-----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, Iz51K90w85LRE9cY6ZuTniaUlvceTm0fsBD/ecgGkEsxQn7wTfW5InBjFulq6sjd jkZgW3z0a/SreVsoXfZG/Q== 0000950131-02-002238.txt : 20020531 0000950131-02-002238.hdr.sgml : 20020531 20020531165248 ACCESSION NUMBER: 0000950131-02-002238 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20011130 FILED AS OF DATE: 20020531 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06018 FILM NUMBER: 02668132 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-K 1 d10k.txt FORM 10-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended November 30, 2001 Commission file number 1-6018 TOKHEIM CORPORATION (Exact name of registrant as specified in its charter) Indiana 35-0712500 (State of Incorporation) (I.R.S. Employer I.D. No.) 10501 Corporate Dr. 46845 Fort Wayne, Indiana (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (260) 470-4600 Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Title of each class Common Stock, no par value Series B Warrants Series C Warrants Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [X] No [_] As of April 22, 2002, 4,169,702 shares of voting common stock were outstanding. The aggregate market value of shares of common stock held by non-affiliates was $1.5 million (based on the last sale price of these shares on the Over the Counter market on such date). Documents Incorporated by Reference None. ================================================================================ TOKHEIM CORPORATION 2001 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS
Page ---- PART I Item 1. Business.............................................................................. 1 Item 2. Properties............................................................................ 8 Item 3. Legal Proceedings..................................................................... 8 Item 4. Submission of Matters to a Vote of Security Holders................................... 9 PART II Item 5. Market For The Registrant's Common Equity and Related Shareholder Matters............. 9 Item 6. Selected Financial Data............................................................... 11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 12 Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................ 21 Item 8. Financial Statements and Supplementary Data........................................... 22 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.. 61 PART III Item 10. Directors and Executive Officers of the Registrant.................................... 62 Item 11. Executive Compensation................................................................ 63 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters............................................................................. 67 Item 13. Certain Relationships and Related Transactions........................................ 68 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....................... 69
Certain statements contained in this Report, including, without limitation, statements containing the words "will," "may," "should," "continue," "intends," "believes," "anticipates," "expects" and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: increases in interest rates or the Company's cost of borrowing or a default under any material debt agreement; inability of the Company to successfully make and integrate acquisitions; inability to achieve anticipated cost savings or revenue growth; dependence on the retail petroleum industry; inability to forecast or achieve future sales levels or other operating results; fluctuations in exchange rates among various foreign currencies, principally among the dollar, the Euro, and the British pound; competition; inability to protect proprietary technology or to integrate new technologies quickly into new products; changes in business strategy or development plans; business disruptions; changes in general economic conditions or in economic conditions of particular markets in which the Company competes; unavailability of funds for capital expenditures or research and development; changes in customer spending levels and demand for new products; changes in governmental, environmental or other regulations, especially as they may affect the capital expenditures of the Company's customers; failure of the Company to comply with governmental regulations; loss of key members of management; adverse publicity; contingent liabilities and other claims asserted against the Company; loss of significant customers or suppliers; and other factors referenced in this Report. Certain of these factors are discussed in more detail elsewhere in this Report, including, without limitation, under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the consolidated financial statements and related notes. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. PART I Item 1. Business. (a) General: Tokheim Corporation is one of the world's largest manufacturers and servicers of electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (including point-of-sale ("POS") systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits. The Company provides products and services to customers in more than 80 countries. The Company is the largest supplier and servicer of petroleum dispensing systems in Europe, Africa, Canada, the Middle East, Eastern Europe and Mexico, and one of the largest in the United States. In addition to its products and services, the Company constructs, on a contractual basis, petrol stations. As used herein, "Tokheim" or "the Company" refers to Tokheim Corporation and its subsidiaries. The Company was organized as the Tokheim Manufacturing Company in Cedar Rapids, Iowa in 1901. In 1918, the Tokheim Manufacturing Company was purchased by a group of businessmen and was moved to Fort Wayne, Indiana, where it was incorporated in Indiana under the name Tokheim Oil Tank and Pump Company. The present name was adopted in December 1953. In September 1996, the Company acquired the petroleum dispenser business of Sofitam S.A. ("Sofitam") for $107.4 million less certain adjustments. Sofitam continues to have a leading market position in France and northern Africa, as well as a strong market position in southern Europe. In December 1997, the Company acquired Management Solutions, Inc. ("MSI") for $12.0 million. MSI develops and distributes retail automation systems (including POS software), primarily for the convenience store, petroleum dispensing and fast food service industries. 1 In March 1998, the Company completed the offering of 4,370,000 shares of its common stock (the "Common Stock Offering"). Net proceeds from the Common Stock Offering totaled approximately $67.7 million. The Company used approximately $39.4 million of the proceeds to redeem $35.0 million in aggregate principal amount of its 11.5% Senior Subordinated Notes due 2006 (the "11.5% Notes"). The remaining $28.3 million of proceeds was applied to reduce borrowings under the then-existing credit agreement and for general corporate purposes. In September 1998, the Company acquired the RPS Division (the "RPS Division" or "RPS") of Schlumberger Limited ("Schlumberger") for $330.0 million in cash, notes, and warrants, subject to certain post-closing adjustments. The information that follows should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included elsewhere in this Form 10-K. Unless otherwise noted, references to years in this Report are to the Company's fiscal years ended November 30. (b) Chapter 11 Reorganization: Tokheim (the "Predecessor Company") filed a Joint Prepackaged Plan of Reorganization (the "Plan") for the Company and its U.S. subsidiaries pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on August 28, 2000. The Bankruptcy Court confirmed the Company's Plan on October 4, 2000, and the Plan became effective as of October 20, 2000 (the "Effective Date"). See Note 2 to the consolidated financial statements for additional information. All discussion of events prior to the Effective Date refers to the Predecessor Company. The audited consolidated financial statements have been presented in accordance with the American Institute of Certified Public Accountants ("AICPA") Statement of Position 90-7 ("SOP 90-7"), Financial Reporting by Entities in Reorganization under the Bankruptcy Code, which provides guidance for financial reporting by entities that have filed voluntary petitions for relief under, and have reorganized in accordance with, the Bankruptcy Code. SOP 90-7 requires the identification of transactions and events that are directly associated with the reorganization of the Company. In accordance with SOP 90-7, the Company adopted "fresh start accounting" as of October 31, 2000, for accounting purposes, and the Company's emergence from its Chapter 11 proceeding resulted in a new reporting entity (the "Successor Company"). Under fresh start accounting, all assets and liabilities were recorded at their estimated fair values and the Company's accumulated deficit was eliminated. See Note 2 to the consolidated financial statements for a description of adjustments that reflect the discharge of the Company's senior and junior subordinated notes, related accrued interest and certain other impaired claims, fresh start adjustments and the Company's new capital structure. As further discussed in Note 2 to the consolidated financial statements, the Company operated its business as a debtor-in-possession under Chapter 11 and was subject to the jurisdiction and supervision of the Bankruptcy Court during the period from August 28, 2000 to October 20, 2000. Under Chapter 11, certain claims against the Company in existence prior to the filing of the petition for relief under the bankruptcy laws were stayed while the Company continued business operations as a debtor-in-possession. These claims were treated as "liabilities subject to compromise" and are more fully described in Note 2 to the consolidated financial statements. The financial statements have been prepared using accounting principles applicable to a going concern, which contemplate the realization of assets and the payment of liabilities in the ordinary course of business. (c) Financial Information About Industry Segments: In 2001, 2000, and 1999, the Company had only one reportable industry segment--the design, manufacture and servicing of petroleum dispensing systems. 2 (d) Narrative Description of Business: Principal Products and Services The Company's principal product offerings include petroleum dispensers and pumps, retail automation systems (including POS systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits and construction of petrol stations. Petroleum dispensers and pumps transfer fuel from storage tanks to vehicles or portable containers. Dispensers include meters that measure the quantity of fuel pumped and transfer the information to the calculators, which determine sales price based on the information received. Retail automation systems control in-store and at-the-pump fuel sales, control pump activation and credit card transactions, monitor inventory, transmit data to a central management system and perform other management functions. Pay-at-the-pump terminals automate customer payment at the pump with cash or credit/debit cards, in addition to facilitating use of loyalty cards by businesses. Upgrade kits permit owners to upgrade a dispenser's capabilities and functionality without incurring the cost of replacing the entire dispenser. The Company also offers services for its products through authorized service representatives ("ASRs") and Company-owned service facilities. In 2001, 2000 and 1999, the petroleum industry accounted for all of the Company's sales. Approximately 92%, 93% and 92% of the Company's sales in 2001, 2000, and 1999, respectively were derived from the sale of retail service station gasoline dispensers, parts, accessories, and service contracts. The remaining portion of the Company's sales is attributable to commercial customers. Markets The Company's products are sold primarily to retail service station operators and commercial customers characterized by the following categories: Major Oil Companies ("MOCs")--MOCs are typically large multinational companies that are vertically integrated with retail operations in developed and emerging markets. They sell "branded" products and typically have standard station formats, including dispenser design and proprietary credit card networks. National Oil Companies ("Nationals")--Nationals are non-U.S. oil companies that operate exclusively (or almost exclusively) in a single national market. Most Nationals are, or until recently were, state-owned. In recent years, a number of Nationals have been privatized or have relinquished their monopolies over the local retail petroleum markets. Independent Oil Companies ("Independents")--Independents are usually U.S. companies that sell "branded" products regionally rather than nationally. They typically have station and dispenser designs, which are standardized, similar to MOCs. Jobbers or Dealers--Jobbers are independent service station owners that operate under the brand of an MOC. A station owned by a jobber looks substantially the same as one owned by an MOC, selling MOC-branded products and using standard MOC station layouts. Most jobbers own multiple stations. Some jobbers work exclusively with one MOC, while others have multiple MOC partners. Moreover, jobbers can change their MOC affiliations within contractual limitations between the jobber and the MOC. Usually, jobbers are not required to purchase their petroleum dispensing equipment from the same manufacturers as their affiliated MOC. Convenience Store Stations--Convenience store stations are petroleum retailers who source over 50% of their sales from merchandise rather than from petroleum products. A significant number of convenience store stations are owned by MOCs. The Company's convenience store station customers include national and regional operators, as well as small, local businesses. Hypermarkets--The Company is the leading supplier to French hypermarkets. The hypermarket is a retailing format pioneered in France, with a growing presence in the rest of Europe. A hypermarket is a very 3 large commercial establishment that is a combination of a department store and a supermarket. Hypermarkets typically offer competitively priced, private label petroleum products to attract customers. In France, more than 50% of retail petroleum sales are through hypermarkets. The Company is gaining strength in this emerging market in the United States (U.S.). Commercial Customers--The commercial market is characterized by companies whose fuel consumption needs justify maintaining internal fueling capabilities, such as truck fleets and municipalities. Through its Gasboy International subsidiary, the Company is the leading supplier of fuel dispensing equipment to the U.S. commercial market. Sales and Distribution Products are distributed in the United States by a sales organization, which operates from national account offices, district sales offices, petroleum equipment firms, industrial suppliers and distributors in major cities across the United States. In areas outside the United States, product distribution is accomplished through foreign subsidiaries, distributors, and special sales representatives. In addition to the Company's widespread sales organization, there are more than 1,400 trained field service representatives acting as independent contractors, many of whom maintain a service parts inventory. The Company's customer service divisions maintain help desks, which are available 24 hours a day, 365 days a year, for immediate response to service needs in most markets. Additionally, the customer service divisions maintain a continuing program of service clinics for customers, ASRs and distributors, both in the field and at the Company's training centers. In recent years, MOCs and Nationals have been moving toward granting national, regional and global contracts or "tenders" and creating alliances with preferred suppliers. The Company believes that its global sales and services capabilities position it positively in response to this trend. New Products; Research and Development The Company continually seeks to enhance its existing product lines to offer increased functionality in new and existing products and has dedicated research and engineering resources to achieve this. The Company spent approximately $20.4 million, $21.6 million and $27.8 million in 2001, 2000 and 1999, respectively, to improve existing products and manufacturing methods, develop new products and pursue other applied research and development. The Company has also formed exclusive relationships with MOCs to develop products that meet their specific needs and with electronics companies to develop advanced technologies. During 2001, the Company introduced several new products to the retail market: The Axial Flow Meter ("AFM") was released to the market with a patented metering technology that the Company believes provides it with a competitive edge. The main advantages created by this new technology include superior accuracy, reliability and durability. In addition to having a state of the art mechanical design, the AFM incorporates a new micro controller-based sensor, which is the heart of the Company's Smart Sensor Architecture. The Company believes that this architecture is the first for optimizing the cost of overall fuel control electronics, while enhancing functionality with self-diagnostics, remote access, electronic calibration and automatic temperature compensation. The advent of the AFM moves the Company into a new generation of data communication, from the meter device to the counter. The Company introduced the Vidium multimedia product ("Vidium"), which is a media platform that can be linked to all standard media content providers in the market. The main objective of this product is to provide a 14" customer interface, which meets all environmental and safety requirements as defined for forecourt equipment. Vidium is capable of driving real-time movies and commercial presentations. The Company believes that this capability will bring about advertising opportunities through the display of commercials and special offers at the pump. Customer guidance in the form of presentations may also be provided through at-the-pump audio and video instructions. 4 The Company incorporated into its new products during the year iQ electronics ("iQ"). iQ is a set of advanced electronic components integrated into the dispenser controller board and the Qpoint Site Controller, which serves as a Windows CE intermediary between new dispensers and existing third party POS systems. iQ comprises real time central processing unit boards with an embedded Windows CE operating system, an Integrated 10.4" VGA Color Display with Touch Screen or ATM User Interface, Disk-On-Chip and expandable Compact Flash Storage, Universal Serial Bus Connectivity to peripherals and Transmission Control Protocol/Internet Protocol ("TCP/IP") communication via Ethernet and Phone Network Alliance. TCP/IP allows the transport of information from one computer or internet address to another. Included software applications provide the ability to display custom content on the dispenser, do remote upgrades of software, and perform automated diagnostics tasks. These components allow many onscreen opportunities for information, merchandising and cobranding, plug and play expansion for peripherals, and many other options which should reduce customer problems. The benefits of this technology are shown in increased merchandising on the pump islands and, in turn, increased numbers of customers in the stores. iQ also dramatically expands communications between the island, store, home office, content providers, help desks and ultimately, each customer. Capitalizing upon the WorldWide Calculator ("WWC T1") introduced in 2000, the Company introduced a fleet of new dispensers, including the Quantium 300T, with the WWC T1 single/twin configuration package, the Quantium 500T with the "high-end" WWC T1 and the Harmony with the "high-end" WWC T1, which also includes the I/2C serial bus interface to the AFM. The I2C is a new type of communication between dispensers which functions in a similar fashion to a local area network. / In 2001, the Company introduced the Quantium 300T, a mid-range product that offers diverse single and twin configurations. Within the Quantium 300T product matrix, there are many different product configurations, ranging from standard flow dispensers to high-speed or very high-speed dispensers. In order to offer coordinated functionality with the high-speed and very high-speed configurations, the Company introduced the master satellite concept, which is also offered as a Liquid Petroleum Gas Single/Twin ("LPG S/T") product. In addition, the Quantium 500T, a high-end Multi-Product Dispenser, was released. It provides built-in product configurations, which are fully adapted to market requirements. This product matrix includes a single or twin configuration with a Liquid Petroleum Gas hydraulic stack. To complement the existing Premier C model line, the Company introduced a completely new form factor dispenser, Harmony. The Harmony is based upon Tokheim's latest technology, AFM and iQ. For Europe, the Company released a version of the Harmony with the WWC T1, Outdoor Payment Terminal ("OPTium") and Vidium. A unique feature of the Harmony dispenser is that it is designed to wrap around the canape column that supports the awning over the pumps. The minimal size of the AFM allowed the designers to stay within the dimensional constraints for the total dispenser. The Company believes that the ability of this dispenser to run diverse applications adds another dimension of user functionality and provides the customer with a new vision of retail station management. An enhancement was also introduced to the previously existing Premier C model line. Radio Frequency Identification ("RFID") solutions were released in both the United States and Canada. RFID, originally test-marketed in 1999 by Tokheim, allows customers to automatically charge an account for fuel, from a microchip key ring tag or a microchip window tag. The United States version is compliant with the key chain RFID product of a major oil company and available as a field upgrade kit and factory option. The field upgrade kit is also available as an upgrade for the Premier B, 4000 and Centurion model dispensers. New products to the retail market also included new developments in the POS area: In 2001, the Company launched its development effort for the next generation POS product in the United States to eventually replace the current DOS-based CVN system, which is the original POS marketed for convenience stores. The new POS, called Focus, is based upon the Microsoft Windows NT operating system and 5 provides an upgrade path for current customers migrating from the CVN system. The Focus architecture is fully scalable, both in terms of software components and hardware platform options, to meet the needs of the mid-range market as well as the high-end market. The Focus architecture ranges from a low-end keyboard version to a full touch-screen system with unlimited terminals. The software includes a robust Quick-Serve Restaurant ("QSR") system integrated with the convenience store POS system. The QSR package in a stand-alone mode was installed in a beta site in September 2001. The first release of the fully integrated Focus POS including fuel control and credit is contracted to go to certification with Shell Oil in 2002. In addition to the development of the next-generation Focus system, customers initiated numerous development projects to enhance the existing CVN system during the year. The major projects include enhanced unattended functionality and reporting for better remote dial-in support and cash-back capabilities. The new unattended feature was installed in two beta sites with a major oil customer. Additional credit network capability was created including Buypass inside and outside to support grocery/hypermarket opportunities, the Chevron network to support new business opportunities with this customer, the ADS network for Shell in support of the roll-out of CVN, and the BP network in support of the Travel Centers of America. Also in development is a project known as CVN/NT, which involves the creation of a special layer of software allowing the DOS-based CVN POS application to run on a Windows NT platform. To facilitate its plans for installing new hardware in all of its locations, a current major customer is supporting this project. European POS developments include the release of Jupiter, Omega and FuelPOS products into the marketplace to handle the conversion of currencies tied to the Euro. In order to offer customers in France a more functional Euro upgrade, which the Company believes will also create opportunities for the installation of future applications, Tokheim introduced the Jupiter application, which is an open standard platform, running on a Microsoft operating system. The Omega Euro application was released in South and Central Europe for a similar purpose. The new FuelPOS Euro application, which operates on a Windows platform, was introduced in Northern Europe to offer customers in that region seamless conversion to the Euro. Also during the year 2001, the Company introduced several new products to the commercial market: The Company continued to expand its offerings of PC software packages based upon the Microsoft Windows ("Windows") operating systems. Tokheim introduced PC/1000 for Windows, which allows a PC to become the central user interface for the Company's Series 1000 fuel control systems. The software provides an interactive communication link between the customer's PC and their Series 1000 automated fuel control systems. Even while unattended, PC/1000 can automatically gather fuel transactions from its fuel sites. A custom report feature allows the customer to design his own transaction reports. The PC/CFN for Windows software package was also enhanced to include inventory reconciliation capabilities. A new major software release for the TopKat fuel control system makes this low-cost fuel management system attractive to a wider range of fleet sizes. The new software allows the system to handle more users and vehicles, control more pumps, and provide a new keypad-entry access method. The Company expanded its fleet dispenser product line with a new twin satellite dispenser model. The satellite dispenser is designed for high volume truck refueling operations and allows for both of a truck's saddle tanks to be refueled simultaneously. The new twin model provides the ability to provide satellite dispensing to two fueling lanes in a small footprint. Raw Materials The principal raw materials necessary to the Company's business are flat sheet steel, aluminum, copper tubing, iron castings and electronics, POS systems, and computer components, all of which are generally available through competitive sources of supply. The Company has not experienced any difficulty in obtaining these materials or products. 6 Patents and Licenses The Company has filed patent applications on its technologies with respect to its dispenser and POS technology. The Company also holds numerous other patents, none of which is considered essential to its overall operations. The Company entered into a license agreement, effective December 1, 1997, pursuant to which the Company paid a $3.0 million fixed royalty fee, paid in 12 quarterly installments, plus earned royalties for the use of a patented vapor recovery system and certain vapor recovery improvements, an electronic blender and a printed receipt severing device. The last quarterly installment was paid on January 30, 2001. The Company amended this license agreement by entering into a settlement agreement. The amended license agreement provides for royalty payments of $50--$200 per item, depending upon the licensed product involved. Additionally, in settlement of a patent infringement lawsuit, Tokheim will pay a royalty of either $25 or $50 per blender on any blenders utilizing licensed technology on or after November 1, 2000 to Gilbarco, Inc. ("Gilbarco"), formerly known as Marconi Commerce Systems. For more information, see Item 3, "Legal Proceedings." Seasonality In recent years, the Company's sales have not been subject to seasonal fluctuations. Working Capital Practices There are no special inventory requirements or credit terms extended to customers that could have a material adverse effect on the Company's working capital. Dependence on a Single Customer No single customer accounted for 10% or more of the Company's consolidated sales in 2001, 2000, or 1999. Backlog The Company's backlog of firm orders for equipment and service at the end of 2001 was approximately $79.0 million, compared to approximately $87.4 million at the end of 2000. The Company expects that the entire backlog will be filled in 2002. The Company believes that its backlog is not necessarily an indicator of sales during the forthcoming year because the average length of the backlog is relatively short. Factors affecting backlog levels include the timing of purchases by MOCs, announcements of price adjustments, sales promotions and production delays. The effect of these factors limits the usefulness of comparing backlogs in different periods. Competition The Company competes principally against, among others, Gilbarco, Dresser-Wayne, Scheidt & Bachmann GmbH and Tatsuno Corporation. Measured in terms of industry sales, the Company is one of the largest global manufacturers and servicers of petroleum dispensing equipment. The Company believes that the principal methods of competition include price, product quality, service, technology and the ability to provide products globally. The Company believes that a number of factors make it unique. These factors include the Company's: (1) global capabilities, which allow it to satisfy the complete petroleum dispensing equipment needs of customers throughout the world; (2) worldwide service network, which the Company believes is the largest in the industry; (3) strong customer relationships; (4) broad, technologically advanced product line; and (5) experienced management team. Several of the Company's current and potential future competitors are subsidiaries or divisions of much larger corporations, and thus, have significantly greater financial, technical and marketing resources than the Company. 7 Environmental Regulations The Company's operations and properties are subject to a variety of complex and stringent federal, state and local laws and regulations, including those governing the use, storage, handling, generation, treatment, emission, release, discharge and disposal of certain materials, substances and wastes, the remediation of contaminated soil and groundwater, and the health and safety of employees. The Company does not believe that compliance with any existing environmental regulations will result in material capital expenditures or have a material adverse effect on the Company's financial position or results of operations. Environmental regulations also tend to affect the Company's customers, resulting in increased spending and demand for the Company's products as they attempt to remain compliant. See Note 21 to the consolidated financial statements, "Contingent Liabilities." Employees As of March 31, 2002, the Company employed approximately 3,700 persons. (e) Financial Information About Foreign and Domestic Operations and Export Sales: Financial information about foreign and domestic operations and export sales for 2001, 2000, and 1999 is set forth in Note 17 to the consolidated financial statements. Item 2. Properties. The Company owns properties in: the United States (Illinois, Indiana and Pennsylvania), Canada, South Africa, Scotland, Germany, France, Italy, Belgium and the Netherlands. The Company leases properties in: France, Morocco, Switzerland, United Kingdom, Spain, Portugal, Tunisia, Senegal, Cameroon, United Arab Emirates, the Netherlands, Italy, Austria, Denmark, Czech Republic, Slovakia, Hungary, Germany, Poland and the United States (Colorado, Indiana, Virginia and Washington). Most of the Company's manufacturing operations are concentrated in the following locations: the United States (Indiana and Pennsylvania), France, Scotland, and South Africa. The Company believes that it has sufficient production capacity to meet demand over the next several years. The Company recently sold facilities in Vilvoorde, Belgium, Weilheim, Germany, and Atlanta, Georgia, as well as several parcels of unimproved land totaling approximately 11 acres, located in Fort Wayne, Indiana. Tokheim has entered into an agreement to sell a facility in Jasper, Tennessee and is holding for sale a 43-acre tract of unimproved land also located in Fort Wayne, Indiana. Item 3. Legal Proceedings. In September 1998, the Company acquired the RPS Division of Schlumberger. One of Tokheim's primary competitors, Gilbarco, formerly known as Marconi Commerce Systems, filed suit, claiming that a fuel dispenser manufactured by RPS violates its electronics design patent for fuel dispensers and its programmable multiple blender patent. Tokheim denied liability for any infringement of the patents and believed that this infringement breached Schlumberger's warranty regarding ownership of the technology. Gilbarco filed suit in federal court in North Carolina. Gilbarco named Schlumberger as a Defendant in this lawsuit and Schlumberger failed to answer. Gilbarco moved for a summary judgement against Schlumberger. A settlement agreement was entered into by and between Tokheim, Schlumberger and Gilbarco on or about October 18, 2001, regarding this matter. As part of the settlement, the Company entered into a technology license agreement providing for payment by the Company of royalties to Gilbarco and Gilbarco received shares of New Common Stock in accordance with the Plan. On October 18, 2000, Schlumberger filed a claim with the Bankruptcy Court with respect to the Company's acquisition of RPS. The claim, which was subsequently modified on January 12, 2001, is for various sums allegedly due to Schlumberger, totaling $10.0 million. The Predecessor Company believed that $6.5 million of the claim was valid and made a provision for that amount. Pursuant to the Plan, this provision was discharged as 8 an impaired claim and included in the calculation of extraordinary gain for the eleven months ended October 31, 2000. If the remaining amount of the claim were to be upheld, it would be treated similarly to the claims of other impaired unsecured creditors. The Company has not paid this claim as it has a counter-claim against Schlumberger for amounts due and alleged to be due to the Company on account of Schlumberger's alleged material breach of various representations and warranties and breaches of other provisions of the agreement entered in connection with the acquisition of RPS. The amount of the Company's counter-claim is substantially higher than the amount of Schlumberger's claim. The Company has commenced arbitration proceedings and has filed its Statement of Claim in the International Court of Arbitration to resolve the matter. On or about September 11, 1998, the Company entered into a Remarketing Agreement with Radiant Systems, Inc. Radiant has alleged that the Company did not satisfy certain of its commitments in the Remarketing Agreement. The parties have entered into a Master Agreement, Remarketer Agreement, and Manufacturing Agreement on March 28, 2002 that resolved the matter. In connection with these agreements, the Company has recorded a liability of approximately $2.0 million at November 30, 2001. The Company has received a subpoena from the SEC requiring submission of documentation related to the RPS acquisition that occurred in 1998 and the subsequent treatment of goodwill related to that acquisition by the Company on certain of its financial statements through the time of the Company's Chapter 11 bankruptcy during the fiscal year 2000. The Company is cooperating fully with the SEC in its response to that subpoena. As more fully described in Note 21 to the consolidated financial statements, "Contingent Liabilities," the Company is defending various claims and legal actions, including claims relating to the U.S. Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and other environmental laws, product liability and various contract and employee matters, some of which may be impaired in the bankruptcy proceeding. These legal actions primarily involve claims for damages arising out of the Company's manufacturing operations, product liability and various contractual and employment issues. Management believes that the outcome of such pending claims will not, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations, or cash flows. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market For The Registrant's Common Equity and Related Shareholder Matters. As of the Effective Date and pursuant to the Plan, all trading of the Company's Old Common Stock ceased when such Old Common Stock was cancelled. Also pursuant to the Plan, the Company authorized the issuance of 4,500,000 shares of New Common Stock, Series B Warrants to purchase 555,556 shares of New Common Stock at $30.00 per share and Series C Warrants to purchase an aggregate of 549,451 shares of New Common Stock at approximately $49.46 per share (each Series C Warrant entitles the holder to purchase 0.04326865 of a share of New Common Stock at a price of $2.14, thereby requiring a holder to exercise approximately 23.111 Series C Warrants at an aggregate exercise price of approximately $49.46 to purchase one share of New Common Stock). The New Common Stock, Series B Warrants and Series C Warrants are traded on the OTC Bulletin Board under the symbols "THMC", "THMCW" and "THMCZ", respectively. There was extremely limited trading volume of the New Common Stock and warrants from the Effective Date to November 30, 2000. As such, there was no significant public trading market and the ranges of closing prices are not presented for that period. As the OTC Bulletin Board is not an exchange, such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. 9 On July 3, 2000, the Company was notified that it would be delisted from the NYSE as of July 14, 2000, for failing to meet the continued listing criteria. The Company's Old Common Stock began trading on the OTC Bulletin Board on Friday July 14, 2000, under the symbol "TOKM". As a result of the Company's new capital structure implemented pursuant to the Plan sales prices for the Old Common Stock are not presented, as such prices are not comparable with the prices of the New Common Stock. The high and low sales prices for the New Common Stock for 2001 are set forth as follows: QUARTERLY HIGH-LOW SHARE PRICES
High Low ----- ---- Year Ended November 30, 2001 First Quarter............... 91/4 1/4 Second Quarter.............. 5 5 Third Quarter............... 9 1/2 5 Fourth Quarter.............. 4 3/4 3
The Company has not declared or paid dividends on its common stock in recent years. Currently, the Company does not anticipate paying any cash dividends on the New Common Stock in the foreseeable future. The post-confirmation credit agreement (the "New Credit Agreement") also restricts the payment of dividends. The number of New Common Stock shareholders of record on April 22, 2002, was approximately 19. 10 Item 6. Selected Financial Data. SELECTED FINANCIAL DATA (Amounts in thousands except dollars per share)
Successor Company Predecessor Company ------------------------ ----------------------------------------- November 1 December 1, Year Ended to 1999 to Year Ended November 30, November 30, November 30, October 31, ----------------------------- 2001 2000 2000 1999 1998(A) 1997 -- ------------ ------------ ----------- -------- --------- -------- Statement of Earnings Data: Net sales............................ $ 494,003 $ 54,648 $ 468,331 $693,932 $ 466,440 $385,469 Operating profit (loss) (B).......... (19,604) 3,831 (23,946) 15,730 14,769 20,645 Interest expense, net................ 37,363 2,921 51,040 51,450 19,257 16,451 Profit (loss) before income taxes (C) (55,459) 832 (336,028) (36,641) (2,698) 5,197 Profit (loss) (C).................... (56,754) 544 (335,801) (36,537) (3,744) 3,980 Preferred stock dividends............ 1,495 120 1,403 1,515 1,484 1,512 Profit (loss) applicable to common stock (C).......................... (58,249) 424 (337,204) (38,052) (5,228) 2,468 Profit (loss) per common share (C): Basic............................. $ (12.96) $ 0.09 * $ (3.01) $ (0.46) $ 0.31 Weighted average shares outstanding..................... 4,494 4,500 * 12,668 11,371 8,042 Diluted........................... $ (12.96) $ 0.08 * $ (3.01) $ (0.46) $ 0.27 Weighted average shares outstanding..................... 4,494 5,178 * 12,668 11,371 9,005 Balance Sheet Data (at year end): Working capital...................... $(215,139) $ 59,223 $ 57,769 $ 70,058 $ 96,473 $ 41,650 Property, plant and equipment, net... 62,067 72,024 70,678 74,550 76,227 42,535 Total assets......................... 458,069 461,861 454,328 690,802 771,816 290,619 Total debt (D)....................... 297,218 257,799 254,577 478,556 443,331 140,980 ESOP preferred stock, net............ 13,346 10,125 10,125 15,439 12,130 9,853 Common shareholders' equity (deficit) (E)...................... (20,036) 39,576 39,775 (22,830) 64,631 10,618 Other Data: Cash flows from operating activities. $ (7,022) $ 718 $ (18,182) $(13,726) $ 9,790 $ 21,202 Cash flows from investing activities. (6,334) (1,727) (6,194) (12,594) (124,414) (10,394) Cash flows from financing activities. 18,590 (21) 19,277 31,227 125,669 (11,795) Capital expenditures................. 9,654 1,799 7,309 17,909 14,548 11,154 Depreciation and amortization........ 34,023 3,086 22,360 25,869 13,136 9,232 Interest expense and preferred stock dividends.......................... 39,145 3,089 52,886 53,708 21,563 18,800 EBITDA (as defined) (F).............. 21,269 8,648 16,035 55,661 43,707 34,767
- -------- (A) Results for 1998 include eleven months of MSI operations and two months of RPS operations. (B) Operating profit (loss) equals net sales less cost of sales, selling, general and administrative expenses, depreciation and amortization, and merger and acquisition costs and other unusual items. (C) The amounts for the years ended November 30, 1999, 1998 and 1997 exclude $6,249, $23,924 and $1,886, respectively, for extraordinary loss on debt extinguishment. The amount for the eleven months ended October 31, 2000 excludes $246,294 for extraordinary gain on discharge of debt, related accrued interest and certain other impaired claims (see Note 2 to the consolidated financial statements). (D) Total debt includes all senior subordinated notes, junior subordinated notes, senior notes, long-term borrowings under the credit agreements and other credit facilities, the current portion of such borrowings, cash overdraft facilities and the guaranteed employee stock ownership plan obligation. 11 (E) Common shareholders' equity at November 30, 2001 and 2000 reflects the Company's new capital structure, including the cancellation of approximately 12,669,000 shares of Old Common Stock and the issuance of 4,474,489 and 4,500,000 shares of New Common Stock (see Note 13 to the consolidated financial statements), respectively, the elimination of the accumulated deficit and accumulated comprehensive loss and the resulting additional paid in capital, pursuant to the Plan (see Note 2 to the consolidated financial statements). Common shareholders' equity at November 30, 1999 and 1998 includes net proceeds of $67,724 from the Company's 1998 common stock offering and $20,000 of common stock warrants issued in connection with the RPS Division acquisition. (F) EBITDA represents profit (loss) from continuing operations before income taxes and extraordinary loss, net interest expense, depreciation and amortization, merger and acquisition costs and other unusual items, reorganization costs and minority interest. Management uses EBITDA as a financial indicator of the Company's ability to service debt, although the precise definition of EBITDA is subject to variation among companies. EBITDA should not be construed as an alternative to operating income or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information on the Company's results of operations and liquidity and capital resources. For additional information concerning the Company's historical cash flows, see the consolidated statement of cash flows included elsewhere herein. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollar amounts are stated in thousands except for share or per share data and where specifically otherwise designated.) General The Company emerged from its Chapter 11 proceeding and adopted "fresh start accounting" as of October 31, 2000 (see Note 2 to the consolidated financial statements). Therefore, the Company's financial statements after this date reflect a new reporting entity (the "Successor Company") and are not directly comparable to the financial statements of prior periods. The principal comparative differences between the twelve month periods ended November 30, 2001 and 2000 relate to the impact of the changes to the Company's capital structure, changes in indebtedness, and the revaluation of the Company's assets and liabilities to reflect the reorganization value at the Effective Date. The changes primarily affect depreciation and amortization expense and interest expense in the Company's results of operations after the Effective Date. However, for the purposes of comparative analysis, the following discussion of the operating results of the Company compares the operating results of the Successor Company for the fiscal year ended November 30, 2001 with the combined operating results of the Predecessor Company and the Successor Company for the twelve month period ended November 30, 2000. The operations (net sales, gross margin, and selling, general and administrative expenses) of the Predecessor and Successor Companies were substantially similar and the comparison of those items is meaningful to the understanding of the business. Management does not consider a comparison of the twelve month period ended November 30, 2001 to the eleven month period ended October 31, 2000 to be meaningful, nor is a discussion of the results of operations for the one month period ended November 30, 2000. While in recent years the Company's sales have not been subject to seasonal fluctuations, there can be significant month to month fluctuations. Results of Operations Net sales decreased 5.5% in 2001 to $494,003, compared to $522,979 in 2000. Sales for North America, excluding domestic export sales, were $132,079 in 2001 compared to $164,960 in 2000. International sales, including domestic export sales, were $361,924 in 2001 compared to $358,019 in 2000. Approximately $12,415 of the decrease in net sales in 2001 versus 2000 is the result of the impact of exchange rate fluctuations, primarily 12 the weakening of the Euro. The decrease in North American sales can be attributed to the continued reorganization of major oil companies and their associated reductions in capital spending. The instability of wholesale gasoline prices has created uncertainty in the retail petroleum industry, which also contributes to this trend. Net sales decreased 24.6% in 2000 to $522,979, compared to $693,932 in 1999. Sales for North America, excluding domestic export sales, were $164,960 in 2000 compared to $219,369 in 1999. International sales, including domestic export sales, were $358,019 in 2000 compared to $474,563 in 1999. Approximately $48,531 of the decrease in net sales in 2000 versus 1999 was the result of the impact of exchange rate fluctuations, primarily the weakening of the Euro. Also, the 1999 consolidation among major oil companies resulted in a substantial slowdown in market conditions and a reduction in their purchases of the Company's products. Finally, sales of POS equipment in 1999 were unusually high due to conversions for Y2K compliance. International sales by foreign subsidiaries and exports from the U.S. totaled approximately 73%, 68%, and 68%, of consolidated net sales in 2001, 2000, and 1999, respectively. Gross margin as a percentage of sales (defined as net sales less cost of sales, divided by net sales) was 20.9% in 2001, compared to 22.3% in 2000. This decrease is primarily attributable to the aforementioned reduction in sales volumes, as the associated fixed manufacturing costs comprise a greater percentage of cost of sales. Gross margin as a percentage of sales was 22.3% in 2000 compared to 23.3% in 1999. The decrease in gross margin for 2000 was attributable to the reduction in sales of higher margin POS equipment mentioned above and an increased level of service contract sales, which typically carry lower margins than dispenser and POS sales. Selling, general, and administrative expense ("SG&A") decreased to $83,622 in 2001 from $92,996 in 2000 as a result of cost reduction strategies implemented by the Company in reaction to market trends. This decrease is a result of successful efforts to address the Company's cost issues, as well as increases in productivity. As a percentage of net sales, SG&A was 16.9% in 2001 compared to 17.8% in 2000. Selling, general, and administrative expense decreased to $92,996 in 2000 from $105,349 in 1999 as a result of cost reduction strategies implemented by the Company to mitigate the impact of the sales decline and cost reductions implemented following the acquisition of the RPS Division. As a percentage of net sales, SG&A was 17.8% in 2000 compared to 15.2% in 1999. Depreciation and amortization expense increased in 2001 to $34,023 from $25,446 in 2000. For the reasons previously stated, depreciation and amortization expense for 2001 is not directly comparable to 2000. The increase is primarily attributable to increased amortization expense for reorganization value in excess of amounts allocable to identifiable assets. Depreciation and amortization expense decreased slightly in 2000 to $25,446 from $25,869 in 1999. This decrease is due primarily to the closure of plants and sales of assets as part of a manufacturing reorganization. For the reasons previously stated, depreciation and amortization expense for 2000 is not directly comparable to 1999. Depreciation and amortization expense for the one month period ended November 30, 2000 was $3,086, as compared to a monthly average of $2,033 for the eleven month period ended October 31, 2000. Merger and acquisition costs and other unusual items for 2001 were $5,255, compared to $18,358 in 2000. This decrease relates primarily to litigation settlement payment obligations incurred relating to the MSI and Gilbarco agreements in 2000 in the amount of $9,729. No such costs were incurred in 2001. The Company also incurred non-capitalizable costs related to the post-confirmation credit agreement during 2000 for approximately $1,885. The net other costs associated with the restructuring plan, including severance related to involuntary terminations, warranty and product-related costs and lease cancellation and facility costs decreased in 2001 by approximately $1,489. (See Note 5 to the consolidated financial statements.) 13 Merger and acquisition costs and other unusual items for 2000 were $18,358, compared to $14,895 in 1999. This increase was primarily attributable to the recording of the payment obligations pursuant to the MSI settlement, as discussed below in Liquidity and Capital Resources. Net interest expense for 2001 decreased to $37,363 from $53,961 in 2000. The decrease was the result of reduced debt levels related to the implementation of the Plan. For the reasons previously stated, net interest expense for 2001 is not directly comparable to 2000. Net interest expense for the one month period ended November 30, 2000 was $2,921, as compared to a monthly average of $4,640 for the eleven month period ended October 31, 2000. Net interest expense for 2000 increased to $53,961 from $51,450 in 1999. The increase was the result of increased borrowings at higher interest rates and increased amortization of fees associated with amending the Company's credit agreements. For the reasons previously stated, net interest expense for 2000 is not directly comparable to 1999. The Company recorded a net foreign currency exchange gain of $1,053 in 2001 compared to $290 in 2000. Foreign currency gains were reported from the completion of restructuring accruals. The Company recorded a net foreign currency exchange gain of $290 in 2000 compared to a net foreign currency exchange loss of $2,148 in 1999. The primary reason for this gain was more effective management of the Company's exposure to fluctuations in the Euro and other foreign currency exchange rates relative to the dollar. The Company recorded reorganization costs totaling $262,045 in 2000 directly relating to its Chapter 11 proceeding. Legal and professional fees amounted to $13,319 and bank fees relating to the post-petition credit agreement were $1,515. In addition, the Company recorded fresh start accounting adjustments totaling $247,211. The major components of the fresh start accounting adjustments were $249,089 to write off goodwill, primarily related to the RPS and Sofitam acquisitions and $5,510 to increase pension, postretirement benefits and other liabilities. These costs were reduced by a $7,388 write up of property, plant and equipment and inventory values at October 31, 2000. Income tax expense for 2001 was $1,295 compared to expense of $61 in 2000 and a benefit of $104 in 1999. Profitable subsidiaries, primarily in Europe, accounted for this expense in 2001. In 2000, as a result of the Chapter 11 proceeding, the Company recorded an extraordinary gain of $246,294, being the discharge of senior and junior subordinated notes, related accrued interest and certain other impaired claims against the Company. In 1999, the Company incurred an extraordinary loss of $6,249 related to the redemption of $192,500 of Senior Notes and Senior Subordinated Seller Notes. See further discussion under "Liquidity and Capital Resources." Because of the substantial changes to the capital structure of the Company resulting from the Chapter 11 proceeding, profit and loss per common share was not calculated for the year ending November 30, 2000. Thus, a comparison of profit and loss per common share for the years ended November 30, 2001, 2000 and 1999 is not meaningful. On January 1, 1999, certain member countries of the European Union established fixed conversion rates between their existing currencies and the European Union's common currency, the Euro. The Company conducts business in member countries. The transition period for the introduction of the Euro is from January 1, 1999 to June 30, 2002. The Company is continuing to address the issues involved with the introduction of the Euro. The more important issues facing the Company include: converting information technology systems, reassessing 14 currency exchange rate risk, negotiating and amending licensing agreements and contracts, product pricing, and processing tax and accounting records. Conversion to the Euro has reduced the Company's intra-European exposure to changes in foreign currency exchange rates. Based upon the Company's plans and progress to date, the Company believes that use of the Euro will not have a significant impact on the manner in which it conducts its business affairs and processes its business and accounting records. However, there can be no certainty that such plans will be implemented successfully or that external factors will not have an adverse effect on the Company's operations. Any costs of compliance associated with the adoption of the Euro have been expensed as incurred and the Company does not expect that any future costs will be material to its financial condition, results of operations or cash flows. Inflation has not had a significant impact on the Company's results of operations. The Company is a party to various legal matters, and its operations are subject to federal, state, and local environmental laws and regulations. For further details, see Note 21 to the consolidated financial statements, "Contingent Liabilities." Liquidity and Capital Resources The Company exited from bankruptcy in October 2000. The debt and equity structure of the Successor Company was based upon a strategic plan. A major assumption of this strategic plan was that the depressed United States market in which the Predecessor Company had been operating in recent years would return to prior growth levels. This assumption in the plan has not been realized. In fact, the United States has continued to experience declines in the overall market. The results that have been achieved demonstrated to the Company that a restructuring of its capital structure is necessary. Toward this end, the Company initiated discussions with its lenders regarding potential restructuring options. Though these discussions have not yet resulted in an arrangement, the Company and its lenders are continuing to explore alternatives. The Company is also exploring refinancing and other strategic alternatives. The Company does not believe that this process will impact its day-to-day operations. While the Company believes that a transaction may be possible, there can be no assurance that a transaction will be achieved. As more fully discussed in Note 7 to the consolidated financial statements, "Notes Payable, Bank Credit Agreement," the Company violated certain covenants during the year ended November 30, 2001. The Company obtained waivers from the bank group related to these violations. The Company's financial statements for the year ended November 30, 2001 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Net sales have declined for three consecutive years and the Company has incurred a net loss for the year ended November 30, 2001 of $56,754. In addition, the Company has a negative working capital as of November 30, 2001 of $215,139 as a result of the classification of the outstanding bank debt as current. Further, the Company expects to incur additional net losses in fiscal 2002. Management believes the Company has sufficient resources to maintain its operations until at least November 30, 2002. However, without restructuring of the credit facility or other changes in the Company's operations, estimated cash availability will not be sufficient to fund the scheduled principal and interest payment on the Special Loan due November 30, 2002. Also, with the Company's recent history of declining sales and operating losses and forecasted future losses, the Company may not be able to attract equity capital in the public markets to strengthen its financial condition. Given these conditions, there can also be no assurances that the Company will meet its financial loan covenants in the future or that the bank group will not exercise its rights within the loan agreement to accelerate maturities on substantially all of the Company's debt. These matters raise substantial doubt about the Company's ability to continue as a going concern. 15 Since joining the Company in September 2001, the new Chief Executive Officer, along with the rest of the Company's management team, has developed a broad strategic and operational plan that is expected to improve operating results for fiscal 2002 and beyond. The plan refocuses Tokheim's sales efforts on growth through different channels and geographic segments, use of recent technology developments for creation of successful products, global integration of engineering and software development activities to reduce redundancy and reduction of excess physical capacity. The plan includes the following major initiatives: . Aggressively seek to penetrate new high growth geographical markets, specifically Asia and Latin America; . Increase market share from major oil companies by attracting business through new customers (such as the acceptance by Shell Oil Company of the Company's tender offer in January 2002); . Increase market share of sales to hypermarkets; and . Reduce costs through standardization of product offerings worldwide and globalization of purchasing. To achieve these goals, the plan encompasses a shift from a geographical focus to a product line focus. The new organization divides the Company's worldwide product portfolio into three distinct business units: the Sales and Service Unit, the Forecourt Products Business Unit and the Systems Business Unit. Each business unit will focus on a specific product line on a global scale allowing use of technologies and components across marketplaces and elimination of redundant designs. The Sales and Service Unit will allow the Company to allocate the necessary resources to improving customer service and selling processes, which is expected to increase market share. The Forecourt Products Business unit will focus on reducing costs through the creation of global components and continuous improvement in the production area. The Systems Business Unit will ensure that research and development efforts for dispensers and software are maximized by eliminating duplication of work. The Company believes that these operating improvements will facilitate its ability to achieve a significant portion of planned cost savings, while increasing revenues. Execution of this plan since November 30, 2001 is evidenced by acceptance of Tokheim's tender offer by Shell Oil Company United States and the announcement of the closure of certain facilities. Tokheim is also strategically positioned through its international hypermarket experience to offer products for this emerging market in the United States. The Company believes that cash generated by the successful implementation of its operating plan coupled with a negotiated restructuring of its capital structure will provide sufficient funds to meet its near term cash needs. There can be no assurance, however, that the Company will achieve planned operating results or obtain the requisite capital restructuring, which will enable it to meet its obligations through November 30, 2002. Cash used in operations for 2001 was $7,022 compared to $17,464 in 2000. This decrease is primarily attributable to a significant decrease in the net loss for the period, to $56,754 in 2001 from $88,963 in 2000. The primary sources of cash in 2001 were increases in accounts payable and accrued expenses of $6,318 and $4,610, respectively. In 2001, $17,550 of the $37,650, or 46.6%, of gross interest expense was attributable to payment in kind interest, with no cash impact. In contrast, payment in kind interest accounted for only $5,997 of the $54,452, or 11.0%, of gross interest expense in 2000. Cash used in operations for 2000 was $17,464 compared to $13,726 in 1999. The primary uses of cash in 2000 were the payment of approximately $8,900 for professional and bank fees in relation to the Chapter 11 proceeding, approximately $13,800 of restructuring expenses incurred as part of the integration and rationalization of the RPS Division, and $34,791 for interest payments. Cash flow was improved by a reduction of $42,877 in accounts receivable and $8,021 in inventories, both mainly due to the reduction in sales revenues and the Company's continued focus on control of working capital. Accounts payable decreased by $17,956 from the unusually high level of 1999. 16 The Company's capital expenditures amounted to $9,654 in 2001, $9,108 in 2000 and $17,909 in 1999. The increase in 2001 derives from capitalization of leases relating to the replacement of service vehicles throughout Europe. The reduction in 2000 reflects a decrease in investments to maintenance levels due to the Company's cash position prior to the Chapter 11 restructuring. At November 30, 2001 and 2000, no significant contractual commitments existed for future capital expenditures. The Company expects to commit approximately $11,700 for capital expenditures during 2002. The Reorganization and New Credit Agreement The Company's Plan became effective as of October 20, 2000. Under the Plan: . the holders of $190,438 of senior subordinated notes and other unsecured creditors were eligible to receive 4,410,000 shares of New Common Stock representing 88% of the equity value of the Successor Company; . the holders of $49,195 of junior subordinated notes received 90,000 shares of New Common Stock representing 2% of the equity value of the reorganized Company, as well as Series B Warrants to acquire 555,556 shares of New Common Stock at an exercise price of $30.00 per share; and . members of the bank group received Series A Warrants to acquire 678,334 shares of New Common Stock at an exercise price of $0.01 per share and Series A Preferred Stock with a liquidation preference of $100 and dividends at an annual rate of 16%. The Company also entered into the New Credit Agreement as of the Effective Date. A portion of the proceeds from these facilities was used to repay all outstanding borrowings under the Company's bank loans existing as of the Effective Date. The New Credit Agreement, with amounts outstanding of $279,127 and $246,999 at November 30, 2001 and 2000, respectively, consists of: . Tranche A Term Loan in the amounts of $33,087 and $36,540 at November 30, 2001 and 2000, respectively, due in September 2005; . Tranche B Term Loan in the amounts of $100,668 and $100,637 at November 30, 2001 and 2000, respectively, due in September 2005; . Special Loan in the amounts of $119,372 and $101,822 at November 30, 2001 and 2000, respectively, including payment-in-kind interest, payable in four annual installments of $25,000 plus accrued interest thereon, commencing in November 2002; and . Revolving credit facility in an amended amount of $35,831 at November 31, 2001 from an original amount of $47,765 at November 30, 2000 due in September 2005, of which $26,000 and $8,000 was outstanding at November 30, 2001 and 2000, respectively. The Company also has outstanding letters of credit at November 30, 2001 and 2000 of $2,002 and $534, respectively. Interest rates on the New Credit Agreement are as follows: . the Tranche A and Tranche B Term Loans bear interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 3.5% in the case of U.S. dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) (as defined in the New Credit Agreement) plus 5% in the case of Euro denominated loans; . the Special Loan bears interest at the rate of 16%, which is capitalized as part of the principal balance in lieu of being paid in cash; . the revolving credit facility bears interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 2.5% in the case of U.S. dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) (as defined in the New Credit Agreement) plus 4% in the case of Euro denominated loans. 17 The valuation for new warrants issued pursuant to the Plan was determined by the Company with the assistance of financial advisors. The Series A Warrants were valued at $6,777 and were recorded as warrants in shareholders' equity and as debt discount, which is being amortized over the life of the New Credit Agreement. The Series B Warrants and the Series C Warrants were valued at $1,422 and recorded as warrants in shareholders' equity as part of the reorganization. On March 14, 2001, the Company amended its New Credit Agreement. Among the items amended were the distribution of the facility between the Tranche A and Tranche B term loans to reflect new balances of $36,509 and $100,668, respectively, and adjustments to covenant levels. At May 31, 2001, the Company was in violation of two of its financial covenants under the New Credit Agreement. The bank group permanently waived this violation and modified, or suspended, the requirement for compliance with certain financial covenants relating to the remainder of fiscal 2001 and the first three quarters of fiscal 2002. The Company agreed to reduce the total availability under the revolving credit facility from $47,765 to $35,000, with the ability to increase by meeting certain future financial criteria. On October 31, 2001 and February 8, 2002, the Company amended its New Credit Agreement to allow additional investment by the Company in its subsidiary in the United Kingdom and investment by the Company's wholly-owned subsidiary, Tokheim South Africa (Pty) Ltd. in a joint venture. As of November 30, 2001 and at February 28, 2002, the Company was in violation of certain covenants under the New Credit Agreement as amended. Effective February 28, 2002, the Company entered into a Fifth Amendment Waiver and Consent. The bank group waived the November 30, 2001 violations and waived through April 15, 2002 the minimum EBITDA requirements for the quarter ended February 28, 2002 and the requirement to file the annual audit report. In addition, a change in the distribution of mandatory prepayments between Tranche A and Tranche B term loans was included. The April 15, 2002 deadline was subsequently extended to June 15, 2002, as part of a new waiver entered into with the bank group. As part of this new waiver the Company is required to execute with the bank group by May 22, 2002 a binding term sheet that sets forth the material terms of a plan of recapitalization and restructuring of the Company's balance sheet. While the Company is in compliance with the adjusted covenants, its ability to remain in compliance in the future may be affected by events beyond its control. Therefore, there can be no assurance that the Company will satisfy such financial covenants or that it will be able to obtain amendments or waivers to the New Credit Agreement, if necessary, to avoid default in the future. In the event of default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable immediately. Under the terms of the RPS Division purchase agreement, the Company is to reimburse Schlumberger for cash (net of adjustments) that remained in the RPS Division on the effective date of the acquisition of the RPS Division, which amounted to $6,507. The Company has filed a claim against Schlumberger for breaches of certain representations and warranties that were made in the purchase agreement related to the acquisition of the RPS Division. The amount of the claim exceeds the cash due to Schlumberger. (See Note 21 to the consolidated financial statements.) As part of the purchase price of the RPS Division, the Company provided for certain costs it expected to incur to close down redundant operations in connection with the reorganization and rationalization of the RPS Division's operations. The Company incurred $932 of such expenditures in 2001 and $3,164 in 2000. These amounts do not include costs associated with the consolidation of previously existing Tokheim subsidiaries, which will be expensed as incurred, nor do these costs benefit future periods. For additional information, see Note 4 to the consolidated financial statements, "Restructuring Charges." 18 As part of the MSI acquisition, the Company was obligated to make contingent payments of up to $13,200 through 2000 based on MSI's performance. The Company was not required to and did not make any performance payments under the purchase agreement. The former stockholders of MSI commenced arbitration proceedings against the Company, which were settled in conjunction with the Chapter 11 proceeding. Critical Accounting Policies Tokheim's discussion and analysis of its financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Tokheim to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Tokheim evaluates its estimates, including those related to allowances for doubtful accounts, inventories, recoverability of long-lived assets, intangible assets, income taxes, warranty obligations, pensions and other postretirement benefits, and contingencies in litigation. Tokheim bases its estimates on historical experiences and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily ascertainable from other sources. Actual results may differ from these estimates under different assumptions or conditions. Tokheim believes that the following critical accounting policies affect its more significant judgements and estimates used in the preparation of its consolidated financial statements. Allowance for doubtful accounts--Tokheim maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of Tokheim's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances might be required. Inventory valuation--Tokheim writes down its inventory for estimated obsolescence or unmarketability in an amount equal to the difference between the cost of inventory and the estimated market value based upon the assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Recoverability of long-lived assets--Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company deems an asset to be impaired if a forecast of undiscounted cash flows directly related to the asset, including disposal value, if any, is less than its carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds fair value. Considerable management judgement is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. Product warranty costs--Tokheim provides for the estimated cost of product warranties at the time revenue is recognized. While Tokheim engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, Tokheim's warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from Tokheim's estimates, revisions to the estimated warranty liability would be required. Deferred taxes--Tokheim records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Tokheim has considered future taxable income and ongoing prudent and 19 feasible tax planning strategies in assessing the need for the valuation allowance. In the event that the amount of future taxable income differs significantly from the estimate, the adjustment to the valuation allowance will be charged or credited to tax expense in the period in which such determination is made. Intangible assets--The Company has significant intangible assets related to reorganization value in excess of amounts allocable to identifiable assets, capitalized software, deferred debt issuance costs and patents and trademarks. The determination of related estimated useful lives and assessment of impairment status involves significant judgements. Changes in strategy and/or market conditions could significantly impact these judgements and require adjustments to recorded asset balances. These assets are currently reviewed for impairment whenever events of changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Financial Accounting Standards Board ("FASB") issued SFAS No. 141 and No. 142 in June 2001. SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting and broadens the criteria for recording intangible assets separate from goodwill. SFAS No. 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. The Company adopted SFAS No. 141 during 2001, with no impact to the consolidated financial statements. The Company plans to adopt SFAS No. 142 during fiscal 2002. At such time, it is expected that amortization associated with reorganization value in excess of amounts attributable to identifiable assets will cease and a reduction in the asset balance is probable. During fiscal 2001, amortization related to reorganization value in excess of amounts allocable to identifiable assets totaled approximately $16,276. The magnitude of the potential asset impairment cannot be determined at this time. Pensions and other postretirement benefits--The Company has significant pension and postretirement benefit costs and credits that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and expected returns on plan assets. The Company is required to consider current market conditions, including changes in interest rates, in selecting these assumptions. Changes in the related pension and postretirement benefit costs or credits may occur in the future, in addition to changes resulting from fluctuations in the Company's related headcount due to changes in the assumptions. Contingencies in litigation--Tokheim is currently involved in certain legal proceedings. As discussed in Note 21 to the consolidated financial statements, "Contingent Liabilities," the Company has accrued its best estimate of the probable costs for resolution of these claims. This estimate has been developed in consultation with outside counsel handling Tokheim's defense in these matters and is based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. The Company does not believe that these proceedings will have a material adverse effect on the its consolidated financial position. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in underlying assumptions or effectiveness of the Company's strategies related to these proceedings. The Future The amended New Credit Agreement requires the Company to meet certain consolidated financial tests, including minimum levels of EBITDA and fixed charge coverage ratio (both as defined in the New Credit Agreement) and maximum levels of capital expenditures. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, payment of dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments and amendments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. The Company's ability to meet financial ratios and tests in the future may be affected by events beyond its control. There can be no guarantee that the Company will be able to comply with such covenants or meet such financial ratios and tests or that it will be able to obtain future amendments or waivers to the New Credit Agreement, if necessary, to avoid a default. In the event of a default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable immediately. 20 Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to various market risks, including fluctuations in interest rates, mismatches in funding obligations and receipts and variability in currency exchange rates. The Company has established policies, procedures and internal processes governing its management of market risks and the limited use of financial instruments to manage its exposure to such risks. The Company is subject to variability in foreign exchange rates primarily in its European and African operations. Exposure to this variability is managed primarily through the use of natural hedges, whereby funding obligations and assets are both managed in the local currency. The Company, from time to time, enters into currency exchange agreements to manage its exposure arising from fluctuating exchange rates related to specific transactions. Tokheim's subsidiary, Tokheim-Italia s.r.l., has entered into interest rate swap agreements to protect exposures to interest rate fluctuations (see Note 22 to the consolidated financial statements, "Derivative Instruments," for more information). The Company had no other material outstanding agreements of this nature at November 30, 2001. The sensitivity of earnings and cash flows to variations in exchange rates is assessed by applying an appropriate range of potential rate fluctuations to the Company's assets, obligations and projected results of operations denominated in foreign currencies. Based on the Company's overall currency rate exposure at November 30, 2001, movements in currency rates could materially impact the results of operations and financial position of the Company. A significant portion of the Company's debt has been borrowed under variable rate arrangements. A 1% change in interest rates on this debt as of November 30, 2001 would impact annual interest expense by approximately $1,600. 21 Item 8. Financial Statements and Supplementary Data CONSOLIDATED STATEMENT OF EARNINGS (Amounts in thousands except data per share)
Successor Company Predecessor Company ------------------------ ----------------------- Period from Period from November 1 December 1, Year ended to 1999 to Year ended November 30, November 30, October 31, November 30, 2001 2000 2000 1999 ------------ ------------ ----------- ------------ Net sales............................................................ $494,003 $54,648 $ 468,331 $693,932 Cost of sales, exclusive of items listed below....................... 390,707 38,766 367,528 532,089 Selling, general, and administrative expenses........................ 83,622 7,181 85,815 105,349 Depreciation and amortization........................................ 34,023 3,086 22,360 25,869 Merger and acquisition costs and other unusual items................. 5,255 1,784 16,574 14,895 -------- ------- --------- -------- Operating profit (loss).............................................. (19,604) 3,831 (23,946) 15,730 Interest expense, net of interest income of $287, $48, $443, $743, respectively........................................................ 37,363 2,921 51,040 51,450 Foreign currency (gain) loss......................................... (1,053) (194) (96) 2,148 Minority interest in subsidiaries.................................... 87 25 44 88 Other (income) expense, net.......................................... (542) 247 (951) (1,315) -------- ------- --------- -------- Profit (loss) before reorganization costs, income taxes and extraordinary items................................................. (55,459) 832 (73,983) (36,641) Reorganization costs................................................. -- -- 262,045 -- -------- ------- --------- -------- Profit (loss) before income taxes and extraordinary items............ (55,459) 832 (336,028) (36,641) Income taxes......................................................... 1,295 288 (227) (104) -------- ------- --------- -------- Profit (loss) before extraordinary items............................. (56,754) 544 (335,801) (36,537) Extraordinary loss on debt extinguishment............................ -- -- -- (6,249) Extraordinary gain on discharge of debt, accrued interest and certain other impaired claims............................................... -- -- 246,294 -- -------- ------- --------- -------- Net profit (loss).................................................... (56,754) 544 (89,507) (42,786) Preferred stock dividends ($1.94 per share).......................... (1,495) (120) (1,403) (1,515) -------- ------- --------- -------- Profit (loss) applicable to common stock............................. $(58,249) $ 424 $ (90,910) $(44,301) ======== ======= ========= ======== Profit (loss) per common share: Basic Before extraordinary items..................................... $ (12.96) $ 0.09 * $ (3.01) Extraordinary loss on debt extinguishment...................... -- -- * (0.49) -------- ------- --------- -------- Net profit (loss).............................................. $ (12.96) $ 0.09 * $ (3.50) ======== ======= ========= ======== Weighted average shares outstanding............................ 4,494 4,500 * 12,668 ======== ======= ========= ======== Diluted Before extraordinary items..................................... $ (12.96) $ 0.08 * $ (3.01) Extraordinary loss on debt extinguishment...................... -- -- * (0.49) -------- ------- --------- -------- Net profit (loss).............................................. $ (12.96) $ 0.08 * $ (3.50) ======== ======= ========= ======== Weighted average shares outstanding............................ 4,494 5,178 * 12,668 ======== ======= ========= ========
- -------- * Earnings per share is not presented for the eleven months ended October 31, 2000 because such presentation would not be meaningful. The Old Common Stock was cancelled and the New Common Stock was issued pursuant to the Plan of Reorganization. The accompanying notes are an integral part of the financial statements. 22 CONSOLIDATED BALANCE SHEET Amounts in thousands except dollars per share
Successor Company ---------------------------------- November 30, 2001 November 30, 2000 ----------------- ----------------- Assets Current assets: Cash and cash equivalents.............................................................. $ 14,132 $ 8,946 Accounts receivable, less allowance for doubtful accounts of $6,190 and $5,178, respectively.......................................................................... 121,195 110,820 Inventories: Raw materials, service parts and supplies........................................... 55,577 57,498 Work in process..................................................................... 5,591 12,497 Finished goods...................................................................... 15,918 8,485 -------- -------- 77,086 78,480 Other current assets................................................................... 13,862 9,767 -------- -------- Total current assets................................................................ 226,275 208,013 Property, plant and equipment............................................................. Land and land improvements............................................................. 5,166 5,536 Buildings and building improvements.................................................... 22,631 23,950 Machinery and equipment................................................................ 45,611 37,355 Construction in progress............................................................... 1,940 5,493 -------- -------- 75,348 72,334 Less: accumulated depreciation............................................................ 13,281 310 -------- -------- 62,067 72,024 Reorganization value in excess of amounts allocable to identifiable assets, net of accumulated amortization of $17,632 and $1,356, respectively............................ 145,125 161,401 Other intangible assets, net.............................................................. 17,367 9,496 Other non-current assets.................................................................. 7,235 10,927 -------- -------- Total assets........................................................................ $458,069 $461,861 ======== ======== Liabilities and Shareholders' Equity Current liabilities: Current maturities of other long term debt............................................. $ 2,984 $ 2,512 Cash overdrafts........................................................................ 17,543 12,061 Accounts payable....................................................................... 68,697 61,609 Accrued expenses....................................................................... 78,424 72,608 Current maturities of notes payable, bank credit agreement............................. 273,766 -- -------- -------- Total current liabilities........................................................... 441,414 148,790 Notes payable, bank credit agreement...................................................... -- 240,238 Other long term debt, less current maturities............................................. 2,925 2,988 Post-retirement benefit liability......................................................... 18,271 18,880 Other long-term liabilities............................................................... 2,049 1,164 -------- -------- 464,659 412,060 Commitments and contingencies............................................................. Redeemable convertible preferred stock (liquidation value of $25 per share), 1,700 shares authorized, 960 shares issued........................................................... 18,320 12,619 Treasury stock, at cost, 199 and 184 shares, respectively................................. (4,974) (2,494) New preferred stock, at liquidation preference of $10 per share, 10 authorized and issued. 100 100 -------- -------- Total preferred equity.............................................................. 13,446 10,225 New common stock, no par value; 30,000 shares authorized, 4,128 and 0 issued, respectively 4,500 4,500 New common stock warrants................................................................. 8,199 8,199 Accumulated comprehensive loss............................................................ (1,986) (623) Retained earnings (accumulated deficit)................................................... (57,825) 424 Additional paid in capital................................................................ 27,076 27,076 -------- -------- Total shareholders' equity (deficit)................................................ (20,036) 39,576 -------- -------- Total liabilities and shareholders' equity.......................................... $458,069 $461,861 ======== ========
The accompanying notes are an integral part of the financial statements. 23 CONSOLIDATED STATEMENT OF CASH FLOWS (Amounts in thousands)
Successor Company Predecessor Company ---------------------------------- --------------------------------- Year November 1, 2000 December 1, 1999 Year ended To to ended November 30, 2001 November 30, 2000 October 31, 2000 November 30, 1999 ----------------- ----------------- ---------------- ----------------- Cash flows from operating activities: Net profit (loss).................................. $(56,754) $ 544 $ (89,507) $ (42,786) Adjustments to reconcile net profit (loss) to net cash provided from (used in) operating activities: Reorganization items: Write-off goodwill.............................. -- -- 249,089 -- Revaluation of assets and liabilities, net...... -- -- (1,878) -- Extraordinary gain on discharge of debt, related accrued interest and other impaired claims........ -- -- (246,294) -- Payment in kind interest........................... 17,550 1,822 4,175 5,020 Extraordinary loss on debt extinguishment.......... -- -- -- 6,249 Depreciation and amortization...................... 34,023 3,086 22,360 28,739 (Gain) loss on sale of property and equipment...... (829) (234) 16 (1,253) Deferred income taxes.............................. 547 6 4 (28) Changes in assets and liabilities: Receivables, net................................... (8,588) (14,221) 57,098 (11,935) Inventories........................................ 1,907 3,699 4,322 21,473 Other current assets............................... (3,905) 3,403 (184) 4,922 Accounts payable................................... 6,318 4,433 (22,389) (3,570) Accrued expenses................................... 4,610 (1,277) (4,568) (14,404) Other current assets............................... (2,713) (568) 13,251 (4,348) Other.............................................. 812 25 (3,677) (1,805) -------- -------- --------- --------- Net cash provided from (used in) operating activities........................ (7,022) 718 (18,182) (13,726) -------- -------- --------- --------- Cash flows from investing activities: Property, plant, and equipment additions........... (9,654) (1,799) (7,309) (17,909) Proceeds from the sale of property, plant, and equipment......................................... 3,320 72 1,115 5,315 -------- -------- --------- --------- Net cash used in investing activities.............. (6,334) (1,727) (6,194) (12,594) -------- -------- --------- --------- Cash flows from financing activities: Redemption of senior notes......................... -- -- -- (22,500) Proceeds from 11.375% senior subordinated notes.... -- -- -- 209,647 Redemption of seller senior subordinated notes..... -- -- -- (170,000) Increase (decrease) in other debt.................. 313 449 13,560 8,060 Net increase (decrease) in notes payable banks..... 15,977 -- -- 22,139 Net increase (decrease) in cash overdraft.......... 5,221 633 (1,262) (1,132) Debt issuance costs................................ -- -- (1,758) (13,102) Issuance of new Special Loans...................... -- -- 100,000 -- Issuance of Term Debt A............................ -- -- 36,608 -- Issuance of Term Debt B............................ -- -- 100,668 -- Issuance of new Revolver Debt...................... -- -- 8,000 -- Refinance in notes payable, bank credit agreement.. -- -- (228,729) -- Decrease in guaranteed ESOP........................ -- -- (1,395) -- Refinance of guaranteed ESOP....................... -- -- (2,956) -- Proceeds from the issuance of old common stock..... -- -- -- 22 Premiums paid on debt extinguishment............... -- -- -- (555) Preferred stock dividends.......................... (1,495) (120) (1,403) (1,515) Other.............................................. (1,426) (983) (2,056) 163 -------- -------- --------- --------- Net cash provided from (used in) financing activities........................ 18,590 (21) 19,277 31,227 -------- -------- --------- --------- Effect of translation adjustments on cash............. (48) (1,965) 2,603 (17,271) Increase (decrease) in cash and cash equivalents... 5,186 (2,995) (2,496) (12,364) Cash and cash equivalents: Beginning of year.................................. 8,946 11,941 14,437 26,801 -------- -------- --------- --------- End of year........................................ $ 14,132 $ 8,946 $ 11,941 $ 14,437 ======== ======== ========= =========
The accompanying notes are an integral part of the financial statements. 24 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the year ended November 30, 1999 (Amounts in thousands)
Retained Accumulated Common Stock Additional Earnings Other Total Common --------------------------- Paid-In (Accumulated Comprehensive Shareholder's Issued Treasury Warrants Capitl Deficit) Loss Equity (Deficit) -------- -------- -------- ---------- ------------ ------------- ---------------- PREDECESSOR COMPANY Balance at November 30, 1998.... $ 90,354 $(695) $ 20,000 $ -- $(19,295) $(25,733) $ 64,631 Net loss..................... (42,786) (42,786) Changes in other comprehensive income (loss)...................... Minimum pension obligation adjustments.............. 3,135 3,135 Foreign currency translation.............. (46,479) (46,479) Stock options exercised...... 21 21 Treasury stock transactions.. 164 164 Preferred stock dividends.... (1,516) (1,516) -------- ----- -------- ------- -------- -------- -------- Balance at November 30, 1999.... 90,375 (531) 20,000 -- (63,597) (69,077) (22,830) Net loss..................... (89,507) (89,507) Changes in other comprehensive income (loss) Foreign currency translation adjustments..... (29,778) (29,778) Common stock warrants........ 6,187 6,187 Preferred stock dividends.... (1,403) (1,403) Cancellation of predecessor company common stock and elimination of existing stockholder's equity upon emergence from bankruptcy............. (90,375) 531 (26,187) 154,507 98,855 137,331 Issuance of successor company common stock........ 4,500 27,076 31,576 New common stock warrants.................... 8,199 8,199 -------- ----- -------- ------- -------- -------- -------- SUCCESSOR COMPANY............... Balance at October 31, 2000..... 4,500 -- 8,199 27,076 -- -- 39,775 Net profit (loss)............ 544 544 Changes in other comprehensive income (loss)...................... Minimum pension obligation adjustments.............. (983) (983) Foreign currency translation adjustments.............. 360 360 Preferred stock dividends.... (120) (120) -------- ----- -------- ------- -------- -------- -------- Balance at November 30, 2000.... 4,500 -- 8,199 27,076 424 (623) 39,576 Net profit (loss)............ (56,754) (56,754) Changes in other comprehensive income (loss)...................... Minimum pension obligation adjustments.............. (2,053) (2,053) Foreign currency translation adjustments.............. 690 690 Preferred stock dividends.... (1,495) (1,495) -------- ----- -------- ------- -------- -------- -------- Balance at November 30, 2001.... $ 4,500 $ -- $ 8,199 $27,076 $(57,825) $ (1,986) $(20,036) ======== ===== ======== ======= ======== ======== ========
25 The Company adopted SFAS No. 130, "Reporting Comprehensive Income" effective November 30, 2000. SFAS No. 130 requires that a separate presentation for accumulated other comprehensive income (loss) be presented. The components of other comprehensive income (loss) consist of foreign currency translation adjustments and minimum pension obligation adjustments. Comprehensive loss for the years ended November 30, 2001, 2000 and 1999 consisted of the following:
2000 1999 --------- -------- PREDECESSOR COMPANY Net loss......................................... $ (89,507) $(42,786) Other comprehensive income (loss): Foreign currency translation adjustments..... (29,778) (46,479) Minimum pension obligation adjustments....... 3,135 --------- -------- Comprehensive loss............................... $(119,285) $(86,130) ========= ========
Month Ended November 30, 2001 2000 -------- ------------ SUCCESSOR COMPANY Net profit (loss)................................ $(56,754) $ 544 Other comprehensive income (loss): Foreign currency translation adjustments..... 690 360 Minimum pension obligation adjustments....... (2,053) (983) -------- ----- Comprehensive loss............................... $(58,117) $ (79) ======== =====
26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands except dollars per share) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation--The consolidated financial statements following the reorganization reflect accounting principles set forth in the American Institute of Certified Public Accountants Statement of Position ("SOP") 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code. This statement provides guidance for financial reporting by entities that have filed voluntary petitions for relief under and have reorganized in accordance with the Bankruptcy Code. As such, the Company adopted "fresh start accounting" as of October 31, 2000, which is reflected in the preparation of the accompanying financial statements. The Company's emergence from Chapter 11 proceedings resulted in a new reporting entity with no retained earnings or accumulated deficit as of October 31, 2000. As discussed further in Note 2 to the consolidated financial statements, the assets and liabilities of the Company were restated as of October 31, 2000, in accordance with SOP 90-7. Thus, the Company's consolidated financial statements for periods prior to October 31, 2000 are not comparable to consolidated financial statements presented on or subsequent to October 31, 2000. A black line has been drawn on the accompanying consolidated financial statements to distinguish between the pre-reorganization entity ("Predecessor Company") and the post-reorganization entity ("Successor Company") (see Note 2 to the consolidated financial statements). For all tabular presentations within the footnotes to the consolidated financial statements, balances presented as of November 30, 2001 and 2000, for the year ended November 30, 2001 and for the period from November 1 through November 30, 2000 relate to the Successor Company. Those presented for the year ended November 30, 1999 and the period from December 1, 1999 through October 31, 2000 relate to the Predecessor Company. Principles of consolidation--The consolidated financial statements include the accounts of Tokheim Corporation and its wholly and majority-owned subsidiaries (the "Company"). The consolidated financial statements include 100% of the assets and liabilities of these subsidiaries, with the ownership interest of minority participants recorded as minority interests. All significant intercompany accounts and transactions have been eliminated in consolidation. Nature of operations--The Company engages principally in the design, manufacture and servicing of electronic and mechanical petroleum dispensing marketing systems, including service station equipment, point-of-sale control systems, and card and cash-activated transaction systems for customers around the world. The Company markets its products through subsidiaries located throughout the world and has major facilities in the United States (U.S.), France, Canada, Germany, Italy, the Netherlands, Scotland, and South Africa. Translation of foreign currency--The financial position, results of operations and cash flows of the Company's foreign subsidiaries are measured using local currency as the functional currency. Revenues and expenses of such subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange at the balance sheet date. Translation gains and losses are deferred as a separate component of shareholders' equity (deficit). Aggregate foreign currency transaction gains and losses are included in determining net profit (loss). Revenue recognition--Revenue from sales of fuel dispensers and service parts is recorded at the time the goods are shipped or delivered, depending on contract terms. On-call service revenue is recognized when the service has been performed. Revenue and costs with separately priced customer service contracts are recognized such that (a) revenue is recognized ratably over the contract period; (b) costs are expensed as incurred (incremental direct acquisition costs are not material); and (c) losses are recognized on contracts where the expected future costs exceed future revenue. Customer service contracts include service and maintenance agreements and extended warranty agreements for fuel dispensers and point-of-sale system hardware and software. 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) Revenue from long-term construction contracts is recognized on the percentage-of-completion method. Percentage-of-completion for the service station construction business is measured principally by the percentage of costs incurred for each contract to date relative to the estimated total costs at completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Revenue from long-term construction contracts is not material to the Company's consolidated revenue. The Company adopted SOP 97-2 "Software Revenue Recognition" at the beginning of 1999. SOP 97-2 supersedes SOP 91-1 and provides more specific guidance on revenue recognition related to software products. The adoption of SOP 97-2 did not have a material impact on the Company's consolidated financial statements. Revenue from the sale of software and point-of-sale systems which is dependent on software is recognized at the time of delivery, as no significant future Company obligations are required under the terms of the sales agreements and the criteria of paragraph 8 of SOP 97-2 have been satisfied. Freight costs--The Company reflects freight costs associated with shipping its products to customers as a component of cost of goods sold. Risks and uncertainties--The Company is not dependent on any single customer, geographic area or supplier of materials, labor or services. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The more significant areas requiring the use of management's estimates include allowances for obsolete inventory and uncollectible receivables, product warranty claims, environmental and other potential litigation claims and settlements, assets and liabilities related to employee benefits, valuation allowances for deferred tax assets, future obligations associated with the Company's restructuring plans, the carrying value of long lived assets, and useful lives for depreciation and amortization. Actual results could differ from these estimates, making it reasonably possible that a change in certain of these estimates could occur in the near term. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times, cash in U.S. banks may exceed Federal Deposit Insurance Corporation ("FDIC") insurance limits. Concentration of credit risk with respect to trade receivables is considered to be minimal due to the Company's large customer base and ongoing control procedures, which monitor the credit worthiness of customers and collectibility of accounts receivable. Substantially all of the Company's revenues are derived from customers in the retail and commercial petroleum dispensing industry. Approximately 250 of the Company's 750 United States employees and approximately 2,100 of the Company's 2,600 foreign employees are subject to collective bargaining agreements. The United States agreements expire in 2003, while the foreign agreements expire on various dates, beginning in 2002. Fair value of financial instruments--The fair value of cash and cash equivalents, trade receivables, and accounts payable approximates the carrying value because of the short-term maturities of these financial instruments. The interest rate on the Company's term loans and revolving credit facility fluctuates with current market rates, which approximate fair value. The interest rate on the Company's Special Loan is fixed at 16%. The carrying value approximates the market prices for the same or similar issues. Allowance for doubtful accounts--The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances might be required. 28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) Inventory valuation--Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. The Company provides allowances for excess, obsolete and slow moving inventories. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon the assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Property, plant and equipment--All property, plant and equipment on hand at October 31, 2000 is valued in accordance with SOP 90-7. All subsequent additions are recorded at cost. Depreciation of plant and equipment is generally determined on a straight-line basis over the estimated useful lives of the assets. Amounts charged to depreciation expense were $14,374, $820, $12,703, and $15,705 in the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000, and the year ended November 30, 1999, respectively. Upon retirement or sale of assets, the cost of the disposed assets and related accumulated depreciation is removed from the accounts, and any resulting gain or loss is credited or charged to income. These gains and losses are accumulated and shown as a component of other income, net in the Consolidated Statement of Earnings. Buildings are generally depreciated over forty years. Machinery and equipment is depreciated over periods ranging from five to ten years. Expenditures for normal repairs and maintenance are charged to expense as incurred. Expenditures for improving or rebuilding existing assets that extend the useful life of the assets are capitalized. Costs incurred related to software developed or obtained for internal use are capitalized during the application development stage of the software development and are amortized over 3 years. Research and development--Product development expenditures are charged to research and development expense in the period incurred. These expenses amounted to $20,447, $1,513, $20,092, and $27,782, for the fiscal year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the fiscal year ended November 30, 1999, respectively. Recoverability of long-lived assets to be held and used in the business--Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company deems an asset to be impaired if a forecast of undiscounted cash flows directly related to the asset, including disposal value, if any, is less than its carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds fair value. During 2001, events and circumstances indicated that approximately $30,000 of property and equipment might be impaired. However, the Company's estimate of undiscounted cash flows indicated that such carrying amounts were expected to be recovered. Reorganization value in excess of amounts allocable to identifiable assets and other intangible assets--On October 20, 2000, the Company recorded reorganization value in excess of amounts allocable to identifiable assets of $162,757, which is being amortized on a straight-line basis over ten years. Accumulated amortization of reorganization value in excess of amounts allocable to identifiable assets was $17,632 and $1,356 at November 30, 2001 and 2000, respectively. The Company continually reviews facts and circumstances to determine whether the remaining estimated useful life of reorganization value in excess of amounts allocable to identifiable assets and other intangible assets warrants revision or whether the carrying amounts may not be recoverable. The Company evaluates the recoverability of reorganization value in excess of amounts allocable to identifiable assets by comparing the 29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) estimated future undiscounted cash flows associated with the recorded asset and its carrying value. The amount of impairment, if any, is determined by calculating the difference in the recorded carrying value as compared with the estimated undiscounted future cash flows that the asset is expected to generate. If the carrying value of reorganization value in excess of amounts allocable to identifiable assets is greater than the estimated undiscounted future cash flows, the value is written down to the amount of the estimated future cash flows and a charge to earnings is recorded for the calculated impairment amount. During 2001, events and circumstances indicated that reorganization value in excess of amounts allocable to identifiable assets might be impaired. However, the Company's estimate of undiscounted cash flows indicated that such carrying amounts were expected to be recovered. See additional discussion of reorganization value in excess of amounts allocable to identifiable assets under New Accounting Pronouncements. Intangible assets are recorded at cost and are amortized on a straight-line basis. The main components of other intangible assets for the Successor Company are deferred financing costs (amortized over the life of the related financing agreement) and capitalized software (amortized over the estimated life of the software, generally three to four years) at November 30, 2001 and November 30, 2000. See Note 2 to the consolidated financial statements for information related to the write off of certain intangible assets in connection with the adoption of fresh start accounting and SOP 90-7 at October 31, 2000 and intangible assets identified as part of allocating the Company's reorganization value. Intangible assets at November 30 are as follows:
2001 2000 ------- ------ Capitalized software.................... $14,660 $7,175 Debt issuance costs..................... 3,538 1,788 Patents and licenses.................... 897 736 Other................................... 1,371 -- ------- ------ Total intangible assets.......... 20,466 9,699 Accumulated amortization................ (3,099) (203) ------- ------ Total intangible assets, net..... $17,367 $9,496 ======= ======
The accumulated amortization of capitalized software was $2,252 and $165 at November 30, 2001 and November 30, 2000, respectively. $2,087, $165, $1,249, and $1,271 were charged to amortization expense for capitalized software in the fiscal year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000, and the fiscal year ended November 30, 1999, respectively. The determination of related estimated useful lives and assessment of impairment status for intangible assets involves significant judgements. Changes in strategy and/or market conditions could significantly impact these judgements and require adjustment to recorded asset balances. Advertising and Promotion--Costs associated with advertising and product promotion are expensed in the period incurred. These expenses amounted to $1,979, $187, $2,520, and $3,258, for the fiscal year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the fiscal year ended November 30, 1999, respectively. Income Taxes--The Company accounts for income taxes under the liability method in accordance with SFAS No. 109 "Accounting for Income Taxes." The provision for income taxes includes federal, foreign, state 30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) and local income taxes currently payable as well as deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. In the event that the amount of future taxable income differs significantly from the estimate, the adjustment to the valuation allowance will be charged or credited to tax expense in the period in which such determination is made. Pension and Postretirement benefits--The Company has significant pension and postretirement benefit costs and credits that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and expected return on plan assets. The Company is required to consider current market conditions, including changes in interest rates, in selecting these assumptions. Changes in the related pension and postretirement benefit costs or credits may occur in the future due to changes in the assumptions. In addition, changes may arise from fluctuations in the Company's headcount. Product Warranty Costs--Anticipated costs related to product warranty are expensed in the period of sale. While Tokheim engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, Tokheim's warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from Tokheim's estimates, revisions to the estimated warranty liability would be required. New Accounting Pronouncements--During 2001, the Financial Accounting Standards Board issued the following statements, which apply to Tokheim: SFAS No. 141 "Business Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method is no longer permitted. SFAS No. 141 also includes guidance on the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination that is completed after June 30, 2001. The Company adopted this statement during the year ended November 30, 2001, with no impact on the Company's consolidated financial statements. SFAS No. 142 no longer permits the amortization of goodwill for indefinite-lived intangible assets. Instead, these assets must be reviewed annually (or more frequently under certain conditions) for impairment in accordance with this statement. This impairment test uses a fair value approach rather than the undiscounted cash flows approach previously required. Intangible assets that do not have indefinite lives will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121. While this statement is effective for fiscal years beginning after December 15, 2001, early adoption is permitted. The Company plans to adopt the new standard during fiscal 2002. Upon adoption, the Company will no longer amortize reorganization value in excess of amounts allocable to identifiable assets, which will reduce amortization by $16,276 annually. The Company will also engage the assistance of outside consultants to evaluate the carrying value of this asset. At that point, a reduction in the asset balance is probable. However, the magnitude of any such reduction has not yet been determined. 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) SFAS No. 144, which supersedes SFAS No. 121, retains many of the provisions of SFAS No. 121, while significantly changing the criteria that must be met to classify an asset as held for disposal. Long-lived assets to be disposed of other than by sales are considered held and used until the disposal occurs. In addition, SFAS No. 144 retains the basic provisions of Accounting Principles Board Opinion ("APBO") No. 30 for presentation of discontinued operations in the statement of operations but broadens that presentation to reflect a component of an entity. Also, future operating losses are no longer recognized before they occur. Companies are required to adopt SFAS No. 144 in their fiscal year beginning after December 15, 2001, fiscal 2003 for Tokheim. Management has not yet quantified the effect, if any, of the new standard on the Company's financial statements. Cash Flows--For purposes of the Consolidated Statement of Cash Flows, the Company considers all highly liquid investments purchased with an initial maturity of ninety days or less to be cash equivalents. Supplemental disclosures of cash flow information:
Year ended November 1, 2000 December 1, 1999 Year ended November 30, to to November 30, 2001 November 30, 2000 October 31, 2000 1999 ------------ ----------------- ---------------- ------------ Cash paid during the period for interest...... $16,861 $1,469 $33,322 $37,574 Cash paid during the period for income taxes.. 1,581 55 563 418 Junior Notes issued in connection with the RPS acquisition................................. -- -- 4,175(2) 5,020(1) Special loan PIK interest..................... 17,550(3) 1,822(3) -- --
- -------- (1) Represents non-cash interest added to principal of the Predecessor Company during 1999. (2) Represents non-cash interest added to principal of the Predecessor Company during 2000. This amount was discharged under the Plan of Reorganization (see Note 2 to the consolidated financial statements). (3) Represents non-cash interest added to principal of the Successor Company during 2001 and 2000. Reorganization Costs--In accordance with SOP 90-7, costs incurred directly related to the bankruptcy proceeding are classified as Reorganization Costs in the accompanying Consolidated Statement of Earnings. Reclassifications--Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation. 2. PLAN OF REORGANIZATION On August 28, 2000, the Company filed a Joint Prepackaged Plan of Reorganization (the "Plan") for the Company and its U.S. subsidiaries pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Bankruptcy Court confirmed the Company's Plan on October 4, 2000, which became effective as of October 20, 2000, the effective date of the Plan (the "Effective Date"). For accounting purposes, the inception date of the Successor Company is deemed to be November 1, 2000. The Plan provided that, among other things, (i) the existing bank credit agreement was restructured to comprise a four year, eleven month senior term facility of $137,177 and a four year, eleven month special facility of $100,000 on which interest is accrued but not paid until at least November 30, 2002; (ii) the Company's bank group provided, in addition to the $237,177 facilities detailed above, a post-petition credit agreement (the "DIP Agreement") facility with available borrowings of $47,765 which was converted into a revolving credit facility upon the Company's emergence from the reorganization; (iii) members of the bank group received Series A Warrants with a five year term to purchase 678,334 shares of the Company's new common stock, no par value 32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) (the "New Common Stock") at an exercise price of $0.01 per share and Series A Preferred Stock with a total liquidation preference of $100, quarterly dividends at the rate of 16% per annum, and the right to elect two directors to the Company's Board of Directors (and to elect a majority of the directors upon certain defaults under the credit agreement); (iv) in exchange for their Notes, the holders of $190,438 of senior subordinated notes and certain other unsecured creditors were eligible to receive 4,410,000 shares of New Common Stock representing 88% of the equity value of the reorganized Company, subject to dilution for warrants to existing shareholders and management options; (v) in exchange for their Notes, the holders of $49,195 of junior subordinated notes were eligible to receive 90,000 shares of New Common Stock representing 2% of the equity value of the reorganized Company, subject to dilution for warrants to existing shareholders and management options and Series B Warrants giving them the right to acquire an aggregate of 555,556 shares of New Common Stock of the reorganized Company at an exercise price of $30.00 per share; (vi) the Company's employees' rights under the Retirement Savings Plan were preserved; and (vii) the Company's approximately 12,669,000 shares of previously outstanding common stock (the "Old Common Stock") were cancelled and existing holders of Old Common Stock received "out of the money" Series C warrants with a six year term giving them the right to acquire an aggregate of 549,451 shares of New Common Stock of the reorganized Company at an exercise price of approximately $49.46 per share (each Series C Warrant entitles the holder to purchase 0.04326865 of a share of New Common Stock at a price of $2.14, thereby requiring a holder to exercise approximately 23.111 Series C Warrants at an aggregate exercise price of approximately $49.46 to purchase one share of New Common Stock). The Plan had a significant impact on the financial statements of the Successor Company, including the creation of a new reporting entity upon emergence from bankruptcy through the application of fresh-start accounting pursuant to SOP 90-7. Accordingly, the Successor Company's financial statements reflect the application of fresh-start accounting and have not been prepared on a basis consistent with the Predecessor Company's financial statements and are not comparable in all respects to the financial statements prior to the reorganization. The Company determined the reorganization value of the Company of approximately $50,000 with the assistance of financial advisors. These advisors (i) reviewed certain historical financial information of the Company for recent years and interim periods; (ii) reviewed certain internal financial and operating data, including five-year financial projections, prepared and provided by management, relating to its business and its prospects, which include the assumption of an average sales volume growth of approximately six percent per year; (iii) met with certain members of senior management of the Company to discuss the Company's operations and future prospects; (iv) reviewed publicly available financial data and considered the market value of public companies which the financial advisors deemed generally comparable to the operating business of the Company; (v) considered certain economic and industry information relevant to the operating business; and (vi) conducted such other studies, analyses, inquiries, and investigations as they deemed appropriate. Based upon the foregoing, the financial advisors developed a range of values for the Company as of the Effective Date. In addition to relying on management's projections, the reorganization valuation analysis made a number of assumptions including, but not limited to, a successful and timely reorganization of the Company's capital structure and the continuation of current market conditions through the forecast period. As part of applying fresh start accounting, the Company retained an independent valuation advisor to appraise certain assets of the Company and issue an appraisal report. The value estimate included in the appraisal report was relied upon by management in determining the fair value of the Company's property, plant and equipment. The difference between the Company's reorganization value and the fair value of the Company's assets and liabilities resulted in the recording of a reorganization value in excess of amounts allocable to identifiable assets of $162,757 as of October 31, 2000. 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) The Company incurred certain costs related to the Plan, which are shown as Reorganization Costs in the Consolidated Statement of Earnings. The components of Reorganization Costs for the eleven months ended October 31, 2000 are as follows:
Eleven months ended October 31, 2000 ---------------- Professional fees: Consulting fees........................... $ (7,085) Legal fees................................ (3,324) Professional fees and advisory services... (2,910) Bank fees................................. (1,515) --------- Total professional fees............... (14,834) --------- Fresh start adjustments: Write off of goodwill..................... (249,089) Write up of property, plant and equipment. 7,006 Write up of inventory..................... 382 Pension and related....................... (3,426) Other..................................... (2,084) --------- Total fresh start adjustments......... (247,211) --------- Total reorganization items............ $(262,045) =========
The Company recorded an extraordinary gain on discharge of debt, accrued interest and certain other impaired claims. The components of this gain are as follows:
Eleven months ended October 31, 2000 ---------------- Cancellation of senior subordinated notes.... $190,438 Cancellation of junior subordinated PIK notes 49,195 Cancellation of accrued interest............. 13,613 Cancellation of other impaired claims........ 16,151 Unamortized debt discount.................... (4,672) Debt issuance costs.......................... (18,431) -------- Net extraordinary gain....................... $246,294 ========
The Consolidated Balance Sheet prepared as of October 31, 2000, discussed below, illustrates the effect of the Company's Plan of Reorganization and the effect of implementing fresh start accounting. The adjustments present (i) the Company's reorganized capital structure, including its new credit agreement, (ii) the effect of discharging the senior and junior subordinated notes, related accrued interest, debt issuance costs and other impaired claims, (iii) the elimination of the Predecessor Company's existing goodwill, (iv) the elimination of the accumulated deficit and comprehensive loss, (v) the estimated liability for the discounted present value of the future redemption of preferred stock under the Company's existing guaranteed ESOP, (vi) the write-up of property, plant and equipment and inventory to approximate fair market value, (vii) the adjustment of the Company's pension plans and postretirement benefit liability to reflect fair market value, and (viii) certain other adjustments to adopt SOP 90-7. 34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) The effects of the Plan, debt discharge and refinance, and fresh start adjustments on the Company's Consolidated Balance Sheet at the Effective Date are as follows (in thousands):
Reorganization Adjustments ------------------------------------------------ Predecessor Debt Company Discharge Fresh October 31, 2000 & Refinance Start ---------------- ----------- --------- Assets Current assets: Cash and cash equivalents.................................... $ 11,941 $ -- $ -- Accounts receivable, net..................................... 95,424 -- -- Inventories, net............................................. 80,650 -- 382 b Other current assets......................................... 12,782 -- -- --------- --------- --------- Total current assets...................................... 200,797 -- 382 Property, plant and equipment, net........................... 63,672 -- 7,006 b Other tangible assets........................................ 150 Intangible assets, net....................................... 276,486 (18,431) a (249,089) b Other non-current assets, net................................ 10,662 -- (64) b Reorganization value in excess of amounts allocable to identifiable assets......................................... -- -- 162,757 b --------- --------- --------- Total assets.............................................. $ 551,767 $ (18,431) $ (79,008) ========= ========= ========= Liabilities and Shareholders' Equity Liabilities subject to compromise: Senior subordinated notes.................................... $ 190,438 $(190,438) a $ -- Junior subordinated payment in kind notes.................... 49,195 (49,195) a -- Accrued interest............................................. 13,613 (13,613) a -- Other accrued liabilities.................................... 16,151 (16,151) a -- --------- --------- --------- Total liabilities subject to compromise................... 269,397 (269,397) -- Liabilities not subject to compromise: Notes payable, bank credit agreement......................... 8,565 (8,565) a -- Current maturities of other long term debt................... 2,385 -- -- Cash overdrafts.............................................. 11,218 -- -- Accounts payable............................................. 56,478 -- -- Accrued expenses............................................. 73,374 (5,491) a 5,446 b --------- --------- --------- Total current liabilities................................. 421,417 (283,453) 5,446 Notes payable, bank credit agreement......................... 223,493 21,684 a (6,877) a Other long term debt, less current maturities................ 2,674 -- -- Guaranteed employees' stock ownership plan obligation........ 2,956 (2,956) a -- Post-retirement benefit liability............................ 18,815 -- -- Other long-term liabilities.................................. 1,129 -- -- --------- --------- --------- Total liabilities......................................... 670,484 (264,725) (1,431) Redeemable convertible preferred stock, at liquidation value of $25 per share, 1,700 shares authorized, 960 shares issued...... 24,000 -- (11,381) a New preferred stock, at liquidation preference of $10 per share, 10 authorized and issued....................................... -- -- 100 a Guaranteed employees' stock ownership plan obligation........... (2,956) -- 2,956 a Treasury stock, at cost, 184 shares............................. (3,347) -- 853 a --------- --------- --------- Total preferred equity.................................... 17,697 -- (7,472) Common stock, no par value; 30,000 shares authorized, 12,701 issued......................................................... 90,375 -- (90,375) a New common stock, no par value; 30,000 shares authorized, 0 issued......................................................... -- -- 4,500 a Common stock warrants........................................... 26,187 -- (26,187) a New common stock warrants....................................... -- -- 8,199 a Accumulated comprehensive loss.................................. (98,855) -- 98,855 c Retained earnings (accumulated deficit)......................... (153,590) 246,294 a (92,704) c Additional paid in capital...................................... -- -- 27,076 c --------- --------- --------- (135,883) 246,294 (70,636) Less treasury stock, at cost.................................... (531) -- 531 a --------- --------- --------- Total shareholders' equity (deficit)...................... (118,717) 246,294 (77,577) --------- --------- --------- Total liabilities and shareholders' equity................ $ 551,767 $ (18,431) $ (79,008) ========= ========= =========
Successor Company October 31, 2000 ---------------- Assets Current assets: Cash and cash equivalents.................................... $ 11,941 Accounts receivable, net..................................... 95,424 Inventories, net............................................. 81,032 Other current assets......................................... 12,782 -------- Total current assets...................................... 201,179 Property, plant and equipment, net........................... 70,678 Other tangible assets........................................ 150 Intangible assets, net....................................... 8,966 Other non-current assets, net................................ 10,598 Reorganization value in excess of amounts allocable to identifiable assets......................................... 162,757 -------- Total assets.............................................. $454,328 ======== Liabilities and Shareholders' Equity Liabilities subject to compromise: Senior subordinated notes.................................... $ -- Junior subordinated payment in kind notes.................... -- Accrued interest............................................. -- Other accrued liabilities.................................... -- -------- Total liabilities subject to compromise................... -- Liabilities not subject to compromise: Notes payable, bank credit agreement......................... -- Current maturities of other long term debt................... 2,385 Cash overdrafts.............................................. 11,218 Accounts payable............................................. 56,478 Accrued expenses............................................. 73,329 -------- Total current liabilities................................. 143,410 Notes payable, bank credit agreement......................... 238,300 Other long term debt, less current maturities................ 2,674 Guaranteed employees' stock ownership plan obligation........ -- Post-retirement benefit liability............................ 18,815 Other long-term liabilities.................................. 1,129 -------- Total liabilities......................................... 404,328 Redeemable convertible preferred stock, at liquidation value of $25 per share, 1,700 shares authorized, 960 shares issued...... 12,619 New preferred stock, at liquidation preference of $10 per share, 10 authorized and issued....................................... 100 Guaranteed employees' stock ownership plan obligation........... -- Treasury stock, at cost, 184 shares............................. (2,494) -------- Total preferred equity.................................... 10,225 Common stock, no par value; 30,000 shares authorized, 12,701 issued......................................................... -- New common stock, no par value; 30,000 shares authorized, 0 issued......................................................... 4,500 Common stock warrants........................................... -- New common stock warrants....................................... 8,199 Accumulated comprehensive loss.................................. -- Retained earnings (accumulated deficit)......................... -- Additional paid in capital...................................... 27,076 -------- 39,775 Less treasury stock, at cost.................................... -- -------- Total shareholders' equity (deficit)...................... 50,000 -------- Total liabilities and shareholders' equity................ $454,328 ========
35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) For purposes of fresh start accounting, the reorganization value used in preparing the consolidated balance sheet was $50,000. The following is a brief description of the adjustments made in preparing the above-Consolidated Balance Sheet: (a) To record the discharge of the senior and junior subordinated notes and borrowings, net of related costs, as well as ESOP debt, under the existing credit agreement, the cancellation of Old Common Stock, warrants and treasury stock, and the issuance of New Common Stock, New Preferred Stock and new warrants pursuant to the Plan; (b) To record certain adjustments to state assets and liabilities at their estimated fair value, including the establishment of reorganization value in excess of amounts allocable to identifiable assets using the reorganization value discussed above. These adjustments include adjusting property, plant and equipment to estimated fair market value and write up of inventory to approximate fair market value; (c) To eliminate the accumulated deficit and accumulated comprehensive loss (which consists of foreign currency translation losses). As a result of the Chapter 11 proceedings and the related Plan, an extraordinary gain on the forgiveness of debt and related accrued interest, net of deferred financing fees, approximating $246,294, was recognized in the Consolidated Statement of Earnings at October 31, 2000. 3. CAPITAL FUNDING AND LIQUIDITY The Company exited from bankruptcy in October 2000. The debt and equity structure of the Successor Company was based upon a strategic plan. A major assumption of this strategic plan was that the depressed United States market in which the Predecessor Company had been operating in recent years would return to prior growth levels. This assumption in the plan has not been realized. In fact, the United States has continued to experience declines in the overall market. The results that have been achieved demonstrated to the Company that a restructuring of its capital structure is necessary. Toward this end, the Company initiated discussions with its lenders regarding potential restructuring options. Though these discussions have not yet resulted in an arrangement, the Company and its lenders are continuing to explore alternatives. The Company is also exploring refinancing and other strategic alternatives. The Company does not believe that this process will impact its day-to-day operations. While the Company believes that a transaction may be possible, there can be no assurance that a transaction will be achieved. As more fully discussed in Note 7 to the consolidated financial statements, "Notes Payable, Bank Credit Agreement," the Company violated certain covenants during the year ended November 30, 2001. The Company obtained waivers from the bank group related to these violations. The Company's financial statements for the year ended November 30, 2001 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Net sales have declined for three consecutive years and the Company has incurred a net loss for the year ended November 30, 2001 of $56,754. In addition, the Company has a negative working capital as of November 30, 2001 of $215,139 as a result of the classification of the outstanding bank debt as current. Further, the Company expects to incur additional net losses in fiscal 2002. Management believes the Company has sufficient resources to maintain its operations until at least November 30, 2002. However, without restructuring of the credit facility or other changes in the Company's operations, estimated cash availability will not be sufficient to fund the scheduled principal and interest payment on the Special Loan due November 30, 2002. Also, with the Company's recent history of declining sales and operating losses and forecasted future 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) losses, the Company may not be able to attract equity capital in the public markets to strengthen its financial condition. Given these conditions, there can also be no assurances that the Company will meet its financial loan covenants in the future or that the bank group will not exercise its rights within the loan agreement to accelerate maturities on substantially all of the Company's debt. These matters raise substantial doubt about the Company's ability to continue as a going concern. Since joining the Company in September 2001, the new Chief Executive Officer, along with the rest of the Company's management team, has developed a broad strategic and operational plan that is expected to improve operating results for fiscal 2002 and beyond. The plan refocuses Tokheim's sales efforts on growth through different channels and geographic segments, use of recent technology developments for creation of successful products, global integration of engineering and software development activities to reduce redundancy and reduction of excess physical capacity. The plan includes the following major initiatives: . Aggressively seek to penetrate new high growth geographical markets, specifically Asia and Latin America; . Increase market share from major oil companies by attracting business through new customers (such as the acceptance by Shell Oil Company of the Company's tender offer in January 2002); . Increase market share of sales to hypermarkets; and . Reduce costs through standardization of product offerings worldwide and globalization of purchasing. 4. RESTRUCTURING CHARGES In 1998, the Company acquired the RPS division ("RPS") of Schlumberger Limited ("Schlumberger"). In connection with the acquisition, the Company accrued certain costs to effect an integration and rationalization plan for the RPS operations. These costs represented involuntary termination and other closure costs in connection with closing redundant manufacturing and service operations. These accrued costs did not include costs associated with consolidation of previously existing Tokheim subsidiaries, which are expensed as incurred or separately accrued once all criteria for accrual are met, nor did these costs benefit future periods. The integration and rationalization plan was completed at November 30, 2000. The final cash payments related to the integration and rationalization plan were made during 2001. 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) The table below summarizes the accrued liability activity by major category and initiative for the years ended November 30, 2001 and 2000. Approximately $4,312 of the original liability was unused at October 31, 2000 and recorded as a reduction of goodwill. Charges to the accrual for the year ended November 30, 2001 amounted to approximately $932, entirely attributable to currency fluctuations.
November 30, Adjustments Charges to November 30, Adjustments Charges to November 30, 1999 to Accrual Accrual 2000 to Accrual Accrual 2001 ------------ ----------- ---------- ------------ ----------- ---------- ------------ Involuntary employee termination benefits......... $8,006 $(4,191) $(2,693) $1,122 $(190) $(932) $-- Facility closure and other closure costs................ 211 (36) (175) -- -- -- -- Lease and contract termination fees......................... 381 (85) (296) -- -- -- -- ------ ------- ------- ------ ----- ----- --- Total accrued integration and rationalization costs.................. $8,598 $(4,312) $(3,164) $1,122 $(190) $(932) $-- ====== ======= ======= ====== ===== ===== ===
The original accrual established at November 30, 1998 included an estimate for 644 employee terminations at various locations. During 2001 and 2000, approximately 25 and 77 employees, respectively, were terminated. The total number of employees terminated under the plan was 722. The adjustments to the accrual resulted from the refinement of the integration and rationalization plan during 2001 and 2000. 5. MERGER AND ACQUISITION COSTS AND OTHER UNUSUAL ITEMS Included in merger and acquisition costs and other unusual items are certain costs that have been accrued as a restructuring liability at November 30, 2001, 2000, and 1999 and charged to operations. The activity in the restructuring accrual was as follows:
Restructuring Accrual ------------- Balance at November 30, 1998.......................... $ 2,300 Charges to the restructuring accrual............... (1,762) Adjustments to the restructuring accrual........... (198) Additions to the restructuring accrual during 1999. 2,700 ------- Balance at November 30, 1999.......................... 3,040 Charges to the restructuring accrual............... (2,490) ------- Balance at November 30, 2000.......................... 550 Charges to the restructuring accrual............... (223) Adjustments to the restructuring accrual........... (327) ------- Balance at November 30, 2001.......................... $ -- =======
During 2001, the Company completed the cash payments related to initiatives that were completed in prior years; the remaining balance of $327 was credited to operations. The balance in the accrual at November 30, 2000 was $341 for involuntary termination and related costs and $209 for lease termination and other exit costs. These balances related directly to initiatives begun in 1999 or 1998 that were complete at November 30, 2000. During 1999, as a result of the continuing integration and rationalization of the RPS Division with other business units, the Company accrued approximately $2,700 as a charge to operations which consisted of 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) approximately $1,680 for involuntary termination and related costs for approximately 69 employees that served in primarily service and administrative roles at various service facilities in France and $1,020 for lease termination and other exit costs. No amounts were charged to this reserve as of November 30, 1999. In addition to the restructuring costs that were accrued as a liability and charged to merger and acquisition costs and other unusual items, the following table illustrates the other costs related to the Company's restructuring plan and costs the Company considers to be unusual that were charged directly to expense as the costs were incurred: 2001 Involuntary employee termination and related costs....... $ 3,756 Lease cancellation and other facility costs.............. 249 Other costs.............................................. 1,250 ------- Total............................................. $ 5,255 ======= 2000 Involuntary employee termination and related costs....... $ 3,587 Lease cancellation and other facility costs.............. 500 Increased warranty and other product related costs....... 1,078 Litigation settlements and related costs................. 9,729 Non-capitalizable credit agreement fees and related costs 1,885 Other costs.............................................. 1,579 ------- Total............................................. $18,358 ======= 1999 Involuntary employee termination and related costs....... $ 5,479 Lease cancellation and other facility costs.............. 1,045 Increased warranty and other product related costs....... 1,717 Other exit costs......................................... 3,954 ------- Total............................................. $12,195 =======
6. ACCRUED EXPENSES Accrued expenses consisted of the following at November 30, 2001 and 2000:
2001 2000 ------- ------- Accrued Expenses: RPS Division integration and rationalization plan. $ -- $ 1,122 RPS Deferred Revenue.............................. 4,250 -- Restructuring plan................................ -- 550 Compensated absences.............................. 11,319 10,604 Salaries, wages, and commissions.................. 9,427 8,358 Retirement benefits and profit sharing............ 10,746 7,889 Interest.......................................... 142 17 Warranty.......................................... 5,557 7,906 Legal and professional............................ 4,343 3,093 Employee payroll taxes............................ 4,760 4,742 Deferred revenue.................................. 6,753 5,878 Taxes (sales, VAT, and other)..................... 14,025 10,467 Other............................................. 7,102 11,982 ------- ------- Total......................................... $78,424 $72,608 ======= =======
39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) 7. NOTES PAYABLE, BANK CREDIT AGREEMENT The Company entered into the New Credit Agreement as of October 20, 2000, which replaced the then existing agreement, the three year $7,600 ESOP Loan Facility and the DIP Agreement. The New Credit Agreement originally comprised a four-year, eleven month revolving credit facility and three four-year, eleven month term facilities; the Tranche A Term Loan, the Tranche B Term Loan and the Special Loan. The weighted-average interest rate on the New Credit Agreement was 12.10% and 13.64% for the years ended November 30, 2001 and 2000, respectively. During the year ended November 30, 2001 and in early 2002, the Company was required to enter several amendments and waivers to the New Credit Agreement (as described below) to avoid the occurrence of events of default relating to certain quantitative and qualitative covenants. On March 14, 2001, the Company amended its New Credit Agreement. Among the items amended were the distribution of the facility between the Tranche A and Tranche B term loans to reflect new balances of $36,509 and $100,668, respectively, from the original amounts of $36,540 and $100,637, respectively, and adjustments to covenant levels. At May 31, 2001, the Company was in violation of two of its financial covenants under the bank credit agreement. The bank group permanently waived this violation and modified, or suspended, the requirement for compliance with the financial covenants relating to the remainder of fiscal 2001 and the first three quarters of fiscal 2002. The Company agreed to reduce the total availability under the revolving facility from $47,765 to $35,000, with the ability to increase by meeting certain future financial criteria. On October 31, 2001 and February 8, 2002, the Company amended its New Credit Agreement to allow additional investment by the Company in its subsidiary in the United Kingdom and investment by the Company's wholly-owned subsidiary, Tokheim South Africa (Pty) Ltd., in a joint venture. As of November 30, 2001 and at February 28, 2002, the Company was in violation of certain covenants under the New Credit Agreement as amended. Effective February 28, 2002, the Company entered into a Fifth Amendment Waiver and Consent. The bank group waived the November 30, 2001 violations and waived through April 15, 2002 the minimum EBITDA requirements for the quarter ended February 28, 2002 and the requirement to file the annual audit report. In addition, a change in the distribution of mandatory prepayments between Tranche A and Tranche B term loans was included. The April 15, 2002 deadline was subsequently extended to June 15, 2002, as part of a new waiver entered into with the bank group. As part of this new waiver the Company is required to execute with the bank group by May 22, 2002 a binding term sheet that sets forth the material terms of a plan of recapitalization and restructuring of the Company's balance sheet. While the Company is in compliance with the adjusted covenants, its ability to remain in compliance in the future may be affected by events beyond its control. Therefore, there can be no assurance that the Company will satisfy such financial covenants or that it will be able to obtain amendments or waivers to the New Credit Agreement, if necessary, to avoid default in the future. In the event of default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable immediately. The revolving credit facility was adjusted in the Second and Fifth Amendments and Waiver to the New Credit Agreement to a maximum amount of $35,831 from the original maximum amount of $47,765 with availability based upon the amount of the Company's plant and machinery, inventory and receivables. Up to $5,000 of the facility may be utilized for the issuance of letters of credit, of which not more than $3,000 may be standby letters of credit. Borrowings under the revolving credit facility may be in U.S. dollars or Euro, and bear 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 2.5% in the case of U.S. dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) (as defined in the New Credit Agreement plus 4% in the case of Euro denominated loans). At November 30, 2001 and 2000, the aggregate amounts outstanding under revolving facilities were $26,000 and $8,000, respectively. The Company also had outstanding letters of credit at November 30, 2001 and 2000 of $2,002 and $534, respectively. Total availability under the revolving facilities at November 30, 2001 and 2000 was $35,831 and $47,765, respectively, of which $7,829 and $39,231 respectively was unused. Any balances on the loan are repayable in full at September 20, 2005. The Tranche A Term Loan and the Tranche B Term Loan in the amounts of $36,509 and $100,668, respectively, bear interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 3.5% in the case of U.S. dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) (as defined in the New Credit Agreement) plus 5% in the case of Euro denominated loans. During 2001, the Company made principal prepayments totaling $3,422 on the Tranche A Term Loan, bringing the outstanding balance to $33,087. The Special Loan is in the amount of $100,000 and bears interest at the rate of 16%, which is capitalized as part of the principal balance in lieu of being paid in cash. The loan is repayable in four annual installments of $25,000 plus capitalized interest thereon, commencing November 30, 2002. Amounts outstanding for the Special Loan were $119,372 and $101,822 at November 30, 2001 and 2000, respectively. Any time an event of default (as defined in the New Credit Agreement) exists, the interest rates on the loans may be increased by 3%. In consideration for establishing the New Credit Agreement, the Company paid certain fees and expenses to the bank group, including issuing Series A Warrants to purchase 678,334 shares of New Common Stock of the Company at a purchase price of $0.01 per share. The Company also issued to the bank group New Preferred Stock with a total liquidation preference of $100 and quarterly dividends at an annual rate of 16%. The holders of the New Preferred Stock are entitled to appoint two directors to the board of directors of the Company. In the event the Company defaults under the New Credit Agreement, the holders of the New Preferred Stock, voting as a separate class, will be entitled to elect a majority of the directors on the board of directors of the Company. Indebtedness of the Company under the New Credit Agreement (a) is secured by (i) a first perfected security interest in and lien on substantially all of the real and personal property assets of the Company's direct and indirect material majority-owned U.S. subsidiaries, (ii) a pledge of 100% of the stock of the Company's direct and indirect material majority-owned U.S. subsidiaries, and (iii) a pledge of 65% of the stock of the Company's first-tier material foreign subsidiaries and (b) is guaranteed by all of the Company's direct and indirect material majority-owned U.S. subsidiaries. The Company may voluntarily prepay the loans, in whole or in part, without penalty except for the Special Loan, which carries a prepayment penalty if paid off prior to August 2002. The Company is also required to apply against the loans (i) all net cash proceeds from sales of assets, (ii) all insurance proceeds (with certain exceptions), (iii) all net proceeds from the sale or issuance of debt or equity (with certain exceptions), (iv) a percentage of excess cash flow (as defined in the New Credit Agreement) for each fiscal year commencing with fiscal year ending November 30, 2002 and (v) net proceeds received by the Company relating to the Schlumberger litigation. The amended New Credit Agreement requires the Company to meet certain consolidated financial tests, including minimum levels of EBITDA and fixed charge coverage ratio (both as defined in the New Credit 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) Agreement) and maximum levels of capital expenditures. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, payment of dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments and amendments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. All outstanding debt under the New Credit Agreement was classified in current liabilities at November 30, 2001 to reflect that there is a greater than remote probability that this debt will become due in the next twelve months. 8. SENIOR SUBORDINATED NOTES Pursuant to the Plan, the holders of $190,438 of Senior Subordinated Notes issued in conjunction with the RPS acquisition, along with certain other unsecured creditors, were eligible to receive, in exchange for their Notes, 4,410,000 shares of New Common Stock representing 88% of the equity value of the reorganized Company, subject to dilution for warrants to existing shareholders and management options. 9. JUNIOR SUBORDINATED PIK NOTES Pursuant to the Plan, the holders of $49,195 of Junior Subordinated Notes issued in conjunction with the RPS acquisition were eligible to receive, in exchange for their Notes, 90,000 shares of New Common Stock representing 2% of the equity value of the reorganized Company, subject to dilution for warrants to existing shareholders, management options, and Series B Warrants giving them the right to acquire an aggregate of 555,556 shares of New Common Stock of the reorganized Company at an exercise price of $30.00 per share. 10. OTHER LONG TERM DEBT Other long-term debt at November 30, 2001 and 2000 consisted of the following:
2001 2000 ------ ------ Capital lease obligations, due through 2006 (a).............................. $4,836 $3,885 Various notes, due through 2006 at interest rates ranging from 2.80% to 7.00% 1,073 1,615 ------ ------ 5,909 5,500 Less: current maturities..................................................... 2,984 2,512 ------ ------ $2,925 $2,988 ====== ======
- -------- (a) Consists of various monthly, quarterly and annual lease obligations for buildings, vehicles and computer equipment. Assets under capital lease obligations are included as part of property, plant and equipment and related amortization is included as part of depreciation expense. Aggregate scheduled maturities of the above other long-term debt obligations during the upcoming five years approximate $2,984, $1,879, $816, $91, and $58, respectively. 11. OPERATING LEASES The Company leases certain manufacturing equipment, office equipment, computers and software, vehicles, and office and warehousing space under operating leases. These leases generally expire in periods ranging from one to five years. Amounts charged to expense under operating leases were $9,057, $1,488, $8,244, and $11,322 for the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) October 31, 2000 and the year ended November 30, 1999, respectively. Future minimum payments under non-cancelable operating leases during the next five years approximate $7,018, $5,304, $3,851, $1,237, $421 and $1,204 thereafter. 12. STOCK OPTION PLANS The Predecessor Company had three separate Stock Option Plans: the 1982 Incentive Stock Option Plan ("ISOP"), the 1982 Unqualified Stock Option Plan ("USOP"), and the 1992 Stock Incentive Plan ("SIP"). On the Effective Date, all rights and awards granted under ISOP, USOP and SIP were cancelled. Transactions in stock options under these plans prior to the Effective Date are summarized as follows:
Shares Under Option Price Range ------------ ------------ Outstanding, November 30, 1998................... 519,800 $ 7.13-20.00 Granted.......................................... 179,000 $8.56- 8.69 Exercised........................................ (2,500) $8.69 Forfeited or expired............................. (89,450) $ 7.13-20.00 -------- Outstanding, November 30, 1999................... 606,850 $ 7.13-20.00 Exercised........................................ -- Forfeited or expired............................. (89,100) $ 8.56-20.00 Cancelled pursuant to the Plan, at Effective Date (517,750) $ 8.69-20.00 -------- Outstanding, November 30, 2000................... -- ========
On the Effective Date, the Successor Company approved a new stock option plan, which provided certain key employees of the Successor Company the right to acquire shares of New Common Stock. Pursuant to the Plan, 500,000 shares of the Successor Company's New Common Stock are reserved for issuance to the participants in the form of nonqualified stock options. Options for 100,000 shares of New Common Stock were granted under the new plan in 2000 at an exercise price of $10.00 per share. During 2001, these options were cancelled due to resignation of the grantee. The Company adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost was recognized for the existing stock option plans under the provisions of this statement. The Company continues to account for incentive stock options at their intrinsic value under the provisions of APBO No. 25, "Accounting for Stock Issued for Employees," which is allowed under SFAS No. 123. Under APBO No. 25, because the option terms are fixed and the exercise price of employee stock options equals the market price on the date of grant, no compensation expense is recorded. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date, consistent with the provisions of SFAS No. 123, the Company's net profit (loss) would have been impacted as indicated below:
Predecessor Successor Company Company -------------------------- ------------ Year ended November 1 to Year ended November 30, November 30, November 30, 2001 2000 1999 ------------ ------------- ------------ As reported: Profit (loss) applicable to common stock. $(58,249) $ 424 $(44,301) Basic profit (loss) per share............ (12.96) 0.09 (3.50) Diluted profit (loss) per share.......... (12.96) 0.08 (3.50) Pro forma: Profit (loss) applicable to common stock. $(58,249) $ 411 $(44,835) Basic profit (loss) per share............ (12.96) 0.09 (3.54) Diluted profit (loss) per share.......... (12.96) 0.08 (3.54)
43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) For purposes of the above pro forma disclosures, the estimated fair value of the options (stock-based compensation) is amortized to expense on a straight-line basis over the options' vesting period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 2000 and 1999:
Assumptions 2000 1999 ----------- ------- ------- Risk free interest rate................................. 5.63% 5.15% Expected life of options................................ 5 years 5 years Expected volatility..................................... 46.50% 62.14% Weighted average fair value of options granted per share $4.80 $4.97
13. SHAREHOLDERS' EQUITY Changes in common stock and common treasury stock are shown below:
Common Common Stock Treasury Stock --------------------- -------------- Shares Amount Shares Amount ----------- -------- ------- ------ Balance, November 30, 1998............. 12,697,000 $ 90,354 38,000 $ 695 Stock options exercised................ 2,500 21 -- -- Other.................................. 1,000 -- (9,000) (164) ----------- -------- ------- ----- Balance, November 30, 1999............. 12,700,500 90,375 29,000 531 Cancellation of stock, Effective Date.. (12,700,500) (90,375) (29,000) (531) Balance, Effective Date................ -- -- -- -- Issuance of New Common Stock, Effective Date................................. 4,500,000 4,500 -- -- ----------- -------- ------- ----- Balance, November 30, 2000............. 4,500,000 4,500 -- -- ----------- -------- ------- ----- Adjust for forfeited New Common Stock.. (26,000) -- -- -- ----------- -------- ------- ----- Balance, November 30, 2001............. 4,474,000 $ 4,500 -- $ -- =========== ======== ======= =====
Changes in redeemable convertible preferred stock and related treasury stock are shown below
Preferred Old Preferred Stock Treasury Stock ------------------ ---------------- Shares Amount Shares Amount ------- -------- ------- ------- Balance, November 30, 1998............... 960,000 $ 24,000 195,000 $ 4,883 Shares redeemed.......................... -- -- 34,500 864 RSP contributions........................ -- -- (61,500) (1,537) ------- -------- ------- ------- Balance, November 30, 1999............... 960,000 24,000 168,000 4,210 Shares redeemed.......................... -- -- 79,000 1,955 RSP contributions........................ -- -- (63,000) (1,568) Reorganization adjustment, Effective Date -- (11,381) -- (853) ESOP Debt adjustment..................... -- -- -- (1,250) ------- -------- ------- ------- Balance, November 30, 2000............... 960,000 12,619 184,000 2,494 ------- -------- ------- ------- Shares redeemed.......................... -- -- 93,200 2,330 RSP contributions........................ -- -- (78,200) (1,953) Amortization and valuation adjustment.... -- 5,701 -- 2,103 ------- -------- ------- ------- Balance, November 30, 2001............... 960,000 $ 18,320 199,000 $ 4,974 ======= ======== ======= =======
44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) On July 10, 1989, the Company sold 960,000 shares of redeemable convertible preferred stock (the "Old Preferred Stock") to the Trust of the Company's Retirement Savings Plan ("RSP") at the liquidation value of $25 per share or $24,000. The Old Preferred Stock has a dividend rate of 7.75%. Prior to the confirmation of the Plan of Reorganization discussed below, the Trustees who held the Old Preferred Stock could have elected to convert each preferred share to one common share in the event of redemption by Tokheim, certain consolidations or mergers of Tokheim, or a redemption by the Trustees which is necessary to provide for distributions under the RSP. A participant could have elected to receive a distribution from the RSP in cash or common stock. If redeemed by the Trustees, the Company was responsible for purchasing the Old Preferred Stock at the $25 floor value. The Company could have elected to pay the redemption price in cash or an equivalent amount of common stock. On August 28, 2000, the Company filed a Joint Prepackaged Plan of Reorganization for the Company and its U.S. subsidiaries pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. The Bankruptcy Court confirmed the Company's Plan on October 4, 2000 and the Company emerged from bankruptcy as of October 20, 2000. The Plan of Reorganization provided that, among other things, (i) the Company's approximately 12,669,000 shares of Old Common Stock (at the Effective Date) were cancelled and the existing holders of Old Common Stock received "out of the money" Series C Warrants with a six year term, giving them the right to acquire an aggregate of 549,451 shares of New Common Stock of the reorganized Company at an exercise price of approximately $49.46 per share; (ii) in exchange for their Notes and other claims, the holders of $239,633 of senior and junior subordinated notes and certain other unsecured creditors were eligible to receive 4,500,000 shares of New Common Stock representing 90% of the equity value of the Successor Company, subject to dilution by warrants to existing shareholders and management options; (iii) holders of junior subordinated notes received five year Series B Warrants to purchase 555,556 shares of the New Common Stock at $30.00 per share; (iv) the Company's employees' rights to receive cash redemption of preferred stock held by the Retirement Savings Plan were preserved and (v) in connection with the New Credit Agreement, the bank group was issued Series A Warrants to purchase 678,334 shares of New Common Stock at $0.01 per share. Pursuant to the Plan, the holders of the senior and junior subordinated notes were required to exchange their Notes for New Common Stock within a one-year period, commencing at the Effective Date. Due to the failure of some of these holders to execute this exchange, the Company has reduced the total number of shares outstanding by approximately 26,000 at November 30, 2001. The valuation for new warrants issued was determined by the Company with the assistance of financial advisors. The Series A Warrants were valued at $6,777 and have been recorded as warrants in shareholders' equity and as debt discount, which is being amortized over the life of the New Credit Agreement. The Series C Warrants and the Series B Warrants were valued at $1,422 and recorded as part of the reorganization. The Plan also provided that the conversion rate of the Old Preferred Stock to Old Common Stock of one-for-one (or $25 for $25 equivalent value) was changed to reflect the conversion of the Old Common Stock into Series C Warrants. As a result, the conversion rate of preferred stock to common stock became one share of Old Preferred Stock to 0.04327 shares of New Common Stock (approximately the equivalent of what could be purchased with one Series C warrant). Therefore, the value of a share of New Common Stock would have to exceed approximately $577.79 per share before the value of 0.04327 shares of New Common Stock exceeds $25. At October 31, 2000, pursuant to the Plan, an adjustment was made to record the Old Preferred Stock at its fair market value using an actuarial calculation. The value of $10,125 represents the actuarial present value of the Company's net obligation for future cash redemptions of the Old Preferred Stock that was outstanding and held 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) by participants at the Effective Date. Such amount for these shares will be actuarially adjusted to reflect periodic amortization of the difference between liquidation value ($25 per share) and carrying value over the period until the employee is expected to terminate, retire or diversify his preferred stock holdings. All shares issued for RSP contributions and all shares redeemed subsequent to October 31, 2000 have been recorded at liquidation value. In consideration for the New Credit Agreement, the Company issued New Preferred Stock with a liquidation preference of $100 in the aggregate and quarterly dividends at an annual rate of 16%. The holders of the New Preferred Stock, voting as a separate class, are entitled to appoint two directors to the board of directors of the Company. In the event the Company defaults under the New Credit Agreement, the holders of the New Preferred Stock, voting as a separate class, will be entitled to elect a majority of the directors on the board of directors of the Company. 14. EARNINGS PER SHARE The Company complies with SFAS No. 128, Earnings Per Share. Under SFAS No. 128, the Company presents two earnings per share ("EPS") amounts, basic and diluted. Basic EPS is calculated based on profit available to common shareholders and the weighted average number of common shares outstanding during the reported period. Diluted EPS includes additional dilution from potential common stock, such as stock issuable pursuant to the conversion of preferred stock or the exercise of stock options and warrants outstanding. The incremental shares from conversions of preferred stock and the exercise of stock options and warrants were not included in computing diluted EPS for the years ended November 30, 2001 and 1999, since the effect of such inclusion is antidilutive during periods when a loss from continuing operations is reported. For the year ended November 30, 2001 and the one month period ended November 30, 2000, the weighted average of potentially issuable common shares included 677,082 and 677,601 shares related to Series A Warrants issued to the bank group, respectively. For the year ended November 30, 1999, the weighted average of potentially issuable common shares included 791,568 shares of convertible preferred stock outstanding, 8,801 shares for stock options and 2,523,999 shares related to warrants issued to Schlumberger. The following table presents the share information necessary to calculate profit (loss) per share for the year ended November 30, 2001, the one month period ended November 30, 2000, and the year ended November 30, 1999:
November 1 To November 30, 2001 2000 1999 ----- ------------ ------ Basic shares outstanding: Weighted average common shares outstanding. 4,494 4,500 12,668 ----- ----- ------ Diluted shares outstanding: Weighted average common shares outstanding. 4,494 4,500 12,668 Share equivalents.......................... -- 678 -- ----- ----- ------ Diluted shares outstanding................. 4,494 5,178 12,668 ===== ===== ======
46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) 15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial information for 2001 and 2000 is as follows:
Successor Company 2001 ------------------------------------------------ 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Total -------- -------- -------- -------- -------- Net sales............. $121,239 $121,786 $112,906 $138,072 $494,003 Cost of sales (A)..... 95,759 94,157 89,893 110,898 390,707 Net loss.............. (11,375) (13,026) (14,701) (17,652) (56,754) -------- -------- -------- -------- -------- Loss per common share: Basic.............. $ (2.61) $ (2.98) $ (3.35) $ (4.03) $ (12.96) ======== ======== ======== ======== ======== Diluted............ $ (2.61) $ (2.98) $ (3.35) $ (4.03) $ (12.96) ======== ======== ======== ======== ========
- -------- (A) Includes product development expenses and excludes depreciation and amortization.
Successor Predecessor Company Company ------------------------------------------- ------------- 2000 -------------------------------------------------------------------- Period from Period from 1st 2nd 3rd September 1 to November 1 to Quarter Quarter Quarter October 31 November 30 Total -------- -------- -------- -------------- ------------- --------- Net sales......................... $132,412 $134,837 $122,668 $ 78,414 $54,648 $ 522,979 Cost of sales (A)................. 104,362 105,851 95,933 61,382 38,766 406,294 Profit (loss) before extraordinary gain............................ (20,551) (17,351) (30,196) (267,703) 544 (335,257) Extraordinary gain on discharge of debt, related accrued interest and other impaired claims....... -- -- -- 246,294 -- 246,294 Net profit (loss)................. (20,551) (17,351) (30,196) (21,409) 544 (88,963) Loss per common share (B): Basic: Before extraordinary gain (loss).............. $ (1.65) $ (1.40) $ (2.41) * $ 0.09 -------- -------- -------- --------- ------- Net profit (loss).......... $ (1.65) $ (1.40) $ (2.41) * $ 0.09 ======== ======== ======== ========= ======= Diluted: Before extraordinary gain (loss).............. $ (1.65) $ (1.40) $ (2.41) * $ 0.08 -------- -------- -------- --------- ------- Net profit (loss).......... $ (1.65) $ (1.40) $ (2.41) * $ 0.08 ======== ======== ======== ========= =======
- -------- (A) Includes product development expenses and excludes depreciation and amortization. (B) Earnings per share has not been calculated for the period from December 1, 1999 to October 31, 2000, as such results would not be meaningful. 16. INCOME TAXES Profit (loss) before income taxes and extraordinary items consists of the following:
Successor Predecessor ---------------------------------- --------------------------------- Year November 1, 2000 December 1, 1999 Year ended to to ended November 30, 2001 November 30, 2000 October 31, 2000 November 30, 1999 ----------------- ----------------- ---------------- ----------------- Domestic $(38,458) $ (465) $(217,485) $ 3,547 Foreign. (17,001) 1,297 (118,543) (40,188) -------- ------ --------- -------- $(55,459) $ 832 $(336,028) $(36,641) ======== ====== ========= ========
47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) Income tax provision (benefit) consists of the following:
Successor Predecessor ----------------------------------- --------------------------------- Year November 1, 2000 December 1, 1999 Year ended to to ended November 30, 2001 November 30, 2000 October 31, 2000 November 30, 1999 ----------------- ----------------- ---------------- ----------------- Current Federal................... $ -- $ -- $ -- $ -- State..................... 1 -- 59 263 Foreign................... 594 229 553 (88) Deferred Federal................... -- -- -- 340 Foreign................... 700 59 (839) (619) ------ ---- ----- ----- Total tax provision (benefit) $1,295 $288 $(227) $(104) ====== ==== ===== =====
A reconciliation of the reported tax expense (benefit) and the amount computed by applying the statutory U.S. federal income tax rate of 35% to profit (loss) before income taxes and extraordinary loss is as stated below:
Successor Predecessor ---------------------------------- --------------------------------- Year November 1, 2000 December 1, 1999 Year ended to to ended November 30, 2001 November 30, 2000 October 31, 2000 November 30, 1999 ----------------- ----------------- ---------------- ----------------- Computed "expected" tax expense (benefit)............. $(19,411) $ 291 $(117,610) $(12,825) Increase (decrease) in taxes resulting from: State income taxes net of federal tax benefit........ -- -- 38 171 Tax effect of dividends paid on stock held in Retirement Savings Plans...................... (523) -- (533) (530) Change in Valuation Allowance.................. 14,661 -- 11,610 17,047 Foreign losses not tax effected at statutory rate. 914 226 20,755 (4,312) Cancellation of indebtedness income........ -- -- 94,289 -- Reorganization items, net.... 5,651 -- (8,925) -- Miscellaneous items, net..... 3 (229) 149 345 -------- ----- --------- -------- Reported tax expense............ $ 1,295 $ 288 $ (227) $ (104) ======== ===== ========= ========
48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) The components of the deferred tax assets and liabilities as of November 30, 2001 and 2000 are as stated below:
November 30, 2001 November 30, 2000 ----------------- ----------------- Gross deferred tax assets: Accounts receivable............... $ 417 $ 334 Compensation and benefit accruals. 10,026 9,065 Accrued expenses.................. 1,749 5,583 Net operating loss carryforwards.. 54,528 32,978 Tax credits....................... 1,338 1,338 Inventory......................... 1,814 812 Intangible assets................. 23,321 29,363 Valuation allowance............... (91,528) (76,867) -------- -------- Total deferred tax asset...... $ 1,665 $ 2,606 ======== ========
November 30, 2001 November 30, 2000 ----------------- ----------------- Gross deferred tax liabilities: Property, plant and equipment........ $1,665 $1,906 Pension assets....................... -- -- Inventory............................ -- -- Accrued expense...................... -- -- ------ ------ Total deferred tax liability..... $1,665 $1,906 ------ ------ Net deferred tax asset.................. $ -- $ 700 ====== ======
SFAS No. 109 requires a valuation allowance to reduce the deferred tax asset reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, management has determined that a valuation allowance of approximately $91,528 is necessary at November 30, 2001 to reduce the deferred tax assets to the amount that will more likely than not be realized. In the event that the Company recognizes, in subsequent years, the tax benefit of any deferred tax asset that existed on the Effective Date, such tax benefit would be reported as a reduction of the reorganization value in excess of amounts allocable to identifiable assets of the Company. In 2000, for financial reporting purposes, the Company reported a book gain of $269,433 resulting from the extinguishment of indebtedness that occurred from the bankruptcy discharge on the Effective Date. Pursuant to Section 108 of the Internal Revenue Code, this gain was excluded from income taxation and certain tax attributes of the Company were reduced, up to the amount of such income excluded from taxation. As of November 30, 2001, the Company had a federal net operating loss carryforward of approximately $72,221. Limitations on utilization may apply to approximately $30,425 of the net operating loss carryforward. The Company's ability to utilize tax credit attributes of $1,338 may also be limited. This limitation applies to all net built-in losses, which existed as of the change in ownership date, in this case, the Effective Date, including all items that gave rise to a deferred tax asset. Domestic net operating losses will begin to expire in the year 2019. As of November 30, 2001, the Company had foreign tax losses available for carryforward of approximately $84,806. A valuation allowance has been applied against these carryforwards. Foreign net operating losses will begin to expire in the year 2002. 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) 17. SEGMENT REPORTING Effective November 30, 1999, the Company adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." This statement establishes standards for the reporting of information about operating segments in financial statements and requires restatement of prior years' segment information. For all reported periods, the Company had only one reportable industry segment--the design, manufacture and servicing of petroleum dispensing systems. The Company has two reportable operating segments: North America and Europe/Africa. In prior years, the Company reported Europe and Africa as separate operating segments. Due to a gradually decreasing percentage of total operations for Africa, the Company no longer reports this region separately. The accounting policies of the segments are the same as described in the summary of significant accounting policies. The Company evaluates the performance of each operating segment based upon income from operations before merger and acquisition costs and other unusual items. The Company's selling, general, and administrative expenses are charged to each segment based upon the operating segment where the costs were incurred. Segment results for 2001, 2000 and 1999 are summarized in the table below. Successor Company
North Europe / 2001 America (1) Africa Eliminations Consolidated - ---- ----------- -------- ------------ ------------ Customer sales............................. $161,136 $332,867 $ -- $494,003 Intercompany sales......................... 2,508 587 (3,095) -- Depreciation and amortization.............. 14,487 15,710 3,826 34,023 Operating profit (loss), before merger and acquisition costs and other unusual items (31,599) 21,134 (3,884) (14,349) Total assets............................... $506,731 $264,999 $(313,661) $458,069 November 1, 2000 to North Europe / November 30, 2000 America (1) Africa Eliminations Consolidated - ------------------- ----------- -------- ------------ ------------ Customer sales............................. $ 18,991 $ 35,657 $ -- $ 54,648 Intercompany sales......................... 209 202 (411) -- Depreciation and amortization.............. 997 1,335 754 3,086 Operating profit (loss), before merger and acquisition costs and other unusual items 749 5,712 (846) 5,615 Total assets............................... $553,154 $320,841 $(412,134) $461,861
50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) Predecessor Company
December 1, 1999 to North Europe / October 31, 2000 America (1) Africa Eliminations Consolidated - ---------------- ----------- -------- ------------ ------------ Customer sales............................. $176,763 $291,568 $ -- $468,331 Intercompany sales......................... 4,361 947 (5,308) -- Depreciation and amortization.............. 10,596 11,764 -- 22,360 Operating profit (loss), before merger and acquisition costs and other unusual items (17,212) 10,962 (1,122) (7,372) Total assets............................... $543,131 $310,624 $(399,427) $454,328
North Europe / 1999 America (1) Africa Eliminations Consolidated - ---- ----------- -------- ------------ ------------ Customer sales............................. $244,965 $448,967 $ -- $693,932 Intercompany sales......................... 3,327 135 (3,462) -- Depreciation and amortization.............. 9,694 16,175 -- 25,869 Operating profit (loss), before merger and acquisition costs and other unusual items (374) 30,976 23 30,625 Total assets............................... $633,435 $425,239 $(367,872) $690,802
- -------- (1) Includes corporate headquarters Reconciliation from segment information to consolidated statement of earnings:
Company Successor Company Predecessor --------------------- -------------------- December 1, November 1, 1999 2000 through through November 30, October 31, 2001 2000 2000 1999 -------- ------------ ----------- -------- Segment operating profit (loss)..................... $(14,349) $ 5,615 $ (7,372) $ 30,625 Merger and acquisition costs and other unusual items (5,255) (1,784) (16,574) (14,895) -------- ------- -------- -------- Consolidated operating profit (loss)................ $(19,604) $ 3,831 $(23,946) $ 15,730 ======== ======= ======== ========
18. ALLOWANCE FOR DOUBTFUL ACCOUNTS
November 1, December 1, 2000 to 1999 to Year ended November 30, October 31, Year ended 2001 2000 2000 1999 - - ---------- ------------ ----------- ---------- Balance, beginning of year......................... $ 5,178 $5,273 $6,786 $2,115 Charged to operations.............................. 2,974 13 35 3,187 Uncollectible accounts written off, less recoveries (2,027) (220) (725) -- Foreign currency translation and other adjustments. 65 112 (787) 1,484 Sale of entity..................................... -- -- (36) -- ------- ------ ------ ------ Balance, end of year............................... $ 6,190 $5,178 $5,273 $6,786 ======= ====== ====== ======
51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) 19. RETIREMENT PLAN COST During 1999 the Company adopted SFAS No. 132, "Disclosure Requirements for Pensions and Other Postretirement Benefits." The Company has several retirement plans covering most employees, including certain employees in foreign countries. Charges to operations for the cost of the Company's retirement plans, including the RSP, were $5,132, $310, $3,312, and $3,715 in the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the year ended November 30, 1999, respectively. Defined Benefit Plans (U.S.)--The Company maintained two noncontributory defined benefit pension plans which cover certain union employees, which were merged during fiscal 2001. The Company makes contributions to the plans equal to the minimum contribution required by the Internal Revenue Code. The benefits are based upon a fixed benefit rate and the employee's years of service. Future benefits under these plans were frozen as of December 31, 1990, at which time the plans' participants became eligible to participate in the RSP. The following table sets forth the aggregate defined benefit plans' net periodic benefit cost, funded status and the amounts reflected in the accompanying financial statements for November 30, 2001, 2000, and 1999:
2001 2000 1999 ------- ------- ------- Components of Net Periodic Benefit Cost Interest cost...................................... $ 748 $ 786 $ 797 Expected return on market related plan assets...... (816) (919) (871) Amortization of transition (asset) obligation...... -- (47) (51) Amortization of recognized actuarial loss.......... 19 8 195 ------- ------- ------- Net periodic benefit cost (credit)................. $ (49) $ (172) $ 70 ======= ======= ======= Reconciliation of Projected Benefit Obligation Projected benefit obligation--beginning of year.... $10,550 $10,145 $12,155 Interest cost...................................... 748 786 797 Settlements........................................ (1,982) -- -- Benefits paid...................................... (1,196) (1,228) (1,194) Actuarial (gain) loss.............................. 766 178 (1,614) Plan transfers..................................... 339 -- -- Plan amendments.................................... -- 669 -- ------- ------- ------- Projected benefit obligation--end of year.......... $ 9,225 $10,550 $10,144 Reconciliation of Fair Value of Plan Assets Plan assets at fair market value--beginning of year $11,016 $11,658 $11,103 Actual return (loss) on plan assets............. (352) 221 1,760 Plan transfers.................................. 370 -- -- Employer contributions.......................... -- 383 -- Settlements..................................... (2,009) -- -- Benefits paid................................... (1,196) (1,228) (1,194) Expenses........................................ (15) (18) (11) ------- ------- ------- Plan assets at fair market value--end of year...... $ 7,814 $11,016 $11,658 ======= ======= =======
52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share)
2001 2000 ------- ------ Reconciliation of funded status Funded status....................................... $(1,412) $ 465 Unrecognized actuarial gain......................... 2,992 973 ------- ------ Net amount recognized............................... 1,580 1,438 Minimum liability adjustment........................ (3,036) (983) ------- ------ Accrued benefit asset (liability)................... (1,456) 455 Amounts recognized in the consolidated balance sheet Prepaid benefit cost................................ 730 553 Accrued benefit liability........................... (2,186) (98) Accumulated other comprehensive income.............. 3,036 983 ------- ------ Net amount recognized............................... $ 1,580 $1,438 ======= ====== Weighted average assumptions Discount rate--Hourly Office Employee Plan.......... 5.61% 6.05% Discount rate--Hourly Factory Employee Plan......... 7.25% 8.00% Expected return on plan assets...................... 8.00% 8.00%
At October 31, 2000, an adjustment of $1,323 was made to increase projected benefit obligation costs for the defined benefit plans as part of stating the pension liabilities at fair value at the Effective Date. This adjustment was recorded in the eleven month period ended October 31, 2000 and has been included as a component of "reorganization costs" in the Consolidated Statement of Earnings. The net periodic benefit cost for 2000 consisted of $(10) for the one month period ended November 30, 2000 and $(162) for the eleven month period ended October 31, 2000. Defined Benefit Plans (Foreign)--Certain foreign subsidiaries of the Company offer unfunded defined benefit plans, as required by the local governing authority, that cover all employees and provide lump-sum benefit payments upon retirement unless employment is terminated prior to retirement age. Net periodic charges to expense were $1,181, $31, $298, and $502 in the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the year ended November 30, 1999. The unfunded accrued benefit liability was $2,368 and $3,104 at November 30, 2001 and 2000, respectively. Defined Contribution Plan (U.S.)--The RSP covers substantially all U.S. employees and includes a common and preferred stock ESOP, which provide a retirement contribution of 2.5% (of salary) for factory and office employees, and 1.5% for all other participants in the plan and a matching contribution of at least two-thirds of the first 6% of employee contributions. The matching contribution can increase to 150% of the first 6% of contributions, depending on the performance of the Company. The number of shares of Old Preferred Stock in the RSP at November 30, 2001 and 2000 was 761,043 and 776,105 respectively, at a cost of $25 per share. The dividend yield on the Old Preferred Stock is 7.75% and the conversion rate was one share of Old Preferred Stock to one share of Old Common Stock at November 30, 1999. In connection with the restructuring at the Effective Date, the preferred stock could no longer be converted to common stock (see Note 13 to the consolidated financial statements). Each year, approximately 8% of the Old Preferred Stock held by the plan is allocated to participants' accounts. The Company guaranteed the RSP loans. A like amount entitled "Guaranteed Employees' Stock Ownership Plan (RSP) obligation" was recorded as a 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) reduction of shareholders' equity at November 30, 1999. As the Company made contributions to the RSP, these contributions, plus the dividends paid on the Company's preferred stock held by the RSP, were used to repay the loans. As the principal amounts of the loans were repaid, the RSP obligation is reduced accordingly. Company contributions in excess of dividends were allocated to interest and compensation expense on a basis proportional to the required debt service on RSP loans. Amounts allocated to interest expense were $263 and $431 for 2000 and 1999, respectively. On the Effective Date, the RSP loans were cancelled and incorporated into the New Credit Agreement. Supplemental Executive Retirement Plan, U.S. ("SERP")--The SERP covers selected officers of the Company and provides supplemental retirement or severance benefits based on final salary plus prior two years' average bonus. The Company maintains and owns life insurance policies on the participants, the proceeds from which are expected to be approximately equal to the cost of providing the benefits. The following table sets forth the net periodic benefit cost, funded status, and the amounts reflected in the accompanying consolidated balance sheet as of November 30, 2001 and 2000.
2001 2000 ------- ------- Components of Net Periodic Benefit Cost Service cost........................................ $ 885 $ 804 Interest cost....................................... 348 392 Amortization of prior service cost.................. -- 536 Amortization of recognized actuarial gain........... -- (656) ------- ------- Net periodic benefit cost........................... $ 1,233 $ 1,076 ------- ------- Reconciliation of Projected Benefit Obligation Projected benefit obligation--beginning of year*.... $ 4,347 $ 3,394 Service cost........................................ 885 804 Interest cost....................................... 348 392 Benefits paid....................................... (193) -- Actuarial loss...................................... (288) (243) ------- ------- Projected benefit obligation--end of year........... $ 5,099 $ 4,347 Reconciliation of funded status Funded Status....................................... $(5,099) $(4,347) Unrecognized actuarial gain......................... (346) (58) ------- ------- Net amount recognized............................... $(5,445) $(4,405) ------- ------- Accrued benefit liability........................... $(5,445) $(4,405) Amounts recognized in the consolidated balance sheet Accrued benefit liability........................... $(5,445) $(4,405) ------- ------- Net amount recognized............................... $(5,445) $(4,405) ------- ------- Weighted average assumptions Discount rate....................................... 7.25% 8.00% Rate of compensation increase....................... 4.00% 4.00%
- -------- * Projected benefit obligation shown for beginning of year for 2000 is the obligation at plan inception. At October 31, 2000, an adjustment of $3,329 was made to increase projected benefit obligation costs for the SERP as a result of stating the plan liability at fair value under "fresh start accounting." This adjustment was recorded in the eleven month period ended October 31, 2000 and was included as a component of "reorganization costs" in the Consolidated Statement of Earnings. The net pension benefit cost for 2000 consisted of $98 for the one month period ended November 30, 2000 and $978 for the eleven month period ended October 31, 2000. 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) 20. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company provides defined benefit postretirement health and life insurance benefits to most of its U.S. employees. Covered employees become eligible for these benefits at retirement, after meeting minimum age and service requirements. The Company continues to fund benefits on a pay-as-you-go basis, with some retirees paying a portion of the costs. The components of net periodic benefit cost for the years ended November 30, 2001, 2000 and 1999 are as follows:
2001 2000 1999 ------ ------ ------ Components of Net Periodic Benefit Cost Service cost........................... $ 467 $ 472 $ 425 Interest cost.......................... 1,254 1,125 930 Amortization of prior service cost..... -- 5 -- Recognized actuarial gain.............. -- (17) (7) ------ ------ ------ Net periodic benefit cost.............. $1,721 $1,585 $1,348 ====== ====== ======
The accumulated postretirement benefit obligations as of November 30, 2001 and 2000 and 1999, respectively, consisted of unfunded obligations as follows:
2001 2000 -------- -------- Reconciliation of accumulated postretirement benefit obligation Accumulated postretirement benefit obligation--beginning balance $ 15,061 $ 16,482 Service cost.................................................... 467 472 Interest cost................................................... 1,254 1,125 Participant contributions....................................... 39 24 Benefits paid................................................... (1,361) (1,251) Actuarial (gain) loss........................................... 2,729 (1,791) -------- -------- Accumulated postretirement benefit obligation--ending balance... $ 18,189 $ 15,061 Reconciliation of fair value plan assets Employer contributions.......................................... $ 1,322 $ 1,227 Participant contributions....................................... 39 24 Benefits paid................................................... (1,361) (1,251) -------- -------- Plan assets at fair market value--ending balance................ $ -- $ -- Reconciliation of funded status Funded status................................................... $(18,189) $(15,061) Unrecognized actuarial loss..................................... 2,754 24 -------- -------- Net amount recognized in the consolidated balance sheet......... $(15,435) $(15,037) ======== ======== Weighted average assumptions Discount rate................................................... 7.25% 8.00% Valuation year health care cost trend rate...................... 7.50% 8.00% Ultimate health care cost trend rate............................ 4.50% 4.50% First year of ultimate health care cost trend rate.............. 2007 2007
At October 31, 2000, an adjustment of $1,080 was made to decrease the accumulated postretirement benefit obligation for the Company's postretirement health and life insurance plan as a result of stating the plan liability at fair value under "fresh start accounting." This adjustment was recorded in the eleven month period ended October 31, 2000 and has been included as a component (reduction) of "reorganization costs" in the Consolidated Statement of Earnings. 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) The net periodic benefit cost for 2000 consisted of $139 for the one month period ended November 30, 2000 and $1,446 for the eleven month period ended October 31, 2000. The health care cost trend rate used to value the accumulated postretirement benefit obligation is assumed to decrease gradually to an ultimate rate of 4.5% in 2007. A 1% increase in this annual trend rate would increase the accumulated postretirement benefit obligation as of November 30, 2001 by approximately $2,665 and the combined service and interest components of the annual net postretirement health care cost by approximately $284. A 1% decrease in this annual trend rate would decrease the accumulated postretirement benefit obligation as of November 30, 2001 by approximately $2,274 and the combined service and interest components of the annual net postretirement health care cost by approximately $238. 21. CONTINGENT LIABILITIES The Company is defending various claims and legal actions that are common to its operations. These legal actions primarily involve claims for damages arising from the Company's manufacturing operations, including environmental actions, patent infringement, product liability, and various contract and employment matters. Environmental Matters--The Company's operations and properties are subject to a variety of complex and stringent federal, state, and local laws and regulations, including those governing the use, storage, handling, generation, treatment, emission, release, discharge and disposal of certain materials, substances and wastes, the remediation of contaminated soil and groundwater, and the health and safety of employees. As such, the nature of the Company's operations exposes it to the risk of claims with respect to such matters. There can be no assurance that material costs or liabilities will not be incurred in connection with such claims. Management believes that the future costs of compliance with existing environmental laws and regulations, and liabilities for known environmental claims pursuant to such laws and regulations, will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. However, future events, such as new information, changes in existing laws and regulations or their interpretation, or more vigorous enforcement policies of regulatory agencies may give rise to additional expenditures or liabilities that could be material. The U.S. Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), also known as the "Superfund" law, imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons with respect to the release of a "hazardous substance" into the environment. These persons include the owner or operator of the disposal site or sites where the release occurred and companies that disposed of or arranged for the disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liabilities for the costs of cleaning up the releases and for damages to natural resources. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury or property damages allegedly caused by the hazardous substances released into the environment. In addition, where the Company has sold properties used in its prior manufacturing operations, it may have contractual obligations to the new owner to remedy environmental contamination on the site arising from prior operations. The Company also generates, or has in the past generated, waste, including hazardous waste, that is subject to the Federal Reserve Conservation and Recovery Act and comparable state statutes. The U.S. Environmental Protection Agency ("EPA") and various state agencies have promulgated regulations that limit the disposal options for certain hazardous and non-hazardous waste. Such regulations may also require corrective action with respect to contamination of facilities caused by the past handling of industrial waste. The Company has been named as a potentially responsible party ("PRP") under CERCLA or similar state Superfund laws at the I. Jones Recycling Site in Fort Wayne, Indiana. The Company believes that the clean up at 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) this site is largely complete and that it has paid, or has currently accrued sufficient funds to pay, any liabilities it may have associated with the clean up of this site. The Company also owns or leases, and has in the past owned or leased, numerous properties that for many years have been used in industrial and manufacturing operations. Although the Company has in the past utilized operating and disposal practices that were standard for the industry at the time, hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company, or on or under other locations where such wastes have been taken for disposal. The Company currently owns property near Atlanta, Georgia on which maintenance and testing of fuel dispensing equipment was previously performed. As part of this operation, chlorinated solvents were inadvertently released into the soil and groundwater through the facility septic system. Migration of these releases has caused solvent concentrations above background levels in the groundwater under an adjacent residential property. The Company has completed the cleanup of this release under the oversight of the Georgia Environmental Protection Division of the Georgia Department of Natural Resources, and is currently monitoring the property to ensure that additional cleanup work is not necessary. The Company also has contracted to sell property near Jasper, Tennessee where chlorinated solvents have been detected in the groundwater. The Company has engaged a firm to remediate the site pursuant to an agreement with the Tennessee Department of Environment and Conservation. The firm has begun a groundwater characterization that is expected to cost approximately $400. Depending upon the results of the characterization (which could take between 6 months and 2 years to complete), additional work may be necessary. Upon completion of the remediation, the Company will seek a no further action letter from the State of Tennessee. Additionally, the Company owns a site in the State of Illinois, which was formerly a die cast operation. The Company has submitted the site to the State of Illinois site remediation program. The Company has retained a firm to assess the situation and to develop a remediation plan. The Company does not yet know what costs, if any, will be necessary for remediation. The Company also has a site located in Bladel, the Netherlands that was acquired as a part of the RPS Acquisition. At the time of purchase, the site had accrued $700 for clean-up costs associated with environmental matters. Schlumberger is responsible for the cleanup and any amounts in excess of the accrual. Total amounts included in accrued expenses related to environmental matters were $1,194 and $1,057 at November 30, 2001 and 2000, respectively. Product Liability and Other Matters--The Company is subject to various other legal actions arising out of the conduct of its business, including actions relating to product liability, and claims for damages alleging violations of federal, state, or local statutes or ordinances as well as claims for breach of various contract relationships. Total amounts included in accrued expenses related to these actions were $1,829 and $1,266 at November 30, 2001 and 2000, respectively. On October 18, 2000, Schlumberger filed a claim with the Bankruptcy Court with respect to the Company's acquisition of RPS. The claim, which was subsequently modified on January 12, 2001, is for various sums allegedly due to Schlumberger, totaling $10,000. The Predecessor Company believed that $6,507 of the claim was valid and made a provision for that amount. Pursuant to the Plan, this provision was discharged as an impaired claim and included in the calculation of extraordinary gain for the eleven months ended October 31, 2000. If the remaining amount of the claim were to be upheld, it would be treated similarly to the claims of other impaired unsecured creditors. The Company has not paid this claim as it has a counter-claim against Schlumberger for amounts due and alleged to be due to the Company on account of Schlumberger's alleged material breach of various representations and warranties in connection with the acquisition of RPS. The amount of the Company's counter-claim is substantially higher than the amount of Schlumberger's claim. The Company has commenced arbitration proceedings and filed its Statement of Claim in the International Court of Arbitration to resolve this matter. 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Dollar amounts in thousands except dollars per share) On or about September 11, 1998, the Company entered into a Remarketing Agreement with Radiant Systems, Inc. Radiant has alleged that the Company did not satisfy certain of its commitments in the Remarketing Agreement. The parties have entered into a Master Agreement, Remarketer Agreement, and Manufacturing Agreement on March 28, 2002 that resolved the matter. The Company has recorded a liability of approximately $2,000. The Company has received a subpoena from the SEC requiring submission of documentation related to the RPS acquisition that occurred in 1998 and the subsequent treatment of goodwill related to that acquisition by the Company on certain of its financial statements through the time of the Company's Chapter 11 bankruptcy during the fiscal year 2000. The Company is cooperating fully with the SEC in its response to that subpoena. In the opinion of the Company, amounts accrued for awards or assessments in connection with these matters at this time are adequate and the ultimate resolution of environmental, product liability, and other legal matters will not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. The Company is not able to estimate the additional loss or range of loss that is reasonably possible, beyond the amounts accrued. The Company reassesses these matters as new facts and cases are brought to management's attention. 22. DERIVATIVE INSTRUMENTS Through its subsidiary, Tokheim-Italia s.r.l, the Company has entered into interest rate swap agreements to guard against interest rate fluctuations on certain debt. However, these agreements do not qualify as hedges, as defined by the SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The nominal amount of the instruments at November 30, 2001 was $2,315. These instruments will expire in 2003 and 2006. The recording of fair value at November 30, 2001 resulted in the creation of a liability and a charge to interest expense of $88. 58 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Directors, Tokheim Corporation We have audited the accompanying consolidated balance sheet of Tokheim Corporation and subsidiaries (Successor Company) as of November 30, 2001, and the related consolidated statements of earnings, shareholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tokheim Corporation and subsidiaries (Successor Company) at November 30, 2001, and the consolidated results of its operations and its cash flow for the year then ended in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that Tokheim Corporation (Successor Company) will continue as a going concern. As more fully described in Note 3 to the consolidated financial statements, the Company experienced a net loss for the year ended November 30, 2001 and has negative working capital at November 30, 2001. In addition, the terms of the Company's debt arrangements include quantitative and qualitative covenants, certain of which were violated during the year ended November 30, 2001 and subsequently waived by the bank group, and provide that the bank group, in its sole discretion, has the ability to accelerate the maturity of substantially all of the Company's debt. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 3 to the consolidated financial statements. The financial statements do not include any adjustments that may result from the outcome of this uncertainty. As more fully described in Note 2 to the consolidated financial statements, effective October 20, 2000, the Company emerged from protection under Chapter 11 of the U.S. Bankruptcy Code pursuant to a Plan of Reorganization. The Company adopted "fresh start" accounting whereby its assets, liabilities and new capital structure were adjusted to reflect estimated fair values as of October 31, 2000. As a result, the consolidated financial statements for periods subsequent to October 31, 2000 reflect the Successor Company's new basis of accounting and are not comparable to the Predecessor Company's consolidated financial statements prepared on a pre-reorganization basis. ERNST & YOUNG LLP Fort Wayne, Indiana April 15, 2002 59 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Directors, Tokheim Corporation We have audited the accompanying consolidated balance sheet of Tokheim Corporation and its subsidiaries as of November 30, 2000 (Successor Company), and the related consolidated statements of earnings, shareholders' equity and cash flows for the period from November 1, 2000 to November 30, 2000 (Successor Company) and for the period from December 1, 1999 to October 31, 2000 (Predecessor Company). We have also audited the consolidated statements of earnings, shareholders' equity and cash flows for the year ended November 30, 1999 (Predecessor Company). The Predecessor Company and the Successor Company may be hereinafter referred to as the Company. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tokheim Corporation and its subsidiaries at November 30, 2000 (Successor Company) and the results of their operations and their cash flows for the period from November 1, 2000 to November 30, 2000 (Successor Company), for the period from December 1, 1999 to October 31, 2000 (Predecessor Company), and for the year ended November 30, 1999 (Predecessor Company), in conformity with accounting principles generally accepted in the United States of America. As more fully described in Note 3 to the consolidated financial statements, Tokheim Corporation and subsidiaries (Successor Company) has incurred a net loss in 2001 and is experiencing capital funding and liquidity difficulties. Management is seeking to restructure the Successor Company's capital structure. The impact of the resolution of these matters on the future operations of the Successor Company is uncertain. As more fully described in Note 2 to the consolidated financial statements, effective October 20, 2000, the Company emerged from protection under Chapter 11 of the U.S. Bankruptcy Code pursuant to a Plan of Reorganization. The Company adopted "fresh start" accounting whereby its assets, liabilities and new capital structure were adjusted to reflect estimated fair values as of October 31, 2000. As a result, the consolidated financial statements for the periods subsequent to October 31, 2000 reflect the Successor Company's new basis of accounting and are not comparable to the Predecessor Company's consolidated financial statements prepared on a pre-reorganization basis. PriceWaterHouseCoopers LLP Indianapolis, Indiana March 19, 2001, except as to the fourth paragraph above for which the date is April 15, 2002 60 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. Upon approval by the audit committee, the Company engaged Ernst & Young LLP as its independent public accountants, effective June 12, 2001. Following the solicitation by Tokheim of bids for independent public accountants, PricewaterhouseCoopers LLP ("PwC") informed the Chief Financial Officer of the Company via telephone on May 18, 2001 that PwC was not going to make a proposal to continue as the Company's independent public accountants and that PwC resigned as the current independent public accountants of the Company effective immediately. PwC sent the Company a letter on May 18, 2001 confirming that the client-auditor relationship between the Company and PwC had ceased. PwC had served as the Company's independent public accountant for more than 15 years. PwC's reports on the financial statements for the fiscal years ended November 30, 2000 and 1999, respectively, did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with its audits for the fiscal years ended November 30, 2000 and 1999, respectively, and through May 18, 2001, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PwC would have caused them to make reference thereto in their report on the financial statements for such years, except that in the second quarter of 1999, the Company and PwC had a disagreement over the propriety of charging certain payroll costs to acquisition reserves. The financial statements were adjusted to PwC's satisfaction prior to the filing of the second quarter report on Form 10-Q. The Company authorized PwC to respond fully to the inquiries of the successor accountant concerning the subject matter of such disagreement. In the fiscal years ended November 30, 2000 and 1999 and through May 18, 2001, there have been no reportable events (as defined in Regulation S-K Item 304(a)(1)(v)) except as follows: 1. In connection with the audit of the fiscal year ended November 30, 1999, PwC advised the Company in PwC's report to the Company's Audit Committee of an internal control deficiency at one of the Company's U.S. subsidiaries, specifically inadequate inventory control and valuation procedures. The Company undertook certain steps to address the internal control deficiencies. The Company's Audit Committee discussed the subject matter of PwC's report with PwC. The Company authorized PwC to respond fully to the inquiries of the successor accountant concerning the subject matter of such issue. 2. In connection with the audit of the fiscal year ended November 30, 2000 financial statements, PwC advised the Company in PwC's report to the Company's Audit Committee of an internal control deficiency at one of the Company's German subsidiaries, specifically inadequate preparation of reconciliations, account analyses and supporting documentation in a timely manner. The Company provided the required reconciliations, account analyses and supporting documentation prior to the completion of the audit. The Company's Audit Committee discussed the subject matter of PwC's report with PwC. The Company authorized PwC to respond fully to the inquiries of the successor accountant concerning the subject matter of such issue. Reference is made hereby to Exhibit 16.2 attached to the Company's Report on Form 8-K/A, dated May 18, 2001, the same being a letter from PricewaterhouseCoopers LLP, addressed to the SEC, setting forth their agreement with the previous four paragraphs of this Item 9, in addition to acknowledging that the Company had requested it to furnish the required letter. Said Exhibit 16.2 is hereby incorporated by reference into this Report on Form 10-K. 61 PART III Item 10. Directors and Executive Officers of the Registrant. The following is a list of the Company's directors and executive officers as of April 15, 2002, together with biographical summaries of their experience. The ages of the persons set forth below are as of April 15, 2002.
Name Age Position(s) with the Company ---- --- ------------------------------------- John S. Hamilton....... 42 President and Chief Executive Officer Jacques St-Denis....... 44 Vice President, Strategic Resources Neil H. Thomas......... 36 Vice President, Global Marketing and Strategy John W. Ballantine..... 56 Director David Forbes-Nixon..... 37 Director George A. Helland, Jr.. 64 Director Horst J. Metz.......... 55 Director Gerald G. Nadig........ 56 Director Andrew Phillips........ 39 Director William E. Redmond, Jr. 42 Director
John S. Hamilton has been President and Chief Executive Officer of the Company since September 4, 2001 and a Director since September 5, 2001. Previously, he was Group President at The Harbour Group from 1999 to 2001, Senior Vice President and Chief Operating Officer for the Fairchild Corporation from 1997 to 1999, and Vice President and General Manager of AlliedSignal Inc. from 1996 to 1997. Jacques St-Denis has been Vice President, Strategic Resources of the Company since November 2001. From 1998 to 2001, he served as Executive Vice President, Global Operations of the Company. From 1996 to 1998, he served as President and Director General of Tokheim-Sofitam S.A. During 1996, he served as Vice President, Tokheim International. From 1995 to 1996, he was the Company's Director of Marketing, and from 1993 to 1994, he was the Company's Director of Worldwide Services. Previously, Mr. St-Denis served as Managing Director of European Operations and National Sales and Marketing Director, USA, for Babson Brothers Company. Neil H. Thomas has been Vice President, Global Marketing and Strategy of the Company since August 2001. From October 1998 to July 2001, he was Senior Manager in the Global Energy Practice at Arthur D. Little, a leading firm of management consultants. Prior to that, he spent 8 years in various marketing, planning, and retail sales roles at Gulf Oil (U.K. subsidiary of Chevron Corporation). John W. Ballantine has been a Director of the Company since November 2000. He has been a private investor since 1998. He was Executive Vice President of First Chicago NDB Corp./The First National Bank of Chicago from 1992 to 1998. He is currently a Director of First Oak Brook Bankshares Oak Brook bank and Scudder Funds (Chicago Board). David Forbes-Nixon has been a Director of the Company since November 2000. He is a Managing Director of Barclays Bank PLC, which he has served in various capacities since 1995. George A. Helland, Jr. has been a Director of the Company since February 2001. He has been an independent management consultant and Senior Associate, Cambridge Energy Research Associates, since 1997. Prior to 1997, he was Vice President Operations for Dresser Industries, Inc. He is currently a Director of Hunting PLC and NS Group, Inc. 62 Horst J. Metz has been a Director of the Company since November 2000. He was Senior Vice President of Booz, Allen & Hamilton, Inc., (BAH) from 1995 to 1997. He held the position of Vice President of BAH prior to 1995 and was a Director at BAH from 1987 to 1990 and from 1992 to 1994. Gerald G. Nadig has been a Director of the Company since November 2000. He has been Chairman of the Board of Material Sciences Corporation ("MSC") since 1998. He has been Chief Executive Officer of MSC since 1997 and President of MSC since 1991. Andrew Phillips has been a Director of the Company since November 2000. He has been Investment Director of Intermediate Capital Group, a London, England, based investor in high yield bonds, leveraged and mezzanine loans since 1989. William E. Redmond, Jr. has been a Director of the Company since November 2000. He has been Chairman of the Board, President and CEO of Gardenway, Inc. since 1996. Previously, he was Vice President Field Operations, Quaker Oats Company from 1994 to 1996. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and the beneficial owners of more than 10% of any class of the Company's equity securities, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Executive officers, directors and 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based on a review of the Section 16(a) forms furnished to the Company and written representations from the Company's executive officers, directors and 10% beneficial owners, all reports were filed on a timely basis. Item 11. Executive Compensation The following tables set forth various aspects of executive compensation paid by the Company for services over the past three fiscal years to the Company's Chief Executive Officer and each of the four most highly compensated executive officers (the "Named Executive Officers"). Amounts set forth below are in actual dollars. Summary Compensation Table
Long-Term Compensation Annual Compensation Awards - - ------------------------------- Securities Other Annual Underlying All Other Name and Principal Position Year Salary Bonus Compensation Options Compensation - --------------------------- ---- -------- -------- ------------ ------------ ------------ D. K. Pinner(1)..................................... 2001 $241,800 $ -- $236,582(2) $442,243(3) Chairman, President and Chief Executive Officer 2000 483,600 -- 12,483 100,000(4) 112,335 1999 476,883 -- 12,317 75,000(5) 98,733 G. A. Helland, Jr................................... 2001 253,438(6) -- 85,151(7) -- 32,617(8) Acting Chief Executive Officer J. S. Hamilton...................................... 2001 93,750 130,000 -- -- -- President and Chief Executive Officer, Director R. L. Macdonald(9).................................. 2001 333,818 -- 4,749(10) -- 25,161(11) Executive Vice President, Finance and Chief 2000 177,273 -- -- -- 58,147 Financial Officer J. St-Denis......................................... 2001 298,555 -- 1,006(12) -- 33,940(13) Executive Vice President, Operations 2000 288,960 -- 912 -- 24,516 1999 284,947 -- 847 31,000(5) 21,270 N. L. Roelke(14).................................... 2001 165,600 -- 1,226(15) -- 60,368(16) Vice President, Secretary and General Counsel 2000 186,000 -- 1,182 -- 28,617 1999 183,417 -- 1,546 15,000(5) 25,793 S. A. Swogger(19)................................... 2001 192,000 -- 580(17) -- 15,498(18) President, Tokheim U.S. 2000 190,333 12,890 556 -- 14,871 1999 171,996 -- 844 10,000(5) 13,255
63 - -------- (1) Mr. Pinner resigned from the Company on March 31, 2001. The information provided for Mr. Pinner is through November 30, 2001. (2) Represents taxes paid on Mr. Pinner's behalf of $6,717 plus SERP payments of $217,620 and $12,245 of lease payments made on a company provided vehicle. (3) Includes Company contributions to the Retirement Savings Plan of $9,350; term life insurance premiums of $13,425; and $105,271 estimated present value of cash surrender value to be received in future years. Also includes $241,800 in severance and $72,397 of accrued vacation paid upon Mr. Pinner's departure. (4) Stock options held by Mr. Pinner were cancelled upon his resignation from the Company. (5) All of these options were canceled pursuant to the Plan of Reorganization. (6) Represents fees paid by the Company to Mr. Helland as Acting CEO. (7) Represents travel and living expense reimbursements by the Company. (8) Represents fees paid by the Company to Mr. Helland as Director fees. (9) Mr. Macdonald resigned from the Company on March 5, 2002. (10) Represents taxes paid on Mr. Macdonald's behalf. (11) Includes Company contributions to the Retirement Savings Plan of $7,950; term life insurance premiums of $9,490; and $7,721 estimated present value of cash surrender value to be received in future years. (12) Represents taxes paid on Mr. St-Denis' behalf. (13) Includes Company contributions to the Retirement Savings Plan of $9,350; term life insurance premiums of $2,011; and $22,579 estimated present value of cash surrender value to be received in future years. (14) Mr. Roelke left the Company on or about August 31, 2001. (15) Represents taxes paid on Mr. Roelke's behalf. (16) Includes Company contributions to the Retirement Savings Plan of $8,700; term life insurance premiums of $2,451; and $20,413 estimated present value of cash surrender value to be received in future years. Also includes $28,804 in accrued vacation pay paid upon Mr. Roelke's departure. In addition, after his departure, Mr. Roelke provided certain consulting services to the Company in the total agreed upon amount of $44,900, which the Company paid to Mr. Roelke in the 2002 fiscal year (and which is not included in the $60,368 amount above). (17) Represents taxes paid on Mr. Swogger's behalf. (18) Includes Company contributions to the Retirement Savings Plan of $9,350; term life insurance premiums of $1,159; and $4,989 estimated present value of cash surrender value to be received in future years. (19) Mr. Swogger left the Company on or about January 31, 2002. The Company did not grant any stock options during the fiscal year ended November 30, 2001 to the Named Executive Officers. In addition, there were no exercises of options during fiscal year 2001 by any of the Named Executive Officers. As of November 30, 2001, there were no securities underlying unexercised options. Compensation of Directors During fiscal year 2001, the compensation for the Directors consisted of a quarterly retainer of $7,500; an additional $2,000 for each committee chairman; $1,500 for each personally attended Board meeting or Board committee meeting; and $500 for each Board meeting or Board committee meeting attended by telephone. In addition, George A. Helland, Jr. received a $5,000 fee for his position as Lead Director and $1,750 a day for each day he worked on Company business. See footnote notes 6, 7 and 8 to the Summary Compensation Table above. Directors who are officers or employees of the Company receive no additional compensation for their services as directors. Employment Contracts and Change-in-Control Arrangements The Company has entered into employment agreements with certain of its Named Executive Officers, including its Chief Executive Officer. These agreements provide for basic terms of compensation for these officers, as well as identifying existing benefit programs extended by the Company. These agreements also 64 restrict the officers from competing with the Company under certain circumstances and prohibit disclosure of confidential information. In addition, the agreements provide for termination benefits in the event an executive officer is terminated without cause (as defined in the agreements themselves) or, with certain agreements, in the event of change in control of the Company (as defined in the agreements themselves) coupled with a termination or constructive termination of employment (as defined in the agreements themselves). These benefits essentially provide for continuing salary and fringe benefits for a period of time in the event that termination of employment occurs within 12 months from the date of change in control. When triggered under any of the above agreements, the benefits provided range from 18 to 24 months. These change in control provisions are intended to keep the Company competitive in its recruitment and retention of senior management personnel. Based upon the level of current compensation of the Named Executive Officers payments under these provisions would range in the aggregate between $1,000,000 and $2,000,000 annually in the event of a termination following a change in control. Repricing of Options The Company has adopted a policy prohibiting the reissue or repricing of any options granted under the Company's Stock Incentive Plan. Compensation Committee Interlocks and Insider Participation Not applicable. Compensation Committee Report The Compensation Committee of the Board of Directors (the "Committee") is responsible for the approval and administration of compensation programs relating to the pay of all executive officers and selected key management employees. It is the objective of the Committee to ensure the Company's ability to attract and retain the highest caliber executives by providing adequate and appropriate compensation programs for attainment of financial results, which ultimately benefit the shareholders, customers, employees, and communities in which the Company operates. The Committee approves all compensation involving the executive officers, all incentive stock awards, and periodically reviews compensation for other key management employees. Salaries To attract and retain the most capable executives, it is the responsibility of the Committee to design a compensation program that is competitive with similar manufacturing companies. The President and Chief Executive Officer's salary is established by the Committee and approved by the Board of Directors. The President and Chief Executive Officer submits the recommended remuneration for the executive officers, operating under his control, to the Committee for approval. The Committee, with the assistance of a Professional Recruiting and Compensation firm, prepared and compared a complete financial package for its Chief Executive Officer against like packages for companies in similar industries and geographical locations. The Committee decided that future compensation for the President and Chief Executive Officer, while still incorporating the elements of base salary, bonus, and long-term incentives, should depend upon the achievement of specific measurable financial targets and goals. Stock Incentive Plan To further encourage superior financial results, the Company implemented a Stock Incentive Plan which was approved by the shareholders at the 1993 Annual Shareholders Meeting and subsequently amended at the 1997 Annual Shareholders Meeting to provide additional shares for stock awards. The purpose of this plan was to promote the long-term financial performance of the Company by distributing stock incentive awards to key management for attaining corporate and individual objectives. The options granted under this plan vested over a number of years to encourage the financial growth of the Company and the retaining of key personnel. On the Effective Date, all rights and awards granted under the Stock Incentive Plan were cancelled and the Successor 65 Company approved a new stock option plan, which provided certain key employees of the Successor Company the right to acquire shares of New Common Stock. There were no stock awards granted during the 2001 fiscal year. Cash Bonuses Also, to promote superior financial results, the Committee has adopted and is responsible for administering a Management Incentive Bonus Plan. This plan is designed to encourage sustained progress and growth of the Company coupled with positive financial results for the benefit of its shareholders. The bonuses under this plan are based on the attainment of corporate objectives and individual performance during the fiscal year as stated in the Company's Business Plan and as approved by the Board of Directors. There were no cash bonuses based upon the Company's performance paid for the 2001 fiscal year. However, bonuses were paid to Named Executive Officers in connection with their employment agreements. Committee Composition This Report is submitted on behalf of the Compensation Committee of the Board of Directors, which comprises: William E. Redmond, Jr., Andrew Phillips, and George A. Helland, Jr. Performance Graph Comparison of Cumulative Total Return* Tokheim Corporation, Russell 2000 Index and Peer Group (Performance Results Through 11/30/2001) [CHART] Tokheim Corporation Russell 2000 Index Peer Group 11/21/2000 $100 $100 $100 11/30/2001 $1,200 $99 $104
11/21/2000 11/30/2001 ---------------------------------------- TOKHEIM CORP...... 100.00 1,200.00 ---------------------------------------- Russell 2000 Index 100.00 98.71 ---------------------------------------- Peer Group........ 100.00 104.23 ----------------------------------------
Assumes $100 invested at the close of trading on 11/21/2000 in Tokheim Corporation Common Stock, Russell 2000 Index and Peer Group. *Cumulative total return assumes reinvestment of dividends Source: Houlihan Lokey Howard & Zukin 66 Factual material is obtained from sources believed to be reliable, but the Company is not responsible for any errors or omissions contained therein. Pursuant to the Plan, as of the Effective Date, all outstanding shares of Old Common Stock were cancelled and shares of New Common Stock were authorized and issued, as more fully described in Note 2 to the consolidated financial statements. Because comparisons of returns on the Old Common Stock would not be meaningful, information is presented only for the period after which trading in New Common Stock commenced on the OTC Bulletin Board. All New Common Stock was issued as of the Effective Date. Prior to this date, no market existed for this stock. As such, stock values within the initial year fluctuated substantially. This fluctuation should not be taken as an expectation of future returns. As the OTC Bulletin Board is not an exchange, over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of March 31, 2002, the number of (i) shares of New Common Stock, (ii) shares of New Common Stock in the Company's Retirement Savings Plan, (iii) shares of Old Preferred Stock in the Company's Retirement Savings Plan and (iv) exercisable stock options beneficially owned by all directors and nominees of the Company, by each of the Named Executive Officers, and by directors and executive officers of the Company as a group. Amount and Nature of Beneficial Ownership (1)
New Old New Common Preferred Exercisable Percent Common Stock in Stock in the Stock of Name Stock the RSP RSP Options Class - ---- ------ -------- ------------ ----------- ------- John W. Ballantine.............. -- -- -- -- * William H. Hardie, III.......... -- -- -- -- * George A. Helland, Jr........... -- -- -- -- * Robert L. Macdonald............. -- -- 374.996 -- * Horst J. Metz................... -- -- -- -- * Gerald G. Nadig................. -- -- -- -- * David Forbes-Nixon (2).......... -- -- -- -- * Andrew Phillips................. -- -- -- -- * Douglas K. Pinner............... -- -- -- -- * William E. Redmond, Jr.......... -- -- -- -- * Norman L. Roelke................ -- -- 4,744.396 -- * Jacques St-Denis................ -- -- 3,441.735 -- * Scott A. Swogger................ -- -- 2,873.469 -- * Executive Officers and Directors as a Group (13 persons)....... -- -- 11,434.596 -- *
- -------- * Represents less than 1% of the Company's outstanding New Common Stock. (1) The Directors do not have beneficial ownership in the Company as a result of the implementation of the Plan. (2) Mr. Forbes-Nixon disclaims ownership of 1,030,455 shares of Common Stock beneficially owned by Barclays Bank PLC. 67 The following table sets forth, as of March 31, 2002, the number of shares of New Common Stock beneficially owned by the only persons known to the Company to own more than 5% of the outstanding shares of New Common Stock and the holder of the Company's Old Preferred Stock.
Name of Individual Amount and Nature of Class of Percent of or Identity of Group Beneficial Ownership Shares Class -------------------- -------------------- ---------------- ---------- Barclays Bank PLC....... 1,030,455 New Common Stock 24.6 5 The North Colonnade Canary Wharf London E14 4BB The Bank of New York.... 764,626 New Common Stock 18.3 925 Patterson Plank Road Secaucus, NJ 07094 JP Morgan/Chase Bank.... 369,161 New Common Stock 8.8 14201 Dallas Parkway Dallas, TX 75254 Citibank of N.A......... 286,740 New Common Stock 6.9 3800 Citicorp Center Tampa, FL 33610 Brown Brothers.......... 248,062 New Common Stock 5.9 63 Wall Street New York, NY 10005 The Bank of New York.... 779,130(1) New Common Stock 100.0 One Wall Street New York, NY 10286
- -------- (1) Represents shares of the Company's Old Preferred Stock held by the Trustee of the Retirement Savings Plan for Employees of Tokheim Corporation and Subsidiaries. Pursuant to this qualified plan, shares of Old Preferred Stock are to be allocated from time to time to the Company's employees, including its officers. It is not possible to predict the actual number of shares of Old Preferred Stock, which will be allocated to officers in the future. Allocated shares are voted by the participants, including officers, to whom they are allocated. Unallocated shares are voted by the Trustee in proportion to the vote by participants with respect to allocated shares. Item 13. Certain Relationships and Related Transactions None. 68 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) (1) Financial Statements Included as outlined in Item 8 of Part II of this Report: Consolidated Statement of Earnings for the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the year ended November 30, 1999............................................................................... Page 22 Consolidated Balance Sheet as of November 30, 2001 and 2000....................................... Page 23 Consolidated Statement of Cash Flows for the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the year ended November 30, 1999............................................................................... Page 24 Consolidated Statement of Shareholders' Equity for the year ended November 30, 2001, the one month period ended November 30, 2000, the eleven month period ended October 31, 2000 and the year ended November 30, 1999......................................................................... Page 25 Notes to Consolidated Financial Statements........................................................ Page 27 Reports of Independent Accountants................................................................ Page 59
(a) (2) Financial Statement Schedules The requirement for Schedule II, "Valuation and Qualifying Accounts" is included in the financial statements included in Item 8 of Part II of this report. All other schedules are not required under the related instructions or are inapplicable to the Company and have therefore been omitted. 69 (a)(3) Exhibits
Exhibit No. Document - ------- -------- 2.1.. Filing of a Joint Prepackaged Plan of Reorganization for the Company and its U.S. subsidiaries pursuant to chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated September 11, 2000). 2.2.. Confirmation of the Joint Prepackaged Plan of Reorganization for the Company and its U.S. subsidiaries pursuant to chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (incorporated herein by reference to the Company's Current Report on Form 8-K dated October 16, 2000). 3.1.. Amended and Restated Articles of Incorporation of Tokheim Corporation, as filed with the Indiana Secretary of State as of October 20, 2000 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 3.2.. Amended and Restated Bylaws of Tokheim Corporation, as amended and restated as of October 20, 2000 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.1.. Post-Confirmation Credit Agreement, dated as of October 20, 2000, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as Administrative Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.2.. Series A Warrant Agreement, dated as of October 20, 2000, among Tokheim Corporation and the holders of Series A Warrant Certificates (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.3.. Series B Warrant Agreement, dated as of October 20, 2000, among Tokheim Corporation and Computershare Investor Services, LLC, as Warrant Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.4.. Series C Warrant Agreement, dated as of October 20, 2000, among Tokheim Corporation and Computershare Investor Services, LLC, as Warrant Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.5.. Registration Rights Agreement, dated as of October 20, 2000, among Tokheim Corporation and the Holders of Stock to be listed on Schedule 1 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.6.. First Amendment to the Credit Agreement, dated as of March 14, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as Administrative Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 2001). 4.7.. Second Amendment to the Credit Agreement, dated as of July 23, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended May 31, 2001). 4.8.. Third Amendment to the Credit Agreement, dated as of October 31, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent.
70
Exhibit No. Document - ------- -------- 4.9 Fourth Amendment to the Credit Agreement, dated as of February 8, 2002, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. 4.10 Fifth Amendment to the Credit Agreement, dated as of February 28, 2002, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. 4.11 Waiver and Consent, dated as of April 15, 2002, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions as lenders, AmSouth Bank as a Lender and as Documentation Agent, and ABN AMRO Bank N.V., as a Lender, as issuing lender and as Administrative Agent. 10.1 Tokheim Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.2 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Douglas K. Pinner (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.3 Employment Agreement, dated May 15, 2000, between Tokheim Corporation and Robert L. Macdonald (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q/A, for the quarter ended May 31, 2000). 10.4 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Jacques St-Denis (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.5 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Norman L. Roelke (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.6 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Scott A. Swogger (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.7 Employment Agreement, dated September 4, 2001, between Tokheim Corporation and John S. Hamilton. 10.8 Technology License Agreement, effective as of December 1, 1997, between Tokheim Corporation and Gilbarco, Inc. (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1997). 10.9 Tokheim Corporation Management Option Plan (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 10.10 Form of Incentive Stock Option Agreement under Tokheim Corporation Management Option Plan (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 10.11 Incentive Stock Option Agreement under Tokheim Corporation Management Option Plan, dated as of October 20, 2000, among Tokheim Corporation and Douglas K. Pinner (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 21.1 Subsidiaries of Tokheim Corporation.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during the fourth quarter of fiscal 2001. 71 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. TOKHEIM CORPORATION /S/ JOHN S. HAMILTON By: _______________________________ John S. Hamilton, President, Chief Executive Officer May 17, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on this 17th of May, 2002. Signature Title --------- ----- /S/ JOHN S. HAMILTON President, Chief Executive - ----------------------------- Officer and Principal John S. Hamilton Financial Officer /S/ DENNIS M. MAUDE Principal Accounting Officer - ----------------------------- Dennis M. Maude /S/ JOHN W. BALLANTINE Director - ----------------------------- John W. Ballantine /S/ DAVID FORBES-NIXON Director - ----------------------------- David Forbes-Nixon /S/ GEORGE A. HELLAND, JR. Director - ----------------------------- George A. Helland, Jr. /S/ HORST J. METZ Director - ----------------------------- Horst J. Metz /S/ GERALD G. NADIG Director - ----------------------------- Gerald G. Nadig /S/ ANDREW PHILLIPS Director - ----------------------------- Andrew Phillips /S/ WILLIAM E. REDMOND, JR. Director - ----------------------------- William E. Redmond, Jr. 72 Exhibit Index:
Exhibit No. Description - ------- ----------- 4.8 Third Amendment to the Credit Agreement, dated as of October 31, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. 4.9 Fourth Amendment to the Credit Agreement, dated as of February 8, 2002, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. 4.10 Fifth Amendment to the Credit Agreement, dated as of February 28, 2002, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. 4.11 Waiver and Consent, dated as of April 15, 2002, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions as lenders, AmSouth Bank as a Lender and as Documentation Agent, and ABN AMRO Bank N.V., as a Lender, as issuing lender and as Administrative Agent. 10.7 Employment Agreement, dated September 4, 2001, between Tokheim Corporation and John S. Hamilton. 21.1 Subsidiaries of Tokheim Corporation.
73 EX-4.(8) 3 dex48.txt THIRD AMENDMENT TO THE CREDIT AGREEMENT Exhibit 4.8 THIRD AMENDMENT AND CONSENT THIS THIRD AMENDMENT AND CONSENT, dated as of October 31, 2001 (this "Amendment and Consent"), is given under the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended by the First Amendment dated as of March 14, 2001, as further amended by the Second Amendment and Waiver dated as of July 23, 2001, and as further amended hereby, the "Credit Agreement"), among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), various subsidiaries thereof (together with the Company, the "Borrowers"), various financial institutions as lenders (the "Lenders"), AMSOUTH BANK, as a Lender and as documentation agent for the Lenders (the "Documentation Agent"), and ABN AMRO BANK N.V., as a Lender, as Issuing Lender and as administrative agent for the Lenders (the "Administrative Agent", and together with the Documentation Agent, the "Agents"). WHEREAS, the Borrowers have requested that the Required Lenders consent to certain matters, as hereinafter set forth, and the Required Lenders are willing to give such consent, subject to the terms and conditions hereinafter set forth; and WHEREAS, the parties desire to amend and modify the provisions of the Credit Agreement in certain other respects, as hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. CONSENT. In reliance on the representations and warranties set forth in this Amendment and Consent, and subject to satisfaction of the conditions set forth in Section 5 hereof, the Required Lenders hereby consent, effective as of the Effective Date, to the following: (a) Pursuant to Section 10.20(p) ("Investments") of the Credit Agreement, the making of an Investment by Tokheim RPS, LLC, a wholly-owned Domestic Subsidiary of the Company ("RPS"), in Tokheim UK Limited ("UK"), a wholly-owned Foreign Subsidiary of the Company, in the form of a loan by RPS to UK in the maximum amount of (pound)10,000,000 pursuant to a commercial loan agreement (the "UK Agreement") in form and substance satisfactory to the Administrative Agent with a maturity date of October 31, 2006; provided that (i) the current outstanding debt of (pound)10,000,000 by UK to RPS due October 31, 2001 be repaid in full. The Borrowers, jointly and severally, covenant and agree that intercompany debt under the UK Agreement shall not be evidenced by any note or other instrument unless such note or other instrument is assigned and delivered to the Administrative Agent pursuant to documentation in form and substance satisfactory to the Administrative Agent; and (b) Acknowledgment by the Administrative Agent of a lease agreement in form and substance satisfactory to the Administrative Agent pursuant to which Tokheim Services LLC, a wholly-owned Domestic Subsidiary of the Company (the "Lessor") will lease the Company's headquarters located at 10501 Corporate Drive, Fort Wayne, Indiana (the "Leased Premises"), including in such lease a grant of an option to purchase the Leased Premises, to Parkview Health System, Inc. (the "Lessee"); provided that the Lessor shall have executed and delivered, and caused the Lessee to execute and deliver, a subordination, non-disturbance and attornment agreement in form and substance satisfactory to the Administrative Agent. The Company shall pay any and all costs related to an endorsement to the Administrative Agent's title insurance on the Leased Premises to evidence the recording of the subordination, non-disturbance and attornment agreement referred to in the immediately preceding sentence. SECTION 2. AMENDMENT. In reliance on the representations and warranties set forth in this Amendment and Consent and subject to satisfaction of the conditions set forth in Section 5 hereof, the Borrowers and, pursuant to Section 14.1 ("Waiver; Amendments") of the Credit Agreement, the Required Lenders hereby agree to amend and restate the first sentence of Section 14.9.1 ("Assignments") of the Credit Agreement, excluding subparagraphs (x), (y) and (z) thereof, to read in its entirety as follows: "No Borrower shall be permitted to assign any or all of its obligations under this Agreement or under any other Loan Document without the prior written consent of each Lender (except as otherwise expressly provided in a Loan Document). Any Lender may, with the prior written consents of the Issuing Lender and the Administrative Agent (which consents shall not be unreasonably delayed or withheld and, in any event, shall not be required for an assignment by a Lender to one of its Affiliates), at any time assign and delegate to one or more Eligible Assignees (any Person to whom such an assignment and delegation is to be made being herein called an "Assignee") (x) all or any fraction of such Lender's Loans and Commitment (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender's Loans and Commitment) in a minimum aggregate amount equal to the lesser of (i) the amount of the assigning Lender's Revolving Loan Percentage of the Revolving Commitment Amount plus the unpaid amount of such Lender's Term Loans and Special Loan and (ii) $5,000,000 or (y) all but not less than all of such Lender's Tranche A Term Loan, Tranche B Term Loan or Special Loans; provided that (a) no assignment and delegation may be made to any Person if, at the time of such assignment and delegation, the Borrowers would be obligated to pay any greater amount under Section 7.6 or Section 8 to the Assignee or the Administrative Agent than the Borrowers are then obligated to pay to the assigning Lender under such Sections (and if any assignment is made in violation of the foregoing, the Borrowers will not be required to pay the incremental amounts), (b) no assignment of all or any part of a Special Loan shall be permitted unless there shall occur simultaneously with such assignment of such Special Loan an assignment of a ratable portion of the assigning Lender's Lender Preferred to the Assignee, (c) no assignment shall be made of all of a Lender's Tranche A Term Loan, Tranche B Term Loan or Special Loan pursuant to part (y) above to more than one Assignee unless, after giving effect thereto, each such assignee shall hold at least $5,000,000 of such Term or Special Loan, as the case may be, and (d) the Borrowers and the Administrative Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee until the date when all of the following conditions shall have been met:" SECTION 3. REPRESENTATIONS AND WARRANTIES. In order to induce the Agents and the Lenders to enter into this Amendment and Consent, the Borrowers, jointly and severally, represent and warrant (which representations and warranties shall survive the execution and delivery hereof) to the Agents and the Lenders that: (a) the representations and warranties in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Effective Date (as such term is defined in Section 5 herein) with the same effect as if made on and as of the Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default exists or will exist after giving effect to this Amendment and Consent; (c) the execution and delivery by the Borrowers of this Amendment and Consent and the performance by the Borrowers of their obligations under the Credit Agreement and the other Loan Documents (i) are within the corporate or limited liability company, as applicable, powers of each Borrower, (ii) have been duly authorized by all necessary corporate or limited liability company action, as applicable, (iii) have received all necessary approvals from all governmental authorities having jurisdiction over any Borrower and (iv) do not and will not conflict with any provision of any law, rule, regulation, requirement, administrative order, decree or agreement that is binding on the Company or any 2 of its Subsidiaries or with any provision of the certificate of incorporation or bylaws or other organizational documents of any Borrower; (d) the Credit Agreement and the other Loan Documents are the legal, valid and binding obligations of each Borrower, enforceable against such Borrower in accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether considered in a proceeding at law or in equity); (e) as of October 29, 2001, (i) the aggregate outstanding principal balance of the Tranche A Term Loans is $33,407,062.12, (ii) the aggregate outstanding principal balance of the Tranche B Term Loans is $100,668,187.24, (iii) the aggregate outstanding principal balance of the Special Loans is $114,732,024.14 and (iv) the aggregate outstanding principal amount of all Revolving Loans is $23,000,000.00, including the Stated Amount of all Letters of Credit in the aggregate amount of $2,002,401.14; (f) attached hereto is an updated Schedule 9.8 ("Subsidiaries") to the Credit Agreement that sets forth a true and complete list as of the date hereof of (i) each Subsidiary of the Company, (ii) the jurisdiction of organization of such Subsidiary, (iii) the name of each stockholder thereof, (iv) the number and percentage of outstanding shares owned by each stockholder thereof and (v) for all Domestic and first-tier Foreign Subsidiaries of the Company, (x) the issued and outstanding shares of capital stock of such Subsidiary and (y) the authorized capital stock of such Subsidiary; and (g) the obligation of the Borrowers and the other Loan Parties to repay the Loans and the other obligations under the Loan Documents are absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim or defense of any nature whatsoever to payment of such obligations. SECTION 4. LIMITED AMENDMENT AND CONSENT. This Amendment and Consent shall be limited precisely as written and shall not be deemed (i) to be an amendment of or a consent granted to any other term or condition of the Credit Agreement, any Loan Document or any of the instruments or agreements referred to in such documents or a waiver of any Default or Event of Default under the Credit Agreement, whether or not known to any of the Agents or the Lenders, or (ii) to prejudice any other right or rights that the Agents or the Lenders may now or in the future have under or in connection with the Credit Agreement, any other Loan Document or any instruments or agreements referred to therein. SECTION 5. EFFECTIVENESS. The consent set forth in Section 1 above and the amendments set forth in Section 2 above shall become effective as of the date hereof (the "Effective Date"), subject to satisfaction of the following conditions: (a) receipt by the Administrative Agent of: (i) a counterpart of this Amendment and Consent executed by the Borrowers and the Required Lenders; (ii) a counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit 1 hereto, executed by each Loan Party; (b) such other documents as the Administrative Agent or any Lender may reasonably request; 3 (c) all legal matters in connection with this Amendment and Consent, the Credit Agreement and the other Loan Documents shall be reasonably satisfactory to Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent; (d) in immediately available funds, payment of all outstanding amounts, if any, that have been invoiced by or on behalf of the Administrative Agent and unpaid as of the date hereof with respect to all reimbursable fees, charges or expenses payable in accordance with the terms and provisions of the Credit Agreement and the other Loan Documents, including, without limitation, all Attorney Costs of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, and all fees and disbursements of FTI Policano & Manzo, financial advisor to such counsel; and (e) no Event of Default shall have occurred and be continuing, and no Unmatured Event of Default shall occur or be continuing upon the effectiveness of this Amendment and Consent. The Administrative Agent shall give notice to the Borrowers upon the occurrence of the Effective Date. Except as provided in Section 8 below, this Amendment and Consent shall be of no force and effect if the preceding conditions have not been satisfied by November 30, 2001. SECTION 6. POST-CLOSING COVENANT. The Borrowers jointly and severally covenant and agree that they shall execute and deliver and use all commercially reasonable efforts to cause unaffiliated third parties to execute and deliver, as soon as practicable, to the Administrative Agent, duly executed Deposit Pledge and Security Agreements and Control Agreements, in form and substance satisfactory to the Administrative Agent, encumbering such of the deposit accounts set forth on Schedule 9.25 ("Domestic Deposit Accounts") to the Credit Agreement as the Administrative Agent shall in its discretion determine. This Section 6 shall supersede in its entirety Section 6(i) of the Second Amendment and Waiver dated as of July 23, 2001 with respect to the Credit Agreement. SECTION 7. MISCELLANEOUS. 7.1 Continuing Effectiveness, etc. The Credit Agreement and the other Loan Documents shall remain in full force and effect after giving effect to this Amendment and Consent and are hereby ratified and confirmed in all respects. After the Effective Date, all references to the "Credit Agreement" or similar terms in the Credit Agreement, the Notes, each other Loan Document and any similar document shall refer to the Credit Agreement as hereby amended and as previously amended, modified or supplemented. This Amendment and Consent shall constitute a Loan Document as defined in the Credit Agreement, and the provisions of this Amendment and Consent may be amended, modified or supplemented, or any provision thereof waived, only in accordance with and subject to the provisions of the Credit Agreement; provided, however, that notwithstanding anything to the contrary in Section 14.1 of the Credit Agreement, the provisions of Section 2 of this Amendment and Consent may only be amended, modified or supplemented, or any provision thereof waived, with the consent of all of the Required Lenders. 7.2 Further Assurances. Each of the Loan Parties expressly acknowledges and agrees (i) to enter into such other or further documents, and to take such other or further actions that may be necessary or, in the opinion of the Administrative Agent, desirable to perfect, preserve or protect the liens and security interests created under the Loan Documents and (ii) to grant liens on such other or further property or assets of the Loan Parties not currently encumbered to secure all obligations of the Loan Parties as the Administrative Agent may require; provided that no Loan Party shall have any obligation to grant liens on any such other or further property to the extent that such Loan Party can demonstrate, to the reasonable satisfaction of the Administrative Agent, that the granting of such lien would have a material and adverse tax consequence to the Loan Parties. 4 7.3 Counterparts. This Amendment and Consent may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Amendment and Consent. Delivery of an executed counterpart of a signature page of this Amendment and Consent by facsimile shall be as effective as delivery of a manually executed counterpart of this Amendment and Consent. 7.4 Expenses. The Company agrees to pay the reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) in connection with the preparation, execution and delivery of this Amendment and Consent. 7.5 GOVERNING LAW. THIS AMENDMENT AND CONSENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE WHOLLY PERFORMED WITHIN THE STATE OF NEW YORK. 7.6 Successors and Assigns. This Amendment and Consent shall be binding upon the Borrowers, the Lenders and the Agents and their respective successors and assigns, and shall inure to the benefit of the Borrowers, the Lenders and the Agents and their respective successors and assigns; provided that no Borrower shall have any right to assign this Amendment and Consent without the prior written consent of the Administrative Agent and the Required Lenders. 7.7 Consultation with Advisors. The Loan Parties acknowledge that they have consulted with counsel and with such other experts and advisors as they have deemed necessary in connection with the negotiation, execution and delivery of this Amendment and Consent. This Amendment and Consent shall be construed without regard to any presumption or any rule requiring that it be construed against the party causing this Amendment and Consent or any part hereof to be drafted. 7.8 Entire Agreement. This Amendment and Consent sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. Each of the parties hereto acknowledges that, except as otherwise expressly stated in this Amendment and Consent, no representations, warranties or commitments, express or implied, have been made by any party to any other party with respect to the subject matter of this Amendment and Consent. None of the terms or conditions of this Amendment and Consent may be changed, modified, waived or cancelled, orally or otherwise, except as provided in the Credit Agreement. 7.9 Enforceability. Should any one or more of the provisions of this Amendment and Consent be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 7.10 Invalidity; Severability. Whenever possible, each provision of this Amendment and Consent shall be interpreted in such manner as to be effective and valid under all applicable laws, rules and regulations. Any provision of this Amendment and Consent that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 5 7.11 Headings. The headings of this Amendment and Consent are for the purpose of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment and Consent. 7.12 Definitions. Capitalized terms used in this Amendment and Consent that are not defined herein but are defined in the Credit Agreement shall have the meaning given to such terms in the Credit Agreement. SECTION 8. RELEASE OF CLAIMS. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THE LIABILITY OF SUCH BORROWER TO REPAY ANY AGENT OR ANY LENDER AS PROVIDED IN THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ANY AGENT OR ANY LENDER OR ANY OF THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND EACH LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT AND CONSENT IS EXECUTED, THAT SUCH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, AND SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THIS AMENDMENT AND CONSENT. THE RELEASES AND DISCHARGES IN THIS SECTION 8 SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. [Remainder of page intentionally left blank; signatures on following pages.] 6 Delivered as of the day and year first above written. TOKHEIM CORPORATION By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- GASBOY INTERNATIONAL, INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM INVESTMENT CORP. By ------------------------------------------- Title ---------------------------------------- MANAGEMENT SOLUTIONS, INC. By ------------------------------------------- Title ---------------------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM SERVICES LLC By ------------------------------------------- Title ---------------------------------------- TOKHEIM RPS, LLC By ------------------------------------------- Title ---------------------------------------- 7 ABN AMRO BANK N.V., as Administrative Agent, as Issuing Lender and as a Lender By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- AMSOUTH BANK, as Documentation Agent and as a Lender By ------------------------------------------- Title ---------------------------------------- BANK ONE, INDIANA, NATIONAL ASSOCIATION, as a Lender By ------------------------------------------- Title ---------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By ------------------------------------------- Title ---------------------------------------- CREDIT AGRICOLE INDOSUEZ, as a Lender By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- BEAR, STEARNS & CO., INC., as a Lender By ------------------------------------------- Title ---------------------------------------- BANKERS TRUST COMPANY, as a Lender By ------------------------------------------- Title ---------------------------------------- 8 SENIOR DEBT PORTFOLIO, as a Lender By: Boston Management and Research, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- EATON VANCE SENIOR INCOME TRUST, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- OXFORD STRATEGIC INCOME FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- FINOVA CAPITAL CORPORATION, as a Lender By ------------------------------------------- Title ---------------------------------------- 9 BANK PEKAO SA (FORMERLY KNOWN AS BANK POLSKA KASA OPIEKI S.A., NEW YORK BRANCH), as a Lender By ------------------------------------------- Title ---------------------------------------- OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By ------------------------------------------- Title ---------------------------------------- OAKTREE CAPITAL MANAGEMENT, LLC, on behalf of certain funds and accounts, as a Lender By ------------------------------------------- Title ---------------------------------------- ARES LEVERAGED INVESTMENT FUND II, L.P., as a Lender By: ARES Management II, L.P., its General Partner By ------------------------------------------- Title ---------------------------------------- WHIPPOORWILL/TOKHEIM OBLIGATIONS TRUST-2000, as a Lender By: Whippoorwill Associates, Incorporated, as its investment representative and advisor By ------------------------------------------- Title ---------------------------------------- BARCLAYS BANK PLC, as a Lender By ------------------------------------------- Title ---------------------------------------- GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender By ------------------------------------------- Title ---------------------------------------- 10 EXHIBIT 1 FORM OF REAFFIRMATION OF LOAN DOCUMENTS October 31, 2001 ABN AMRO Bank N.V., as Administrative Agent and the other parties to the Credit Agreement referred to below Re: Reaffirmation of Loan Documents Ladies and Gentlemen: Please refer to: 1. The Guaranty dated as of October 20, 2000 (the "Guaranty") executed in favor of the Administrative Agent and various other parties by certain of the undersigned; 2. The Security Agreement dated as of October 20, 2000 (the "Security Agreement") among the undersigned and the Administrative Agent; and 3. The Pledge Agreement dated as of October 20, 2000 (the "Pledge Agreement") among certain of the undersigned and the Administrative Agent. 4. The Post-Confirmation Pledge Agreement dated March 14, 2001 (the "German Pledge Agreement") between the Company and the Administrative Agent. 5. The Deed of Pledge of Registered Shares dated April 27, 2001 (the "Dutch Pledge Agreement") among Tokheim Investment Corp., Tokheim Holding Netherlands B.V. and the Administrative Agent. 6. The Scots Pledge Agreement dated as of June 12, 2001 (the "Scots Pledge Agreement") between Tokheim Investment Corp. and the Administrative Agent. 7. The Shares Account Pledge Agreement dated as of July 31, 2001 (the "French Pledge Agreement") among Tokheim Investment Corp., Tokheim Sofitam S.A. and the Administrative Agent. Capitalized terms not otherwise defined herein will have the meanings given to such terms in the Credit Agreement referred to below. Each of the undersigned acknowledges that the Borrowers, the Lenders and the Agents have executed the Third Amendment and Consent dated as of the date hereof (the "Amendment and Consent") given under the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Exhibit 1--Page 1 Each of the undersigned hereby (i) confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment and Consent and that, upon such effectiveness, all of the references in each such Loan Document to the "Credit Agreement" shall be references to the Credit Agreement as amended by the Amendment and Consent, (ii) acknowledges and agrees that its obligations under the Loan Documents are absolute and unconditional, and that it does not have any right of setoff, recoupment, claim, counterclaim or defense of any kind or nature whatsoever that can be asserted to reduce or eliminate such obligations or to seek affirmative relief or damages of any kind or nature from any Agent or any Lender, or any of their predecessors, agents, employees, successors and assigns, (iii) reaffirms and admits the validity and enforceability of the Loan Documents and the Liens in the Collateral granted pursuant to the Loan Documents or otherwise and (iv) VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE AMENDMENT AND CONSENT IS EXECUTED, THAT IT MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, OR SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THE AMENDMENT AND CONSENT. THE RELEASES AND DISCHARGES IN THIS LETTER AGREEMENT SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THE AMENDMENT AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. This letter agreement may be signed in counterparts and by the various parties hereto on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same letter agreement. Delivery of an executed counterpart of a signature page of this letter agreement by facsimile shall be as effective as delivery of a manually executed counterpart of this letter agreement. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. TOKHEIM CORPORATION By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- GASBOY INTERNATIONAL, INC. By ------------------------------------------- Title ---------------------------------------- Exhibit 1--Page 2 TOKHEIM INVESTMENT CORP. By ------------------------------------------- Title ---------------------------------------- MANAGEMENT SOLUTIONS, INC. By ------------------------------------------- Title ---------------------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM SERVICES LLC By ------------------------------------------- Title ---------------------------------------- TOKHEIM RPS, LLC By ------------------------------------------- Title ---------------------------------------- PAXCIS NETWORKS, INC. By ------------------------------------------- Title ---------------------------------------- Exhibit 1--Page 3 SCHEDULE 9.8 Subsidiaries ------------
Subsidiary Tokheim % Jurisdiction of Name Ownership Organization - ------------------------------------------- ------------------- ------------------- Management Solutions, Inc. (A) 100.00% USA - Colorado Tokheim RPS, LLC (K) 100.00% USA - Delaware Paxcis Networks, Inc. (A) 100.00% USA - Delaware Sunbelt Hose & Petroleum Equipment, Inc. (B) 100.00% USA - Georgia Tokheim Services LLC (S) 100.00% USA - Indiana Gasboy International, Inc. (B) 100.00% USA - Pennsylvania Tokheim Investment Corp. (A) 100.00% USA - Texas Tokheim Austria GesmbH (G) 100.00% Austria Tokheim Belgium N.V. (O) 100.00% Belgium Socatam S.A. (F) 99.93% Cameroon Tokheim and Gasboy of Canada Limited (C) 100.00% Canada - Ontario Tokheim Czech Republic S.r.o. (R) 100.00% Czech Republic Tokheim Scandinavia A/S (I) 100.00% Denmark Tokheim Sofitam S.A. (B) 100.00% France Tokheim Sofitam Applications S.A. (E) 100.00% France Outelec (F) less-than 1.00% France Excelsior S.A. (F) 20.00% France Serip S.A. (F) 66.00% France Tokheim Services France S.A. (F) 100.00% France Tokheim Holding GmbH (A) 100.00% Germany Tokheim GmbH (G) 100.00% Germany Deutsche Tokheim GmbH (G) 100.00% Germany Tokheim Germann GmbH (M) 100.00% Germany Tokheim Tanksysteme GmbH (M) 100.00% Germany Tokheim Hungary k.f.t. (F) 100.00% Hungary Tulla Electronics Limited (B) 100.00% Ireland Tokheim Ireland Limited (B) 100.00% Ireland Tokheim Italia S.r.l. (F) 100.00% Italy Tokheim de Mexico (B) 100.00% Mexico Matam S.A. (F) 99.90% Morocco Tokheim Polgermann (N) 100.00% Poland Tokheim Portugal (Q) 99.81% Portugal Rossgermann (N) 100.00% Russia Cosetam S.A. (F) 100.00% Senegal Tokheim Slovakia S.r.o. (F) 100.00% Slovakia Tokheim Properties (Proprietary) Limited (D) 100.00% South Africa Tokheim South Africa (Proprietary) Limited (D) 100.00% South Africa Tokheim Koppens Iberica S.A. (F) 99.96% Spain Tokheim Switzerland A.G. (B) 100.00% Switzerland
Schedule 9.8--Page 1
Tokheim Holding Netherlands B.V. (B) 100.00% The Netherlands Koppens Automatic Fabrieken B.V. (I) 100.00% The Netherlands Tokheim Netherlands B.V. (I) 100.00% The Netherlands Tokheim Europe B.V. (I) 100.00% The Netherlands Cottam Sarl (F) 100.00% Tunisia Tokheim UK Limited (B) 100.00% United Kingdom Sofitam Pump Services Ltd. (H) 100.00% United Kingdom Independent Pump Services (T) 100.00% United Kingdom Sofitam Nigeria (J) 25.00% Nigeria
Includes Director Qualifying Shares for Tokheim de Mexico S.A. de C.V., Serip S.A. and Cottam S.A. (A) Directly owned by Tokheim Corporation. (B) Directly owned by Tokheim Corporation's subsidiary Tokheim Investment Corp., or directors' qualifying shares. (C) Directly owned 65% by Tokheim Corporation's subsidiary Tokheim Investment Corp. and 35% by Tokheim Corporation's subsidiary Gasboy International, Inc. (D) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim and Gasboy of Canada Limited. (E) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim Sofitam S.A. (F) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim Sofitam Applications S.A. (G) Directly owned by Tokheim Corporation's direct subsidiary Tokheim Holding GmbH. (H) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim UK Ltd. (I) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim Holding Netherlands B.V. (J) Directly owned 25% by Tokheim Corporation's indirect subsidiary Tokheim Sofitam Applications S.A. (K) Directly owned by Tokheim Corporation's indirect subsidiary Gasboy International, Inc. (L) Directly owned by Tokheim Corporation's indirect subsidiary Sofitam Iberica S.A. (M) Directly owned by Tokheim Corporation's indirect subsidiary Deutsche Tokheim GmbH. (N) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim Germann GmbH. (O) Directly owned 88.48% by Tokheim Corporation's indirect subsidiary Tokheim Holding Netherlands B.V., 11.50% by Tokheim Corporation's indirect subsidiary Tokheim Sofitam Application S.A., and 0.016% by Tokheim Corporation's indirect subsidiary Koppens Automatic Fabrieken B.V. (P) Directly owned 98.6% by Tokheim Corporation's indirect subsidiary Tokheim Sofitam Application S.A. and 0.8% by Tokheim Corporation's indirect subsidiary Matam S.A. (Q) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim Koppens Iberica S.A. (R) Directly owned by Tokheim Corporation's indirect subsidiary Tokheim Services France S.A. (S) Directly owned 99% by Tokheim Corporation and 1% by Tokheim Corporation's subsidiary Tokheim Investment Corp. (T) Directly owned by Tokheim Corporation's indirect subsidiary Sofitam Pump Services Ltd. Schedule 9.8--Page 2 CAPITALIZATION AND OWNERSHIP OF DOMESTIC AND FIRST-TIER FOREIGN SUBSIDIARIES
- ------------------------------------------------------------------------------------------------------------------------------------ Subsidiary Name Jurisdiction of Issued and Outstanding Authorized Capital Owner(s), with Percentage Organization Shares of Capital Stock Stock of Ownership - ------------------------------------------------------------------------------------------------------------------------------------ Domestic - ------------------------------------------------------------------------------------------------------------------------------------ Gasboy International, Inc. USA--Pennsylvania 144 500 Tokheim Investment Corp. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Management Solutions, Inc. USA--Colorado 500,000 1,000,000 Tokheim Corporation (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Paxcis Networks, Inc. USA--Delaware 1,000 1,000 Tokheim Corporation (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Sunbelt Hose & Petroleum USA--Georgia 1,000 10,000 Tokheim Investment Corp. Equipment, Inc. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Investment Corp. USA--Texas 1,000 5,000 Tokheim Corporation (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim RPS, LLC USA--Delaware not applicable not applicable Gasboy International, Inc. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Services LLC USA--Indiana not applicable not applicable Tokheim Investment Corp. (99%); Tokheim Corporation (1%) - ----------------------------------------------------------------------------------------------------------------------------------- First-Tier Foreign - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Holding GmbH Germany 1 not applicable* Tokheim Corporation (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Holding Netherlands B.V. The Netherlands 41 200 Tokheim Investment Corp. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Ireland Limited Ireland 10,000 1,000,000 Tokheim Investment Corp. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Sofitam S.A. France 4,673,131 4,673,131 Tokheim Investment Corp. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim Switzerland A.G. Switzerland 3,000 3,000 Tokheim Investment Corp. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tokheim UK Limited United Kingdom 127,800 12,980,000 Tokheim Investment Corp. (100%) - ----------------------------------------------------------------------------------------------------------------------------------- Tulla Electronics Limited Ireland 56,576 100,000 Tokheim Investment Corp. (100%) - ------------------------------------------------------------------------------------------------------------------------------------ Tokheim de Mexico S.A. de C.V. Mexico 50 50 Tokheim Corporation - ------------------------------------------------------------------------------------------------------------------------------------ Tokheim & Gasboy of Canada Ltd. Ontario, Canada 1,000 1,000 Gasboy International, Inc. (35%) and Tokheim Investment Corp. (65%) - ------------------------------------------------------------------------------------------------------------------------------------
- -------- * Under German law, the concept of Authorized Capital Stock is not applicable to a German limited liability company (GmbH). Schedule 9.8--Page 3 EX-4.(9) 4 dex49.txt FOURTH AMENDMENT TO THE CREDIT AGREEMENT Exhibit 4.9 FOURTH AMENDMENT AND CONSENT THIS FOURTH AMENDMENT AND CONSENT, dated as of February 8, 2002 (this "Amendment and Consent"), is given under the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended by the First Amendment dated as of March 14, 2001, the Second Amendment and Waiver dated as of July 23, 2001 and the Third Amendment and Consent dated as of October 31, 2001, and as further amended hereby, the "Credit Agreement"), among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), various subsidiaries thereof (together with the Company, the "Borrowers"), various financial institutions as lenders (the "Lenders"), AMSOUTH BANK, as a Lender and as documentation agent for the Lenders (the "Documentation Agent"), and ABN AMRO BANK N.V., as a Lender, as Issuing Lender and as administrative agent for the Lenders (the "Administrative Agent", and together with the Documentation Agent, the "Agents"). WHEREAS, the Borrowers have requested that the Required Lenders consent to an Investment by a Subsidiary of the Company in a certain joint venture in the Republic of South Africa as hereinafter set forth, and the Required Lenders are willing to give such consent, subject to the terms and conditions hereinafter set forth; and WHEREAS, the Borrowers have requested that the Required Revolving Lenders delete a sublimit in the Credit Agreement on the amount of Standby Letters of Credit as hereinafter set forth, and the Required Revolving Lenders are willing to remove such sublimit, subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. CONSENT. Subject to the occurrence of the Effective Date, the Required Lenders hereby consent pursuant to clause (p) of Section 10.20 ("Investments") of the Credit Agreement to the making of an Investment by Tokheim South Africa (Pty) Ltd., a Wholly-Owned Foreign Subsidiary of the Company ("TSAL"), in a joint venture (the "Joint Venture") in the Republic of South Africa with Milleneum Pump Services (Western Cape) (Pty) Ltd., for the purposes and on the terms and conditions described in Attachment A hereto; provided that the amount of the Investment by TSAL shall not exceed in the aggregate $5,000. SECTION 2. AMENDMENT. In reliance on the representations and warranties set forth in this Amendment and Consent and subject to satisfaction of the conditions set forth in Section 5 hereof, the Borrowers and, pursuant to clause (iv) of Section 14.1 ("Waiver; Amendments") of the Credit Agreement, the Required Revolving Lenders hereby agree to amend Section 2.1.5 ("L/C Commitment") of the Credit Agreement by deleting the text of clause (b)(ii) thereof and substituting in lieu thereof the following: "[intentionally omitted]". SECTION 3. REPRESENTATIONS AND WARRANTIES. In order to induce the Agents and the Lenders to enter into this Amendment and Consent, the Borrowers, jointly and severally, represent and warrant (which representations and warranties shall survive the execution and delivery hereof) to the Agents and the Lenders that: (a) the representations and warranties in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Effective Date (as such term is defined in Section 5 herein) with the same effect as if made on and as of the Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default exists or will exist after giving effect to this Amendment and Consent; (c) the execution and delivery by the Borrowers of this Amendment and Consent and the performance by the Borrowers of their obligations under the Credit Agreement and the other Loan Documents (i) are within the corporate or limited liability company, as applicable, powers of each Borrower, (ii) have been duly authorized by all necessary corporate or limited liability company action, as applicable, (iii) have received all necessary approvals from all governmental authorities having jurisdiction over any Borrower and (iv) do not and will not conflict with any provision of any law, rule, regulation, requirement, administrative order, decree or agreement that is binding on the Company or any of its Subsidiaries or with any provision of the certificate of incorporation or bylaws or other organizational documents of any Borrower; (d) the Credit Agreement and the other Loan Documents are the legal, valid and binding obligations of each Borrower, enforceable against such Borrower in accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether considered in a proceeding at law or in equity); (e) as of January 14, 2002, (i) the aggregate outstanding principal balance of the Tranche A Term Loans is $33,087,129.43, (ii) the aggregate outstanding principal balance of the Tranche B Term Loans is $100,668,187.44, (iii) the aggregate outstanding principal balance of the Special Loans is $119,372,297.12 and (iv) the aggregate outstanding principal amount of all Revolving Loans is $29,537,401.14, including the Stated Amount of all Letters of Credit in the aggregate amount of $2,537,401.14; (f) the obligation of the Borrowers and the other Loan Parties to repay the Loans and the other obligations under the Loan Documents are absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim or defense of any nature whatsoever to payment of such obligations; and (g) Attachment A hereto contains a true and accurate description of the Joint Venture and the proposed Investment by TSAL in the Joint Venture. SECTION 4. LIMITED AMENDMENT AND CONSENT. This Amendment and Consent shall be limited precisely as written and shall not be deemed (i) to be an amendment of or a consent granted to any other term or condition of the Credit Agreement, any Loan Document or any of the instruments or agreements referred to in such documents or a waiver of any Default or Event of Default under the Credit Agreement, whether or not known to any of the Agents or the Lenders, or (ii) to prejudice any other right or rights that the Agents or the Lenders may now or in the future have under or in connection with the Credit Agreement, any other Loan Document or any instruments or agreements referred to therein. SECTION 5. EFFECTIVENESS. The consent set forth in Section 1 above and the amendment set forth in Section 2 above shall become effective as of the date hereof (the "Effective Date"), subject to satisfaction of the following conditions: 2 (a) receipt by the Administrative Agent of: (i) a counterpart of this Amendment and Consent executed by the Borrowers and the Required Lenders; (ii) a counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit 1 hereto, executed by each Loan Party; (b) such other documents as the Administrative Agent or any Lender may reasonably request; (c) all legal matters in connection with this Amendment and Consent, the Credit Agreement and the other Loan Documents shall be reasonably satisfactory to Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent; (d) in immediately available funds, payment of all outstanding amounts, if any, that have been invoiced by or on behalf of the Administrative Agent and unpaid as of the date hereof with respect to all reimbursable fees, charges or expenses payable in accordance with the terms and provisions of the Credit Agreement and the other Loan Documents, including, without limitation, all Attorney Costs of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, and all fees and disbursements of FTI Policano & Manzo, financial advisor to such counsel; and (e) no Event of Default shall have occurred and be continuing, and no Unmatured Event of Default shall occur or be continuing upon the effectiveness of this Amendment and Consent. The Administrative Agent shall give notice to the Borrowers upon the occurrence of the Effective Date. SECTION 6. MISCELLANEOUS. ------------- 6.1 Continuing Effectiveness, etc. The Credit Agreement and the other Loan Documents shall remain in full force and effect after giving effect to this Amendment and Consent and are hereby ratified and confirmed in all respects. After the Effective Date, all references to the "Credit Agreement" or similar terms in the Credit Agreement, the Notes, each other Loan Document and any similar document shall refer to the Credit Agreement as hereby amended and as previously amended, modified or supplemented. This Amendment and Consent shall constitute a Loan Document as defined in the Credit Agreement, and the provisions of this Amendment and Consent may be amended, modified or supplemented, or any provision thereof waived, only in accordance with and subject to the provisions of the Credit Agreement. 6.2 Further Assurances. Each of the Loan Parties expressly acknowledges and agrees (i) to enter into such other or further documents, and to take such other or further actions that may be necessary or, in the opinion of the Administrative Agent, desirable to perfect, preserve or protect the liens and security interests created under the Loan Documents and (ii) to grant liens on such other or further property or assets of the Loan Parties not currently encumbered to secure all obligations of the Loan Parties as the Administrative Agent may require; provided that no Loan Party shall have any obligation to grant liens on any such other or further property to the extent that such Loan Party can demonstrate, to the reasonable satisfaction of the Administrative Agent, that the granting of such lien would have a material and adverse tax consequence to the Loan Parties. 6.3 Counterparts. This Amendment and Consent may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Amendment and 3 Consent. Delivery of an executed counterpart of a signature page of this Amendment and Consent by facsimile shall be as effective as delivery of a manually executed counterpart of this Amendment and Consent. 6.4 Expenses. The Company agrees to pay the reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) in connection with the preparation, execution and delivery of this Amendment and Consent. 6.5 GOVERNING LAW. THIS AMENDMENT AND CONSENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE WHOLLY PERFORMED WITHIN THE STATE OF NEW YORK. 6.6 Successors and Assigns. This Amendment and Consent shall be binding upon the Borrowers, the Lenders and the Agents and their respective successors and assigns, and shall inure to the benefit of the Borrowers, the Lenders and the Agents and their respective successors and assigns; provided that no Borrower shall have any right to assign this Amendment and Consent except to the extent permitted by the first sentence of Section 14.9.1 of the Credit Agreement. 6.7 Consultation with Advisors. The Loan Parties acknowledge that they have consulted with counsel and with such other experts and advisors as they have deemed necessary in connection with the negotiation, execution and delivery of this Amendment and Consent. This Amendment and Consent shall be construed without regard to any presumption or any rule requiring that it be construed against the party causing this Amendment and Consent or any part hereof to be drafted. 6.8 Entire Agreement. This Amendment and Consent sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. Each of the parties hereto acknowledges that, except as otherwise expressly stated in this Amendment and Consent, no representations, warranties or commitments, express or implied, have been made by any party to any other party with respect to the subject matter of this Amendment and Consent. None of the terms or conditions of this Amendment and Consent may be changed, modified, waived or cancelled, orally or otherwise, except as provided in the Credit Agreement. 6.9 Enforceability. Should any one or more of the provisions of this Amendment and Consent be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 6.10 Invalidity; Severability. Whenever possible, each provision of this Amendment and Consent shall be interpreted in such manner as to be effective and valid under all applicable laws, rules and regulations. Any provision of this Amendment and Consent that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 6.11 Headings. The headings of this Amendment and Consent are for the purpose of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment and Consent. 4 6.12 Definitions. Capitalized terms used in this Amendment and Consent that are not defined herein but are defined in the Credit Agreement shall have the meaning given to such terms in the Credit Agreement. SECTION 7. RELEASE OF CLAIMS. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THE LIABILITY OF SUCH BORROWER TO REPAY ANY AGENT OR ANY LENDER AS PROVIDED IN THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ANY AGENT OR ANY LENDER OR ANY OF THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND EACH LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT AND CONSENT IS EXECUTED, THAT SUCH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, AND SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THIS AMENDMENT AND CONSENT. THE RELEASES AND DISCHARGES IN THIS SECTION 7 SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. [Remainder of page intentionally left blank; signatures on following pages.] 5 Delivered as of the day and year first above written. TOKHEIM CORPORATION By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- GASBOY INTERNATIONAL, INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM INVESTMENT CORP. By ------------------------------------------- Title ---------------------------------------- MANAGEMENT SOLUTIONS, INC. By ------------------------------------------- Title ---------------------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM SERVICES LLC By ------------------------------------------- Title ---------------------------------------- TOKHEIM RPS, LLC By ------------------------------------------- Title ---------------------------------------- SIGNATURE PAGE TO TOKHEIM FOURTH AMENDMENT AND CONSENT ABN AMRO BANK N.V., as Administrative Agent, as Issuing Lender and as a Lender By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- AMSOUTH BANK, as Documentation Agent and as a Lender By ------------------------------------------- Title ---------------------------------------- BANK ONE, INDIANA, NATIONAL ASSOCIATION, as a Lender By ------------------------------------------- Title ---------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By ------------------------------------------- Title ---------------------------------------- CREDIT AGRICOLE INDOSUEZ, as a Lender By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- BEAR, STEARNS & CO., INC., as a Lender By ------------------------------------------- Title ---------------------------------------- BANKERS TRUST COMPANY, as a Lender By ------------------------------------------- Title ---------------------------------------- SIGNATURE PAGE TO TOKHEIM FOURTH AMENDMENT AND CONSENT SENIOR DEBT PORTFOLIO, as a Lender By: Boston Management and Research, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- EATON VANCE SENIOR INCOME TRUST, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- OXFORD STRATEGIC INCOME FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------- Title ---------------------------------------- CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- FINOVA CAPITAL CORPORATION, as a Lender By ------------------------------------------- Title ---------------------------------------- SIGNATURE PAGE TO TOKHEIM FOURTH AMENDMENT AND CONSENT BANK PEKAO SA (FORMERLY KNOWN AS BANK POLSKA KASA OPIEKI S.A., NEW YORK BRANCH), as a Lender By ------------------------------------------- Title ---------------------------------------- OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By ------------------------------------------- Title ---------------------------------------- OAKTREE CAPITAL MANAGEMENT, LLC, as agent and on behalf of certain funds and accounts, as a Lender By ------------------------------------------- Title ---------------------------------------- ARES LEVERAGED INVESTMENT FUND II, L.P., as a Lender By: ARES Management II, L.P., its General Partner By ------------------------------------------- Title ---------------------------------------- WHIPPOORWILL/TOKHEIM OBLIGATIONS TRUST-2000, as a Lender By: Whippoorwill Associates, Incorporated, as its investment representative and advisor By ------------------------------------------- Title ---------------------------------------- BARCLAYS BANK PLC, as a Lender By ------------------------------------------- Title ---------------------------------------- GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender By ------------------------------------------- Title ---------------------------------------- SIGNATURE PAGE TO TOKHEIM FOURTH AMENDMENT AND CONSENT ATTACHMENT A EXPLANATION OF TOKHEIM SOUTH AFRICA (PTY) LTD.'S PROPOSED JOINT VENTURE In order to address newly enacted regulations in South Africa, Tokheim Corporation ("Tokheim") proposes a joint venture between its subsidiary Tokheim South Africa (Pty) Ltd. ("TSAL") and Milleneum Pump Services (Western Cape) (Pty) Ltd ("Milleneum"). Currently, TSAL has approximately 20 service technicians covering only part of South Africa. This business generates revenues of around $2.5 million per year, although it is not profitable. The facilities in South Africa are a main building for dispenser assembly and a small service building for refurbishments and spare parts. Milleneum was established in June 1999, with a head office in Cape Town and a branch in Port Elizabeth. Milleneum's main business is in field maintenance on all makes of dispensers and pumps, as well as installation and maintenance of E Fuel equipment. It also has a workshop that refurbishes all makes of dispensers and pumps. Through 15 service vehicles and 27 employees, Milleneum is able to provide service from 8 technician bases throughout the country. Milleneum's major customers are Engen, BP, Afric Oil and Excel. New regulations in South Africa require that companies should be progressively moving toward majority ownership by Blacks or Indians, known as "Black Empowerment". The regulations specifically address the oil companies, who, in turn, have requested the same compliance from their suppliers, e.g., TSAL. As Milleneum is a company with Black ownership, a joint venture between the two companies would ensure compliance with regulations. Due to the presence of a similar business focus by both TSAL and Milleneum, the joint venture would complement both existing businesses. The proposed joint venture would ensure TSAL's compliance with the new regulations, as well as provide additional customer service potential. This would allow TSAL to provide service contracts to customers for the whole territory, thus minimizing limitations set by the current regional coverage. At present, only Tokheim's competitor, Marconi, offers this service. Market share in this region is expected to increase as a result of this wider coverage area and competition may be slightly reduced. The joint venture would comprise a 49% ownership by TSAL and a 51% ownership by Milleneum, with voting rights allocated in accordance with ownership levels. Existing laws in South Africa require that all decisions regarding joint ventures must be unanimously agreed by the company's shareholders. Thus, the risk associated with the absence of a majority interest holding by TSAL would be minimal. Initial investment in this joint venture would be only U.S.$2,000. The joint venture would itself have no employees; its sole function would be to allow TSAL to present a single offer to a customer, covering all of South Africa. Any customer not requiring compliance with Black Empowerment could still be handled through TSAL rather than the joint venture. Due to this minimal level of investment, TSAL could easily liquidate the investment should it become necessary. The joint venture would be designed through its Articles of Association in such a way as to guarantee coverage of all costs. Any costs incurred by either TSAL or Milleneum in the administration of the joint venture would be recharged to the new company at a fixed mark-up, yet to be determined. As the joint venture would engage subcontractors, the contracts between the joint venture and the subcontractors would be drawn in such a fashion as to ensure that in cases of claims against such subcontractors, no liability would exist for the joint venture in excess of a specific minimum insurance requirement. ATTACHMENT A However, as the joint venture would handle all dealings with the final customers, the joint venture would have to act as intermediary for all such claims. Compliance with the new regulations necessitates a change in Tokheim's service business in South Africa. The new regulations are such that TSAL must create a joint venture to handle service contracts with the oil companies. Alternatively, Tokheim could divest the service business in South Africa. Overall, this proposal will increase market share in South Africa in the maintenance sector, as well as show an effort on the part of Tokheim to comply with local regulations. ATTACHMENT A - Page 2 EXHIBIT 1 FORM OF REAFFIRMATION OF LOAN DOCUMENTS February ___ , 2002 ABN AMRO Bank N.V., as Administrative Agent and the other parties to the Credit Agreement referred to below Re: Reaffirmation of Loan Documents Ladies and Gentlemen: Each of the undersigned acknowledges that the Borrowers, the Lenders and the Agents have executed the Fourth Amendment and Consent dated as of the date hereof (the "Amendment and Consent") given under the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. Each of the undersigned hereby (i) confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment and Consent and that, upon such effectiveness, all of the references in each such Loan Document to the "Credit Agreement" shall be references to the Credit Agreement as amended by the Amendment and Consent, (ii) acknowledges and agrees that its obligations under the Loan Documents are absolute and unconditional, and that it does not have any right of setoff, recoupment, claim, counterclaim or defense of any kind or nature whatsoever that can be asserted to reduce or eliminate such obligations or to seek affirmative relief or damages of any kind or nature from any Agent or any Lender, or any of their predecessors, agents, employees, successors and assigns, (iii) reaffirms and admits the validity and enforceability of the Loan Documents and the Liens in the Collateral granted pursuant to the Loan Documents or otherwise and (iv) VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE AMENDMENT AND CONSENT IS EXECUTED, THAT IT MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, OR SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THE AMENDMENT AND CONSENT. THE RELEASES AND DISCHARGES IN THIS LETTER AGREEMENT SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EXHIBIT 1 EFFECTIVENESS OF THE AMENDMENT AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. This letter agreement may be signed in counterparts and by the various parties hereto on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same letter agreement. Delivery of an executed counterpart of a signature page of this letter agreement by facsimile shall be as effective as delivery of a manually executed counterpart of this letter agreement. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. TOKHEIM CORPORATION By ------------------------------------------- Title ---------------------------------------- By ------------------------------------------- Title ---------------------------------------- GASBOY INTERNATIONAL, INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM INVESTMENT CORP. By ------------------------------------------- Title ---------------------------------------- MANAGEMENT SOLUTIONS, INC. By ------------------------------------------- Title ---------------------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------------------- Title ---------------------------------------- TOKHEIM SERVICES LLC By ------------------------------------------- Title ---------------------------------------- EXHIBIT 1--Page 2 TOKHEIM RPS, LLC By ------------------------------------------- Title ---------------------------------------- PAXCIS NETWORKS, INC. By ------------------------------------------- Title ---------------------------------------- EXHIBIT 1--Page 3 EX-4.(10) 5 dex410.txt FIFTH AMENDMENT TO THE CREDIT AGREEMENT Exhibit 4.10 FIFTH AMENDMENT, WAIVER AND CONSENT THIS FIFTH AMENDMENT, WAIVER AND CONSENT, dated as of February 28, 2002 (this "Amendment, Waiver and Consent"), amends, and is given with respect to, the Post-Confirmation Credit Agreement dated as of October 20, 2000, as amended by the First Amendment dated as of March 14, 2001 (the "First Amendment"), the Second Amendment and Waiver dated as of July 23, 2001 (the "Second Amendment"), the Third Amendment and Consent dated as of October 31, 2001 (the "Third Amendment") and the Fourth Amendment and Consent dated as of February 8, 2002 (the "Fourth Amendment") (as so amended, the "Credit Agreement"), among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), various subsidiaries thereof (together with the Company, the "Borrowers"), various financial institutions as lenders (the "Lenders"), AMSOUTH BANK, as a Lender and as documentation agent for the Lenders (the "Documentation Agent"), and ABN AMRO BANK N.V., as a Lender, as issuing lender and as administrative agent for the Lenders (the "Administrative Agent", and together with the Documentation Agent, the "Agents"). WHEREAS, an Event of Default under Section 12.1.5 of the Credit Agreement has occurred and is continuing as a result of the failure of the Borrowers to comply with the provisions of Sections 10.6.5 and 10.20 of the Credit Agreement (the "Existing Events of Default"); WHEREAS, the Borrowers have requested that the Lenders (i) waive the Existing Events of Default, (ii) consent to an extension of the Credit Agreement's scheduled delivery date for (x) the annual audit report of the Company and its Subsidiaries in respect of Fiscal Year 2001 and (y) related documentation required under the Credit Agreement, (iii) agree to amend the EBITDA level in the Credit Agreement for the Computation Period ended November 30, 2001 and (iv) agree to certain other modifications and amendments, as hereinafter set forth; and WHEREAS the Lenders are willing to agree to such waiver, give such consent and agree to such modifications and amendments, but only on and subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. WAIVER. In reliance on the representations and warranties set forth in this Amendment, Waiver and Consent and subject to satisfaction of the conditions set forth in Section 7 hereof, effective as of the Effective Date, the Lenders hereby (i) waive the Existing Event of Default under Section 10.20 resulting from failure of the Borrowers to comply with the limitations of subparagraph (o)(ii) thereof (but solely to the extent such Existing Event of Default shall not exist after giving effect to the amendment set forth in Section 3(g) hereof) and (ii) waive, but solely for the period commencing on the Effective Date and ending on April 15, 2002, the Existing Event of Default under Section 10.6.5 resulting from the failure of the Borrowers to comply therewith for the Computation Period ended on February 28, 2002, it being understood and agreed that the waiver under this subpart (ii) is solely a limited waiver and shall expire on April 15, 2002 without further deed or act of any party, and that thereafter such Event of Default shall exist as if such waiver had not occurred and the rights and remedies of the Agents and the Lenders arising as a result thereof under the Credit Agreement and the other Loan Documents shall not be prejudiced and are hereby expressly preserved. SECTION 2. CONSENT. In reliance on the representations and warranties set forth in this Amendment, Waiver and Consent and subject to satisfaction of the conditions set forth in Section 7 hereof, effective as of the Effective Date: (a) The Lenders hereby consent to the extension of the date by which the Borrowers are required, pursuant to Section 10.1.1 of the Credit Agreement, to deliver to the Administrative Agent (x) the annual audit report of the Company and its Subsidiaries in respect of Fiscal Year 2001, audited by the Company's independent accountants, and (y) the written statement from such accountants described in such subsection, from February 28, 2002 to April 15, 2002; provided that any failure by the Borrowers to deliver such audited report and statement by April 15, 2002 shall constitute an Event of Default under the Credit Agreement on such date, without any notice, additional passage of time or other grace or cure period whatsoever; and (b) The Lenders hereby agree to modify their consent given in subparagraph (a) of Section 1 of the Third Amendment as follows: (i) the reference therein to a maturity date of "October 31, 2006" shall instead refer to a maturity date of "April 30, 2007" and (ii) the phrase therein "repaid in full" shall instead read "repaid or otherwise satisfied in full". SECTION 3. AMENDMENTS TO CREDIT AGREEMENT. In reliance upon the representations and warranties set forth in this Amendment, Waiver and Consent and subject to satisfaction of the conditions set forth in Section 7 hereof, the Borrower and the Lenders hereby agree to the following amendments: (a) The definition of "Net Cash Proceeds" set forth in Section 1.1 ("Definitions") of the Credit Agreement is hereby amended by (i) deleting the word "and" at the end of subparagraph (b) thereof, (ii) replacing the period at the end of subparagraph (c) thereof with a semi-colon followed by the word "and" and (iii) adding a new subparagraph (d) thereof to read in its entirety as follows: "(d) with respect to the receipt by the Company of any Schlumberger Proceeds, net of direct legal costs and expenses incurred in connection therewith. (b) The following definition is hereby added to Section 1.1 ("Definitions") of the Credit Agreement: "`Schlumberger Proceeds' means cash proceeds received by the Company or any Subsidiary in connection with claims or counterclaims by the Company or by any Subsidiary against Schlumberger Limited or any affiliate thereof (it being understood that any such cash proceeds received in any arbitration or proceeding shall be net of any recoveries paid by the Company or any Subsidiary to Schlumberger Limited or its affiliate in such arbitration or proceeding)." (c) Section 6.2.2 ("Mandatory Prepayments") is hereby amended as follows: (i) to add a new subclause (a)(vii) thereof to read as follows: "(vii) Concurrently with the receipt of any Net Cash Proceeds from any Schlumberger Proceeds, in an amount equal to 100% of such Net Cash Proceeds."; and 2 (ii) to restate the second full paragraph of clause (a) thereof to read in its entirety as follows: "Subject to the second sentence of Section 7.2, all Designated Proceeds shall be applied to the Loans as follows: (1) as to any Designated Proceeds comprising the first $20,000,000 of Designated Proceeds received by the Company or its Subsidiaries in the aggregate after February 28, 2002 (all such Designated Proceeds, "Primary Proceeds"), to prepay Tranche A Term Loans and (2) as to all Designated Proceeds other than Primary Proceeds, if any, first, 50% to prepay the Tranche A Term Loans and 50% to prepay the Tranche B Term Loans until all Term Loans are paid in full, and second, after payment in full of the Term Loans, to prepay the Special Loans until the Special Loans are paid in full; provided, however, that, in the case of any Mandatory Prepayment Event described in clause (i), (ii) or (vii) above, the Designated Proceeds of such Mandatory Prepayment Event shall be applied first to prepay the Revolving Loans (without a concurrent reduction in the Revolving Commitment Amount) (x) in the case of any Mandatory Prepayment Event described in clause (i) or (ii), to the extent necessary to eliminate any Borrowing Base Shortfall caused by such Mandatory Prepayment Event and (y) in the case of any Mandatory Prepayment Event described in clause (vii), in an amount (provided it is a positive number) equal to (A) $10,000,000 minus (B) the excess, if any, of the maximum amount available to be borrowed under Section 2.1.1 over the Revolving Outstandings, and, in each case, to the extent of such application to the Revolving Loans, such Designated Proceeds shall be disregarded for purposes of calculating the amount of Primary Proceeds received under clause (1) of this sentence (and after such application to the Revolving Loans, such Designated Proceeds shall be applied as set forth in clauses (1) and (2) of this sentence)."; (d) Section 10.1.1 ("Annual Report") of the Credit Agreement is hereby amended and restated to read in its entirety as follows: "10.1.1 Annual Report.Promptly when available and (except for the annual report in respect of Fiscal Year 2001, which report shall be due on April 15, 2002) in any event within 90 days after the close of each Fiscal Year (or such earlier date as such information shall be required to be filed with the SEC or any similar governmental authority): (a) a copy of the annual audit report of the Company and its Subsidiaries for such Fiscal Year, including therein consolidated balance sheets and statements of operations and cash flows of the Company and its Subsidiaries as at the end of such Fiscal Year, audited by Ernst & Young LLP or other independent auditors of recognized standing selected by the Company and reasonably acceptable to the Required Lenders, which audit report shall be unqualified as to going concern or scope of audit, shall contain no other material qualifications or exceptions and shall state that such financial statements present fairly the financial position of the Company and its Subsidiaries on a consolidated basis and the results of operations and cash flows as at the dates and for the periods indicated in accordance with GAAP consistently applied, together with a written statement from such independent auditors to the effect that in making the examination necessary for the signing of such annual audit report by such independent auditors, nothing came to their attention that caused them to believe that the Company was not in compliance with any provision of Section 10.6, 10.7 or 10.9 of this Agreement insofar as such provision relates to accounting matters or, if something has come to their attention that caused them to believe that the Company was not in compliance with any such 3 provision, describing such non-compliance in reasonable detail; and (b) consolidating balance sheets of the Company and its Subsidiaries as of the end of such Fiscal Year and a consolidating statement of operations and a consolidated statement of cash flows for the Company and its Subsidiaries for such Fiscal Year, certified by the Chief Financial Officer, Controller or Finance Director of the Company."; (e) Section 10.1.7 of the Credit Agreement is hereby amended to add a new subsection (d) thereof to read in its entirety as follows: "(d) By no later than March 29, 2002, a detailed outline of the Company's proposed plan of recapitalization and restructuring of the balance sheets of the Company and its Subsidiaries, which outline shall contain a specific list of steps to achieve such plan and a timetable showing the dates by which such steps shall be implemented, all in form and substance satisfactory to the Administrative Agent."; (f) Section 10.6.5 of the Credit Agreement is hereby amended, effective as of November 30, 2001, to replace the amount set forth opposite the date "November 30, 2001" with the amount "$20,400,000"; and (g) Subparagraph (o) of Section 10.20 is hereby amended by (i) replacing the amount "$38,900,000" with the amount "$41,100,000" and (ii) replacing the amount "$4,300,000" with the amount "$4,350,000". SECTION 4. LOANS, LETTERS OF CREDIT NOT REQUIRED. In consideration of the waiver, consent and amendments hereinabove set forth, and notwithstanding any provision to the contrary set forth in the Credit Agreement or any of the other Loan Documents, each of the Borrowers hereby acknowledges and agrees that: (a) no Lender is required or otherwise obligated to make, and no Borrower shall request that any Lender make, any Loan or otherwise extend credit to any Borrower and (b) the Issuing Lender and the Lenders are not required or otherwise obligated to issue, and no Borrower shall request that the Issuing Lender or any Lender issue, any Letters of Credit other than Letters of Credit (or renewals thereof) issued to renew Letters of Credit outstanding on the date hereof in accordance with the requirements of Section 2.3 of the Credit Agreement; except in either case to the extent that after giving effect to such Loan or issuance of Letter of Credit, the aggregate Revolving Outstandings shall not exceed the lesser of: (i) $35,831,000 and (ii) the Borrowing Base. This Section 3 shall amend and restate in its entirety the covenant and agreement of the parties set forth in Section 3 of the Second Amendment in regard to the Credit Agreement. SECTION 5. REPRESENTATIONS AND WARRANTIES. In order to induce the Agents and the Lenders to enter into this Amendment, Waiver and Consent, the Borrowers, jointly and severally, represent and warrant (which representations and warranties shall survive the execution and delivery hereof) to the Agents and the Lenders that, after giving effect to this Amendment, Waiver and Consent: (a) the representations and warranties in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Effective Date with the same effect as if made on and as of the Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); 4 (b) no Event of Default or Unmatured Event of Default will exist after giving effect to this Amendment, Waiver and Consent; (c) the execution and delivery by the Borrowers of this Amendment, Waiver and Consent and the performance by the Borrowers of their obligations under the Credit Agreement and the other Loan Documents (i) are within the corporate or limited liability company, as applicable, powers of each Borrower, (ii) have been duly authorized by all necessary corporate or limited liability company action, as applicable, (iii) have received all necessary approvals from all governmental authorities having jurisdiction over any Borrower and (iv) do not and will not conflict with any provision (x) of any law, rule, regulation, requirement, administrative order, decree or agreement that is binding on the Company or any of its Subsidiaries or to which any of their property is subject or (y) of the certificate of incorporation or bylaws or other organizational documents of any Borrower; (d) the Credit Agreement and the other Loan Documents are the legal, valid and binding obligations of each Borrower, enforceable against such Borrower in accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether considered in a proceeding at law or in equity); (e) as of the Effective Date, (i) the authorized capital stock of the Company consists solely of 30,000,000 shares of Common Stock and 5,000,000 Special Shares; of the Special Shares, as of the Fifth Amendment Effective Date, 1,700,000 shares of ESOP Preferred Stock have been designated and 25,000 shares of Lender Preferred have been designated. Of the authorized capital stock of the Company (assuming no Warrant is exercised), 4,127,915 shares of Common Stock, 960,000 (including treasury shares) shares of ESOP Preferred Stock (convertible to Common Stock pursuant to the terms of the Restated Charter) and 10,000 shares of Lender Preferred are issued and outstanding. All of such outstanding capital stock is validly issued, fully paid and nonassessable and has been issued in compliance with all applicable securities laws. Furthermore, the outstanding warrants to purchase Common Stock of the Company consist solely of (x) 678,334 Series A Warrants to purchase shares of Common Stock, no par value, at the exercise price of $0.01; (y) 555,556 Series B Warrants to purchase shares of Common Stock, no par value, at the exercise price of $30.00; and (z) 549,451 Series C Warrants to purchase shares of Common Stock, no par value, at the exercise price of $49.46; and (ii) except as set forth on Schedule 9.24 to the Credit Agreement and except for the Warrants, the Lender Preferred and the ESOP Preferred Stock, there are no existing options, convertible securities, warrants, calls, pledges, transfer restrictions (except restrictions imposed by federal and state securities laws), liens, rights of first offer, rights of first refusal, antidilution provisions or commitments of any character created by or binding upon the Company or to which the Company is a party relating to any issued or unissued shares of capital stock of the Company. Except for the Warrants, the Lender Preferred and the ESOP Preferred Stock, there are no preemptive or other preferential rights 5 applicable to the issuance and sale of equity securities (or securities convertible or exercisable into or exchangeable for equity securities) of the Company; (f) as of February 28, 2002, (i) the aggregate outstanding principal balance of the Tranche A Term Loans is $33,087,129.43, (ii) the aggregate outstanding principal balance of the Tranche B Term Loans is $100,668,187.44, (iii) the aggregate outstanding principal balance of the Special Loans is $124,147,189.00 and (iv) the aggregate Revolving Outstandings are $30,537,401.14, including the Stated Amount of all Letters of Credit in the aggregate amount of $2,537,401.14; and (g) the obligation of the Borrowers and the other Loan Parties to repay the Loans and the other obligations under the Loan Documents are absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim or defense of any nature whatsoever to payment of such obligations. SECTION 6. LIMITED AMENDMENT, WAIVER AND CONSENT. This Amendment, Waiver and Consent shall be limited precisely as written and shall not be deemed (i) to be an amendment, waiver or modification of, or a consent granted pursuant to, any other term or condition of the Credit Agreement, any Loan Document or any of the instruments or agreements referred to in such documents, or, except as expressly set forth in Section 1 above, a waiver of any Unmatured Event of Default or Event of Default under the Credit Agreement, whether or not known to any of the Agents or the Lenders or (ii) to prejudice any other right or rights that the Agents or the Lenders may now or in the future have under or in connection with the Credit Agreement, any other Loan Document or any instruments or agreements referred to therein. SECTION 7. EFFECTIVENESS. The waiver set forth in Section 1 above, the consents set forth in Section 2 above and the amendments and agreements set forth in Section 3 and Section 4 above shall become effective as of the date hereof (the "Effective Date"), subject to satisfaction of the following conditions (unless waived in writing by the Administrative Agent or the requisite Lenders pursuant to the Credit Agreement, as the case may be): (a) receipt by the Administrative Agent of: (i) counterparts of this Amendment, Waiver and Consent fully executed by the Borrowers and the requisite Lenders pursuant to the Credit Agreement; (ii) unaudited consolidated and consolidating balance sheets of the Company and its Subsidiaries for the Fiscal Quarter and the Fiscal Year ended November 30, 2001, together with (x) unaudited consolidated statements of operations and cash flows for such Fiscal Quarter and Fiscal Year, (y) a comparison with the corresponding periods of Fiscal Year 2000 and (z) a comparison with the corresponding periods of the Budget for Fiscal Year 2001, all certified by the Chief Financial Officer, Controller or Finance Director of the Company; (iii) a counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit 1 hereto, fully executed by each Loan Party; and (iv) such other documents as the Administrative Agent or any Lender may reasonably request; 6 (b) all legal matters in connection with this Amendment, Waiver and Consent, the Credit Agreement and the other Loan Documents shall be reasonably satisfactory to Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent; (c) in immediately available funds, payment of all outstanding amounts that have been invoiced by or on behalf of the Administrative Agent and unpaid as of the date hereof with respect to all reimbursable fees, charges or expenses payable in accordance with the terms and provisions of the Credit Agreement and the other Loan Documents, including, without limitation, all Attorney Costs of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, all fees and disbursements of FTI Policano & Manzo, financial advisor to such counsel, and all amounts due and payable pursuant to Section 7.5; and (d) upon the effectiveness of this Amendment, Waiver and Consent, (i) the representations and warranties in this Amendment, Waiver and Consent are true and correct in all material respects on and as of the Effective Date, (ii) no Event of Default shall have occurred and be continuing and (iii) no Unmatured Event of Default shall occur or be continuing. Except as provided in Section 8 below, this Amendment, Waiver and Consent shall be of no force and effect if the preceding conditions have not been satisfied by April 4, 2002. For purposes of determining compliance with the conditions specified in this Section 7, each Lender that has executed this Amendment, Waiver and Consent shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent, or made available for inspection, by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Administrative Agent and the requisite Lenders pursuant to the Credit Agreement. SECTION 8. MISCELLANEOUS. 8.1 Continuing Effectiveness, etc. The Credit Agreement and the other Loan Documents shall remain in full force and effect after giving effect to this Amendment and are hereby ratified and confirmed in all respects. After the Effective Date, all references to the "Credit Agreement" or similar terms in the Credit Agreement, the Notes, each other Loan Document and any similar document shall refer to the Credit Agreement as hereby amended and as previously amended, modified or supplemented. This Amendment, Waiver and Consent shall constitute a Loan Document as defined in the Credit Agreement, and the provisions of this Amendment, Waiver and Consent may be amended, modified or supplemented, or any provision hereof waived, only in accordance with and subject to the provisions of the Credit Agreement. 8.2 Reaffirmation of Security Interest. Each of the Borrowers hereby reaffirms as of the date hereof each and every security interest and lien granted in favor of the Administrative Agent and the Lenders under the Loan Documents and agrees and acknowledges that such security interests and liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Credit Agreement as amended by this Amendment, Waiver and Consent, and the obligations secured thereby and thereunder shall include Borrowers' obligations under the Credit Agreement as amended by this Amendment, Waiver and Consent. Each such reaffirmed security interest and lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed. 7 8.3 Further Assurances. Each of the Loan Parties expressly acknowledges and agrees (i) to enter into such other or further documents, and to take such other or further actions that may be necessary, or, in the opinion of the Administrative Agent, desirable, to perfect, preserve or protect the liens and security interests created under the Loan Documents and (ii) to grant liens on such other or further property or assets of the Loan Parties not currently encumbered to secure all obligations of the Loan Parties as the Administrative Agent may require; provided that no Loan Party shall have any obligation to grant liens on any such other or further property to the extent that such Loan Party can demonstrate, to the reasonable satisfaction of the Administrative Agent, that the granting of such lien would have a material and adverse tax consequence to the Loan Parties. 8.4 Counterparts. This Amendment, Waiver and Consent may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Amendment, Waiver and Consent. Delivery of an executed counterpart of a signature page of this Amendment, Waiver and Consent by facsimile shall be as effective as delivery of a manually executed counterpart of this Amendment, Waiver and Consent. 8.5 Expenses. The Company agrees that its obligations set forth in Section 14.6 of the Credit Agreement to pay the reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) shall extend to the preparation, execution and delivery of this Amendment, Waiver and Consent and any other documentation contemplated hereby (whether or not this Amendment, Waiver and Consent becomes effective or the transactions contemplated hereby are consummated), including, but not limited to, the reasonable fees and disbursements of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, and FTI Policano & Manzo, financial advisor to such counsel. 8.6 GOVERNING LAW. THIS AMENDMENT, WAIVER AND CONSENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE WHOLLY PERFORMED WITHIN THE STATE OF NEW YORK. 8.7 Successors and Assigns. This Amendment, Waiver and Consent shall be binding upon the Borrowers, the Lenders and the Agents and their respective successors and assigns and shall inure to the benefit of the Borrowers, the Lenders and the Agents and their respective successors and assigns; provided that no Borrower shall have any right to assign this Amendment, Waiver and Consent except to the extent permitted by the first sentence of Section 14.9.1 of the Credit Agreement. 8.8 Consultation with Advisors. The Loan Parties acknowledge that they have consulted with counsel and with such other experts and advisors as they have deemed necessary in connection with the negotiation, execution and delivery of this Amendment, Waiver and Consent. This Amendment, Waiver and Consent shall be construed without regard to any presumption or any rule requiring that it be construed against the party causing this Amendment, Waiver and Consent or any part hereof to be drafted. 8.9 Entire Agreement. This Amendment, Waiver and Consent sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. Each of the parties hereto acknowledges that, except as otherwise expressly stated in this Amendment, Waiver and Consent, no representations, warranties or commitments, express or implied, have been made by any party to any other party with respect to the subject matter of this Amendment, Waiver and Consent. None of the terms or conditions of this Amendment, Waiver and Consent may be changed, modified, waived or canceled, orally or otherwise, except as provided in the Credit Agreement. 8 8.10 Enforceability. Should any one or more of the provisions of this Amendment, Waiver and Consent be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 8.11 Invalidity; Severability. Whenever possible, each provision of this Amendment, Waiver and Consent shall be interpreted in such manner as to be effective and valid under all applicable laws, rules and regulations. Any provision of this Amendment, Waiver and Consent that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 8.12 Headings. The headings of this Amendment, Waiver and Consent are for the purpose of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment, Waiver and Consent. 8.13 Definitions. Capitalized terms used in this Amendment, Waiver and Consent that are not defined herein but are defined in the Credit Agreement shall have the meaning given to such terms in the Credit Agreement. SECTION 9. RELEASE OF CLAIMS. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THE LIABILITY OF SUCH BORROWER TO REPAY ANY AGENT OR ANY LENDER AS PROVIDED IN THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ANY AGENT OR ANY LENDER OR ANY OF THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND EACH LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT, WAIVER AND CONSENT IS EXECUTED, THAT SUCH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, AND SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THIS AMENDMENT, WAIVER AND CONSENT. THE RELEASES AND DISCHARGES IN THIS SECTION 9 SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT, WAIVER AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. [Remainder of page intentionally left blank; signatures on following pages.] 9 Delivered as of the day and year first above written. TOKHEIM CORPORATION By -------------------------------------- Title President and CEO By -------------------------------------- Title General Counsel and Secretary GASBOY INTERNATIONAL, INC. By -------------------------------------- Title President TOKHEIM INVESTMENT CORP. By -------------------------------------- Title President MANAGEMENT SOLUTIONS, INC. By -------------------------------------- Title General Manager SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By -------------------------------------- Title President TOKHEIM SERVICES LLC By -------------------------------------- Title Manager TOKHEIM RPS, LLC By -------------------------------------- Title Manager SIGNATURE PAGE TO TOKHEIM FIFTH AMENDMENT AND CONSENT ABN AMRO BANK N.V., as Administrative Agent, as Issuing Lender and as a Lender By -------------------------------------- Title ----------------------------------- By -------------------------------------- Title ----------------------------------- AMSOUTH BANK, as Documentation Agent and as a Lender By -------------------------------------- Title ----------------------------------- BANK ONE, INDIANA, NATIONAL ASSOCIATION, as a Lender By -------------------------------------- Title ----------------------------------- CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By -------------------------------------- Title ----------------------------------- CREDIT AGRICOLE INDOSUEZ, as a Lender By -------------------------------------- Title ----------------------------------- By -------------------------------------- Title ----------------------------------- BEAR, STEARNS & CO., INC., as a Lender By -------------------------------------- Title ----------------------------------- BANKERS TRUST COMPANY, as a Lender By -------------------------------------- Title ----------------------------------- SIGNATURE PAGE TO TOKHEIM FIFTH AMENDMENT AND CONSENT SENIOR DEBT PORTFOLIO, as a Lender By: Boston Management and Research, as Investment Advisor By -------------------------------------- Title ----------------------------------- EATON VANCE SENIOR INCOME TRUST, as a Lender By: Eaton Vance Management, as Investment Advisor By -------------------------------------- Title ----------------------------------- OXFORD STRATEGIC INCOME FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By -------------------------------------- Title ----------------------------------- EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By -------------------------------------- Title ----------------------------------- CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender By -------------------------------------- Title ----------------------------------- By -------------------------------------- Title ----------------------------------- FINOVA CAPITAL CORPORATION, as a Lender By -------------------------------------- Title ----------------------------------- SIGNATURE PAGE TO TOKHEIM FIFTH AMENDMENT AND CONSENT BANK PEKAO SA (FORMERLY KNOWN AS BANK POLSKA KASA OPIEKI S.A., NEW YORK BRANCH), as a Lender By -------------------------------------- Title ----------------------------------- OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By -------------------------------------- Title ----------------------------------- OAKTREE CAPITAL MANAGEMENT, LLC, as agent and on behalf of certain funds and accounts, as a Lender By -------------------------------------- Title ----------------------------------- ARES LEVERAGED INVESTMENT FUND II, L.P., as a Lender By: ARES Management II, L.P., its General Partner By -------------------------------------- Title ----------------------------------- WHIPPOORWILL/TOKHEIM OBLIGATIONS TRUST-2000, as a Lender By: Whippoorwill Associates, Incorporated, as its investment representative and advisor By -------------------------------------- Title ----------------------------------- BARCLAYS BANK PLC, as a Lender By -------------------------------------- Title ----------------------------------- GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender By -------------------------------------- Title ----------------------------------- SIGNATURE PAGE TO TOKHEIM FIFTH AMENDMENT AND CONSENT EXHIBIT 1 FORM OF REAFFIRMATION OF LOAN DOCUMENTS February 28, 2002 ABN AMRO Bank N.V., as Administrative Agent and the other parties to the Credit Agreement referred to below Re: Reaffirmation of Loan Documents Ladies and Gentlemen: Each of the undersigned acknowledges that the Borrowers, the Lenders and the Agents have executed the Fifth Amendment, Waiver and Consent dated as of the date hereof (the "Amendment, Waiver and Consent") given under the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. Each of the undersigned hereby reaffirms as of the date hereof each and every security interest and lien granted in favor of the Administrative Agent and the Lenders under the Loan Documents and agrees and acknowledges that such security interests and liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Credit Agreement as amended by the Amendment, Waiver and Consent, and the obligations secured thereby and thereunder shall include Borrowers' obligations under the Credit Agreement as amended by the Amendment, Waiver and Consent. Each such reaffirmed security interest and lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed. Each of the undersigned hereby (i) confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment, Waiver and Consent, (ii) acknowledges and agrees that its obligations under the Loan Documents are absolute and unconditional, and that it does not have any right of setoff, recoupment, claim, counterclaim or defense of any kind or nature whatsoever that can be asserted to reduce or eliminate such obligations or to seek affirmative relief or damages of any kind or nature from any Agent or any Lender, or any of their predecessors, agents, employees, successors and assigns, (iii) reaffirms and admits the validity and enforceability of the Loan Documents and the Liens in the Collateral granted pursuant to the Loan Documents or otherwise and (iv) VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE AMENDMENT, WAIVER AND CONSENT IS EXECUTED, THAT IT MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, OR SUCH EXHIBIT 1 AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THE AMENDMENT, WAIVER AND CONSENT. THE RELEASES AND DISCHARGES IN THIS LETTER AGREEMENT SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THE AMENDMENT, WAIVER AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. This letter agreement may be signed in counterparts and by the various parties hereto on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same letter agreement. Delivery of an executed counterpart of a signature page of this letter agreement by facsimile shall be as effective as delivery of a manually executed counterpart of this letter agreement. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. TOKHEIM CORPORATION By -------------------------------------- Title President and CEO By -------------------------------------- Title General Counsel and Secretary GASBOY INTERNATIONAL, INC. By -------------------------------------- Title President TOKHEIM INVESTMENT CORP. By -------------------------------------- Title President MANAGEMENT SOLUTIONS, INC. By -------------------------------------- Title General Manager SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By -------------------------------------- Title President EXHIBIT 1--Page 2 TOKHEIM SERVICES LLC By -------------------------------------- Title Manager TOKHEIM RPS, LLC By -------------------------------------- Title Manager EXHIBIT 1--Page 3 EX-4.(11) 6 dex411.txt WAIVER & CONSENT Exhibit 4.11 WAIVER AND CONSENT THIS WAIVER AND CONSENT, dated as of April 15, 2002 (this "Waiver and Consent"), is given with respect to, the Post-Confirmation Credit Agreement dated as of October 20, 2000, as amended by the First Amendment dated as of March 14, 2001 (the "First Amendment"), the Second Amendment and Waiver dated as of July 23, 2001 (the "Second Amendment"), the Third Amendment and Consent dated as of October 31, 2001 (the "Third Amendment"), the Fourth Amendment and Consent dated as of February 8, 2002 (the "Fourth Amendment"), and the Fifth Amendment, Waiver and Consent dated as of February 28, 2002 (the "Fifth Amendment"; such Credit Agreement as so amended, the "Credit Agreement"), among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), and various subsidiaries thereof as borrowers (the Company and such subsidiaries together, the "Borrowers"), various financial institutions as lenders (the "Lenders"), AMSOUTH BANK, as a Lender and as documentation agent for the Lenders (the "Documentation Agent"), and ABN AMRO BANK N.V., as a Lender, as issuing lender and as administrative agent for the Lenders (the "Administrative Agent", and together with the Documentation Agent, the "Agents"). WHEREAS, pursuant to the Fifth Amendment, (a) the Event of Default occurring under Section 12.1.5 of the Credit Agreement as a result of the failure of the Borrowers to comply with the provisions of Section 10.6.5 of the Credit Agreement for the Computation Period ended February 28, 2002 was waived by the Lenders solely through April 15, 2002 (the "EBITDA Event of Default") and (b) the Lenders consented to an extension to April 15, 2002 of the date by which (i) the annual audit report of the Company and its Subsidiaries in respect of Fiscal Year 2001 and (ii) related documentation required under the Credit Agreement must be delivered pursuant to the Credit Agreement; WHEREAS, the Borrowers have requested that the Lenders (a) extend through June 15, 2002 (i) the waiver of the EBITDA Event of Default and (ii) the date by which (x) the annual audit report of the Company and its Subsidiaries in respect of Fiscal Year 2001 and (y) related documentation required under the Credit Agreement must be delivered pursuant to the Credit Agreement, (b) consent to the issuance of the annual audit report with certain qualifications and exceptions and (c) consent to the filing by the Company by no later than June 15, 2002 of its Annual Report on Form 10-K in respect of Fiscal Year 2001 and its Quarterly Report on Form 10-Q in respect of the first Fiscal Quarter of Fiscal Year 2002; and WHEREAS the Lenders are willing to agree to extend such waiver and give such consent but only on and subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. WAIVER. In reliance on the representations and warranties set forth in this Waiver and Consent and subject to satisfaction of the conditions set forth in Section 5 hereof, effective as of the Effective Date, the Lenders hereby extend, solely for the period ending on June 15, 2002, the waiver contained in the Fifth Amendment of the EBITDA Event of Default; it being understood and agreed that the previously granted waiver has been and continues to be solely a limited waiver and shall now expire on June 15, 2002 without further deed or act of any party and that thereafter such Event of Default shall exist as if such waiver (and any extension thereof achieved hereunder or under the Fifth Amendment) had not occurred and the rights and remedies of the Agents and the Lenders arising as a result thereof under the Credit Agreement and the other Loan Documents shall not be prejudiced and are hereby expressly preserved. SECTION 2. CONSENT. In reliance on the representations and warranties set forth in this Waiver and Consent and subject to satisfaction of the conditions set forth in Section 5 hereof, effective as of the Effective Date, the Lenders hereby consent: (a) to a further extension to June 15, 2002 of the date by which the Borrowers are required, pursuant to Section 10.1.1 of the Credit Agreement, to deliver to the Administrative Agent (i) the annual audit report of the Company and its Subsidiaries (with accompanying financial statements) in respect of Fiscal Year 2001, audited by the Company's independent accountants and (ii) the written statement from such accountants described in such section; (b) to delivery, pursuant to Section 10.1.1 of the Credit Agreement, of such annual audit report in respect of Fiscal Year 2001 with such exceptions and qualifications as shall be required by the Company's independent auditors, provided that such exceptions and qualifications shall be reasonably acceptable to the Administrative Agent and to the financial advisors to the Administrative Agent's counsel; and (c) to the filing by the Company with the SEC, as required pursuant to Section 10.4 of the Credit Agreement, by no later than June 15, 2002 of its Annual Report on Form 10-K in respect of Fiscal Year 2001 and of its Quarterly Report on Form 10-Q in respect of the first Fiscal Quarter of Fiscal Year 2002; it being expressly acknowledged and agreed that any failure by the Borrowers to take any of the actions described in and as required by this Section 2 by June 15, 2002 shall constitute an immediate Event of Default under the Credit Agreement on such date, without any notice, additional passage of time or other grace or cure period whatsoever. SECTION 3. REPRESENTATIONS AND WARRANTIES. In order to induce the Agents and the Lenders to enter into this Waiver and Consent, the Borrowers, jointly and severally, represent and warrant (which representations and warranties shall survive the execution and delivery hereof) to the Agents and the Lenders that, after giving effect to this Waiver and Consent: (a) the representations and warranties in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Effective Date with the same effect as if made on and as of the Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default will exist after giving effect to this Waiver and Consent; (c) the execution and delivery by the Borrowers of this Waiver and Consent and the performance by the Borrowers of their obligations under the Credit Agreement and the other Loan Documents (i) are within the corporate or limited liability company, as applicable, powers of each Borrower, (ii) have been duly authorized by all necessary corporate or limited liability company action, as applicable, (iii) have received all necessary approvals from all governmental authorities having jurisdiction over any Borrower and (iv) do not and will not conflict with any provision (x) of any law, rule, 2 regulation, requirement, administrative order, decree or agreement that is binding on the Company or any of its Subsidiaries or to which any of their property is subject or (y) of the certificate of incorporation or bylaws or other organizational documents of any Borrower; (d) the Credit Agreement and the other Loan Documents are the legal, valid and binding obligations of each Borrower, enforceable against such Borrower in accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether considered in a proceeding at law or in equity); (e) as of the Effective Date, (i) the authorized capital stock of the Company consists solely of 30,000,000 shares of Common Stock and 5,000,000 Special Shares; of the Special Shares, as of the Fifth Amendment Effective Date, 1,700,000 shares of ESOP Preferred Stock have been designated and 25,000 shares of Lender Preferred have been designated. Of the authorized capital stock of the Company (assuming no Warrant is exercised), 4,127,915 shares of Common Stock, 960,000 shares (including treasury shares) of ESOP Preferred Stock (convertible to Common Stock pursuant to the terms of the Restated Charter) and 10,000 shares of Lender Preferred are issued and outstanding. All of such outstanding capital stock is validly issued, fully paid and nonassessable and has been issued in compliance with all applicable securities laws. Furthermore, the outstanding warrants to purchase Common Stock of the Company consist solely of (x) 678,334 Series A Warrants to purchase shares of Common Stock, no par value, at the exercise price of $0.01; (y) 555,556 Series B Warrants to purchase shares of Common Stock, no par value, at the exercise price of $30.00; and (z) 549,451 Series C Warrants to purchase shares of Common Stock, no par value, at the exercise price of $49.46; and (ii) except as set forth on Schedule 9.24 to the Credit Agreement and except for the Warrants, the Lender Preferred and the ESOP Preferred Stock, there are no existing options, convertible securities, warrants, calls, pledges, transfer restrictions (except restrictions imposed by federal and state securities laws), liens, rights of first offer, rights of first refusal, antidilution provisions or commitments of any character created by or binding upon the Company or to which the Company is a party relating to any issued or unissued shares of capital stock of the Company. Except for the Warrants, the Lender Preferred and the ESOP Preferred Stock, there are no preemptive or other preferential rights applicable to the issuance and sale of equity securities (or securities convertible or exercisable into or exchangeable for equity securities) of the Company; (f) as of April 4, 2002, (i) the aggregate outstanding principal balance of the Tranche A Term Loans is $33,087,129.43, (ii) the aggregate outstanding principal balance of the Tranche B Term Loans is $100,668,187.44, (iii) the aggregate outstanding principal balance of the Special Loans is $124,147,189.00 and (iv) the aggregate Revolving Outstandings are $31,537,401.14, including the Stated Amount of all Letters of Credit in the aggregate amount of $2,537,401.14; and 3 (g) the obligation of the Borrowers and the other Loan Parties to repay the Loans and the other obligations under the Loan Documents are absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim or defense of any nature whatsoever to payment of such obligations. SECTION 4. LIMITED WAIVER AND CONSENT. This Waiver and Consent shall be limited precisely as written and shall not be deemed (i) to be a waiver of, or a consent granted pursuant to, any other term or condition of the Credit Agreement, any Loan Document or any of the instruments or agreements referred to in such documents, or, except as expressly set forth in Section 1 above, a waiver of any Unmatured Event of Default or Event of Default under the Credit Agreement, whether or not known to any of the Agents or the Lenders, or (ii) to prejudice any other right or rights that the Agents or the Lenders may now or in the future have under or in connection with the Credit Agreement, any other Loan Document or any instruments or agreements referred to therein. SECTION 5. EFFECTIVENESS. The waiver set forth in Section 1 above and the consent set forth in Section 2 above shall become effective as of the date hereof (the "Effective Date"), subject to satisfaction of the following conditions (unless waived in writing by the Administrative Agent or the requisite Lenders pursuant to the Credit Agreement, as the case may be): (a) receipt by the Administrative Agent of: (i) counterparts of this Waiver and Consent fully executed by the Borrowers and the requisite Lenders pursuant to the Credit Agreement; (ii) a counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit 1 hereto, fully executed by each Loan Party; and (iii) such other documents as the Administrative Agent or any Lender may reasonably request; (b) all legal matters in connection with this Waiver and Consent, the Credit Agreement and the other Loan Documents shall be reasonably satisfactory to Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent; (c) in immediately available funds, payment of all outstanding amounts that have been invoiced by or on behalf of the Administrative Agent and unpaid as of the date hereof with respect to all reimbursable fees, charges or expenses payable in accordance with the terms and provisions of the Credit Agreement and the other Loan Documents, including, without limitation, all Attorney Costs of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, all fees and disbursements of FTI Policano & Manzo, financial advisor to such counsel, and all amounts due and payable pursuant to Section 7.5; and (d) upon the effectiveness of this Waiver and Consent, (i) the representations and warranties in this Waiver and Consent are true and correct in all material respects on and as of the Effective Date, (ii) no Event of Default shall have occurred and be continuing and (iii) no Unmatured Event of Default shall occur or be continuing. Except as provided in Section 8 below, this Waiver and Consent shall be of no force and effect if the preceding conditions have not been satisfied by April 24, 2002. 4 For purposes of determining compliance with the conditions specified in this Section 5, each Lender that has executed this Waiver and Consent shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent, or made available for inspection, by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Administrative Agent and the requisite Lenders pursuant to the Credit Agreement. SECTION 6. POST-CLOSING COVENANTS. (a) The Borrowers jointly and severally covenant and agree that they shall: (i) by not later than April 19, 2002, retain an interim turnaround chief financial officer of the Company who shall be reasonably acceptable to the Administrative Agent and the Required Lenders; and (ii) by the earlier of (i) the date on which the annual audit report of the Company and its Subsidiaries in respect of Fiscal Year 2001 reported on Form 10-K is filed with the SEC or (ii) April 30, 2002, agree to and execute a binding term sheet that shall set forth the material terms of the Company's plan of recapitalization and restructuring of the balance sheets of the Company and its Subsidiaries, which term sheet shall be acceptable in form and substance to the Administrative Agent; it being expressly acknowledged and agreed that any failure to keep, perform and/or satisfy such undertakings set forth in this Section 6(a) (x) shall constitute an immediate Event of Default under the Credit Agreement and the rights and remedies of the Agents and the Lenders arising as a result thereof under the Credit Agreement and the other Loan Documents are hereby expressly preserved and (y) shall cause the waiver set forth in Section 1 above and the consent set forth in Section 2 above to become immediately null and void and such waiver and such consent shall be treated as if they were never granted; and (b) The Borrowers jointly and severally covenant and agree that any amounts realized by any Borrower from a whole life insurance policy in connection with settlement of any claim by a vested participant in the Company's Supplemental Executive Retirement Plan in excess of the amount of such settlement (net of direct costs and expenses incurred in connection therewith) shall be deemed Designated Proceeds under Section 6.2.2(a)(vii) (but without giving effect to the proviso thereunder) of the Credit Agreement, and accordingly such excess proceeds shall be applied to the Loans as set forth in the last sentence of Section 6.2.2(a) of the Credit Agreement. This provision shall be deemed an additional covenant and agreement of the Borrowers under Section 6.2.2 of the Credit Agreement. SECTION 7. MISCELLANEOUS. 7.1 Continuing Effectiveness, etc. The Credit Agreement and the other Loan Documents shall remain in full force and effect after giving effect to this Amendment and are hereby ratified and confirmed in all respects. After the Effective Date, all references to the "Credit Agreement" or similar terms in the Credit Agreement, the Notes, each other Loan Document and any similar document shall refer to the Credit Agreement as hereby supplemented and as previously amended, modified or supplemented. This Waiver and Consent shall constitute a Loan Document as defined in the Credit 5 Agreement, and the provisions of this Waiver and Consent may be amended, modified or supplemented, or any provision hereof waived, only in accordance with and subject to the provisions of the Credit Agreement. 7.2 Reaffirmation of Security Interest. (i) Each of the Borrowers hereby reaffirms as of the date hereof each and every security interest and lien granted in favor of the Administrative Agent and the Lenders under the Loan Documents and agrees and acknowledges that such security interests and liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Credit Agreement as amended by this Waiver and Consent, and the obligations secured thereby and thereunder shall include Borrowers' obligations under the Credit Agreement as amended by this Waiver and Consent. Each such reaffirmed security interest and lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed. (ii) Each of the Borrowers hereby further covenants and agrees that: (x) to the extent any of the same shall constitute "commercial tort claims" within the meaning of Article 9 of the Uniform Commercial Code (and without prejudice to the characterization thereof), it hereby grants a lien and security interest in, and assigns, pledges and conveys to the Administrative Agent for the benefit of the "Lender Parties" as security for the "Liabilities" (as such terms are defined in the Security Agreement), and agrees that the lien and security interests granted under the Security Agreement shall cover and extend to, any and all claims of any of the undersigned against Schlumberger Limited ("Schlumberger") in connection with the acquisition of the RPS Division of Schlumberger, including, but not limited to, claims subject to arbitration, and the proceeds thereof, (y) such claims and proceeds shall constitute part of the "Collateral" under and as defined by the Security Agreement and (z) the Security Agreement is effectively hereby amended to incorporate (to the extent not already incorporated) such assets as part of the "Collateral". 7.3 Further Assurances. Each of the Loan Parties expressly acknowledges and agrees (i) to enter into such other or further documents, and to take such other or further actions that may be necessary, or, in the opinion of the Administrative Agent, desirable, to perfect, preserve or protect the liens and security interests created under the Loan Documents and (ii) to grant liens on such other or further property or assets of the Loan Parties not currently encumbered to secure all obligations of the Loan Parties as the Administrative Agent may require; provided that no Loan Party shall have any obligation to grant liens on any such other or further property to the extent that such Loan Party can demonstrate, to the reasonable satisfaction of the Administrative Agent, that the granting of such lien would have a material and adverse tax consequence to the Loan Parties. 7.4 Counterparts. This Waiver and Consent may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Waiver and Consent. Delivery of an executed counterpart of a signature page of this Waiver and Consent by facsimile shall be as effective as delivery of a manually executed counterpart of this Waiver and Consent. 6 7.5 Expenses. The Company agrees that its obligations set forth in Section 14.6 of the Credit Agreement to pay the reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) shall extend to the preparation, execution and delivery of this Waiver and Consent and any other documentation contemplated hereby (whether or not this Waiver and Consent becomes effective or the transactions contemplated hereby are consummated), including, but not limited to, the reasonable fees and disbursements of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, and FTI Policano & Manzo, financial advisor to such counsel. 7.6 GOVERNING LAW. THIS WAIVER AND CONSENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE WHOLLY PERFORMED WITHIN THE STATE OF NEW YORK. 7.7 Successors and Assigns. This Waiver and Consent shall be binding upon the Borrowers, the Lenders and the Agents and their respective successors and assigns and shall inure to the benefit of the Borrowers, the Lenders and the Agents and their respective successors and assigns; provided that no Borrower shall have any right to assign this Waiver and Consent except to the extent permitted by the first sentence of Section 14.9.1 of the Credit Agreement. 7.8 Consultation with Advisors. The Loan Parties acknowledge that they have consulted with counsel and with such other experts and advisors as they have deemed necessary in connection with the negotiation, execution and delivery of this Waiver and Consent. This Waiver and Consent shall be construed without regard to any presumption or any rule requiring that it be construed against the party causing this Waiver and Consent or any part hereof to be drafted. 7.9 Entire Agreement. This Waiver and Consent sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. Each of the parties hereto acknowledges that, except as otherwise expressly stated in this Waiver and Consent, no representations, warranties or commitments, express or implied, have been made by any party to any other party with respect to the subject matter of this Waiver and Consent. None of the terms or conditions of this Waiver and Consent may be changed, modified, waived or canceled, orally or otherwise, except as provided in the Credit Agreement. 7.10 Enforceability. Should any one or more of the provisions of this Waiver and Consent be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 7.11 Invalidity; Severability. Whenever possible, each provision of this Waiver and Consent shall be interpreted in such manner as to be effective and valid under all applicable laws, rules and regulations. Any provision of this Waiver and Consent that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7.12 Headings. The headings of this Waiver and Consent are for the purpose of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Waiver and Consent. 7 7.13 Definitions. Capitalized terms used in this Waiver and Consent that are not defined herein but are defined in the Credit Agreement shall have the meaning given to such terms in the Credit Agreement. SECTION 8. RELEASE OF CLAIMS. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THE LIABILITY OF SUCH BORROWER TO REPAY ANY AGENT OR ANY LENDER AS PROVIDED IN THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ANY AGENT OR ANY LENDER OR ANY OF THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND EACH LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS WAIVER AND CONSENT IS EXECUTED, THAT SUCH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, AND SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THIS WAIVER AND CONSENT. THE RELEASES AND DISCHARGES IN THIS SECTION 8 SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THIS WAIVER AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. [Remainder of page intentionally left blank; signatures on following pages.] 8 Delivered as of the day and year first above written. TOKHEIM CORPORATION By ---------------------------------------- Title ------------------------------------- By ---------------------------------------- Title ------------------------------------- GASBOY INTERNATIONAL, INC. By ---------------------------------------- Title ------------------------------------- TOKHEIM INVESTMENT CORP. By ---------------------------------------- Title ------------------------------------- MANAGEMENT SOLUTIONS, INC. By ---------------------------------------- Title ------------------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ---------------------------------------- Title ------------------------------------- TOKHEIM SERVICES LLC By ---------------------------------------- Title ------------------------------------- TOKHEIM RPS, LLC By ---------------------------------------- Title ------------------------------------- SIGNATURE PAGE TO TOKHEIM WAIVER AND CONSENT ABN AMRO BANK N.V., as Administrative Agent, as Issuing Lender and as a Lender By ----------------------------------------------- Title -------------------------------------------- By ----------------------------------------------- Title -------------------------------------------- AMSOUTH BANK, as Documentation Agent and as a Lender By ----------------------------------------------- Title -------------------------------------------- BANK ONE, INDIANA, NATIONAL ASSOCIATION, as a Lender By ----------------------------------------------- Title -------------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By ----------------------------------------------- Title -------------------------------------------- CREDIT AGRICOLE INDOSUEZ, as a Lender By ----------------------------------------------- Title -------------------------------------------- By ----------------------------------------------- Title -------------------------------------------- BEAR, STEARNS & CO., INC., as a Lender By ----------------------------------------------- Title -------------------------------------------- BANKERS TRUST COMPANY, as a Lender By ----------------------------------------------- Title -------------------------------------------- SIGNATURE PAGE TO TOKHEIM WAIVER AND CONSENT SENIOR DEBT PORTFOLIO, as a Lender By: Boston Management and Research, as Investment Advisor By ------------------------------------------------ Title --------------------------------------------- EATON VANCE SENIOR INCOME TRUST, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------------ Title --------------------------------------------- OXFORD STRATEGIC INCOME FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------------ Title --------------------------------------------- EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------------------------ Title --------------------------------------------- CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender By ------------------------------------------------ Title --------------------------------------------- By ------------------------------------------------ Title --------------------------------------------- FINOVA CAPITAL CORPORATION, as a Lender By ------------------------------------------------ Title --------------------------------------------- SIGNATURE PAGE TO TOKHEIM WAIVER AND CONSENT BANK PEKAO SA (FORMERLY KNOWN AS BANK POLSKA KASA OPIEKI S.A., NEW YORK BRANCH), as a Lender By ------------------------------------------------ Title --------------------------------------------- OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By ------------------------------------------------ Title --------------------------------------------- OAKTREE CAPITAL MANAGEMENT, LLC, as agent and on behalf of certain funds and accounts, as a Lender By ------------------------------------------------ Title --------------------------------------------- ARES LEVERAGED INVESTMENT FUND II, L.P., as a Lender By: ARES Management II, L.P., its General Partner By ------------------------------------------------ Title --------------------------------------------- WHIPPOORWILL/TOKHEIM OBLIGATIONS TRUST-2000, as a Lender By: Whippoorwill Associates, Incorporated, as its investment representative and advisor By ------------------------------------------------ Title --------------------------------------------- BARCLAYS BANK PLC, as a Lender By ------------------------------------------------ Title --------------------------------------------- GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender By ------------------------------------------------ Title --------------------------------------------- SIGNATURE PAGE TO TOKHEIM WAIVER AND CONSENT EXHIBIT 1 FORM OF REAFFIRMATION OF LOAN DOCUMENTS April 15, 2002 ABN AMRO Bank N.V., as Administrative Agent and the other parties to the Credit Agreement referred to below Re: Reaffirmation of Loan Documents Ladies and Gentlemen: Each of the undersigned acknowledges that the Borrowers, the Lenders and the Agents have executed the Waiver and Consent dated as of the date hereof (the "Waiver and Consent") given under the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. Each of the undersigned hereby reaffirms as of the date hereof each and every security interest and lien granted in favor of the Administrative Agent and the Lenders under the Loan Documents and agrees and acknowledges that such security interests and liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Credit Agreement as supplemented by the Waiver and Consent, and the obligations secured thereby and thereunder shall include Borrowers' obligations under the Credit Agreement as amended by the Waiver and Consent. Each such reaffirmed security interest and lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed. Each of the undersigned hereby (i) confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Waiver and Consent, (ii) acknowledges and agrees that its obligations under the Loan Documents are absolute and unconditional, and that it does not have any right of setoff, recoupment, claim, counterclaim or defense of any kind or nature whatsoever that can be asserted to reduce or eliminate such obligations or to seek affirmative relief or damages of any kind or nature from any Agent or any Lender, or any of their predecessors, agents, employees, successors and assigns, (iii) reaffirms and admits the validity and enforceability of the Loan Documents and the Liens in the Collateral granted pursuant to the Loan Documents or otherwise and (iv) VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE WAIVER AND CONSENT IS EXECUTED, THAT IT MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, OR SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, EXHIBIT 1 AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THE WAIVER AND CONSENT. THE RELEASES AND DISCHARGES IN THIS LETTER AGREEMENT SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THE WAIVER AND CONSENT ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. This letter agreement may be signed in counterparts and by the various parties hereto on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same letter agreement. Delivery of an executed counterpart of a signature page of this letter agreement by facsimile shall be as effective as delivery of a manually executed counterpart of this letter agreement. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. TOKHEIM CORPORATION By -------------------------------------------- Title ----------------------------------------- By -------------------------------------------- Title ----------------------------------------- GASBOY INTERNATIONAL, INC. By -------------------------------------------- Title ----------------------------------------- TOKHEIM INVESTMENT CORP. By -------------------------------------------- Title ----------------------------------------- MANAGEMENT SOLUTIONS, INC. By -------------------------------------------- Title ----------------------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By -------------------------------------------- Title ----------------------------------------- EXHIBIT 1--Page 2 TOKHEIM SERVICES LLC By --------------------------------------------- Title ------------------------------------------ TOKHEIM RPS, LLC By --------------------------------------------- Title ------------------------------------------ EXHIBIT 1--Page 3 EX-10.(7) 7 dex107.txt JOHN S. HAMILTON EMPLOYMENT AGREEMENT Exhibit 10.7 EMPLOYMENT AGREEMENT THIS AGREEMENT (this "Agreement"), dated as of September 4, 2001 is made by and among Tokheim Corporation, an Indiana Corporation (the "Corporation") and Mr. John Hamilton (the "Executive"). Recitals -------- A. The Corporation desires to employ the Executive as the President and Chief Executive Officer of the Corporation, and to enter into this Employment Agreement as of September 4, 2001 embodying the terms of such relationship. B. The Executive is willing to be employed as the President and Chief Executive Officer of the Corporation on the terms set forth herein. Agreement --------- Now, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the Corporation and the Executive hereby agree as follows: 1. Definitions ----------- 1.1 "Affiliate" means any person or entity of any kind effectively controlling, effectively controlled by or under common control with the Corporation. 1.2 "Board" means the Board of Directors of the Corporation. 1.3 "Cause" means (a) the Executive is convicted for a felony involving moral turpitude, (b) the Executive commits a willful act intending to materially enrich himself at the expense of the Corporation or any Affiliate, or (c) the Executive, in carrying out his duties and responsibilities under this Agreement, (i) is guilty of gross neglect, or (ii) voluntarily engaged in conduct which, in either case, results, or is reasonably likely to result, in material economic or reputational harm to the Corporation and/or any Affiliate, unless such conduct described in (ii) was reasonably believed by the Executive in good faith to be in in the best interest of the Corporation. 1.4 "Disability" means the Executive's inability to render the services required hereunder by reason of a physical or mental disability for a period of six consecutive months, as determined by the written medical opinion of an independent medical physician reasonably 1 acceptable to the Executive and the Corporation; provided the Executive will not be considered disabled until the expiration of the six-month period. 1.5 "Subsidiary" means a corporation or other entity of which the Corporation owns 80% or more of the issued and outstanding stock or other equity securities. 2. Employment. Subject to the terms and provisions set forth in this Agreement, the Corporation during the Term of Employment agrees to employ the Executive as the President and Chief Executive Officer of the Corporation, and the Executive hereby accepts such employment. During the Terms of Employment, the Corporation shall use its reasonable best efforts to cause the Executive to be a director of the Corporation. 3. Term of Employment. The Term of Employment under this Agreement shall commence as of September 4, 2001 (the "Commencement Date") and shall continue unless earlier terminated by the Corporation or the Executive under Section 6 of this Agreement. 4. Positions, Responsibilities and Duties. -------------------------------------- 4.1 Positions and Duties. During the Term of Employment, the Executive shall be employed and shall serve as the President and Chief Executive Officer of the Corporation, with such duties, responsibilities, and authority as are commensurate with such positions, as determined from time to time by the Board. The Executive shall serve under the direction and supervision of the Board, and shall report to the Board. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities which would result in a non-compliance with or violation of any applicable law. 4.2 Attention to Duties and Responsibilities. During the Term of Employment, the Executive shall devote his full business time to the business and affairs of the Corporation and the Executive shall use his best efforts, ability and fidelity to perform faithfully and efficiently the duties and responsibilities contemplated by this Agreement; provided, however, that the Executive shall be allowed, to the extent such activities do not substantially interfere with the performance by the Executive of his duties and responsibilities hereunder, to (a) manage the Executive's personal affairs, and (b) (i) serve on boards or committees of civic or charitable organizations or trade associations, and (ii) serve on the board of directors of no more than one corporation, provided, however, that the Executive 2 shall request and gain approval from the Board in writing of any such corporate directorship under Section 4.2(b)(ii) and, if requested by the Board, that any such directorship does not detract from the Executive's performance of his duties and responsibilities under this agreement. 5. Compensation and Other Benefits. 5.1 Base Salary. During the Term of Employment, the Executive shall receive a base salary of $375,000 per annum ("Base Salary") payable in accordance with the Corporation's normal payroll practices. Such Base Salary shall be reviewed annually on or about each annual anniversary of the Commencement Date for increase at the sole discretion of the Board, but the Base Salary may not be less than $375,000. Such Base Salary as so increased shall then constitute the Executive's "Base Salary" for purposes of this Agreement. 5.2 Annual Bonus. During the Term of Employment, the Executive shall be eligible to receive an annual bonus payment (the "Annual Bonus") with a target of 75% of the Base Salary, but may range from 0-150% of the target payout, and will be based upon the achievement of specified performance goals established annually by the Board and the Executive. The pro rata Annual Bonus for fiscal year 2001 shall be $70,312.50 and shall be paid on 3/1/02. Except for the pro rata fiscal year 2001 Annual Bonus, the determination and awarding of any Annual Bonus shall be in the sole discretion of the Board. 5.3 Sign-On Bonus. A maximum sign-on Bonus of $130,000 will be available to the Executive as follows: 5.3.1 Within 30 days of receipt of documentation of the $25,000 loan made to the Executive by his previous employer, the Corporation shall pay the Executive $25,000; and 5.3.2 The Corporation shall pay to the Executive $105,000 on December 1, 2001. 5.4 EBITDA Profit Incentive. The EBITDA improvement incentive ("Incentive") will be paid, if earned, to the Executive annually beginning in FY2002 and continuing annually thereafter. The Incentive will be paid in the following fiscal year, within 60 days after receipt of audited financial statements. For purposes of this Agreement, "EBITDA" means the earnings before interest, taxes, 3 depreciation, and amortization of the Corporation (determined on a consolidated basis) but excluding extraordinary items, as determined by the Corporation's regular outside auditors and as reflected in the Corporation's audited financial statements. The amount of Incentive earned shall be determined as follows: 5.4.1 Beginning in FY2002, and continuing annually thereafter (referred to as the "Base Year"), the difference between the EBITDA of the Base Year and the prior fiscal year shall be determined (the "Improvement"). 5.4.2 The Incentive shall be payable only if the Improvement is $5,000,000 or more. 5.4.3 The Incentive shall be determined as follows: 5.4.3.1 If the Improvement is equal to or greater than $5,000,000 but less than $10,000,000, then the Incentive shall be equal to 8% of the Improvement; 5.4.3.2 If the Improvement is equal to or greater than $10,000,000 but less than $20,000,000, then the Incentive shall be equal to 10% of the Improvement; and 5.4.3.3 If the Improvement is equal to or greater than $20,000,000, then the Incentive shall be equal to 12% of the Improvement. The determination of and the payment of the Incentive may be illustrated by the following examples: 1. In FY2002 the EBITDA is $7,000,000 and in the FY2001 the EBITDA is $1,000,000. The Improvement is $6,000,000. The Incentive payment paid to the Executive in 2003, within 60 days after the release of the FY2002 audited financial statements, is equal to 8% times $6,000,000 or $480,000. 2. On June 1, 2004, the Executive is terminated without Cause. The FY2004 EBITDA is $20,000,000 and the FY2003 EBITDA is $9,000,000. The Improvement is $11,000,000. The Incentive payment paid to the Executive in 2005, within 60 days after the release of the FY2004 audited financial statements, is equal to 50% times 10% times $11,000,000 or $550,000. 4 5.5 Incentive, Retirement, and Savings Plans. During the Term of Employment and to the extent eligible, the Executive shall participate in all incentive, pension, retirement, savings and other employee benefit plans and programs, if any, maintained from time to time by the Corporation for the benefit of senior executives and other employees of the Corporation. 5.6 Welfare Benefit Plans. During the Term of Employment and to the extent eligible, the Executive, the Executive's spouse, if any, and their eligible dependents, if any, shall participate in and be covered by all the welfare benefit plans and programs, if any, maintained by the Corporation for the benefit of senior executives and other employees of the Corporation; provided, however, the Corporation shall provide health insurance for the Executive, his spouse, and dependents. The Corporation shall provide the executive with term life insurance having a death benefit equal to one time Base Salary. 5.7 Executive Stock Option Program. The Executive and the Corporation agree that working with the Compensation Committee, a reasonable Executive Stock Option Program will be developed. 5.8 Expense Reimbursement. During the Term of Employment, the Executive shall be entitled to receive prompt reimbursement for all expenses incurred by the Executive in performing his duties and responsibilities hereunder in accordance with the policies and procedures of the Corporation as in effect at the time the expense was incurred, as the same may be changed from time to time. In addition, the Corporation shall reimburse Executive for his relocation and temporary living expenses. 5.9 Vacation and Fringe Benefits. During the Term of Employment, and effective upon execution of this Agreement, the Executive shall be entitled to an annual four (4) weeks paid vacation at such times which do not materially interfere with the performance of the Executive's duties hereunder. In addition, during the Term of Employment, the Executive shall be entitled to payment of initiation fees and dues and the annual or monthly fees or dues for a membership in one country club (selected by the Executive and approved by the Board). 6. Termination. 6.1 Termination Due to Death or Disability. Upon 15 days prior written notice to the Executive, the Corporation may terminate the Executive's employment hereunder due to Disability. In the event of 5 the Executive's death or a termination of the Executive's employment by either the Corporation or the Executive due to Disability, the Term of Employment shall thereupon end and the Executive, his estate or other legal representative, as the case may be, shall only be entitled to: (a) Base Salary up to and including the date of termination; (b) Any prior fiscal year Annual Bonus actually earned, but not yet paid as of the date of termination and a pro rata portion of an Annual Bonus for the fiscal year in which such death or Disability termination occurs (provided that the awarding of a bonus is in the sole discretion of the Board); (c) Reimbursement for all expenses (under Section 5.7) incurred as of the date of termination, but not yet paid as of the date of termination; (d) Any earned but unpaid (EBITDA) Incentive and a pro rata amount of the Incentive for the year in which such death or Disability termination occurs; and (e) Any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Corporation or any Subsidiary. 6.2 Termination by the Corporation for Cause. The Corporation may terminate the Executive's employment hereunder for Cause, as provided below. If the Corporation terminates the Executive's employment hereunder for Cause, the Term of Employment shall thereupon end as set forth below and the Executive shall only be entitled to: (a) Base Salary up to and including the date of termination; (b) Any prior fiscal year Annual Bonus actually awarded, but not yet paid as of the date of termination; (c) Reimbursement for all expenses (under Section 5.7) incurred as of the date of termination, but not yet paid as of the date of termination; and 6 (d) Any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Corporation or any Subsidiary. In each case, the existence of Cause must be confirmed by a majority of the Board prior to any termination therefor. In the event of such a confirmation, the Corporation shall notify the Executive that the Corporation intends to terminate the Executive's employment for Cause under this Section 6.2 (the "Confirmation Notice"). The Confirmation Notice shall specify the problems, upon the basis of which the majority of the Board has so confirmed the existence of Cause. If the Executive notifies the Corporation in writing that he disagrees with the Board's confirmation of Cause, (the "Opportunity Notice") within five (5) days after the Executive has received the Confirmation Notice, then the Executive shall first have a thirty (30) day opportunity to cure and correct the allegations only with respect to matters referred to in Section 1.3(c). If the Executive cures and corrects these problems, then the Executive's employment shall continue. If after the expiration of such thirty (30) day period the Board again confirms the existence of Cause and concludes that the Executive did not cure and correct the problems, then the Executive, along with legal counsel selected by the Executive, if any, shall be provided one opportunity to meet with the Board (or a sufficient quorum thereof) to discuss such problems. Such opportunity to meet shall be fixed and shall occur on a date selected by the Board (such date be not less than five (5) nor more than fifteen (15) days after the Corporation receives the Opportunity Notice from the Executive). Such meeting shall take place at the principal offices of the Corporation. During the period commencing on the date the Corporation receives the Opportunity Notice and ending on the date next succeeding the date on which such meeting between the Board (or a sufficient quorum thereof) and the Executive is scheduled to occur, the Executive shall be suspended with pay from his employment with the Corporation and the Board may, during such suspension period, reasonably limit the Executive's access to the principal offices of the Corporation or any of its assets. If the Board properly sets the date of such meeting and does not rescind its confirmation at such meeting or if the Executive fails to attend such meeting for any reason, the Executive's employment by the Corporation shall, immediately upon the closing of such meeting, be terminated, but subject to the ability of the Executive to challenge the existence of Cause and challenge whether the Executive has cured and corrected the alleged problems. If the Executive does not respond in writing to the Confirmation Notice in the manner and within the time deadline specified in this Section 6.2, the Executive's 7 employment with the Corporation shall, on the sixth day after the receipt by the Executive of the Confirmation Notice, be terminated. Nothing in this Section shall be deemed to limit or restrict the ability of the Executive to dispute and challenge the existence of Cause and whether the Executive has cured and corrected allegations of Cause pursuant to the provisions of Section 7. 6.3 Termination Without Cause. Upon 15 days prior written notice to the Executive, the Corporation may terminate the Executive's employment hereunder without Cause. If the Corporation terminates the Executive's employment hereunder without Cause (other than due to death, Disability) the Term of Employment shall thereupon end and the Executive shall only be entitled to: (a) Base Salary continuation at the rate in effect (as provided in Section 5.1 of this Agreement) on the date of termination for an eighteen-month period commencing on such date of termination, or, if the Board so determines in its sole discretion and in lieu of such eighteen-month salary continuation, a lump sum payment equal to such Base Salary continuation amount, such lump sum payable within thirty days after the date of termination; (b) Any prior fiscal year Annual Bonus actually earned, but not yet paid as of the date of termination and a pro rata portion of an Annual Bonus for the year in which the Executive is terminated (provided that the awarding of a bonus is in the sole discretion of the Board); (c) Reimbursement for all expenses (under Section 5.8) incurred as of the date of termination, but not yet paid as of the date of termination; (d) Continuation of the welfare benefits of the Executive, including without limitation health insurance for the Executive, his spouse, and his dependents, at the expense of the Corporation, and at the level in effect as provided for by Section 5.6 of this Agreement on the date of termination for the eighteen month period commencing on the date of termination. (e) Any earned but unpaid (EBITDA) Incentive and a pro rata amount of the Incentive for the year in which the termination occurs; and 8 (f) Any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plan or programs, if any, of the Corporation or any Subsidiary. 6.4 Voluntary Termination. A Voluntary Termination shall entitle the Executive only to all of the rights and benefits which the Executive would be entitled in the event of a termination of his employment by the Corporation for Cause. A "Voluntary Termination" shall mean a termination of employment by the Executive on his own initiative other than termination due to death or Disability and other than termination for Good Reason as provided below. 6.5 No Mitigation; No Offset. In the event of any termination of employment under this Section 6, the Executive shall be under no obligation to seek other employment and there shall be no offset against any amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that the Executive may obtain. Any amounts due under this Section 6 are in the nature of severance payment, or liquidated damages, or both, and are not in the nature of a penalty. 6.6 Notice of Termination. Any termination of the Executive's employment under this Section 6 requiring advance written notice shall be communicated by a notice of termination to the other party hereto given in accordance with Section 10.3 of this Agreement (the "Notice of Termination"). 6.7 Statements by the Executive. Subject to the requirements of any applicable securities or other laws, the Executive agrees that during and after the Term of Employment, he shall not at any time make any statement or representation, written or oral, which the Executive knows is false and will materially and adversely affect the reputation or goodwill of the Corporation or Subsidiary. 6.8 Termination by Executive for Good Reason. If the Executive voluntarily terminates his employment for Good Reason, then such termination shall be deemed to be a termination by the Corporation without Cause, and the Executive shall have all the rights set forth in Section 6.3. For purpose of this Agreement, Good Reason means the occurrence of the following: 6.8.1 The Executive is not elected to the Board of Directors within 60 days of the date of this Agreement, or if so elected, the 9 Executive is subsequently removed from the Board or not re-elected. 7. Resolution of Disputes. With the exception of proceedings for equitable relief brought pursuant to Section 8.4 of this Agreement or otherwise, any disputes arising under or in connection with this Agreement, including, without limitation, any assertion by any party hereto that the other party has breached any provision of this Agreement, shall be resolved by arbitration, to be held in Fort Wayne, Indiana, in accordance with the rules and procedures of the American Arbitration Association. The obligation of the Corporation and the Executive under this Section 7 shall survive the termination for any reason of the Term of Employment (whether such termination is by the Corporation, by the Executive or upon the expiration of the Term of Employment). 8. Confidential Information and Noncompetition. ------------------------------------------- 8.1 Confidential Information. The Executive shall not, during the Term of Employment and at any time thereafter, without the prior express written consent of the Board, directly or indirectly, use any Confidential Information (as defined below) in any way, or divulge, disclose or make available or accessible any Confidential Information to any person, firm, partnership, corporation, trust or any other entity (other than in connection with the performance by Executive of his duties and responsibilities under this Agreement). The Executive shall also immediately notify the Board if he becomes aware of any unauthorized use or disclosure of any Confidential Information by any third party, and the Executive agrees to cooperate fully in any attempts or efforts by the Corporation or any Affiliate to obtain any relief or remedy in respect of such unauthorized use or disclosure. The Executive agrees that he shall not make any copies of any kind of any document, computer software or other writing or recording containing any Confidential Information without the prior approval of the Board (other than when required to do so in good faith to perform the Executive's duties and responsibilities under this Agreement or when required to do so by a lawful order of a court of competent jurisdiction). Upon written request by the Corporation, and after termination of his employment, the Executive shall also proffer to the Board's designee, and without retaining any copies, notes or excerpts thereof, all memoranda, computer disks or other media, computer programs, diaries, notes, records, data, customer or client lists, marketing plans and strategies, and any other documents consisting of or containing any Confidential Information that are in the 10 Executive's actual possession or which are subject to his control at such time. In addition, the Executive shall at all times use his best efforts carefully to safeguard any Confidential Information in the Executive's possession or under his control. For purposes of this Agreement, "Confidential Information" shall mean all information respecting the business and activities of the Corporation and/or any Subsidiary, including, without limitation, the terms and provisions of this Agreement, the clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware of computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, data gathering methods and/or strategies of the Corporation and/or any Subsidiary. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability occurs as a result of the Executive's breach of any portion of this Section 8.1 or any other obligation the Executive owes to the Corporation and/or any Affiliate) or information which is available from a third party not under any duty of confidentiality to the Corporation. 8.2 Noncompetition. The Executive, if his employment with the Corporation is terminated by the Corporation for any reason or by the Executive voluntarily, shall not, during the Term of Employment and for 18 months after the date of termination, directly or indirectly (a) engage, without the prior express written consent of the Corporation, in any business or activity, whether as an employee, consultant, partner, principal, agent, representative, stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice to any business, activity, person or entity, if such business, activity, service, person or entity, directly or indirectly, competes in any material manner with any product, service or other business of the Corporation of any Subsidiary engaged in, or which is in production, distribution or development, as of the date of termination, and/or (b) meaningfully assist, help or otherwise support, without the prior express written consent of the Corporation, any person, business, corporation, partnership or other entity or activity, whether as an employee, consultant, partner, principal, agent, representative, stockholder of in any other individual, corporate or representative capacity, to create, commence or otherwise initiate, or to develop, enhance or otherwise further, any business or activity if such business or activity directly or indirectly, competes (or is reasonably likely to compete) 11 in any manner with any significant business or activity of the Corporation of any Subsidiary. 8.3 Nonsolicitation. The Executive, if his employment with the Corporation is terminated by the Corporation for any reason, shall not, directly or indirectly, during the Term of Employment and for 18 months after the date of termination (a) take any action to solicit or divert any business (or potential business) or clients or customers (or potential clients or potential customers) away from the Corporation or any Subsidiary, (b) induce customers, potential customers, clients, potential clients, suppliers, agents or other persons under contract or otherwise associated or doing business with the Corporation or any Affiliate to terminate, reduce or alter any such association of business or business with or from the Corporation or any Subsidiary, and/or (c) induce any person in the employment of the Corporation or any Subsidiary or any consultant to the Corporation or any Subsidiary to (i) terminate such employment, or consulting arrangement, (ii) accept employment, or enter into any consulting arrangement, with anyone other than the Corporation or any Subsidiary, and/or (iii) interfere with the customers, suppliers, or clients of the Corporation or any Subsidiary in any manner or the business of the Corporation or any Subsidiary in any manner. For purposes of this Section 8.3, a "potential client" or a "potential customer" shall mean a person or entity that the Corporation or any Subsidiary (A), as of the date the Executive's employment terminates, is, or will be in the reasonably foreseeable future, soliciting or considering soliciting (or has targeted for solicitation, or will be so targeting in the reasonably foreseeable future), and/or (B) has, at any time or from time to time, within the 12 month period prior to the date of the Executive's employment terminates, been soliciting for or in respect of any current, actively pending or contemplated produce lines, businesses, or services offered by the Corporation or any Affiliate, including, without limitation, any licensing arrangements, manufacturing arrangements, and/or distribution arrangements (the "Products"), and "potential business" shall mean any current or reasonably foreseeable commercial activity or any current or reasonably foreseeable commercial opportunities associated in any way with the Products. 8.4 Injunctive Relief. The Executive acknowledges and agrees that the Corporation will have no adequate remedy at law, and would be irreparably harmed, if the Executive breaches or threatens to breach any of the provisions of this Section 8 of this Agreement. The Executive agrees that the Corporation shall be entitled to equitable and/or injunctive relief to prevent any breach or threatened breach of 12 this Section 8, and to specific performance of each of the terms of such Section in addition to any other legal and equitable remedies that the Corporation may have. The Executive further agrees that he shall not, in any equity proceeding relating to the enforcement of the terms of this Section 8, raise the defense that the Corporation has an adequate remedy at law. 8.5 Special Severability. The terms and provisions of this Section 8 are intended to be separate and divisible provisions and if, for any reason, any one or more of them is held to be invalid or unenforceable, neither the validity nor the enforceability of any other provision of this Agreement shall thereby be affected. It is the intention of the parties to this Agreement that the potential restrictions on the Executive's future employment imposed by this Section 8 be reasonable in both duration and geographic scope and in all other respects. If for any reason any court of competent jurisdiction shall find any provisions of this Section 8 unreasonable in duration or geographic scope or otherwise, the Executive and the Corporation agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction. 9. Successors. 9.1 The Executive. This Agreement is personal to the Executive and, without the prior express written consent of the Corporation, shall not be assignable by the Executive, except that the Executive's rights to receive any compensation or benefits under this Agreement may be transferred or disposed of pursuant to testamentary disposition, interstate succession or pursuant to a qualified domestic relations order. This Agreement shall inure to the benefit of and be enforceable by the Executive's heirs, beneficiaries and/or legal representatives. 9.2 The Corporation. This agreement shall inure to the benefit of and be binding upon the Corporation and its successors and assigns. 10.0 Miscellaneous. 10.1 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without regard to principles of conflict of law. 10.2 Amendments/Waiver. This Agreement may not be amended waives, or modified otherwise than by a written agreement executed by the 13 parties to this Agreement or their respective successors and legal representatives. No waiver by any party to this Agreement of any breach of any term, provision or condition of this Agreement by the other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, or any prior or subsequent time. 10.3 Notices. All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party, by facsimile transmission, by overnight courier, or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: John Hamilton If to the Corporation: Tokheim Corporation ATTN: General Counsel 10501 Corporate Drive Fort Wayne, IN 46845 Or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee. 10.4 Withholding. The Corporation may withhold from any amounts payable under this Agreement such taxes as shall be required to be withheld pursuant to any applicable law or regulation. 10.5 Severability. The invalidity or unenforceability of any provision of this agreement shall not affect the validity or enforceability of any other provision of this Agreement. 10.6 Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. 10.7 Entire Agreements. This Agreement contains the entire agreement between the parties to this Agreement concerning the subject matter hereof and supersedes all prior agreements, understandings, 14 discussions, negotiations and undertakings, whether written or oral, between the parties with respect thereto, including, but not limited to, the Original Employment Agreement and the Option Agreement. 10.8 Representation. The Executive represents and warrants that the performance of the Executive's duties and obligations under this Agreement will not violate any agreement between the Executive and any other person, firm, partnership, corporation, or organization. 10.9 Survivorship. The respective rights and obligations of the parties to this Agreement shall survive any termination of this Agreement or the Executive's employment hereunder for any reason to the extent necessary to the intended preservation of such rights and obligations. 10.10 Indemnification. To the fullest extent permitted by law, the Corporation shall indemnify and hold the Executive harmless with respect to claims, suits, judgments, investigations, and proceedings (including all reasonable attorneys fees) arising out of or related to the Executive's status or activities as an employee, officer or director of the Corporation or any Affiliate or Subsidiary, provided that indemnification is conditioned upon the Executive having acted in good faith with respect to the events giving rise to the claim for indemnification. This Section 10.10 does not limit the rights the Executive may have under the Corporation's Bylaws or Articles of Incorporation or under law. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the Corporation has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written. TOKHEIM CORPORATION By: /s/ W.E. Redmond, Jr. ------------------------------------- Name: W.E. Redmond, Jr. TItle: Director--Tokheim Comp Committee Chair /s/ John Hamilton ------------------------------------- John Hamilton 15 EX-21.(1) 8 dex211.txt TOKHEIM SUBSIDIARIES Exhibit 21.1 Subsidiaries*
Tokheim % Jurisdiction of F/S Information Subsidiary Name Ownership Incorporation Included By - --------------- --------- ----------------- --------------- Tokheim Austria GesmbH..................... (G) 100.00% Austria Consolidated Tokheim Belgium N.V........................ (L) 100.00% Belgium Consolidated Socatam S.A................................ (F) 99.90% Cameroon Consolidated Tokheim & Gasboy of Canada, Ltd............ (C) 100.00% Canada--Ontario Consolidated Tokheim Czech Republic s.r.o............... (O) 100.00% Czech Republic Consolidated Tokheim Scandinavia A/S.................... (H) 100.00% Denmark Consolidated Serip S.A.................................. (F) 66.00% France Consolidated Tokheim Services France S.A................ (F) 100.00% France Consolidated Tokheim Sofitam Applications S.A........... (E) 100.00% France Consolidated Tokheim Sofitam S.A........................ (B) 100.00% France Consolidated Deutsche Tokheim Verwaltungesellschaft GmbH (G) 100.00% Germany Consolidated Tokheim Germann GmbH....................... (P) 100.00% Germany Consolidated Tokheim GmbH............................... (G) 100.00% Germany Consolidated Tokheim Holding GmbH....................... (A) 100.00% Germany Consolidated Tokheim Tanksysteme GmbH................... (P) 100.00% Germany Consolidated Tokheim Hungary k.f.t...................... (F) 100.00% Hungary Consolidated Tokheim Ireland Limited.................... (B) 100.00% Ireland Consolidated Tulla Electronics Limited.................. (B) 100.00% Ireland Consolidated Tokheim-Italia SRL......................... (F) 99.00% Italy Consolidated Tokheim de Mexico.......................... (B) 100.00% Mexico Consolidated Matam S.A.................................. (F) 99.90% Morocco Consolidated Tokheim--MM................................ (Q) 50.00% Poland Equity Method Tokheim Polgermann......................... (K) 100.00% Poland Consolidated G.N.C. Portugal............................ (J) 100.00% Portugal Consolidated Cosetam S.A................................ (F) 98.93% Senegal Consolidated Tokheim Slovakia s.r.o..................... (F) 100.00% Slovak Republic Consolidated Tokheim South Africa (Proprietary), Ltd.... (D) 100.00% South Africa Consolidated Tokheim Koppens Iberica S.A................ (F) 99.81% Spain Consolidated Tokheim Switzerland AG..................... (B) 100.00% Switzerland Consolidated Koppens Automatic Fabrieken B.V............ (H) 100.00% The Netherlands Consolidated Tokheim Holding Netherlands B.V............ (B) 100.00% The Netherlands Consolidated Tokheim Netherlands B.V.................... (H) 100.00% The Netherlands Consolidated Cottam Sarl................................ (F) 99.88% Tunisia Consolidated Independent Pump Services.................. (N) 100.00% United Kingdom Consolidated Tokheim Services Limited................... (N) 100.00% United Kingdom Consolidated Tokheim UK Limited......................... (B) 100.00% United Kingdom Consolidated Management Solutions, Inc.................. (A) 100.00% USA--Colorado Consolidated Paxcis..................................... (A) 100.00% USA--Delaware Consolidated Tokheim RPS, LLC........................... (I) 100.00% USA--Delaware Consolidated Sunbelt Hose & Petroleum Equipment, Inc.... (B) 100.00% USA--Georgia Consolidated Tokheim Services, LLC...................... (M) 100.00% USA--Indiana Consolidated Gasboy International, Inc.................. (B) 100.00% USA--Pennsylvania Consolidated Tokheim Investment Corp.................... (A) 100.00% USA--Texas Consolidated
- -------- * Subsidiaries as of November 30, 2001. Does not include entities in which Tokheim Corporation or subsidiaries hold less than 50%. Does not take into account subsequent liquidations, mergers, or other transactions. A) Directly owned by Tokheim Corporation. B) Directly owned by Tokheim Corporation's subsidiary, Tokheim Investment Corp., or directors' qualifying shares. C) Directly owned 65% by Tokheim Corporation's subsidiary, Tokheim Investment Corp., and 35% by Tokheim Corporation's indirect subsidiary Gasboy International, Inc. D) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim & Gasboy of Canada, Ltd. E) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Sofitam S.A. F) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Sofitam Applications S.A. G) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Holding GmbH. H) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Holding Netherlands B.V. I) Directly owned by Tokheim Corporation's indirect subsidiary, Gasboy International, Inc. J) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Koppens Iberica S.A. K) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Germann GmbH. L) Directly owned 98.92% by Tokheim Corporation's indirect subsidiary, Tokheim Holding Netherlands B.V., 1.04% by Tokheim Corporation's indirect subsidiary, Tokheim Sofitam Applications S.A., and 0.04% by Tokheim Corporation's indirect subsidiary, Koppens Automatic Fabrieken B.V. M) Directly owned 99% by Tokheim Corporation and 1% by Tokheim Corporation's subsidiary, Tokheim Investment Corp. N) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim UK Limited. O) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Services France S.A. P) Directly owned by Tokheim Corporation's indirect subsidiary, Deutsche Tokheim Verwaltungesellschaft GmbH. Q) Directly owned by Tokheim Corporation's indirect subsidiary, Tokheim Polgermann. All subsidiaries are consolidated, except for Tokheim--MM, which is accounted for using the equity method. -----END PRIVACY-ENHANCED MESSAGE-----