-----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, GFnty570gy6FxnWxG/M3+0A12jGCa7XCn+s7jxt5Fw6idZ0o6pp8n7iYPS8IqX2u Dh/lP+9hNPZrHA6Qao8Oug== 0000950131-99-005732.txt : 19991018 0000950131-99-005732.hdr.sgml : 19991018 ACCESSION NUMBER: 0000950131-99-005732 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991015 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOKHEIM CORP CENTRAL INDEX KEY: 0000098559 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 350712500 STATE OF INCORPORATION: IN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06018 FILM NUMBER: 99729506 BUSINESS ADDRESS: STREET 1: 10501 CORPORATE DRIVE CITY: FORT WAYNE STATE: IN ZIP: 46845 BUSINESS PHONE: 2194704600 MAIL ADDRESS: STREET 1: 10501 CORPORATE DRIVE CITY: FORT WAYNE STATE: IN ZIP: 46845 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1999 Commission File Number 1-6018 TOKHEIM CORPORATION (Exact name of Registrant as specified in its charter) INDIANA 35-0712500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10501 CORPORATE DRIVE, FORT WAYNE, IN 46845 (Address of principal executive offices) (Zip Code) (Registrant's telephone number including area code): (219) 470-4600 NOT APPLICABLE (Former name, former address, and former fiscal year if changed since last report) 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 As of August 31, 1999, 12,671,383 shares of voting common stock were outstanding. The exhibit index is located on page 21. PART I. FINANCIAL INFORMATION Item 1. Financial Statements TOKHEIM CORPORATION AND SUBSIDIARIES Consolidated Condensed Statement of Earnings (Amounts in thousands except amounts per share)
(UNAUDITED) (UNAUDITED) Three Months Ended Nine Months Ended August 31, August 31, August 31, August 31, 1999 1998 1999 1998 ------------------------------- -------------------------------- NET SALES......................................... $ 169,170 $ 101,492 $ 512,374 $ 291,997 Cost of sales, exclusive of items listed below.... 128,927 73,782 393,999 213,975 Selling, general, and administrative expenses..... 25,023 18,298 78,729 53,192 Depreciation and amortization..................... 6,319 2,681 19,279 7,799 Merger and acquisition costs and other unusual items............................................ 1,292 263 6,115 6,596 ----------- ------------ ------------ ------------ Operating profit 7,609 6,468 14,252 10,435 ----------- ------------ ------------ ------------ Interest expense, net............................. 13,279 2,549 37,944 9,882 Foreign currency (gain) loss .................... (483) (33) 2,372 (813) Minority interest................................. (2) 227 88 289 Other (income), net .............................. 261 (54) (1,048) (332) ----------- ------------ ------------ ------------ Earnings (loss) before income taxes and extraordinary item............................... (5,446) 3,779 (25,104) 1,409 Income taxes...................................... 2 850 (480) 1,658 ----------- ------------ ------------ ------------ Earnings (loss) before extraordinary item......... (5,448) 2,929 (24,624) (249) Extraordinary loss on debt extinguishment......... -- -- (6,249) (4,965) ----------- ------------ ------------ ------------ NET EARNINGS (LOSS) $ (5,448) $ 2,929 $ (30,873) $ (5,214) =========== ============ ============ ============ Preferred stock dividends......................... $ (376) $ (370) $ (1,124) $ (1,113) Earnings (loss) applicable to common stock... $ (5,824) $ 2,559 $ (31,997) $ (6,327) Earnings (loss) per common share: Basic: Before extraordinary loss.................... $ (0.46) $ 0.20 $ (2.03) $ (0.12) Extraordinary loss on debt extinguishment.... -- -- (0.49) (0.45) ----------- ------------ ------------ ------------ Net earnings (loss).......................... $ (0.46) $ 0.20 $ (2.52) $ (0.57) =========== ============ ============ ============ Weighted average shares outstanding.......... 12,670 12,631 12,667 10,925 Diluted: Before extraordinary loss.................... $ (0.46) $ 0.19 $ (2.03) $ (0.12) Extraordinary loss on debt extinguishment.... -- -- (0.49) (0.45) ----------- ------------ ------------ ------------ Net earnings (loss).......................... $ (0.46) $ 0.19 $ (2.52) $ (0.57) =========== ============ ============ ============ Weighted average shares outstanding.......... 12,670 13,618 12,667 10,925
2
TOKHEIM CORPORATION AND SUBSIDIARIES - -------------------------------------------------------------------------------- Consolidated Condensed Balance Sheet (In thousands) (UNAUDITED) August 31, November 30, 1999 1998 -------------------------------- ASSETS Current assets: Cash and cash equivalents......................... $ 20,985 $ 26,801 Accounts receivable, net.......................... 150,880 172,693 Inventories: Raw materials and supplies..................... 58,795 70,545 Work in process................................ 15,503 27,418 Finished goods................................. 30,839 25,070 ------------ ------------ 105,137 123,033 Other current assets.............................. 16,923 19,139 ------------ ------------ Total current assets.............................. 293,925 341,666 Property, plant, and equipment, net............... 75,895 77,905 Other tangible assets............................. 2,226 4,873 Goodwill, net..................................... 296,307 324,113 Other non-current assets and deferred charges, net..................................... 36,667 28,085 ------------ ------------ Total assets...................................... $ 705,020 $ 776,642 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current maturities of long-term debt.............. 57,629 2,110 Notes payable to banks............................ 194 410 Cash overdrafts................................... 19,852 15,064 Accounts payable.................................. 73,297 95,322 Accrued expenses.................................. 116,584 136,164 ------------ ------------ Total current liabilities......................... 267,556 249,070 Notes payable, bank credit agreement.............. 147,520 182,145 Senior notes...................................... -- 22,500 Senior subordinated notes......................... 202,298 170,000 Junior subordinated Payment In Kind note.......... 43,709 40,000 Other long-term debt, less current maturities..... 3,616 4,115 Guaranteed Employees' Stock Ownership Plan obligation...................................... 5,029 6,987 Post-retirement benefit liability................. 14,883 14,418 Minimum pension liability......................... 3,135 3,135 Other long-term liabilities....................... 5,739 7,511 ------------ ------------ 693,485 699,881 ============ ============ Redeemable convertible preferred stock............ 24,000 24,000 Guaranteed Employees' Stock Ownership Plan obligation...................................... (5,029) (6,987) Treasury stock, at cost........................... (4,156) (4,883) ------------ ------------ 14,815 12,130 ------------ ------------ Common stock...................................... 90,375 90,354 Common stock warrants............................. 20,000 20,000 Minimum pension liability......................... (3,135) (3,135) Foreign currency translation adjustments.......... (58,697) (22,598) Accumulated deficit............................... (51,291) (19,295) ------------ ------------ (2,748) 65,326 Less treasury stock, at cost...................... (532) (695) ------------ ------------ (3,280) 64,631 ------------ ------------ Total liabilities and shareholders' equity........ $ 705,020 $ 776,642 ============ ============
3 TOKHEIM CORPORATION AND SUBSIDIARIES - --------------------------------------------------------------------------------
Consolidated Condensed Statement of Cash Flows (UNAUDITED) (In thousands) Nine Months Ended August 31, August 31, 1999 1998 ------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss.......................................................... $ (30,873) $ (5,214) Adjustments to reconcile net loss to cash used in operations: Write-off of in process research and development........... -- 5,879 Payment in kind interest................................... 3,709 -- Extraordinary loss on debt extinguishment.................. 6,249 4,965 Depreciation and amortization.............................. 19,279 8,930 Gain on sale of property and equipment..................... (1,240) 2 Changes in assets and liabilities: Accounts receivable, net.................................. 11,686 3,559 Inventories............................................... 11,924 97 Accounts payable.......................................... (17,334) (9,356) Accrued expenses.......................................... (14,394) (5,730) Long term deferred assets................................. (2,610) -- Other..................................................... (6,989) (4,732) ------------ ---------- Net cash used in operating activities............................. (20,593) (1,600) ------------ ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition, net of cash acquired................................. -- (12,137) Proceeds from the sales of property and equipment................. 3,842 411 Plant and equipment additions..................................... (15,695) (7,390) ------------ ---------- Net cash used in investing activities............................. (11,853) (19,116) ------------ ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of senior notes........................................ (22,500) -- Proceeds from senior subordinated notes.......................... 209,647 -- Redemption of senior subordinated notes........................... (170,000) (35,382) Increase (decrease) in other debt................................. (280) -- Increase (decrease) in notes payable, banks....................... 21,000 (4,594) Increase in cash overdraft........................................ 5,830 2,215 Equity issuance costs............................................. -- (4,885) Deferred debt issuance costs...................................... (8,066) -- Proceeds from issuance of common stock............................ 22 73,281 Premiums paid on debt extinguishment.............................. (555) (3,450) Other............................................................. 890 (760) Preferred stock dividends......................................... (1,124) (1,113) ------------ ---------- Net cash provided from financing activities....................... 34,864 25,312 ------------ ---------- EFFECT OF TRANSLATION ADJUSTMENT ON CASH.......................... (8,234) (939) CASH AND CASH EQUIVALENTS: Increase (decrease) in cash...................................... (5,816) 3,657 Beginning of year................................................. 26,801 6,438 ------------ ---------- End of period..................................................... $ 20,985 $ 10,095 ============ ==========
4 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The interim financial statements are unaudited and reflect all adjustments (consisting solely of normal recurring adjustments) that, in the opinion of management, are necessary for a fair statement of the interim periods presented. This report includes information in a condensed format and should be read in conjunction with the audited consolidated financial statements included in Tokheim Corporation's (the "Company") Annual Report to Shareholders for the year ended November 30, 1998. The results of operations for the three and nine months ended August 31, 1999 are not necessarily indicative of the results expected for the full year or any other interim period. Amounts for the year ended November 30, 1998 were derived from audited financial statements included in the 1998 Annual Report to Shareholders. 1. NEW ACCOUNTING PRONOUNCEMENTS SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," 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 since they are "disclosure only" standards. The Company is currently evaluating the impact that SFAS No. 131 will have on its current segment groupings. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998 and is effective for the year ending November 30, 2001. SFAS No. 133 establishes a new model for accounting for derivatives in the balance sheet as either assets or liabilities and measures them at fair value. Certain disclosures concerning the designation and assessment of hedging relationships are also required. Management has not yet determined the impact of this statement on the Company's consolidated financial statements. The Company will adopt SFAS No. 130, "Reporting Comprehensive Income", for the year ending November 30, 1999 by including a separate statement of comprehensive income as part of the consolidated financial statements. Total comprehensive loss for the three and nine month periods ended August 31, 1999 was $41.6 million and $67.0 million compared to earnings of $1.6 million and a loss of $6.5 million in the comparable 1998 periods. The other components of comprehensive loss in addition to net loss for the three and nine month periods consist of foreign currency translation adjustments and minimum pension liability. 2. SENIOR SUBORDINATED NOTES On January 26, 1999, the Company issued $123.0 million aggregate principal amount of 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes") and Euro 75.0 million ($87.0 million equivalent) aggregate principal amount of 11.375% Senior Subordinated Notes due 2008 (the "Euro Notes") in a private placement pursuant to Rule 144A (the "Offering"). The Notes will mature on August 1, 2008, and interest is payable semi-annually on February 1 and August 1 of each year, commencing August 1, 1999. The Company used the net proceeds from the Offering to redeem in whole, the $170.0 million Senior Subordinated Seller Notes and the $22.5 million Senior Notes. In addition, the Company used approximately $9.1 million of the net proceeds to reduce borrowings under the revolving credit facility under the New Credit Agreement and to permanently reduce the bank revolving credit commitment from $120.0 million to $110.0 million. The Company has designated the Euro 75.0 million of Senior Subordinated Notes as a hedge instrument against its' foreign denominated intercompany long term notes receivable held by domestic subsidiaries. As such, any gains or losses on translation of these notes to U.S. dollars are recorded in the Shareholders Equity section of the balance sheet. For the nine months ended August 31, 1999 the Company recognized $7.7 million currency translation gain due to the devaluation of the Euro as compared to the U.S. dollar. 5 During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6.2 million in connection with the refinancing of the Senior Notes and the Senior Subordinated Seller Notes with proceeds received from the Offering. This amount consists of $0.5 million of premiums on the Senior Notes and approximately $5.7 million of unamortized deferred issuance costs that were written off. Each of the Dollar Notes and the Euro Notes will be redeemable, at the Company's option, in whole at any time, or in part from time to time, on and after February 1, 2004, 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 February 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:
-------------------------------------------------------- Year Percentage -------------------------------------------------------- 2004 .................. 105.688% -------------------------------------------------------- 2005 .................. 103.792% -------------------------------------------------------- 2006 .................. 101.896% -------------------------------------------------------- 2007 and thereafter .................. 100.000% --------------------------------------------------------
Optional Redemption upon Public Equity Offerings. At any time, or from time to time, on or prior to February 1, 2002, the Company may, at its option, use the net cash proceeds of one or more public equity offerings to redeem up to 35% of the original principal amount of the Dollar Notes issued in the Offering and up to 35% of the original principal amount of the Euro Notes issued in the Offering, each at a redemption price equal to 111.375% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that at least 55% of the original principal amount of the Dollar Notes issued in the Offering or the Euro Notes issued in the Offering, as the case may be, remains outstanding immediately after any such redemption and the Company shall make such redemption not more than 120 days after the consummation of any such public equity offering. The Notes are unsecured and subordinated to all of the Company's existing and future senior debt, including its obligations under the New Credit Agreement. All of the Company's current and future U.S. subsidiaries will guarantee the Notes with guarantees that will be unsecured and subordinated to senior debt of subsidiaries. The indentures under which the Notes were issued contain covenants limiting the Company's ability to incur additional debt; pay dividends on capital stock, repurchase capital stock or make certain other restricted payments; make certain investments; create liens on our assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and transfer and sell assets. The Company and the subsidiary guarantors have entered into a Registration Rights Agreement pertaining to the Dollar Notes and another Registration Rights Agreement pertaining to the Euro Notes (together, the "Registration Rights Agreements"). The Registration Rights Agreements require the Company to, at its own cost, (i) within 90 days after the Issue Date, file a registration statement on the appropriate registration form (the "Exchange Offer Registration Statement") with the Securities and Exchange Commission (the "Commission") with respect to the notes (the "Exchange Notes") which will have terms substantially identical in all material respects to the Dollar Notes or the Euro Notes, as the case may be, (except that the Exchange Notes will not contain terms with respect to transfer restrictions or liquidated damages), (ii) use its best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after the Issue Date and (iii) use its best efforts to consummate the Exchange Offer within 195 days after the Issue Date. The Company has filed the Exchange Offer Registration Statement described above and the Exchange Offer Registration Statement was declared effective by the Commission on September 22, 1999. The 6 Exchange Offer is currently being conducted, and the Company is offering the Exchange Notes in Exchange for surrender of the Euro Notes and Dollar Notes. The Company failed to have the Exchange Offer Registration Statement declared effective within 150 days of the Issue Date. As such, the Company was obligated to pay the holders of the Dollar Notes and the Euro Notes an additional interest premium of 0.5% until September 22, 1999, the date the Exchange Offer Registration Statement was declared effective. In addition, the Company has failed to consummate the Exchange Offer within 195 days of the Issue Date. As such, the Company is obligated to pay the holders of the Dollar Notes and the Euro Notes an additional premium of 0.5% from the date the Exchange Offer Registration Statement was declared effective until the date the Exchange Offer is consummated, subject to an additional increase of 0.5% after 90 days and for each 90 day period thereafter (up to a maximum of 1.0% per annum). 3. ACQUISITION On September 30, 1998, the Company completed the acquisition of the RPS division of Schlumberger Limited. As part of the purchase price, the Company issued warrants exercisable for five years, beginning on January 30, 1999 to purchase at a nominal price, 2,526,923 shares of the Company's common stock. The warrants are considered potential common stock under the guidelines of SFAS No. 128 "Earnings Per Share" for purposes of calculating diluted earnings per share and will be reflected as shares outstanding when the Company is in an earnings position. As part of the purchase price of the RPS division, the Company has provided $20.3 million for certain costs it expects to incur to close down redundant operations in connection with the reorganization and rationalization of the RPS division's operations. As of August 31, 1999, the Company has incurred and charged approximately $11.1 million against this accrued liability for projects initiated since the acquisition date, leaving a remaining balance of $9.2 million. The Company expects to incur in excess of $2.8 million of restructuring charges in the fourth quarter of 1999. In addition, at November 30, 1998 the Company established a restructuring reserve related to the closure of its Glenrothes, Scotland location in the amount of $5.1 million. For the nine month period ended August 31, 1999, the Company incurred costs of $4.6 million which were charged against the reserve leaving a remaining balance of $0.5 million. These charges relate to severance costs and facility closure expenses. The Company expects the closure of this facility to be completed during the fourth quarter of 1999. 4. BANK CREDIT AGREEMENT During the quarter ended August 31, 1999, the Company failed to satisfy certain financial covenants contained in its New Credit Agreement. The Company has received waivers relating to the financial covenant defaults for the fiscal quarter ended August 31, 1999 and has also amended its New Credit Agreement to, among other things, amend the related financial covenants that cover the Company's fourth fiscal quarter of 1999 and periods thereafter. In connection with amending the New Credit Agreement, the Company has agreed to obtain $50.0 million by issuing new equity type securities and pay down the New Credit Agreement balance on or before January 25, 2000. The Company believes that it can obtain such additional equity on or before January 25, 2000 or complete alternative refinancing arrangements and meet the amended financial covenants in future periods. As such, the Company has reclassified $50.0 million of the indebtedness under the New Credit Agreement to current liabilities. However, there can be no assurance that the $50.0 million in additional equity type securities will be obtained by the Company nor that alternative refinancing can be secured and the failure to do so would create an event of default under the amended New Credit Agreement. See further discussion in Management's Discussion and Analysis of Financial Condition and Results of Operations. 7 5. Guarantor and Nonguarantor Financial Statements The Dollar Notes and the Euro Notes are, and the exchange notes which will be issued in the exchange offer for the Dollar Notes and the Euro Notes will be, general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company, and guaranteed on a full, unconditional, joint and several basis by the Company's wholly-owned domestic subsidiaries. The following condensed consolidating financial information presents: (1) Condensed consolidating financial statements as of August 31, 1999 and August 31, 1998 and for the nine months ended August 31, 1999 and 1998, of (a) Tokheim Corporation, the parent; (b) the guarantor subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a consolidated basis, and (2) Elimination entries necessary to consolidate Tokheim Corporation, the parent, with guarantor and nonguarantor subsidiaries. Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements for the guarantor subsidiaries and the nonguarantor subsidiaries are not presented because management believes that such financial statements would not be meaningful to investors. 8 CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the nine months ended August 31, 1999 (Amounts in thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ---------- ------------ ------------ ------------ ---------- Net sales................................................. $ 121,653 $ 68,050 $ 332,923 $ (10,252) $ 512,374 Cost of sales, exclusive of items listed below............ 93,104 47,608 263,539 (10,252) 393,999 Selling, general, and administrative expenses............. 20,429 19,946 38,353 -- 78,729 Depreciation and amortization............................. 3,755 3,465 12,060 -- 19,279 Merger and acquisition costs and other unusual items...... 887 686 4,541 -- 6,115 ---------- --------- ---------- ---------- ---------- Operating profit (loss)................................... 3,478 (3,656) 14,430 0 14,252 Interest (income) expense, net............................ 10,169 (327) 28,101 (0) 37,944 Foreign currency loss..................................... 316 800 1,256 -- 2,372 Equity in (earnings) loss of consolidated subsidiaries.... 12,874 -- -- (12,874) -- Minority interest......................................... -- -- 88 -- 88 Other (income) expense, net............................... 4,689 (23,909) 18,172 -- (1,048) ---------- --------- ---------- ---------- ---------- Earnings (loss) before income taxes....................... (24,570) 19,779 (33,187) 12,874 (25,104) Income taxes.............................................. 54 (335) (198) (1) (480) ---------- --------- ---------- ---------- ---------- Earnings (loss) before extraordinary item................. (24,624) 20,114 (32,989) 12,875 (24,624) Extraordinary loss on debt extinguishment................. (6,249) -- -- -- (6,249) ---------- --------- ---------- ---------- ---------- Net earnings (loss)....................................... $ (30,873) $ 20,114 $ (32,989) $ 12,875 $ (30,873) ========== ========= ========== ========== ==========
9 CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the nine months ended August 31, 1998 (Amounts in thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ---------- ------------ ------------ ------------ ---------- Net sales................................................. $ 110,264 $ 43,658 $ 151,182 $ (13,106) $ 291,997 Cost of sales, exclusive of items listed below............ 83,607 27,821 115,653 (13,106) 213,975 Selling, general, and administrative expenses............. 24,163 8,189 20,840 -- 53,192 Depreciation and amortization............................. 3,017 661 4,121 -- 7,799 Merger and acquisition costs and other unusual items...... 6,218 -- 378 -- 6,596 ---------- --------- ---------- ---------- ---------- Operating profit (loss)................................... (6,741) 6,987 10,190 (0) 10,435 Interest (income) expense, net............................ 2,973 (59) 6,968 (0) 9,882 Foreign currency loss..................................... (932) (30) 148 -- (813) Equity in (earnings) loss of consolidated subsidiaries.... (3,946) -- -- 3,946 -- Minority interest......................................... -- -- 289 -- 289 Other (income) expense, net............................... (4,648) (1,328) 5,643 -- (332) ---------- --------- ---------- ---------- ---------- Earnings (loss) before income taxes....................... (188) 8,404 (2,858) (3,946) 1,409 Income taxes.............................................. 61 426 1,214 (41) 1,658 ---------- --------- ---------- ---------- ---------- Earnings (loss) before extraordinary item................. (249) 7,978 (4,072) (3,905) (249) Extraordinary loss on debt extinguishment................. (4,965) -- -- -- (4,965) ---------- --------- ---------- ---------- ---------- Net earnings (loss)....................................... $ (5,214) $ 7,978 $ (4,072) $ (3,905) $ (5,214) ========== ========= ========== ========== ==========
10 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the nine months ended August 31, 1999 (Amounts in thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total --------- ------------ ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by (used in) operations. $ (30,303) $ 1,668 $ (4,832) $ 12,874 $ (20,593) CASH FLOWS FROM INVESTING ACTIVITIES: Plant and equipment additions............ (12,180) 2,550 (6,065) -- (15,695) Proceeds from sale of property and equipment............ 8,535 (6,950) 2,257 -- 3,842 Investments in and advances to subsidiaries, net.... 12,874 -- -- (12,874) -- --------- -------- -------- -------- --------- Net cash provided from (used in) investing activities......... 9,229 (4,400) (3,808) (12,874) (11,853) CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of senior notes................ (22,500) -- -- -- (22,500) Proceeds from issuance of senior subordinated notes................ 209,647 -- -- -- 209,647 Redemption of issuance of senior subordinated notes................ (170,000) -- -- -- (170,000) Increase (decrease) in term debt............ -- -- (280) -- (280) Increase (decrease) notes payable, banks. 17,000 4,000 -- -- 21,000 Increase (decrease) cash overdraft....... (131) (6) 5,967 -- 5,830 Debt issuance costs... (8,066) -- -- -- (8,066) Premiums paid on debt extinguishment....... (555) -- -- -- (555) Other................. 890 -- -- -- 890 Proceeds from issuance of common stock...... 22 -- -- -- 22 Preferred stock dividends............ (1,124) -- -- -- (1,124) --------- -------- -------- -------- --------- Net cash provided from (used in) financing activities......... 25,183 3,994 5,687 -- 34,864 EFFECT OF TRANSLATION ADJUSTMENT ON CASH.... (2,207) (2,717) (3,310) -- (8,234) --------- -------- -------- -------- --------- CASH AND CASH EQUIVALENTS: Increase (decrease) in cash................. 1,902 (1,456) (6,263) -- (5,816) Beginning of year..... 849 5,381 20,571 -- 26,801 --------- -------- -------- -------- --------- End of period......... $ 2,751 $ 3,925 $ 14,308 $ -- $ 20,985 ========= ======== ======== ======== =========
11 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the nine months ended August 31, 1998 (Amounts In thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by (used in) operations.......... $(21,289) $ 3,836 $ 19,799 $(3,946) $ (1,600) CASH FLOWS FROM INVESTING ACTIVITIES: Plant and equipment additions........... (4,061) (1,000) (2,329) -- (7,390) Proceeds from sale of property and equipment........... 62 8 341 -- 411 Investments in and advances to subsidiaries, net... (12,137) -- (3,946) 3,946 (12,137) -------- -------- ------- ------- -------- Net cash provided from (used in) investing activities............ (16,136) (992) (5,934) 3,946 (19,116) CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of senior notes............... -- -- -- -- -- Proceeds from issuance of senior subordinated notes.. -- -- -- -- -- Redemption of senior subordinated notes, net................. (35,382) -- -- -- (35,382) Increase (decrease) in term debt....... -- -- -- -- -- Increase (decrease) notes payable, banks............... (990) -- (3,604) -- (4,594) Increase (decrease) in cash overdraft... 918 663 634 -- 2,215 Equity issuance costs............... -- -- (4,885) -- (4,885) Premiums paid on debt extinguishment...... -- -- (3,450) -- (3,450) Other................ (760) -- -- -- (760) Proceeds from issuance of common stock....... 73,281 -- -- -- 73,281 Preferred stock dividends........... (1,113) -- -- -- (1,113) -------- -------- -------- ------- -------- Net cash provided from (used in) financing activities............ 35,954 663 (11,305) -- 25,312 EFFECT OF TRANSLATION ADJUSTMENTS ON CASH... -- -- (939) -- (939) -------- -------- -------- ------- -------- CASH AND CASH EQUIVALENTS: Increase (decrease) in cash............. (1,471) 3,507 1,621 -- 3,657 Beginning of year.... 2,764 1,170 2,505 -- 6,438 -------- -------- -------- ------- -------- End of period........ $ 1,293 $ 4,677 $ 4,126 $ -- $ 10,095 ======== ======== ======== ======= ========
12 CONSOLIDATED CONDENSED BALANCE SHEET As of August 31, 1999 (Amounts in thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents.......... $ 2,751 $ 3,925 $ 14,308 $ -- $ 20,985 Accounts receivables, net.................. 48,408 77,660 113,758 (88,947) 150,880 Inventories, net...... 20,685 11,278 73,239 (63) 105,137 Other current assets.. 1,814 921 14,188 -- 16,923 --------- -------- -------- -------- --------- Total current assets.. 73,657 93,785 215,493 (89,010) 293,925 Investments in subsidiaries......... 48,282 26,900 3,284 (78,467) -- Property, plant, and equipment, net....... 24,099 13,244 38,553 -- 75,895 Goodwill, net......... 71,577 36,217 188,513 -- 296,307 Other non-current assets and deferred charges, net......... 7,736 326,150 6,078 (301,071) 38,893 --------- --------- ---------- --------- --------- Total assets........ $ 225,352 $ 496,296 $ 451,921 $(468,549) $ 705,020 ========= ========= ========== ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current maturities of long-term debt......... $ -- $ 55,625 $ 2,004 $ -- $ 57,629 Notes payable to banks.. -- -- 194 -- 194 Cash overdrafts......... -- 168 19,685 -- 19,852 Accounts payable........ 35,395 38,896 89,352 (90,346) 73,297 Accrued expenses........ 13,117 42,636 60,831 -- 116,584 --------- --------- ---------- ---------- --------- Total current liabilities............ 48,512 137,325 172,066 (90,346) 267,556 Notes payable, bank credit agreement....... 17,000 126,905 3,616 -- 147,520 Senior subordinated notes.................. -- 202,298 -- -- 202,298 Junior subordinated payment in kind note... -- 43,709 -- -- 43,709 Other long-term debt, less current maturities............. 6,000 3,616 302,462 (308,462) 3,616 Guaranteed Employees' Stock Ownership Plan obligation............. 5,029 -- -- -- 5,029 Post-retirement benefit liability.............. 14,883 -- (0) -- 14,883 Minimum pension liability.............. 3,135 -- -- -- 3,135 Other long-term liabilities............ 136 (217) 5,917 (97) 5,739 --------- --------- ---------- ---------- --------- 94,695 513,635 484,061 (398,906) 693,485 Redeemable convertible preferred stock........ 24,000 -- -- -- 24,000 Guaranteed Employees' Stock Ownership Plan obligation............. (5,029) -- -- -- (5,029) Treasury stock, at cost. (4,156) -- -- -- (4,156) --------- --------- ---------- ---------- --------- 14,815 -- -- -- 14,815 Common stock............ 90,375 41,722 14,962 (56,685) 90,375 Common stock warrants... 20,000 -- -- -- 20,000 Minimum pension liability.............. (3,135) -- -- -- (3,135) Foreign currency translation adjustments............ (7,896) (37,284) 15,426 (28,944) (58,697) Retained earnings (accumulated deficit).. 17,030 (21,778) (62,528) 15,985 (51,291) --------- --------- ---------- ---------- --------- 116,373 (17,339) (32,140) (69,643) (2,748) Less treasury stock, at cost................... (532) -- -- -- (532) --------- --------- ---------- ---------- --------- 115,842 (17,339) (32,140) (69,643) (3,280) --------- --------- ---------- ---------- --------- Total liabilities and shareholders' equity............. $ 225,352 $ 496,296 $ 451,921 $ (468,549) $ 705,020 ========= ========= ========== ========== =========
13 CONSOLIDATED CONDENSED BALANCE SHEET As of August 31, 1998 (Amounts in thousands)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents.......... $ 1,293 $ 4,677 $ 4,126 $ -- $ 10,095 Accounts receivables, net.................. 36,536 33,281 54,773 (45,347) 79,243 Inventories, net...... 16,486 8,336 38,758 0 63,580 Other current assets.. 1,724 626 4,342 -- 6,691 --------- --------- --------- ---------- --------- Total current assets.. 56,038 46,918 101,999 (45,347) 159,609 Investments in subsidiaries......... 33,311 (7,675) 3,124 (28,760) -- Property, plant, and equipment, net....... 21,489 4,598 18,725 -- 44,812 Goodwill, net......... 8,343 63,073 -- 71,416 Other non-current assets and deferred charges, net......... 98,762 434 2,598 (80,603) 21,192 --------- --------- --------- ---------- --------- Total assets........ $ 217,944 $ 44,275 $ 189,519 $ (154,709) $ 297,029 ========= ========= ========= ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current maturities of long-term debt......... $ -- $ -- $ 2,254 $ -- $ 2,254 Notes payable to banks.. -- -- 336 -- 336 Cash overdrafts......... -- 166 12,567 -- 12,733 Accounts payable........ 20,133 9,744 43,261 (27,446) 45,692 Accrued expenses........ 13,095 5,156 27,975 -- 46,226 --------- --------- --------- ---------- --------- Total current liabilities............ 33,228 15,066 86,392 (27,446) 107,241 Notes payable, bank credit agreement....... 18,599 -- 4,741 -- 23,340 Senior subordinated notes.................. 55,000 -- -- -- 55,000 Junior subordinated payment in kind note... -- -- -- -- -- Other long-term debt, less current maturities............. -- -- 86,509 (82,855) 3,654 Guaranteed Employees' Stock Ownership Plan obligation............. 7,615 -- -- -- 7,615 Post-retirement benefit liability.............. 14,217 -- (0) -- 14,216 Minimum pension liability.............. 2,173 -- -- -- 2,173 Other long-term liabilities............ 597 (361) 1,320 (105) 1,451 --------- --------- --------- ---------- --------- 131,428 14,705 178,962 (110,406) 214,690 Redeemable convertible preferred stock........ 24,000 -- -- -- 24,000 Guaranteed Employees' Stock Ownership Plan obligation............. (7,615) -- -- -- (7,615) Treasury stock, at cost. (4,927) -- -- -- (4,927) --------- --------- --------- ---------- --------- 11,457 -- -- -- 11,458 Common stock............ 89,581 26,895 5,042 (31,938) 89,581 Common stock warrants... -- -- -- -- -- Minimum pension liability.............. (2,173) -- -- -- (2,173) Foreign currency translation adjustments............ (12,479) (11,110) 41,689 (37,441) (19,341) Retained earnings (accumulated deficit).. 821 13,785 (36,175) 25,075 3,506 --------- --------- --------- ---------- --------- 75,750 29,570 10,556 (44,304) 71,573 Less treasury stock, at cost................... (692) -- -- -- (692) --------- --------- --------- ---------- --------- 75,058 29,570 10,556 (44,304) 70,881 --------- --------- --------- ---------- --------- Total liabilities and shareholders' equity............. $ 217,944 $ 44,275 $ 189,519 $ (154,709) $ 297,029 ========= ========= ========= ========== =========
14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Tokheim Corporation, including its subsidiaries ("Tokheim" or the "Company"), is the world's largest manufacturer and servicer 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. The Company provides products and services to customers in more than 80 countries. The Company is the largest supplier of petroleum dispensing systems in Europe, Africa, Canada and Mexico, and one of the largest in the United States. The Company also has established operations in Asia and Latin America. RESULTS OF OPERATIONS Consolidated sales for the three and nine month periods ended August 31, 1999 were $169.2 million and $512.4 million compared to $101.5 million and $292.0 million for the three and nine month periods ended August 31, 1998. Sales for North America, excluding export sales, increased 26.2% and 33.7% for the three and nine month periods, respectively, from $44.6 million and $125.3 million in 1998 to $56.3 million and $167.5 million in the comparable 1999 periods. International sales, including domestic export sales, increased 98.4% and 106.9% for the three and nine month periods, respectively, from $56.9 million and $166.7 million in 1998 to $112.9 million and $344.9 million in 1999. The increase in sales from the prior year is attributable to the RPS division acquisition. Sales for the three and nine month periods ended August 31, 1999 were adversely affected by the continued merger activity taking place among the major oil companies, which has resulted in a decrease in levels of capital expenditures. Decreased spending was especially significant in emerging markets, where the Company has a strong presence. Gross margin as a percent of sales (defined as net sales less cost of sales divided by net sales) decreased from 27.3% and 26.7% in the 1998 three and nine month periods to 23.8% and 23.1% in the three and nine month periods ended August 31, 1999. This decline from the 1998 percentages was primarily driven by the historically lower margins achieved by the RPS division and increased mix of service contract revenue, which provide a lower margin than dispenser sales. The increase in gross margin as a percentage of sales for the three month period ended August 31, 1999 as compared to the nine month period ended August 31, 1999 is the result of efficiencies gained from management's efforts at cost savings put in place following the acquisition of the RPS division. In light of current financial conditions, management has further accelerated the integration of the RPS division and has instituted a series of immediate additional cost reduction measures. Selling, general, and administrative expenses as a percent of sales for the three and nine month periods ended August 31, 1999 were 14.8% and 15.4% compared to 18.0% and 18.2% in the comparable year ago periods. This decline is primarily due to the inclusion of the RPS division and closure of redundant facilities and termination of related personnel. Depreciation and amortization expense for the three and nine month periods ended August 31, 1999, was $6.3 million and $19.3 million compared to $2.7 million and $7.8 million in the comparable year ago period. The majority of the increase from the 1998 periods relates to increased depreciation and amortization expense for fixed and intangible assets recorded in connection with the acquisition of the RPS division. 15 Merger and acquisition costs and other unusual items for the three and nine month periods ended August 31, 1999 were $1.3 million and $6.1 million compared to $0.3 million and $6.6 million in the comparable 1998 periods. The amounts recorded in 1999 relate primarily to closure and severance expenses related to the closing, consolidation, and merger activities involving certain facilities. The 1999 costs include salaries of employees involved in closure activities, vacancy costs related to owned facilities, and certain travel expenses incurred while executing closure activities. The merger and acquisition costs recorded in 1998 primarily relate to a $5.9 million non-recurring write-off of in process research and development that was purchased in connection with the December 1997 acquisition of Management Solutions, Inc. ("MSI"). Net interest expense for the nine month period ended August 31, 1999 was $37.9 million compared to $9.9 million in the comparable 1998 period. This increase is due to increased debt levels associated with the September 1998 acquisition of the RPS division and related financing. Foreign currency effect for the three and nine month periods ended August 31, 1999 was a gain of $0.5 million and a loss $2.4 million compared to foreign currency gain of $0.8 million in comparable nine month period. The loss for the nine month 1999 period was driven by short-term inter-company receivables and payables being revalued at the current rate of exchange in effect at August 31, 1999. The 1998 amounts represent realized gains associated with repayment of various French Franc denominated Euro currency contracts entered into under the Company's previous Bank Credit Agreement. Other income, net, was expense of $0.3 million and income of $1.0 million for the respective three and nine month periods ended August 31, 1999 compared to income of $0.1 million and $0.3 million in the comparable year ago periods. The 1999 nine month amount includes a gain on the sale of surplus land adjacent to the Company's corporate headquarters. The 1998 amounts are attributable to various income and expense items, which are individually immaterial. Income taxes for the nine month period ended August 31, 1999 was a benefit of $0.5 million compared to expense of $1.7 million in the nine month 1998 period. This change is due to lower 1999 earnings at subsidiaries that recorded taxable income during 1998 combined with certain subsidiaries recording tax benefits in 1999 due to circumstances within these local jurisdictions. Extraordinary loss on debt extinguishment was $6.2 million in the nine month period ended August 31, 1999 compared to $5.0 million in the comparable nine month period of 1998. During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6.2 million in connection with the refinancing of the Senior Notes and the Senior Subordinated Seller Notes with proceeds received from the Offering. This amount consists of $0.5 million of premiums on the Senior Notes and approximately $5.7 million of unamortized deferred issuance costs that were written off. The $5.0 million 1998 amount was a result of a $35.0 million bond redemption. The amount includes $3.5 million of call premiums and $1.5 million of unamortized deferred issuance cost. As a result of the above mentioned items, loss before extraordinary item was $5.5 million and $24.6 million for the three and nine month periods ended August 31, 1999, compared to earnings of $2.9 million and loss of $0.3 million in the comparable 1998 periods. Diluted loss per common share before extraordinary item for the three and nine month 1999 periods was $0.46 and $2.03 compared to earnings of $0.19 and loss of $0.12 in the three and nine month 1998 periods. Diluted loss per common share from extraordinary loss on debt extinguishment was $0.49 in the nine month 1999 period compared to $0.45 in the nine month 1998 period. Net loss for the three and nine months ended August 31, 1999 was $0.46 and $2.52 per diluted common share compared to a net earnings of $0.19 and net loss of $0.57 per diluted common share for the comparable 1998 periods. LIQUIDITY AND CAPITAL RESOURCES Cash used in operations for the nine months ended August 31, 1999 was $20.6 million versus $1.6 million in the comparable period of 1998. During the nine month 1999 period, the Company was able to collect receivables and reduce inventory levels by a combined amount of $23.6 million. This is a direct result of 16 management's continued focus on working capital improvements. This cash inflow was used to reduce the outstanding accounts payable and accrued liabilities. Cash used in investing activities for the nine month period ended August 31, 1999, was $11.9 million compared to a cash usage of $19.1 million in the comparable 1998 period. The cash usage in the 1999 period is attributable to routine capital expenditures as well as capital expenditures incurred in the implementation of the Company's restructuring plan. The cash usage in the 1998 period is mainly attributable to the acquisition of MSI and routine capital expenditures. Cash provided from financing activities for the 1999 nine month period was $34.9 million compared to $25.3 provided in the comparable 1998 period. The 1999 amount includes the issuance of new high yield debt in a private placement offering and increased bank debt. The cash provided in the 1998 period is largely attributable to the March 1998 common stock offering. During the quarter ended August 31, 1999, the Company failed to satisfy certain financial covenants contained in its New Credit Agreement. The Company has received waivers relating to the financial covenant defaults for the fiscal quarter ended August 31, 1999 and has also amended its New Credit Agreement to, among other things, amend the related financial covenants that cover the Company's fourth fiscal quarter of 1999 and periods thereafter. In connection with amending the New Credit Agreement, the Company has agreed to obtain $50.0 million by issuing new equity type securities and pay down the New Credit Agreement balance on or before January 25, 2000. The Company believes that it can obtain such additional equity on or before January 25, 2000 or complete alternative refinancing arrangements and meet the amended financial covenants in future periods. As such, the Company has reclassified $50.0 million of the indebtedness under the New Credit Agreement to current liabilities. However, there can be no assurance that the $50.0 million in additional equity type securities will be obtained by the Company nor that alternative refinancing can be secured and the failure to do so would create an event of default under the amended New Credit Agreement. On January 26, 1999, the Company issued $123.0 million aggregate principal amount of 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes") and Euro 75.0 million ($87.0 million equivalent) aggregate principal amount of 11.375% Senior Subordinated Notes due 2008 (the "Euro Notes") in a private placement pursuant to Rule 144A (the "Offering"). The Notes will mature on August 1, 2008, and interest is payable semi-annually on February 1 and August 1 of each year, commencing August 1, 1999. The August 1, 1999 payment of approximately $11.8 million was primarily funded from borrowings under the working capital facility as well as cash flows from operations. At October 15, 1999 the outstanding borrowings under the Company's revolving credit facility were $91.9 million. Available borrowings under the revolving working capital facility were $18.1 million at October 15, 1999, subject to the Company's borrowing base calculation and certain other loan covenants. Net proceeds from the issuance of Senior Subordinated Notes due 2008 were used to redeem the Senior Subordinated Seller Notes and the Senior Notes. The Senior Subordinated Seller Notes were redeemed at an aggregate price of $176.7 million, representing principal of $170.0 million and accrued and unpaid interest thereon of $6.7 million. The Senior Notes were redeemed at an aggregate price of $23.2 million, representing principal of $22.5 million, accrued and unpaid interest of $0.2 million and an applicable call premium of $0.5 million. In addition, the Company used approximately $9.1 million of the net proceeds to reduce borrowings under the revolving credit facility under the New Credit Agreement and to permanently reduce the bank working capital commitment from $120.0 million to $110.0 million. During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6.2 million in connection with the refinancing of the Senior Notes and the Senior Subordinated Seller Notes with proceeds received from the Offering. This amount consists of $0.5 million of premiums on the Senior Notes and approximately $5.7 million of unamortized deferred issuance costs that were written off. As part of the purchase price of the RPS division, the Company has provided $20.3 million for certain costs it expects to incur to close down redundant operations in connection with the reorganization and rationalization of the RPS division's operations. As of August 31, 1999, the Company has incurred and charged approximately $11.1 million against this accrued liability for projects initiated since the acquisition 17 date, leaving a remaining balance of $9.2 million. The Company expects to incur approximately $2.8 million of restructuring charges in the fourth quarter of 1999. In addition, at November 30, 1998 the Company established a restructuring reserve related to the closure of its Glenrothes, Scotland location in the amount of $5.1 million. For the nine month period ended August 31, 1999, the Company incurred costs of $4.6 million which were charged against the reserve leaving a remaining balance of $0.5 million. These charges relate to severance costs and facility closure expenses. The Company expects the closure of this facility to be completed during the fourth quarter of 1999. The Company has guaranteed loans to the Employees' Stock Ownership Plan ("ESOP") in the amounts of $5.0 million and $7.0 million at August 31, 1999 and November 30, 1998, respectively. Preferred stock dividends paid were $0.4 million and $1.1 million for each of the three and nine month periods ended August 31, 1999 and 1998, respectively. In December 1997, the Company initiated its Year 2000 plan, including the organization and staffing of a full-time Year 2000 program office. The Company has organized the process into the following sections: product certification (ensuring all products sold by the Company are Year 2000 ready); internal information systems (ensuring all internal hardware and software is Year 2000 ready through upgrades or replacement); suppliers, distributors and external agents (ensuring all suppliers, distributors and external agents used by the Company to purchase or sell goods and services are Year 2000 ready); and manufacturing and infrastructure (ensuring manufacturing and infrastructure systems are Year 2000 ready). As of August 31, 1999, 98.0% of the Company's products worldwide had been tested for Year 2000 readiness. 93.0% of the Company's total product lines are Year 2000 ready, and the Company believes that the remaining products will be Year 2000 ready by December 1999. The Company's products presently being sold are Year 2000 ready. The Company has assessed which products in the field are not Year 2000 ready and its responsibility to the customers, if any, to remedy non- compliant products. This assessment has been done for all products sold by each entity with the assessment efforts focused on the recently acquired RPS division locations. There is a possibility that certain third-party networks over which the POS systems must operate may not be Year 2000 ready, but the Company's products will still allow the pumping of petroleum products. The Company has surveyed its critical suppliers, and over 50.0% of the respondents have indicated that they are Year 2000 ready. The remainder of those responding have indicated that they are still working to achieve Year 2000 readiness, but none have indicated that they expect not to be ready. The Company believes that all of its critical information systems will be Year 2000 ready no later than November 30, 1999. The total costs associated with required modifications to become Year 2000 ready are not expected to be material to the Company's financial position results of operations or cash flows. The Company estimates that it will spend a total of approximately $3.7 million by December 31, 1999, of which approximately $2.8 million had been spent as of August 31, 1999 to become Year 2000 ready. The Company has enlisted the assistance of a third-party consulting company to provide independent verification and validation of its entire Year 2000 plan. The failure to correct a material Year 2000 problem could result in an interruption in, or a failure of certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operation, liquidity, and financial condition. The Company believes that the most likely failure scenario is that its POS systems that have not been updated in the field may fail, but the Company's dispensers will still allow the dispensing of petroleum products. Under such a scenario, purchasers of petroleum products would still be able to use the dispensers but would be required to pay for their purchases at the cashier rather than at the pump. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers, customers, and devices that interface with the Company's products, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity, or financial condition. The Year 2000 plan is expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem and, in particular, about the Year 2000 readiness of its material external agents. The Company believes that, with the implementation of new business systems and completion of the Year 2000 plan as scheduled, the possibility of significant interruptions of normal operations should be reduced. However, 18 contingency planning for all sections discussed above commenced in the fourth quarter of 1998, and the Company is currently focusing on assessing the potential Year 2000 problems that may arise and the risks of not becoming Year 2000 ready for each section mentioned. A contingency plan was developed in the first quarter of 1999 and distributed throughout the Company. Former shareholders of MSI, which the Company purchased from the shareholders in December 1997, have filed a $30.0 million arbitration claim against the Company alleging fraud, breech of contract, tortious interference with contractual relations and breach of implied good faith and fair dealing. The Company believes that the claims are without merit and will vigorously defend against the allegations. The Company has filed counterclaims and is also seeking damages in excess of $4.0 million for breach of representations and warranties in the purchase agreement. The Company's principal sources of liquidity in the future are expected to be cash flow from operations, including cash flow anticipated to be generated from the recently acquired RPS division, and available borrowings under the New Credit Agreement and the issuance of equity securities. It is expected that the Company's principal uses of liquidity will be to provide working capital, finance capital expenditures, fund costs associated with the Company's integration and rationalization plan and meet debt service requirements. As a result of the acquisition of the RPS division, the Company has a significant level of debt. Based upon current levels of operations and anticipated cost savings and future growth, the Company believes that its expected cash flow from operations, together with available borrowings under the New Credit Agreement and its other sources of liquidity, including leases, will be adequate to meet its anticipated requirements for working capital, capital expenditures, lease payments and scheduled principal and interest payments on a short and long term basis. There can be no assurance, however, that the Company's business will continue to generate cash flow at or above current levels, that estimated cost savings or growth will be achieved. The indentures under which the Dollar Notes and the Euro Notes were issued (the "Indentures") and the New Credit Agreement contain a number of significant covenants. The New Credit Agreement requires the Company to maintain specified financial ratios and satisfy certain financial tests. The Company's ability to meet the new financial covenants may be affected by events beyond its control, including reduced purchases of dispensers and equipment by the major oil companies. If this purchasing weakness continues, there can be no assurance that the Company can or will remain in compliance with its covenants. In addition, the Indentures limit the ability of the Company and its subsidiaries to, among other things: incur additional debt; pay dividends on capital stock or repurchase capital stock or take certain other restricted payments; use the proceeds of certain asset sales; make certain investments; create liens on assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and transfer and sell assets. 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, 1999. None of the pronouncements that have been issued but not yet adopted by the Company are expected to have a material impact on the Company's financial position, results of operations or cash flows. See the footnotes to the consolidated condensed financial statements for additional information about recently issued accounting pronouncements. 19 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is engaged in an arbitration matter relating to an employment claim. The matter was discussed in the Company's Form 10-Q for the quarter ended May 31, 1999, filed July 28, 1999, and is also discussed in this Report in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Liquidity and Capital Resources." Item 3. Defaults Upon Senior Securities During the quarter ended August 31, 1999, the Company failed to satisfy certain financial covenants contained in its New Credit Agreement. The Company has received waivers relating to the financial covenant defaults for the fiscal quarter ended August 31, 1999 and has also amended its New Credit Agreement to, among other things, amend the related financial covenants that cover the Company's fourth fiscal quarter of 1999 and periods thereafter. In connection with amending the New Credit Agreement, the Company has agreed to obtain $50.0 million by issuing new equity type securities and pay down the New Credit Agreement balance on or before January 25, 2000. The Company believes that it can obtain such additional equity on or before January 25, 2000 or complete alternative refinancing arrangements and meet the amended financial covenants in future periods. As such, the Company has reclassified $50.0 million of the indebtedness under the New Credit Agreement to current liabilities. However, there can be no assurance that the $50.0 million in additional equity type securities will be obtained by the Company nor that alternative refinancing can be secured and the failure to do so would create an event of default under the amended New Credit Agreement. 20 Item 6. Exhibits and Reports on Form 8-K a. Exhibits
Exhibit No. Document - ------- -------- 2.1 Stock Purchase Agreement, dated as of December 29, 1997 between Tokheim Corporation and Arthur S. ("Rusty") Elston, Ronald H. Elston, Eric E. Burwell and Curt E. Burwell (incorporated herein by reference to the Company's Current Report on Form 8-K, dated December 31, 1997). 2.2 Master Agreement for Purchase and Sale of Shares, Assets, and Liabilities, dated as of June 19, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 2.3 Amendment No. 1 to the Master Agreement for Purchase and Sale of Shares, Assets and Liabilities, dated as of September 30, 1998 between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 3.1 Restated Articles of Incorporation of Tokheim Corporation, as amended, as filed with the Indiana Secretary of State on February 5, 1997 (incorporated herein by reference to the Company's Annual Report on Form 10-K/A for the year ended November 30, 1996). 3.2 Bylaws of Tokheim Corporation, as restated on July 12, 1995 and amended March 2, 1998 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended May 31, 1998). 3.3 Articles of Incorporation of Monitec Corporation (now known as Envirotronic Systems, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.4 Articles of Amendment of the Articles of Incorporation of Monitec Corporation (changing name to Envirotronic Systems, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.5 Bylaws of Envirotronic Systems, Inc. (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.6 Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. (now known as Gasboy International, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.7 Amendment No. 1 to Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.8 Amendment No. 2 to Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.9 Amendment No. 2 to Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. (changing name to Gasboy International, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.10 Restated Bylaws of Gasboy International, Inc. (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.11 Articles of Incorporation of Management Solutions of Colorado, Inc. (now known as Management Solutions, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended).
21 3.12 Articles of Amendment to the Articles of Incorporation of Management Solutions of Colorado, Inc. (changing name to Management Solutions, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.13 Bylaws of Management Solutions, Inc. (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.14 Articles of Incorporation of ESCIA, Inc. (now known as Sunbelt Hose & Petroleum Equipment, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.15 Articles of Amendment of ESCIA, Inc. (changing name to Sunbelt Hose & Petroleum Equipment, Inc.) (incorpo rated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.16 Bylaws of Sunbelt Hose & Petroleum Equipment, Inc. (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.17 Articles of Incorporation of Tokheim Base Systems, Inc. (now known as Tokheim Automation Corporation) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.18 Articles of Amendment to the Articles of Incorporation of Tokheim Base Systems, Inc. (changing name to Mini Base Systems, Inc.) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.19 Articles of Amendment to the Articles of Incorporation of Mini Base Systems, Inc. (changing name to Tokheim Automation Corporation) (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.20 Bylaws of Tokheim Automation Corporation (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.21 Certificate of Incorporation of Tokheim Equipment Corporation (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.22 Bylaws of Tokheim Equipment Corporation (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.23 Articles of Incorporation of Tokheim Investment Corp (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.24 Bylaws of Tokheim Investment Corp (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.25 Certificate of Formation of Tokheim RPS, LLC (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.26 Limited Liability Company Agreement of Tokheim RPS, LLC (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.27 Articles of Organization of Tokheim Services LLC (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 3.28 Limited Liability Company Agreement of Tokheim Services LLC (incorporated herein by reference to the Company's Registration Statement on Form S-4, filed April 28, 1999, as amended). 4.1 Rights Agreement, dated as of January 22, 1997, between Tokheim Corporation and Harris Trust and Savings Bank, as Rights Agent (incorporated herein by reference to the Company's Current Report on Form 8-K, filed February 23, 1997). 4.2 Amendment No. 1 to Rights Agreement, dated as of September 30, 1998, between Tokheim Corporation and Harris Trust and Savings Bank (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.3 Securities Purchase Agreement, dated September 30, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998).
22 4.4 12% Junior Subordinated Note due 2008 in the amount of $40,000,000 (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.5 Junior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim Corporation, Management Solutions, Inc., Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy International, Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as guarantors, and Harris Trust and Savings Bank, as trustee (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.6 Amendment No. 1 to Junior Subordinated Note Indenture, dated as of January 25, 1999 (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.7 Warrant to Purchase up to 19.9% of the Shares of Common Stock of Tokheim Corporation (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.8 Registration Rights Agreement, dated September 30, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.9 Amended and Restated Credit Agreement, dated as of September 30, 1998, among Tokheim Corporation, the Borrowing Subsidiaries, the Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais as documentation and collateral agent and Gleacher NatWest Inc. and Bankers Trust Company as co-syndication agents (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated October 1, 1998). 4.10 Second Amended and Restated Credit Agreement, dated as of December 14, 1998, among Tokheim Corporation, the Borrowing Subsidiaries, the Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais as documentation and collateral agent and Gleacher NatWest Inc. and Bankers Trust Company as co-syndication agents (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.11 Consent and Amendment No. 1 to Amended and Restated Credit Agreement, dated as of January 11, 1999 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999). 4.12 Amendment No. 2 to Amended and Restated Credit Agreement, dated as of March 1, 1999. (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999). 4.13 Amendment No. 3 to Second Amended and Restated Credit Agreement, dated as of February 27, 1999 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999). 4.14 Amendment No. 4 and Waiver to Second Amended and Restated Credit Agreement, dated as of October 14, 1999. 4.15 Dollar Notes Indenture, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorpo rated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.16 Euro Notes Indenture, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.17 Dollar Registration Rights Agreement, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.18 Euro Registration Rights Agreement, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 23
10.1 Tokheim Corporation 1992 Stock Incentive Plan, established December 15, 1992 (incorporated herein by reference to the Company's Registration Statement on Form S-8, File No. 33-52167, dated February 4, 1994). 10.2 Retirement Savings Plan for Employees of Tokheim Corporation and Subsidiaries (incorporated herein by reference to Amendment No. 1 to the Company'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 herein by reference to the Company's Report on Form 10- Q/A, for the quarter ended February 29, 1996, filed November 20, 1996). 10.4 Tokheim Corporation Deferred Compensation Plan. 10.5 Tokheim Corporation Supplemental Executive Retirement Plan. 10.6 Employment Agreement, dated July 15, 1999, between the Company and Douglas K. Pinner. 10.7 Employment Agreement, dated July 15, 1999, between the Company and John A. Negovetich. 10.8 Employment Agreement, dated July 15, 1999, between the Company and Jacques St-Denis. 10.9 Employment Agreement, dated July 15, 1999, between the Company and Norman L. Roelke. 10.10 Employment Agreement, dated July 15, 1999, between the Company and Scott A. Swogger. 10.11 Technology License Agreement, effective as of December 1, 1997, between Tokheim and Gilbarco, Inc. (incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended November 30, 1997). 10.12 Tokheim Corporation 1997 Incentive Plan (incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended November 39, 1997). 10.13 Employment Agreement, dated December 31, 1997, between Management Solutions, Inc. and Arthur S. Elston (incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended November 30, 1997). 11.1 Statement re computation of per share earnings. 27.1 Financial Data Schedule.
b. Reports on Form 8-K None. 24 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. TOKHEIM CORPORATION Date: October 15, 1999 /s/ Douglas K. Pinner --------------------- Chairman, President and Chief Executive Officer Date: October 15, 1999 /s/ John A. Negovetich ---------------------- Executive Vice-President, Finance and Administration and Chief Financial Officer 25 Exhibit Index
Exhibit No. Document - ------- -------- 4.14 Amendment No. 4 and Waiver to Second Amended and Restated Credit Agreement, dated as of October 14, 1999. 10.4 Tokheim Corporation Deferred Compensation Plan. 10.5 Tokheim Corporation Supplemental Executive Retirement Plan. 10.6 Employment Agreement, dated July 15, 1999, between the Company and Douglas K. Pinner. 10.7 Employment Agreement, dated July 15, 1999, between the Company and John A. Negovetich. 10.8 Employment Agreement, dated July 15, 1999, between the Company and Jacques St-Denis. 10.9 Employment Agreement, dated July 15, 1999, between the Company and Norman L. Roelke. 10.10 Employment Agreement, dated July 15, 1999, between the Company and Scott A. Swogger. 11.1 Statement re computation of per share earnings. 27.1 Financial Data Schedule.
26 EX-4.14 2 AM #4 TO CREDIT AGREEMENT DATED 10/14/99 EXHIBIT 4.14 EXECUTION COPY AMENDMENT NO. 4 AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDMENT NO. 4 AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment") is made as of October 14, 1999 by and among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), GASBOY INTERNATIONAL, INC., a Pennsylvania corporation ("Gasboy"), TOKHEIM-SOFITAM S.A., a societe anonyme organized under the laws of France ("Tokheim-Sofitam"), TOKHEIM SOFITAM APPLICATIONS S.A., a societe anonyme organized under the laws of France ("Sofitam Applications"), the financial institutions listed on the signature pages hereof (the "Lenders"), BANK ONE, INDIANA, NATIONAL ASSOCIATION, formerly known as NBD BANK, N.A., in its individual capacity as a Lender and as contractual representative on behalf of the Lenders (the "Administrative Agent"), CREDIT LYONNAIS, as Documentation and Collateral Agent, and BANKERS TRUST COMPANY, as Co-Syndication Agent under that certain Second Amended and Restated Credit Agreement dated as of December 14, 1998 by and among the Company, Gasboy, Tokheim-Sofitam, Sofitam Applications, the Lenders, the Administrative Agent, the Documentation and Collateral Agent, and the Co- Syndication Agent, as amended by an Amendment No. 1, an Amendment No. 2 and an Amendment No. 3, dated as of January 11, 1999, March 1, 1999 and February 27, 1999, respectively (as amended and as the same may be amended, restated, supplemented or otherwise modified from time to time, 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, Gasboy, Tokheim-Sofitam, Sofitam Applications, the Lenders, the Administrative Agent, the Documentation and Collateral Agent, and the Co-Syndication Agent are parties to the Credit Agreement; WHEREAS, the Company has notified the Administrative Agent and the Lenders that the Company may be in violation of the financial covenants set forth in Sections 6.12, 6.23, 6.24, 6.25, and 6.33 of the Credit Agreement, in each case, for the fiscal quarter ending on August 31, 1999; WHEREAS, the Borrowers have requested that the Administrative Agent and the Required Lenders waive the "Applicable Defaults" (as described below) and amend the Credit Agreement in certain respects, and the Required Lenders and the Administrative Agent are willing to waive the Applicable Defaults and to amend the Credit Agreement on the terms and conditions set forth herein, it being expressly understood that the waiver set forth herein shall in no event constitute a waiver by the Lenders or the Administrative Agent of any other breach of the Credit Agreement or any of the Lenders' or Administrative Agent's rights or remedies with respect thereto; 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, Gasboy, Tokheim-Sofitam, Sofitam Applications, the Administrative Agent and the Required Lenders have agreed to the following amendments to the Credit Agreement: 1. Amendments to Credit Agreement. Effective as of October 14, 1999 and subject to the satisfaction of the conditions precedent set forth in Section 3 below, the Credit Agreement is hereby amended as follows: 1.1. Section 1.1 of the Credit Agreement is hereby amended (i) to delete the phrase "four" now appearing in clause (x) of the definition of "EBITDA", and to substitute the following therefor: "nine"; and (ii) to insert the following immediately prior to the period (".") now appearing at the end of the first sentence of the definition of "Fixed Charge Coverage Ratio": ", minus (f) for the four-quarter period ending on November 30, 1999, the current portion of the Term Loans in an amount not to exceed $50,000,000". 1.2. Section 2.1.1(i) of the Credit Agreement is hereby amended to delete the phrase ", or, after the Agent has concluded that the syndication process has been completed with Lenders that can Lend the Agreed Currencies or the Revolving Loan restructured to provide a tranche to be provided by Lenders that can provide the Agreed Currencies," now appearing therein, and to substitute the following therefor: ", or, unless the Administrative Agent has notified the Company in writing that the Administrative Agent has determined that Eurocurrency Loans in currencies other than Dollars shall not be available (a copy of which notice shall be delivered to each of the Lenders) and such notice has not been terminated by the Administrative Agent in writing,". 1.3. Section 2.1.2(i) of the Credit Agreement is hereby amended to delete the word "or" now appearing immediately after the phrase "to the Company in Dollars" in the first sentence thereof, and to substitute the following therefor: ", or, unless the Administrative Agent has notified the Company in writing that the Administrative Agent has determined that Swing Loans in currencies other than Dollars shall not be available (a copy of which notice shall be delivered to each of the Lenders) and such notice has not been terminated by the Administrative Agent in writing,". 1.4. Section 2.1.4(i) of the Credit Agreement is hereby amended to delete the word "Upon" now appearing at the beginning thereof, and to substitute the following therefor: "Unless the Administrative Agent has notified the Company in writing that the Administrative Agent has determined that Alternate Currency Loans shall not be available (a copy of which notice shall be delivered to each of the Lenders and the Alternate Currency Banks) and such notice has not been terminated by the Administrative Agent in writing, upon". 1.5. Section 2.5.3(B)(i)(d) of the Credit Agreement is hereby amended to delete the phrase "[Intentionally Omitted]" now appearing therein, and to substitute the following therefor: 2 "On or before January 25, 2000, and exclusive of any mandatory prepayment required pursuant to Section 2.5.3(B)(i)(a) or (c), the Company shall make a mandatory prepayment of the Term Loans in an amount not less than $50,000,000, and without duplication with respect to any amounts paid as a mandatory prepayment pursuant to Section 2.5.3(B)(i)(b)(i)". 1.6. Section 2.6.1(a) of the Credit Agreement is hereby amended to delete the word "or Agreed Currency" now appearing after the phrase "it is denominated in Dollars" now appearing in the second proviso thereof, and to substitute the following therefor: "or, unless the Administrative Agent has notified the Company in writing that the Administrative Agent has determined that Letters of Credit in currencies other than Dollars shall not be available (a copy of which notice shall be delivered to each of the Lenders) and such notice has not been terminated by the Administrative Agent in writing, an Agreed Currency". 1.7. Section 6.1(ii) of the Credit Agreement is hereby amended (i) to delete the phrase "60 days" now appearing therein, and to substitute the following therefor: "45 days", and (ii) to delete the phrase "and consolidating" now appearing therein. 1.8. Section 6.1(vii) of the Credit Agreement is hereby amended to delete the phrase "ninety (90) days after the beginning of each fiscal year commencing with the fiscal year beginning December 1, 1999" now appearing therein, and to substitute the following therefor: "December 31, 1999 for the fiscal year beginning December 1, 1999, and not later than ninety (90) days after the beginning of each subsequent fiscal year," 1.9. Section 6.1(ix) of the Credit Agreement is hereby deleted in its entirety, and the following new clauses (ix) and (x) are substituted therefor: "(ix) As soon as practicable, and in any event within sixty (60) days after the calendar month ending on November 30, 1999 (other than the cash forecast described below for such calendar month which shall be delivered within thirty (30) days after such calendar month), and within thirty (30) days after the close of each subsequent calendar month, with sufficient copies for the Lenders, copies of internal management financial statements for the most recently completed calendar month, together with unaudited consolidated income statements and balance sheets as of the end of such prior calendar month, cash forecast (including sources and uses) for the next succeeding calendar month, and an update on synergies, in each case with respect to the Borrower and the Consolidated Subsidiaries. (x) On or before January 25, 2000, for itself and the Consolidated Subsidiaries, unaudited balance sheets as at the close of the fiscal quarter ending on November 30, 1999 and consolidated profit and loss and reconciliation of surplus statements and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its Financial Officer, together with a compliance certificate in substantially the 3 form of Exhibit I hereto signed by its Financial Officer showing the calculations necessary to determine compliance with Section 6.23 and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof." 1.10 Section 6.12 is hereby deleted in its entirety, and the following is substituted therefor: " 6.12. Consolidated Net Worth. The Company shall maintain, as of the end of each fiscal quarter, Consolidated Net Worth of not less than: (A) for the fiscal quarter ending on or about November 30, 1999, the sum of (i) $60,000,000 plus (ii) 100% of Net Cash Proceeds received after the Effective Date through November 30, 1999 from the issuance of Capital Stock of the Company or any of its Subsidiaries to any Person other than the Company or its Subsidiaries; (B) for the fiscal quarter ending on or about February 29, 2000, the sum of (i) $100,000,000 plus (ii) an amount equal to (x) 100% of Net Cash Proceeds received after the Effective Date through February 29, 2000 from the issuance of Capital Stock of the Company or any of its Subsidiaries to any Person other than the Company or its Subsidiaries, minus (y) $50,000,000, minus (z) any amounts used to redeem the Seller Equity Interests; (C) for the fiscal quarter ending on or about May 31, 2000, the sum of (i) $103,000,000 plus (ii) an amount equal to (x) 100% of Net Cash Proceeds received after the Effective Date through May 31, 2000 from the issuance of Capital Stock of the Company or any of its Subsidiaries to any Person other than the Company or its Subsidiaries, minus (y) $50,000,000, minus (z) any amounts used to redeem the Seller Equity Interests; (D) for the fiscal quarter ending on or about August 31, 2000, the sum of (i) $106,000,000 plus (ii) an amount equal to (x) 100% of Net Cash Proceeds received after the Effective Date through August 31, 2000 from the issuance of Capital Stock of the Company or any of its Subsidiaries to any Person other than the Company or its Subsidiaries, minus (y) $50,000,000, minus (z) any amounts used to redeem the Seller Equity Interests; and (E) for each fiscal quarter thereafter, the sum of (i) $118,000,000 plus (ii) sixty percent (60%) of Consolidated Net Income (if positive) for each fiscal year of the Company commencing with the fiscal year ending on or about November 30, 2000 and concluding with the fiscal year ending most recently prior to the date of determination but without deduction for any fiscal year in which there is a loss plus (iii) an amount equal to (x) 100% of Net Cash Proceeds received after the Effective Date from the issuance of Capital Stock of the Company or 4 any of its Subsidiaries to any Person other than the Company or its Subsidiaries, minus (y) $50,000,000, minus (z) any amounts used to redeem the Seller Equity Interests." 1.11. Section 6.23 is hereby deleted in its entirety, and the following is substituted therefor: "6.23 Leverage Ratio and Senior Leverage Ratio. (a) At any and all times, the Company shall not permit the Leverage Ratio to exceed the amounts set forth below during the fiscal periods set forth below:
Fiscal Quarter Ending On or About the Dates Set Forth Below: Maximum Ratio -------------------------- ------------- November 30, 1999 7.00 to 1.00 February 29, 2000 5.60 to 1.00 May 31, 2000 5.00 to 1.00 August 31, 2000 4.75 to 1.00 November 30, 2000 4.25 to 1.00 February 28, 2001 4.00 to 1.00 May 31, 2001 4.00 to 1.00 August 31, 2001 4.00 to 1.00 November 30, 2001 3.50 to 1.00 February 28, 2002 3.50 to 1.00 May 31, 2002 3.50 to 1.00 August 31, 2002 3.50 to 1.00 And at all times during each fiscal quarter thereafter 3.0 to 1.00
(b) At any and all times, the Company shall not permit the Senior Leverage Ratio to exceed the amounts set forth below during the fiscal periods set forth below:
Fiscal Quarter Ending On or About the Dates Set Forth Below: Maximum Ratio -------------------------- ------------- November 30, 1999 3.75 to 1.00 February 29, 2000 2.75 to 1.00 May 31, 2000 2.50 to 1.00 August 31, 2000 2.25 to 1.00 November 30, 2000 2.00 to 1.00 And at all times during each fiscal quarter thereafter 2.00 to 1.00
5 The Leverage Ratio and Senior Leverage Ratio shall be calculated, in each case, as of the last day of each fiscal quarter based upon (A) for Indebtedness, Indebtedness as of the last day of each such fiscal quarter; and (B) for EBITDA, the actual amount for the four-quarter period ending on such day." 1.12. Section 6.24 is hereby deleted in its entirety, and the following is substituted therefor: "6.24 Interest Expense Coverage Ratio . The Company shall not permit the Interest Expense Coverage Ratio to be less than the amounts set forth below for the fiscal periods set forth below:
Fiscal Quarter Ending On or About the Dates Set Forth Below: Minimum Ratio -------------------------- ------------- November 30, 1999 1.25 to 1.00 February 29, 2000 1.50 to 1.00 May 31, 2000 1.65 to 1.00 August 31, 2000 1.75 to 1.00 November 30, 2000 2.00 to 1.00 February 28, 2001 through November 30, 2001 2.25 to 1.00 And for each fiscal quarter ending thereafter 2.50 to 1.00" 1.13. Section 6.25 is hereby deleted in its entirety, and the following is substituted therefor: "6.25 Fixed Charge Coverage Ratio. The Company shall not permit the Fixed Charge Coverage Ratio to be less than the amounts set forth below for the fiscal periods set forth below: Fiscal Quarter Ending On or About the Dates Set Forth Below: Minimum Ratio --------------------------------- ------------- November 30, 1999 0.80 to 1.00 February 29, 2000 0.90 to 1.00 May 31, 2000 1.00 to 1.00 August 31, 2000 1.10 to 1.00 November 30, 2000 through November 30, 2001 1.20 to 1.00
6 And for each fiscal quarter ending thereafter 1.25 to 1.00" 1.14. Section 6.33 is hereby deleted in its entirety, and the following is substituted therefor: "6.33. Minimum EBITDA. The Company shall not permit EBITDA to be less than the amounts set forth below for the fiscal periods ending on the dates set forth below:
Fiscal Quarter Ending on or About the Dates Set Forth Below: Minimum EBITDA -------------------------- -------------- November 30, 1999 $ 63,000,000 February 29, 2000 $ 70,000,000 May 31, 2000 $ 76,000,000 August 31, 2000 $ 83,000,000 November 30, 2000 $ 90,000,000 February 28, 2001 $ 92,000,000 May 31, 2001 $ 94,000,000 August 31, 2001 $ 97,000,000 November 30, 2001 and each fiscal quarter thereafter $100,000,000
In each case, EBITDA shall be determined as of the last day of each fiscal quarter then ended for the four fiscal quarter period ending on such date." 1.15. Section 7.3 of the Credit Agreement is hereby amended to insert immediately prior to the period (".") now appearing at the end thereof, the following: "and 6.1(x)". 1.16. Section 7.4 of the Credit Agreement is hereby amended to insert immediately after the phrase "Section 6.1" appearing therein, the following: "(other than Section 6.1(x))". 2. Waiver. 2.1 Upon the effectiveness of this Amendment in accordance with the provisions of Section 3 below, the Administrative Agent and the Required Lenders hereby waive permanently any violation of the financial covenants set forth in Sections 6.12, 6.23, 6.24, 6.25, and 6.33 of the Credit Agreement, in each case, for the fiscal quarter ending on August 31, 1999 (collectively, the "Applicable Defaults"), and the Lenders' and the Administrative Agent's rights and remedies arising therefrom. 3. Conditions of Effectiveness. This Amendment shall become effective and be deemed effective as of October 14, 1999 upon (a) the delivery of (i) duly executed originals of this Amendment from the Required Lenders, Gasboy, Tokheim- Sofitam, Sofitam Applications and the Company and (ii) duly executed originals of a Reaffirmation in the form of Exhibit A attached 7 hereto from Tokheim Automation Corporation, Envirotronic Systems, Inc., Tokheim Investment Corp., Sunbelt Hose & Petroleum Equipment, Inc., Gasboy, Tokheim- Sofitam, Sofitam Applications, Management Solutions, Inc., Tokheim Equipment Corporation, and Tokheim RPS, LLC, and (b) the payment of all the Amendment Fee described in Section 4 below and any other fees payable by the Company in connection herewith. 4. Amendment Fee. Each Lender that delivers a duly executed signature page to this Amendment to James E. Clark or Robert J. Lewis, Sidley & Austin (fax: 312-853-7036) by 5:00 p.m. (Chicago time) on October 14, 1999, shall be entitled to an Amendment Fee of 0.25% of such Lender's Commitment (as defined in the Credit Agreement) as in effect on October 14, 1999; provided, that the first Lenders (other than the Administrative Agent) that deliver duly executed signature pages as described above (as determined by the time-stamp on such facsimile signature pages) and whose aggregate Percentages when added to the Percentage of the Administrative Agent first exceed fifty percent (50%) shall be entitled to an additional fee of 0.05% of such Lender's Commitment as in effect on October 14, 1999; provided, however, that no such Amendment Fee or additional fee shall be payable unless this Amendment is approved by the Required Lenders by 5:00 p.m. (Chicago time) on October 14, 1999 and by the Company. The Amendment Fee shall be due and payable on the date the Company executes this Amendment. 5. Representations and Warranties of the Company. The Company, Gasboy, Tokheim-Sofitam and Sofitam Applications (each a "Credit Party") 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 such Credit Party and are enforceable against such Credit Party in accordance with their terms. (b) Upon the effectiveness of this Amendment, each Credit Party 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 (unless expressly made as of a different date). 6. Reference to the Effect on the Credit Agreement. 6.1. 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 Second Amended and Restated Credit Agreement dated as of December 14, 1998, as amended previously and as amended hereby. 6.2. Except as specifically amended above, the Credit Agreement 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. 6.3. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein with respect to the Applicable Defaults, operate as a waiver of any right, power or remedy of the Administrative 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. 8 7. Costs and Expenses. The Company agrees to pay all reasonable costs, fees and out-of-pocket expenses (including reasonable attorneys' fees and expenses charged to the Administrative Agent) incurred by the Administrative Agent in connection with the preparation, execution and enforcement of this Amendment. 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING WITHOUT LIMITATION, 735 ILCS 105/5- 1 ET SEQ., BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS) OF THE STATE OF ILLINOIS. 9. 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. 10. 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. 9 IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. TOKHEIM CORPORATION, as a Borrower By: ______________________________ Name: Title: GASBOY INTERNATIONAL, INC., as a Borrower By: ______________________________ Name: Title: TOKHEIM-SOFITAM S.A., as a Borrower By: ______________________________ Name: Title: TOKHEIM SOFITAM APPLICATIONS S.A., as a Borrower By: ______________________________ Name: Title: BANK ONE, INDIANA, NATIONAL ASSOCIATION, formerly known as NBD BANK, N.A., as Administrative Agent, as a Lender, as Issuing Lender, and a Swing Loan Lender By: ______________________________ Name: Title: CREDIT LYONNAIS, CHICAGO BRANCH, as Documentation and Collateral Agent and as a Lender By: ______________________________ Name: Title: BANKERS TRUST COMPANY, as Co-Syndication Agent and as a Lender By: ______________________________ Name: Title: ABN AMRO BANK N.V., as a Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: CREDIT AGRICOLE INDOSUEZ, as a Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: HARRIS TRUST AND SAVINGS BANK, as a Lender By: ______________________________ Name: Title: COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE, as a Lender By: ______________________________ Name: Title: MERCANTILE BANK N.A., as a Lender By: ______________________________ Name: Title: THE PROVIDENT BANK, as a Lender By: ______________________________ Name: Title: FINOVA CAPITAL CORPORATION, as a Lender By: ______________________________ Name: Title: IMPERIAL BANK, as a Lender By: ______________________________ Name: Title: NATEXIS BANQUE BFCE, as a Lender By: ______________________________ Name: Title: By: ______________________________ Name: Title: BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A. GROUP, NEW YORK BRANCH, as a Lender By: ______________________________ Name: Title: SENIOR DEBT PORTFOLIO, as a Lender By: Boston Management and Research, as Investment Advisor By: ______________________________ Name: Title: EATON VANCE SENIOR INCOME TRUST, as By: Eaton Vance Management as Investment Advisor By: ______________________________ Name: Title: OXFORD STRATEGIC INCOME FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By: ______________________________ Name: Title: OCTAGON LOAN TRUST, as a Lender By: Octagon Credit Investors, as Manager By: ______________________________ Name: Title: OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By: ______________________________ Name: Title: INDOSUEZ CAPITAL FUNDING IIA, LIMITED, as a Lender By: Indosuez Capital Luxembourg, as Collateral Manager By: ______________________________ Name: Title: INDOSUEZ CAPITAL FUNDING IV, LP, as a Lender By: Indosuez Capital Luxembourg, as Collateral Manager By: ______________________________ Name: Title: ALLIANCE INVESTMENT OPPORTUNITIES FUND, L.L.C., as a Lender By: ALLIANCE INVESTMENT OPPORTUNITIES MANAGEMENT, L.L.C., as Managing Member By: ALLIANCE CAPITAL MANAGEMENT L.P., as Managing Member By: ALLIANCE CAPITAL MANAGEMENT CORPORATION, as General Partner By: ______________________________ Name: Title: AMSOUTH BANK, as a Lender By: ______________________________ Name: Title: EXHIBIT A REAFFIRMATION Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 4 and Waiver to the Second Amended and Restated Credit Agreement dated as of December 14, 1998 by and among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), GASBOY INTERNATIONAL, INC., a Pennsylvania corporation ("Gasboy"), TOKHEIM-SOFITAM S.A., a societe anonyme organized under the laws of France ("Tokheim-Sofitam"), TOKHEIM SOFITAM APPLICATIONS S.A., a societe anonyme organized under the laws of France ("Sofitam Applications", and, together with the Company, Gasboy and Tokheim-Sofitam, the "Borrowers"), the financial institutions from time to time party thereto (the "Lenders") and BANK ONE, INDIANA, NATIONAL ASSOCIATION, formerly known as NBD BANK, N.A., in its individual capacity as a Lender and as contractual representative on behalf of the Lenders (the "Administrative Agent"), CREDIT LYONNAIS, as Documentation and Collateral Agent, and BANKERS TRUST COMPANY, as Co-Syndication Agent, as amended by an Amendment No. 1, an Amendment No. 2 and an Amendment No. 3, dated as of January 11, 1999, March 1, 1999 and February 27, 1999, respectively (as amended and as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), which Amendment No. 4 and Waiver is dated as of October 14, 1999 (the "Amendment"). Capitalized terms used in this Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by any Agent or any Lender, each of the undersigned reaffirms the terms and conditions of the Guaranty, Pledge Agreement, Security Agreement and any other Loan Document executed by it and acknowledges and agrees that such agreement and each and every such Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. All references to the Credit Agreement contained in the above-referenced documents shall be a reference to the Credit Agreement as so modified by Amendment No. 1, Amendment No. 2, Amendment No. 3 and the Amendment and as the same may from time to time hereafter be amended, modified or restated. Dated as of October 14, 1999 TOKHEIM AUTOMATION CORPORATION ENVIROTRONIC SYSTEMS, INC. TOKHEIM INVESTMENT CORP. SUNBELT HOSE & PETROLEUM EQUIPMENT, INC. GASBOY INTERNATIONAL, INC. MANAGEMENT SOLUTIONS, INC. TOKHEIM EQUIPMENT CORPORATION TOKHEIM RPS, LLC By: Gasboy International, Inc. TOKHEIM-SOFITAM S.A. TOKHEIM SOFITAM APPLICATIONS S.A. By: ______________________________ Name: Title: EX-10.4 3 TOKHEIM CORP DEFERRED COMPENSATION PLAN EXHIBIT 10.4 [TOKHEIM LOGO GOES HERE] TOKHEIM CORPORATION DEFERRED COMPENSATION PLAN TOKHEIM CORPORATION DEFERRED COMPENSATION PLAN ARTICLE 1 PURPOSE ------- Tokheim Corporation ("Company") originally established the Tokheim Corporation Deferred Compensation Plan ("Plan"), effective as of January 1, 1997. Effective April 28, 1999, the Plan is restated as provided herein. The purpose of the Plan is to provide deferred compensation for a select group of key management Employees of the Company and certain subsidiaries of the Company designated by the Company's Board of Directors (the Company and such subsidiaries hereafter referred to as the "Employer") in recognition of their substantial contributions to the Employer's success and to provide those Employees with additional financial security as an inducement to remain in the employment of the Employer. ARTICLE 2 DEFINITIONS AND RULES OF CONSTRUCTION ------------------------------------- Section 2.1. Definitions. As used in the Plan, the following words and phrases, when capitalized, have the following meanings: (a) "Account" means, with respect to a Participant, his Deferral Account and Matching Account. "Account" also means, where the context permits, the amount credited to an Account. (b) "Affiliate" means an employer required to be aggregated with the Company pursuant to Section 414(b) or (c) of the Internal Revenue Code. (c) "Base Compensation" means, with respect to a Participant for a Plan Year, all of his Compensation for the Plan Year other than Incentive Compensation. (d) "Beneficiary" means the beneficiary or beneficiaries designated by a Participant in writing to receive the payment of benefits provided under this Plan following the Participant's death. To be effective, a Beneficiary designation must be received by a member of the Committee during the Participant's life. In the absence of a designation, or if the Participant's designated Beneficiaries predecease him, the Beneficiary shall be (i) the Participant's surviving spouse, if the Participant is married at the time of his death and is survived by his spouse, or, (ii) in all other cases, the Participant's estate. (e) "Benefit Commencement Date" means, with respect to a Participant, the date as of which distribution of the Participant's Accounts begins. (f) "Board of Directors" means the Company's Board of Directors or its designee. (g) "Change of Control" means the occurrence of any one of the following: (i) any person, as that term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time, other than a retirement plan sponsored by the Company, becomes a beneficial owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of Company's then outstanding securities; (ii) less than fifty-one percent (51%) of the members of the Board are Incumbent Directors; (iii) any corporation or group of associated persons acting in concert, owns more than twenty-five percent (25%) of the outstanding shares of voting stock of the Company coupled with or followed by the exercise of the voting power of such shares by the election of two (2) or more directors of the Company in any one election at the instance of such corporation or group; (iv) the Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which the Company will be a constituent corporation, and either (A) the Company is not the surviving or resulting corporation, or (B) the transaction will result in less than sixty percent (60%) of the outstanding voting securities of the surviving or resulting entity being owned by the former shareholders of the Company; (v) the Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person which is not an Affiliate; (vi) an event that triggers to exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the triggering event; or (vii) the occurrence of another event that the Board designates a Change in Control. (h) "Committee" means the Benefits Committee appointed by the Board of Directors. (i) "Company" means Tokheim Corporation. (j) "Compensation" means, with respect to a Participant for a Plan Year, the Participant's wages for federal income tax purposes for such year, increased by amounts that would have been included in the Participant's wages for the year, except for the Participant's election pursuant to Code Section 125 or 401(k) or this Plan; provided, however, Compensation included in a Participant's Compensation for purposes of the Plan before the year of its inclusion as wages shall not be included in his Base Compensation again in the year in which included as wages. (k) "Deemed Post-Termination Earnings Rate" means the average rate of interest charged by National City Bank; Home Loan Bank, FSB; and Bank One, N.A; or their successors in Fort Wayne, Indiana, for a 15-year fixed-rate first mortgage in the amount of One Hundred Thousand Dollars ($100,000) as of the first business day of the month preceding the Participant's Benefit Commencement Date. The rate of interest specified in the preceding sentence shall be increased to reflect any points charged with respect to the loan in accordance with federal rules applicable to mortgage lenders. The Committee shall determine the Deemed Post-Termination Earnings Rate in good faith, and its good faith judgment shall be binding on all persons. If changed circumstances make determination of the Deemed Post-Termination Earnings Rate in the foregoing manner impossible, the Committee shall determine such rate in a manner calculated to effect the intent of the method specified above, and the Committee's determination shall be final. (l) "Deferral" means Compensation deferred by a Participant pursuant to Section 3.1. (m) "Deferral Account" means, with respect to a Participant, the bookkeeping account pursuant to which the Participant's interest in the Plan attributable to Deferrals is determined. (n) "Deferral Agreement" means a written agreement between an Employer and a Participant pursuant to which the Participant elects to defer Compensation under the Plan. (o) "Disabled" means, which respect to a Participant, having a disability that has been determined by the Social Security Administration to qualify the Participant for permanent disability benefit payments under the Social Security Act. If a Participant has applied for permanent disability benefits under the Social Security Act, and a physician acceptable to the Committee has opined that the Participant satisfies the requirements for permanent disability under the Social Security Act, the Participant shall be deemed to be Disabled pending the Social Security Administration's determination. If distributions to a Participant begin pursuant to the preceding sentence, and the Social Security Administration later reaches a final determination that the Participant is not permanently disabled, any future payments to the Participant or his Beneficiary pursuant to the Plan shall be adjusted to reflect any prior overpayment to the Participant on account of his deemed Disability. (p) "Early Retirement Age" means, with respect to a Participant, the later of age 50 or the Participant's completion of five years of continuous employment by the Company. (q) "Effective Date" means January 1, 1997. (r) "Employee" means a key management employee of the Employer. (s) "Employer" means the Company and any subsidiary of the Company designated as eligible by the Company's Board that adopts the Plan. (t) "Incentive Compensation" means, with respect to a Participant for a Plan Year, his Compensation for the Plan Year consisting of bonuses and other incentive compensation. (u) "Incumbent Director" means a director serving on the Board who (i) was a director on the Effective Date or (ii) was later elected as a director (except a director whose initial assumption of office was in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors) and whose appointment, election, or nomination for election was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date hereof or whose appointment, election, or nomination for election was previously so approved or recommended. (v) "Matching Account" means, with respect to a Participant, the bookkeeping account pursuant to which the Participant's Plan interest attributable to Matching Credits is determined. (w) "Matching Credit" means the amount credited to a Participant's Matching Account pursuant to Section 3.2. -3- (x) "Minimum Earnings Rate" means, with respect to a Plan Year, the rate for 30-year United States government bonds issued on the first business day of that year. If the United States government ceases to issue 30-year bonds, the Committee shall determine the "Minimum Earnings Rate" in a manner calculated to effect the intent of the rate specified above, and the Committee's determination shall be final. (y) "Participant" means an Employee selected by the Committee to participate in the Plan for the Plan Year or a former Employee entitled to future benefits under the Plan. (z) "Plan" means the plan established by this document, known as the Tokheim Deferred Compensation Plan, as amended from time to time. (aa) "Plan Year" means the period beginning on the Effective Date and ending December 31, 1997, and each calendar year thereafter. (bb) "Stated Earnings Rate" means a rate equal to the greater of (i) the Minimum Earnings Rate or (ii) such higher rate established by the Committee from time to time. The Committee shall inform Participants of the Stated Earnings Rate (or the factor or index by which the Stated Earnings Rate is determined) before each change thereof. (cc) "Terminated Employment" or "Termination of Employment" means the cessation of the relationship of employer and employee between the Participant and all Employers by reason of death, resignation, or discharge. (dd) "Vested" means, with respect to an Account, that the Participant's interest in the Account is nonforfeitable, except as provided in Section 6.2. Section 2.2. Rules of Construction. The following rules of construction shall govern in interpreting the Plan: (a) The provisions of the Plan shall be construed and governed in all respects under and by the laws of the State of Indiana, to the extent not preempted by federal law. (b) Words used in the masculine gender shall be construed to include the feminine gender where appropriate, and vice versa. (c) Words used in the singular shall be construed to include the plural where appropriate, and vice versa. (d) The headings and subheadings in the Plan are inserted for convenience of reference only and are not to be considered in the construction of any provision of the Plan. -4- (e) If any provision of the Plan shall be held to be illegal or invalid for any reason, that provision shall be deemed to be null and void, but the invalidation of that provision shall not otherwise impair or affect the Plan. ARTICLE 3 DEFERRAL OF COMPENSATION ------------------------ Section 3.1. Election to Defer Compensation. (a) A Participant may elect to defer a portion of his Base Compensation up to the amount or percentage specified by the Committee and/or a portion of his Incentive Compensation up to the amount or percentage specified by the Committee. The Employer shall withhold the elected Deferral amount from a Participant's Compensation. Amounts withheld from a Participant's Compensation shall be credited to his Deferral Account as of the date withheld. (b) An individual who first becomes a Participant as of a date other than the first day of a Plan Year may make his initial Deferral election by filing a completed Deferral Agreement with the Committee at any time before becoming a Participant, in which case his election shall become effective as of the effective date of his participation (which effective date shall be determined by the Committee). Except as provided in the preceding sentence, a Participant's Deferral election for a Plan Year must be made by filing a completed Deferral Agreement with the Committee before the first payroll date in such Plan Year, in which case the Participant's election shall become effective as of the first day of the Plan Year. The Committee shall provide each Participant with a Deferral Agreement within a reasonable period of time before the election is required. After its effective date, an election may be changed only as of the first day of a later Plan Year by making an election before the first payroll date in that Plan Year; provided, however, if the Employer elects to discontinue future Matching Credits, a Participant may change his election with respect to future Deferrals within thirty (30) days after he is informed of such election by the Employer. An election pursuant to this Section shall remain in effect for each subsequent Plan Year, unless changed or revoked by the Participant before the first payroll date in the Plan Year for which the change or revocation is to be effective. Section 3.2. Matching Credits. The Employer may, in its sole discretion, match all or a portion of a Participant's Deferrals for a Plan Year. The Employer may elect to match different amounts and/or percentages for different Participants, and it may change the matching amount or portion from year to year. Matching Credits for a Plan Year shall be credited to the Participant's Matching Account as of the last day of the Plan Year or such earlier date as designated by the Committee. In the case of a Participant who receives a lump sum distribution during a Plan Year, any Matching Credits on behalf of the Participant for that Plan Year shall be made before the distribution to the Participant. -5- ARTICLE 4 PARTICIPANTS' ACCOUNTS ---------------------- Section 4.1. Accounts. The Committee shall create and maintain adequate records to disclose the interest in the Plan of each Participant and Beneficiary. Records shall be in the form of individual bookkeeping accounts. Each Participant shall have a separate Deferral Account and Matching Account. Except as expressly provided herein, the establishment of Accounts shall not give a Participant or Beneficiary the right to any specific assets except as a general creditor of the Employer. Section 4.2. Crediting of Earnings to Accounts. As of the last day of each Plan Year before the Plan Year containing the Participant's Benefit Commencement Date, and as of the day preceding the Participant's Benefit Commencement Date, the Committee shall credit earnings to the Participants' Accounts. Earnings for a Plan Year shall be credited (i) at the Stated Earnings Rate for that Plan Year (ii) as if all contributions credited to the Participant's Accounts for the Plan Year (and all hardship distributions made to the Participant during the Plan Year) had been credited (or made) as of the first day of the Plan Year; provided, however, for the Plan Year containing the Participant's Benefits Commencement Date, the Stated Earnings Rate shall be multiplied by a fraction, the numerator of which is the number of full months in the Plan Year preceding the Benefits Commencement Date and the denominator of which is 12. Section 4.3. Valuation of Accounts. The value of a Participant's Account as of any date before his Benefit Commence Date shall equal the dollar amount of Deferrals or Matching Contributions credited to the Account, adjusted to reflect earnings credited to the Account, and decreased by any prior payments from the Account. Section 4.4. Annual Report. Within ninety (90) days following the end of each Plan Year, the Company shall provide to each Participant a written statement of the amount credited to his Deferral Account and Matching Account as of the end of that year. ARTICLE 5 PAYMENT OF DEFERRED COMPENSATION -------------------------------- Section 5.1. Distribution Upon Termination of Employment before Early Retirement Age for Reason Other Than Death. -6- If a Participant Terminates Employment before Early Retirement Age for a reason other than death, his Deferral Account and Vested Matching Account shall be distributed to him in a lump sum within thirty (30) days after he Terminates Employment. Section 5.2. Distribution Upon Termination of Employment after Reaching Early Retirement Age for Reason Other Than Death. If a Participant Terminates Employment after reaching his Early Retirement Age for a reason other than death, his Deferral Account and Matching Account shall be distributed as provided in this Section. A Participant may elect as part of a Deferral Agreement that Plan benefits attributable to amounts deferred pursuant to the agreement (including Matching Credits and earnings on amounts credited to the Participant's Accounts) be distributed either (i) as a lump sum or (ii) in substantially equal annual installments. Distributions elected pursuant to the preceding sentence must begin at least thirty (30) days after the Participant's Termination of Employment and must be made not later than two (2) years after the Participant's Termination of Employment (in the case of a lump sum) or end not later than fifteen (15) years after the Participant's Termination of Employment (in the case of annual installments). In addition, a Participant may make a one-time election of a distribution option described above before January 15, 1998, with respect to benefits attributable to amounts deferred in 1997 (including Matching Credits and earnings on amounts credited to the Participant's Accounts), provided such election shall not be effective if the Participant Terminates Employment before December 31, 1999. In the absence of an election to the contrary pursuant to this Section, distributions shall be made in equal monthly payments as of the first day of the month over a period of fifteen (15) years, beginning with the first month that begins at least thirty (30) days after his Termination of Employment. Unless a Participant's entire Vested Accounts are distributed to him within sixty (60) days after his Termination of Employment, the amount of each payment made pursuant to this Section shall be determined by assuming that the Participant's Accounts (reduced for distributions) would earn the Deemed Post-Termination Earnings Rate throughout the distribution period. Section 5.3. Distributions Upon Death. If a Participant dies after distribution of his Accounts has begun, his remaining Deferral Account and Vested Matching Account shall be paid to his Beneficiary in a lump sum within thirty (30) days following his death. If a Participant dies before distribution of his Accounts has begun, his Vested Accounts shall be paid to his Beneficiary a lump sum within thirty (30) days following his death. Section 5.4. Minimum Distributions. (a) If any monthly distribution due to a Participant hereunder will be less than $3,000, the Committee may, in its discretion, make distributions annually instead of monthly. Annual distributions pursuant to the preceding sentence shall be made at the time the first monthly distribution for the Plan Year would otherwise be made. (b) If the total remaining amount to be distributed to a Participant hereunder is less than $30,000, the Committee may, in its discretion, elect to pay the balance of the Participant's Vested -7- Account in a lump sum. A payment pursuant to the preceding sentence shall be made at the time of the next regularly scheduled payment following the Committee's decision to accelerate payment pursuant to this Subsection (b). Section 5.5. Early Distribution on Change in Control. If the Participant's employment with the Employer terminates for any reason within one year after a Change of Control, the Participant shall receive a distribution under the Plan pursuant to the provisions of this Section. If this Section applies, the Participant's Deferral Account and Matching Account shall be distributed in a lump sum within thirty (30) days after the later of (i) the Change in Control or (ii) the date on which the Participant Terminated Employment. Section 5.6. Early Distribution upon Occurrence of Other Events. If (i) the Company's 11-3/8% senior subordinated notes' credit rating, as set by Moody's Investment Services or its successor, falls to lower than "B3" or (ii) the Company is in material default under the financial provisions of a bond indenture or banking agreement to which it is a party, Participants' Accounts shall be distributed to them within thirty (30) days after occurrence of the event described in clause (i) or (ii), provided such situation continues on the date of distribution. Section 5.7. Hardship Distributions. If a Participant (i) applies for a hardship distribution of some or all of his Deferrals; (ii) supplies evidence reasonably satisfactory to the Committee that the requested distribution is both made on account of an immediate and heavy financial need of the Participant and is necessary to satisfy the financial need, after applying the standards of Treasury Regulation Section 1.401(k)(1)(d)(2), as amended, supplemented, and interpreted from time to time; and (iii) if, but only if, the Company, subsequent to adoption of this Plan, elects in writing to make hardship distributions available to Participants, the Committee may, in its sole discretion, direct distribution of all or a portion of the Participant's Deferral Account (not exceeding the amount of his prior Deferrals, reduced by any prior distributions of his Deferral Account) in an amount sufficient to satisfy the hardship. ARTICLE 6 VESTING AND FORFEITURE OF ACCOUNTS ---------------------------------- Section 6.1. Vesting of Accounts. A Participant's interest in his Deferral Account shall always be 100% Vested. No portion of a Participant's interest in his Matching Account shall become Vested until the earliest to occur of his (i) death while an Employee, (ii) Disability while an Employee, (iii) a Change of Control, (iv) reaching age 50 while an Employee, or (v) completion of five years of continuous service with the Employer. Upon the occurrence of an event described in the preceding sentence, a Participant's Matching Account shall become 100% Vested. Notwithstanding the preceding provisions of this Section, a Participant's Matching Account may be forfeited and his Deferred Account reduced pursuant to Section 6.2. -8- Section 6.2. Forfeitures. If a Participant Terminates Employment for a reason other than death or Disability before his Accounts are Vested, his non-Vested Accounts shall be forfeited immediately. Notwithstanding any other provision of the Plan to the contrary, if a Participant violates the terms of any confidentiality or noncompetition agreement with his Employer or the Participant's employment is terminated because of the Participant's (i) commission of a felony or any crime or offense lesser than a felony involving the property of the Company; (ii) engaging in conduct that has caused demonstrable and serious injury to the Company, monetary or otherwise; or (iii) gross dereliction of duties or other grave misconduct and the failure to cure such situation within thirty (30) days after the receipt of notice thereof from the Chairman of the Board of Directors, President, and Chief Executive Officer, the Participant's Matching Account shall be forfeited in its entirety, and his Deferral Account shall be redetermined by crediting the Participant's Deferral Account with the lesser of the Minimum Earnings Rate or the Stated Earnings Rate, retroactive to the beginning of the Participant's participation in the Plan. ARTICLE 7 ADMINISTRATIVE -------------- Section 7.1. Plan Administrator. The Committee shall be the Plan Administrator. Section 7.2. Powers and Duties of the Administrator. Subject to the specific limitations stated in this Plan, the Committee shall have the following powers and duties: (a) to carry out the general administration of the Plan; (b) to cause to be prepared all forms necessary or appropriate for the administration of the Plan; (c) to keep appropriate books and records; (d) to determine amounts to be disbursed to Participants and others under the provisions of the Plan; (e) to determine, consistent with the provisions of this instrument, all questions of eligibility, rights, and status of Participants and others under the Plan; -9- (f) to exercise all other powers and duties specifically conferred upon the Committee elsewhere in this instrument; (g) to interpret, with discretionary authority, the provisions of this Plan and to resolve, with discretionary authority, all disputed questions of Plan interpretation and benefit eligibility; (h) to incur reasonable expenses in the performance of its duties; and (i) to delegate any of its powers and/or duties, including its discretionary authority, to the Committee. Section 7.3. Correction of Defects. The Committee may correct any defect or supply any omission or reconcile any error or inconsistency in its previous proceedings, decisions, orders, directions, or other actions in such manner and to such extent as it shall deem advisable to carry out the purposes of the Plan. ARTICLE 8 MISCELLANEOUS ------------- Section 8.1. Relationship. Notwithstanding any other provision of this Plan, this Plan and action taken pursuant to it shall not be deemed or construed to establish a trust or fiduciary relationship of any kind between or among an Employer, Participant, Beneficiary, or any other persons. The right of a Participant or Beneficiary to receive payment of deferred compensation is strictly a contractual right to payment, and this Plan does not grant nor shall it be deemed to grant a Participant, Beneficiary, or any other person any interest in or right to any of the funds, property, or assets of the Employer other than as a general creditor of the Employer. Section 8.2. Other Benefits and Plans. Nothing in the Plan shall be deemed to prevent the Participant from receiving, in addition to the deferred compensation provided for under the Plan, any funds that may be distributable to him at any time under any other present or future retirement or incentive plan of the Employer. -10- Section 8.3. Alienation of Benefits. Neither the Participant nor any Beneficiary shall have the power to transfer, assign, pledge, alienate, or otherwise encumber in advance any payment that may become due under the Plan, and any attempt to do so shall be void. Payments that may become due under the Plan shall not be subject to attachment, garnishment, or execution or be transferrable by operation of law in the event of bankruptcy, insolvency, or otherwise. Section 8.4. Benefit. This Plan shall be binding upon and inure to the benefit of the Employer and its successors and assigns. Section 8.5. No Employment Guarantee. Except as otherwise expressly provided, neither the Plan nor any action taken hereunder shall be deemed to give a Participant the right to be retained as an Employee of the Employer or to interfere with the right of the Employer to alter the responsibilities and duties or to discharge the Participant at any time. Section 8.6. Successors in Interest. Upon any Change in Control, the Employer shall obtain the written agreement of the successor to assume the Employer's obligations under this Plan. If a Change in Control occurs without the successor's assumption of the Employer's obligations under this Agreement, the Employer shall make the benefit payment to which the Participant is entitled under Section 5.2 upon the Change in Control, without regard to whether the Participant has been terminated or whether his responsibilities or salary have been reduced and without regard to whether the Participant has reached his Early Retirement Age. Section 8.7. Tax Withholding. The Employer may withhold from any payment due hereunder any taxes that the Employer determines in good faith are required to be withheld under applicable federal, state, or local tax laws or regulations. Section 8.8. Tax Liability. The Employer does not guarantee the tax consequences of participation in the Plan. Section 8.9. Indemnification. The Employee shall indemnify a Participant against, and pay any liability or expense, including without limitation, attorneys' fees, incurred by the Participant in enforcing his rights under this Plan. -11- ARTICLE 9 AMENDMENT AND TERMINATION ------------------------- Section 9.1. Amendment. The Company, by duly authorized action of the Board of Directors or a designated committee, reserves the right to amend the Plan at any time. No amendment shall reduce any benefits accrued under the Plan before the date on which the amendment was duly authorized (including the right to future earnings credits with respect to such benefits), nor shall any amendment change the distribution provisions of the Plan with respect to a Participant without the Participant's prior written consent. Section 9.2. Termination. The Company reserves the right to terminate the Plan at any time as it deems appropriate. Upon termination of the Plan, no further Deferrals or Matching Contributions shall be made to the Plan, and each Participant's Deferral Account and Matching Account shall be distributed to him or her within thirty (30) days after the effective date of the Plan's termination. Tokheim Corporation has caused this restatement of the Plan to be executed by its duly authorized officers, as of the 20th day of July, 1999. TOKHEIM CORPORATION By: /s/ Douglas K. Pinner ------------------------------------- Title: President and Chief Executive Officer ------------------------------------- ATTEST: /s/ Norman L. Roelke - ---------------------------- Signature Vice President and Secretary - ---------------------------- Title -12- EX-10.5 4 TOKHEIM SUPPLEMENTAL EXEC. RETIREMENT PLAN EXHIBIT 1O.5 [LOGO OF TOKHEIM HERE] TOKHEIM CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE OF CONTENTS -----------------
Page ---- Section 1. Definitions....................................................... 1 Section 2. Participation..................................................... 3 Section 3. Vesting........................................................... 3 Section 4. Supplemental Retirement Benefit................................... 3 Section 5. Post-Retirement Survivor Benefit.................................. 4 Section 6. Pre-Retirement Survivor Benefit................................... 4 Section 7. Beneficiary....................................................... 4 Section 8. Forfeiture Provisions............................................. 4 Section 9. Change in Control................................................. 4 Section 10. Trust Fund....................................................... 6 Section 11. Funding of Trust................................................. 6 Section 12. General Provisions............................................... 7 Section 13. No Right of Employment........................................... 8 Section 14. Administration................................................... 8 Section 15. Amendment and Termination........................................ 9
TOKHEIM CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN The Tokheim Corporation Supplemental Executive Retirement Plan ("Plan") is hereby adopted by Tokheim Corporation ("Company"), effective April 28, 1999. Background 1. The purpose of the Plan is to provide nonqualified deferred compensation for a select group of key management employees of the Company or an Affiliated Employer. 2. Exhibit A, as amended from time to time, contains a list of each key management employee selected to participate in the Plan, contingent on such employee's execution of a participation agreement. Plan Section 1. Definitions. When the initial letter of a word or phrase is capitalized herein, the meaning of the word or phrase shall be as follows: (a) "Administrator" means the Company. In performing its duties as Administrator, the Company shall act through its Board or a Committee designated by the Board to administer the Plan. The initial members of the Committee are John Negovetich, Tim Eastom, and Norm Roelke. (b) "Affiliated Employer" means the Company and any subsidiary of the Company. (c) "Base Income" means, with respect to a Participant, the Participant's Base Monthly Rate multiplied by 12. (d) "Base Monthly Rate" means the sum of (i) the Participant's base monthly salary, before any reductions pursuant to the Participant's election, and (ii) one-twelfth of the average annual bonus for the two Fiscal Years immediately preceding the Participant's Termination of Employment. (e) "Beneficiary" means, with respect to a Participant, the person or persons determined pursuant to Section 7. (f) "Benefits Commencement Date" means, with respect to a Participant, the date as of which distribution of the Participant's Plan benefits is scheduled to begin; provided, however, in the case of a benefit payable pursuant to Section 6, the Benefits -1- Commencement Date shall be the first day of the month next following the Participant's death. (g) "Board" means the Company's Board of Directors. (h) "Change in Control" has the meaning specified in Section 9. (i) "Company" means Tokheim Corporation and any successor in interest. (j) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (k) "Committee" means the committee of individuals designated by the Board to perform the functions of Administrator on behalf of the Company. (l) "Disabled" or "Disability" means, with respect to an Participant, that the Participant has a mental or physical condition that has rendered him or her incapable of performing services of the same type and nature rendered to the Employer immediately before onset of the condition, if such condition lasts at least 180 days. A physician appointed by and paid for by the Company shall determine the existence of such condition. (m) "Earliest Retirement Date" means, with respect to a Participant, the later of (i) the Triggering Event or (ii) the Participant's 60th birthday. (n) "Effective Date" means April 28, 1999. (o) "Employer" means the Company and any Affiliated Employer that employs a Participant. (p) "Fiscal Year" means the 12-consecutive month period beginning December 1 and ending the following November 30. (q) "Participant" means a key management employee (or, where the context so permits, former key management employee) who has become a participant pursuant to Section 2 and whose entire benefits hereunder have not been distributed or forfeited. (r) "Present Value" means present actuarial value, calculated using the factors specified in Section 9. (s) "Plan" means the Tokheim Supplemental Executive Retirement Plan, as set out in this document, as it is amended from time to time. -2- (t) "Surviving Spouse" means the person to whom a Participant is married on the date of his or her death. (u) "Target Retirement Benefit" means, with respect to a Participant, a monthly benefit equal to 60% of the Participant's Base Monthly Rate. (v) "Term Certain Expiration Date" means the 15th annual anniversary of the Benefits Commencement Date under the Plan. (w) "Termination of Employment" means, with respect to a Participant, a complete termination of the employment relationship between the Participant and all Affiliated Employers. (x) "Triggering Event" has the meaning specified in Section 9. (y) "Trust" means the trust created by the Company pursuant to Section 10. (z) "Trustee" means the person or persons serving as trustee of the Trust. (aa) "Vested" means, with respect to a Participant, that his or her interest in the Plan is nonforfeitable, except as provided in Section 8. Except as provided in Section 9, the extent to which a Participant's interest under the Plan is Vested shall be determined pursuant to Section 3. Section 2. Participation. Participation in the Plan is limited to key management employees designated by the Board or a committee designated by the Board from time to time; provided however, an individual shall not become a Participant until he or she has signed a participation agreement aceptable to the Board or a committee designated by the Board from time to time. Section 3. Vesting. Subject only to the provisions of Section 8, a Participant's interest in benefits provided hereunder shall become Vested upon the first to occur of: (a) 60 consecutive months of employment by one or more Affiliated Employers (b) a Change in Control, (c) attainment of age 50, or (d) the Participant's death or Disability. If a Participant Terminates Employment (other than because of his or her death) before becoming Vested, the Participant shall not be entitled to any benefit under the Plan. -3- Section 4. Supplemental Retirement Benefit. If a Participant Terminates Employment for a reason other than his or her death with a Vested interest in his or her benefits hereunder, the Participant shall be entitled to a monthly benefit for life equal to his or her Target Retirement Benefit, beginning as of the first day of the month next following the later of the Participant's (i) 60/th/ birthday or (ii) Termination of Employment. Section 5. Post-Retirement Survivor Benefit. If a Participant dies after his or her Benefits Commencement Date and before the Term Certain Expiration Date, payment of the Target Retirement Benefit shall be made to the Participant's Beneficiary as of the first day of each month occurring after the Participant's death and before the Term Certain Expiration Date. Section 6. Pre-Retirement Survivor Benefit. If a Participant dies either (i) while in the Employer's employ or (ii) after having Terminated Employment with a Vested benefit under the Plan but before his or her Benefits Commencement Date, payment of the Target Retirement Benefit shall be made to the Participant's Beneficiary as of the first day of each month occurring after the Participant's death and before the Term Certain Expiration Date. Section 7. Beneficiary. A Participant may designate one or more persons as Beneficiary to receive his or her interest in the Plan after his or her death To be effective, the designation must be made on a form acceptable to the Administrator and received by the Administrator during the Participant's life. If the Participant fails to designate a Beneficiary, the Beneficiary predeceases the Participant, or the Participant's designation is legally ineffective for any reason, the Participant's Beneficiary shall be (i) his or her spouse, if the Participant is survived by a spouse, or (ii) the Participant's estate, if the Participant is not survived by his or her spouse. Section 8. Forfeiture Provisions. Notwithstanding the preceding Sections, a Participant shall forfeit all rights hereunder, if he or she is discharged for Cause before the earlier of (i) a Change in Control or (ii) his or her Benefits Commencement Date. "Cause" means indictment for any act of theft, embezzlement, fraud, or the misappropriation of property constituting a felony under applicable state or federal law; provided, however, a Participant's Plan benefits shall be forfeited pursuant to this Section only if the Participant is ultimately convicted of or pleads guilty to such felony. Until such proceedings are resolved, the Participant's benefits under the Plan shall not be paid. Section 9. Change in Control. ----------------- 9.1. Benefits payable. Notwithstanding any provision of the Plan to the contrary, a Participant shall be entitled to receive the present value of his Target Retirement Benefit, as determined pursuant to Section 9.2, upon the occurrence of a Triggering Event. 9.1.1 Triggering Event. A Triggering Event shall be deemed to have occurred if: -4- 9.1.1.1. there is a Change in Control; and 9.1.1.2. within 12 months after the Change in Control: (a) the Company terminates this Plan or reduces benefits (including the right to future accruals) hereunder, or (b) there is a Termination of Employment with respect to the Participant. 9.1.2. Change in Control. A "Change in Control" shall be deemed to have occurred if there has been one or more of the following: 9.1.2.1. any "person" (as such term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time), other than a retirement plan sponsored by the Company, becomes a beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of Company's then outstanding securities; 9.1.2.2. less than 51% of the members of the Board are Incumbent Directors (as defined in the Company's Deferred Compensation Plan, as in effect on the Effective Date); 9.1.2.3. any corporation or group of associated persons acting in concert owns more than 25% of the outstanding shares of voting stock of the Company coupled with or followed by the exercise of the voting power of such shares by the election of two or more directors of the Company in any one election at the instance of such corporation or group; 9.1.2.4. the Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which the Company will be a constituent corporation, and either (i) the Company is not the surviving or resulting corporation, or (ii) the transaction will result in less than 60% of the outstanding voting securities of the surviving or resulting entity being owned by the former shareholders of the Company; 9.1.2.5. the Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person that is not an Affiliated Employer; -5- 9.1.2.6. an event that triggers the exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the Triggering Event; or 9.1.2.7. the occurrence of another event that the Board designates a Change in Control. 9.2. Benefits. If a Triggering Event with respect to a Participant occurs, the Participant shall be entitled to a single lump sum payment within 30 days thereafter. If the Participant (or Beneficiary, in the case of a deceased Participant) Terminated Employment before the Change in Control, the amount of the lump sum payment shall be the Present Value of all future payments to which the Participant (or Beneficiary) is entitled pursuant to the Plan. If the Participant did not Terminate Employment before the Change in Control, the amount of the lump sum payment shall be the Present Value of the benefits that would be payable to the Participant beginning as of his Earliest Retirement Date, if he remained employed until such date and his Base Income increased annually until such date in a manner equivalent to his past increases in Base Income. For purposes of this Section, Present Value shall be determined using 1983 Group Annuity Mortality Table, 50% male/ 50% female and a discount rate equal to the average rate for 30-year United States government bonds over the calendar year preceding the Change in Control. Section 10. Trust Fund. The Company shall enter into a trust agreement creating a trust to implement and carry out the provisions of the Plan and to finance benefits under the Plan. All rights of a Participant or Beneficiary under the Plan shall be subject to all the terms and conditions of the Trust. The Company may modify the Trust from time to time to accomplish the purposes of the Plan. The Company shall not have any right, title, or interest in the contributions made to the Trust and no part of the Trust assets shall revert to the Company until all benefits have been paid; provided, however, all assets of the Trust shall at all times be subject to the claims of the Company's creditors. If the Trust does not timely make a benefit payment, the Employer shall pay it within 20 days of its due date. No Participant or Beneficiary has any right or interest in the Trust assets except as expressly provided in the Plan and the Trust. Section 11. Funding of Trust. ---------------- (a) Annual Deposits. If funded by life insurance, the Employer shall deposit the following amounts in the Trust no less frequently than annually: (1) for each Fiscal Year, the total amount of premiums due for that Fiscal Year with respect to all life insurance policies then maintained in the Trust, less the total value of cash and liquid assets maintained in such Trust on the first day of that Fiscal Year (not including any cash value of such insurance policies); and -6- (2) for each Fiscal Year, such amounts as shall be needed from time to time for the Trustee to make all benefit payments due under the Plan for such Fiscal Year, reduced by the value of the other Trust assets (except for life insurance policies) then available to pay such benefits. (b) Funding on Change in Control. Upon a Change in Control, the Company shall promptly deposit any amount necessary to increase the Trust assets to an amount equal to or greater than the amount that would be payable pursuant to Section 9.2, if a Triggering Event occurred with respect to all Participants on the Change in Control date. (c) Tokheim May Make Additional Contributions. Although the Company is obligated only to make contributions to the Trust as aforesaid in this Section 11, it may make any additional contributions to the Trust from time to time as it desires. Section 12. General Provisions. ------------------ (a) Other Participants. The Company may from time to time add Participants to be covered under the Plan, under the same or different terms and conditions as are stated herein, provided that no such addition shall reduce or eliminate the benefits of any Participant then covered under the Plan without the Participant's written consent. (b) Governing Law. To the extent not preempted by ERISA, this Plan shall be construed in accordance with and governed by the internal laws (but not the jurisdictional or choice of law rules) of the State of Indiana. (c) Headings. The headings herein are for convenience only and shall not affect in any way the meaning or interpretation of this Plan. (d) Non-Assignability of Benefits. No benefit payable at any time under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, garnishment, or encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit whether presently or thereafter payable shall be void. No benefit hereunder nor the Trust shall in any manner be liable for or subject to the debts or liabilities of any Participant, Beneficiary, or other person entitled to any benefit. Any attempted assignment, transfer, pledge, disposition or encumbrance in contravention of this provision, or the levy, attachment, execution, garnishment or other judicial process thereupon shall be null and void and without effect. (e) Other Rights Unaffected. A Participant's rights under any pension or profit sharing plans or other arrangements of the Employer in which he or she is a participant shall be governed solely by the terms of such plans and programs, and shall be unaffected by this Plan. Further, any deferred compensation payable under this Plan shall not be -7- deemed salary or other compensation to the Participant for the purpose of computing benefits to which he or she may be entitled under any pension, profit sharing, or othe plan or arrangement of the Employer. (f) Payments to Legal Representatives. If the Board finds that any Participant or Beneficiary is unable to care for his or her affairs because of illness or accident, any payment due may be paid to such payee's spouse, a child, a parent, sibling, or any person deemed by the Board to have responsibility for the care of such payee; provided, however, such payment shall be paid to that payee's duly appointed guardian, committee, or other legal representative upon presentation of a proper claim to the Board. Any payment made pursuant to this Subsection shall constitute a complete discharge of the liabilities of the Employer and the Trust under this Plan with respect to such payment. (g) Reversion of Excess. The Employer's obligations to pay benefits under the Plan shall be satisfied when it has paid all of the benefits promised under the Plan. Therefore, once this has been done, any remaining assets of the Trust or held in escrow or otherwise on behalf of the Plan or Trust shall revert to the Company. (h) Severability. If any provision of the Plan is invalid as applied to any fact or circumstances, its invalidity shall not effect the validity of any other provision of the Plan or of the same provision as applied to any other fact or circumstance. (i) Attorneys' Fees and Expenses. A Participant shall be entitled to recover from the Company his or her reasonable attorneys' fees, costs, and expenses incurred as a result of any successful action to enforce any of his or her rights under the Plan. (j) Successors. The Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participant and his or her successors and assigns, including his or her heirs, executors, administrators, and legal representatives. (k) Tax Withholding. The Employer shall provide to the Trustee appropriate federal, state, and local tax withholding information, and the Trustee shall withhold such amounts from the distributions and shall deliver to the Employer for remittance to the appropriate taxing authority the amounts of any taxes required to be withheld. The Employer shall have full responsibility for the proper remittance of all withholding taxes to the appropriate taxing authority and shall furnish the Participant or Beneficiary and the Trustee with the appropriate tax information form reporting the amounts of such distributions and any withholding taxes. Section 13. No Right of Employment. Nothing contained in the Plan shall be construed as conferring upon any Participant the right to continue in the employ of the Employer as a participant or in any other capacity. The Employer's right to discipline or discharge any Participant or any other employee shall not be affected by any provisions of the Plan. -8- Section 14. Administration. The Plan shall be administered by the Administrator. All costs of administration shall be borne by the Company. The Administrator shall be the named fiduciary as that term is used in ERISA. The Administrator may employ and suitably compensate such attorneys and advisors and such clerical and other service providers as it may deem necessary for the performance of its duties. The Administrator shall have authority to promulgate such uniform and nondiscriminatory rules for the Plan as are not inconsistent with the provisions of the Plan or the Trust document and to make or cause to be made all reports and filings necessary to meet its responsibilities under ERISA concerning reporting and disclosure. The Administrator shall enforce the Plan in accordance with its terms and in accordance with the terms of the Trust document and shall have all powers necessary to accomplish that purpose including without limiting the generality of the foregoing, the following: (i) to determine conclusively all questions of fact, including those relating to the eligibility of the Participants to receive benefits under the Plan; (ii) to compute and certify to the Trustee the amount of benefits payable to a Participant or Beneficiary; (iii) to authorize all disbursements by the Trustee from the Trust; (iv) to interpret conclusively the terms and provisions of the Plan; (v) to promulgate such uniform and nondiscriminatory rules for the Plan as are not inconsistent with the provisions hereof, and (vi) to make or cause to be made all reports and filings necessary to meet its responsibilities under ERISA concerning reporting and disclosure. In performing its duties hereunder, the Administrator may use its discretion to the maximum extent permitted by law. Section 15. Amendment and Termination. The Company reserves the sole and exclusive right to amend or terminate the Plan at any time; provided, however, such amendment or termination may not reduce the benefits of any Participant or Beneficiary accrued through the date of the amendment or termination in the absence of the Participant's or Beneficiary's written consent. -9- IN WITNESS WHEREOF, the undersigned duly authorized officer or the Company has executed this document on behalf of the Company of this 20th day of July, 1999. TOKHEIM CORPORATION By: /s/ Douglas K. Pinner ----------------------- Douglas K. Pinner, Chairman, President and Chief Executive Officer -10- EXHIBIT A KEY MANAGEMENT EMPLOYEE PARTICIPANTS Douglas K Pinner Chairman, President and CEO John A. Negovetich Executive VP, Administration, Finance and CFO Jacques St-Denis Executive VP. Operations Norman L. Roelke VP, Secretary and General Counsel EX-10.6 5 EMPLYMNT AGRMNT DATED 7/15/99 - DOUGLAS K. PINNER Exhibit 10.6 EMPLOYMENT AGREEMENT for CHIEF EXECUTIVE OFFICER THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 15th day of July, 1999, 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 are hereby acknowledged, the parties agree as follows: EMPLOYMENT. Company agrees to employ Employee, and Employee agrees to serve Company, on a full time basis in the capacity of Chairman, President, and Chief Executive Officer, 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. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the following meanings, when capitalized: "Base Monthly Rate" means the sum of (i) Employee's monthly salary payable under Section 4.1 as of the determination date and (ii) one-twelfth of the average bonus paid to Employee for the two fiscal years of the Company preceding the determination date. For purposes of Section 5, the determination date shall be the date on which this Agreement terminates, and, for purposes of Section 7, the determination date shall be the date on which the Change in Control occurs. For purposes of clause (ii) of the first sentence of this definition, if Employee was not employed for the two full fiscal years immediately preceding the determination date, the amount under clause (ii) shall be one-twelfth of Employee's bonus for the fiscal year immediately preceding the determination date. "Board" means the Company's Board of Directors. "Cause" has the meaning specified in Section 5.1.1. "Change in Control" has the meaning specified in Section 7.1.2. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a duly authorized committee of the Board. "Confidential Information" has the meaning specified in Section 8. "Deferred Compensation Plan" means the Tokheim Corporation Deferred Compensation Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. "Disabled" or "Disability" means a mental or physical illness of Employee that prevents Employee from performing the essential functions of his position in a satisfactory manner and that the Board determines is likely to continue for at least six months or the remainder of Employee's life. The Board's determination of the existence or non-existence of Disability shall be made in good faith based on medical evidence acceptable to the Board. "Supplemental Executive Retirement Plan" means the Tokheim Corporation Supplemental Executive Retirement Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. 3. DUTIES. 3.1 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 or a Committee shall from time to time direct. Subject to the provisions of Section 7, Company retains the right to change the position, responsibilities, duties, or services to be performed by Employee in such manner as it deems appropriate. 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 the Board. 3.2 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 -2- and assign any and all applications, assignments, and other instruments which Company shall deem necessary to apply for and obtain letters patent of the United States and foreign countries for any Inventions and to assign and convey to Company or its nominee the sole and exclusive right, title, and interest in and to any Inventions or 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. 4. COMPENSATION. During the term of this Agreement, Company shall compensate Employee for his services as follows: 4.1 Employee shall be entitled to an initial monthly base salary of $40,300. Employee's base salary shall be payable in semi-monthly or monthly installments in accordance with the policy of Company at the time of such payments. Employee's base salary shall be reviewed by the Board or a Committee at least annually and, subject to the provisions of Section 7, shall be subject to adjustment by the Board or such Committee. 4.2 Employee shall be eligible for such bonus program as may from time to time be made available and applicable to Employee by the Board or a Committee. 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, the Deferred Compensation Plan, the Supplemental Executive Retirement Plan, 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, as in effect from time to time. Except as provided in Section 7, nothing in this Agreement shall be deemed to alter the terms and conditions of any Plan or the policy of Company with respect to any Plan, 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 Plan. 4.3.1 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. -3- 5. TERMINATION. Either Company, by action of the Board, or Employee may terminate this Agreement upon providing written notice to the other. 5.1 By the Company. In the event this Agreement is terminated with Cause, 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: 5.1.1.1 Employee engages in any breach of fiduciary duty, act of dishonesty, or theft involving Company; 5.1.1.2 Employee is convicted of a felony; 5.1.1.3 Employee discloses Confidential Information in violation of Section 8 or competes with Company in violation of Section 9; 5.1.1.4 Employee refuses or fails to carry out the duties which may have been assigned to him; or 5.1.1.5 Employee continues to violate any written Company policy after written notice by Company of the violation. Before the Board terminates Employee's employment for Cause, it shall provide Employee an opportunity, after reasonable notice, to appear before the Board. To terminate Employee for Cause, the Board must adopt a resolution terminating Employee by affirmative vote of at least 75% of its members, after having given Employee the opportunity to present his case to the Board. The Board's resolution must state that the Board finds in good faith that (i) Employee is guilty of conduct constituting Cause, specifying the details of such conduct, and (ii), for cause described in Section 5.1.1.5, Employee failed to cure such conduct within 30 days after receiving written notice from Company detailing such conduct. The effective date of Employee's termination for Cause shall be the date on which Employee receives a copy of the resolution adopted by the Board or such later date specified in the resolution. 5.1.2 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 payable pursuant to Section 4.1 in effect at the time of the termination, payable at the same interval as his salary at the time of the termination. -4- Employee shall have no obligation to mitigate damages by seeking other employment. 5.1.3 The right to severance pay under this Section 5.1.2 shall vest upon notice of termination and shall not be affected by Employee's subsequent death or disability. 5.1.3.1 Employee shall also be entitled to the following for 36 months or until Employee begins alternative employment: i Medical insurance, life insurance, and disability insurance benefits from Company comparable to such benefits provided with respect to Employee as of the date of the termination of this Agreement. ii Continued accrual of benefits under the Supplemental Executive Retirement Plan as if Employee's employment had continued at the Base Monthly Rate. 5.2 By Employee. Subject to Section 7, 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. 5.3 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 Disability. In the event this Agreement terminates by Employee's death or Disability, Company shall pay Employee's pro-rata base salary under Section 4.1 through the termination date, and Employee shall be entitled to such continuing benefits as may be provided in any plan or by law, but Employee shall not be entitled to severance pay. 6. 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, 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. -5- 7. CHANGE IN CONTROL. 7.1 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, 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. 7.1.1 Triggering Event. For purposes of this Agreement, a Triggering Event shall be deemed to have occurred if: 7.1.1.1 there is a Change in Control; and 7.1.1.2 within 12 months after the Change in Control: (a) Company terminates this Agreement without Cause, or (b) (1) Company or Employee terminates this Agreement, and (2) in combination with the Change in Control, there has been one or more of the following: (i) termination of Employee's appointment as President, Chairman, or Chief Executive Officer, (ii) a change of Employee's job authority or responsibilities, (iii) a reduction of Employee's base salary payable pursuant to Section 4.1 or a material reduction of aggregate benefits provided to Employee, or (iv) the relocation of Employee's primary office location to a distance greater than 50 miles from the current office location. -6- 7.1.2 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: 7.1.2.1 any "person" (as such term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time), other than a retirement plan sponsored by Company, becomes a beneficial owner, directly or indirectly, of securities of Company representing 20% or more of the combined voting power of Company's then outstanding securities; 7.1.2.2 less than 51% of the members of the Board are Incumbent Directors (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement): 7.1.2.3 any corporation or group of associated persons acting in concert, owns more than 25% of the outstanding shares of voting stock of Company coupled with or followed by the exercise of the voting power of such shares by the election of two or more directors of Company in any one election at the instance of such corporation or group; 7.1.2.4 Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which Company will be a constituent corporation, and either (i) Company is not the surviving or resulting corporation, or (ii) the transaction will result in less than 60% of the outstanding voting securities of the surviving or resulting entity being owned by former shareholders of Company; 7.1.2.5 Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person which is not an Affiliate (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement); 7.1.2.6 an event that triggers the exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the Triggering Event; or 7.1.2.7 the occurrence of another event that the Board designates a Change in Control. -7- 7.2 Benefits. In the event this Agreement is terminated by a Triggering Event, Employee shall be entitled to the following: 7.2.1 A lump sum severance payment equal to Employee's Base Monthly Rate multiplied by 36, payable within 30 days following termination of the Agreement. 7.2.2 Employee shall also be entitled to the following for 36 months or until Employee begins alternative employment. 7.2.2.1 Medical, life, accidental death and dismemberment, disability, pension, and split dollar life insurance benefits from Company comparable to such benefits with respect to Employee as of the date of the termination of this Agreement. 7.2.2.2 Continued accrual of benefits under the Supplemental Executive Retirement Plan as if Employee's employment had continued at the Base Monthly Rate. 7.3 If Employee incurs taxes under Code Section 4999, Company shall gross up the amount payable pursuant to Section 7.2.1 to compensate Employee for such taxes and well as any taxes payable on account of the gross up under this Section. 7.4 Employee shall have the right to enforce his rights under this Section 7 in any court with jurisdiction over the parties and matter or pursuant to the arbitration procedures of Section 15. Company shall be responsible for Employee's reasonable expenses and attorneys' fees in any such court proceeding or arbitration and shall pay all costs of arbitration relating to Employee's enforcement of his rights under this Section. 8. 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. 8.1 Employee acknowledges his position with Company will expose Employee to certain Confidential Information and that Confidential Information constitutes a valuable, special, and unique asset of Company's business. Employee shall 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. -8- 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. 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 attorneys' 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 attorneys' fees from Employee. 8.3 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, tapes or video recordings, 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. 9. 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. 9.1 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 shall 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 shall 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 activities under this Section is the entire world. 9.2 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. In the event Company obtains an injunction enjoining Employee from violating this provision, Company shall be entitled to recover all -9- costs incurred in connection with the injunction, including reasonable attorneys' fees. Company shall also be permitted to pursue any other available remedies available for such breach, including the recovery of damages and reasonable costs and attorneys' fees from Employee. 9.3 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. 10. FORFEITURE OF BENEFITS. If Employee breaches his obligations under either Section 8 or Section 9, Employee shall forfeit all future payments or compensation payable or provided by Company, except as required pursuant to the terms of a Plan. 11. 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. 12. 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. 13. WITHHOLDING. Company may withhold from any payments or benefits provided under this Agreement: 13.1 all federal, state, city, or other taxes as required pursuant to any law or governmental regulation or ruling; and 13.2 any amounts owed by Employee to Company for any reason at the time of the termination of this Agreement. 14. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by Employee without Company's prior written consent; provided, however, nothing in this Section 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, -10- 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. 15. 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: 15.1 Limitation of Section. The provisions of this Section are subject to and limited by the provisions of Sections 7.4, 8.2, and 9.2. Except to the extent elected by Employee under Section 7.4, or by the Company under Section 8.2 or 9.2, the provisions of this Section shall not apply to any action brought pursuant to Sections 7.4, 8.2, or 9.2. 15.2 Scope of Arbitration. The parties shall 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. 15.3 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. 15.4 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: 15.4.1 In the event of a dispute arising out of a termination of this Agreement, within six months of the date of termination; 15.4.2 In the event of a breach of Section 8 or 9, within four months after the full Board has actual knowledge of the breach; or 15.4.3 In the event of any other dispute, within three months after the dispute arises. -11- 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. 15.5 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 8 and 9 and for which either party may require provisional relief pending a decision on the merits by the arbitrator. 15.6 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. 15.7 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 ten business days within which they may identify a mutually agreeable arbitrator. After the ten 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. 15.8 Arbitrator Selection. In the event the parties cannot agree upon an arbitrator within ten 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. 15.9 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 -12- 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 confer 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 attorneys' fees and costs, including reasonable expenses associated with production of witnesses or proof, upon a finding that the other party (i) engaged in unreasonable delay, (ii) failed to comply with the arbitrator's discovery order, or (iii) 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. 15.10 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. 15.11 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. 15.12 The Hearing. At any hearing, the party bearing the burden of proof according to the governing substantive law shall present its evidence first. 15.13 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. 15.14 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- 15.15 Costs. Except as otherwise expressly provided in this Agreement, as to any disputes arising from the termination of the Agreement, each party shall be responsible for its costs, including attorneys' 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. 15.15.1 Notwithstanding anything herein to the contrary, Company shall be entitled to recover its reasonable costs and attorneys' fees incurred in enforcing the provisions of Section 8 or Section 9, provided that it prevails in such enforcement action. 15.15.2 Notwithstanding anything herein to the contrary, Employee shall be entitled to recover from the Company all costs and expenses incurred in enforcing his rights under this Agreement, including all expenses of the arbitration and attorneys' fees and costs, provided that he prevails in whole or in part in such enforcement action. 15.16 Remedies. 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. 15.17 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. 15.18 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. 15.19 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. 16. MISCELLANEOUS. 16.1 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- 16.2 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. 16.3 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. 16.4 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. 16.5 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. 16.6 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. 16.7 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. 16.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana. 16.9 Survival. The provisions and restrictions contained in Sections 8 and 9 shall survive the termination of this Agreement and Employee's employment with Company. 16.10 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. 16.11 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 -15- 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: _______________________________ _______________________________ _______________________________ IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. TOKHEIM CORPORATION EMPLOYEE /s/ Walter S. Ainsworth /s/ Douglas K. Pinner - ------------------------------ ------------------------------- WALTER S. AINSWORTH, CHAIRMAN DOUGLAS K. PINNER COMPENSATION COMMITTEE /s/ Norman L. Roelke - ------------------------------ By: NORMAN L. ROELKE Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL -16- EX-10.7 6 EMPLYMNT AGRMNT DATED 7/15/99 - JOHN A. NEGOVETICH EXHIBIT 10.7 EMPLOYMENT AGREEMENT for CORPORATE OFFICER THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 15TH day of JULY, 1999, 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 are hereby acknowledged, the parties agree as follows: EMPLOYMENT. Company agrees to employ Employee, and Employee agrees to serve Company, on a full time basis in the capacity of EXECUTIVE VICE PRESIDENT, FINANCE/ADMINISTRATION, 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. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the following meanings, when capitalized: "Base Monthly Rate" means the sum of (i) Employee's monthly salary payable under Section 4.1 as of the determination date and (ii) one-twelfth of the average bonus paid to Employee for the two fiscal years of the Company preceding the determination date. For purposes of Section 5, the determination date shall be the date on which this Agreement terminates, and, for purposes of Section 7, the determination date shall be the date on which the Change in Control occurs. For purposes of clause (ii) of the first sentence of this definition, if Employee was not employed for the two full fiscal years immediately preceding the determination date, the amount under clause (ii) shall be one-twelfth of Employee's bonus for the fiscal year immediately preceding the determination date. "Board" means the Company's Board of Directors. "Cause" has the meaning specified in Section 5.1.1. "Change in Control" has the meaning specified in Section 7.1.2. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a duly authorized committee of the Board. "Confidential Information" has the meaning specified in Section 8. "Deferred Compensation Plan" means the Tokheim Corporation Deferred Compensation Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. "Disabled" or "Disability" means a mental or physical illness of Employee that prevents Employee from performing the essential functions of his position in a satisfactory manner and that the Board determines is likely to continue for at least six months or the remainder of Employee's life. The Board's determination of the existence or non-existence of Disability shall be made in good faith based on medical evidence acceptable to the Board. "Supplemental Executive Retirement Plan" means the Tokheim Corporation Supplemental Executive Retirement Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. 3. DUTIES. 3.1 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, a Committee, its Chief Executive Officer, or another executive officer designated by the Board or a Committee shall from time to time direct. Subject to the provisions of Section 7, Company retains the right to change the position, responsibilities, duties, or services to be performed by Employee in such manner as it deems appropriate. 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 the Board. 3.2 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 -2- 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 to apply for and obtain letters patent of the United States and foreign countries for any Inventions and to assign and convey to Company or its nominee the sole and exclusive right, title, and interest in and to any Inventions or 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. 4. COMPENSATION. During the term of this Agreement, Company shall compensate Employee for her services as follows: 4.1 Employee shall be entitled to an initial monthly base salary of $24,080. Employee's base salary shall be payable in semi-monthly or monthly installments in accordance with the policy of Company at the time of such payments. Employee's base salary shall be reviewed by the Board or a Committee at least annually and, subject to the provisions of Section 7, shall be subject to adjustment by the Board or such Committee. 4.2 Employee shall be eligible for such bonus program as may from time to time be made available and applicable to Employee by the Board or a Committee. 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, the Deferred Compensation Plan, the Supplemental Executive Retirement Plan, 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, as in effect from time to time. Except as provided in Section 7, nothing in this Agreement shall be deemed to alter the terms and conditions of any Plan or the policy of Company with respect to any Plan, 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 Plan. 4.3.1 Except as may otherwise be expressly provided, Employee shall be granted, upon termination of this Agreement, such rights as may be available to her pursuant to any Plan or Plans then in effect. -3- 5. TERMINATION. Either Company or Employee may terminate this Agreement upon providing written notice to the other. 5.1 By the Company. In the event this Agreement is terminated with Cause, 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: 5.1.1.1 Employee engages in any breach of fiduciary duty, act of dishonesty, or theft involving Company; 5.1.1.2 Employee is convicted of a felony; 5.1.1.3 Employee discloses Confidential Information in violation of Section 8 or competes with Company in violation of Section 9; 5.1.1.4 Employee refuses or fails to carry out the duties which may have been assigned to him; or 5.1.1.5 Employee continues to violate any written Company policy after written notice by Company of the violation. Before the Board terminates Employee's employment for Cause, it shall provide Employee an opportunity, after reasonable notice, to appear before the Board. To terminate Employee for Cause, the Board must adopt a resolution terminating Employee by affirmative vote of at least 75% of its members, after having given Employee the opportunity to present his case to the Board. The Board's resolution must state that the Board finds in good faith that (i) Employee is guilty of conduct constituting Cause, specifying the details of such conduct, and (ii), for cause described in Section 5.1.1.5, Employee failed to cure such conduct within 30 days after receiving written notice from Company detailing such conduct. The effective date of Employee's termination for Cause shall be the date on which Employee receives a copy of the resolution adopted by the Board or such later date specified in the resolution. 5.1.2 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 payable pursuant to Section 4.1 in effect at the time of the termination, payable at the same interval as his salary at the time of the termination. -4- Employee shall have no obligation to mitigate damages by seeking other employment. 5.1.3 The right to severance pay under this Section 5.1.2 shall vest upon notice of termination and shall not be affected by Employee's subsequent death or disability. 5.1.3.1 Employee shall also be entitled to the following for 18 months or until Employee begins alternative employment: i Medical insurance, life insurance, and disability insurance benefits from Company comparable to such benefits provided with respect to Employee as of the date of the termination of this Agreement. ii Continued accrual of benefits under the Supplemental Executive Retirement Plan, if Employee is a Participant therein, as if Employee's employment had continued at the Base Monthly Rate. 5.2 By Employee. Subject to Section 7, 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. 5.3 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 Disability. In the event this Agreement terminates by Employee's death or Disability, Company shall pay Employee's pro-rata base salary under Section 4.1 through the termination date, and Employee shall be entitled to such continuing benefits as may be provided in any plan or by law, but Employee shall not be entitled to severance pay. 6. 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, 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. -5- 7. CHANGE IN CONTROL. 7.1 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, 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. 7.1.1 Triggering Event. For purposes of this Agreement, a Triggering Event shall be deemed to have occurred if: 7.1.1.1 there is a Change in Control; and 7.1.1.2 within 12 months after the Change in Control: -- (a) Company terminates this Agreement without Cause, or (b) (1) Company or 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 in the President and/or Chief Executive Officer of Tokheim Corporation or the principle managing corporation, (ii) a change of Employee's job authority or responsibilities, (iii) a reduction of Employee's base salary payable pursuant to Section 4.1 or a material reduction of aggregate benefits provided to Employee, or (iv) the relocation of Employee's primary office location to a distance greater than 50 miles from the current office location. 7.1.2 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 - 7.1.2.1 any "person" (as such term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time), other than a retirement plan sponsored by Company, becomes a beneficial owner, directly or indirectly, of securities of Company representing 20% or more of the combined voting power of Company's then outstanding securities; 7.1.2.2 less than 51% of the members of the Board are Incumbent Directors (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement): 7.1.2.3 any corporation or group of associated persons acting in concert, owns more than 25% of the outstanding shares of voting stock of Company coupled with or followed by the exercise of the voting power of such shares by the election of two or more directors of Company in any one election at the instance of such corporation or group; 7.1.2.4 Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which Company will be a constituent corporation, and either (i) Company is not the surviving or resulting corporation, or (ii) the transaction will result in less than 60% of the outstanding voting securities of the surviving or resulting entity being owned by former shareholders of Company; 7.1.2.5 Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person which is not an Affiliate (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement); 7.1.2.6 an event that triggers the exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the Triggering Event; or 7.1.2.7 the occurrence of another event that the Board designates a Change in Control. 7.2 Benefits. In the event this Agreement is terminated by a Triggering Event, Employee shall be entitled to the following: -7- 7.2.1 A lump sum severance payment equal to Employee's Base Monthly Rate multiplied by 24, payable within 30 days following termination of the Agreement. 7.2.2 Employee shall also be entitled to the following for 24 months or until Employee begins alternative employment. 7.2.2.1 Medical, life, accidental death and dismemberment, disability, pension, and split dollar life insurance benefits from Company comparable to such benefits with respect to Employee as of the date of the termination of this Agreement. 7.2.2.2 Continued accrual of benefits under the Supplemental Executive Retirement Plan as if Employee's employment had continued at the Base Monthly Rate. 7.3 Notwithstanding any provision of this Section 7 to the contrary, if Company reasonably determines that any payment or benefit provided pursuant to this Section is an "excess parachute payment" within the meaning of Code Section 280G or any successor thereof, Company may limit the total payment or benefit to Employee to the maximum amount payable by Company that would not constitute an "excess parachute payment." 7.4 Employee shall have the right to enforce his rights under this Section 7 in any court with jurisdiction over the parties and matter or pursuant to the arbitration procedures of Section 15. Company shall be responsible for Employee's reasonable expenses and attorneys' fees in any such court proceeding or arbitration and shall pay all costs of arbitration relating to Employee's enforcement of his rights under this Section. 8. 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. 8.1 Employee acknowledges his position with Company will expose Employee to certain Confidential Information and that Confidential Information constitutes a valuable, special, and unique asset of Company's business. Employee shall 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. -8- 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. 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 attorneys' 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 attorneys' fees from Employee. 8.3 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, tapes or video recordings, 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. 9. 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. 9.1 Employee hereby covenants and agrees that, for the greater of 18 months after termination of this Agreement, or such time as Employee is receiving any severance pay from Company (the "Restricted Period"), Employee shall 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 shall 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 activities under this Section is the entire world. 9.2 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. In the event Company obtains an injunction enjoining Employee from violating this provision, Company shall be entitled to recover all -9- costs incurred in connection with the injunction, including reasonable attorneys' fees. Company shall also be permitted to pursue any other available remedies available for such breach, including the recovery of damages and reasonable costs and attorneys' fees from Employee. 9.3 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. 10. FORFEITURE OF BENEFITS. If Employee breaches his obligations under either Section 8 or Section 9, Employee shall forfeit all future payments or compensation payable or provided by Company, except as required pursuant to the terms of a Plan. 11. 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. 12. 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. 13. WITHHOLDING. Company may withhold from any payments or benefits provided under this Agreement: 13.1 all federal, state, city, or other taxes as required pursuant to any law or governmental regulation or ruling; and 13.2 any amounts owed by Employee to Company for any reason at the time of the termination of this Agreement. 14. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by Employee without Company's prior written consent; provided, however, nothing in this Section 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, -10- 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. 15. 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: 15.1 Limitation of Section. The provisions of this Section are subject to and limited by the provisions of Sections 7.4, 8.2, and 9.2. Except to the extent elected by Employee under Section 7.4, or by the Company under Section 8.2 or 9.2, the provisions of this Section shall not apply to any action brought pursuant to Sections 7.4, 8.2, or 9.2. 15.2 Scope of Arbitration. The parties shall 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. 15.3 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. 15.4 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: 15.4.1 In the event of a dispute arising out of a termination of this Agreement, within six months of the date of termination; 15.4.2 In the event of a breach of Section 8 or 9, within four months after the full Board has actual knowledge of the breach; or 15.4.3 In the event of any other dispute, within three months after the dispute arises. -11- 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. 15.5 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 8 and 9 and for which either party may require provisional relief pending a decision on the merits by the arbitrator. 15.6 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. 15.7 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 ten business days within which they may identify a mutually agreeable arbitrator. After the ten 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. 15.8 Arbitrator Selection. In the event the parties cannot agree upon an arbitrator within ten 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. 15.9 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 -12- 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 confer 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 attorneys' fees and costs, including reasonable expenses associated with production of witnesses or proof, upon a finding that the other party (i) engaged in unreasonable delay, (ii) failed to comply with the arbitrator's discovery order, or (iii) 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. 15.10 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. 15.11 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. 15.12 The Hearing. At any hearing, the party bearing the burden of proof according to the governing substantive law shall present its evidence first. 15.13 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. 15.14 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- 15.15 Costs. Except as otherwise expressly provided in this Agreement, as to any disputes arising from the termination of the Agreement, each party shall be responsible for its costs, including attorneys' 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. 15.15.1 Notwithstanding anything herein to the contrary, Company shall be entitled to recover its reasonable costs and attorneys' fees incurred in enforcing the provisions of Section 8 or Section 9, provided that it prevails in such enforcement action. 15.15.2 Notwithstanding anything herein to the contrary, Employee shall be entitled to recover from the Company all costs and expenses incurred in enforcing his rights under this Agreement, including all expenses of the arbitration and attorneys' fees and costs, provided that he prevails in whole or in part in such enforcement action. 15.16 Remedies. 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. 15.17 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. 15.18 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. 15.19 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. 16. MISCELLANEOUS. 16.1 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- 16.2 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. 16.3 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. 16.4 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. 16.5 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. 16.6 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. 16.7 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. 16.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana. 16.9 Survival. The provisions and restrictions contained in Sections 8 and 9 shall survive the termination of this Agreement and Employee's employment with Company. 16.10 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. 16.11 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 -15- 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 NORMAN L. ROELKE, VICE PRESIDENT, SECRETARY & GENERAL COUNSEL P.O. BOX 360 FORT WAYNE, IN 46801 If to Employee: __________________________________________ __________________________________________ __________________________________________ __________________________________________ IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. TOKHEIM CORPORATION EMPLOYEE /s/ DOUGLAS K. PINNER /s/ JOHN A. NEGOVETICH ______________________________ _______________________________ DOUGLAS K. PINNER, CHAIRMAN JOHN A. NEGOVETICH PRESIDENT & CEO /s/ NORMAN L. ROELKE ______________________________ By: NORMAN L. ROELKE Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL -16- EX-10.8 7 EMPLYMNT AGRMNT DATED 7/15/99 - JACQUES ST-DENIS Exhibit 10.8 EMPLOYMENT AGREEMENT for CORPORATE OFFICER THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 15TH day of JULY, 1999, 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 are hereby acknowledged, the parties agree as follows: EMPLOYMENT. Company agrees to employ Employee, and Employee agrees to serve Company, on a full time basis in the capacity of EXECUTIVE VICE PRESIDENT, OPERATIONS, 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. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the following meanings, when capitalized: "Base Monthly Rate" means the sum of (i) Employee's monthly salary payable under Section 4.1 as of the determination date and (ii) one-twelfth of the average bonus paid to Employee for the two fiscal years of the Company preceding the determination date. For purposes of Section 5, the determination date shall be the date on which this Agreement terminates, and, for purposes of Section 7, the determination date shall be the date on which the Change in Control occurs. For purposes of clause (ii) of the first sentence of this definition, if Employee was not employed for the two full fiscal years immediately preceding the determination date, the amount under clause (ii) shall be one-twelfth of Employee's bonus for the fiscal year immediately preceding the determination date. "Board" means the Company's Board of Directors. "Cause" has the meaning specified in Section 5.1.1. "Change in Control" has the meaning specified in Section 7.1.2. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a duly authorized committee of the Board. "Confidential Information" has the meaning specified in Section 8. "Deferred Compensation Plan" means the Tokheim Corporation Deferred Compensation Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. "Disabled" or "Disability" means a mental or physical illness of Employee that prevents Employee from performing the essential functions of his position in a satisfactory manner and that the Board determines is likely to continue for at least six months or the remainder of Employee's life. The Board's determination of the existence or non-existence of Disability shall be made in good faith based on medical evidence acceptable to the Board. "Supplemental Executive Retirement Plan" means the Tokheim Corporation Supplemental Executive Retirement Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. 3. DUTIES. 3.1 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, a Committee, its Chief Executive Officer, or another executive officer designated by the Board or a Committee shall from time to time direct. Subject to the provisions of Section 7, Company retains the right to change the position, responsibilities, duties, or services to be performed by Employee in such manner as it deems appropriate. 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 the Board. 3.2 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 -2- 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 to apply for and obtain letters patent of the United States and foreign countries for any Inventions and to assign and convey to Company or its nominee the sole and exclusive right, title, and interest in and to any Inventions or 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. 4. COMPENSATION. During the term of this Agreement, Company shall compensate Employee for his services as follows: 4.1 Employee shall be entitled to an initial monthly base salary of $24,080. Employee's base salary shall be payable in semi-monthly or monthly installments in accordance with the policy of Company at the time of such payments. Employee's base salary shall be reviewed by the Board or a Committee at least annually and, subject to the provisions of Section 7, shall be subject to adjustment by the Board or such Committee. 4.2 Employee shall be eligible for such bonus program as may from time to time be made available and applicable to Employee by the Board or a Committee. 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, the Deferred Compensation Plan, the Supplemental Executive Retirement Plan, 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, as in effect from time to time. Except as provided in Section 7, nothing in this Agreement shall be deemed to alter the terms and conditions of any Plan or the policy of Company with respect to any Plan, 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 Plan. 4.3.1 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. -3- 5. TERMINATION. Either Company or Employee may terminate this Agreement upon providing written notice to the other. 5.1 By the Company. In the event this Agreement is terminated with Cause, 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: 5.1.1.1 Employee engages in any breach of fiduciary duty, act of dishonesty, or theft involving Company; 5.1.1.2 Employee is convicted of a felony; 5.1.1.3 Employee discloses Confidential Information in violation of Section 8 or competes with Company in violation of Section 9; 5.1.1.4 Employee refuses or fails to carry out the duties which may have been assigned to him; or 5.1.1.5 Employee continues to violate any written Company policy after written notice by Company of the violation. Before the Board terminates Employee's employment for Cause, it shall provide Employee an opportunity, after reasonable notice, to appear before the Board. To terminate Employee for Cause, the Board must adopt a resolution terminating Employee by affirmative vote of at least 75% of its members, after having given Employee the opportunity to present his case to the Board. The Board's resolution must state that the Board finds in good faith that (i) Employee is guilty of conduct constituting Cause, specifying the details of such conduct, and (ii), for cause described in Section 5.1.1.5, Employee failed to cure such conduct within 30 days after receiving written notice from Company detailing such conduct. The effective date of Employee's termination for Cause shall be the date on which Employee receives a copy of the resolution adopted by the Board or such later date specified in the resolution. 5.1.2 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 payable pursuant to Section 4.1 in effect at the time of the termination, payable at the same interval as his salary at the time of the termination. -4- Employee shall have no obligation to mitigate damages by seeking other employment. 5.1.3 The right to severance pay under this Section 5.1.2 shall vest upon notice of termination and shall not be affected by Employee's subsequent death or disability. 5.1.3.1 Employee shall also be entitled to the following for 18 months or until Employee begins alternative employment: i Medical insurance, life insurance, and disability insurance benefits from Company comparable to such benefits provided with respect to Employee as of the date of the termination of this Agreement. ii Continued accrual of benefits under the Supplemental Executive Retirement Plan, if Employee is a Participant therein, as if Employee's employment had continued at the Base Monthly Rate. 5.2 By Employee. Subject to Section 7, 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. 5.3 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 Disability. In the event this Agreement terminates by Employee's death or Disability, Company shall pay Employee's pro-rata base salary under Section 4.1 through the termination date, and Employee shall be entitled to such continuing benefits as may be provided in any plan or by law, but Employee shall not be entitled to severance pay. 6. 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, 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. -5- 7. CHANGE IN CONTROL. 7.1 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, 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. 7.1.1 Triggering Event. For purposes of this Agreement, a Triggering Event shall be deemed to have occurred if: 7.1.1.1 there is a Change in Control; and 7.1.1.2 within 12 months after the Change in Control: (a) Company terminates this Agreement without Cause, or (b) (1) Company or 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 in the President and/or Chief Executive Officer of Tokheim Corporation or the principle managing corporation, (ii) a change of Employee's job authority or responsibilities, (iii) a reduction of Employee's base salary payable pursuant to Section 4.1 or a material reduction of aggregate benefits provided to Employee, or (iv) the relocation of Employee's primary office location to a distance greater than 50 miles from the current office location. 7.1.2 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- 7.1.2.1 any "person" (as such term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time), other than a retirement plan sponsored by Company, becomes a beneficial owner, directly or indirectly, of securities of Company representing 20% or more of the combined voting power of Company's then outstanding securities; 7.1.2.2 less than 51% of the members of the Board are Incumbent Directors (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement): 7.1.2.3 any corporation or group of associated persons acting in concert, owns more than 25% of the outstanding shares of voting stock of Company coupled with or followed by the exercise of the voting power of such shares by the election of two or more directors of Company in any one election at the instance of such corporation or group; 7.1.2.4 Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which Company will be a constituent corporation, and either (i) Company is not the surviving or resulting corporation, or (ii) the transaction will result in less than 60% of the outstanding voting securities of the surviving or resulting entity being owned by former shareholders of Company; 7.1.2.5 Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person which is not an Affiliate (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement); 7.1.2.6 an event that triggers the exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the Triggering Event; or 7.1.2.7 the occurrence of another event that the Board designates a Change in Control. 7.2 Benefits. In the event this Agreement is terminated by a Triggering Event, Employee shall be entitled to the following: -7- 7.2.1 A lump sum severance payment equal to Employee's Base Monthly Rate multiplied by 24, payable within 30 days following termination of the Agreement. 7.2.2 Employee shall also be entitled to the following for 24 months or until Employee begins alternative employment. 7.2.2.1 Medical, life, accidental death and dismemberment, disability, pension, and split dollar life insurance benefits from Company comparable to such benefits with respect to Employee as of the date of the termination of this Agreement. 7.2.2.2 Continued accrual of benefits under the Supplemental Executive Retirement Plan as if Employee's employment had continued at the Base Monthly Rate. 7.3 Notwithstanding any provision of this Section 7 to the contrary, if Company reasonably determines that any payment or benefit provided pursuant to this Section is an "excess parachute payment" within the meaning of Code Section 280G or any successor thereof, Company may limit the total payment or benefit to Employee to the maximum amount payable by Company that would not constitute an "excess parachute payment." 7.4 Employee shall have the right to enforce his rights under this Section 7 in any court with jurisdiction over the parties and matter or pursuant to the arbitration procedures of Section 15. Company shall be responsible for Employee's reasonable expenses and attorneys' fees in any such court proceeding or arbitration and shall pay all costs of arbitration relating to Employee's enforcement of his rights under this Section. 8. 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. 8.1 Employee acknowledges his position with Company will expose Employee to certain Confidential Information and that Confidential Information constitutes a valuable, special, and unique asset of Company's business. Employee shall 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. -8- 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. 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 attorneys' 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 attorneys' fees from Employee. 8.3 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, tapes or video recordings, 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. 9. 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. 9.1 Employee hereby covenants and agrees that, for the greater of 18 months after termination of this Agreement, or such time as Employee is receiving any severance pay from Company (the "Restricted Period"), Employee shall 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 shall 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 activities under this Section is the entire world. 9.2 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. In the event Company obtains an injunction enjoining Employee from violating this provision, Company shall be entitled to recover all -9- costs incurred in connection with the injunction, including reasonable attorneys' fees. Company shall also be permitted to pursue any other available remedies available for such breach, including the recovery of damages and reasonable costs and attorneys' fees from Employee. 9.3 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. 10. FORFEITURE OF BENEFITS. If Employee breaches his obligations under either Section 8 or Section 9, Employee shall forfeit all future payments or compensation payable or provided by Company, except as required pursuant to the terms of a Plan. 11. 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. 12. 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. 13. WITHHOLDING. Company may withhold from any payments or benefits provided under this Agreement: 13.1 all federal, state, city, or other taxes as required pursuant to any law or governmental regulation or ruling; and 13.2 any amounts owed by Employee to Company for any reason at the time of the termination of this Agreement. 14. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by Employee without Company's prior written consent; provided, however, nothing in this Section 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, -10- 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. 15. 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: 15.1 Limitation of Section. The provisions of this Section are subject to and limited by the provisions of Sections 7.4, 8.2, and 9.2. Except to the extent elected by Employee under Section 7.4, or by the Company under Section 8.2 or 9.2, the provisions of this Section shall not apply to any action brought pursuant to Sections 7.4, 8.2, or 9.2. 15.2 Scope of Arbitration. The parties shall 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. 15.3 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. 15.4 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: 15.4.1 In the event of a dispute arising out of a termination of this Agreement, within six months of the date of termination; 15.4.2 In the event of a breach of Section 8 or 9, within four months after the full Board has actual knowledge of the breach; or 15.4.3 In the event of any other dispute, within three months after the dispute arises. -11- 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. 15.5 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 8 and 9 and for which either party may require provisional relief pending a decision on the merits by the arbitrator. 15.6 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. 15.7 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 ten business days within which they may identify a mutually agreeable arbitrator. After the ten 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. 15.8 Arbitrator Selection. In the event the parties cannot agree upon an arbitrator within ten 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. 15.9 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 -12- 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 confer 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 attorneys' fees and costs, including reasonable expenses associated with production of witnesses or proof, upon a finding that the other party (i) engaged in unreasonable delay, (ii) failed to comply with the arbitrator's discovery order, or (iii) 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. 15.10 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. 15.11 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. 15.12 The Hearing. At any hearing, the party bearing the burden of proof according to the governing substantive law shall present its evidence first. 15.13 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. 15.14 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- 15.15 Costs. Except as otherwise expressly provided in this Agreement, as to any disputes arising from the termination of the Agreement, each party shall be responsible for its costs, including attorneys' 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. 15.15.1 Notwithstanding anything herein to the contrary, Company shall be entitled to recover its reasonable costs and attorneys' fees incurred in enforcing the provisions of Section 8 or Section 9, provided that it prevails in such enforcement action. 15.15.2 Notwithstanding anything herein to the contrary, Employee shall be entitled to recover from the Company all costs and expenses incurred in enforcing his rights under this Agreement, including all expenses of the arbitration and attorneys' fees and costs, provided that he prevails in whole or in part in such enforcement action. 15.16 Remedies. 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. 15.17 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. 15.18. 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. 15.19 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. 16. MISCELLANEOUS. 16.1 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- 16.2 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. 16.3 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. 16.4 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. 16.5 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. 16.6 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. 16.7 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. 16.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana. 16.9 Survival. The provisions and restrictions contained in Sections 8 and 9 shall survive the termination of this Agreement and Employee's employment with Company. 16.10 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. 16.11 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 -15- 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 NORMAN L. ORELKE, VICE PRESIDENT, SECRETARY & GENERAL COUNSEL P.O. BOX 360 FORT WAYNE, IN 46801 If to Employee: ----------------------------------------- ----------------------------------------- ----------------------------------------- ----------------------------------------- IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. TOKHEIM CORPORATION EMPLOYEE /s/ Douglas K. Pinner /s/ Jacques St-Denis - --------------------------- --------------------------- DOUGLAS K. PINNER, CHAIRMAN JACQUES ST-DENIS PRESIDENT & CEO /s/ Norman L. Roelke -------------------------- By: NORMAN L. ROELKE Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL -16- EX-10.9 8 EMPLYMNT AGRMNT DATED 7/15/99 - NORMAN L. ROELKE Exhibit 10.9 EMPLOYMENT AGREEMENT for CORPORATE OFFICER THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 15TH day of JULY, 1999, 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 are hereby acknowledged, the parties agree as follows: EMPLOYMENT. Company agrees to employ Employee, and 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. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the following meanings, when capitalized: "Base Monthly Rate" means the sum of (i) Employee's monthly salary payable under Section 4.1 as of the determination date and (ii) one-twelfth of the average bonus paid to Employee for the two fiscal years of the Company preceding the determination date. For purposes of Section 5, the determination date shall be the date on which this Agreement terminates, and, for purposes of Section 7, the determination date shall be the date on which the Change in Control occurs. For purposes of clause (ii) of the first sentence of this definition, if Employee was not employed for the two full fiscal years immediately preceding the determination date, the amount under clause (ii) shall be one-twelfth of Employee's bonus for the fiscal year immediately preceding the determination date. "Board" means the Company's Board of Directors. "Cause" has the meaning specified in Section 5.1.1. "Change in Control" has the meaning specified in Section 7.1.2. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a duly authorized committee of the Board. "Confidential Information" has the meaning specified in Section 8. "Deferred Compensation Plan" means the Tokheim Corporation Deferred Compensation Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. "Disabled" or "Disability" means a mental or physical illness of Employee that prevents Employee from performing the essential functions of his position in a satisfactory manner and that the Board determines is likely to continue for at least six months or the remainder of Employee's life. The Board's determination of the existence or non-existence of Disability shall be made in good faith based on medical evidence acceptable to the Board. "Supplemental Executive Retirement Plan" means the Tokheim Corporation Supplemental Executive Retirement Plan, as in effect on the earlier of Executive's termination of employment or a Change in Control. 3. DUTIES. 3.1 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, a Committee, its Chief Executive Officer, or another executive officer designated by the Board or a Committee shall from time to time direct. Subject to the provisions of Section 7, Company retains the right to change the position, responsibilities, duties, or services to be performed by Employee in such manner as it deems appropriate. 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 the Board. 3.2 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 -2- 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 to apply for and obtain letters patent of the United States and foreign countries for any Inventions and to assign and convey to Company or its nominee the sole and exclusive right, title, and interest in and to any Inventions or 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. 4. COMPENSATION. During the term of this Agreement, Company shall compensate Employee for his services as follows: 4.1 Employee shall be entitled to an initial monthly base salary of $15,500. Employee's base salary shall be payable in semi-monthly or monthly installments in accordance with the policy of Company at the time of such payments. Employee's base salary shall be reviewed by the Board or a Committee at least annually and, subject to the provisions of Section 7, shall be subject to adjustment by the Board or such Committee. 4.2 Employee shall be eligible for such bonus program as may from time to time be made available and applicable to Employee by the Board or a Committee. 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, the Deferred Compensation Plan, the Supplemental Executive Retirement Plan, 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, as in effect from time to time. Except as provided in Section 7, nothing in this Agreement shall be deemed to alter the terms and conditions of any Plan or the policy of Company with respect to any Plan, 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 Plan. 4.3.1 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. -3- 5. TERMINATION. Either Company or Employee may terminate this Agreement upon providing written notice to the other. 5.1 By the Company. In the event this Agreement is terminated with Cause, 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: 5.1.1.1 Employee engages in any breach of fiduciary duty, act of dishonesty, or theft involving Company; 5.1.1.2 Employee is convicted of a felony; 5.1.1.3 Employee discloses Confidential Information in violation of Section 8 or competes with Company in violation of Section 9; 5.1.1.4 Employee refuses or fails to carry out the duties which may have been assigned to him; or 5.1.1.5 Employee continues to violate any written Company policy after written notice by Company of the violation. Before the Board terminates Employee's employment for Cause, it shall provide Employee an opportunity, after reasonable notice, to appear before the Board. To terminate Employee for Cause, the Board must adopt a resolution terminating Employee by affirmative vote of at least 75% of its members, after having given Employee the opportunity to present his case to the Board. The Board's resolution must state that the Board finds in good faith that (i) Employee is guilty of conduct constituting Cause, specifying the details of such conduct, and (ii), for cause described in Section 5.1.1.5, Employee failed to cure such conduct within 30 days after receiving written notice from Company detailing such conduct. The effective date of Employee's termination for Cause shall be the date on which Employee receives a copy of the resolution adopted by the Board or such later date specified in the resolution. 5.1.2 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 payable pursuant to Section 4.1 in effect at the time of the termination, payable at the same interval as his salary at the time of the termination. -4- Employee shall have no obligation to mitigate damages by seeking other employment. 5.1.3 The right to severance pay under this Section 5.1.2 shall vest upon notice of termination and shall not be affected by Employee's subsequent death or disability. 5.1.3.1 Employee shall also be entitled to the following for 18 months or until Employee begins alternative employment: i Medical insurance, life insurance, and disability insurance benefits from Company comparable to such benefits provided with respect to Employee as of the date of the termination of this Agreement. ii Continued accrual of benefits under the Supplemental Executive Retirement Plan, if Employee is a Participant therein, as if Employee's employment had continued at the Base Monthly Rate. 5.2 By Employee. Subject to Section 7, 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. 5.3 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 Disability. In the event this Agreement terminates by Employee's death or Disability, Company shall pay Employee's pro-rata base salary under Section 4.1 through the termination date, and Employee shall be entitled to such continuing benefits as may be provided in any plan or by law, but Employee shall not be entitled to severance pay. 6. 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, 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. -5- 7. CHANGE IN CONTROL. 7.1 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, 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. 7.1.1 Triggering Event. For purposes of this Agreement, a Triggering Event shall be deemed to have occurred if: 7.1.1.1 there is a Change in Control; and 7.1.1.2 within 12 months after the Change in Control: (a) Company terminates this Agreement without Cause, or (b) (1) Company or 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 in the President and/or Chief Executive Officer of Tokheim Corporation or the principle managing corporation, (ii) a change of Employee's job authority or responsibilities, (iii) a reduction of Employee's base salary payable pursuant to Section 4.1 or a material reduction of aggregate benefits provided to Employee, or (iv) the relocation of Employee's primary office location to a distance greater than 50 miles from the current office location. 7.1.2 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- 7.1.2.1 any "person" (as such term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time), other than a retirement plan sponsored by Company, becomes a beneficial owner, directly or indirectly, of securities of Company representing 20% or more of the combined voting power of Company's then outstanding securities; 7.1.2.2 less than 51% of the members of the Board are Incumbent Directors (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement): 7.1.2.3 any corporation or group of associated persons acting in concert, owns more than 25% of the outstanding shares of voting stock of Company coupled with or followed by the exercise of the voting power of such shares by the election of two or more directors of Company in any one election at the instance of such corporation or group; 7.1.2.4 Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which Company will be a constituent corporation, and either (i) Company is not the surviving or resulting corporation, or (ii) the transaction will result in less than 60% of the outstanding voting securities of the surviving or resulting entity being owned by former shareholders of Company; 7.1.2.5 Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person which is not an Affiliate (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement); 7.1.2.6 an event that triggers the exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the Triggering Event; or 7.1.2.7 the occurrence of another event that the Board designates a Change in Control. 7.2 Benefits. In the event this Agreement is terminated by a Triggering Event, Employee shall be entitled to the following: -7- 7.2.1 A lump sum severance payment equal to Employee's Base Monthly Rate multiplied by 24, payable within 30 days following termination of the Agreement. 7.2.2 Employee shall also be entitled to the following for 24 months or until Employee begins alternative employment. 7.2.2.1 Medical, life, accidental death and dismemberment, disability, pension, and split dollar life insurance benefits from Company comparable to such benefits with respect to Employee as of the date of the termination of this Agreement. 7.2.2.2 Continued accrual of benefits under the Supplemental Executive Retirement Plan as if Employee's employment had continued at the Base Monthly Rate. 7.3 Notwithstanding any provision of this Section 7 to the contrary, if Company reasonably determines that any payment or benefit provided pursuant to this Section is an "excess parachute payment" within the meaning of Code Section 280G or any successor thereof, Company may limit the total payment or benefit to Employee to the maximum amount payable by Company that would not constitute an "excess parachute payment." 7.4 Employee shall have the right to enforce his rights under this Section 7 in any court with jurisdiction over the parties and matter or pursuant to the arbitration procedures of Section 15. Company shall be responsible for Employee's reasonable expenses and attorneys' fees in any such court proceeding or arbitration and shall pay all costs of arbitration relating to Employee's enforcement of his rights under this Section. 8. 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. 8.1 Employee acknowledges his position with Company will expose Employee to certain Confidential Information and that Confidential Information constitutes a valuable, special, and unique asset of Company's business. Employee shall 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. -8- 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. 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 attorneys' 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 attorneys' fees from Employee. 8.3 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, tapes or video recordings, 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. 9. 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. 9.1 Employee hereby covenants and agrees that, for the greater of 18 months after termination of this Agreement, or such time as Employee is receiving any severance pay from Company (the "Restricted Period"), Employee shall 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 shall 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 activities under this Section is the entire world. 9.2 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. In the event Company obtains an injunction enjoining Employee from violating this provision, Company shall be entitled to recover all -9- costs incurred in connection with the injunction, including reasonable attorneys' fees. Company shall also be permitted to pursue any other available remedies available for such breach, including the recovery of damages and reasonable costs and attorneys' fees from Employee. 9.3 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. 10. FORFEITURE OF BENEFITS. If Employee breaches his obligations under either Section 8 or Section 9, Employee shall forfeit all future payments or compensation payable or provided by Company, except as required pursuant to the terms of a Plan. 11. 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. 12. 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. 13. WITHHOLDING. Company may withhold from any payments or benefits provided under this Agreement: 13.1 all federal, state, city, or other taxes as required pursuant to any law or governmental regulation or ruling; and 13.2 any amounts owed by Employee to Company for any reason at the time of the termination of this Agreement. 14. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by Employee without Company's prior written consent; provided, however, nothing in this Section 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, -10- 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. 15. 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: 15.1 Limitation of Section. The provisions of this Section are subject to and limited by the provisions of Sections 7.4, 8.2, and 9.2. Except to the extent elected by Employee under Section 7.4, or by the Company under Section 8.2 or 9.2, the provisions of this Section shall not apply to any action brought pursuant to Sections 7.4, 8.2, or 9.2. 15.2 Scope of Arbitration. The parties shall 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. 15.3 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. 15.4 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: 15.4.1 In the event of a dispute arising out of a termination of this Agreement, within six months of the date of termination; 15.4.2 In the event of a breach of Section 8 or 9, within four months after the full Board has actual knowledge of the breach; or 15.4.3 In the event of any other dispute, within three months after the dispute arises. -11- 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. 15.5 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 8 and 9 and for which either party may require provisional relief pending a decision on the merits by the arbitrator. 15.6 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. 15.7 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 ten business days within which they may identify a mutually agreeable arbitrator. After the ten 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. 15.8 Arbitrator Selection. In the event the parties cannot agree upon an arbitrator within ten 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. 15.9 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 -12- 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 confer 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 attorneys' fees and costs, including reasonable expenses associated with production of witnesses or proof, upon a finding that the other party (i) engaged in unreasonable delay, (ii) failed to comply with the arbitrator's discovery order, or (iii) 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. 15.10 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. 15.11 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. 15.12 The Hearing. At any hearing, the party bearing the burden of proof according to the governing substantive law shall present its evidence first. 15.13 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. 15.14 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- 15.15 Costs. Except as otherwise expressly provided in this Agreement, as to any disputes arising from the termination of the Agreement, each party shall be responsible for its costs, including attorneys' 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. 15.15.1 Notwithstanding anything herein to the contrary, Company shall be entitled to recover its reasonable costs and attorneys' fees incurred in enforcing the provisions of Section 8 or Section 9, provided that it prevails in such enforcement action. 15.15.2 Notwithstanding anything herein to the contrary, Employee shall be entitled to recover from the Company all costs and expenses incurred in enforcing his rights under this Agreement, including all expenses of the arbitration and attorneys' fees and costs, provided that he prevails in whole or in part in such enforcement action. 15.16 Remedies. 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. 15.17 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. 15.18 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. 15.19 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. 16. MISCELLANEOUS. 16.1 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- 16.2 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. 16.3 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. 16.4 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. 16.5 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. 16.6 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. 16.7 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. 16.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana. 16.9 Survival. The provisions and restrictions contained in Sections 8 and 9 shall survive the termination of this Agreement and Employee's employment with Company. 16.10 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. 16.11 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 -15- 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: IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. TOKHEIM CORPORATION EMPLOYEE /s/ DOUGLAS K. PINNER /s/ NORMAN L. ROELKE _____________________________ ____________________________ DOUGLAS K. PINNER, CHAIRMAN NORMAN L. ROELKE PRESIDENT & CEO /s/ TIMOTHY R. EASTOM ________________________________ By: TIMOTHY R. EASTOM Its: VICE PRESIDENT, HUMAN RESOURCES -16- EX-10.10 9 EMPLYMNT AGRMNT DATED 7/15/99 - SCOTT A. SWOGGER EXHIBIT 10.10 EMPLOYMENT AGREEMENT for CORPORATE OFFICER THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of this 15TH day of JULY, 1999, 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 are hereby acknowledged, the parties agree as follows: EMPLOYMENT. Company agrees to employ Employee, and Employee agrees to serve Company, on a full time basis in the capacity of PRESIDENT, TOKHEIM U.S., 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. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the following meanings, when capitalized: "Base Monthly Rate" means the sum of (i) Employee's monthly salary payable under Section 4.1 as of the determination date and (ii) one-twelfth of the average bonus paid to Employee for the two fiscal years of the Company preceding the determination date. For purposes of Section 5, the determination date shall be the date on which this Agreement terminates, and, for purposes of Section 7, the determination date shall be the date on which the Change in Control occurs. For purposes of clause (ii) of the first sentence of this definition, if Employee was not employed for the two full fiscal years immediately preceding the determination date, the amount under clause (ii) shall be one-twelfth of Employee's bonus for the fiscal year immediately preceding the determination date. "Board" means the Company's Board of Directors. "Cause" has the meaning specified in Section 5.1.1. "Change in Control" has the meaning specified in Section 7.1.2. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a duly authorized committee of the Board. "Confidential Information" has the meaning specified in Section 8. "Disabled" or "Disability" means a mental or physical illness of Employee that prevents Employee from performing the essential functions of his position in a satisfactory manner and that the Company determines is likely to continue for at least six months or the remainder of Employee's life. The Company's determination of the existence or non-existence of Disability shall be made in good faith based on medical evidence acceptable to the Company. 3. DUTIES. 3.1 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 Chief Executive Officer, or another executive officer designated by the Chief Executive Officer shall from time to time direct. Subject to the provisions of Section 7, Company retains the right to change the position, responsibilities, duties, or services to be performed by Employee in such manner as it deems appropriate. 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 the Chief Executive Officer or another executive officer designated by the Chief Executive Officer. 3.2 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 to apply for and obtain letters patent of the United States and foreign countries for any Inventions and to assign and convey to Company or its nominee the sole and exclusive right, title, and interest in and to any Inventions or 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, -2- 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. 4. COMPENSATION. During the term of this Agreement, Company shall compensate Employee for his services as follows: 4.1 Employee shall be entitled to an initial monthly base salary of $14,333. Employee's base salary shall be payable in semi-monthly or monthly installments in accordance with the policy of Company at the time of such payments. Employee's base salary shall be reviewed by the Company at least annually and, subject to the provisions of Section 7, shall be subject to adjustment by the Company. 4.2 Employee shall be eligible for such bonus program as may from time to time be made available and applicable to Employee by the Company. 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 applicable to Employee (collectively, "Plans"), consistent with the policies of Company and the terms and conditions of the Plans, as in effect from time to time. Except as provided in Section 7, nothing in this Agreement shall be deemed to alter the terms and conditions of any Plan or the policy of Company with respect to any Plan, 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 Plan. 4.3.1 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. 5. TERMINATION. Either Company or Employee may terminate this Agreement upon providing written notice to the other. 5.1 By the Company. In the event this Agreement is terminated with Cause, 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. -3- 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: 5.1.1.1 Employee engages in any breach of fiduciary duty, act of dishonesty, or theft involving Company; 5.1.1.2 Employee is convicted of a felony; 5.1.1.3 Employee discloses Confidential Information in violation of Section 8 or competes with Company in violation of Section 9; 5.1.1.4 Employee refuses or fails to carry out the duties which may have been assigned to him; or 5.1.1.5 Employee continues to violate any written Company policy after written notice by Company of the violation. 5.1.2 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 payable pursuant to Section 4.1 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. 5.1.3 The right to severance pay under this Section 5.1.2 shall vest upon notice of termination and shall not be affected by Employee's subsequent death or disability. 5.1.3.1 Employee shall also be entitled to the following for 12 months or until Employee begins alternative employment: i Medical insurance, life insurance, and disability insurance benefits from Company comparable to such benefits provided with respect to Employee as of the date of the termination of this Agreement. 5.2 By Employee. Subject to Section 7, 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- 5.3 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 Disability. In the event this Agreement terminates by Employee's death or Disability, Company shall pay Employee's pro-rata base salary under Section 4.1 through the termination date, and Employee shall be entitled to such continuing benefits as may be provided in any plan or by law, but Employee shall not be entitled to severance pay. 6. 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, 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. 7. CHANGE IN CONTROL. 7.1 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, 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. 7.1.1 Triggering Event. For purposes of this Agreement, a Triggering Event shall be deemed to have occurred if: 7.1.1.1 there is a Change in Control; and 7.1.1.2 within 12 months after the Change in Control: (a) Company terminates this Agreement without Cause, or (b) (1) Company or Employee terminates this Agreement, and (2) in combination with the Change in Control, there has been one or more of the following: -5- (i) a change in the President and/or Chief Executive Officer of Tokheim Corporation or the principle managing corporation. (ii) a change of Employee's job authority or responsibilities, (iii) a reduction of Employee's base salary payable pursuant to Section 4.1 or a material reduction of aggregate benefits provided to Employee, or (iv) the relocation of Employee's primary office location to a distance greater than 50 miles from the current office location. 7.1.2 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: 7.1.2.1 any "person" (as such term is used in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time), other than a retirement plan sponsored by Company, becomes a beneficial owner, directly or indirectly, of securities of Company representing 20% or more of the combined voting power of Company's then outstanding securities; 7.1.2.2 less than 51% of the members of the Board are Incumbent Directors (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement): 7.1.2.3 any corporation or group of associated persons acting in concert, owns more than 25% of the outstanding shares of voting stock of Company coupled with or followed by the exercise of the voting power of such shares by the election of two or more directors of Company in any one election at the instance of such corporation or group; 7.1.2.4 Company becomes a party to an agreement of merger, consolidation, or other reorganization pursuant to which Company will be a constituent corporation, and either (i) Company is not the surviving or resulting corporation, or (ii) the transaction will result -6- in less than 60% of the outstanding voting securities of the surviving or resulting entity being owned by former shareholders of Company; 7.1.2.5 Company becomes a party to an agreement providing for Company's sale or other disposition of all or substantially all of its assets to any individual, partnership, joint venture, association, trust, corporation, or other entity or person which is not an Affiliate (as defined in the Company's Deferred Compensation Plan, as in effect on the date of this Agreement); 7.1.2.6 an event that triggers the exercisability of rights under the Company's Shareholder Rights Plan, as in effect at the time of the Triggering Event; or 7.1.2.7 the occurrence of another event that the Board designates a Change in Control. 7.2 Benefits. In the event this Agreement is terminated by a Triggering Event, Employee shall be entitled to the following: 7.2.1 A lump sum severance payment equal to Employee's Base Monthly Rate multiplied by 18, payable within 30 days following termination of the Agreement. 7.2.2 Employee shall also be entitled to the following for 18 months or until Employee begins alternative employment. 7.2.2.1 Medical, life, accidental death and dismemberment, disability, pension, and split dollar life insurance benefits from Company comparable to such benefits with respect to Employee as of the date of the termination of this Agreement. 7.3 Notwithstanding any provision of this Section 7 to the contrary, if Company reasonably determines that any payment or benefit provided pursuant to this Section is an "excess parachute payment" within the meaning of Code Section 280G or any successor thereof, Company may limit the total payment or benefit to Employee to the maximum amount payable by Company that would not constitute an "excess parachute payment." 7.4 Employee shall have the right to enforce his rights under this Section 7 in any court with jurisdiction over the parties and matter or pursuant to the arbitration procedures of Section 15. Company shall be responsible for Employee's reasonable expenses and attorneys' fees in any such court proceeding or arbitration and shall pay all costs of arbitration relating to Employee's enforcement of his rights under this Section. -7- 8. 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. 8.1 Employee acknowledges his position with Company will expose Employee to certain Confidential Information and that Confidential Information constitutes a valuable, special, and unique asset of Company's business. Employee shall 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. 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. 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 attorneys' 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 attorneys' fees from Employee. 8.3 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, tapes or video recordings, 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. 9. 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. 9.1 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 shall not, directly or indirectly own, -8- 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 shall 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 activities under this Section is the entire world. 9.2 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. 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 attorneys' fees. Company shall also be permitted to pursue any other available remedies available for such breach, including the recovery of damages and reasonable costs and attorneys' fees from Employee. 9.3 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. 10. FORFEITURE OF BENEFITS. If Employee breaches his obligations under either Section 8 or Section 9, Employee shall forfeit all future payments or compensation payable or provided by Company, except as required pursuant to the terms of a Plan. 11. 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. 12. 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. -9- 13. WITHHOLDING. Company may withhold from any payments or benefits provided under this Agreement: 13.1 all federal, state, city, or other taxes as required pursuant to any law or governmental regulation or ruling; and 13.2 any amounts owed by Employee to Company for any reason at the time of the termination of this Agreement. 14. NO ASSIGNMENT OR ALIENATION. This Agreement shall not be assignable by Employee without Company's prior written consent; provided, however, nothing in this Section 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. 15. 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: 15.1 Limitation of Section. The provisions of this Section are subject to and limited by the provisions of Sections 7.4, 8.2, and 9.2. Except to the extent elected by Employee under Section 7.4, or by the Company under Section 8.2 or 9.2, the provisions of this Section shall not apply to any action brought pursuant to Sections 7.4, 8.2, or 9.2. 15.2 Scope of Arbitration. The parties shall 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 for the 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. 15.3 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. -10- 15.4 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: 15.4.1 In the event of a dispute arising out of a termination of this Agreement, within six months of the date of termination; 15.4.2 In the event of a breach of Section 8 or 9, within four months after the full Board has actual knowledge of the breach; or 15.4.3 In the event of any other dispute, within three 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. 15.5 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 8 and 9 and for which either party may require provisional relief pending a decision on the merits by the arbitrator. 15.6 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. 15.7 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 ten business days within which they may identify a mutually agreeable arbitrator. After the ten 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. -11- 15.8 Arbitrator Selection. In the event the parties cannot agree upon an arbitrator within ten 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. 15.9 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 confer 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 attorneys' fees and costs, including reasonable expenses associated with production of witnesses or proof, upon a finding that the other party (i) engaged in unreasonable delay, (ii) failed to comply with the arbitrator's discovery order, or (iii) 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. 15.10 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. -12- 15.11 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. 15.12 The Hearing. At any hearing, the party bearing the burden of proof according to the governing substantive law shall present its evidence first. 15.13 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. 15.14 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. 15.15 Costs. Except as otherwise expressly provided in this Agreement, as to any disputes arising from the termination of the Agreement, each party shall be responsible for its costs, including attorneys' 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. 15.15.1 Notwithstanding anything herein to the contrary, Company shall be entitled to recover its reasonable costs and attorneys' fees incurred in enforcing the provisions of Section 8 or Section 9, provided that it prevails in such enforcement action. 15.15.2 Notwithstanding anything herein to the contrary, Employee shall be entitled to recover from the Company all costs and expenses incurred in enforcing his rights under this Agreement, including all expenses of the arbitration and attorneys' fees and costs, provided that he prevails in whole or in part in such enforcement action. 15.16 Remedies. 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- 15.17 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. 15.18 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. 15.19 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. 16. MISCELLANEOUS. 16.1 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. 16.2 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. 16.3 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. 16.4 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. 16.5 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- 16.6 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. 16.7 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. 16.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana. 16.9 Survival. The provisions and restrictions contained in Sections 8 and 9 shall survive the termination of this Agreement and Employee's employment with Company. 16.10 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- 16.11 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 NORMAN L. ROELKE, VICE PRESIDENT, SECRETARY & GENERAL COUNSEL P.O. BOX 360 FORT WAYNE, IN 46801 If to Employee: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. TOKHEIM CORPORATION EMPLOYEE /s/ John A. Negovetich /s/ Scott Swogger - ---------------------------------- ------------------------------ JOHN A. NEGOVETICH, EXECUTIVE VICE SCOTT A. SWOGGER PRESIDENT FINANCE & ADMINISTRATION /s/ Norman L. Roelke - ---------------------------------- By: NORMAN L. ROELKE Its: VICE PRESIDENT, SECRETARY & GENERAL COUNSEL -16- EX-11.1 10 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS Tokheim Corporation and Subsidiaries Exhibit (11) - Earnings Per Share For the three and nine month periods ended August 31, 1999 and 1998. Basic earnings per share ("EPS") is calculated based on earnings (loss)available to common shareholders and the weighted average number of common stock shares outstanding during each period. Diluted EPS includes additional dilution from potential common stock equivalents such as stock issued in connection with the conversion of preferred stock or the exercise of stock options outstanding. The following table presents information necessary to calculate EPS for the three and nine month periods ended August 31, 1999 and 1998.
Basic Basic ------------------------ ------------------------ Three Months Ended Nine Months Ended ------------------------ ------------------------ August 31, August 31, August 31, August 31, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Shares outstanding (in thousands): Weighted average outstanding................... 12,670 12,631 12,667 10,925 ========= ========= ========== ========= Net earnings (loss): Before extraordinary item...................... $ (5,448) $ 2,929 $ (24,624) $ (249) Extraordinary loss on debt extinguishment...... -- -- (6,249) (4,965) --------- --------- ---------- --------- Net earnings (loss)............................ (5,448) 2,929 (30,873) (5,214) Preferred stock dividends...................... (376) (370) (1,124) (1,113) --------- --------- ----------- --------- Earnings (loss) applicable to common stock..... $ (5,824) $ 2,559 $ (31,997) $ (6,327) ========= ========= ========== ========= Net earnings (loss) per common share: Before extraordinary item...................... $ (0.46) $ 0.20 $ (2.03) $ (0.12) Extraordinary loss on debt extinguishment...... -- -- (0.49) (0.45) --------- --------- --------- --------- Net earnings (loss)............................ $ (0.46) $ 0.20 $ (2.52) $ (0.57) ========= ========= ========= =========
For financial reporting purposes, the loss per share, assuming full dilution, is considered to be the same as basic for periods when a net loss is reported since the effect of the common stock equivalents would be antidilutive.
Diluted Diluted ----------------------- ------------------------ Three Months Ended Nine Months Ended ----------------------- ------------------------ August 31, August 31, August 31, August 31, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Shares outstanding (in thousands): Weighted average outstanding..................... 12,670 12,631 12,667 10,925 Share equivalents................................ 826 224 403 254 Weighted conversion of preferred stock........... 794 763 794 763 ---------- ---------- ---------- ---------- Adjusted outstanding............................. 14,290 13,618 13,864 11,942 ========== ========== ========== ========== Net earnings (loss): Before extraordinary item........................ $ (5,448) $ 2,929 $ (24,624) $ (249) Extraordinary loss on debt extinguishment........ -- -- (6,249) (4,965) ---------- ---------- ---------- ---------- Net earnings (loss).............................. (5,448) 2,929 (30,873) (5,214) Incremental RSP expense.......................... (376) (370) (1,124) (1,113) ---------- ---------- ---------- ---------- Earnings (loss) applicable to common stock....... $ (5,824) $ 2,559 $ (31,997) $ (6,327) ========== ========== ========== ========== Net earnings (loss) per common share: Before extraordinary item........................ $ (0.41) $ 0.19 $ (1.86) $ (0.11) Extraordinary loss on debt extinguishment........ -- -- (0.45) (0.42) ---------- ---------- ---------- ---------- Net earnings (loss).............................. $ (0.41) $ 0.19 $ (2.31) $ (0.53) ========== ========== ========== =========
EX-27 11 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS NOV-30-1999 AUG-31-1999 20,985 0 160,175 9,295 105,137 293,925 155,960 80,065 705,020 267,556 202,298 14,815 0 89,843 (93,123) 705,020 512,374 512,374 393,999 393,999 6,115 0 37,944 (25,104) (480) (24,624) 0 (6,249) 0 (30,873) (2.52) (2.52) Represents gross inventory net of loss reserve. Represents gross PP&E. Represents common stock of $90,375 less treasury stock of $532. Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of $5,029 and treasury stock of $4,156. Represents accumulated deficit of ($51,291) less minimum pension liability of ($3,135) less foreign currency translation adjustments of ($58,697) plus common stock warrants of $20,000. Includes product development expenses and excludes depreciation and amortization.
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