At any hearing, the party bearing the burden of
proof according to the governing substantive law shall present its evidence
first.
14.12 Posthearing Briefs. After the close of the arbitration
hearing, and on any issue concerning prehearing procedures, the arbitrator shall
allow the parties to submit written briefs.
14.13 Confidentiality. All arbitration proceedings hereunder shall
be confidential. Neither party shall disclose any information about the evidence
produced by the other in the arbitration proceeding or about documents produced
by the other in connection with the proceeding, except in the course of a
judicial, regulatory or arbitration proceeding, or as may be requested by
governmental authority. Before making any disclosure permitted by the preceding
sentence, the party shall give the other party reasonable written notice of the
intended disclosure and an opportunity to protect its interests. Expert
witnesses and stenographic reporters shall sign appropriate nondisclosure
agreements.
14.14 Costs. As to any disputes arising from the termination of
the Agreement, each party shall be responsible for its costs, including
attorney's fees, incurred in any arbitration, and the arbitrator shall not have
authority to include all or any portion of said costs and fees in his or her
award. The costs and fees of the arbitrator and of the AAA shall be borne
equally by the parties.
14.14.1 Notwithstanding anything herein to the contrary, Company
shall be entitled to recover its costs and attorney's fees incurred in
enforcing the provisions of section 7 and section 8.
14.15 Remedies. Subject to the provisions of section , the
arbitrator shall have authority to award any remedy or relief that a federal or
state court situated in the State of Indiana could grant in conformity to
applicable law.
14.16 Law Governing the Arbitrator's Award. In rendering an award,
the arbitrator shall determine the rights and obligations of the parties,
including employment
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discrimination issues, according to federal law and the substantive law of the
State of Indiana (excluding conflicts of laws principles) as though the matter
were before a court of law.
14.17 Written Awards and Enforcement. Any arbitration award shall be
accompanied by a written statement containing a summary of the issues in
controversy, a description of the award, and an explanation of the reasons for
the award. The parties agree that a competent court shall enter judgment upon
the award of the arbitrator, provided it is in conformity with the terms of this
Agreement.
14.18 Conflict in Procedure. If any part of this arbitration
procedure is in conflict with any mandatory requirement of applicable law, the
mandatory requirement shall govern, and the procedure set forth above shall be
reformed and construed to the maximum extent possible in conformance with the
applicable law. The procedure shall remain otherwise unaffected and
enforceable.
15. MISCELLANEOUS.
15.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and all prior negotiations and
agreements, whether written or oral, are merged into this Agreement.
15.2 Severability. If any provision of this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect any other provision or part of a provision of this Agreement;
but this Agreement shall be reformed and construed as if such
provision had never been contained in it, and any such provision shall
be reformed so that it would be valid, legal and enforceable to the
maximum extent permitted.
15.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which counterparts collectively shall constitute one document
representing the agreement among the parties.
15.4 Binding Agreement. This Agreement shall be binding upon
and shall inure to the benefit of the parties to this Agreement and
their respective successors and assigns.
15.5 Amendment. This Agreement may not be amended, discharged,
terminated, or changed orally; and any such proposed amendment,
discharge, termination, or change shall be in writing and signed by
the party against whom such amendment, change, discharge, or
termination is sought.
15.6 Waiver of Breach. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach; and no waiver shall be valid unless
it is in writing and is signed by the party against whom such waiver
is sought.
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15.7 Extension of Noncompete Period. The periods of time during
which Employee is prohibited from engaging in such business practices
pursuant to this Agreement shall be extended by any length of time
during which Employee is in breach of any of such covenants.
15.8 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
15.9 Survival. The provisions and restrictions contained in
sections and shall survive the termination of this Agreement and
Employee's employment with Company.
15.10 Attorney Fees and Expenses. Except as expressly provided
in this Agreement or by statute and ordered by an arbitrator or court
in accordance with the provisions of this Agreement, no party shall be
entitled to recover from the other party the reasonable attorney's
fees, costs and expenses incurred as a result of any action to enforce
any of the rights under this Agreement.
15.11 Full Disclosure. Employee acknowledges that Employee's
employment with Company is conditioned upon the execution of this
Agreement. Employee represents and acknowledges that Employee has
carefully reviewed all of the terms and conditions in this Agreement,
and has been advised of Employee's right to seek independent legal
counsel prior to execution of this Agreement.
15.12 Notices. Any notice, request, or other communication
required or permitted under this Agreement shall be in writing. Notice
shall be deemed to have been given only if personally delivered or
sent by registered or certified mail, return receipt requested. Any
notice so mailed shall be deemed given on the postmark date. Failure
or refusal to accept or receive any notice or communication shall not
affect the validity of the notice. All such notices shall be given to
the respective parties at the addresses designated below, or to such
other address as a party may designate in a like manner.
If to Company: TOKHEIM CORPORATION
c/o TIMOTHY EASTOM, VP HUMAN RESOURCES
P.O. BOX 360
FORT WAYNE, IN 46801
If to Employee: DOUGLAS K. PINNER
13701 SQUAWCREEK
FORT WAYNE, IN 46804
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IN WITNESS WHEREOF, the parties have entered into this Agreement the date
first written above.
COMPANY EMPLOYEE
TOKHEIM CORPORATION
/s/ WALTER S. AINSWORTH /s/ DOUGLAS K. PINNER
- -------------------------------- -----------------------------------
WALTER S. AINSWORTH, CHAIRMAN DOUGLAS K. PINNER
COMPENSATION COMMITTEE
/s/ NORMAN L. ROELKE
- ---------------------------------
Attest: NORMAN L. ROELKE
Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL
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[TOKHEIM LOGO] Exhibit 10.5
EMPLOYMENT AGREEMENT
for CORPORATE OFFICERS
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 23rd day of
DECEMBER, 1997, by and between Tokheim Corporation, an Indiana Corporation
("Company") and JOHN A. NEGOVETICH ("Employee").
RECITALS
A. Company acknowledges and recognizes the value of Employee's services
and deems it necessary and desirable to retain Employee's full-time services.
B. Employee and Company desire to embody the terms and conditions of
Employee's employment in a written agreement which will supersede all prior
employment agreements, whether written or oral.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
EMPLOYMENT. Company agrees to employ Employee, and the Employee agrees to
serve Company, on a full time basis in the capacity of PRESIDENT, TOKHEIM, NORTH
AMERICA, subject to the terms and conditions of this Agreement.
1. TERM. Employee's employment shall commence on the effective date of
this Agreement and continue for an indefinite period and until such
time as it may be terminated by one or both of the parties as provided
below.
2. DUTIES.
2.1 During the term of this Agreement, Employee shall have such
duties and responsibilities and shall supply such services in the carrying
out of such duties and responsibilities as Company, through its Board of
Directors ("Board"), any duly appointed Committee of the Board, the Chief
Executive Officer of the Company (the "Chief Executive Officer"), or such
other Executive Officers as may be designated by the Board, shall, from
time to time, direct. Company specifically retains the right to alter or
amend the position, responsibilities, duties or services to be performed by
Employee in such
<PAGE>
manner as to it shall be deemed in the best interests of Company. During
the term of employment, Employee shall devote his best efforts and skills
to the business interests of Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with
Company's business, or which may in any way interfere with his employment,
without the consent of Company.
2.2 Employee agrees that, during the term of his employment, any and
all inventions and discoveries, whether or not patentable, which Employee
may conceive or make (collectively, "Inventions"), either alone or in
conjunction with others and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, promptly
execute and assign any and all applications, assignments and other
instruments which Company shall deem necessary in order to apply for and
obtain letters patent of the United States and foreign countries for any
Inventions, and in order to assign and convey to Company, or to Company's
nominee the sole and exclusive right, title and interest in and to any
Inventions or any applications or patents thereon. As promptly as known or
possessed by Employee, Employee shall disclose to Company all information
with respect to any Invention. Employee further agrees that, during the
term of employment, any trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted (collectively, "Marks"), originated by Employee, alone or in
conjunction with others, and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, take all
action necessary to register or otherwise perfect Company's interest in and
to any Marks.
3. COMPENSATION. During the term of this Agreement, Company shall
compensate Employee for his services as follows:
3.1 Employee shall be entitled to a monthly base salary of
$20,066.67 (the "Base Salary"). Base Salary will be reviewed
periodically. Base Salary shall be payable in semi-monthly or monthly
installments, in accordance with the policy of Company at the time of
such payments.
3.2 Employee shall be eligible for such officer's bonus program
as may from time to time be made available and applicable to Employee.
Provided, however, that nothing in this Agreement shall prevent
Company, through its Board, any duly appointed Committees of the Board
or such other Executive Officers of the Company as the Board may
designate, from altering or amending the terms, eligibility, or other
provisions of the officers bonus program, or from eliminating or
adding any other bonus programs as it shall from time to time deem
appropriate and in the interests of Company.
3.3 Employee shall be granted participation in all employee
benefit plans applicable to Employee's position with Company,
including, but not limited
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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 Employee (collectively,
"Plans"), consistent with the policies of Company and the terms and
conditions of the Plans. Nothing in this Agreement shall be deemed to
alter the terms and conditions of any Plans or the policy of Company
with respect to any Plans, and nothing in this Agreement shall be
deemed to entitle Employee to any rights in any Plan which would not
otherwise be made available to Employee pursuant to the terms,
conditions and provisions of the Plans. Further, nothing in this
Agreement shall prevent Company, through its Board, any duly appointed
Committees of the Board or such other Executive Officers of the
Company as the Board may designate, from altering or amending the
terms, eligibility, or other provisions of the Plan, or from
eliminating or adding any other Plan as it shall from time to time
deem appropriate and in the interests of Company.
3.3.1 Except as may otherwise be expressly provided,
Employee shall be granted, upon termination of this Agreement,
such rights as may be available to him pursuant to any Plan or
Plans then in effect.
4. TERMINATION. Either Company or Employee may terminate this Agreement
upon providing written notice to the other.
4.1 By the Company. In the event this Agreement is terminated with
cause (as defined below), Employee shall be entitled to no severance pay
and 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.
4.1.1 With Cause. For purposes of this Agreement, the
termination of this Agreement shall be deemed to have been made with
cause only upon the occurrence of one or more of the following
circumstances:
4.1.1.1 Employee engages in any breach of fiduciary duty,
act of dishonesty, or theft involving Company;
4.1.1.2 Employee is convicted of a felony;
4.1.1.3 Employee discloses Confidential Information in
violation of section 7 , below, or competes with Company in
violation of section 8, below;
4.1.1.4 Employee refuses or fails to carry out the duties
which may have been assigned to him; or
4.1.1.5 Employee continues to violate any written Company
policy after written notice by Company of the violation.
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<PAGE>
4.1.2 Without Cause. In the event Company terminates this
Agreement without cause, Employee shall be entitled to severance pay
equal to 18 months of Employee's Base Salary in effect at the time of
the termination, payable at the same interval as his salary at the
time of the termination.
4.1.2.1 Employee shall have no obligation to mitigate
damages by seeking other employment.
4.1.2.2 The right to severance pay under this section
shall vest upon notice of termination and shall not be
affected by Employee's subsequent death or disability.
4.2 By Employee. In the event Employee terminates this Agreement,
Employee shall be entitled to no severance pay and shall be entitled only
to such other rights as may be provided in this Agreement or as may
otherwise be available to him in law or equity.
4.3 Death or disability. In the event Employee dies or becomes
permanently disabled during the term of this Agreement or any extension of
it, this Agreement shall terminate upon the date of such death or permanent
disability. In the event this Agreement terminates by Employee's death or
disability, Company shall pay Employee's pro-rata Base Salary through the
termination date, and Employee shall be entitled to no severance pay.
Notwithstanding anything to the contrary, in the event this Agreement
terminates as a result of Employee's death or disability, Employee shall be
entitled to such continuing benefits as may be provided in any Plan or by
law.
5. RETURN OF COMPANY PROPERTY. Upon termination of this Agreement for any
reason, Employee shall immediately surrender to Company, in the same condition
as existed prior to termination of this Agreement, all property of Company in
his possession or control, including Confidential Information (as defined
below), computers, files, and any other property owned by Company. Employee and
Company acknowledge and agree that the damages suffered as a result of the
breach of this section would be difficult to ascertain. Accordingly, the parties
agree that Company shall be entitled to liquidated damages in the amount of
$5,000 in the event of a breach by Employee of this section.
6. CHANGE IN CONTROL.
6.1 Benefits payable. Notwithstanding anything in this Agreement to
the contrary, Employee shall be entitled to the termination benefits set forth
below if this Agreement is terminated by a "Triggering Event." The benefits set
forth below shall be in addition to any other benefits which may have accrued to
Employee during the term of employment; provided, however, that the provisions
regarding direct severance pay shall be exclusive and shall replace any other
rights of Employee to direct severance payments as set forth in section 5.
6.1.1 Triggering Event. For purposes of this Agreement, a
Triggering Event shall be deemed to have occurred if:
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<PAGE>
6.1.1.1 there is a Change in Control (as defined below);
and
6.1.1.2 within 12 months after the Change in Control:
(a) Company terminates this Agreement without cause,
or
(b) (1) Employee terminates this Agreement, and
(2) in combination with the Change in Control
there has been one or more of the following:
(i) a change of the Chief Executive
Officer,
(ii) a material change of Employee's job
responsibilities,
(iii) a greater than 20% reduction of
Employee's Base Salary or benefits, or
(iv) the relocation of Employee's primary
office location to a distance greater than 50
miles from the current office location.
6.1.2 Change in Control. As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if there has been one
or more of the following:
6.1.2.1 any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended [the "Exchange Act"]), other than a trustee or
fiduciary holding securities under an employee benefit
plan of Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Company representing twenty
percent (20%) or more of the combined voting power of
Company's then outstanding voting securities;
6.1.2.2 there is a merger or consolidation of Company
in which Company is not the surviving corporation; or
6.1.2.3 the business or businesses of Company for
which Employee's services are principally performed is
disposed of by Company pursuant to a partial or complete
liquidation of Company, a sale of assets (including stock
of a subsidiary) of Company, or otherwise.
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<PAGE>
6.2 Benefits. In the event this Agreement is terminated by a
Triggering Event, Employee shall be entitled to the following:
6.2.1 Severance pay in an amount equal to 299% of Employee's
"annualized includible compensation for the base period," within the
meaning of section 280(G), of the Internal Revenue Code, as amended.
Notwithstanding anything herein to the contrary, any amounts payable
pursuant to this subparagraph shall be reduced by the amount of any
disability benefits paid to Employee.
6.2.1.1 Payments under this section shall be made over 12
months in the same interval as Employee's salary as the time of
termination of this Agreement.
6.2.1.2 Employee shall have no obligation to mitigate damages
by seeking other employment.
6.2.2 Medical insurance, life insurance and disability insurance
benefits from Company on terms comparable to the benefits provided by
Company to Employee as of the date of the termination of this
Agreement for 12 months or until Employee shall begin alternative
employment.
6.2.3 Deferred Compensation. Employee, as a participant in the
Company's Deferred Compensation Plan, shall receive a payment equal
to, but not less than, the Company match said Employee received in the
year prior to the takeover, or a full year prior to Employee's
termination, whichever is later.
6.3 Notwithstanding anything herein to the contrary, in the event
Company reasonably determines that any payment or benefit provided under
this section is an "excess parachute payment" within the meaning of section
280(G) of the Internal Revenue Code, as amended, Company shall be entitled
to limit the total of all payments or compensation to Employee to the
maximum amount payable by Company that would not constitute such "excess
parachute payment."
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, Confidential Information is defined as trade secrets (as defined in
Indiana Code 24-2-3-2, as amended), software programs, customer reports,
customer lists, vendor reports, vendor lists, and other information regarding
customers and vendors utilized by Company in the course of its business, and any
information regarding Company's present or future business plans.
7.1 Employee acknowledges his position with Company will expose
Employee to certain Confidential Information of Company; and that
Confidential Information constitutes a valuable, special and unique asset
of Company's business. Employee will not, during or at any time after the
term of his employment, disclose any Confidential Information acquired by
Employee during his employment, to any person, firm, corporation,
association, or other entity for any purpose, or use Confidential
Information for any purpose, other than for the performance of services for
Company.
6
<PAGE>
7.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section , Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction, including reasonable attorney's fees. Company shall also be
permitted to pursue any other available remedies available for such breach
or threatened breach, including the recovery of damages, costs and
attorney's fees from Employee.
7.3 Employee acknowledges that all Confidential Information is the
sole and exclusive property of Company. Employee shall surrender possession
of all Confidential Information, including documents, computers, software,
disks, tape or video recording, or any other written, recorded, or graphic
matter, however produced or reproduced, containing Confidential Information
to Company upon any suspension or termination of Employee's employment. If,
after the suspension or termination of Employee's employment, Employee
becomes aware of any Confidential Information in his possession, Employee
shall immediately surrender possession of the Confidential Information to
Company.
8. RESTRICTIVE COVENANT. For purposes of this Agreement, "Competing
Business" is defined as Gilbarco, Wayne, Schlumberger, Bennett, and Tatsuno, and
their respective affiliates and subsidiaries, both domestic and international,
and any other company engaged in the petroleum dispensing manufacturing business
or point of sale equipment business related to petroleum dispensing.
8.1 Employee hereby covenants and agrees that, for the greater of 12
months after termination of this Agreement, or such time as Employee is
receiving any severance pay from Company (the "Restricted Period") Employee
will not, directly or indirectly own, manage, operate, control, be
controlled by, participate in, be employed by, or be connected in any
manner with the ownership, management, operation or control of any
Competing Business. Employee further covenants and agrees that he will not
during the Restricted Period contact or attempt to contact, either directly
or indirectly, any customers of Company as they may exist at the time of
termination of Employee's employment for the purpose of soliciting such
customer's business for or on behalf of any Competing Business. Employee
specifically acknowledges and agrees that Company's business is
international in scope and that the restriction as contained in this
section is intended to cover activity by Employee both domestically and
internationally. Employee further stipulates, covenants and agrees that a
reasonable geographic restriction, as that term is used and defined by
Indiana law, on Employee's activity's under this section is the entire
world.
8.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section , Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction,
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<PAGE>
including reasonable attorney's fees. Company shall also be permitted to
pursue any other available remedies available for such breach, including
the recovery of damages, costs and attorney's fees from Employee.
8.3 If a court of competent jurisdiction or any arbitrator determines
that any provision or restriction in this section is unreasonable or
unenforceable, the court or arbitrator shall modify such restriction or
provision so that the agreement then becomes an enforceable restriction of
the activities of Employee.
9. FORFEITURE OF BENEFITS. In the event Employee is breaching his
obligations under either section 7 or section 8 of this Agreement, Employee
shall forfeit all future payments or compensation payable or provided by
Company.
10. NO CONTINUING OBLIGATION. Employee acknowledges and agrees that this
Agreement does not grant Employee the right to continue as an Employee of
Company as an executive or in any other capacity.
11. NO TRUST ESTABLISHED. All payments provided under this Agreement
shall be paid in cash from the general funds of Company and no separate or
special fund has been or shall be established and no segregation of assets has
been or shall be made to assure payment. Employee shall have no right, title or
interest in or to any investments or other assets which Company may acquire or
obtain to assist in meeting its obligations under this Agreement. 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 Company and Employee or any other person. The right of any
person to receive payments from Company under this Agreement shall be no greater
than the rights of a general unsecured creditor of Company.
12. TAXES, ETC. Company may withhold from any payments or benefits
provided under this Agreement:
12.1 all federal, state, city or other taxes as required pursuant to
any law or governmental regulation or ruling; and
12.2 any amounts owed by Employee to Company for any reason at the
time of the termination of this Agreement.
13. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable
by Employee without Company's prior written consent; provided, however, that
nothing in this paragraph shall preclude Employee from designating a beneficiary
to receive any benefit payable upon his death, or preclude Employee's executors,
administrators or other legal representatives of his estate from assigning any
rights hereunder to the person or persons entitled thereto. Further, 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.
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14. ARBITRATION. Employee and Company recognize and agree that the
arbitration of disputes provides mutual advantages in terms of facilitating the
fair and expeditious resolution of disputes. In consideration of these mutual
advantages, the parties agree as follows:
14.1 Scope of Arbitration. The parties will submit to arbitration,
in accordance with these provisions, any and all disputes either party
may have arising from or related to this Agreement, and any other
disputes between the parties arising from or related to their
employment relationship, including but not limited to, any disputes
regarding alleged common law tort violations or violations of state or
federal statutory rights. The parties further agree that the
arbitration process set forth below shall be the exclusive means for
resolving all disputes made subject to arbitration but that no
arbitrator shall have authority to determine whether disputes fall
within the scope of these arbitration provisions.
14.2 Governing Law. Employee and Company agree that the
interpretation and enforcement of the arbitration provisions of this
Agreement, including any right to appeal, shall be governed by the
Indiana Uniform Arbitration Act, I.C. 34-4-2-1, et seq.
14.3 Time Limits on Submitting Disputes. Employee and Company
acknowledge and agree that one of the objectives of this arbitration
provision is to resolve disputes expeditiously, as well as fairly, and
that it is the obligation of both parties, to those ends, to raise any
disputes subject to arbitration under this Agreement in an expeditious
manner. Accordingly, the parties agree to waive all statutes of
limitations that might otherwise be applicable, and agree further
that, as to any dispute subject to arbitration pursuant to this
Agreement, notice of a demand for arbitration must be provided to the
other party:
14.3.1 In the event of a dispute arising out of a termination
of this Agreement, within 6 months of the date of termination;
14.3.2 In the event of a breach of section or section of this
Agreement, within 4 months after the Chief Executive Officer has
actual knowledge of the breach; or
14.3.3 In the event of any other dispute, within 3 months
after the dispute arises.
Failure to demand arbitration on claims within these time limits is
intended to, and shall to the furthest extent permitted by law, be a waiver and
release with respect to such claims, and, in the absence of a timely submitted
written demand for arbitration, an arbitrator has no authority to resolve the
disputes or render an award.
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14.4 Availability of Provisional Relief. Notwithstanding anything herein
to the contrary, nothing in this section shall prevent Company or Employee from
obtaining injunctive relief from a court of competent jurisdiction to enforce
the obligations of sections and for which either party may require provisional
relief pending a decision on the merits by the arbitrator.
14.5 American Arbitration Association Rules Apply as Modified Herein. Any
arbitration of disputes shall be conducted under the Model Employment Procedures
of the American Arbitration Association (AAA), as modified in this Agreement.
14.6 Invoking Arbitration. Either party may invoke the arbitration
procedures described in this Agreement by written notice of a demand for
arbitration (an "Arbitration Notice"). An Arbitration Notice shall contain a
statement of the matter to be arbitrated in sufficient detail to establish the
timeliness of the demand. The parties shall then have 10 business days within
which they may identify a mutually agreeable arbitrator. After the 10-day period
has expired, the parties shall prepare and submit to the AAA a joint submission,
with each party to contribute half of the appropriate administrative fee. In
their submission to the AAA, the parties shall either designate a mutually
acceptable arbitrator or request a panel of arbitrators from the AAA according
to the procedure described in section 14.7, below.
14.7 Arbitrator Selection. In the event the parties cannot agree upon an
arbitrator within 10 business days after the Arbitration Notice is received,
their joint submission to the AAA shall request a panel of seven arbitrators
from the joint Labor and Commercial Arbitration Panels who are practicing
attorneys with professional experience in the field of labor and/or employment
law and the parties shall attempt to select an arbitrator from the panel
according to AAA procedures. If the parties remain unable to select an
arbitrator, they shall request from AAA a panel of three comparably qualified
arbitrators from which the AAA shall reject the least preferred candidate of
each party and select the candidate with the highest joint ranking of the
parties.
In the event of the death or disability of an arbitrator, the parties shall
select a new arbitrator as provided above. The substitute arbitrator shall have
the power to determine the extent to which he or she shall act on the record
already made in arbitration.
14.8 Prehearing Procedures. Upon accepting assignment as arbitrator, the
arbitrator shall promptly conduct a preliminary hearing at which each party
shall be entitled to submit a brief statement of their respective positions, and
at which the arbitrator shall establish a timetable for prehearing activities
and the conduct of the hearing, and may address initial requests from the
parties for prehearing disclosure of information. At the preliminary hearing
and/or thereafter, the arbitrator shall have the discretion and authority to
order, upon request or otherwise, the prehearing disclosure of information to
the parties. Such disclosure may include, without limitation, production of
requested documents, exchange of witness lists and summaries of the testimony of
proposed witnesses, and examination by deposition of potential witnesses, to the
end that information disclosure shall be conducted in the most expeditious and
cost-effective manner possible, and shall be limited to that which is relevant
and for which each party has a substantial, demonstrable need. The arbitrator
shall further have the authority, upon request or otherwise, to conference with
the parties or their designated representatives concerning any matter, and to
set or modify timetables for all aspects of the arbitration proceeding.
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The arbitrator may award either party its reasonable attorney's fees and
costs, including reasonable expenses associated with production of witnesses or
proof, upon a finding that the other party (a) engaged in unreasonable delay,
(b) failed to comply with the Arbitrator's discovery order, or (c) failed to
comply with requirements of confidentiality hereunder. The arbitrator shall also
have the authority, upon request or otherwise, to entertain and decide motions
for prehearing judgment.
14.9 Stenographic Record. There shall be a stenographic record of the
arbitration hearing, unless the parties agree to record the proceedings by other
reliable means. The costs of recording the proceedings shall be borne equally by
the parties.
14.10 Location. Unless otherwise agreed by the parties, arbitration
hearings shall take place in Fort Wayne, Allen County, Indiana at a mutually
agreeable place or, if no agreement can be reached, at a place designated by the
AAA.
14.11 The Hearing. At any hearing, the party bearing the burden of proof
according to the governing substantive law shall present its evidence first.
14.12 Posthearing Briefs. After the close of the arbitration hearing, and
on any issue concerning prehearing procedures, the arbitrator shall allow the
parties to submit written briefs.
14.13 Confidentiality. All arbitration proceedings hereunder shall be
confidential. Neither party shall disclose any information about the evidence
produced by the other in the arbitration proceeding or about documents produced
by the other in connection with the proceeding, except in the course of a
judicial, regulatory or arbitration proceeding, or as may be requested by
governmental authority. Before making any disclosure permitted by the preceding
sentence, the party shall give the other party reasonable written notice of the
intended disclosure and an opportunity to protect its interests. Expert
witnesses and stenographic reporters shall sign appropriate nondisclosure
agreements.
14.14 Costs. As to any disputes arising from the termination of the
Agreement, each party shall be responsible for its costs, including attorney's
fees, incurred in any arbitration, and the arbitrator shall not have authority
to include all or any portion of said costs and fees in his or her award. The
costs and fees of the arbitrator and of the AAA shall be borne equally by the
parties.
14.14.1 Notwithstanding anything herein to the contrary, Company
shall be entitled to recover its costs and attorney's fees incurred in
enforcing the provisions of section 7 and section 8.
14.15 Remedies. Subject to the provisions of section, the
arbitrator shall have authority to award any remedy or relief that a federal or
state court situated in the State of Indiana could grant in conformity to
applicable law.
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14.16 Law Governing the Arbitrator's Award. In rendering an award,
the arbitrator shall determine the rights and obligations of the parties,
including employment discrimination issues, according to federal law and the
substantive law of the State of Indiana (excluding conflicts of laws principles)
as though the matter were before a court of law.
14.17 Written Awards and Enforcement. Any arbitration award shall be
accompanied by a written statement containing a summary of the issues in
controversy, a description of the award, and an explanation of the reasons for
the award. The parties agree that a competent court shall enter judgment upon
the award of the arbitrator, provided it is in conformity with the terms of this
Agreement.
14.18 Conflict in Procedure. If any part of this arbitration
procedure is in conflict with any mandatory requirement of applicable law, the
mandatory requirement shall govern, and the procedure set forth above shall be
reformed and construed to the maximum extent possible in conformance with the
applicable law. The procedure shall remain otherwise unaffected and enforceable.
15. MISCELLANEOUS.
15.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and all prior negotiations and
agreements, whether written or oral, are merged into this Agreement.
15.2 Severability. If any provision of this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect any other provision or part of a provision of this Agreement;
but this Agreement shall be reformed and construed as if such
provision had never been contained in it, and any such provision shall
be reformed so that it would be valid, legal and enforceable to the
maximum extent permitted.
15.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which counterparts collectively shall constitute one document
representing the agreement among the parties.
15.4 Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties to this Agreement and their
respective successors and assigns.
15.5 Amendment. This Agreement may not be amended, discharged,
terminated, or changed orally; and any such proposed amendment,
discharge, termination, or change shall be in writing and signed by
the party against whom such amendment, change, discharge, or
termination is sought.
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15.6 Waiver of Breach. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach; and no waiver shall be valid unless
it is in writing and is signed by the party against whom such waiver
is sought.
15.7 Extension of Noncompete Period. The periods of time during
which Employee is prohibited from engaging in such business practices
pursuant to this Agreement shall be extended by any length of time
during which Employee is in breach of any of such covenants.
15.8 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
15.9 Survival. The provisions and restrictions contained in
sections and shall survive the termination of this Agreement and
Employee's employment with Company.
15.10 Attorney Fees and Expenses. Except as expressly provided
in this Agreement or by statute and ordered by an arbitrator or court
in accordance with the provisions of this Agreement, no party shall be
entitled to recover from the other party the reasonable attorney's
fees, costs and expenses incurred as a result of any action to enforce
any of the rights under this Agreement.
15.11 Full Disclosure. Employee acknowledges that Employee's
employment with Company is conditioned upon the execution of this
Agreement. Employee represents and acknowledges that Employee has
carefully reviewed all of the terms and conditions in this Agreement,
and has been advised of Employee's right to seek independent legal
counsel prior to execution of this Agreement.
15.12 Notices. Any notice, request, or other communication
required or permitted under this Agreement shall be in writing. Notice
shall be deemed to have been given only if personally delivered or
sent by registered or certified mail, return receipt requested. Any
notice so mailed shall be deemed given on the postmark date. Failure
or refusal to accept or receive any notice or communication shall not
affect the validity of the notice. All such notices shall be given to
the respective parties at the addresses designated below, or to such
other address as a party may designate in a like manner.
If to Company: TOKHEIM CORPROATION
c/o TIMOTHY EASTOM, VICE PRESIDENT, HUMAN RESOURCES
P.O. BOX 360
FORT WAYNE, IN 46801
If to Employee: JOHN A. NEGOVETICH
5519-7 OLD DOVER BLVD
FORT WAYNE, IN 46835
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IN WITNESS WHEREOF, the parties have entered into this Agreement the
date first written above.
COMPANY EMPLOYEE
TOKHEIM CORPORATION
/s/ DOUGLAS K. PINNER /s/ JOHN A. NEGOVETICH
- ---------------------------------------- -------------------------------
DOUGLAS K. PINNER JOHN A. NEGOVETICH
CHAIRMAN, PRESIDENT & CEO
/s/ NORMAN L. ROELKE
- ----------------------------------------
Attest: NORMAN L. ROELKE
Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL
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Exhibit 10.6
[TOKHEIM LOGO]
EMPLOYMENT AGREEMENT
for CORPORATE OFFICERS
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 23rd day of
DECEMBER, 1997, by and between Tokheim Corporation, an Indiana Corporation
("Company") and JACQUES ST-DENIS ("Employee").
RECITALS
A. Company acknowledges and recognizes the value of Employee's services
and deems it necessary and desirable to retain Employee's full-time services.
B. Employee and Company desire to embody the terms and conditions of
Employee's employment in a written agreement which will supersede all prior
employment agreements, whether written or oral.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
EMPLOYMENT. Company agrees to employ employee, and the employee agrees to
serve company, on a full time basis in the capacity of PRESIDENT, SOFITAM,
subject to the terms and conditions of this agreement.
1. TERM. Employee's employment shall commence on the effective date of
this Agreement and continue for an indefinite period and until such time as it
may be terminated by one or both of the parties as provided below.
2. DUTIES.
2.1 During the term of this Agreement, Employee shall have such
duties and responsibilities and shall supply such services in the carrying
out of such duties and responsibilities as Company, through its Board of
Directors ("Board"), any duly appointed Committee of the Board, the Chief
Executive Officer of the Company (the "Chief Executive Officer"), or such
other Executive Officers as may be designated by the Board, shall, from
time to time, direct. Company specifically retains the right to alter or
amend the position, responsibilities, duties or services to be performed by
Employee in such manner as to it shall be deemed in the best interests of
Company. During the term of
<PAGE>
employment, Employee shall devote his best efforts and skills to the
business interests of Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with
Company's business, or which may in any way interfere with his employment,
without the consent of Company.
2.2 Employee agrees that, during the term of his employment, any and
all inventions and discoveries, whether or not patentable, which Employee
may conceive or make (collectively, "Inventions"), either alone or in
conjunction with others and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, promptly
execute and assign any and all applications, assignments and other
instruments which Company shall deem necessary in order to apply for and
obtain letters patent of the United States and foreign countries for any
Inventions, and in order to assign and convey to Company, or to Company's
nominee the sole and exclusive right, title and interest in and to any
Inventions or any applications or patents thereon. As promptly as known or
possessed by Employee, Employee shall disclose to Company all information
with respect to any Invention. Employee further agrees that, during the
term of employment, any trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted (collectively, "Marks"), originated by Employee, alone or in
conjunction with others, and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, take all
action necessary to register or otherwise perfect Company's interest in and
to any Marks.
3. COMPENSATION. During the term of this Agreement, Company shall
compensate Employee for his services as follows:
3.1 Employee shall be entitled to a monthly base salary of
$20,066.67 (the "Base Salary"). Base Salary will be reviewed
periodically. Base Salary shall be payable in semi-monthly or monthly
installments, in accordance with the policy of Company at the time of
such payments.
3.2 Employee shall be eligible for such officer's bonus program
as may from time to time be made available and applicable to Employee.
Provided, however, that nothing in this Agreement shall prevent
Company, through its Board, any duly appointed Committees of the Board
or such other Executive Officers of the Company as the Board may
designate, from altering or amending the terms, eligibility, or other
provisions of the officers bonus program, or from eliminating or
adding any other bonus programs as it shall from time to time deem
appropriate and in the interests of Company.
3.3 Employee shall be granted participation in all employee
benefit plans applicable to Employee's position with Company,
including, but not limited to, medical plans, disability plans, life
insurance plans, savings plans, stock option
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plans and such other plans as may from time to time be made available
and applicable to Employee (collectively, "Plans"), consistent with
the policies of Company and the terms and conditions of the Plans.
Nothing in this Agreement shall be deemed to alter the terms and
conditions of any Plans or the policy of Company with respect to any
Plans, and nothing in this Agreement shall be deemed to entitle
Employee to any rights in any Plan which would not otherwise be made
available to Employee pursuant to the terms, conditions and
provisions of the Plans. Further, nothing in this Agreement shall
prevent Company, through its Board, any duly appointed Committees of
the Board or such other Executive Officers of the Company as the
Board may designate, from altering or amending the terms,
eligibility, or other provisions of the Plan, or from eliminating or
adding any other Plan as it shall from time to time deem appropriate
and in the interests of Company.
3.3.1 Except as may otherwise be expressly provided,
Employee shall be granted, upon termination of this Agreement,
such rights as may be available to him pursuant to any Plan or
Plans then in effect.
4. TERMINATION. Either Company or Employee may terminate this Agreement
upon providing written notice to the other.
4.1 By the Company. In the event this Agreement is terminated with
cause (as defined below), Employee shall be entitled to no severance pay
and 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.
4.1.1 With Cause. For purposes of this Agreement, the
termination of this Agreement shall be deemed to have been made with
cause only upon the occurrence of one or more of the following
circumstances:
4.1.1.1 Employee engages in any breach of fiduciary duty,
act of dishonesty, or theft involving Company;
4.1.1.2 Employee is convicted of a felony;
4.1.1.3 Employee discloses Confidential Information in
violation of section 7 , below, or competes with Company in
violation of section 8, below;
4.1.1.4 Employee refuses or fails to carry out the duties
which may have been assigned to him; or
4.1.1.5 Employee continues to violate any written Company
policy after written notice by Company of the violation.
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4.1.2 Without Cause. In the event Company terminates this
Agreement without cause, Employee shall be entitled to severance pay
equal to 18 months of Employee's Base Salary in effect at the time of
the termination, payable at the same interval as his salary at the
time of the termination.
4.1.2.1 Employee shall have no obligation to mitigate
damages by seeking other employment.
4.1.2.2 The right to severance pay under this section
shall vest upon notice of termination and shall not be
affected by Employee's subsequent death or disability.
4.2 By Employee. In the event Employee terminates this Agreement,
Employee shall be entitled to no severance pay and shall be entitled only
to such other rights as may be provided in this Agreement or as may
otherwise be available to him in law or equity.
4.3 Death or disability. In the event Employee dies or becomes
permanently disabled during the term of this Agreement or any extension of
it, this Agreement shall terminate upon the date of such death or permanent
disability. In the event this Agreement terminates by Employee's death or
disability, Company shall pay Employee's pro-rata Base Salary through the
termination date, and Employee shall be entitled to no severance pay.
Notwithstanding anything to the contrary, in the event this Agreement
terminates as a result of Employee's death or disability, Employee shall be
entitled to such continuing benefits as may be provided in any Plan or by
law.
5. RETURN OF COMPANY PROPERTY. Upon termination of this Agreement for any
reason, Employee shall immediately surrender to Company, in the same condition
as existed prior to termination of this Agreement, all property of Company in
his possession or control, including Confidential Information (as defined
below), computers, files, and any other property owned by Company. Employee and
Company acknowledge and agree that the damages suffered as a result of the
breach of this section would be difficult to ascertain. Accordingly, the parties
agree that Company shall be entitled to liquidated damages in the amount of
$5,000 in the event of a breach by Employee of this section.
6. CHANGE IN CONTROL.
6.1 Benefits payable. Notwithstanding anything in this Agreement to
the contrary, Employee shall be entitled to the termination benefits set forth
below if this Agreement is terminated by a "Triggering Event." The benefits set
forth below shall be in addition to any other benefits which may have accrued to
Employee during the term of employment; provided, however, that the provisions
regarding direct severance pay shall be exclusive and shall replace any other
rights of Employee to direct severance payments as set forth in section 5.
6.1.1 Triggering Event. For purposes of this Agreement, a
Triggering Event shall be deemed to have occurred if:
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6.1.1.1 there is a Change in Control (as defined below);
and
6.1.1.2 within 12 months after the Change in Control:
(a) Company terminates this Agreement without cause,
or
(b) (1) Employee terminates this Agreement, and
(2) in combination with the Change in Control
there has been one or more of the following:
(i) a change of the Chief Executive
Officer,
(ii) a material change of Employee's job
responsibilities,
(iii) a greater than 20% reduction of
Employee's Base Salary or benefits, or
(iv) the relocation of Employee's primary
office location to a distance greater than
50 miles from the current office location.
6.1.2 Change in Control. As used in this Agreement, a "Change
in Control" shall be deemed to have occurred if there has been
one or more of the following:
6.1.2.1 any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended [the "Exchange Act"]), other than a trustee or
fiduciary holding securities under an employee benefit
plan of Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Company representing twenty
percent (20%) or more of the combined voting power of
Company's then outstanding voting securities;
6.1.2.2 there is a merger or consolidation of Company
in which Company is not the surviving corporation; or
6.1.2.3 the business or businesses of Company for which
Employee's services are principally performed is disposed
of by Company pursuant to a partial or complete
liquidation of Company, a sale of assets (including stock
of a subsidiary) of Company, or otherwise.
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6.2 Benefits. In the event this Agreement is terminated by a
Triggering Event, Employee shall be entitled to the following:
6.2.1 Severance pay in an amount equal to 299% of Employee's
"annualized includible compensation for the base period," within the
meaning of section 280(G), of the Internal Revenue Code, as amended.
Notwithstanding anything herein to the contrary, any amounts payable
pursuant to this subparagraph shall be reduced by the amount of any
disability benefits paid to Employee.
6.2.1.1 Payments under this section shall be made over 12
months in the same interval as Employee's salary as the time of
termination of this Agreement.
6.2.1.2 Employee shall have no obligation to mitigate damages
by seeking other employment.
6.2.2 Medical insurance, life insurance and disability insurance
benefits from Company on terms comparable to the benefits provided by
Company to Employee as of the date of the termination of this
Agreement for 12 months or until Employee shall begin alternative
employment.
6.2.3 Deferred Compensation. Employee, as a participant in the
Company's Deferred Compensation Plan, shall receive a payment equal
to, but not less than, the Company match said Employee received in the
year prior to the takeover, or a full year prior to Employee's
termination, whichever is later.
6.3 Notwithstanding anything herein to the contrary, in the event
Company reasonably determines that any payment or benefit provided under
this section is an "excess parachute payment" within the meaning of section
280(G) of the Internal Revenue Code, as amended, Company shall be entitled
to limit the total of all payments or compensation to Employee to the
maximum amount payable by Company that would not constitute such "excess
parachute payment."
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, Confidential Information is defined as trade secrets (as defined in
Indiana Code 24-2-3-2, as amended), software programs, customer reports,
customer lists, vendor reports, vendor lists, and other information regarding
customers and vendors utilized by Company in the course of its business, and any
information regarding Company's present or future business plans.
7.1 Employee acknowledges his position with Company will expose
Employee to certain Confidential Information of Company; and that
Confidential Information constitutes a valuable, special and unique asset
of Company's business. Employee will not, during or at any time after the
term of his employment, disclose any Confidential Information acquired by
Employee during his employment, to any person, firm,
6
<PAGE>
corporation, association, or other entity for any purpose, or use
Confidential Information for any purpose, other than for the performance of
services for Company.
7.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section, Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction, including reasonable attorney's fees. Company shall also be
permitted to pursue any other available remedies available for such breach
or threatened breach, including the recovery of damages, costs and
attorney's fees from Employee.
7.3 Employee acknowledges that all Confidential Information is the
sole and exclusive property of Company. Employee shall surrender possession
of all Confidential Information, including documents, computers, software,
disks, tape or video recording, or any other written, recorded, or graphic
matter, however produced or reproduced, containing Confidential Information
to Company upon any suspension or termination of Employee's employment. If,
after the suspension or termination of Employee's employment, Employee
becomes aware of any Confidential Information in his possession, Employee
shall immediately surrender possession of the Confidential Information to
Company.
8. RESTRICTIVE COVENANT. For purposes of this Agreement, "Competing
Business" is defined as Gilbarco, Wayne, Schlumberger, Bennett, and Tatsuno, and
their respective affiliates and subsidiaries, both domestic and international,
and any other company engaged in the petroleum dispensing manufacturing business
or point of sale equipment business related to petroleum dispensing.
8.1 Employee hereby covenants and agrees that, for the greater of 12
months after termination of this Agreement, or such time as Employee is
receiving any severance pay from Company (the "Restricted Period") Employee
will not, directly or indirectly own, manage, operate, control, be
controlled by, participate in, be employed by, or be connected in any
manner with the ownership, management, operation or control of any
Competing Business. Employee further covenants and agrees that he will not
during the Restricted Period contact or attempt to contact, either directly
or indirectly, any customers of Company as they may exist at the time of
termination of Employee's employment for the purpose of soliciting such
customer's business for or on behalf of any Competing Business. Employee
specifically acknowledges and agrees that Company's business is
international in scope and that the restriction as contained in this
section is intended to cover activity by Employee both domestically and
internationally. Employee further stipulates, covenants and agrees that a
reasonable geographic restriction, as that term is used and defined by
Indiana law, on Employee's activity's under this section is the entire
world.
8.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section , Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the
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<PAGE>
event Company obtains an injunction enjoining Employee from violating this
provision, Company shall be entitled to recover all costs incurred in
connection with the injunction, including reasonable attorney's fees.
Company shall also be permitted to pursue any other available remedies
available for such breach, including the recovery of damages, costs and
attorney's fees from Employee.
8.3 If a court of competent jurisdiction or any arbitrator determines
that any provision or restriction in this section is unreasonable or
unenforceable, the court or arbitrator shall modify such restriction or
provision so that the agreement then becomes an enforceable restriction of
the activities of Employee.
9. FORFEITURE OF BENEFITS. In the event Employee is breaching his
obligations under either section 7 or section 8 of this Agreement, Employee
shall forfeit all future payments or compensation payable or provided by
Company.
10. NO CONTINUING OBLIGATION. Employee acknowledges and agrees that this
Agreement does not grant Employee the right to continue as an Employee of
Company as an executive or in any other capacity.
11. NO TRUST ESTABLISHED. All payments provided under this Agreement shall
be paid in cash from the general funds of Company and no separate or special
fund has been or shall be established and no segregation of assets has been or
shall be made to assure payment. Employee shall have no right, title or interest
in or to any investments or other assets which Company may acquire or obtain to
assist in meeting its obligations under this Agreement. 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
Company and Employee or any other person. The right of any person to receive
payments from Company under this Agreement shall be no greater than the rights
of a general unsecured creditor of Company.
12. TAXES, ETC. Company may withhold from any payments or benefits
provided under this Agreement:
12.1 all federal, state, city or other taxes as required pursuant to
any law or governmental regulation or ruling; and
12.2 any amounts owed by Employee to Company for any reason at the
time of the termination of this Agreement.
13. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by
Employee without Company's prior written consent; provided, however, that
nothing in this paragraph shall preclude Employee from designating a beneficiary
to receive any benefit payable upon his death, or preclude Employee's executors,
administrators or other legal representatives of his estate from assigning any
rights hereunder to the person or persons entitled thereto. Further, 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
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by operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
14. ARBITRATION. Employee and Company recognize and agree that the
arbitration of disputes provides mutual advantages in terms of facilitating the
fair and expeditious resolution of disputes. In consideration of these mutual
advantages, the parties agree as follows:
14.1 Scope of Arbitration. The parties will submit to arbitration, in
accordance with these provisions, any and all disputes either party
may have arising from or related to this Agreement, and any other
disputes between the parties arising from or related to their
employment relationship, including but not limited to, any disputes
regarding alleged common law tort violations or violations of state or
federal statutory rights. The parties further agree that the
arbitration process set forth below shall be the exclusive means for
resolving all disputes made subject to arbitration but that no
arbitrator shall have authority to determine whether disputes fall
within the scope of these arbitration provisions.
14.2 Governing Law. Employee and Company agree that the
interpretation and enforcement of the arbitration provisions of this
Agreement, including any right to appeal, shall be governed by the
Indiana Uniform Arbitration Act, I.C. 34-4-2-1, et seq.
14.3 Time Limits on Submitting Disputes. Employee and Company
acknowledge and agree that one of the objectives of this arbitration
provision is to resolve disputes expeditiously, as well as fairly, and
that it is the obligation of both parties, to those ends, to raise any
disputes subject to arbitration under this Agreement in an expeditious
manner. Accordingly, the parties agree to waive all statutes of
limitations that might otherwise be applicable, and agree further
that, as to any dispute subject to arbitration pursuant to this
Agreement, notice of a demand for arbitration must be provided to the
other party:
14.3.1 In the event of a dispute arising out of a termination
of this Agreement, within 6 months of the date of termination;
14.3.2 In the event of a breach of section or section of this
Agreement, within 4 months after the Chief Executive Officer has
actual knowledge of the breach; or
14.3.3 In the event of any other dispute, within 3 months
after the dispute arises.
Failure to demand arbitration on claims within these time limits is
intended to, and shall to the furthest extent permitted by law, be a waiver and
release with respect to such claims, and, in the absence of a timely submitted
written demand for arbitration, an arbitrator has no authority to resolve the
disputes or render an award.
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14.4 Availability of Provisional Relief. Notwithstanding anything herein
to the contrary, nothing in this section shall prevent Company or Employee from
obtaining injunctive relief from a court of competent jurisdiction to enforce
the obligations of sections and for which either party may require provisional
relief pending a decision on the merits by the arbitrator.
14.5 American Arbitration Association Rules Apply as Modified Herein. Any
arbitration of disputes shall be conducted under the Model Employment Procedures
of the American Arbitration Association (AAA), as modified in this Agreement.
14.6 Invoking Arbitration. Either party may invoke the arbitration
procedures described in this Agreement by written notice of a demand for
arbitration (an "Arbitration Notice"). An Arbitration Notice shall contain a
statement of the matter to be arbitrated in sufficient detail to establish the
timeliness of the demand. The parties shall then have 10 business days within
which they may identify a mutually agreeable arbitrator. After the 10-day
period has expired, the parties shall prepare and submit to the AAA a joint
submission, with each party to contribute half of the appropriate administrative
fee. In their submission to the AAA, the parties shall either designate a
mutually acceptable arbitrator or request a panel of arbitrators from the AAA
according to the procedure described in section, below.
14.7 Arbitrator Selection. In the event the parties cannot agree upon
an arbitrator within 10 business days after the Arbitration Notice is received,
their joint submission to the AAA shall request a panel of seven arbitrators
from the joint Labor and Commercial Arbitration Panels who are practicing
attorneys with professional experience in the field of labor and/or employment
law and the parties shall attempt to select an arbitrator from the panel
according to AAA procedures. If the parties remain unable to select an
arbitrator, they shall request from AAA a panel of three comparably qualified
arbitrators from which the AAA shall reject the least preferred candidate of
each party and select the candidate with the highest joint ranking of the
parties.
In the event of the death or disability of an arbitrator, the parties shall
select a new arbitrator as provided above. The substitute arbitrator shall have
the power to determine the extent to which he or she shall act on the record
already made in arbitration.
14.8 Prehearing Procedures. Upon accepting assignment as arbitrator, the
arbitrator shall promptly conduct a preliminary hearing at which each party
shall be entitled to submit a brief statement of their respective positions, and
at which the arbitrator shall establish a timetable for prehearing activities
and the conduct of the hearing, and may address initial requests from the
parties for prehearing disclosure of information. At the preliminary hearing
and/or thereafter, the arbitrator shall have the discretion and authority to
order, upon request or otherwise, the prehearing disclosure of information to
the parties. Such disclosure may include, without
limitation, production of requested documents, exchange of witness lists and
summaries of the testimony of proposed witnesses, and examination by deposition
of potential witnesses, to the end that information disclosure shall be
conducted in the most expeditious and cost-effective manner possible, and shall
be limited to that which is relevant and for which each party has a substantial,
demonstrable need. The arbitrator shall further have the authority, upon
request or otherwise, to
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conference with the parties or their designated representatives concerning any
matter, and to set or modify timetables for all aspects of the arbitration
proceeding.
The arbitrator may award either party its reasonable attorney's fees and
costs, including reasonable expenses associated with production of witnesses or
proof, upon a finding that the other party (a) engaged in unreasonable delay,
(b) failed to comply with the Arbitrator's discovery order, or (c) failed to
comply with requirements of confidentiality hereunder. The arbitrator shall
also have the authority, upon request or otherwise, to entertain and decide
motions for prehearing judgment.
14.9 Stenographic Record. There shall be a stenographic record of the
arbitration hearing, unless the parties agree to record the proceedings by other
reliable means. The costs of recording the proceedings shall be borne equally
by the parties.
14.10 Location. Unless otherwise agreed by the parties, arbitration
hearings shall take place in Fort Wayne, Allen County, Indiana at a mutually
agreeable place or, if no agreement can be reached, at a place designated by the
AAA.
14.11 The Hearing. At any hearing, the party bearing the burden of proof
according to the governing substantive law shall present its evidence first.
14.12 Posthearing Briefs. After the close of the arbitration hearing, and
on any issue concerning prehearing procedures, the arbitrator shall allow the
parties to submit written briefs.
14.13 Confidentiality. All arbitration proceedings hereunder shall be
confidential. Neither party shall disclose any information about the evidence
produced by the other in the arbitration proceeding or about documents produced
by the other in connection with the proceeding, except in the course of a
judicial, regulatory or arbitration proceeding, or as may be requested by
governmental authority. Before making any disclosure permitted by the preceding
sentence, the party shall give the other party reasonable written notice of the
intended disclosure and an opportunity to protect its interests. Expert
witnesses and stenographic reporters shall sign appropriate nondisclosure
agreements.
14.14 Costs. As to any disputes arising from the termination of the
Agreement, each party shall be responsible for its costs, including attorney's
fees, incurred in any arbitration, and the arbitrator shall not have authority
to include all or any portion of said costs and fees in his or her award. The
costs and fees of the arbitrator and of the AAA shall be borne equally by the
parties.
14.14.1 Notwithstanding anything herein to the contrary, Company
shall be entitled to recover its costs and attorney's fees incurred in
enforcing the provisions of section 7 and section 8.
14.15 Remedies. Subject to the provisions of section , the arbitrator
shall have authority to award any remedy or relief that a federal or state court
situated in the State of Indiana could grant in conformity to applicable law.
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14.16 Law Governing the Arbitrator's Award. In rendering an award,
the arbitrator shall determine the rights and obligations of the parties,
including employment discrimination issues, according to federal law and the
substantive law of the State of Indiana (excluding conflicts of laws principles)
as though the matter were before a court of law.
14.17 Written Awards and Enforcement. Any arbitration award shall be
accompanied by a written statement containing a summary of the issues in
controversy, a description of the award, and an explanation of the reasons for
the award. The parties agree that a competent court shall enter judgment upon
the award of the arbitrator, provided it is in conformity with the terms of this
Agreement.
14.18 Conflict in Procedure. If any part of this arbitration
procedure is in conflict with any mandatory requirement of applicable law, the
mandatory requirement shall govern, and the procedure set forth above shall be
reformed and construed to the maximum extent possible in conformance with the
applicable law. The procedure shall remain otherwise unaffected and
enforceable.
15. MISCELLANEOUS.
15.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and all prior negotiations and
agreements, whether written or oral, are merged into this Agreement.
15.2 Severability. If any provision of this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect any other provision or part of a provision of this Agreement;
but this Agreement shall be reformed and construed as if such
provision had never been contained in it, and any such provision shall
be reformed so that it would be valid, legal and enforceable to the
maximum extent permitted.
15.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which counterparts collectively shall constitute one document
representing the agreement among the parties.
15.4 Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties to this Agreement and their
respective successors and assigns.
15.5 Amendment. This Agreement may not be amended, discharged,
terminated, or changed orally; and any such proposed amendment,
discharge, termination, or change shall be in writing and signed by
the party against whom such amendment, change, discharge, or
termination is sought.
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15.6 Waiver of Breach. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach; and no waiver shall be valid unless
it is in writing and is signed by the party against whom such waiver
is sought.
15.7 Extension of Noncompete Period. The periods of time during
which Employee is prohibited from engaging in such business practices
pursuant to this Agreement shall be extended by any length of time
during which Employee is in breach of any of such covenants.
15.8 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
15.9 Survival. The provisions and restrictions contained in
sections and shall survive the termination of this Agreement and
Employee's employment with Company.
15.10 Attorney Fees and Expenses. Except as expressly provided
in this Agreement or by statute and ordered by an arbitrator or court
in accordance with the provisions of this Agreement, no party shall be
entitled to recover from the other party the reasonable attorney's
fees, costs and expenses incurred as a result of any action to enforce
any of the rights under this Agreement.
15.11 Full Disclosure. Employee acknowledges that Employee's
employment with Company is conditioned upon the execution of this
Agreement. Employee represents and acknowledges that Employee has
carefully reviewed all of the terms and conditions in this Agreement,
and has been advised of Employee's right to seek independent legal
counsel prior to execution of this Agreement.
15.12 Notices. Any notice, request, or other communication
required or permitted under this Agreement shall be in writing. Notice
shall be deemed to have been given only if personally delivered or
sent by registered or certified mail, return receipt requested. Any
notice so mailed shall be deemed given on the postmark date. Failure
or refusal to accept or receive any notice or communication shall not
affect the validity of the notice. All such notices shall be given to
the respective parties at the addresses designated below, or to such
other address as a party may designate in a like manner.
If to Company: TOKHEIM CORPORATION
c/o TIMOTHY EASTOM, VICE PRESIDENT, HUMAN RESOURCES
P.O. BOX 360
FORT WAYNE, IN 46801
If to Employee: JACQUES ST-DENIS
2714 CROSSBRANCH COURT
FORT WAYNE, IN 46825
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IN WITNESS WHEREOF, the parties have entered into this Agreement the
date first written above.
COMPANY EMPLOYEE
TOKHEIM CORPORATION
/s/ DOUGLAS K. PINNER /s/ JACQUES ST-DENIS
- ------------------------------- ------------------------------------
DOUGLAS K. PINNER JACQUES ST-DENIS
CHAIRMAN, PRESIDENT & CEO
/s/ NORMAN L. ROELKE
- -------------------------------
Attest: NORMAN L. ROELKE
Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL
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Exhibit 10.7
[TOKHEIM LOGO]
EMPLOYMENT AGREEMENT
for CORPORATE OFFICERS
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 23rd day of
DECEMBER, 1997, by and between Tokheim Corporation, an Indiana Corporation
("Company") and NORMAN L. ROELKE ("Employee").
RECITALS
A. Company acknowledges and recognizes the value of Employee's services
and deems it necessary and desirable to retain Employee's full-time services.
B. Employee and Company desire to embody the terms and conditions of
Employee's employment in a written agreement which will supersede all prior
employment agreements, whether written or oral.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
EMPLOYMENT. Company agrees to employ employee, and the employee agrees to
serve company, on a full time basis in the capacity of VICE PRESIDENT, SECRETARY
& GENERAL COUNSEL, subject to the terms and conditions of this agreement.
1. TERM. Employee's employment shall commence on the effective date of
this Agreement and continue for an indefinite period and until such
time as it may be terminated by one or both of the parties as provided
below.
2. DUTIES.
2.1 During the term of this Agreement, Employee shall have such
duties and responsibilities and shall supply such services in the carrying
out of such duties and responsibilities as Company, through its Board of
Directors ("Board"), any duly appointed Committee of the Board, the Chief
Executive Officer of the Company (the "Chief Executive Officer"), or such
other Executive Officers as may be designated by the Board, shall, from
time to time, direct. Company specifically retains the right to alter or
amend the position, responsibilities, duties or services to be performed by
Employee in such
<PAGE>
manner as to it shall be deemed in the best interests of Company. During
the term of employment, Employee shall devote his best efforts and skills
to the business interests of Company and shall not engage in any commercial
enterprise or activity, either directly or indirectly, in conflict with
Company's business, or which may in any way interfere with his employment,
without the consent of Company.
2.2 Employee agrees that, during the term of his employment, any and
all inventions and discoveries, whether or not patentable, which Employee
may conceive or make (collectively, "Inventions"), either alone or in
conjunction with others and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, promptly
execute and assign any and all applications, assignments and other
instruments which Company shall deem necessary in order to apply for and
obtain letters patent of the United States and foreign countries for any
Inventions, and in order to assign and convey to Company, or to Company's
nominee the sole and exclusive right, title and interest in and to any
Inventions or any applications or patents thereon. As promptly as known or
possessed by Employee, Employee shall disclose to Company all information
with respect to any Invention. Employee further agrees that, during the
term of employment, any trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not
copyrighted (collectively, "Marks"), originated by Employee, alone or in
conjunction with others, and related or in any way connected with the
business of Company, shall be the sole and exclusive property of Company.
Employee shall, without further compensation or consideration, but at the
expense of Company, and as and when requested to do so by Company, take all
action necessary to register or otherwise perfect Company's interest in and
to any Marks.
3. COMPENSATION. During the term of this Agreement, Company shall
compensate Employee for his services as follows:
3.1 Employee shall be entitled to a monthly base salary of
$12,916.67 (the "Base Salary"). Base Salary will be reviewed
periodically. Base Salary shall be payable in semi-monthly or monthly
installments, in accordance with the policy of Company at the time of
such payments.
3.2 Employee shall be eligible for such officer's bonus program
as may from time to time be made available and applicable to Employee.
Provided, however, that nothing in this Agreement shall prevent
Company, through its Board, any duly appointed Committees of the Board
or such other Executive Officers of the Company as the Board may
designate, from altering or amending the terms, eligibility, or other
provisions of the officers bonus program, or from eliminating or
adding any other bonus programs as it shall from time to time deem
appropriate and in the interests of Company.
3.3 Employee shall be granted participation in all employee
benefit plans applicable to Employee's position with Company,
including, but not limited
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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 Employee (collectively,
"Plans"), consistent with the policies of Company and the terms and
conditions of the Plans. Nothing in this Agreement shall be deemed to
alter the terms and conditions of any Plans or the policy of Company
with respect to any Plans, and nothing in this Agreement shall be
deemed to entitle Employee to any rights in any Plan which would not
otherwise be made available to Employee pursuant to the terms,
conditions and provisions of the Plans. Further, nothing in this
Agreement shall prevent Company, through its Board, any duly appointed
Committees of the Board or such other Executive Officers of the
Company as the Board may designate, from altering or amending the
terms, eligibility, or other provisions of the Plan, or from
eliminating or adding any other Plan as it shall from time to time
deem appropriate and in the interests of Company.
3.3.1 Except as may otherwise be expressly provided,
Employee shall be granted, upon termination of this Agreement,
such rights as may be available to him pursuant to any Plan or
Plans then in effect.
4. TERMINATION. Either Company or Employee may terminate this Agreement
upon providing written notice to the other.
4.1 By the Company. In the event this Agreement is terminated with
cause (as defined below), Employee shall be entitled to no severance pay
and 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.
4.1.1 With Cause. For purposes of this Agreement, the
termination of this Agreement shall be deemed to have been made with
cause only upon the occurrence of one or more of the following
circumstances:
4.1.1.1 Employee engages in any breach of fiduciary duty,
act of dishonesty, or theft involving Company;
4.1.1.2 Employee is convicted of a felony;
4.1.1.3 Employee discloses Confidential Information in
violation of section 7 , below, or competes with Company in
violation of section 8, below;
4.1.1.4 Employee refuses or fails to carry out the duties
which may have been assigned to him; or
4.1.1.5 Employee continues to violate any written Company
policy after written notice by Company of the violation.
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4.1.2 Without Cause. In the event Company terminates this
Agreement without cause, Employee shall be entitled to severance pay
equal to 18 months of Employee's Base Salary in effect at the time of
the termination, payable at the same interval as his salary at the
time of the termination.
4.1.2.1 Employee shall have no obligation to mitigate
damages by seeking other employment.
4.1.2.2 The right to severance pay under this section
shall vest upon notice of termination and shall not be
affected by Employee's subsequent death or disability.
4.2 By Employee. In the event Employee terminates this Agreement,
Employee shall be entitled to no severance pay and shall be entitled only
to such other rights as may be provided in this Agreement or as may
otherwise be available to him in law or equity.
4.3 Death or disability. In the event Employee dies or becomes
permanently disabled during the term of this Agreement or any extension of
it, this Agreement shall terminate upon the date of such death or permanent
disability. In the event this Agreement terminates by Employee's death or
disability, Company shall pay Employee's pro-rata Base Salary through the
termination date, and Employee shall be entitled to no severance pay.
Notwithstanding anything to the contrary, in the event this Agreement
terminates as a result of Employee's death or disability, Employee shall be
entitled to such continuing benefits as may be provided in any Plan or by
law.
5. RETURN OF COMPANY PROPERTY. Upon termination of this Agreement for any
reason, Employee shall immediately surrender to Company, in the same condition
as existed prior to termination of this Agreement, all property of Company in
his possession or control, including Confidential Information (as defined
below), computers, files, and any other property owned by Company. Employee and
Company acknowledge and agree that the damages suffered as a result of the
breach of this section would be difficult to ascertain. Accordingly, the parties
agree that Company shall be entitled to liquidated damages in the amount of
$5,000 in the event of a breach by Employee of this section.
6. CHANGE IN CONTROL.
6.1 Benefits payable. Notwithstanding anything in this Agreement to
the contrary, Employee shall be entitled to the termination benefits set forth
below if this Agreement is terminated by a "Triggering Event." The benefits set
forth below shall be in addition to any other benefits which may have accrued to
Employee during the term of employment; provided, however, that the provisions
regarding direct severance pay shall be exclusive and shall replace any other
rights of Employee to direct severance payments as set forth in section 5.
6.1.1 Triggering Event. For purposes of this Agreement, a
Triggering Event shall be deemed to have occurred if:
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6.1.1.1 there is a Change in Control (as defined below);
and
6.1.1.2 within 12 months after the Change in Control:
(a) Company terminates this Agreement without cause,
or
(b) (1) Employee terminates this Agreement, and
(2) in combination with the Change in Control
there has been one or more of the following:
(i) a change of the Chief Executive
Officer,
(ii) a material change of Employee's job
responsibilities,
(iii) a greater than 20% reduction of
Employee's Base Salary or benefits, or
(iv) the relocation of Employee's primary
office location to a distance greater than
50 miles from the current office location.
6.1.2 Change in Control. As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if there has been one or
more of the following:
6.1.2.1 any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended [the "Exchange Act"]), other than a trustee or
fiduciary holding securities under an employee benefit plan
of Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Company representing twenty
percent (20%) or more of the combined voting power of
Company's then outstanding voting securities;
6.1.2.2 there is a merger or consolidation of Company in
which Company is not the surviving corporation; or
6.1.2.3 the business or businesses of Company for which
Employee's services are principally performed is disposed of
by Company pursuant to a partial or complete liquidation of
Company, a sale of assets (including stock of a subsidiary)
of Company, or otherwise.
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6.2 Benefits. In the event this Agreement is terminated by a
Triggering Event, Employee shall be entitled to the following:
6.2.1 Severance pay in an amount equal to 299% of Employee's
"annualized includible compensation for the base period," within the
meaning of section 280(G), of the Internal Revenue Code, as amended.
Notwithstanding anything herein to the contrary, any amounts payable
pursuant to this subparagraph shall be reduced by the amount of any
disability benefits paid to Employee.
6.2.1.1 Payments under this section shall be made over 12 months
in the same interval as Employee's salary as the time of
termination of this Agreement.
6.2.1.2 Employee shall have no obligation to mitigate damages by
seeking other employment.
6.2.2 Medical insurance, life insurance and disability insurance
benefits from Company on terms comparable to the benefits provided by
Company to Employee as of the date of the termination of this
Agreement for 12 months or until Employee shall begin alternative
employment.
6.2.3 Deferred Compensation. Employee, as a participant in the
Company's Deferred Compensation Plan, shall receive a payment equal
to, but not less than, the Company match said Employee received in the
year prior to the takeover, or a full year prior to Employee's
termination, whichever is later.
6.3 Notwithstanding anything herein to the contrary, in the event
Company reasonably determines that any payment or benefit provided under
this section is an "excess parachute payment" within the meaning of section
280(G) of the Internal Revenue Code, as amended, Company shall be entitled
to limit the total of all payments or compensation to Employee to the
maximum amount payable by Company that would not constitute such "excess
parachute payment."
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, Confidential Information is defined as trade secrets (as defined in
Indiana Code 24-2-3-2, as amended), software programs, customer reports,
customer lists, vendor reports, vendor lists, and other information regarding
customers and vendors utilized by Company in the course of its business, and any
information regarding Company's present or future business plans.
7.1 Employee acknowledges his position with Company will expose
Employee to certain Confidential Information of Company; and that
Confidential Information constitutes a valuable, special and unique asset
of Company's business. Employee will not, during or at any time after the
term of his employment, disclose any Confidential Information acquired by
Employee during his employment, to any person, firm, corporation,
association, or other entity for any purpose, or use Confidential
Information for any purpose, other than for the performance of services for
Company.
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7.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section , Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction, including reasonable attorney's fees. Company shall also be
permitted to pursue any other available remedies available for such breach
or threatened breach, including the recovery of damages, costs and
attorney's fees from Employee.
7.3 Employee acknowledges that all Confidential Information is the
sole and exclusive property of Company. Employee shall surrender
possession of all Confidential Information, including documents, computers,
software, disks, tape or video recording, or any other written, recorded,
or graphic matter, however produced or reproduced, containing Confidential
Information to Company upon any suspension or termination of Employee's
employment. If, after the suspension or termination of Employee's
employment, Employee becomes aware of any Confidential Information in his
possession, Employee shall immediately surrender possession of the
Confidential Information to Company.
8. RESTRICTIVE COVENANT. For purposes of this Agreement, "Competing
Business" is defined as Gilbarco, Wayne, Schlumberger, Bennett, and Tatsuno, and
their respective affiliates and subsidiaries, both domestic and international,
and any other company engaged in the petroleum dispensing manufacturing business
or point of sale equipment business related to petroleum dispensing.
8.1 Employee hereby covenants and agrees that, for the greater of 12
months after termination of this Agreement, or such time as Employee is
receiving any severance pay from Company (the "Restricted Period") Employee
will not, directly or indirectly own, manage, operate, control, be
controlled by, participate in, be employed by, or be connected in any
manner with the ownership, management, operation or control of any
Competing Business. Employee further covenants and agrees that he will not
during the Restricted Period contact or attempt to contact, either directly
or indirectly, any customers of Company as they may exist at the time of
termination of Employee's employment for the purpose of soliciting such
customer's business for or on behalf of any Competing Business. Employee
specifically acknowledges and agrees that Company's business is
international in scope and that the restriction as contained in this
section is intended to cover activity by Employee both domestically and
internationally. Employee further stipulates, covenants
and agrees that a reasonable geographic restriction, as that term is used
and defined by Indiana law, on Employee's activity's under this section is
the entire world.
8.2 In the event of Employee's actual or threatened breach of the
provisions of this section, subject to the provisions of section , Company
shall be entitled to obtain an injunction enjoining Employee from
committing such actual or threatened breach. In the event Company obtains
an injunction enjoining Employee from violating this provision, Company
shall be entitled to recover all costs incurred in connection with the
injunction,
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including reasonable attorney's fees. Company shall also be permitted to
pursue any other available remedies available for such breach, including
the recovery of damages, costs and attorney's fees from Employee.
8.3 If a court of competent jurisdiction or any arbitrator determines
that any provision or restriction in this section is unreasonable or
unenforceable, the court or arbitrator shall modify such restriction or
provision so that the agreement then becomes an enforceable restriction of
the activities of Employee.
9. FORFEITURE OF BENEFITS. In the event Employee is breaching his
obligations under either section 7 or section 8 of this Agreement, Employee
shall forfeit all future payments or compensation payable or provided by
Company.
10. NO CONTINUING OBLIGATION. Employee acknowledges and agrees that this
Agreement does not grant Employee the right to continue as an Employee of
Company as an executive or in any other capacity.
11. NO TRUST ESTABLISHED. All payments provided under this Agreement shall
be paid in cash from the general funds of Company and no separate or special
fund has been or shall be established and no segregation of assets has been or
shall be made to assure payment. Employee shall have no right, title or interest
in or to any investments or other assets which Company may acquire or obtain to
assist in meeting its obligations under this Agreement. 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
Company and Employee or any other person. The right of any person to receive
payments from Company under this Agreement shall be no greater than the rights
of a general unsecured creditor of Company.
12. TAXES, ETC. Company may withhold from any payments or benefits provided
under this Agreement:
12.1 all federal, state, city or other taxes as required pursuant to
any law or governmental regulation or ruling; and
12.2 any amounts owed by Employee to Company for any reason at the
time of the termination of this Agreement.
13. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by
Employee without Company's prior written consent; provided, however, that
nothing in this paragraph shall preclude Employee from designating a beneficiary
to receive any benefit payable upon his death, or preclude Employee's executors,
administrators or other legal representatives of his estate from assigning any
rights hereunder to the person or persons entitled thereto. Further, 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.
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14. ARBITRATION. Employee and Company recognize and agree that the
arbitration of disputes provides mutual advantages in terms of facilitating the
fair and expeditious resolution of disputes. In consideration of these mutual
advantages, the parties agree as follows:
14.1 Scope of Arbitration. The parties will submit to arbitration, in
accordance with these provisions, any and all disputes either party
may have arising from or related to this Agreement, and any other
disputes between the parties arising from or related to their
employment relationship, including but not limited to, any disputes
regarding alleged common law tort violations or violations of state or
federal statutory rights. The parties further agree that the
arbitration process set forth below shall be the exclusive means for
resolving all disputes made subject to arbitration but that no
arbitrator shall have authority to determine whether disputes fall
within the scope of these arbitration provisions.
14.2 Governing Law. Employee and Company agree that the
interpretation and enforcement of the arbitration provisions of this
Agreement, including any right to appeal, shall be governed by the
Indiana Uniform Arbitration Act, I.C. 34-4-2-1, et seq.
14.3 Time Limits on Submitting Disputes. Employee and Company
acknowledge and agree that one of the objectives of this arbitration
provision is to resolve disputes expeditiously, as well as fairly, and
that it is the obligation of both parties, to those ends, to raise any
disputes subject to arbitration under this Agreement in an expeditious
manner. Accordingly, the parties agree to waive all statutes of
limitations that might otherwise be applicable, and agree further
that, as to any dispute subject to arbitration pursuant to this
Agreement, notice of a demand for arbitration must be provided to the
other party:
14.3.1 In the event of a dispute arising out of a termination of
this Agreement, within 6 months of the date of termination;
14.3.2 In the event of a breach of section or section of this
Agreement, within 4 months after the Chief Executive Officer has
actual knowledge of the breach; or
14.3.3 In the event of any other dispute, within 3 months after
the dispute arises.
Failure to demand arbitration on claims within these time limits is
intended to, and shall to the furthest extent permitted by law, be a waiver and
release with respect to such claims, and, in the absence of a timely submitted
written demand for arbitration, an arbitrator has no authority to resolve the
disputes or render an award.
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14.4 Availability of Provisional Relief. Notwithstanding anything herein
to the contrary, nothing in this section shall prevent Company or Employee from
obtaining injunctive relief from a court of competent jurisdiction to enforce
the obligations of sections and for which either party may require provisional
relief pending a decision on the merits by the arbitrator.
14.5 American Arbitration Association Rules Apply as Modified Herein. Any
arbitration of disputes shall be conducted under the Model Employment Procedures
of the American Arbitration Association (AAA), as modified in this Agreement.
14.6 Invoking Arbitration. Either party may invoke the arbitration
procedures described in this Agreement by written notice of a demand for
arbitration (an "Arbitration Notice"). An Arbitration Notice shall contain a
statement of the matter to be arbitrated in sufficient detail to establish the
timeliness of the demand. The parties shall then have 10 business days within
which they may identify a mutually agreeable arbitrator. After the 10-day period
has expired, the parties shall prepare and submit to the AAA a joint submission,
with each party to contribute half of the appropriate administrative fee. In
their submission to the AAA, the parties shall either designate a mutually
acceptable arbitrator or request a panel of arbitrators from the AAA according
to the procedure described in section , below.
14.7 Arbitrator Selection. In the event the parties cannot agree upon an
arbitrator within 10 business days after the Arbitration Notice is received,
their joint submission to the AAA shall request a panel of seven arbitrators
from the joint Labor and Commercial Arbitration Panels who are practicing
attorneys with professional experience in the field of labor and/or employment
law and the parties shall attempt to select an arbitrator from the panel
according to AAA procedures. If the parties remain unable to select an
arbitrator, they shall request from AAA a panel of three comparably qualified
arbitrators from which the AAA shall reject the least preferred candidate of
each party and select the candidate with the highest joint ranking of the
parties.
In the event of the death or disability of an arbitrator, the parties shall
select a new arbitrator as provided above. The substitute arbitrator shall have
the power to determine the extent to which he or she shall act on the record
already made in arbitration.
14.8 Prehearing Procedures. Upon accepting assignment as arbitrator, the
arbitrator shall promptly conduct a preliminary hearing at which each party
shall be entitled to submit a brief statement of their respective positions, and
at which the arbitrator shall establish a timetable for prehearing activities
and the conduct of the hearing, and may address initial requests from the
parties for prehearing disclosure of information. At the preliminary hearing
and/or thereafter, the arbitrator shall have the discretion and authority to
order, upon request or otherwise, the prehearing disclosure of information to
the parties. Such disclosure may include, without limitation, production of
requested documents, exchange of witness lists and summaries of the testimony of
proposed witnesses, and examination by deposition of potential witnesses, to the
end that information disclosure shall be conducted in the most expeditious and
cost-effective manner possible, and shall be limited to that which is relevant
and for which each party has a substantial, demonstrable need. The arbitrator
shall further have the authority, upon request or otherwise, to conference with
the parties or their designated representatives concerning any matter, and to
set or modify timetables for all aspects of the arbitration proceeding.
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The arbitrator may award either party its reasonable attorney's fees and
costs, including reasonable expenses associated with production of witnesses or
proof, upon a finding that the other party (a) engaged in unreasonable delay,
(b) failed to comply with the Arbitrator's discovery order, or (c) failed to
comply with requirements of confidentiality hereunder. The arbitrator shall also
have the authority, upon request or otherwise, to entertain and decide motions
for prehearing judgment.
14.9 Stenographic Record. There shall be a stenographic record of the
arbitration hearing, unless the parties agree to record the proceedings by other
reliable means. The costs of recording the proceedings shall be borne equally by
the parties.
14.10 Location. Unless otherwise agreed by the parties, arbitration
hearings shall take place in Fort Wayne, Allen County, Indiana at a mutually
agreeable place or, if no agreement can be reached, at a place designated by the
AAA.
14.11 The Hearing. At any hearing, the party bearing the burden of proof
according to the governing substantive law shall present its evidence first.
14.12 Posthearing Briefs. After the close of the arbitration hearing, and
on any issue concerning prehearing procedures, the arbitrator shall allow the
parties to submit written briefs.
14.13 Confidentiality. All arbitration proceedings hereunder shall be
confidential. Neither party shall disclose any information about the evidence
produced by the other in the arbitration proceeding or about documents produced
by the other in connection with the proceeding, except in the course of a
judicial, regulatory or arbitration proceeding, or as may be requested by
governmental authority. Before making any disclosure permitted by the preceding
sentence, the party shall give the other party reasonable written notice of the
intended disclosure and an opportunity to protect its interests. Expert
witnesses and stenographic reporters shall sign appropriate nondisclosure
agreements.
14.14 Costs. As to any disputes arising from the termination of the
Agreement, each party shall be responsible for its costs, including attorney's
fees, incurred in any arbitration, and the arbitrator shall not have authority
to include all or any portion of said costs and fees in his or her award. The
costs and fees of the arbitrator and of the AAA shall be borne equally by the
parties.
14.14.1 Notwithstanding anything herein to the contrary, Company
shall be entitled to recover its costs and attorney's fees incurred in
enforcing the provisions of section 7 and section 8.
14.15 Remedies. Subject to the provisions of section, the arbitrator
shall have authority to award any remedy or relief that a federal or state court
situated in the State of Indiana could grant in conformity to applicable law.
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14.16 Law Governing the Arbitrator's Award. In rendering an award,
the arbitrator shall determine the rights and obligations of the parties,
including employment discrimination issues, according to federal law and the
substantive law of the State of Indiana (excluding conflicts of laws principles)
as though the matter were before a court of law.
14.17 Written Awards and Enforcement. Any arbitration award shall be
accompanied by a written statement containing a summary of the issues in
controversy, a description of the award, and an explanation of the reasons for
the award. The parties agree that a competent court shall enter judgment upon
the award of the arbitrator, provided it is in conformity with the terms of this
Agreement.
14.18 Conflict in Procedure. If any part of this arbitration
procedure is in conflict with any mandatory requirement of applicable law, the
mandatory requirement shall govern, and the procedure set forth above shall be
reformed and construed to the maximum extent possible in conformance with the
applicable law. The procedure shall remain otherwise unaffected and
enforceable.
15. MISCELLANEOUS.
15.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and all prior negotiations and
agreements, whether written or oral, are merged in to this Agreement.
15.2 Severability. If any provision of this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect any other provision or part of a provision of this Agreement;
but this Agreement shall be reformed and construed as if such
provision had never been contained in it, and any such provision shall
be reformed so that it would be valid, legal and enforceable to the
maximum extent permitted.
15.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which counterparts collectively shall constitute one document
representing the agreement among the parties.
15.4 Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties to this Agreement and their
respective successors and assigns.
15.5 Amendment. This Agreement may not be amended, discharged,
terminated, or changed orally; and any such proposed amendment,
discharge, termination, or change shall be in writing and signed by
the party against whom such amendment, change, discharge, or
termination is sought.
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15.6 Waiver of Breach. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach; and no waiver shall be valid unless it is in writing and is
signed by the party against whom such waiver is sought.
15.7 Extension of Noncompete Period. The periods of time during which
Employee is prohibited from engaging in such business practices pursuant to this
Agreement shall be extended by any length of time during which Employee is in
breach of any of such covenants.
15.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
15.9 Survival. The provisions and restrictions contained in sections and
shall survive the termination of this Agreement and Employee's employment with
Company.
15.10 Attorney Fees and Expenses. Except as expressly provided in this
Agreement or by statute and ordered by an arbitrator or court in accordance with
the provisions of this Agreement, no party shall be entitled to recover from the
other party the reasonable attorney's fees, costs and expenses incurred as a
result of any action to enforce any of the rights under this Agreement.
15.11 Full Disclosure. Employee acknowledges that Employee's employment
with Company is conditioned upon the execution of this Agreement. Employee
represents and acknowledges that Employee has carefully reviewed all of the
terms and conditions in this Agreement, and has been advised of Employee's right
to seek independent legal counsel prior to execution of this Agreement.
15.12 Notices. Any notice, request, or other communication required or
permitted under this Agreement shall be in writing. Notice shall be deemed to
have been given only if personally delivered or sent by registered or certified
mail, return receipt requested. Any notice so mailed shall be deemed given on
the postmark date. Failure or refusal to accept or receive any notice or
communication shall not affect the validity of the notice. All such notices
shall be given to the respective parties at the addresses designated below, or
to such other address as a party may designate in a like manner.
If to Company: TOKHEIM CORPORATION
c/o TIMOTHY EASTOM, VICE PRESIDENT, HUMAN RESOURCES
P.O. BOX 360
FORT WAYNE, IN 46801
If to Employee: NORMAN L. ROELKE
9225 COVINGTON WOODS
FORT WAYNE, IN 46804
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<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement the date
first written above.
COMPANY EMPLOYEE
TOKHEIM CORPORATION
/s/ DOUGLAS K. PINNER /s/ NORMAN L. ROELKE
________________________________________ _______________________________
DOUGLAS K. PINNER NORMAN L. ROELKE
CHAIRMAN, PRESIDENT & CEO
/s/ TIMOTHY EASTOM
________________________________________
Attest: Timothy Eastom
Its: Vice President, Human Resources
_________________________________
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Exhibit 10.8
[LOGO]
EMPLOYMENT AGREEMENT
for EXECUTIVE OFFICERS
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 23rd
day of DECEMBER, 1997, by and between Tokheim Corporation, an Indiana
Corporation ("Company") and SCOTT A. SWOGGER ("Employee").
RECITALS
A. Company acknowledges and recognizes the value of Employee's
services and deems it necessary and desirable to retain Employee's full-time
services.
B. Employee and Company desire to embody the terms and conditions of
Employee's employment in a written agreement which will supersede all prior
employment agreements, whether written or oral.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
EMPLOYMENT. Company agrees to employ Employee, and the Employee
agrees to serve Company, on a full time basis in the capacity of PRESIDENT,
TOKHEIM US, subject to the terms and conditions of this Agreement.
1. TERM. Employee's employment shall commence on the effective date
of this Agreement and continue for an indefinite period and until such time as
it may be terminated by one or both of the parties as provided below.
2. DUTIES.
2.1 During the term of this Agreement, Employee shall have such
duties and responsibilities and shall supply such services in the carrying out
of such duties and responsibilities as Company, through its Board of Directors
("Board"), any duly appointed Committee of the Board, the Chief Executive
Officer of the Company (the "Chief Executive Officer"), or such other Executive
Officers as may be designated by the Board, shall, from time to time, direct.
Company specifically retains the right to alter or amend the position,
responsibilities, duties or services to be performed by Employee in such manner
as to it shall be deemed in the best interests of Company. During the term of
employment, Employee shall devote his best efforts and skills to the business
interests of Company and shall not engage in
<PAGE>
any commercial enterprise or activity, either directly or indirectly, in
conflict with Company's business, or which may in any way interfere with his
employment, without the consent of Company.
2.2 Employee agrees that, during the term of his employment, any and
all inventions and discoveries, whether or not patentable, which Employee may
conceive or make (collectively, "Inventions"), either alone or in conjunction
with others and related or in any way connected with the business of Company,
shall be the sole and exclusive property of Company. Employee shall, without
further compensation or consideration, but at the expense of Company, and as and
when requested to do so by Company, promptly execute and assign any and all
applications, assignments and other instruments which Company shall deem
necessary in order to apply for and obtain letters patent of the United States
and foreign countries for any Inventions, and in order to assign and convey to
Company, or to Company's nominee the sole and exclusive right, title and
interest in and to any Inventions or any applications or patents thereon. As
promptly as known or possessed by Employee, Employee shall disclose to Company
all information with respect to any Invention. Employee further agrees that,
during the term of employment, any trademarks, tradenames, service marks, trade
styles, logos, emblems, labels, slogans and writings, whether or not copyrighted
(collectively, "Marks"), originated by Employee, alone or in conjunction with
others, and related or in any way connected with the business of Company, shall
be the sole and exclusive property of Company. Employee shall, without further
compensation or consideration, but at the expense of Company, and as and when
requested to do so by Company, take all action necessary to register or
otherwise perfect Company's interest in and to any Marks.
3. COMPENSATION. During the term of this Agreement, Company shall
compensate Employee for his services as follows:
3.1 Employee shall be entitled to a monthly base salary of $12,500.00
(the "Base Salary"). Base Salary will be reviewed periodically. Base Salary
shall be payable in semi-monthly or monthly installments, in accordance with the
policy of Company at the time of such payments.
3.2 Employee shall be eligible for such officer's bonus program as
may from time to time be made available and applicable to Employee. Provided,
however, that nothing in this Agreement shall prevent Company, through its
Board, any duly appointed Committees of the Board or such other Executive
Officers of the Company as the Board may designate, from altering or amending
the terms, eligibility, or other provisions of the officers bonus program, or
from eliminating or adding any other bonus programs as it shall from time to
time deem appropriate and in the interests of Company.
3.3 Employee shall be granted participation in all employee benefit
plans applicable to Employee's position with 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 Employee (collectively, "Plans"),
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<PAGE>
consistent with the policies of Company and the terms and conditions of the
Plans. Nothing in this Agreement shall be deemed to alter the terms and
conditions of any Plans or the policy of Company with respect to any Plans, and
nothing in this Agreement shall be deemed to entitle Employee to any rights in
any Plan which would not otherwise be made available to Employee pursuant to the
terms, conditions and provisions of the Plans. Further, nothing in this
Agreement shall prevent Company, through its Board, any duly appointed
Committees of the Board or such other Executive Officers of the Company as the
Board may designate, from altering or amending the terms, eligibility, or other
provisions of the Plan, or from eliminating or adding any other Plan as it shall
from time to time deem appropriate and in the interests of Company.
3.3.1 Except as may otherwise be expressly provided, Employee
shall be granted, upon termination of this Agreement, such rights
as may be available to him pursuant to any Plan or Plans then in
effect.
4. TERMINATION. Either Company or Employee may terminate this Agreement
upon providing written notice to the other.
4.1 By the Company. In the event this Agreement is terminated with
cause (as defined below), Employee shall be entitled to no severance pay and 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.
4.1.1 With Cause. For purposes of this Agreement, the
termination of this Agreement shall be deemed to have been made
with cause only upon the occurrence of one or more of the
following circumstances:
4.1.1.1 Employee engages in any breach of fiduciary duty,
act of dishonesty, or theft involving Company; 4.1.1.2 Employee
is convicted of a felony;
4.1.1.2 Employee is convicted of a felony;
4.1.1.3 Employee discloses Confidential Information in
violation of section 7, below, or competes with Company in
violation of section 8, below;
4.1.1.4 Employee refuses or fails to carry out the duties
which may have been assigned to him; or
4.1.1.5 Employee continues to violate any written Company
policy after written notice by Company of the violation.
4.1.2 Without Cause. In the event Company terminates this
Agreement without cause, Employee shall be entitled to severance
pay equal to 12 months of Employee's Base Salary in effect at the
time of the
<PAGE>
termination, payable at the same interval as his salary at the
time of the termination.
4.1.2.1 Employee shall have no obligation to mitigate
damages by seeking other employment.
4.1.2.2 Subject to any right of offset for Earned Income,
the right to severance pay under this section shall vest
upon notice of termination and shall not be affected by
Employee's subsequent death or disability.
4.2 By Employee. In the event Employee terminates this Agreement,
Employee shall be entitled to no severance pay and shall be entitled only to
such other rights as may be provided in this Agreement or as may otherwise be
available to him in law or equity.
4.3 Death or disability. In the event Employee dies or becomes
permanently disabled during the term of this Agreement or any extension of it,
this Agreement shall terminate upon the date of such death or permanent
disability. In the event this Agreement terminates by Employee's death or
disability, Company shall pay Employee's pro-rata Base Salary through the
termination date, and Employee shall be entitled to no severance pay.
Notwithstanding anything to the contrary, in the event this Agreement terminates
as a result of Employee's death or disability, Employee shall be entitled to
such continuing benefits as may be provided in any Plan or by law.
5. RETURN OF COMPANY PROPERTY. Upon termination of this Agreement for any
reason, Employee shall immediately surrender to Company, in the same condition
as existed prior to termination of this Agreement, all property of Company in
his possession or control, including Confidential Information (as defined
below), computers, files, and any other property owned by Company. Employee and
Company acknowledge and agree that the damages suffered as a result of the
breach of this section would be difficult to ascertain. Accordingly, the parties
agree that Company shall be entitled to liquidated damages in the amount of
$5,000 in the event of a breach by Employee of this section.
6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, Confidential Information is defined as trade secrets (as defined in
Indiana Code 24-2-3-2, as amended), software programs, customer reports,
customer lists, vendor reports, vendor lists, and other information regarding
customers and vendors utilized by Company in the course of its business, and any
information regarding Company's present or future business plans.
6.1 Employee acknowledges his position with Company will expose
Employee to certain Confidential Information of Company; and that
Confidential Information constitutes a valuable, special and unique asset
of Company's business. Employee will not, during or at any time after the
term of his employment, disclose any
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<PAGE>
Confidential Information acquired by Employee during his employment,
to any person, firm, corporation, association, or other entity for any
purpose, or use Confidential Information for any purpose, other than
for the performance of services for Company.
6.2 In the event of Employee's actual or threatened breach of
the provisions of this section, subject to the provisions of section
14, Company shall be entitled to obtain an injunction enjoining
Employee from committing such actual or threatened breach. In the
event Company obtains an injunction enjoining Employee from violating
this provision, Company shall be entitled to recover all costs
incurred in connection with the injunction, including reasonable
attorney's fees. Company shall also be permitted to pursue any other
available remedies available for such breach or threatened breach,
including the recovery of damages, costs and attorney's fees from
Employee.
6.3 Employee acknowledges that all Confidential Information is
the sole and exclusive property of Company. Employee shall surrender
possession of all Confidential Information, including documents,
computers, software, disks, tape or video recording, or any other
written, recorded, or graphic matter, however produced or reproduced,
containing Confidential Information to Company upon any suspension or
termination of Employee's employment. If, after the suspension or
termination of Employee's employment, Employee becomes aware of any
Confidential Information in his possession, Employee shall immediately
surrender possession of the Confidential Information to Company.
7. RESTRICTIVE COVENANT. For purposes of this Agreement, "Competing
Business" is defined as Gilbarco, Wayne, Schlumberger, Bennett, and Tatsuno, and
their respective affiliates and subsidiaries, both domestic and international,
and any other company engaged in the petroleum dispensing manufacturing business
or point of sale equipment business related to petroleum dispensing.
7.1 Employee hereby covenants and agrees that, for the greater
of 12 months after termination of this Agreement, or such time as
Employee is receiving any severance pay from Company (the "Restricted
Period") Employee will not, directly or indirectly own, manage,
operate, control, be controlled by, participate in, be employed by, or
be connected in any manner with the ownership, management, operation
or control of any Competing Business. Employee further covenants and
agrees that he will not during the Restricted Period contact or
attempt to contact, either directly or indirectly, any customers of
Company as they may exist at the time of termination of Employee's
employment for the purpose of soliciting such customer's business for
or on behalf of any Competing Business. Employee specifically
acknowledges and agrees that Company's business is international in
scope and that the restriction as contained in this section is
intended to cover activity by Employee both domestically and
internationally. Employee further stipulates, covenants and agrees
that a reasonable geographic restriction, as that term is used and
defined by Indiana law, on Employee's activity's under this section is
the entire world.
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<PAGE>
7.2 In the event of Employee's actual or threatened breach of
the provisions of this section, subject to the provisions of section
14, Company shall be entitled to obtain an injunction enjoining
Employee from committing such actual or threatened breach. In the
event Company obtains an injunction enjoining Employee from violating
this provision, Company shall be entitled to recover all costs
incurred in connection with the injunction, including reasonable
attorney's fees. Company shall also be permitted to pursue any other
available remedies available for such breach, including the recovery
of damages, costs and attorney's fees from Employee.
7.3 If a court of competent jurisdiction or any arbitrator
determines that any provision or restriction in this section is
unreasonable or unenforceable, the court or arbitrator shall modify
such restriction or provision so that the agreement then becomes an
enforceable restriction of the activities of Employee.
8. FORFEITURE OF BENEFITS. In the event Employee is breaching his
obligations under either section 7 or section 8 of this Agreement, Employee
shall forfeit all future payments or compensation payable or provided by
Company.
9. NO CONTINUING OBLIGATION. Employee acknowledges and agrees that
this Agreement does not grant Employee the right to continue as an Employee of
Company as an executive or in any other capacity.
10. NO TRUST ESTABLISHED. All payments provided under this Agreement
shall be paid in cash from the general funds of Company and no separate or
special fund has been or shall be established and no segregation of assets has
been or shall be made to assure payment. Employee shall have no right, title or
interest in or to any investments or other assets which Company may acquire or
obtain to assist in meeting its obligations under this Agreement. 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 Company and Employee or any other person. The right of any
person to receive payments from Company under this Agreement shall be no greater
than the rights of a general unsecured creditor of Company.
11. TAXES, ETC. Company may withhold from any payments or benefits
provided under this Agreement:
11.1 all federal, state, city or other taxes as required
pursuant to any law or governmental regulation or ruling; and
11.2 any amounts owed by Employee to Company for any reason at
the time of the termination of this Agreement.
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<PAGE>
12. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be
assignable by Employee without Company's prior written consent; provided,
however, that nothing in this paragraph shall preclude Employee from designating
a beneficiary to receive any benefit payable upon his death, or preclude
Employee's executors, administrators or other legal representatives of his
estate from assigning any rights hereunder to the person or persons entitled
thereto. Further, 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. ARBITRATION. Employee and Company recognize and agree that the
arbitration of disputes provides mutual advantages in terms of facilitating the
fair and expeditious resolution of disputes. In consideration of these mutual
advantages, the parties agree as follows:
13.1 Scope of Arbitration. The parties will submit to
arbitration, in accordance with these provisions, any and all disputes
either party may have arising from or related to this Agreement, and
any other disputes between the parties arising from or related to
their employment relationship, including but not limited to, any
disputes regarding alleged common law tort violations or violations of
state or federal statutory rights. The parties further agree that the
arbitration process set forth below shall be the exclusive means for
resolving all disputes made subject to arbitration but that no
arbitrator shall have authority to determine whether disputes fall
within the scope of these arbitration provisions.
13.2 Governing Law. Employee and Company agree that the
interpretation and enforcement of the arbitration provisions of this
Agreement, including any right to appeal, shall be governed by the
Indiana Uniform Arbitration Act, I.C. 34-4-2-1, et seq.
13.3 Time Limits on Submitting Disputes. Employee and Company
acknowledge and agree that one of the objectives of this arbitration
provision is to resolve disputes expeditiously, as well as fairly, and
that it is the obligation of both parties, to those ends, to raise any
disputes subject to arbitration under this Agreement in an expeditious
manner. Accordingly, the parties agree to waive all statutes of
limitations that might otherwise be applicable, and agree further
that, as to any dispute subject to arbitration pursuant to this
Agreement, notice of a demand for arbitration must be provided to the
other party:
13.3.1 In the event of a dispute arising out of a
termination of this Agreement, within 6 months of the date
of termination;
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13.3.2 In the event of a breach of section 7 or section 8 of this
Agreement, within 4 months after the Chief Executive Officer has
actual knowledge of the breach; or
13.3.3 In the event of any other dispute, within 3 months after
the dispute arises.
Failure to demand arbitration on claims within these time limits is intended to,
and shall to the furthest extent permitted by law, be a waiver and release with
respect to such claims, and, in the absence of a timely submitted written demand
for arbitration, an arbitrator has no authority to resolve the disputes or
render an award.
13.4 Availability of Provisional Relief. Notwithstanding anything herein
to the contrary, nothing in this section shall prevent Company or Employee from
obtaining injunctive relief from a court of competent jurisdiction to enforce
the obligations of sections 7 and 8 for which either party may require
provisional relief pending a decision on the merits by the arbitrator.
13.5 American Arbitration Association Rules Apply as Modified Herein. Any
arbitration of disputes shall be conducted under the Model Employment Procedures
of the American Arbitration Association (AAA), as modified in this Agreement.
13.6 Invoking Arbitration. Either party may invoke the arbitration
procedures described in this Agreement by written notice of a demand for
arbitration (an "Arbitration Notice"). An Arbitration Notice shall contain a
statement of the matter to be arbitrated in sufficient detail to establish the
timeliness of the demand. The parties shall then have 10 business days within
which they may identify a mutually agreeable arbitrator. After the 10-day period
has expired, the parties shall prepare and submit to the AAA a joint submission,
with each party to contribute half of the appropriate administrative fee. In
their submission to the AAA, the parties shall either designate a mutually
acceptable arbitrator or request a panel of arbitrators from the AAA according
to the procedure described in section 14.7, below.
13.7 Arbitrator Selection. In the event the parties cannot agree upon an
arbitrator within 10 business days after the Arbitration Notice is received,
their joint submission to the AAA shall request a panel of seven arbitrators
from the joint Labor and Commercial Arbitration Panels who are practicing
attorneys with professional experience in the field of labor and/or employment
law and the parties shall attempt to select an arbitrator from the panel
according to AAA procedures. If the parties remain unable to select an
arbitrator, they shall request from AAA a panel of three comparably qualified
arbitrators from which the AAA shall reject the least preferred candidate of
each party and select the candidate with the highest joint ranking of the
parties.
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In the event of the death or disability of an arbitrator, the parties shall
select a new arbitrator as provided above. The substitute arbitrator shall have
the power to determine the extent to which he or she shall act on the record
already made in arbitration.
13.8 Prehearing Procedures. Upon accepting assignment as arbitrator, the
arbitrator shall promptly conduct a preliminary hearing at which each party
shall be entitled to submit a brief statement of their respective positions, and
at which the arbitrator shall establish a timetable for prehearing activities
and the conduct of the hearing, and may address initial requests from the
parties for prehearing disclosure of information. At the preliminary hearing
and/or thereafter, the arbitrator shall have the discretion and authority to
order, upon request or otherwise, the prehearing disclosure of information to
the parties. Such disclosure may include, without limitation, production of
requested documents, exchange of witness lists and summaries of the testimony of
proposed witnesses, and examination by deposition of potential witnesses, to the
end that information disclosure shall be conducted in the most expeditious and
cost-effective manner possible, and shall be limited to that which is relevant
and for which each party has a substantial, demonstrable need. The arbitrator
shall further have the authority, upon request or otherwise, to conference with
the parties or their designated representatives concerning any matter, and to
set or modify timetables for all aspects of the arbitration proceeding.
The arbitrator may award either party its reasonable attorney's fees and
costs, including reasonable expenses associated with production of witnesses or
proof, upon a finding that the other party (a) engaged in unreasonable delay,
(b) failed to comply with the Arbitrator's discovery order, or (c) failed to
comply with requirements of confidentiality hereunder. The arbitrator shall also
have the authority, upon request or otherwise, to entertain and decide motions
for prehearing judgment.
13.9 Stenographic Record. There shall be a stenographic record of the
arbitration hearing, unless the parties agree to record the proceedings by other
reliable means. The costs of recording the proceedings shall be borne equally by
the parties.
13.10 Location. Unless otherwise agreed by the parties, arbitration
hearings shall take place in Fort Wayne, Allen County, Indiana at a mutually
agreeable place or, if no agreement can be reached, at a place designated by the
AAA.
13.11 The Hearing. At any hearing, the party bearing the burden of proof
according to the governing substantive law shall present its evidence first.
13.12 Posthearing Briefs. After the close of the arbitration hearing, and
on any issue concerning prehearing procedures, the arbitrator shall allow the
parties to submit written briefs.
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13.13 Confidentiality. All arbitration proceedings hereunder shall be
confidential. Neither party shall disclose any information about the
evidence produced by the other in the arbitration proceeding or about
documents produced by the other in connection with the proceeding, except
in the course of a judicial, regulatory or arbitration proceeding, or as
may be requested by governmental authority. Before making any disclosure
permitted by the preceding sentence, the party shall give the other party
reasonable written notice of the intended disclosure and an opportunity to
protect its interests. Expert witnesses and stenographic reporters shall
sign appropriate nondisclosure agreements.
13.14 Costs. As to any disputes arising from the termination of the
Agreement, each party shall be responsible for its costs, including
attorney's fees, incurred in any arbitration, and the arbitrator shall not
have authority to include all or any portion of said costs and fees in his
or her award. The costs and fees of the arbitrator and of the AAA shall be
borne equally by the parties.
13.14.1 Notwithstanding anything herein to the contrary,
Company shall be entitled to recover its costs and attorney's
fees incurred in enforcing the provisions of section 7 and
section 8.
13.15 Remedies. Subject to the provisions of section 14.14, the
arbitrator shall have authority to award any remedy or relief that a
federal or state court situated in the State of Indiana could grant in
conformity to applicable law.
13.16 Law Governing the Arbitrator's Award. In rendering an award,
the arbitrator shall determine the rights and obligations of the parties,
including employment discrimination issues, according to federal law and
the substantive law of the State of Indiana (excluding conflicts of laws
principles) as though the matter were before a court of law.
13.17 Written Awards and Enforcement. Any arbitration award shall be
accompanied by a written statement containing a summary of the issues in
controversy, a description of the award, and an explanation of the reasons
for the award. The parties agree that a competent court shall enter
judgment upon the award of the arbitrator, provided it is in conformity
with the terms of this Agreement.
13.18 Conflict in Procedure. If any part of this arbitration
procedure is in conflict with any mandatory requirement of applicable law,
the mandatory requirement shall govern, and the procedure set forth above
shall be reformed and construed to the maximum extent possible in
conformance with the applicable law. The procedure shall remain otherwise
unaffected and enforceable.
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14. MISCELLANEOUS.
14.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and all prior negotiations and agreements, whether
written or oral, are merged into this Agreement.
14.2 Severability. If any provision of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provision or part of a provision of this Agreement; but this Agreement
shall be reformed and construed as if such provision had never been
contained in it, and any such provision shall be reformed so that it would
be valid, legal and enforceable to the maximum extent permitted.
14.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
counterparts collectively shall constitute one document representing the
agreement among the parties.
14.4 Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties to this Agreement and their
respective successors and assigns.
14.5 Amendment. This Agreement may not be amended, discharged,
terminated, or changed orally; and any such proposed amendment, discharge,
termination, or change shall be in writing and signed by the party against
whom such amendment, change, discharge, or termination is sought.
14.6 Waiver of Breach. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach; and no waiver shall be valid unless it is in
writing and is signed by the party against whom such waiver is sought.
14.7 Extension of Noncompete Period. The periods of time during which
Employee is prohibited from engaging in such business practices pursuant to
this Agreement shall be extended by any length of time during which
Employee is in breach of any of such covenants.
14.8 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
14.9 Survival. The provisions and restrictions contained in sections
7 and 8 shall survive the termination of this Agreement and Employee's
employment with Company.
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14.10 Attorney Fees and Expenses. Except as expressly provided in
this Agreement or by statute and ordered by an arbitrator or court in
accordance with the provisions of this Agreement, no party shall be
entitled to recover from the other party the reasonable attorney's fees,
costs and expenses incurred as a result of any action to enforce any of the
rights under this Agreement.
14.11 Full Disclosure. Employee acknowledges that Employee's
employment with Company is conditioned upon the execution of this
Agreement. Employee represents and acknowledges that Employee has carefully
reviewed all of the terms and conditions in this Agreement, and has been
advised of Employee's right to seek independent legal counsel prior to
execution of this Agreement.
14.12 Notices. Any notice, request, or other communication required
or permitted under this Agreement shall be in writing. Notice shall be
deemed to have been given only if personally delivered or sent by
registered or certified mail, return receipt requested. Any notice so
mailed shall be deemed given on the postmark date. Failure or refusal to
accept or receive any notice or communication shall not affect the validity
of the notice. All such notices shall be given to the respective parties at
the addresses designated below, or to such other address as a party may
designate in a like manner.
If to Company: TOKHEIM CORPORATION
c/o TIMOTHY R. EASTOM, VP, HUMAN RESOURCES
P.O. BOX 360
FORT WAYNE, IN 46801
If to Employee: SCOTT A. SWOGGER
10063 E 415 N
KENDALLVILLE, IN 46755
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IN WITNESS WHEREOF, the parties have entered into this Agreement the date
first written above.
COMPANY EMPLOYEE
TOKHEIM CORPORATION
/s/ John A. Negovetich /s/ Scott A. Swogger
- --------------------------- -------------------------
JOHN A. NEGOVETICH Scott A. Swogger
PRESIDENT, TOKHEIM NORTH AMERICA
/s/ Norman L. Roelke
- ---------------------------
Attest: NORMAN L. ROELKE
Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL
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EXHIBIT 10.9
TECHNOLOGY LICENSE AGREEMENT
- --------------------------------------------------------------------------------
THIS AGREEMENT, effective as of December 1, 1997 (referred to in this
Agreement as the "Effective Date"), is made between GILBARCO INC., a corporation
of Delaware having a place of business at 7300 West Friendly Avenue, Greensboro,
North Carolina 27410 (referred to in this Agreement as "GILBARCO," and TOKHEIM
CORPORATION, a corporation of Indiana having a place of business at 10501
Corporate Drive, Fort Wayne, Indiana 46845 (referred to in this Agreement as
"TOKHEIM").
WHEREAS, GILBARCO is the owner, by assignment, of U.S. Patent Nos. Re.
35,238 granted May 14, 1996 as a reissue of U.S. Patent No, 5,040,577 granted
August 20, 1991 entitled "Vapor Recovery System for Fuel Dispenser," and U.S.
Patent No. 5,355,915 granted October 18, 1994 entitled "Vapor Recovery
Improvements," and U.S. Patent No. 4,876,653 granted October 24, 1989 entitled
"Programmable Multiple Blender," and U.S. Patent No. 5,407,115 granted April 18,
1995 entitled "Printed Receipt Severing," and also is the owner of certain
inventions in vapor recovery and gasoline dispensing systems which are described
and claimed in those patents;
WHEREAS, TOKHEIM is a manufacturer of gasoline dispensing systems and
desires to obtain a license under GILBARCO's patents and to use its vapor
recovery and gasoline dispensing system technology;
WHEREAS, GILBARCO and TOKHEIM are currently parties to Civil Action No.
2:95CV00581 now pending in the United States District Court for the Middle
District of North
<PAGE>
Carolina ("Lawsuit"), in which GILBARCO charges TOKHEIM with committing
infringement of GILBARCO's Patent Rights and acts of unfair competition in
violation of N.C.G.S. 75-1.1;
WHEREAS, GILBARCO and TOKHEIM desire to compromise and settle said
litigation pursuant to the terms of this Agreement, including the entry by the
Court of the Consent Judgment appended hereto as Exhibit A; and
WHEREAS, TOKHEIM desires to exploit products incorporating GILBARCO's
patented inventions and its technology.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
recited and other good and valuable consideration, the parties hereto agree as
follows.
ARTICLE I - DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
1.1 "GILBARCO's Patent Rights" shall mean United States Patent No. Re.
35,238 granted May 14, 1996 as a reissue of United States Patent No. 5,040,577
granted August 20, 1991, United States Patent No. 5,355,915 granted October 18,
1994, United States Patent No. 4,876,653 granted October 24, 1989, and United
States Patent No. 5,407,115 granted April 18, 1995, and all foreign counterpart
patents thereof, and all reissues, reexaminations, divisions, continuations, or
continuations-in-part of said patents.
1.2 "Vapor Recovery Licensed Product" shall mean a TOKHEIM vacuum-assist
vapor recovery system if the completed combination or any portion thereof is
claimed in
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GILBARCO's Patent Rights, including TOKHEIM's MaxVac(R) vapor recovery products.
Vapor Recovery Licensed Products may have any number of hoses, up to eight (8),
either active or inactive, per dispenser, and up to two (2) sides per dispenser.
1.3 "Electronic Blending Licensed Product" shall mean a TOKHEIM electronic
fuel blending system if the completed combination or any portion thereof is
claimed in GILBARCO's Patent Rights, including TOKHEIM's Model -REB, -B3 and -B5
electronic blender products. Electronic Blending Licensed Products may have any
number of hoses, up to eight (8), either active or inactive, per dispenser, and
up to two (2) sides per dispenser.
1.4 "Receipt Severing Licensed Product" shall mean a TOKHEIM printed
receipt severing device utilizing a blade, if the completed combination or any
portion thereof is claimed in GILBARCO's Patent Rights, including TOKHEIM's
present models of print severing receipt devices utilizing a peaked stationary
blade. Receipt Severing Licensed Products may have any number of hoses up to
eight (8) and up to two (2) sides per dispenser.
1.5 "Licensed Products" shall mean Vapor Recovery Licensed Products,
Electronic Blending Licensed Products, Receipt Severing Licensed Products, and
TOKHEIM gasoline pumps or dispensers incorporating Vapor Recovery Licensed
Products, Electronic Blending Licensed Products, and Receipt Severing Licensed
Products, and Related Technology, if the completed combination or any portion
thereof is claimed in GILBARCO's Patent Rights.
1.6 "Related Technology" shall mean the inventions in vapor recovery
and gasoline dispensing systems which are described in GILBARCO's Patent Rights.
1.7 "Subsidiary" shall mean a firm, company, or corporation in which a
party owns or controls, directly or indirectly, at least a majority of the
voting stock or control.
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1.8 "Parent" shall mean a firm, company, or corporation which owns or
controls, directly or indirectly, at least a majority of the voting stock or
control of a party. For the purpose of this definition, the stock owned or
controlled by a particular firm, company or corporation shall be deemed to
include all stock owned or controlled, directly or indirectly, by any other
firm, company or corporation of which the particular firm, company or
corporation owns or controls, directly or indirectly, at least a majority of the
stock having the right to vote for directors thereof.
1.9 "Affiliate" shall mean a firm, company, or corporation as to which a
majority of the voting stock or control is owned or controlled, directly or
indirectly, by a Parent of the party.
ARTICLE II - GRANTS
2.1 Subject to the terms and conditions of this Agreement, and the entry
by the Court of the Consent Judgment appended as Exhibit A, GILBARCO hereby
grants to TOKHEIM for the term of this Agreement a nonexclusive, nontransferable
(except as provided herein) worldwide license under GILBARCO's Patent Rights to
make, have made, use, offer to sell and sell Licensed Products throughout the
world, together with the right to convey to direct and indirect purchasers of
such Licensed Products a nonexclusive license under GILBARCO's Patent Rights to
use such Licensed Products so purchased, and the right to grant sublicenses with
such grant to Subsidiaries. Affiliates and Parents of TOKHEIM, but no other
sublicensing right is granted.
ARTICLE III - ROYALTIES
3.1 As license fees for the transfer and license of GILBARCO's Patent
Rights and Related Technology, and for technical assistance and consulting
services provided by
4
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GILBARCO by mutual consent of both parties, until the expiration of the last of
GILBARCO's Patent Rights as set forth in Article V, paragraph 5.2 of this
Agreement, TOKHEIM shall make the following payments:
A. Three Million Dollars ($3,000,000) as a fixed royalty, payable in equal
quarterly installments over three (3) years (or twelve (12) quarterly
installments of $250,000 each), plus interest at a rate per annum equal to the
"prime rate" published by "The Wall Street Journal" at the time such payment is
due. Such interest shall accrue from the Effective Date of this Agreement. The
first of said installments shall be due and payable with the first quarterly
royalty report, and payment, if any, which is due after the Effective Date of
this Agreement, and each installment thereafter shall be due and payable with
each quarterly royalty report and payment, if any, due, pursuant to Article IV,
paragraph 4.2 of this Agreement (i.e., such installment payments shall be due
for the first such year on April 30, July 30 and October 30, 1998, and on
January 30, 1999; for the second such year on April 30, July 30 and October 30,
1999, and on January 30, 2000; and for the third such year on April 30, July 30
and October 30, 2000, and on January 30, 2001).
B. TOKHEIM acknowledges and agrees that the fixed royalty and installment
payments due under Article III, paragraph 3.1.A of this Agreement are
nonrefundable and shall be paid in full, regardless of any disputes or
disagreements which may arise at any time under this Agreement, including, but
not limited to, termination under Article V.
3.2 In addition to the fixed royalty payable to GILBARCO pursuant to
Article III, paragraph 3.1 above, TOKHEIM shall also pay GILBARCO the following
earned royalties, for each Licensed Product manufactured, used or sold by
TOKHEIM subsequent to the Effective
5
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Date of this Agreement:
A. (*1) per dispenser side for each dispenser side incorporating or
retrofitting a Vapor Recovery Licensed Product, or (*2) for each two sided
dispenser incorporating or retrofitting Vapor Recovery Licensed Products on both
sides.
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(*1) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.
(*2) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.
B. (*3) per dispenser side for each dispenser side incorporating or
retrofitting an Electronic Blending Licensed Product, or (*4) for each two sided
dispenser incorporating or retrofitting Electronic Blending Licensed Products on
both sides.
- ---------------
(*3) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.
(*4) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.
C. (*5) per dispenser side for each dispenser side incorporating or
retrofitting a Receipt Severing Licensed Product, or (*6) for each two-sided
dispenser incorporating or retrofitting Receipt Severing Licensed Products on
both sides.
- ---------------
(*5) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.
(*6) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.
3.3 Royalties and payments provided for in this Agreement in Article III,
paragraphs 3.1 and 3.2, when overdue, shall bear interest at a rate per annum
equal to two percent (2%) in excess of the "prime rate" published by "The Wall
Street Journal" at the time such payment is due, and for the time period until
payment is received by GILBARCO.
3.4 The earned royalties accrued or paid by TOKHEIM under the terms of
Article III, paragraph 3.2 of this Agreement shall also be nonrefundable.
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ARTICLE IV - ACCOUNTING PROVISIONS
4.1 Records
TOKHEIM shall keep or cause to be kept, in accordance with generally
accepted accounting principles, books, records and accounts covering its
operations applicable to this Agreement and containing all information necessary
for the accurate determination of amounts payable hereunder. TOKHEIM also agrees
to permit a mutually agreed to, certified public accountant, which agreement
shall not be unreasonably withheld by TOKHEIM, to inspect, at GILBARCO's
expense, at reasonable intervals and during regular business hours, such books,
records and accounts as may be necessary to determine the completeness and
accuracy of reports required to be made hereunder. Such certified public
accountant shall agree to keep all TOKHEIM information confidential. In the
event such inspection reveals that the reports provided by TOKHEIM pursuant to
Article 4.2 below understate the number of Licensed Products sold by an amount
which is five percent (5%) or more, then TOKHEIM shall bear the cost of such
inspection.
4.2 Reports and Payment
A. As promptly as practicable and within thirty (30) days after the end
of each calendar quarter, any part of which is within the term of this
Agreement, TOKHEIM shall deliver to GILBARCO a report in writing, certified by
an officer of TOKHEIM, setting forth the number and type of Licensed Products
sold during such calendar quarter by TOKHEIM. Such report shall be made whether
or not TOKHEIM has made any sales during such quarter. TOKHEIM agrees to
accompany each such report with payment of the royalties, if any, due to
GILBARCO for TOKHEIM's sales during the period for which such report is made.
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B. TOKHEIM shall also provide GILBARCO an annual summary within sixty
(60) days after the completion of each of TOKHEIM's fiscal years, prepared by an
independent accounting firm which at the time shall be used by TOKHEIM as its
auditors attesting to the number of Licensed Products sold by TOKHEIM in that
fiscal year. The examination of books and records and preparation of this annual
report shall be at the expense of TOKHEIM.
ARTICLE V - TERM AND TERMINATION
5.1 Term
The term of this Agreement shall be from the Effective Date until the
expiration or lapsing of the last of GILBARCO's Patent Rights as set forth below
in this Article V, paragraph 5.2 of this Agreement.
5.2 Royalty Payments and Termination of Patents
A. Royalty Payments and Expiration or Lapse of Patents
TOKHEIM's obligation to GILBARCO for earned royalty payments for Vapor
Recovery Licensed Products in this Agreement under Article III, paragraph 3.1
shall cease with the last to lapse or expire of GILBARCO's U.S. Patent Nos. Re.
35,238 and 5,355,915, i.e., October 18, 2011; TOKHEIM's obligation to GILBARCO
for earned royalty payments for Electronic Blending Licensed Products in this
Agreement under Article III, paragraph 3.1 shall cease with the lapse or
expiration of GILBARCO's U.S. Patent No. 4,876,653, i.e., October 24, 2006;
TOKHEIM's obligation to GILBARCO for earned royalty payments for Receipt
Severing Licensed Products in this Agreement under Article III, paragraph 3.1
shall cease with the lapse or expiration of GILBARCO's U.S. Patent No.
5,407,115, i.e., April 18, 2012.
8
<PAGE>
B. Royalty Payments and Invalidity or Unenforceability of Patents
In the event any of the foregoing patents are found to be invalid, void or
unenforceable by a final decision of a court from which no appeal may be taken,
TOKHEIM's obligations to pay earned royalties for that patent under the
appropriate Paragraph of Article III, paragraph 3.2 shall cease. In no event
shall this Paragraph affect TOKHEIM's obligation to pay the fixed royalty, or
any of the installment payments due, under Article III., paragraph 3.1 of this
Agreement.
5.3 Termination
A. GILBARCO, at its option, may terminate the License granted by it under
this Agreement if TOKHEIM fails to make any of the payments due under this
Agreement, or defaults in the performance of any material obligation and if the
default has not been remedied within ninety (90) days after written notice by
GILBARCO to TOKHEIM describing the default, except that in the case of a default
GILBARCO may not terminate if the matter is being arbitrated pursuant to Article
XI.
B. TOKHEIM shall inform GILBARCO of any filing of a voluntary petition of
bankruptcy, or another party's filing of an involuntary petition of bankruptcy,
in writing within thirty (30) days of the filing of such a petition. Such
filing shall be a material breach of this Agreement and shall entitle GILBARCO,
at its sole discretion, to immediately terminate this Agreement as of the
effective date of the filing of such petition.
ARTICLE VI - GOVERNING LAW
This Agreement shall be governed and interpreted in accordance with the
laws of the State of North Carolina, except to the extent that North Carolina's
conflict of law rules would
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<PAGE>
indicate the application of the law of another state or country. TOKHEIM
further consents to the jurisdiction over it of the State and federal courts of
North Carolina for the purpose of resolving any disputes, claims or
controversies arising out of this Agreement, other than any disputes, claims or
controversies which are subject to adjudication by the arbitration provisions of
Article XI of this Agreement.
ARTICLE VII-ENFORCEMENT OF GILBARCO'S PATENT RIGHTS
7.1 TOKHEIM shall promptly notify GILBARCO and provide evidence and
documentation of any infringement by another of GILBARCO's Patent Rights in the
United States, insofar as such rights relate to Licensed Products hereunder. If
such evidence and documentation establishes that a third party is actually
infringing any of GILBARCO's Patent Rights in the United States to the
substantial detriment of TOKHEIM, while TOKHEIM is paying earned royalties to
GILBARCO pursuant to the provisions of this Agreement and is not in material
breach of any term or condition hereof, and if GILBARCO within a period of six
(6) months after receiving such written notice of infringement and such evidence
and documentation of actual infringement from TOKHEIM fails to institute legal
action against such unlicensed third party to enjoin such unlicensed activities,
or fails to reasonably satisfy TOKHEIM that such unlicensed activities will
cease, TOKHEIM shall have the right, at its expense, to institute legal action
against such unlicensed third party and to retain any royalties or other damages
collected as a result of such legal action, provided that TOKHEIM shall keep
GILBARCO fully and promptly advised with respect to such legal action and, in
particular, all challenges to the validity and enforceability of GILBARCO's
Patent Rights, and shall permit GILBARCO to join such
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<PAGE>
action, at GILBARCO's expense, if GILBARCO so desires. If GILBARCO is required
to join such legal action under the rules of the jurisdiction, GILBARCO will do
so at TOKHEIM's expense.
7.2 The existence of any known or suspected infringement by another of
GILBARCO's Patent Rights shall not entitle TOKHEIM to cease the payment of
earned royalties pursuant to the terms of ARTICLE III.
ARTICLE VIII - GENERAL TERMS AND CONDITIONS
8.1 Relationship of the Parties
This Agreement does not constitute a partnership agreement, nor does it
create a joint venture or agency relationship between the Parties. Neither Party
shall hold itself out contrary to the terms of this Paragraph. Neither Party
shall be liable to any third party for the representations, acts or omissions of
the other party.
8.2 Notices
Unless otherwise expressly provided for, all notices required under this
Agreement must be in writing and must be delivered personally or sent by
certified mail (postage prepaid and return receipt requested) to the other Party
at the address set forth below (or to any other address given by either Party to
the other Party in writing):
For GILBARCO:
GILBARCO INC.
P.O. Box 22087
7300 West Friendly Avenue
Greensboro, NC 27420
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Attn: Office of the General Counsel
For TOKHEIM:
TOKHEIM CORPORATION
10501 Corporate Drive
Fort Wayne, Indiana 46945
Attn: Office of the General Counsel
In the case of mailing, the effective date of delivery of any notice shall be
considered to be ten (10) days after proper mailing.
8.3 Waiver and Amendment
No waiver, amendment or modification of this Agreement shall be effective
unless in writing and signed by the party against whom the waiver, amendment or
modification is sought to be enforced. No failure or delay by either Party in
exercising any right power or remedy under this Agreement shall operate as a
waiver of the right, power or remedy. No waiver of any term, condition or
default of this Agreement shall be construed as a waiver of any other term,
condition or default.
8.4 Assignment
TOKHEIM may not assign any rights or obligations under this Agreement
without GILBARCO's prior written consent except that the respective rights and
obligations of TOKHEIM under this Agreement shall be assignable without the
consent of GILBARCO, but subject to prior notice, to any person or entity who
acquires all of that portion of TOKHEIM's business to which this Agreement
relates, in which event the assignee shall enjoy the benefits of, and be bound
by the respective rights and obligations of TOKHEIM hereunder. Any other
12
<PAGE>
assignment of this Agreement or the rights hereunder by TOKHEIM shall be void
and of no effect unless consented to in writing by GILBARCO. GILBARCO has the
right to assign this Agreement and to assign its rights under this Agreement,
in whole or in part, at any time and without TOKHEIM's consent.
8.5 Entire Agreement
This Agreement constitutes the complete and final agreement between the
parties, and supersedes all prior negotiations and agreements between the
parties concerning its subject matter. The interpretation of this Agreement may
not be explained or supplemented by any course of dealing or performance, or by
usage of trade.
8.6 Patent Marking
TOKHEIM agrees to mark every device manufactured by or sold by it under
this Agreement in accordance with the statutes of the United States relating to
marking of patented articles.
8.7 Heading
The section and paragraph headings of this Agreement are intended as a
convenience only, and shall not affect the interpretation of its provisions.
8.8 Singular and Plural Terms
Where the context of this Agreement requires, singular terms shall be
considered plural, and plural terms shall be considered singular.
8.9 Severability
If any provision of this Agreement is finally held by a court of competent
jurisdiction to be unlawful, the remaining provisions of this Agreement shall
remain in full force and effect, unless as a result of such unlawful provision
there is a material failure of consideration as to a
13
<PAGE>
party and such party is unwilling to waive such failure.
ARTICLE IX -- WARRANTIES
9.1 GILBARCO represents and warrants that it owns GILBARCO's Patent Rights
and that such rights are not the subject of any encumbrance, lien or claim of
ownership by any third party.
9.2 TOKHEIM understands, acknowledges and agrees that, except as
specifically provided herein, GILBARCO DOES NOT MAKE ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED (INCLUDING, BUT NOT LIMITED TO, A
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), IN RESPECT OF
THE GILBARCO'S PATENT RIGHTS AND RELATED TECHNOLOGY, FOR ANY PRODUCTS PRODUCED
BY OR FOR TOKHEIM, OR ANY OTHER SUBJECT MATTER HEREOF.
ARTICLE X -- CONFIDENTIALITY OF AGREEMENT
The terms and conditions of this Agreement shall be kept confidential by
both parties hereto and shall not be disclosed by either party without the prior
written consent of the other, except as may be required by law or by order of a
court, or as required by the provisions of any license agreement to which
GILBARCO is a party, provided, however, TOKHEIM may disclose the terms and
conditions of this Agreement to Nuovo Pignone's counsel, pursuant to the
Protective Order in this case as "Confidential Counsel Only" without prior
written consent of GILBARCO. Nothing in this Paragraph, however, shall preclude
either party from announcing
14
<PAGE>
that an agreement has been reached between the parties settling the disputes
between them and that GILBARCO has granted and TOKHEIM has received a license
under GILBARCO's Patent Rights and to use its Related Technology.
ARTICLE XI -- ARBITRATION
11.1 Provision for Arbitration
Any controversy or claim arising out of or relating to this Agreement, or
breach thereof, if not otherwise settled by the parties, shall be settled by
expedited binding arbitration in accordance with the Rules of the American
Arbitration Association, and judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction thereof, provided,
however, that the arbitrators shall not have the power to either amend this
Agreement in any respect, or to arbitrate any issue of the validity,
enforceability or infringement of GILBARCO's Patent Rights. The arbitration
award shall then have the same force and effect as if the award and decision
were made and entered by a court. The arbitration proceedings shall be conducted
in Greensboro, North Carolina, and shall be conducted by an arbitrator who shall
be experienced in the field to which the issues relate and approved by both
Parties and who shall have no financial interest or relation to the subject
matter or the Parties hereto.
11.2 Commencement
GILBARCO or TOKHEIM may commence an arbitration proceeding under this
Section by giving written notice to the other party, which notice shall set
forth the matters to be arbitrated. The other party shall respond within thirty
(30) days upon receipt of such notice. Thereafter the arbitrator shall be
selected in accordance with the Rules of the American
15
<PAGE>
Arbitration Association and the provisions of Article XI, paragraph 11.1 above.
11.3 Expenses and Costs
Until a determination hereunder, the parties shall share equally in the
payment of the expenses of the arbitrator. As part of any award, the arbitrator
may award the payment of arbitration expenses to the prevailing party.
11.4 Rules of Procedure
In the event that the Rules of the American Arbitration Association do not
cover a question arising during arbitration, then the laws of the United States
of America and the State of North Carolina pertaining to arbitration shall
apply. The arbitrators shall provide for discovery, pursuant to the Federal
Rules of Civil Procedure and the Federal Rules of Evidence, for a reasonable
period following the selection of the arbitrator, with questions relating to
such discovery determined by the arbitrator.
ARTICLE XII - FORCE MAJEURE
12.1 Neither Party shall be responsible to the other for failure to
perform any of the obligations (other than the obligation to pay money) imposed
by this Agreement, provided such failure shall be caused directly by fire,
explosion, lightening, windstorm, earthquake, subsidence of soil, failure or
destruction, in whole or in part, of machinery or equipment or failure of supply
of materials, discontinuity in the supply of power, governmental interference,
civil commotion, riot, war, strikes, labor disturbance, transportation
difficulties, labor shortage or by any cause beyond the reasonable control of
the Party in question.
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ARTICLE XIII - RELEASE AND SETTLEMENT
13.1 In consideration of the promises and covenants contained herein, the
parties hereto agree as follows:
A. Release by GILBARCO. Subject to the provisions of this Agreement
--------------------
and the entry of the Consent Judgment appended as Exhibit A, GILBARCO hereby
releases and forever discharges TOKHEIM, together with its directors, officers,
agents, stockholders, as well as its/their heirs, assigns, suppliers and
successors, from any and all claims, demands, liabilities, actions or causes of
action of whatsoever kind or nature which GILBARCO has or may have as a result
of or arising out of the subject matter of GILBARCO's Patent Rights and/or the
Lawsuit. Subject to the provisions of this Agreement and the entry of the
Consent Judgment appended as Exhibit A, it is the intent of the parties that
GILBARCO hereby releases any and all claim which it believes it has or may have
against TOKHEIM and/or its officers, directors, shareholders, agents, heirs or
its successors in interest at any time prior to and including the date of the
execution of this Agreement that it has or may have as a result of or arising
out of the subject matter of the GILBARCO Patent Rights and/or the Lawsuit.
B. Release by TOKHEIM. Subject to the provisions of this Agreement
-------------------
and the entry of the Consent Judgment appended as Exhibit A, Tokheim hereby
releases and forever discharges GILBARCO and its agents, as well as its heirs
and assigns, from any and all claims, demands, liabilities, actions or causes of
action of whatsoever kind or nature which they may have arising out of the
subject matter of the Lawsuit and/or GILBARCO'S Patent Rights. Subject to the
provisions of that Agreement and the entry of the Consent Judgment appended as
Exhibit A, it is the intent of the parties that TOKHEIM releases GILBARCO and
its agents, heirs
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and assigns from any and all claims which it has or may have at any time prior
to and including the date of the execution of this Agreement that it has or may
have as a result of or arising out of the subject matter of the GILBARCO Patent
Rights and/or the Lawsuit.
GILBARCO INC.
By: /s/ David L. Kaehler
---------------------------
Title: President, Gilbarco N.A.
------------------------
DATED: 2/11/98
------------------------
TOKHEIM CORPORATION
By: /s/ John A. Negovetich
---------------------------
Title: Executive Vice President, Finance and Administration
----------------------------------------------------
DATED: 2/4/98
------------------------
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Exhibit 10.10
[LOGO OF TOKHEIM]
TOKHEIM CORPORATION
1997 INCENTIVE PLAN
SECTION 1. OBJECTIVE:
- --------------------
Tokheim's Salary Administration Program, Stock Option/Grant Programs, and the
1997 Key Management Incentive Bonus Plan's objectives are to increase
executives' and managerial focus toward optimizing Corporate financial
performance for shareholders and return on their investment while also providing
the financial resources to support the Corporation's objectives for growth,
service and quality commitments, and employee and organizational development.
SECTION 2. PHILOSOPHY:
- ---------------------
The compensation of certain key executives and managers should be based, in
part, on preestablished financial objectives of the Corporation and individual,
specific, measurable objectives. This incentive plan is intended to focus the
effort of the plan participants on achieving the goals approved by the Board of
Directors to insure the profitability and long-term growth of Tokheim.
In addition, corporate officers are expected to share with the company in the
responsibility to accumulate Tokheim stock. Corporate officer stock ownership
should be significant; as such, the C.E.O. should own three (3) times base
salary and each Vice President should own two (2) times their respective base
salary in Tokheim stock. This goal should be reached progressively over the next
continuing five (5) year period.
Stock grants and/or options and performance incentives should be the largest
component of total compensation.
SECTION 3. ADMINISTRATION:
- -------------------------
The Board of Directors will consider and, if appropriate, approve a plan
annually. The Plan will be administered by the Compensation Committee whose
actions are subject to the Board of Directors approval. The decision of the
Board of Directors will be final as to the interpretation of the Plan or any
rule, procedure or action of the Compensation Committee.
The award or sale of shares under this plan may be restricted for up to five
years and will be accompanied by cash awards equal to the fair market value of
the shares on the date of lapsed restriction, if awarded, or equal to the excess
of the fair market value on the date of the lapse over the original purchase
price, if purchased. Annual share grants/options will not exceed 1% of total
outstanding shares per year. Shares authorized for plan use will not exceed 10%
of outstanding
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shares at any point in time. An addendum will be added to the plan each year
reflecting current market payouts. The Compensation Committee will make the
final determination of stock option levels and/or restrictions for the C.E.O.
and will review the C.E.O.'s recommendation for all other corporate
participants.
SECTION 4. ELIGIBILITY:
- ----------------------
Categories of eligible Plan participants are:
CATEGORY 1: CEO;
CATEGORY 2: Division President(s); and Corporate Vice Presidents;
CATEGORY 3: Other Corporate staff and key functional managers as may be
designated by the CEO of Tokheim.
Participants are measured on the results of the operating unit or units in which
their principal duties are performed, that is Corporate, Group or individual
operating unit. The award for those individuals who serve as Divisional
Presidents will depend on the attainment of the Business Performance Factors of
both the Corporation in total (50%) and the Group they administer (50%). A
participant who transfers from one eligibility class to another will share pro-
rata in each class based on the percentage eligibility in each class and the
portion of the fiscal year spent in each class.
To receive a bonus under this Plan, a participant must be an active, full-time
employee on the last business day of the Company's fiscal year. Those who join
during the year will be awarded a pro-rata bonus based upon days in the plan.
If a participant dies, and such death occurs during the last two fiscal quarters
of the year, a bonus, prorated in accordance with the number of days in the year
in which he participated before his death, will be paid to his or her
beneficiary at the same time and in the same manner as bonuses for the year are
paid to Plan participants. The beneficiary will be the beneficiary designated
for the employee's group life insurance plan. If no such beneficiary has been
designated, the bonus will be paid to the employee's estate.
If a participant retires prior to the last day of any Plan year, a bonus,
prorated in accordance with the number of days in the year in which he or she
participated before retirement, will be paid to such participant at the same
time and in the same manner as bonuses for the year are paid to other
participants.
SECTION 5. BONUS PERCENTAGES AND COMPONENTS:
- -------------------------------------------
Total incentives will be determined by the attainment of Business Performance
Factors (BPF) and Strategic Performance Factors (SPF). Attainment of minimum
acceptable corporate
2
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performance will yield a payout of 50% of the target opportunity.
The target bonus payable to a participant will be the following.
CATEGORY 1: C.E.O. - 50% of base salary.
CATEGORY 2: V.P. and Subsidiary Officers - 40% of base salary
CATEGORY 3: Key Managers - Up to 25% of base salary as determined for each
participant by the CEO.
In each class, participants earn the bonus at the specific percentage defined
for achievement of financial objectives and the specific percentage defined for
achievement of non-financial objectives each year.
Salary, as used to determine an employee's bonus, will mean the employee's total
base salary earned in the bonus year, before deductions for salary reduction
benefit plans, but excluding any and all items or forms of special compensation,
bonuses, commissions or reimbursed expenses.
The above provisions notwithstanding:
A. Should any event result in a loss for the bonus year, the Chief Executive
Officer and all Corporate Officers will not be eligible for a formula bonus.
B. Participants whose potential bonus is measured solely on corporate
performance, are eligible for the applicable bonus only when no loss is
experienced for the bonus year.
C. Participants whose bonus is measured by both divisional, subsidiary or
corporate performance, are eligible for the applicable bonus based on each
unit measured that experiences no loss for the bonus year.
D. The C.E.O. or the Committee may recommend discretionary bonuses based on
individual performance.
SECTION 6. BUSINESS PERFORMANCE FACTORS:
- ----------------------------------------
The financial objectives will be proposed to the Compensation Committee by the
CEO. The Committee will make its recommendation to the Board after evaluating
Management's Business Performance Factors (BPF) targets for the Corporation as a
whole and its individual operating units. The BPF targets will be determined by
the CEO and will not be less than the operating plan BPF targets.
3
<PAGE>
When determining formula bonuses, operating profit and pretax profit will
exclude any unusual gains or losses (such as a benefit from FAS87, a Board
approved sale of business, etc.). Participants will not benefit from "Windfall"
or unusual types of gains or losses, but will be given appropriate consideration
based on their role in the transaction.
The BPF target as a percentage of the Total Bonus will be determined annually.
The financial component of the bonus award is a function of achieving the BPF
targets and may range from 0% to 200%. The method of calculating the financial
objective of the bonus follows:
A. Minimum Bonus Level: 50% - A bonus will not be paid if the minimum BPF target
is not achieved.
B. Target Bonus Level; 100% - Paid when the BPF target is achieved.
C. Maximum Bonus Level; 200% - The maximum bonus is based on 125% achievement of
the BPF target as determined by the CEO and will be prorated.
SECTION 7. STRATEGIC PERFORMANCE FACTORS:
- ----------------------------------------
This portion of a participant's bonus is based on individual performance
evaluation of preestablished non-financial personal, unit and corporate
objectives. The performance of the CEO will be evaluated by the Board of
Directors. The performance of other officers will be evaluated by the CEO. The
performance of Key Managers and Category 2 and 3 participants will be made by
appropriate supervisors and the Vice President of Human Resources, subject to
review by the CEO.
The SPF as a percentage of the Total Bonus will be determined annually.
SECTION 8. CALCULATION, APPROVAL AND PAYMENT:
- --------------------------------------------
Upon completion of the annual audit and certification of results by the
Company's independent auditors, the CEO will recommend bonuses for plan
participants to the Compensation Committee. Other provisions notwithstanding,
the CEO may recommend increases or decreases in individual bonuses or the
addition or deletion of a participant to or from the Plan in view of
extraordinary or unusual events or circumstances.
Any payment to a participant under any Tokheim Deferred Compensation Plan for
the bonus plan year will be deducted from the bonus award, if any.
The Committee will review the CEO's recommendations and make such adjustments as
it deems appropriate.
4
<PAGE>
Bonus components may consist of cash, stock grants/options or company stock at
the discretion of the CEO.
Payment of bonuses under this Plan, as reviewed by the Committee and approved by
the Board of Directors will be made promptly after such approval, or to such
deferred plan as the Corporation may establish for such purposes.
SECTION 9. NO CONTRACT:
- ----------------------
This Plan is not and will not be construed as an employment contract or as a
promise or contract to pay bonuses to participants or their beneficiaries. The
Plan will be reviewed at least annually by the Board of Directors, and the Plan
may be amended from time to time by the Board of Directors without notice. No
participant or beneficiary may sell, assign, transfer, discount or pledge as
collateral for a loan, or otherwise anticipate any right to a payment or a bonus
under this Plan.
5
<PAGE>
EXHIBIT 10.11
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of the 1/st/ day of
January, 1998 (the "Effective Date"), by and between Management Solutions, Inc.
("Company"), a Colorado corporation, a wholly-owned subsidiary of Tokheim
Corporation ("Tokheim"), an Indiana corporation, and Arthur S. ("Rusty") Elston
("Employee").
RECITALS
A. Company acknowledges and recognizes the value of Employee's services
and deems it necessary and desirable to retain Employee's full-time services.
B. Employee and Company desire to embody the terms and conditions of
Employee's employment in a written agreement which will supersede all prior
employment agreements, whether written or oral.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Company agrees to employ Employee, and Employee agrees to serve
Company, on a full-time basis in the capacity of President, subject to the terms
and conditions of this Agreement, provided, that the Company shall not relocate
either its main office or Employee from the southeast Denver, Colorado
metropolitan area.
2. TERM. Employee's employment shall commence on the Effective Date and
continue for three (3) years thereafter unless earlier terminated by one or both
of the parties as provided below (the "Term").
3. DUTIES. During the Term, Employee shall have such duties and
responsibilities and shall supply such services in the carrying out of such
duties and responsi-
<PAGE>
bilities as the Chief Executive Officer of Tokheim (the "Chief Executive
Officer") or the President of Tokheim-North America (or the person in any
successor position thereto) shall, from time to time, direct. Employee shall
have the primary day-to-day responsibility for the management of the Company
consistent with the customary duties and responsibilities of the president of a
wholly-owned subsidiary of a public company and Section 1.6 of the Stock
Purchase Agreement (as hereinafter defined). During the term of employment,
Employee shall devote his best efforts and skills to the business interests of
Company and shall not engage in any commercial enterprise or activity, either
directly or indirectly, in conflict with Company's business, or which may in any
way interfere with his employment, without the consent of Company.
4. COMPENSATION. During the term of this Agreement, Company shall compensate
Employee for his services as follows:
4.1 Employee shall be entitled to a base salary of $250,000 (the
"Base Salary") per year. Base Salary will be reviewed periodically; provided
that the Base Salary may not be decreased during the Term. Base Salary shall be
payable in semimonthly or monthly installments, in accordance with the policy of
Company at the time of such payments. When referred to as a monthly payment or
amount, Base Salary shall mean $20,833.33 per month.
4.2 Employee shall be eligible for such officer's bonus program as
may from time to time be made available and applicable to Employee's position
with Company, and shall be consistent with employees in similar positions with
Tokheim; provided, however, that nothing in this Agreement shall prevent
Company, through its Board, any duly appointed Committees of the Board or the
Chief Executive Officer, from altering or amending the terms, eligibility, or
other provisions of the officers' bonus program, or from eliminating or adding
any other bonus programs as it shall from time to time deem appropriate and in
the interests of Company; provided further that Employee shall have the right
to refuse any bonus to the extent that such bonus would decrease the "Adjusted
EBIT" of the Company (as such term is defined in the Stock Purchase Agreement,
dated December 29, 1997, between Tokheim, Employee and others (the "Stock
Purchase Agreement")).
4.3 Employee shall be granted participation in all employee benefit
plans applicable to Employee's position with 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
2
<PAGE>
applicable to Employee (collectively, "Plans"), consistent with the policies of
Company and the terms and conditions of the Plans. Nothing in this Agreement
shall be deemed to alter the terms and conditions of any Plans or the policy of
Company with respect to any Plans, and nothing in this Agreement shall be deemed
to entitle Employee to any rights in any Plan which would not otherwise be made
available to Employee pursuant to the terms, conditions and provisions of the
Plans. Further, nothing in this Agreement shall prevent Company, through its
Board, any duly appointed Committees of the Board or the Chief Executive
Officer, from altering or amending the terms, eligibility, or other provisions
of the Plan, or from eliminating or adding any other Plan as it shall from time
to time deem appropriate and in the interests of Company.
4.3.1 Except as may otherwise be expressly provided herein,
Employee shall be granted, upon termination of this Agreement, such rights as
may be available to him pursuant to any Plan or Plans then in effect.
4.4 Employee shall be entitled to receive incentive bonuses
(collectively, the "Incentive Bonus") up to an aggregate maximum of $5,180,000
payable as follows:
4.4.1 Company shall pay Employee an amount equal to (*) (the
"Payment Multiple") times the amount by which the Adjusted EBIT (as defined and
determined pursuant to the Stock Purchase Agreement) for fiscal year 1998
exceeds (*) (the "Estimated 1997 Adjusted EBIT") but only if and only to
the extent that Sellers have been paid an aggregate of (*) pursuant to
Section 1.2(c)(i), Section 1.2(c)(ii) and Section 1.2(c)(iii) of the Stock
Purchase Agreement.
(*) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.)
4.4.2 Company shall pay Employee an amount equal to the Payment
Multiple times the amount by which the Adjusted EBIT for fiscal year 1999
exceeds the higher of the Estimated 1997 Adjusted EBIT and the actual Adjusted
EBIT for fiscal year 1998 but only if and only to the extent that Sellers (as
defined in the Stock Purchase Agreement) have been paid an aggregate of
(*) pursuant to Section 1.2 (c)(i) and Section 1.2(c)(ii) of the Stock
Purchase Agreement; and
(*) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.)
4.4.3 Company shall pay Employee an amount equal to the Payment
Multiple times the amount by which the Adjusted EBIT for fiscal year 2000
exceeds the highest of the Estimated 1997 Adjusted EBIT, the actual Adjusted
EBIT for fiscal year 1998 and the actual Adjusted EBIT for fiscal year 1999 but
only if and only to the extent that Sellers have been paid an aggregate of
(*) pursuant to
(*) Confidential information has been omitted and filed separately with the
Securities and Exchange Commission.)
3
<PAGE>
Section 1.2(c)(i), Section 1.2(c)(ii) and Section 1.2(c)(iii) of the Stock
Purchase Agreement.
The Incentive Bonus will be payable on or within 30 days after
completion of a final determination of the Adjusted EBIT consistent with Section
1.4 of the Stock Purchase Agreement for each of the three successive periods
described above (each a "Period"). The parties hereto agree that fiscal year
1998 consists of the 12-month period from December 1, 1997 to November 30, 1998.
In each Period, the fiscal year will be deemed to begin on December 1/st/ of the
prior calendar year and end on the following November 30/th/. In no event shall
the aggregate Incentive Bonus be more than $5,180,000. Upon termination of the
Employee during the Periods by the Company with cause as provided in Section 5.1
or by the Employee for reason other than a material breach of this Agreement by
the Company, the Incentive Bonus shall remain payable to Employee but calculated
using a Payment Multiple of [*]. Upon termination of the Employee during the
Periods by the Company without cause or by the Employee due to a material beach
by the Company as finally and judicially determined, the maximum Incentive Bonus
(less any portion previously paid) shall be paid to the Employee on the next
regular date on which an Incentive Bonus payment is due. Notwithstanding
anything in this Agreement to the contrary, if within the Periods (i) Tokheim
sells all or any portion of the capital stock of the Company such that the
Company is no longer eligible to be a member of Tokheim's consolidated group as
defined for federal income tax purposes, or (ii) the Company sells all or
substantially all of its assets to any person or entity other than a member of
Tokheim's consolidated group, then the maximum Incentive Bonus (less any portion
previously paid) shall be paid to the Employee on the next regular date on which
an Incentive Bonus payment is due.
5. TERMINATION. Either Company or Employee may terminate this Agreement as
provided in this Section 5 upon providing written notice to the other.
5.1 By Company. In the event this Agreement is terminated with cause
(as defined below), Employee shall be entitled to no severance pay, and 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.
5.1.1 With Cause. For purposes of this Agreement, the
termination of this Agreement shall be deemed to have been made with cause only
upon the occurrence of one or more of the following circumstances:
4
<PAGE>
5.1.1.1 Employee engages in any material breach of fiduciary
duty, act of dishonesty, fraud, or theft involving Company;
5.1.1.2 Employee is convicted of a felony (excluding traffic-
related incidents), including the entry of a guilty or nolo contendere plea;
5.1.1.3 Employee discloses Confidential Information in violation
of section 7, below, or competes with Company in violation of section 8, below;
or
5.1.1.4 Employee violates any written Company policy or refuses
or fails to substantially carry out the duties which have been assigned to him
after the Company has given written notice to Employee detailing such violation,
refusal or failure and Employee shall not have cured such violation, refusal or
failure within twenty (20) days of receipt of such written notice.
5.1.2 Without Cause. In the event Company terminates this Agreement
without cause, Employee shall be entitled, in addition to the amounts provided
in Section 4.4, to severance pay equal to the greater of (i) the number of
months remaining in the Term at the Employee's Base Salary per month in effect
at the time of termination or (ii) 12 months of Employee's Base Salary per month
in effect at the time of the termination, payable at the same interval as his
salary at the time of the termination. Employee shall have no obligation to
mitigate damages by seeking other employment and Employee's severance pay shall
not be subject to reduction for any reason, including Employee obtaining other
employment. The right to severance pay under this section shall vest upon notice
of termination and shall not be affected by Employee's subsequent death or
disability.
5.2 By Employee. In the event Employee terminates this Agreement,
Employee shall be entitled to no severance pay and shall be entitled only to
such other rights as may be provided in this Agreement or as may otherwise be
available to him in law or equity, provided, however, that if Employee
terminates this Agreement because of Company's failure to comply with any
material provision of this Agreement that has not been cured within twenty (20)
days after Employee has given written notice detailing such noncompliance to the
Company, Employee shall be entitled, in addition to the amounts provided in
Section 4.4, to severance pay equal to the greater of (i) the number of months
remaining in the Term at the Employee's Base Salary per month in effect at the
time of termination or (ii) 12
5
<PAGE>
months of Employee's Base Salary per month in effect at the time of the
termination, payable at the same interval as his salary at the time of the
termination.
5.3 Death or disability. In the event employee dies or becomes
permanently disabled during the Term, this Agreement shall terminate upon the
date of such death or the date specified in a written notice of termination as
provided below. In the event this Agreement terminates for such reason, Company
shall pay Employee's pro-rata Base Salary through the termination date, and
Employee shall be entitled to no severance pay. Notwithstanding anything to the
contrary, in the event this Agreement terminates as a result of Employee's death
or disability, Employee shall be entitled to such continuing benefits as may be
provided in any Plans or by law. As used in this Section 5.3, "disability" shall
mean Employee's inability, due to physical or mental illness or accident,
accident or injury, to perform his duties for 40 or more business days within
three consecutive months. If Company elects to terminate this Agreement for
disability, it shall give written notice thereof to Employee specifying the
date of termination.
6. BUSINESS PLAN. Before November 30, 1998 and 1999, Employee will, or will
cause the Company's employees to, prepare a business plan (each a "Business
Plan"), setting forth a detailed estimate of revenues and expenditures for the
forthcoming fiscal year of Company's point of sale software unit (the "Unit")
and any other business of Company for which Employee is primarily responsible,
together with a description of the objectives and marketing strategies that
management of Company proposes to use during such fiscal year. The Business Plan
will take into account revenue opportunities reasonably available and reasonable
estimates of expenditures, with the goal of maximizing the value of the Unit.
Each Business Plan will be submitted to the Chief Executive Officer on or before
November 30/th/ of each fiscal year for discussion and approval.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For purposes of this Agreement,
Confidential Information is defined as trade secrets (as defined by Colorado
Revised Statute 7-74-102, as amended), software programs, customer reports,
customer lists, vendor reports, vendor lists, and other information regarding
customers and vendors utilized by Company in the course of its business,
marketing and/or sales plans or proposals, business plans, costs and/or pricing
information, intellectual property or any information regarding Tokheim or
Company, and any information regarding Tokheim's or Company's present or future
business plans, whether any of the foregoing is embodied in hardcopy, software,
computer readable form or otherwise.
6
<PAGE>
7.1 Employee acknowledges his position with Company will expose
Employee to certain Confidential Information of Company; and that Confidential
Information constitutes a valuable, unique asset of Company's business. Employee
will not, and will not assist any third party to, during or at any time after
the Term, disclose, copy or publish any Confidential Information acquired by
Employee during his employment, to any person, firm, corporation, association,
or other entity for any purpose, or use Confidential Information for any
purpose, other than for the performance of services for Company or pursuant to a
court order or other process of law; provided, however, that if the Confidential
Information is or becomes generally available to the public through no fault of
Employee, then such information shall not be covered by the scope or intent of
this Agreement.
7.2 In the event of Employee's actual or threatened breach of the
provisions of this section, Company shall be entitled to obtain an injunction
enjoining Employee from committing such actual or threatened breach. Company
shall also be permitted to pursue any other available remedies available for
such breach or threatened breach.
8. RESTRICTIVE COVENANT. For purposes of this Agreement, "Competing Business"
is defined as Gilbarco, Inc., Wayne (a division of Dresser Industries, Inc.),
Schlumberger Limited, Tankanlagen Salzkotten GmbH, Scheidt & Bachmann GmbH,
Tatsuno Corporation and Bennett Pump Company, and their respective affiliates,
subsidiaries and successors, both domestic and international, and any other
company engaged in the petroleum dispenser manufacturing business or the point-
of-sale software or equipment business.
8.1 Employee hereby covenants and agrees that, from the date of this
Agreement until the later of (x) a period of 48 months thereafter, and (y) 12
months after termination of employment with the Company (the "Restricted
Period"), Employee will not, directly or indirectly, own, manage, operate,
control, be controlled by, participate in, be employed by, or be connected in
any manner with the ownership, management, operation or control of any Competing
Business. Employee further covenants and agrees that he will not during the
Restricted Period solicit, induce, conspire with or attempt to solicit, induce
or conspire with either (a) any of the officers or employees of the Company or
any of its affiliates to terminate their employment relationship with or to
compete against the Company or any of its affiliates or (b) any customer or
supplier of the Company or any of its affiliates with whom Employee has dealt or
otherwise has or had dealings during the 24 months
7
<PAGE>
prior to such attempted solicitation or inducement, to terminate their business
relationship with the Company or any of its affiliates. Employee specifically
acknowledges and agrees that Company's business is international in scope and
that the restriction as contained in this section is a reasonable geographic
restriction, as that term is used and defined by Colorado law, on Employee's
activities.
8.2 In the event of Employee's actual or threatened breach of the
provisions of this section, Company shall be entitled to obtain an injunction
enjoining Employee from committing such actual or threatened breach. Company
shall also be permitted to pursue any other available remedies available for
breach or threatened such breach.
8.3 If a court of competent jurisdiction or any arbitrator deter
mines that any provision or restriction in this section is unreasonable or
unenforceable, the court or arbitrator shall modify such restriction or
provision to the minimum extent necessary so that the agreement then becomes an
enforceable restriction of the activities of Employee.
9. OWNERSHIP AND ASSIGNMENT OF CERTAIN WORKS.
9.1 Works for Hire. Employee expressly acknowledges that all
copyrightable aspects of the Inventions (as defined herein) are to be considered
"works made for hire" within the meaning of the Copyright Act of 1976, as
amended (the "Act"), and that Company is to be the "author" within the meaning
of such Act for all purposes. All such copyrightable works, as well as all
copies of such works in whatever medium fixed or embodied, shall be owned
exclusively by Company as its creation, and Employee hereby expressly disclaims
any and all interest in any of such copyrightable works and waives any moral
rights or similar rights.
9.2 Assignment. Employee acknowledges and agrees that all Inventions
constitute trade secrets of Company and shall be the sole property of Company or
any other entity designated by Company. If title to any or all of the Inventions
or any part or element thereof, may not, by operation of law, vest in Company or
such Inventions may be found as a matter of law not to be "works made for hire"
within the meaning of the Act, Employee hereby conveys and irrevocably assigns
to Company, without further consideration, all his right, title and interest, in
all Inventions and all copies of them, in whatever medium fixed or embodied, and
in all written records, graphics, diagrams, notes, or reports relating thereto
in Employee's possession or under its control, including, with respect to any
of the foregoing,
8
<PAGE>
all rights of copyright, patent, trademark, trade secret, and any and all other
proprietary rights therein, the right to modify and create derivative works, the
right to invoke the benefit of any priority under any international convention,
and all rights to register and renew same.
9.3 Further Assurances. Employee agrees to assist Company, or any
party designated by Company, promptly on Company's request, whether before or
after the termination of employment however such termination may occur, in
perfecting, registering, maintaining, and enforcing, in any jurisdiction,
Company's rights in the Inventions by performing all acts and executing all
documents and instruments deemed necessary or convenient by Company, including,
by way of illustration and not limitation:
9.3.1 Executing assignments, applications, and other documents
and instruments in connection with (A) obtaining patents, copyrights, trade
marks, or other proprietary protections for the Inventions and (B) confirming
the assignment to Company of all right, title, and interest in the Inventions or
otherwise establishing Company's exclusive ownership rights therein.
9.3.2 Cooperating in the prosecution of patent, copyright and
trademark applications, as well as rendering reasonable assistance in the
enforcement of Company's rights in the Inventions, including, but not limited
to, testifying in court on other administrative body, or before any patent,
copyright or trademark registry office.
Employee will be reimbursed for all out-of-pocket costs incurred in connection
with the foregoing, if requested by Company after the termination of employment.
In addition, to the extent that, after the termination of employment for
whatever reason, Employee's cooperation or assistance shall be required in
connection with the fulfillment of the obligations set forth in Section 9.3.2,
Company will compensate Employee at a reasonable rate for the time actually
spent by Employee at Company's request rendering such assistance.
9.4 Power of Attorney. Except with respect to any Invention which is
the subject of a dispute between Employee and Company, Employee hereby
irrevocably appoints Company to be his Attorney-In-Fact in his name and on his
behalf to execute any document and to take any action and to generally use his
name for the purpose of giving to Company the full benefit of the assignment
provisions set forth above.
9
<PAGE>
9.5 Definition of Inventions. For the purpose of this Agreement, the
term "Inventions" shall mean all inventions, discoveries, improvements, trade
secrets, formulas, techniques, data, programs, systems, specifications,
documentation, algorithms, flow charts, logic diagrams, source codes, processes,
and other information, including works-in-progress, whether or not subject to
patent, trademark, copy-right or trade secret protection, and whether or not
reduced to practice, which are made, created, authored, conceived, or reduced to
practice by Employee, either alone or jointly with others, during the period of
employment with Company which (A) relate to the actual or anticipated business,
activities, research, or investigations of Company or (B) result from or is
suggested by work performed by Employee for Company (whether or not made or
conceived during normal working hours or on the premises of Company), or (C)
which result, to any extent, from use of Company's premises or property.
9.6 Representations. Employee represents, warrants, and covenants
that he:
(A) is not a party to any conflicting agreements with third parties
which will prevent him from fulfilling the terms of employment and the
obligations of this Agreement; and
(B) does not have in his possession any confidential or proprietary
information or documents belonging to others.
Employee has supplied or shall promptly supply to Company a copy of
each written agreement to which Employee is subject which includes any
obligation of confidentiality, assignment of Inventions, or non-competition.
Employee agrees to indemnify and save harmless Company from any loss,
claim, damage, costs or expenses of any kind (including without limitation,
reasonable attorney fees) to which Company may be subjected by virtue of a
breach by Employee of the foregoing representations, warranties, and covenants.
9.7 Obligations upon Termination. In the event of any termination of
his employment, for whatever reason, Employee will promptly (A) deliver to
Company, all physical property, discs, documents, notes, print-outs, and all
copies thereof and other materials in Employee's possession or under Employee's
control pertaining to the business of Company, including, but not limited to,
those embodying or relating to the Inventions and the Confidential Information,
(B) deliver to
10
<PAGE>
Company all notebooks and other data relating to research or experiments or
other work conducted by Employee in the scope of Employment or any Inventions
made, created, authored, conceived, or reduced to practice by Employee, either
alone or jointly with others and (C) make full disclosure regarding any
Inventions.
Upon termination of employment with Company, Employee shall, if
requested by Company, reaffirm Employee's recognition of the importance of
maintaining the confidentiality of Company's Confidential Information.
10. FORFEITURE OF BENEFITS. In the event Employee has breached his obligations
under Section 7 or Section 8 of this Agreement, Employee shall forfeit all
future payments or compensation payable by Company pursuant to the terms of this
Agreement, specifically not including, however, the Contingent Purchase Price
payable under the Stock Purchase Agreement or the Incentive Bonus under Section
4.4 hereof.
11. NO TRUST ESTABLISHED. All payments provided under this Agreement shall be
paid in cash from the general funds of Company, and no separate or special fund
has been or shall be established and no segregation of assets has been or shall
be made to assure payment. Employee shall have no right, title or interest in or
to any investments or other assets which Company may acquire or obtain to assist
in meeting its obligations under this Agreement. 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
Company and Employee or any other person. The right of any person to receive
payments from Company under this Agreement shall be no greater than the rights
of a general unsecured creditor of Company.
12. TAXES, ETC., Company may withhold from any payments or benefits provided
under this Agreement:
12.1 all federal, state, city or other taxes as required pursuant to
any law or governmental regulation or ruling; and
12.2 any amounts owed by Employee to Company for any reason at the
time of the termination of this Agreement.
13. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by
either party; provided, however, that nothing in this paragraph shall preclude
Employee from designating a beneficiary to receive any benefit payable
11
<PAGE>
upon his death, or preclude Employee's executors, administrators or other legal
representatives of his estate from assigning any rights hereunder to the person
or persons entitled thereto.
14. ARBITRATION. Employee and Company recognize and agree that the arbitration
of disputes provides mutual advantages in terms of facilitating the fair and
expeditious resolution of disputes. In consideration of these mutual advantages,
the parties agree as follows:
14.1 Scope of Arbitration. The parties will submit to arbitration, in
accordance with these provisions, any and all disputes either party may have
arising from or related to this Agreement, and any other disputes between the
parties arising from or related to their employment relationship, including, but
not limited to, any disputes regarding alleged common-law tort violations or
violations of state or federal statutory rights; provided, however, that all
disputes with respect to the determination of Adjusted EBIT shall be governed by
the terms of the Stock Purchase Agreement. The parties further agree that the
arbitration process set forth below shall be the exclusive means for resolving
all disputes hereunder, except as otherwise provided, but that no arbitrator
shall have authority to determine whether disputes fall within the scope of
these arbitration provisions.
14.2 Governing Law. Employee and Company agree that the
interpretation and enforcement of the arbitration provisions of this Agreement,
including any right to appeal, shall be governed by Colorado law.
14.3 Time Limits on Submitting Disputes. Employee and Company
acknowledge and agree that one of the objectives of this arbitration provision
is to resolve disputes expeditiously, as well as fairly, and that it is the
obligation of both parties, to those ends, to raise any disputes subject to
arbitration under this Agreement in an expeditious manner. Accordingly, the
parties agree to waive all statutes of limitations that might otherwise be
applicable, and agree further that, as to any dispute subject to arbitration
pursuant to this Agreement, notice of a demand for arbitration must be provided
to the other party:
14.3.1 in the event of a dispute arising out of a termination
of this Agreement within 6 months of the date of termination;
14.3.2 in the event of a breach of Section 7 or Section 8 of
this Agreement, within 4 months after the Chief Executive Officer has actual
knowledge of the breach; or
12
<PAGE>
14.3.3 in the event of any other dispute, within 3 months after
the party has actual knowledge of the dispute.
Failure to demand arbitration on claims within these time limits is intended to,
and shall to the furthest extent permitted by law, be a waiver and release with
respect to such claims, and, in the absence of a timely submitted written demand
for arbitration, an arbitrator has no authority to resolve the disputes or
render an award.
14.4 Availability of Provisional Relief. Notwithstanding anything
herein to the contrary, nothing in this Section shall prevent Company or
Employee from obtaining injunctive relief from a court of competent jurisdiction
to enforce the obligations of Sections 7 and 8 for which either party may
require provisional relief pending a decision on the merits by the arbitrator.
14.5 American Arbitration Association Rules Apply as Modified Herein.
Any arbitration of disputes shall be conducted under the Model Employment
Procedures of the American Arbitration Association ("AAA"), as modified in this
Agreement.
14.6 Invoking Arbitration. Either party may invoke the arbitration
procedures described in this Agreement by written notice of a demand for
arbitration (an "Arbitration Notice"). An Arbitration Notice shall contain a
statement of the matter to be arbitrated in sufficient detail to establish the
timeliness of the demand. The parties shall then have 20 business days within
which they may identify a mutually agreeable arbitrator. After the 20-day period
has expired, the parties shall prepare and submit within 30 days thereafter to
the AAA a joint submission, with each party to contribute half of the
appropriate administrative fee. In their submission to the AAA, the parties
shall either designate a mutually acceptable arbitrator or request a panel of
arbitrators from the AAA according to the procedure described in Section 14.7,
below.
14.7 Arbitrator Selection. Each of Employee on the one hand, and
Company on the other hand, shall select an arbitrator and a third arbitrator
shall be selected jointly by the arbitrators selected by the parties within
fifteen (15) days after demand for arbitration is made by a party. If the
arbitrators are unable to agree on a third arbitrator within that period, then
any party may request that the AAA select the third arbitrator. The arbitrators
shall possess substantive legal experience in the principal issues in dispute
and shall be independent of the parties hereto.
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<PAGE>
In the event of the death or disability of an arbitrator, the parties shall
select a new arbitrator as provided above. The substitute arbitrator shall have
the power to determine the extent to which he or she shall act on the record
already made in arbitration.
14.8 Prehearing Procedures. Upon accepting assignment as arbitrator, the
arbitrator shall promptly conduct a preliminary hearing at which each party
shall be entitled to submit a brief statement of their respective positions, and
at which the arbitrator shall establish a timetable for prehearing activities
and the conduct of the hearing, and may address initial requests from the
parties for prehearing disclosure of information. At the preliminary hearing
and/or thereafter, the arbitrator shall have the discretion and authority to
order, upon request or otherwise, the prehearing disclosure of information to
the parties. Such disclosure may include, without limitation, production of
requested documents, exchange of witness lists and summaries of the testimony of
proposed witnesses, and examination by deposition of potential witnesses, to the
end that information disclosure shall be conducted in the most expeditious and
cost-effective manner possible, and shall be limited to that which is relevant
and for which each party has a substantial, demonstrable need. The arbitrator
shall further have the authority, upon request or otherwise, to conference with
the parties or their designated representatives concerning any matter, and to
set or modify timetables for all aspects of the arbitration proceeding.
14.9 Location. Unless otherwise agreed by the parties, arbitration
hearings shall take place in Arapahoe County, Colorado.
14.10 Confidentiality. All arbitration proceedings hereunder shall be
confidential. Neither party shall disclose any information about the evidence
produced by the other in the arbitration proceeding or about documents produced
by the other in connection with the proceeding, except in the course of a
judicial, regulatory or arbitration proceeding, or as may be requested by
governmental authority. Before making any disclosure permitted by the preceding
sentence, the party shall give the other party reasonable written notice of the
intended disclosure and an opportunity to protect its interests. Expert
witnesses and stenographic reporters shall sign appropriate nondisclosure
agreements.
14.11 Costs. The non-prevailing party shall be responsible for the
reasonable attorney's fees and costs of the prevailing party incurred in any
arbitration, and shall reimburse the prevailing party for any such fees and
costs paid
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<PAGE>
thereby. The costs and fees of the arbitrator and of the AAA shall be borne
equally by the parties.
14.12 Remedies. Subject to the provisions of Section 14.14, the arbitrator
shall have authority to award any remedy or relief that a federal or state court
situated in the State of Colorado could grant in conformity to applicable law.
14.13 Law Governing the Arbitrator's Award. In rendering an award, the
arbitrator shall determine the rights and obligations of the parties, including
employment discrimination issues, according to federal law and the substantive
law of the State of Colorado (excluding conflicts-of-laws principles) as though
the matter were before a court of law.
14.14 Written Awards and Enforcement. Any arbitration award shall be
accompanied by a written statement containing a summary of the issues in
controversy, a description of the award, and an explanation of the reasons for
the award. The parties agree that a competent court shall enter judgment upon
the award of the arbitrator, provided it is in conformity with the terms of this
Agreement.
14.15 Conflict in Procedure. If any part of this arbitration procedure is
in conflict with any mandatory requirement of applicable law, the mandatory
requirement shall govern, and the procedure set forth above shall be reformed
and construed to the maximum extent possible in conformance with the applicable
law. The procedure shall remain otherwise unaffected and enforceable.
15. MISCELLANEOUS.
15.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto, and supercedes all prior agreements, written or
oral.
15.2 Severability. If any provision of this Agreement shall for any reason
be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
or part of a provision of this Agreement, and any such provision shall be
reformed so that it would be valid, legal, and enforceable to the maximum extent
permitted.
15.3 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which counter-
15
<PAGE>
parts collectively shall constitute one document representing the agreement
among the parties.
15.4 Binding Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties to this Agreement and their respective
successors and assigns.
15.5 Amendment. Any such proposed amendment, discharge, termination, or
change to this Agreement shall be in writing and signed by the parties.
15.6 Waiver of Breach. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach. No waiver shall be valid unless it is in writing and is
signed by the party against whom such waiver is sought.
15.7 Extension of Noncompete Period. The periods of time during which
Employee is prohibited from engaging in such business practices pursuant to this
Agreement shall be extended by any length of time during which Employee is in
breach of any of such covenants.
15.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
15.9 Survival. The provisions and restrictions contained in Sections 7 and
8 shall survive the termination of this Agreement and Employee's employment with
Company.
15.10 Attorney Fees and Expenses. Except as expressly provided in this
Agreement or by statute and ordered by an arbitrator or court in accordance with
the provisions of this Agreement, no party shall be entitled to recover from the
other party the reasonable attorney's fees, costs, and expenses incurred as a
result of any action to enforce any of the rights under this Agreement.
15.11 Full Disclosure. Employee acknowledges that Employee's employment
with Company is conditioned upon the execution of this Agreement. Employee
represents and acknowledges that Employee has carefully reviewed all of the
terms and conditions in this Agreement, and has been advised of Employee's right
to seek independent legal counsel prior to execution of this Agreement.
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15.12 Notices. Any notice, request, or other communication required or
permitted under this Agreement shall be in writing. Notice shall be deemed to
have been given only if personally delivered or sent by registered or certified
mail, return receipt requested. Any notice so mailed shall be deemed given on
the postmark date. Failure or refusal to accept or receive any notice or
communication shall not affect the validity of the notice. All such notices
shall be given to the respective parties at the addresses designated below, or
to such other address as a party may designate in a like manner.
If to Company: Management Solutions, Inc.
Denver Technological Center
5351 S. Roslyn Street, Suite 200
Greenwood Village, CO 80111
with copy to: General Counsel
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, IN 46845
If to Employee: Arthur S. ("Rusty") Elston
11925 E. Ida Circle
Englewood, CO 80111
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<PAGE>
In WITNESS WHEREOF, the parties have entered into this Agreement the date
first written above.
COMPANY
/s/ William D. Shank
------------------------------
Management Solutions, Inc.
By: William D. Shank
Title:
EMPLOYEE
/s/ Arthur S. ("Rusty") Elston
------------------------------
Arthur S. ("Rusty") Elston
18
<PAGE>
EXHIBIT 11
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11)--EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996, AND 1995.
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, 1997, 1996, and 1995.
<TABLE>
<CAPTION>
PRIMARY
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding...................... 8,044 7,939 7,893
Share equivalents................................. 39 42 18
------- ------- -------
Adjusted outstanding.............................. 8,083 7,981 7,911
======= ======= =======
Net earnings (loss):
Before extraordinary loss on debt extinguishment.. $ 3,980 $(2,009) $ 3,231
Extraordinary loss on debt extinguishment......... (1,886) -- --
------- ------- -------
Net earnings (loss)............................... 2,094 (2,009) 3,231
Less preferred stock dividend..................... (1,512) (1,543) (1,580)
------- ------- -------
Earnings (loss) applicable to common stock........ $ 582 $(3,552) $ 1,651
======= ======= =======
Net loss per common share:
Before cumulative effect of change in method of
accounting....................................... $ 0.31 $ (0.45) $ 0.21
Cumulative effect of change in method of
accounting....................................... (0.23) -- --
------- ------- -------
Net earnings (loss) per common share.............. $ 0.07 $ (0.45) $ 0.21
======= ======= =======
</TABLE>
For 1996, 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
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding...................... 8,044 7,939 7,893
Share equivalents................................. 77 44 18
Weighted conversion of preferred stock............ 946 1,863 1,909
------- ------- -------
Adjusted outstanding.............................. 9,067 9,846 9,820
======= ======= =======
Net earnings (loss):
Before extraordinary loss on debt extinguishment.. $ 3,980 $(2,009) $ 3,231
Extraordinary loss on debt extinguishment......... (1,886) -- --
------- ------- -------
Net earnings (loss)............................... 2,094 (2,009) 3,231
Incremental compensation expense.................. (1,512) (1,543) (1,580)
------- ------- -------
Earnings (loss) applicable to common stock........ $ 582 $(3,552) $ 1,651
======= ======= =======
Net loss per common share:
Before cumulative effect of change in method of
accounting....................................... $ 0.31 $ (0.36) $ 0.17
Cumulative effect of change in method of
accounting....................................... (0.23) -- --
------- ------- -------
Net earnings (loss) per common share.............. $ (0.07) $ (0.36) $ 0.17
======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fully Diluted
----------------------------------
1997 1996 1995
--------- -------- -------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding......................... 7,939 7,893
Share equivalents.................................... 44 18
Weighted conversion of preferred stock............... 1,863 1,909
------- -------
Adjusted outstanding................................. 9,846 9,820
======= =======
Net earnings (loss):
Before cumulative effect of change in method of
accounting......................................... $(2,009) $ 3,231
Cumulative effect of change in method of accounting.. -- --
------- -------
Net earnings (loss).................................. (2,009) 3,231
Incremental compensation expense..................... (1,543) (1,580)
------- -------
Earnings (loss) applicable to common stock........... $(3,552) $ 1,651
======= =======
Net loss per common share:
Before cumulative effect of change in method of
accounting......................................... $ (0.36) $ 0.17
Cumulative effect of change in method of accounting.. -- --
------- -------
Net earnings (loss) per common share................. $ (0.36) $ 0.17
======= =======
</TABLE>
<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 Sofitam 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
Sofitam International S.A. (F) 100.00% France Consolidated
Sofitam N.V. (H) 100.00% Belgium Consolidated
Sofitam Iberica (G) 99.81% Spain Consolidated
Tokheim Sofitam Italia (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) 100.00% 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 23, 1998, on our audits of the consolidated financial statements of
Tokheim Corporation and subsidiaries as of November 30, 1997 and 1996, and for
the years ended November 30, 1997, 1996, and 1995, which report is included in
this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
February 13, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Tokheim Corporation's November 30, 1997, 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-30-1997
<PERIOD-END> NOV-30-1997
<CASH> 6,438
<SECURITIES> 0
<RECEIVABLES> 86,923
<ALLOWANCES> 3,912
<INVENTORY> 64,347<F1>
<CURRENT-ASSETS> 160,501
<PP&E> 106,175<F2>
<DEPRECIATION> 64,209
<TOTAL-ASSETS> 209,619
<CURRENT-LIABILITIES> 118,851
<BONDS> 90,000
<COMMON> 21,018<F3>
9,853<F4>
0
<OTHER-SE> (10,400)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 290,619
<SALES> 385,469
<TOTAL-REVENUES> 385,469
<CGS> 283,932<F6>
<TOTAL-COSTS> 283,932<F6>
<OTHER-EXPENSES> 3,493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,451
<INCOME-PRETAX> 5,197
<INCOME-TAX> 1,217
<INCOME-CONTINUING> 3,980
<DISCONTINUED> 0
<EXTRAORDINARY> (1,886)
<CHANGES> 0
<NET-INCOME> 2,094
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.06
<FN>
<F1> Represents gross inventory net of loss reserves.
<F2> Represents gross PP&E.
<F3> Represents common stock of $21,158 less treasury stock of $140.
<F4> Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$9,429 and treasury stock of $4,718.
<F5> Represents retained earnings of $9,821 less minimum pension liability of
$2,173 and foreign currency translation adjustments of $18,048.
<F6> Includes product development expenses and excludes depreciation and
amortization.
</FN>
</TABLE>
