-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WuL9fr5JZ1lf1zTJYl2fVPt9LECyId3hbSO++MBLtP8Pi2eInXXJPKn5MP39miDh QzyqPHOkf+g2/sk0GE7WCQ== 0000886044-97-000032.txt : 19970512 0000886044-97-000032.hdr.sgml : 19970512 ACCESSION NUMBER: 0000886044-97-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEAK TECHNOLOGIES GROUP INC CENTRAL INDEX KEY: 0000886044 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 363149386 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20078 FILM NUMBER: 97599439 BUSINESS ADDRESS: STREET 1: 600 MADISON AVE STREET 2: 26TH FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 4103126033 MAIL ADDRESS: STREET 1: 9200 BERGER RD CITY: COLUMBIA STATE: MD ZIP: 21046 10-Q 1 MARCH 31, 1997 FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File number 0-20078 THE PEAK TECHNOLOGIES GROUP, INC. - ---------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 22-3028807 - -------------------------------- ------------------------------- (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 600 Madison Avenue, 26th Floor, New York, New York 10022 - --------------------------------------------------- --------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 212-832-2833 ----------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- The number of shares outstanding of the issuer's Common Stock, $.01 par value, was 9,305,722 as of May 7, 1997. THE EXHIBIT INDEX IS FOUND ON PAGE 11 2. THE PEAK TECHNOLOGIES GROUP, INC. INDEX TO FORM 10-Q PART I. FINANCIAL INFORMATION PAGE - -------------------------------- ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets at March 31, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Operations for the Three Months ended March 31, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 7 PART II. OTHER INFORMATION - -------------------------------- Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 3. THE PEAK TECHNOLOGIES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
March 31, December 31, 1997 1996 ----------- ------------ (Unaudited) ASSETS - ------------------------------------ Current assets: Cash $ 530 $ 789 Accounts receivable, less allowances for doubtful accounts and sales returns of $1,518 in 1997 and $1,952 in 1996 36,792 38,924 Inventories 27,732 28,380 Refundable income tax 781 1,371 Deferred tax asset 9,137 8,182 Prepaid expenses and other current assets 2,710 2,536 ----------- ------------ Total current assets 77,682 80,182 Furniture, equipment and leasehold improvements 11,168 11,416 Less accumulated depreciation 4,599 4,485 ----------- ------------ 6,569 6,931 Customer list, less accumulated amortization of $1,882 in 1997 and $1,802 in 1996 1,192 1,273 Non-competition agreements, less accumulated amortization of $1,112 in 1997 and $933 in 1996 1,808 1,987 Cost in excess of fair value of net assets acquired, less accumulated amortization of $4,586 in 1997 and $4,204 in 1996 44,989 45,352 Deferred tax asset 121 244 Other assets 551 433 ----------- ------------ $132,912 $136,402 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 21,887 $ 25,557 Other accrued liabilities 11,071 11,537 Deferred income - maint. contracts 12,144 10,922 ----------- ------------ Total current liabilities 45,102 48,016 Long-term debt 25,408 24,928 Other liabilities 2,372 3,388 Commitments and contingencies - - Stockholders' equity Preferred stock, $.01 par value; authorized 2,000,000 shares; none issued and outstanding - - Treasury stock, 8,250 shares held in treasury (132) - Common stock, $.01 par value; authorized 15,000,000 shares; issued and outstanding shares of 9,305,722 in 1997 and 9,290,906 in 1996 93 93 Capital in excess of par 66,269 65,966 Retained deficit (6,200) (5,989) ----------- ------------ Total stockholders' equity 60,030 60,070 ----------- ------------ $132,912 $136,402 =========== ============
See notes to condensed consolidated financial statements. 4. THE PEAK TECHNOLOGIES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
For the three months ended March 31, ------------------------------ 1997 1996 --------- --------- Sales: Equipment and Systems $ 43,327 $ 40,858 Maintenance 10,567 8,374 -------- -------- 53,894 49,232 Cost of Sales: Equipment and Systems 30,711 27,370 Maintenance 5,115 4,309 -------- -------- 35,826 31,679 Gross Profit 18,068 17,553 Selling, general, engineering and administrative expenses 17,732 14,101 Amortization of intangibles 534 300 --------- -------- Income (loss) from operations (198) 3,152 Other expenses: Interest expense, net 538 110 Amortization of debt issuance costs 6 13 --------- -------- 544 123 --------- -------- Income (loss) before income taxes (742) 3,029 Provision for income taxes 222 1,228 --------- -------- Net income (loss) $ (964) $ 1,801 ========= ======== Per share data: Net income (loss) $ (0.10) $ 0.20 ========= ======== Average common shares outstanding 9,287 9,181
See notes to condensed consolidated financial statements. 5. THE PEAK TECHNOLOGIES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
For the three months ended March 31, ------------------------------------ 1997 1996 -------- -------- Cash flows from operating activities: Net income (loss) $ (964) $1,801 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,130 688 Accounts receivable 2,132 (2,784) Inventories 648 (1,150) Income taxes (242) 1,066 Accounts payable and accrued liabilities (4,136) 1,804 Prepaid expenses and other current assets (174) (1,726) Deferred income - maintenance contracts 1,222 1,253 Other assets and liabilities (304) (896) -------- -------- Net cash provided by (used in) operating activities (688) 56 Cash flows from investing activities: Capital expenditures (226) (790) Purchase of business - (4,592) -------- -------- Net cash used in investing activities (226) (5,382) Cash flows from financing activities: Borrowing under revolving loans, net 480 5,181 Capital contribution and issuance of stock 171 268 -------- -------- Net cash provided by financing activities 655 5,449 Net increase (decrease) in cash (259) 123 Cash at beginning of the period 789 311 -------- -------- Cash at end of the period $ 530 $ 434 ======== ======== Supplemental disclosure of cash flow information: Cash paid during period for: Income taxes $ 336 $ 13 ======== ======== Interest $ 550 $ 105 ======== ========
See notes to consolidated financial statements. 6. THE PEAK TECHNOLOGIES GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (which consist of only normal, recurring adjustments) necessary for a fair presentation of the financial position and results of operations as of and for the periods presented. 2. Primary earnings per share are computed by using the weighted average number of common stock and dilutive common share equivalents outstanding in the application of the treasury stock method. Primary and fully-diluted earnings per share are identical. 3. Inventories are stated primarily at the lower of cost (first-in, first-out) or market and consist of the following:
March 31, 1997 December 31, 1996 ------------------ ----------------- (In thousands) Equipment: Components $ 4,585 $ 5,063 Finished goods 13,402 13,687 Maintenance Parts 9,745 9,630 ----------------- ----------------- $27,732 $28,380
4. SUBSEQUENT EVENT On April 23, 1997, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), among the Company, Moore U.S.A. Inc., a Delaware corporation ("Parent"), and Kirkwood Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Parent ("Sub"). On April 29, 1997, pursuant to the terms of the Merger Agreement, Sub commenced a tender offer for all outstanding shares of common stock of the Company ("Shares"), at a purchasing price of $18.00 per Share net to the seller in cash (the "Offer"). The obligation of Sub to accept for payment, and pay for, any Shares pursuant to the Offer is subject to certain conditions, including, but not limited to (i) there having been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares that would constitute a majority of the outstanding Shares (determined on a fully- diluted basis for all outstanding stock options and any other rights to acquire Shares) and (ii) any waiting period under the HSR Act (as defined in the Merger Agreement) and the German Competition Act (as defined in the Merger Agreement) applicable to the purchase of Shares pursuant to the Offer having expired or been terminated. Early termination of the waiting period under the HSR Act was granted on May 6, 1997. The Offer is currently scheduled to expire May 27, 1997. The Merger Agreement further provides that, following the expiration of the Offer and subject to the satisfaction or waiver of certain conditions (i) all of the issued and outstanding Shares (other than shares canceled pursuant to the Merger Agreement and any Shares the holders of which have exercised appraisal rights under Delaware law) will be converted into the right to receive in the Merger $18.00 per Share (or any greater amount paid per Share in the Offer) in cash, and (ii) Sub will be merged with and into the Company (the "Merger") with the Company to continue as the surviving corporation. In connection with the Merger Agreement, on April 23, 1997, the Company and ChaseMellon Shareholder Services, as Rights Agent (the "Rights Agent"), entered into an amendment (the "Rights Amendment") to the Rights Agreement, dated as of March 28, 1997, by and between the Company and the Rights Agent (the "Rights Agreement"), having the effect of exempting the events and transactions contemplated by the Merger Agreement from the Rights Agreement. 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth certain income statement data expressed as a percentage of net sales and the percentage change of such item compared to the corresponding prior period. The discussion and analysis set forth below is affected by acquisitions occurring throughout the periods presented. Reference is made to the Company's 1996 10-K, for detailed discussion and analysis of the Company's financial condition and results of operations for the periods covered by that report.
% of Net Sales ----------------------------- % Increase/ Three Months Ended March 31, (Decrease) ----------------------------- ---------------- 1997 1996 1996 to 1997 ------ ------ ---------------- Net Sales 100.0% 100.0% 9.4% Cost of Sales 66.5 64.3 13.1 ------ ------ Gross Profit 33.5 35.7 2.9 Selling, General, Engineering and Administrative Expenses 32.9 28.7 25.7 Amortization of Intangibles 1.0 0.6 78.0 ------ ------ Income (loss) from Operations (0.4) 6.4 N/M Interest and Other Expenses, net 1.0 0.2 N/M ------ ------ Income (loss) before Income Taxes (1.4) 6.2 N/M ====== ====== N/M - Not Meaningful
Results of Operations March 31, 1997 Compared to March 31, 1996 - ----------------------------------------- Net sales for the three months ended March 31, 1997 increased to $53,894,000 from $49,232,000 in the first quarter of 1996, an increase of 9.4%. Equipment and systems sales increased by 6.0% to $43,327,000 and maintenance service sales increased 26.2% to $10,567,000 during the first quarter of 1997 compared to the first quarter of 1996. Sales and results of operations of the 1996 acquisitions of Combitrading, Syntest, Acquidata, Barcode Systems and SASS Computer are included with the Company's from the date of acquisition. The equipment and systems sales increase resulted from revenue generated from operations acquired during 1996 and the increase in maintenance service revenues resulted from increased U.S. maintenance revenue as well as revenue generated from operations acquired in 1996. 8. The Company's gross profit margin for the three months ended March 31, 1997, was 33.5% compared to 35.7% for the same period of 1996. For the three months ended March 31, 1997, equipment and systems margins were 29.1% compared to 33.0% for the same period of 1996. Maintenance service margins increased to 51.6% for the three months ended March 31, 1997 compared to 48.5% for the three months ended March 31, 1996. Equipment and systems margins were lower primarily as a result of lower gross profit margins in Peak's European operations, while maintenance service margin increased from the Company's continued focus on providing its customers with comprehensive after sale service. Selling, general, engineering, and administrative ("SGE&A") expense were 32.9% of net sales for the three months ended March 31, 1997 compared to 28.7% for the first quarter of 1996. The increase was a result of higher SGE&A expenses relative to sales in the Company's European operations. The Company continues implementing its restructuring plan which was announced in the fourth quarter of 1996. This plan, which will be completed by the end of 1997, is designed to reduce expense levels to be in line with revenue expectations. Interest and other expenses were $544,000 at March 31, 1997 compared to $123,000 at March 31, 1996 as a result of increased borrowing related primarily to the 1996 acquisitions. The Company's loss before income taxes was $964,000 in the first quarter of 1997 compared to income before income taxes of $3,029,000 in the first quarter of 1996. Liquidity and Capital Resources The Company's current ratio was 1.7 to 1 at both March 31, 1997 and December 31, 1996. As of March 31, 1997, working capital was $32,580,000. As of March 31, 1997, the Company's long- term revolving loan facility with a bank had an outstanding balance of $25,408,000 with an available borrowing of approximately $6,592,000. Amounts available under the Company's $32,000,000 loan facilities and funds generated from operations have been the Company's primary source of liquidity, which the Company believes will be sufficient to fund present cash needs. As the Company continues to implement its restructuring plan, which it began during the fourth quarter of 1996, it incurred approximately $1,060,000 in payments during the first quarter of 1997 related to the restructuring plan. At March 31, 1997, approximately $2,540,000 of the restructuring charge had not been utilized. 9. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The exhibit filed as part of this report is as follows: Exhibit 2.1 - Agreement and Plan of Merger, dated as of April 23, 1997, by and among Moore U.S.A. Inc., Kirkwood Acquisition Corp. and The Peak Technologies Group, Inc. (filed as Exhibit 2 to the Company's Current Report on Form 8-K filed with the Commission on April 25, 1997) Exhibit 10.1 - Executive Employment Agreement dated January 8, 1997 between The Peak Technologies Group, Inc. and Howard Cohen. Exhibit 10.2 - Letter Agreement dated February 1, 1997 between The Peak Technologies Group, Inc. and Mr. Gregory Thomas. (filed as Exhibit (c) (4) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Commission on April 29, 1997) Exhibit 10.3 - Letter Agreement dated February 1, 1997 between The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed as Exhibit (c) (5) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Commission on April 29, 1997) Exhibit 10.4 - Consulting Agreement dated February 1, 1997 between The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed as Exhibit (c) (6) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Commission on April 29, 1997) Exhibit 27 - Financial Data Schedule - March 31, 1997 Financial Data Schedule (b) The reports on Form 8-K filed as part of this report are as follows: On April 25, 1997, the Company filed a Current Report on Form 8-K (Item 5) related to the merger. 10. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE PEAK TECHNOLOGIES GROUP, INC. - ---------------------------------- (Registrant) DATED: May 9, 1996 By: /s/ Edward A. Stevens ------------------------- EDWARD A. STEVENS Executive Vice President, Chief Financial Officer 11. EXHIBIT INDEX ------------- EXHIBIT DESCRIPTION - ------- ----------- 10.1 Executive Employment Agreement dated January 8, 1997 between The Peak Technologies Group, Inc. and Howard Cohen. 10.2 Letter Agreement dated February 1, 1997 between The Peak Technologies Group, Inc. and Mr. Gregory Thomas. (filed as Exhibit (c) (4) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Commission on April 29, 1997) 10.3 Letter Agreement dated February 1, 1997 between The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed as Exhibit (c) (5) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Commission on April 29, 1997) 10.4 Consulting Agreement dated February 1, 1997 between The Peak Technologies Group, Inc. and Mr. Hugo Biermann. (filed as Exhibit (c) (6) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Commission on April 29, 1997) 27 March 31, 1997 Financial Data Schedule EX-10 2 EXECUTIVE EMPLOYMENT AGREEMENT EXHIBIT 10.1 EXECUTIVE EMPLOYMENT AGREEMENT This Agreement is made and entered as of this 8th day of January, 1997, by and between The Peak Technologies Group, Inc., ("Peak") a Delaware corporation with its headquarters in Columbia, Maryland, and Howard S. Cohen ("Executive"), a resident of Illinois, and together referred to as the parties. 1. Duties and Term. A. Peak engages Executive as President and Chief Operating Officer of Peak for a term of two (2) years (the "Term"), commencing with the above date, and successive terms of one (1) year each beginning automatically at the end of the Term, to perform those duties customarily performed by a President and Chief Operating Officer and those set forth in the "Offer Letter", attached hereto and made a part hereof, and reporting to Peak's Chairman and Chief Executive Officer ("CEO"). Executive shall also perform those additional duties which may reasonably be specified by the CEO and Peak's Board of Directors, from time to time, consistent with his position as a senior executive. During the term of this Agreement, Executive shall be included as part of the management slate of directors recommended to the shareholders for election to Peak' Board of Directors. B. As a condition and during the term of his employment Executive agrees to the following: (i) commence his employment, full-time, no later than March 1, 1997 or such earlier date as agreed to by the parties; (ii) devote his full business time to the business and affairs of Peak and work exclusively for Peak, and (iii) maintain a duty of loyalty and care to Peak as an officer and director of Peak, as those terms are defined in law and pursuant to this Agreement. C. Executive may not engage in any other remunerative work, provided, however, that Peak recognizes that Executive may desire to write, speak and serve on boards of directors, which may be done with the prior written approval of the CEO, and which approval shall not be unreasonably withheld. Executive represents and warrants that he has not entered into any prior agreements, investments or commitments which would in any manner limit his work, effort or activity on behalf of and while employed by Peak. 2. Compensation and Benefits. The compensation and benefits for Executive through the Term are set forth in the Offer Letter and this Agreement. A portion of the Executive's compensation, as determined in Executive's sole discretion, will be deferred and placed in trust, in accordance with applicable laws and regulations and Peak's 401(k) plan. The compensation includes: (i) a "Severance Agreement", the form of which is attached hereto, and which will provide compensation and benefits for Executive in the event of a change in control in Peak and providing for, among other things, up to three (3) years of severance pay; (ii) insurance coverage through all applicable insurance provided by Peak, including, but not limited to, Director and Officer Liability Insurance at the limits provided for officers and directors of Peak and a full indemnity by Peak up to the limits allowed under Delaware law; (iii) an initial grant of fifty-thousand (50,000) stock options for Peak common stock; and, (iv) an annual grant of additional stock options compatible with other executives of the company and in accordance with Peak's policies, and in all cases in the absolute discretion of the Board of Directors. Peak further agrees as to (iii) and (iv) that Section 6(ii) of Peak's Stock Option Plan shall not apply to Executive or any stock options issued to him and that Peak hereby agrees to the registration of all stock issued to Executive within a reasonable time after exercise of such options, and subject to regulatory limitations, if any. 3. Termination by Executive. A. Executive may terminate this Agreement any time, other than for "Good Reason" as defined herein, upon one hundred and twenty (120) days written notice to Peak, or in the event of death or total disability (deemed voluntary termination). B. Executive may also terminate this Agreement at any time, upon giving ninety (90) day notice, for "Good Reason" which includes: (i) failure of Peak seek the nomination of Executive to the Board of Directors within six (6) months after Executive commences his employment; (ii) failure of the officers to report to Executive; (iii) any reason described as "Good Reason" in Section 1.6 of the Severance Agreement I; (iv) a change of control as described in the Severance Agreement I; and, (v) default by Peak in any of its material obligations hereunder and failure to cure such default in a reasonable period of time after receiving notice from Executive. 4. Termination by Peak. A. Peak may terminate this Agreement without cause upon sixty (60) days written notice to Executive. B. Peak may terminate this Agreement without notice, at any time, for "Good Cause", which includes, but is not limited to: (i) breach of the covenants contained in Sections 6, 7, 8 and 10 of this Agreement; (ii) willful gross malfeasance resulting in material injury or loss to Peak; (iii) acts on behalf of Peak as a result of which Executive is charged with a criminal offense involving moral turpitude, dishonesty or breach of trust; (iv) conviction of a felony or plea of guilty or plea of guilty or no lo contendere with respect to a felony; and, (v) breach of the duty of an officer or director imposed by law or statute that involves an intentional, bad faith act that results in material loss or injury to Peak. C. Termination of this Agreement for any reason whatsoever shall not preclude executive from receiving any base salary, bonus or other benefit accrued through the date of termination, and shall not affect any accrued amount due and payable to Executive under the Severance Agreement I. 5. Executive's Severance Benefits Upon Termination. A. If Executive is terminated by Peak for reasons other than termination for Good Cause, during the Term and any renewal term, or Executive leaves Peak for Good Reason, during the Term and any renewal term, Executive shall be entitled to the following: (i) the balance of his salary payable under the terms of this Agreement plus twelve (12) additional months of salary as severance, both amounts payable semi- monthly and subject to all applicable taxes; (ii) payment of $300,000.00, and a prorated payment of $300,000.00 divided by the number of months, or partial months, worked by Executive, both amounts payable semi-monthly and subject to all applicable taxes; (iii) the vesting of all stock options as of the date of termination; and, (iv) payment of fifteen percent (15%) of his base salary, or up to $45,000 toward out- placement services; and (v) continuation of payment for premiums on all health and medical insurance for eighteen (18) months, or so long as Executive remains eligible for such insurance. B. If Executive terminates his employment during the Term or any renewal term, for other than Good Reason, and does not accept or engage in employment with a third party or entity, and does not otherwise violate any other terms of this Agreement or any post-employment agreements or covenants, Executive shall be entitled to the following: (i) the balance of his salary under this Agreement, plus twelve (12) additional months of severance, both payable semi-monthly and subject to all applicable taxes; and, (ii) the vesting of all stock options. C. Severance payments and benefits provided for in this Agreement and the Offer Letter are conditioned upon Executive's continued compliance with this Agreement and all post-employment covenants and agreements. If Peak wishes to withhold payment, it must first commence enforcement of this Agreement through the filing of a civil suit or criminal complaint, then all payments provided for hereunder shall be paid to and held by a court of competent jurisdiction or placed in a mutually agreed upon escrow account, until such proceeding has been resolved. 6. Return of Peak's Property and Non-Disclosure of Non- Public Information. A. Upon termination of his employment with Peak for any reason, Executive shall return to Peak all records, data, plans, customer lists, computer programs and related documentation or other documents or materials of any nature which are in his possession or control which he obtained from Peak or compiled or produced for Peak during his employment and any and all copies thereof, which shall include all confidential information as defined above. B. Executive agrees that he will not retain copies of any Peak's documents or materials and will not disclose, reveal or make available to, or inform any other person, firm, corporation, partnership or other association of the names and addresses of customers, information about prices charged to customers, Peak's operating and sales techniques and methods, or any other confidential proprietary information concerning Peak, or any documents or information which contain or are derived from confidential proprietary information concerning Peak, its products, pricing, margins, vendor relationships, contracts, stock, personnel, systems, software, policies or techniques and methods of operation, provided, however, that Executive shall disclose any information required or compelled in any legal or judicial proceeding or otherwise in the public domain through sources other than Executive, and shall notify Peak of such legal or judicial proceeding in a reasonable time prior to complying with such request or subpoena, so that Peak may seek to protect its interests and information as necessary. 7. Covenant Not to Compete or Solicit. Executive covenants and agrees that during his employment and for a period of one (1) year following the later of: (i) the termination of his employment, or (ii) the date set for the commencement of his severance payments, and so long as Peak continues to pay all severance benefits when due and Peak has not undergone a "Change in Control" as defined in Severance Agreement I, Executive will not for himself, or in conjunction with any other person, firm, partnership, corporation or other form of business organization or arrangement, whether as a principal, agent, director, officer, manager, trustee, representative, executive or consultant, for whatever reason, directly or indirectly do any of the following: A. Work for any competitor of Peak, or seek or accept employment with any of Peak's clients if such employment is in the same area, field and scope of products and services which Peak sells or provides; B. Solicit or accept any business from any person or entity who, at the time of, or any time during the twelve months preceding such termination, was an active account or was actively solicited by Peak according to the books and records of Peak, provided, however, that nothing herein shall prohibit him from transacting business with any such person during such period if the business he solicits is not competitive with services or products offered, furnished to, licensed or sold by Peak to such person or entity; C. Cause or assist anyone or any entity to solicit the purchase of any product or service by any of Peak's clients of the sort provided by Peak to the client, or the sort Peak was seeking an opportunity to supply or request or cause any of Peak's clients, vendors or suppliers to cancel or terminate any business relationship with Peak; D. Request or cause any employee of Peak to terminate employment with Peak or permit any employee of Peak to be solicited to leave the employ of Peak. 8. Post Employment Affiliations and Restrictions. Executive covenants and agrees that during his employment and for a period of one (1) year following the later of: (i) the termination of his employment; or, (ii) or the date set for commencement of his severance payments, and so long as Peak continues to pay all severance benefits when due and Peak has not undergone a "Change in Control" as defined in Severance Agreement I, Executive will not for himself, or in conjunction with any other person, firm, partnership, corporation or other form of business organization or arrangement, whether as a principal, agent, director, officer, manager, trustee, representative, Executive or consultant, directly or indirectly develop, refine, modify or in any way be connected with or give advice or consultation concerning software which is trademarked, copyrighted, owned and/or proprietary to Peak, and cannot be purchased in routine retail transactions. 9. Scope of Restrictions. If the scope of any restriction contained in this Agreement is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum extent permitted by law, and Executive hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforced such restriction. Executive acknowledges and agrees that the covenants contained herein are necessary for the protection of Peak's legitimate business interests and are reasonable in scope and content. 10. Prohibition Against Use and Disclosure of Proprietary or Confidential Information. Executive shall not use or divulge to anyone for any reason any of the trade secrets or other proprietary, secret, or other confidential information of Peak or its clients, or any information which contains or is derived from proprietary, secret or other confidential information, either during his employment or after his termination for any reason, provided, however, that Executive shall disclose any information required or compelled in any legal or judicial proceeding or otherwise in the public domain through sources other than Executive, and shall notify Peak of such legal or judicial proceeding in a reasonable time prior to complying with such request or subpoena, so that Peak may seek to protect its interests and information as necessary. 11. List of Competing Companies. Executive agrees that prior to terminating his employment with Peak, and as a condition of receiving any severance payments provided for hereunder, Peak may supplement the list of competitive companies attached hereto which Peak, in its sole discretion, deems competitors and for and with whom Executive shall not be employed in any manner whatsoever. 12. Remedies of Peak. A. Executive agrees that he is able to engage in other businesses for the purpose of earning a livelihood and that the restrictive covenants in the Agreement will not interfere with his ability to engage in other businesses. Executive agrees that breach of the covenants and limitation in this Agreement will cause irreparable harm to Peak in that money damages will not amount to adequate compensation for the breach, and he agrees that injunctive relief is appropriate to prevent the continuation of such breach by Executive without the necessity of proof of actual damage. B. In the event of a breach as described in A above, or a breach by Peak resulting in the filing of a lawsuit by Executive against Peak in a court of competent jurisdiction, the prevailing party shall be responsible for the other party's reasonable legal fees, as ordered by a court of competent jurisdiction, arbitrator, mediator, or agreed to by the parties, provided, however, such fees will be limited to the equal of the Executive's base annual income for the last year of employment. C. The parties agrees that the restrictive covenants contained herein are reasonable in the sense that they are necessary to protect Peak in its legitimate business interests. D. This Agreement in no way affects Executive's right to engage in any business not competitive with Peak. Remedies set forth in this Agreement shall be in addition to and not in limitation of any other remedies, including money damages, which Peak might have, legal or equitable. 13. No Waivers. Any waiver by any of the parties hereto of a breach of any of the provisions of this Agreement by any other party shall not operate or be construed as a waiver by the other parties of any of the rights and privileges of said parties hereunder or of any subsequent breach. 14. Prohibition Against Assignment. Executive's rights under this Agreement may not be assigned, except to a solvent associated company, or as may be agreed by the parties in writing. 15. Severability and Binding Nature of Agreement. The parties hereto agree that the clauses of the Agreement are severable and should any clause be declared invalid, it shall not effect the validity of the remaining provisions of this Agreement. The parties agree that the provisions hereof shall be binding upon their successors in interest, heirs, next of kin, personal representatives and assigns. 16. Entire Agreement. This Agreement, Offer Letter and Attachments, Tier I Relocation Package, and Severance Agreement I constitute the final and entire agreement between the parties and no party shall be bound by any terms, conditions, statements, warranties, or representations, oral or written, not contained herein and no term or provision hereof (including the terms and provisions of this paragraph) may be altered, amended or modified in any way except by a writing signed by all parties. 17. Governing Law. This Agreement shall be governed and interpreted pursuant to the laws of the state of Maryland for all purposes, and without regard to choice of law rules. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day, month and year first above written. The Peak Technologies Group, Inc. Executive /s/ Nicholas R.H. Toms /s/ Howard S. Cohen - ----------------------------- -------------------------- Nicholas R. H. Toms, Howard S. Cohen, Chairman and Chief President and Chief Executive Officer Operating Officer EX-27 3 MARCH 31, 1997 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 530 0 36,792 1,518 27,732 77,682 11,168 4,599 132,912 45,102 25,408 0 0 93 59,937 132,912 53,894 53,894 35,826 35,826 18,272 0 538 (742) 222 (964) 0 0 0 (964) (0.10) (0.10)
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