-----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, LjjGQ4TSsk299EjhoFJK4Ej3jOq9fnsU2EAWFAuGlKhv/kSlB6nlHm4VaPiUKMUO hfRjri1K8utgxAuGZAgkqQ== 0000950131-99-002600.txt : 19990429 0000950131-99-002600.hdr.sgml : 19990429 ACCESSION NUMBER: 0000950131-99-002600 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 36 FILED AS OF DATE: 19990428 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: S-4 SEC ACT: SEC FILE NUMBER: 333-77253 FILM NUMBER: 99603490 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 S-4 1 FORM S-4 As filed with the Securities Exchange Commission on April 28, 1999 Registration No. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT Under The Securities Act of 1933 --------------- TOKHEIM CORPORATION (Exact name of registrant as specified in its charter) --------------- Indiana 3580 35-0712500 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification Number) incorporation or Code Number) organization) 10501 Corporate Drive Fort Wayne, IN 46845 (219) 470-4600 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Copy to: Douglas K. Pinner Chairman of the William R. Kunkel Skadden, Arps, Slate, Board, President and Chief Executive Meagher & Flom (Illinois) Officer 10501 Corporate Drive Fort 333 West Wacker Drive Chicago, IL 60606 Wayne, IN 46845 (219) 470-4600 (312) 407-0700 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
Jurisdiction Primary Standard I.R.S. Employer of Industrial Classification Identification Exact Name of Additional Registrants Incorporation Code Number Number ------------------------------------ ------------- ------------------------- --------------- Envirotronic Systems, Inc.* Indiana 3823 35-1753684 Gasboy International, Inc. Pennsylvania 3586 23-1265426 P.O. Box 309, Lansdale, PA 19664 (215) 855-4631 Management Solutions, Inc. Colorado 3824 84-1007527 5351 S. Roslyn St., Suite 200, Greenwood Village, CO 80111 (303) 773-9300 Sunbelt Hose & Petroleum Equipment, Inc.* Georgia 5084 35-1682561 Tokheim Automation Corporation* Texas 5084 76-0261484 Tokheim Equipment Corporation* Delaware 3586 36-4250806 Tokheim Investment Corp.* Texas 6726 74-2137031 Tokheim RPS, LLC* Delaware 6726 36-5250803 Tokheim Services LLC* Indiana 6726 36-4260132
*Address and telephone of principal executive offices are the same as those of Tokheim Corporation. --------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------
Proposed Proposed Maximum Title of Each Class Maximum Aggregate Amount of Of Securities To Be Amount To Be Offering Price Offering Price Registration Registered Registered Per Unit (1) (1) Fee - -------------------------------------------------------------------------------------- 11 3/8% Senior Subordinated Dollar Notes due 2008......... $123,000,000 100% $123,000,000 $34,194 - -------------------------------------------------------------------------------------- Guarantees of Senior Subordinated Dollar Notes (2).............. -- -- -- (3) - -------------------------------------------------------------------------------------- 11 3/8% Senior Subordinated Euro Notes due 2008............... $86,647,500(4) 100% $86,647,500(4) $24,088 - -------------------------------------------------------------------------------------- Guarantees of Senior Subordinated Euro Notes (2).................... -- -- -- (3)
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) Estimated pursuant to Rule 457 solely for the purpose of calculating the registration fee. (2) All existing and future U.S. subsidiaries of the Registrant have each guaranteed the Notes being registered. (3) Pursuant to Rule 457(n), no separate fee is payable with respect to the guarantees of the Notes being registered. (4) Calculated using an exchange rate of (Euro)1.00=$1.1553. --------------- The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOKHEIM CORPORATION CROSS REFERENCE SHEET
Form S-4 Item Location in Prospectus - ------------- ------------------------------------------- A. INFORMATION ABOUT THE TRANSACTION Item 1:Forepart Of Registration Statement And Outside Front Cover Page Of Prospectus................... Outside Front Cover Page Item 2:Inside Front And Outside Back Cover Pages Inside Front Cover Page; Outside Back Cover Of Prospectus................ Page Item 3:Risk Factors, Ratio Of Earnings To Fixed Prospectus Summary; Risk Factors; Unaudited Charges, And Other Pro Forma Consolidated Condensed Financial Information.................. Statements; Selected Financial Data of Tokheim Corporation and Subsidiaries; Selected Financial Data of the RPS Division Item 4:Terms Of The Transaction.... Prospectus Summary; The Exchange Offer; Certain United States Federal Income Tax Considerations; The Transactions; Description of the Exchange Notes; Plan of Distribution Item 5:Pro Forma Financial Prospectus Summary; Unaudited Pro Forma Information.................. Consolidated Condensed Financial Statements; Selected Financial Data of Tokheim Corporation and Subsidiaries; Selected Financial Data of the RPS Division Item 6:Material Contacts With The Company Being Acquired..................... Not Applicable Item 7:Additional Information Required For Reoffering By Persons And Parties Deemed to Be Underwriters........... Not Applicable Item 8:Interests Of Named Experts And Counsel.................. Not Applicable Item 9:Disclosure Of Commission Position On Indemnification For Securities Act Liabilities... Not Applicable B. INFORMATION ABOUT THE REGISTRANT Item 10:Information With Respect To Summary; Unaudited Pro Forma Consolidated S-3 Registrants.............. Condensed Financial Statements Item 11:Incorporation Of Certain Information By Reference.................... Information Incorporated by Reference Item 12:Information With Respect To S-2 Or S-3 Registrants.................. Not Applicable Item 13:Incorporation Of Certain Information By Reference.................... Not Applicable
Form S-4 Item Location in Prospectus - ------------- ------------------------------------------- Item 14:Information With Respect To Registrants Other Than S-3 Or S-2 Registrants.......................... Not Applicable C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED Item 15:Information With Respect To S-3 Companies............................ Not Applicable Item 16:Information With Respect To S-2 Or S-3 Companies........................ Not Applicable Item 17:Information With Respect To Companies Other Than S-3 Or S-2 Companies............................ Not Applicable D. VOTING AND MANAGEMENT INFORMATION Item 18:Information If Proxies, Consents Or Authorizations Are To Be Solicited... Not Applicable Item 19:Information If Proxies, Consents Or Authorizations Are Not To Be Solicited............................ Management; Principal Shareholders
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these notes until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these notes and it is not soliciting an offer to buy these + +notes in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion, dated April 28, 1999 Prospectus [LOGO OF TOKHEIM CORPORATION] Tokheim Corporation Exchange Offer for $123,000,000 and (Euro)75,000,000 11 3/8% Senior 11 3/8% Senior Subordinated Notes Subordinated Notes Due 2008 Due 2008 - -------------------------------------------------------------------------------- Terms of the Exchange Offer . Expires 5:00 p.m. New . The exchange of York City time (in the outstanding notes for case of outstanding exchange notes will not dollar notes) or 5:00 be a taxable exchange p.m., London time (in for U.S. federal income the case of outstanding tax purposes. Euro notes), , 1999, unless extended. . The terms of the exchange notes and the . All outstanding notes outstanding notes are that are validly substantially tendered and not identical, except for validly withdrawn will certain transfer be exchanged. restrictions, registration rights and . Tenders of the liquidated damages outstanding notes may relating to the be withdrawn any time outstanding notes. prior to the expiration of the exchange offer. . There is no existing market for the exchange . Not subject to any notes and the Company condition, other than does not currently that the exchange offer intend to apply for not violate applicable their listing on any law or any applicable securities exchange. interpretation of the staff of the Securities and Exchange Commission. . The Company will not receive any proceeds from the exchange offer. - -------------------------------------------------------------------------------- For a discussion of certain factors that should be considered by holders prior to tendering their outstanding notes in the exchange offer, see "Risk Factors" beginning on page 21. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. - -------------------------------------------------------------------------------- , 1999 This prospectus incorporates by reference documents that are not contained in or delivered with the prospectus. These documents are available without charge upon request to Tokheim Corporation, 10501 Corporate Drive, Fort Wayne, IN, 46845, Attention: Executive Vice President, Finance and Administration and Chief Financial Officer, telephone number (219) 470-4600. To ensure timely delivery of the documents, any request should be made by , 1999. ---------------- TABLE OF CONTENTS
Page ---- Summary................................................................... 1 Risk Factors.............................................................. 21 Debt Financing Risks.................................................... 21 Risks Associated with the Operation of the Business..................... 24 Government Regulation................................................... 28 Risks Associated with the Exchange Offer................................ 28 The Exchange Offer........................................................ 30 The Transactions.......................................................... 38 Sources and Uses of Funds................................................. 39 Capitalization............................................................ 40 Unaudited Pro Forma Consolidated Condensed Financial Statements........... 41 Selected Financial Data of Tokheim Corporation and Subsidiaries .......... 47 Selected Financial Data of the RPS Division............................... 49 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................... 50 Business.................................................................. 59 Management................................................................ 72 Principal Shareholders.................................................... 74 Description of Certain Indebtedness....................................... 76 Description of the Schlumberger Warrants.................................. 78 Description of the Exchange Notes......................................... 79 Certain United States Federal Income Tax Considerations................... 112 Plan of Distribution...................................................... 117 Legal Matters............................................................. 117 Independent Accountants................................................... 118 General Listing Information............................................... 119 Where You Can Find More Information....................................... 120 Information Incorporated by Reference..................................... 120 Index to Financial Statements............................................. F-1
i THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SUURENDERS OF OR EXCHANGE FROM, HOLDERS OF OUTSTANDING NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. EXCHANGE NOTES MAY NOT BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY TO THE PUBLIC IN THE REPUBLIC OF FRANCE. NEITHER THIS DOCUMENT, WHICH HAS NOT BEEN SUBMITTED FOR THE APPROVAL OF THE COMMISSION DES OPERATIONS DE BOURSE, NOR ANY OFFERING MATERIAL RELATING TO THE EXCHANGE NOTES MAY BE RELEASED OR ISSUED TO THE PUBLIC IN CONNECTION WITH ANY SUCH OFFER. EXCHANGE NOTES HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR SALE UNDER THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA. EXCHANGE NOTES ARE NOT BEING OFFERED AND MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN CANADA OR TO OR FOR THE ACCOUNT OF ANY RESIDENT OF CANADA IN CONTRAVENTION OF THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY THEREOF. THIS PROSPECTUS IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN ADVERTISEMENT OR A PUBLIC OFFERING IN CANADA OF THE SECURITIES DESCRIBED HEREIN. CANADIAN RESIDENTS SHOULD CONSULT THEIR OWN ATTORNEY AS TO RESTRICTIONS ON RESALES OF EXCHANGE NOTES. EXCHANGE NOTES MAY NOT BE OFFERED IN THE NETHERLANDS OR ELSEWHERE TO THE ACCOUNT OF ANY PERSON OR ENTITY OTHER THAN TO PERSONS WHO OR ENTITIES WHICH TRADE OR INVEST IN SECURITIES IN THE CONDUCT OF A PROFESSION OR BUSINESS WITHIN THE MEANING OF THE SECURITIES TRANSACTIONS SUPERVISION ACT 1995 (WET TOEZICHT EFFECTENVERKEER 1995) AND ITS IMPLEMENTING REGULATIONS (WHICH INCLUDE BANKS, INVESTMENT BANKS, BROKERS, DEALERS, PENSION FUNDS, INSURANCE COMPANIES, SECURITIES FIRMS, INVESTMENT INSTITUTIONS, OTHER INSTITUTIONAL INVESTORS, AND OTHER PARTIES INCLUDING INTER ALIA TREASURIES AND FINANCE COMPANIES OF LARGE ENTERPRISES WHICH REGULARLY, AS AN ANCILLARY ACTIVITY, TRADE OR INVEST IN SECURITIES). EXCHANGE NOTES WILL ONLY BE AVAILABLE FOR EXCHANGE IN THE UNITED KINGDOM PURSUANT TO THE EXCHANGE OFFER BY PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES OR OTHERWISE IN CIRCUMSTANCES THAT DO NOT CONSTITUTE AN OFFER TO THE PUBLIC IN THE UNITED KINGDOM FOR PURPOSES OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995. NO DOCUMENT ISSUED IN CONNECTION WITH THE EXCHANGE OFFER, INCLUDING THIS PROSPECTUS, MAY BE PASSED ON TO ANY PERSON IN THE UNITED KINGDOM UNLESS THAT PERSON IS AS DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT OF 1986 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1996 (AS AMENDED), OR IS A PERSON TO WHOM THE DOCUMENT MAY OTHERWISE LAWFULLY BE ISSUED OR PASSED ON. ACCORDINGLY, BY ACCEPTING DELIVERY OF THIS PROSPECTUS, THE RECIPIENT WARRANTS AND ACKNOWLEDGES THAT IT IS SUCH A PERSON. DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS All statements other than statements of historical facts included in this prospectus, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and cost savings and plans and objectives of management for future operations, are forward-looking statements. In ii addition, you can generally identify forward-looking statements by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or the negative thereof, variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations are disclosed under "Risk Factors" and elsewhere in this prospectus, including, without limitation, in conjunction with the forward- looking statements included in this prospectus. We do not undertake any obligation to update any forward-looking statements. Given the uncertainties associated with forward-looking statements, you should not place undue reliance on them. EXCHANGE RATES In this prospectus, references to "dollars," "US$," and "$" are to United States dollars, and references to "United States" and "U.S." mean the United States of America, its states, territories, possessions and all areas subject to its jurisdiction. References herein to "Euro" and "(Euro)" are to the currency that was introduced at the start of the third stage of economic and monetary union pursuant to the treaty establishing the European Economic Community, as amended by the Treaty on European Union, signed at Maastricht, the Netherlands on February 7, 1992 (the "Treaty"). Except as otherwise stated herein, conversions of non-U.S. dollar currencies to U.S. dollars in the financial statements and other information included herein have been calculated, for income statement purposes, on the basis of average exchange rates over the related periods and, for balance sheet purposes, on the date of the balance sheet. These translations should not be construed as representations that the non-U.S. dollar currency amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated or at any other rates. On May 3, 1998, the Council of the European Union adopted Council Regulation (EC) No. 974/98, which defines the initial participants in Stage III of European Monetary Union as Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. This definition of initial participants does not include England, Denmark and Greece. Thus, their currencies--the British pound, the Danish krone, and the Greek drachma--were not among those that were converted to the Euro. Our business may cause us to encounter currency exchange risks. We may experience an adverse effect, which may be material, if any local currency we use devalues against the dollar. You should read "Risk Factors--Risks Associated with the Operation of the Business--Foreign Currency; Common European Currency" for a discussion of the impact of the exchange rate fluctuations on our financial condition and results of operations. The Euro was introduced on January 1, 1999 at an exchange rate of (Euro)1.00=$1.17. As of April 26, 1999 the noon buying rate with respect to the Euro was (Euro)1.00=$1.06. Unless otherwise indicated, the exchange rate used in this prospectus is (Euro)1.00=$1.1553. The following table sets forth, for the periods and dates indicated, certain information concerning the French Franc ("FFR") exchange rate, set forth in FFR per dollar.
FFR per dollar -------------------------------- Year/Period Calendar Period End High Low Average(1) --------------- ----------- ---- ---- ---------- 1994..................................... 5.34 5.98 5.10 5.54 1995..................................... 4.91 5.40 4.76 4.99 1996..................................... 5.19 5.27 4.88 5.11 1997..................................... 5.99 6.35 5.19 5.84 1998..................................... 5.62 6.21 5.42 5.90 1999 (through April 26).................. 6.20 6.20 5.54 5.91
- -------- (1) Average of the closing rates for each business day during the period. On April 26, 1999, the noon buying rate with respect to the FFR was $1.00 = FFR 6.20. We make no representation that the amounts referred to herein could have been or could be converted into the foregoing currencies at any particular rate or at all. iii SUMMARY The following summary highlights selected information from this prospectus and may not contain all of the information that is important to you. This prospectus includes the terms of the notes we are offering, as well as business and detailed financial information. We encourage you to read this prospectus in its entirety. In this prospectus, "we," "us," "our" and the "Company" refer to Tokheim Corporation and its subsidiaries after our acquisition of the RPS Division of Schlumberger Limited (the "RPS Division"), unless otherwise indicated. "Tokheim" refers to Tokheim Corporation and its subsidiaries prior to the acquisition of the RPS Division. The market share and other data contained in this prospectus relating to the petroleum dispenser and related industries, both in the United States and internationally, have been derived from industry and other sources available to us. While we believe that our estimates derived from such sources, including as to market share data, are reasonable, no assurances can be given as to their accuracy. Overview On September 30, 1998, we acquired the RPS Division and became the world's largest manufacturer and servicer of electronic and mechanical petroleum dispensing systems. We financed this acquisition by entering into a credit agreement and issuing various securities, including senior notes, senior subordinated notes, junior subordinated notes and warrants. On January 29, 1999, we privately placed $123.0 million of 11 3/8% Senior Subordinated Notes due 2008 and (Euro)75.0 million of 11 3/8% Senior Subordinated Notes due 2008. We used the proceeds from the placement of these outstanding notes to refinance the senior notes and the senior subordinated notes issued in connection with the acquisition of the RPS Division and to reduce borrowings under the revolving working capital facility of the credit agreement by approximately $3.4 million. In addition, total availability under the revolving working capital facility of the credit agreement was permanently reduced from $120.0 to $110.0 million. The outstanding notes are, and the exchange notes will be, guaranteed by all of our existing and future U.S. subsidiaries on a senior subordinated basis with guarantees that are unsecured and subordinated to existing and future senior debt of such subsidiaries. Simultaneously with the private placement, the subsidiary guarantors and the Company entered into two registration rights agreements with the initial purchasers of the outstanding notes, one agreement for the notes issued in dollars and one for the notes issued in Euros. Under these registration rights agreements, we must deliver this prospectus to the holders of the outstanding notes and must complete this exchange offer on or before August 12, 1999. If this exchange offer does not take place on or before August 12, 1999, we must pay liquidated damages to the holders of the outstanding notes until this exchange offer is completed. You may exchange your outstanding notes for exchange notes with substantially the same terms in this exchange offer. You should read the discussion under the heading "Summary of Terms of the Exchange Notes" and "Description of the Exchange Notes" for further information regarding the exchange notes. We believe that holders may resell the exchange notes without complying with the registration and prospectus delivery provisions of the Securities Act of 1933 (the "Securities Act") if certain conditions are met. You should read the discussion under the headings "Summary of the Exchange Offer" and "The Exchange Offer" for further information regarding the exchange offer and resales of the exchange notes. The Company As a result of our acquisition of the petroleum dispenser business of Sofitam S.A. ("Sofitam") in September 1996 and the RPS Division in September 1998, we are the largest global competitor in the petroleum dispenser business, with an estimated 37% share of the world market, and the ability to provide both products and services to customers in over 80 countries. 1 We are the largest supplier of petroleum dispensing systems in Europe, Africa, Canada and Mexico, and one of the largest suppliers in the United States. We also have established operations in Asia and Latin America. We believe that our global capabilities provide us with a competitive advantage to attract additional business and form alliances with customers. Before we acquired the RPS Division it was headquartered in France and was a leading manufacturer and servicer of fuel dispensing systems in western Europe. In 1992, it established a presence in North America with the acquisition of Southwest Energy Control Systems and continued to develop its North American position. The RPS Division is also present in eastern Europe and the former Soviet Union. The main manufacturing sites for the RPS Division are located in Dundee, Scotland and in Bonham, Texas, respectively. We recently announced that we will be closing the Bonham facility. Our Products We manufacture and service electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (including point-of-sale systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits. Our Services We believe that our Company offers superior customer service and support. In western Europe and Africa, we provide support through our extensive, Company- direct service organization. Throughout the rest of the world, service is provided through authorized service representatives and distributors. Customer service includes the installation, maintenance, certification and calibration of, and technical support for, petroleum dispensers, pumps, electronic hardware and software systems. We offer 24-hour, seven day-per-week support by telephone and over the Internet via our FASRLINK(TM) help desk to authorized service representatives, distributors and customers in major markets. We believe our service and support capabilities are important factors in winning supply contracts and gaining new customers. Additionally, major oil companies ("MOCs") are more frequently entering into geographically broader service contracts, which we believe we are well-positioned to win. Our Industry and Customers Petroleum dispensing systems are designed for and sold principally to owners of retail service stations. These owners include MOCs, national oil companies ("nationals"), independent owners operating under a MOC brand ("jobbers"), independent oil companies ("independents"), convenience store stations, hypermarkets and other retailers, and to commercial customers. As a result of industry consolidation, we estimate that the top three manufacturers of petroleum dispensing equipment account for approximately 75% of worldwide annual sales. We estimate that the combined annual sales of the top five manufacturers in our industry is approximately $2 billion. In 1998, approximately 88% of our sales were to retail owners, such as Arco, BP Amoco, Elf Aquitaine, Esso, Fina, Marathon, Shell, SuperAmerica, Total and their affiliated jobbers, and approximately 12% of our sales were to commercial customers, such as Federal Express, United Parcel Service, Penske Corporation and municipalities. In the United States, Canada, and western Europe, demand for our products has been driven by demand for new, more convenient systems, such as credit/debit card readers, and by environmental regulations, such as those requiring vapor recovery systems and more secure underground storage tanks (often with electronic leak detection technology). In emerging markets, economic growth requires vehicle use and infrastructure development, which increase the demand for fuel and fuel dispensers. Deregulation of local markets and privatization of state-owned oil companies have also created additional growth opportunities in emerging markets. Growth Through Acquisition Tokheim was already one of the world's largest manufacturers and servicers of electronic and mechanical petroleum dispensing systems prior to its acquisition of the RPS Division. Between 1994 and 1998, Tokheim's revenues grew from approximately $202.1 million to $466.4 million, and EBITDA (as defined below under Note 4 to the Summary 2 Financial Data of Tokheim Corporation and Subsidiaries) increased from approximately $10.2 million to $43.7 million, in large part due to the acquisition of Sofitam. Competitive Strengths We believe that a number of factors make us a premier manufacturer and servicer of petroleum dispenser systems. These factors include our: Global Capabilities. We are the world's largest manufacturer and servicer of petroleum dispenser systems, supplying products and services in more than 80 countries. As a result, we believe that we are able to satisfy the complete petroleum dispensing equipment needs of customers throughout the world. Our global capabilities provide a significant advantage when competing for sales to MOCs and nationals, including through national, regional and global supply relationships ("tenders") that MOCs and nationals are awarding more frequently to meet their fuel dispensing equipment needs. World's Largest Service Network. We offer service to customers in over 80 countries through our 414 distributors, 319 authorized service representativies and over 3,800 trained field representatives. We believe our global distribution and service network also provides a significant advantage when competing for tenders. We believe that the reach of our European and African networks for distribution and service makes us a preferred partner for MOCs in these regions. We also recently launched an Internet-based help desk known as FASRLINK, which provides authorized service representativies worldwide with 24- hour access to installation drawings, product updates and diagnostic procedures. Our service network enables us to strengthen existing customer relationships, attract new customers, increase our understanding of competitive products and customer needs, and augment sales. Strong Customer Relationships. Our strong relationships with MOCs, independents and hypermarkets are increasingly valuable. As these customers expand across regions, they commonly rely on their traditional suppliers to expand with them. We have established relationships with many such customers, including Arco, BP Amoco, Carrefour, Elf, Esso, Fina, Intermarche, Repsol, Shell, Statoil and Total. Furthermore, our ability to customize our equipment and software to meet customer- and country-specific standards makes us attractive to MOCs and nationals as a single source of supply. Broad, Technologically Advanced Product Line. We manufacture and sell a wide variety of dispensers, pumps, meters, payment and retail automation systems, including point-of-sale systems (both hardware and software) and fleet fueling systems. Our acquisition of Management Solutions, Inc. in December 1997 provided additional depth to our retail automation system product line. The RPS Division's unique microprocessor-driven dispenser electronics platform further enhances our product portfolio. Our commitment to invest in technology allows us to continue to satisfy diverse customer- and country-specific requirements. We consider our Company to be an industry leader in the integration of electronics and software into our products and believe there is a significant potential demand for certain existing technologies. For example, in 1997, only 26% of all retail petroleum dispensers in the United States were estimated to have dispenser payment or "pay-at-the-pump" terminals. Proven Management Team. Since our current management team was assembled in 1992, it has successfully implemented a strategic plan that has restored financial viability, strengthened MOC relationships, broadened product lines and reduced costs. As part of this strategy, we acquired Sofitam in 1996 and the RPS Division in 1998. Management has been successful to date in integrating Sofitam's operations into the Company and consolidating our operations in Europe. In addition, management has already initiated numerous cost-cutting programs in connection with the acquisition of the RPS Division. See "-- Business Strategy--Realize Operating Synergies and Cost Savings." Business Strategy Our business strategy has the following principal components: Leverage Global Platform. We intend to use our broad product portfolio and our understanding of the regulatory requirements of the countries where our customers operate to compete aggressively for 3 national, regional and global tenders and new customers. We also believe we can obtain additional customers and increase sales to existing customers by offering comprehensive sales and service coverage worldwide through our extensive network. Enhance Largest Service Organization. Our service organization provides us with information on customer needs and products, the opportunity to sell new products to service customers and a stable source of recurring revenues from product support. We intend to expand our service organization geographically. Maintain Technological Leadership. In developed markets, such as the United States, Canada and western Europe, we believe that improved technology will be the primary driver of sales of petroleum dispensing products. As a result, we have made a significant effort to maintain our competitive edge technologically and consider ourselves a leader in the integration of electronics and software into petroleum dispensing products. For example, our new radio frequency identification ("RFID") technology (currently being test marketed in the U.S.), similar to the drive-through payment systems used at toll booths, permits consumers to pay for fuel purchases without using cash or credit cards. We also plan to continue to invest in developing new technologies, such as human interface displays, wireless forecourt systems, improved metering and robotic fueling. Maintain Top Quality. We strive to produce the highest quality products and are committed to continuously improving quality. An aggressive focus on product quality has reduced Tokheim's defect rate (measured in parts per million) by approximately 90% since 1995. Another indication of our commitment to quality is the award of ISO-9000 certification to most of our manufacturing facilities. Moreover, our automated computerized dispenser testers comprehensively test each dispenser's electrical and fluid systems before shipment to the customer, further assuring the delivery of quality products. Realize Operating Synergies and Cost Savings. We believe that we will be able to achieve $47.3 million in annual cash cost savings by the end of the third full year after the acquisition of the RPS Division, of which we believe $28.7 million can be obtained in the first full year after this acquisition. The principal components of our cost savings program are: . Combine Manufacturing Capabilities. We intend to consolidate substantially all of our dispenser manufacturing into three modern facilities. We estimate that we can save $26.0 million on an annual basis from such consolidation. . Integrate Service Organizations. We are in the process of streamlining our European service organization. We plan to further reduce costs and improve service by integrating Tokheim's and the RPS Division's service organizations. We estimate that we can save $9.0 million on an annual basis from such integration. . Eliminate General and Administrative Redundancies. We expect to achieve further savings by eliminating redundant administrative staff and headquarter facilities. We estimate that we can save $5.0 million on an annual basis from such reductions. . Reduce Raw Material Costs. We expect to save $5.5 million annually due to increased purchasing leverage. . Reduce Foreign Currency Exposure. The RPS Division incurred a $2.5 million loss from currency exchange connected with intercompany purchases of inventory during fiscal 1997. We expect to reduce these losses by approximately $1.8 million annually by using hedging techniques. To realize the $47.3 million of cost savings, we expect that approximately $32.2 million of expenditures will be required. We believe that further cost savings may be achievable from: . reduced manufacturing costs resulting from product standardization and elimination of redundant products; . productivity and efficiency improvements resulting from increased capacity utilization levels; 4 . reduced administrative expense items such as insurance premiums and supplies; and . cost savings from bringing in-house various manufacturing operations, such as fabrication, that the RPS Division outsourced before its acquisition. The savings described above are based on estimates and assumptions of the Company that are inherently uncertain, and are subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond our control. We can give no assurance as to what extent or when such savings will be achieved. See "Disclosure Regarding Forward-Looking Statements." Tokheim was formed in 1901 and our principal executive offices are located at 10501 Corporate Drive, Fort Wayne, Indiana, 46845. Our telephone number is (219) 470-4600. The Acquisition On September 30, 1998, we completed the acquisition of the RPS Division for a price equal to $330.0 million in cash, notes, and warrants, subject to certain post-closing adjustments. Of the $330.0 million purchase price, $100.0 million was paid in cash borrowed under the terms of a new bank credit agreement with a consortium of banks (the "New Credit Agreement") as well as $22.5 million of senior notes due 2005 (the "Senior Notes"). The seller note portion of the purchase price consisted of $40.0 million in ten year, 12.0% junior subordinated payment-in-kind notes issued to Schlumberger (the "Schlumberger Junior Subordinated Notes") and $170.0 million in 12.0% senior subordinated notes due January 29, 1999, issued to Schlumberger (the "Schlumberger Senior Subordinated Notes" and, together with the Schlumberger Junior Subordinated Notes, the "Schlumberger Subordinated Notes"). The remaining $20.0 million of the purchase price was paid with common stock warrants (the "Schlumberger Warrants") exercisable for five years, beginning January 30, 1999 to purchase at a nominal price 2,526,923 shares of the Company's common stock. The Schlumberger Senior Subordinated Notes, along with the Senior Notes, were repaid on January 29, 1999 with the proceeds from the sale of the outstanding notes. We have the option, subject to bank approval, to redeem (in whole or in part) the Schlumberger Junior Subordinated Notes. The Company is to reimburse Schlumberger for cash that remained in the RPS Division on the effective date of the acquisition, net of certain adjustments. We currently estimate this amount to be up to approximately $6.5 million. We anticipate that this payment to Schlumberger will be made in the second quarter of 1999 from funds available through the revolving working capital facility under the New Credit Agreement. On the closing date of the acquisition of the RPS Division, we entered into a technology and licensing agreement with Schlumberger, under which Schlumberger will pay us a minimum fee of approximately $0.9 million a year, regardless of use, for a period of five years, payable monthly. The payments under the agreement are due in full even if Schlumberger terminates the agreement or discontinues use of the services at any time during the five year payment period. The New Credit Agreement currently provides for a six year, $110.0 million revolving working capital facility and a six year, $120.0 million term loan facility. An additional agreement provides for the assignment of a three year, $7.6 million ESOP loan facility. At February 28, 1999 the outstanding borrowings were $65.1 million under the revolving working capital facility, $120.0 million under the term loan, and $6.3 million under the ESOP facility. Available borrowings under the revolving working capital facility were $44.9 million at February 28, 1999. Also, simultaneously with the acquisition of the RPS Division, we entered into a note purchase agreement, pursuant to which we issued $22.5 million aggregate principal amount of Senior Notes. Proceeds from the these notes were used in connection with our refinancing of existing indebtedness. Also on September 30, 1998, we completed the repurchase of the final $55.0 million of our 11.5% Senior Subordinated Notes that were then outstanding. These notes were redeemed at an 5 aggregate premium and consent payment of approximately $12.3 million along with accrued interest of approximately $1.1 million. The proceeds from the issuance of the outstanding notes were used to: (i) redeem the Schlumberger Senior Subordinated Notes; these notes were redeemed at an aggregate price of $176.7 million, representing principal of $170.0 million and accrued and unpaid interest thereon of $6.7 million; (ii) redeem the Senior Notes; these notes were redeemed at an aggregate price of $23.2 million, representing principal of $22.5 million, accrued and unpaid interest thereon of $0.2 million and an applicable call premium of $0.5 million; and (iii) reduce borrowings under the revolving working capital facility of the New Credit Agreement by $3.4 million. (iv) pay discounts, fees and expenses associated with the Offering of $6.3 million. In addition, total availability under the revolving working capital facility of the New Credit Agreement was permanently reduced from $120.0 million to $110.0 million. The indentures under which the outstanding notes were, and the exchange notes will be, issued will permit us, subject to certain conditions, to refinance the Schlumberger Junior Subordinated Notes and reacquire the Schlumberger Warrants with junior subordinated debt. The issuance of the exchange notes contemplated by this prospectus is referred to as either the "Exchange Offer" or the "exchange offer." The issuance of the outstanding notes and the application of the proceeds therefrom are referred to collectively as the "Offering." The exchange offer, the Offering, along with the execution of the credit agreement, the sale of the Senior Notes, the Schlumberger Subordinated Notes and Schlumberger Warrants, and the consummation of the acquisition of the RPS Division are referred to collectively as the "Transactions." See "The Transactions" and "Description of Certain Indebtedness." Risk Factors See the section entitled "Risk Factors," beginning on page 21, for a discussion of certain factors that you should consider before deciding whether to participate in the exchange offer. Principal Executive Office Our headquarters are located at 10501 Corporate Drive, Fort Wayne, Indiana 46845, telephone number (219) 470-4600. 6 Summary of the Exchange Offer Registration Rights Agreements... We sold the outstanding notes on January 29, 1999 to the initial purchasers--BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder & Co. Inc. The initial purchasers then sold the outstanding notes to institutional investors. Simultaneously with the initial sale of the outstanding notes, we entered into two registration rights agreements, one agreement for the notes issued in dollars and one for the notes issued in Euros, each of which provides for the exchange offer. You may exchange your outstanding notes for exchange notes, which have substantially identical terms. The exchange offer satisfies your rights under the registration rights agreements. After the exchange offer is over, you will not be entitled to any exchange or registration rights with respect to your outstanding notes, except under limited circumstances. The Exchange Offer............... We are offering to exchange $123.0 million total principal amount of 11 3/8% Senior Subordinated Exchange Notes due 2008 and (Euro)75.0 million total principal amount of 11 3/8% Senior Subordinated Exchange Notes due 2008 of the Company, all of which have been registered under the Securities Act for your outstanding 11 3/8% Senior Subordinated Dollar Notes due 2008 or your outstanding 11 3/8% Senior Subordinated Euro Notes due 2008 sold in the January 1999 private offering. To exchange your outstanding notes, you must properly tender them, and we must accept them. We will exchange all outstanding notes that you validly tender and do not validly withdraw. We will issue registered exchange notes at or promptly after the end of the exchange offer. Resales.......................... We believe that you can offer for resale, resell and otherwise transfer the exchange notes without complying with the registration and prospectus delivery requirements of the Securities Act if: . you acquire the exchange notes in the ordinary course of your business; . you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes; and . you are not an "affiliate" of ours, as defined in Rule 405 of the Securities Act. 7 By executing the letter of transmittal, or by agreeing to the terms of the letter of transmittal, each holder will represent to us that each of these conditions is satisfied. If any of these conditions is not satisfied and you transfer any exchange note without delivering a proper prospectus or without qualifying for a registration exemption, you may incur liability under the Securities Act. We do not assume or indemnify you against such liability. Each broker-dealer acquiring exchange notes for its own account in exchange for outstanding notes, which it acquired through market-making or other trading activities, must acknowledge that it will deliver a proper prospectus when any exchange notes are transferred. A broker- dealer may use this prospectus for an offer to resell, a resale or other retransfer of the exchange notes. Expiration Date.................. The exchange offer expires at 5:00 p.m., New York City time (in the case of outstanding dollar notes) or 5:00 p.m., London time (in the case of outstanding Euro notes), on , 1999, unless we extend the expiration date. Conditions to the Exchange The exchange offer is subject to customary Offer........................... conditions, some of which we may waive. Procedures for Tendering We issued the outstanding dollar notes as Outstanding Notes............... global securities. When the outstanding dollar notes were issued, the Company deposited them with U.S. Bank Trust National Association, as custodian. U.S. Bank Trust National Association issued a certificateless depositary interest in the outstanding dollar notes, which represents a 100% interest in the outstanding dollar notes, to The Depositary Trust Company ("DTC"). Beneficial interests in the outstanding dollar notes, which are held by direct or indirect participants in DTC through the certificateless depositary interest, are shown on records maintained in book-entry form by DTC. When the outstanding Euro notes were issued, the Company deposited them with Midland Bank plc, as common depositary for the Euroclear System ("Euroclear"), and Cedel Bank, a societe anonyme ("Cedel Bank"). Security entitlements with respect to the outstanding Euro notes are shown on records maintained in book-entry form by Euroclear, Cedel Bank or your securities intermediary. Each holder of outstanding notes desiring to accept the exchange offer must, unless an agent's message is used in connection with a book-entry transfer, complete and sign the letter of transmittal or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or deliver the letter of transmittal, 8 together with the outstanding notes and any other required documents, to the appropriate exchange agent at the addresses set forth herein and in the letter of transmittal prior to 5:00 p.m., New York City time (in the case of outstanding dollar notes) or 5:00 p.m., London time (in the case of outstanding Euro notes) on the expiration date. See "The Exchange Offer-- Procedures for Tendering Outstanding Notes" for more information. Do not send letters of transmittal and certificates representing outstanding notes to the Company or to DTC or Euroclear or Cedel Bank. Send these documents only to the appropriate exchange agent. See "The Exchange Offer--Exchange Agents" for more information. Special Procedures for If you are a beneficial owner whose Beneficial Owners............... outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and wish to tender your outstanding notes in the exchange offer, please contact the registered holder as soon as possible and instruct it to tender on your behalf and comply with our instructions set forth elsewhere in this prospectus. Guaranteed Delivery Procedures for Outstanding Notes........... If you wish to tender your outstanding notes, and time will not permit your required documents to reach the appropriate exchange agent by the expiration date, or the procedure for book-entry transfer cannot be completed on time or certificates for registered notes cannot be delivered on time, you may tender your outstanding notes pursuant to the procedures described below under "The Exchange Offer--Procedures for Tendering Outstanding Notes-- Guaranteed Delivery." Withdrawal Rights................ You may withdraw the tender of your outstanding notes at any time before 5:00 p.m., New York City time (in the case of outstanding dollar notes) or 5:00 p.m., London time (in the case of outstanding Euro notes), on , 1999, unless we extend the date. Appraisal or Dissenters' Rights.. Holders of outstanding notes do not have any appraisal or dissenters' rights in the exchange offer. If you do not tender your outstanding notes or the Company rejects your tender, you will not be entitled to any further registration rights under the registration rights agreements, except under limited circumstances. However, your notes will remain outstanding and entitled to the benefits of the indentures. Holders should read the discussion under the heading "Risk Factors--Consequences of a Failure to Exchange Outstanding Notes" for further information. 9 U.S. Federal Income Tax The exchange of outstanding notes for Considerations.................. exchange notes is not a taxable exchange for United States federal income tax purposes. You will not recognize any taxable gain or loss or any interest income as a result of the exchange. For additional information regarding federal income tax considerations, you should read the discussion under the heading "Certain United States Federal Income Tax Considerations." Use of Proceeds.................. We will not receive any proceeds from the issuance of the exchange notes, and we will pay the expenses of the exchange offer. Exchange Agents.................. U.S. Bank Trust National Association is serving as the exchange agent for the outstanding dollar notes in the exchange offer. Midland Bank plc is serving as the exchange agent for the outstanding Euro notes in the exchange offer. The addresses, telephone numbers and facsimile numbers of the exchange agents are listed in the section of this prospectus entitled "The Exchange Offer--Exchange Agents" and in the letter of transmittal. You should consider carefully the information set forth under the caption "Risk Factors" beginning on page 21 and all other information set forth in this prospectus before deciding whether to participate in the exchange offer. 10 Summary of Terms of the Exchange Notes The form and terms of the exchange notes are the same as the form and terms of the outstanding notes, except that the exchange notes will be registered under the Securities Act. As a result, the exchange notes will not bear legends restricting their transfer and will not contain the registration rights and liquidated damage provisions contained in the outstanding notes. The exchange notes represent the same debt as the outstanding notes. Both the outstanding notes and the exchange notes are governed by the same indentures. Securities Offered............... $123.0 million aggregate principal amount of 11 3/8% Senior Subordinated Exchange Notes due 2008 and (Euro)75.0 million aggregate principal amount of 11 3/8% Senior Subordinated Exchange Notes due 2008. Issuer........................... Tokheim Corporation. Maturity Date.................... August 1, 2008. Interest Rate.................... . Dollar-denominated exchange notes: 11 3/8% per year (calculated using a 360 day year) . Euro-denominated exchange notes: 11 3/8% per year (calculated using a 360 day year) Interest Payment Dates........... February 1 and August 1, beginning on August 1, 1999. Ranking.......................... The exchange notes will: . be unsecured senior subordinated obligations; . rank junior to our existing and future senior debt, including our obligations under the New Credit Agreement; . rank equally in right of payment with any of our other senior subordinated obligations; and . rank senior to all of our junior subordinated indebtedness, including the Schlumberger Junior Subordinated Notes. As of February 28, 1999, on a pro forma basis for the Offering we had approximately $212.4 million of senior debt outstanding, substantially all of which was secured by our assets and the assets of certain of our subsidiaries. You should read "Capitalization" and "Description of the Exchange Notes--Subordination" for more information regarding the Company's debt and the payment ranking of the exchange notes. Guarantees....................... All existing and future U.S. subsidiaries will guarantee the exchange notes on a senior subordinated basis with guarantees that will be unsecured and subordinated to existing and future senior debt of the guarantor. Our existing U.S. subsidiaries are: Envirotronic Systems, Inc.; Gasboy International, Inc.; Management Solutions, Inc.; Sunbelt Hose & Petroleum Equipment, Inc.; Tokheim 11 Automation Corporation; Tokheim Equipment Corporation; Tokheim Investment Corp.; Tokheim RPS, LLC; and Tokheim Services LLC. You should read "Description of the Exchange Notes--Subordination" and "Description of the Exchange Notes-- Subsidiary Guarantees" for more information regarding the guarantees of the exchange notes. Optional Redemption.............. Except as described in the next section, we cannot redeem the exchange notes until February 1, 2004. Thereafter we may redeem some or all of the notes at the redemption prices listed in the "Description of the Exchange Notes" section under the heading "Optional Redemption," plus accrued and unpaid interest. Optional Redemption after Public Equity Offerings................ At any time (which may be more than once) before February 1, 2002, we can choose to redeem up to 35% of the original principal amount of the dollar-denominated exchange notes and up to 35% of the original principal amount of the Euro-denominated exchange notes with money that we raise in one or more public equity offerings, as long as we redeem the exchange notes within 120 days of completing the public equity offering, and . in the case of a redemption of dollar-denominated exchange notes, we pay 111.375% of the face amount of the dollar-denominated exchange notes, plus interest, and at least 55% of the original principal amount of the dollar-denominated exchange notes remains outstanding afterwards; and . in the case of a redemption of Euro- denominated exchange notes, we pay 111.375% of the face amount of the Euro-denominated exchange notes, plus interest, and at least 55% of the original principal amount of the Euro-denominated exchange notes remains outstanding afterwards. Change of Control................ If a change of control of our Company occurs, you will have the right to require us to repurchase all of the outstanding exchange notes held by you at a price equal to 101% of their face amount plus accrued and unpaid interest to the date of repurchase. We might not be able to pay you the required price for exchange notes you present to us at the time of a change of control of our Company because: . we might not have enough funds at that time; or . the terms of our senior debt may prevent us from repaying the exchange notes. 12 For more information, see "Risk Factors-- Debt Financing Risks--Change of Control" and "Description of the Exchange Notes-- Change of Control." Certain Indenture Provisions..... The indentures under which the outstanding notes have been, and the exchange notes will be, issued each contain certain covenants for your benefit limiting our (and most or all of our subsidiaries') ability to, among other things: . incur additional debt; . pay dividends on capital stock, repurchase capital stock or make certain other restricted payments; . make certain investments; . create liens on our assets to secure debt; . enter into transactions with affiliates; . merge or consolidate with another company; and . transfer and sell assets. These covenants are subject to a number of important limitations and exceptions. See the "Description of the Exchange Notes" section under the heading "Certain Covenants." Asset Sale Proceeds.............. If we or our subsidiaries engage in certain asset sales, we generally must either invest the net cash proceeds from such sales in our business within a period of time, prepay senior debt or make an offer to purchase a principal amount of the exchange notes equal to the excess net cash proceeds. The purchase price of the exchange notes will be 100% of their principal amount, plus accrued and unpaid interest. Trustee, Paying and Transfer Agent and Registrar............. U.S. Bank Trust National Association. Luxembourg Paying and Transfer Bankers Trust Luxembourg S.A. (if the Notes Agent........................... are listed on the Luxembourg Stock Exchange). London Paying Agent and Common Depositary...................... Midland Bank plc. Use of Proceeds.................. The Company will not receive any cash proceeds in the exchange offer. Form of the Exchange Notes....... The dollar-denominated exchange notes will be represented by one or more securities in registered, global form deposited with U.S. Bank Trust National Association, as custodian for DTC. The Euro-denominated exchange notes will be represented by one or more securities in registered, global form, deposited with Midland Bank plc as common depositary for Euroclear and Cedel Bank. You will not receive notes in certificated 13 form unless one of the events set forth under the heading "Description of the Exchange Notes--Form of Exchange Notes, Clearance and Settlement--Certificated Notes" occurs. Instead: . beneficial interests in the dollar- denominated exchange notes will be shown on, and transfers of these interests will be effected only through, records maintained in book- entry form by DTC with respect to its participants; and . security entitlements with respect to the Euro-denominated exchange notes will be shown on, and transfers of these entitlements will be effected only through, records maintained in book-entry form by Euroclear, Cedel Bank or your securities intermediary. Absence of a Public Market for the Exchange Notes.............. While the outstanding dollar notes are presently eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") market of the National Association of Securities Dealers, Inc. ("NASD") by qualified institutional buyers, there is no existing market for the exchange notes. The initial purchasers of the outstanding notes have advised the Company that they currently intend to make a market in the exchange notes following the exchange offer, but they are not obligated to do so, and any market-making may be discontinued at any time without notice. The Company does not currently intend to apply for a listing of the exchange notes on any securities exchange. We do not know if an active public market for the exchange notes will develop or, if developed, will continue. If an active public market does not develop or is not maintained, the market price and liquidity of the exchange notes may be adversely affected. We cannot assure you of the liquidity of any markets that may develop for the exchange notes, of your ability to sell your exchange notes, or of the price at which you would be able to sell your exchange notes. Risk Factors..................... You should read "Risk Factors," which begins on page 21, for a description of certain risks you should consider before deciding whether to participate in the exchange offer. You should read "Description of the Exchange Notes" for additional information regarding the exchange notes. 14 Summary Unaudited Pro Forma Consolidated Financial Data (dollars in thousands) The following table sets forth summary unaudited pro forma consolidated financial data of the Company. The summary unaudited pro forma statement of earnings data and other data give effect to our March 1998 public offering of our common stock (the "Common Stock Offering") and the Transactions (including the expected cost savings, as used in the calculation of Adjusted EBITDA (as defined) and as described under "The Summary--Business Strategy--Realize Operating Synergies and Cost Savings") as if they had occurred as of December 1, 1997. The summary unaudited pro forma balance sheet data as of February 28, 1999 includes the Transactions and the Offering. The summary unaudited pro forma consolidated financial data do not purport to represent what our results of operations actually would have been if the Common Stock Offering and the Transactions (including the expected cost savings) had occurred as of such dates and are not necessarily indicative of our future operating results or financial position. The information contained in this table should be read in conjunction with "Summary Financial Data of Tokheim Corporation and Subsidiaries," "Summary Financial Data of the RPS Division," "Unaudited Pro Forma Financial Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors" and the financial statements of the Company and the RPS Division, including the notes thereto, appearing elsewhere or incorporated by reference in this prospectus.
Three Months Year Ended Ended November 30, February 28, 1998 1999 ------------ ------------ Statement of Earnings Data: Net sales.......................................... $743,623 $166,193 Merger and acquisition costs and other unusual items............................................. 15,603 1,123 Operating income (loss)(1)......................... 4,313 (886) Interest expense, net.............................. 50,609 12,421 Loss before income taxes........................... (48,036) (14,685) Net loss(2)........................................ (46,572) (14,292) Preferred stock dividends(3)....................... 1,484 374 Net loss applicable to common stock(2)............. (48,056) (14,666) Other Data: Capital expenditures............................... $ 20,640 $ 12,341 Depreciation and amortization...................... 24,423 6,892 Interest expense and preferred stock dividends..... 52,930 13,424 EBITDA (as defined)(4)............................. 42,926 5,845 Adjusted EBITDA (as defined)(5).................... 71,626 7,003 Ratio of earnings to fixed charges(6).............. --x --x As of February 28, 1999 ------------ Balance Sheet Data: Working capital................................................. $ 88,868 Property, plant and equipment, net.............................. 75,874 Total assets.................................................... 724,906 Total debt(7)................................................... 459,259 ESOP preferred stock, net....................................... 12,941 Common shareholders' equity, net(8)............................. 18,572
- -------- (1) Operating income (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. (2) Excludes extraordinary loss from debt extinguishment of $23,924 for the twelve months ended November 30, 1998 and $6,249 for the three months ended February 28, 1999. (3) Dividends are payable on the Company's ESOP Preferred Stock, the proceeds of which are used to service the Guaranteed ESOP Obligation. (4) EBITDA (as used in this prospectus) represents earnings (loss) from continuing operations before income taxes and extraordinary loss, plus net interest expense, depreciation and amortization, merger and acquisition costs and other unusual items and minority interest. 15 The following table calculates EBITDA (as defined) using data extracted from the Unaudited Pro Forma Consolidated Condensed Financial Statements and the financial statements of the Company and the RPS Division, included elsewhere herein:
For the Three Months Ended February 28, 1999 ----------------------------------------- (Amounts in thousands) Tokheim Tokheim Corporation Corporation Offering And Subsidiaries And Pro Forma Pro Forma Subsidiaries Adjustments Offering ------------ ----------- ---------------- Loss before income taxes and extraordinary loss. $(14,571) $(114) $(14,685) Interest expense, net... 12,307 114 12,421 Depreciation and amortization........... 6,892 -- 6,892 Merger and acquisition costs and other unusual items.................. 1,123 -- 1,123 Minority interest....... 94 -- 94 -------- ----- -------- EBITDA................. $ 5,845 $ -- $ 5,845 ======== ===== ========
For the Year Ended November 30, 1998 -------------------------------------------------------------------------------------------------- (Amounts in thousands) Tokheim Tokheim Corporation Corporation Acquisition And And Subsidiaries Tokheim And Subsidiaries Pro Forma RPS RPS Corporation Financing Pro Forma Offering Acquisition, RPS Division Division And Pro Forma Acquisition Pro Forma Financing Division Adjustments Adjusted Subsidiaries Adjustments & Financing Adjustments & Offering -------- ----------- -------- ------------ ----------- ------------ ----------- ---------------- Earnings (loss) before income taxes and extraordinary loss... $(19,027) $7,987 $(11,040) $(2,698) $(34,316) $(48,054) $ 18 $(48,036) Interest expense, net. 1,833 -- 1,833 19,257 29,537 50,627 (18) 50,609 Depreciation and amortization......... 11,126 (3,251) 7,875 13,136 5,487 26,498 -- 26,498 Merger and acquisition costs and other unusual items........ -- 1,918 1,918 13,685 -- 15,603 -- 15,603 Minority interest..... 30 (25) -- 327 -- 327 -- 327 -------- ------ -------- ------- -------- -------- ---- -------- EBITDA............... $ (6,038) $6,629 $ 586 $43,707 $ 708 $ 42,926 $-- $ 42,926 ======== ====== ======== ======= ======== ======== ==== ========
EBITDA is used by us as a financial indicator of our 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 our operating performance or as a measure of liquidity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." For additional information concerning the Company's historical cash flows, see the consolidated statement of cash flows included elsewhere herein. (5) Adjusted EBITDA (as defined) is EBITDA plus $28,700 for the twelve months ended November 30, 1998 or $1,158 for the three months ended February 28, 1999 of the original $28,700 of anticipated first fiscal year cost savings. The following table represents the remaining cost savings, which we believe, can be achieved in the one and three year periods described:
After After One Full Three Full Fiscal Year Fiscal Years ----------- ------------ Estimated annual cost savings: Combined manufacturing capabilities................. $20,300 $26,000 Integrated European service organizations........... 1,800 9,000 Elimination of general and administrative redundancies....................................... 2,300 5,000 Reduced raw material cost........................... 2,500 5,500 Reduced foreign currency exposure................... 1,800 1,800 ------- ------- Total estimated annual savings.................... $28,700 $47,300 ======= =======
16 Combined manufacturing capabilities--We intend to consolidate substantially all of our dispenser manufacturing into three facilities. We expect to generate approximately $26,000 of annual savings, $20,300 of which is expected to be achieved in the first full fiscal year after the acquisition of the RPS Division. These savings include net personnel reductions and elimination of fixed costs associated with the closed facilities. Integrated European service organizations--We plan to combine the service functions of the RPS Division and Tokheim into a single organization. We expect to generate approximately $9,000 of annual savings, $1,800 of which is expected in the first full fiscal year after the acquisition of the RPS Division through a reduction in personnel and the disposition of an estimated 100 excess vehicles. Elimination of general and administrative redundancies--We intend to eliminate redundant administrative staff. We estimate that approximately $5,000 of annual cost savings are achievable from such reductions, $2,300 of which is expected in the first full fiscal year after the acquisition of the RPS Division. Reduced raw material cost--We believe that benefits from the combined volume purchasing power of the consolidated Company will result in volume discounts as well as rationalization of products and use of common parts are expected to reduce the annual cost of materials by an additional 1.5% or approximately $5,500, $2,500 of which is expected in the first full fiscal year after the acquisition of the RPS Division. Reduced foreign currency exposure--In 1997 the RPS Division incurred a $2,458 loss from currency exchange losses connected with intercompany purchases of inventory. We believe that the utilization of hedging techniques would reduce these future losses by approximately $1,800 per annum. In addition, we expect to realize savings from other areas, principally: (i) reduced manufacturing costs resulting from product standardization and elimination of redundant products; (ii) productivity and efficiency improvement resulting from increased capacity utilization levels; (iii) reduced administrative expense items such as insurance and supplies; and (iv) cost savings from bringing in-house, various manufacturing operations that the RPS Division currently out sources, such as metal fabrication. It is anticipated that approximately $32,200 of expenditures will be required to realize the $47,300 of cost savings. The savings described above are based on our estimates and assumptions which are inherently uncertain and are subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond our control. There can be no assurance that all such savings will be achieved. See "Disclosure Regarding Forward-Looking Statements" and "Risk Factors--Risks Associated with the Operation of the Business--Integration of Operations." (6) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings (loss) before income taxes and extraordinary loss plus fixed charges. Fixed charges consist of interest expense, amortization of deferred debt issuance, the portion of rental expense assumed to represent interest and dividends on the ESOP Preferred Stock, which dividends service the Guaranteed ESOP Obligation. Earnings were insufficient to cover fixed charges by $48,036 and $14,685 for the twelve months ended November 30, 1998 and the three months ended February 28, 1999, respectively. (7) Total debt includes these dollar-denominated exchange notes and these Euro- denominated exchange notes, long-term borrowings under the New Credit Agreement and other credit agreements, the current portion of such borrowings, cash overdraft facilities, the Schlumberger Junior Subordinated Notes and the guarantee of certain debt incurred by our Employee Stock Ownership Plan (the "ESOP") to purchase our preferred stock, the dividends of which are used by the ESOP to service the Guaranteed ESOP Obligation. (8) Includes amounts attributable to the Schlumberger Warrants. The indentures under which the outstanding notes were, and the exchange notes will be, issued will permit the Company, subject to certain conditions, to refinance the Schlumberger Junior Subordinated Notes and reacquire the Schlumberger Warrants with junior subordinated debt. 17 Summary Financial Data of Tokheim Corporation and Subsidiaries (dollars in thousands) The following table sets forth summary financial data of the Company. The summary statement of earnings data, other data and balance sheet data as of and for each of the fiscal years in the five-year period ended November 30, 1998 were derived from the audited consolidated financial statements of the Company. The information contained in this table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of the Company, including the notes thereto, appearing elsewhere or incorporated by reference in this prospectus. The summary historical financial data as of and for the three months ended February 28, 1998 and 1999 were derived from unaudited interim consolidated condensed financial statements of the Company. In the opinion of management, such unaudited interim consolidated condensed financial statements contain all adjustments (consisting of only normal recurring items with the exception of merger and acquisition costs and other unusual items and the extraordinary items) necessary to present fairly the Company's financial position and results of operations as of and for the periods presented.
Three Months Ended Year Ended November 30, February 28, ------------------------------------------------- ------------------ 1994 1995 1996(1) 1997 1998(1) 1998 1999 -------- -------- -------- -------- --------- -------- -------- (unaudited) Statement of Earnings Data: Net sales.............. $202,134 $221,573 $279,733 $385,469 $ 466,440 $ 90,852 $166,193 Merger and acquisition costs and other unusual items......... 820 2,680 6,459 3,493 13,685 5,987 1,123 Operating income (loss)(2)............. 3,780 5,811 6,356 20,645 14,769 (966) (886) Interest expense, net.. 2,806 3,319 7,191 16,451 19,257 4,011 12,307 Earnings (loss) before income taxes(3)....... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571) Earnings (loss)(3)..... 1,675 3,231 (2,009) 3,980 (3,744) (5,606) (14,178) Preferred stock dividends............. 1,617 1,580 1,543 1,512 1,484 374 374 Earnings (loss) applicable to common stock(3).............. 58 1,651 (3,552) 2,468 (5,228) (5,980) (14,552) Other Data: Capital expenditures... $ 2,757 $ 5,559 $ 3,061 $ 11,154 $ 14,548 $ 1,885 $ 4,996 Depreciation and amortization.......... 4,672 4,857 5,028 9,232 13,136 2,500 6,892 Interest expense and preferred stock dividends............. 4,219 4,604 9,336 18,800 21,563 4,518 12,842 EBITDA (as defined)(4). 10,230 14,126 17,842 34,767 43,707 7,265 5,845 Net cash provided from (used in) operations.. 2,408 3,347 5,897 21,202 9,790 (5,341) (1,308) Net cash used in investing activities.. (2,562) (4,910) (54,079) (10,394) (124,414) (12,526) (4,996) Net cash provided from (used in) financing activities............ (5,063) 754 57,016 (11,795) 125,669 19,806 13,330 Ratio of earnings to fixed charges(5)...... 1.4x 1.6x -- x 1.3x -- x -- x -- x
As of As of November 30, February 28, 1998 1999 ------------ ------------ (unaudited) Balance Sheet Data: Working capital..................................... $92,596 $88,868 Property, plant and equipment, net.................. 77,905 75,874 Total assets........................................ 776,642 724,906 Total debt(6)....................................... 443,331 459,259 ESOP preferred stock, net........................... 12,130 12,941 Common shareholders' equity, net.................... 64,631 18,572
- -------- (1) Results for 1996 include three months of Sofitam operations and results for 1998 include two months of the RPS Division's operations. (2) Operating income (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. 18 (3) The amounts for the years ended November 30, 1998 and November 30, 1997 and the three months ended February 28, 1999 exclude $23,924, $1,886 and $6,249, respectively, for extraordinary loss from debt extinguishment. The amounts for the year ended November 30, 1994 exclude the cumulative effect of change in method of accounting for post-retirement benefits other than pensions of $13,416. (4) EBITDA (as used in this prospectus) represents earnings (loss) from continuing operations before income taxes and extraordinary loss, net interest expense, depreciation and amortization, merger and acquisition costs and other unusual items and minority interest. Management uses EBITDA as a financial indicator of the Company's ability to service debt, although the precise definition of EBITDA is subject to variation among companies. EBITDA should not be construed as an alternative to operating income or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." For additional information concerning the Company's historical cash flows, see the consolidated statement of cash flows included elsewhere herein. (5) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings (loss) before income taxes and extraordinary loss plus fixed charges. Fixed charges consist of interest expense, amortization of deferred debt issuance expense, the portion of rental expense assumed to represent interest and dividends on the ESOP Preferred Stock, which dividends service the Guaranteed ESOP Obligation. Earnings were insufficient to cover fixed charges by $1,229, $2,698, $5,306 and $14,571 for the fiscal years ended 1996 and 1998 and for the three months ended February 28, 1998 and 1999, respectively. (6) Total debt includes the 11.5% Senior Subordinated Notes, the Schlumberger Senior Subordinated Notes, the Senior Notes, the Schlumberger Junior Subordinated Notes, long-term borrowings under the old credit agreement and other credit agreements, the current portion of such borrowings, cash overdraft facilities and the Guaranteed ESOP Obligation. 19 Summary Financial Data of the RPS Division (dollars in thousands) The following table sets forth selected summary financial data of the RPS Division. The summary statement of income data, other data and balance sheet data as of and for each fiscal year in the three year period ended December 31, 1997 were derived from the audited combined financial statements of the RPS Division. The summary financial data as of and for the nine months ended September 30, 1997 and 1998 were derived from the unaudited combined condensed financial statements of the RPS Division. The information contained in this table should be read in conjunction with the combined financial statements of the RPS Division, including the notes thereto, appearing elsewhere in this prospectus.
Nine Months Ended Year Ended December 31, September 30, ---------------------------- ------------------ 1995 1996 1997 1997 1998 -------- -------- -------- -------- -------- (unaudited) Statement of Income Data: Net sales.................. $303,668 $333,915 $344,248 $231,978 $231,764 Restructuring charges...... -- 9,978 -- -- -- Operating loss............. (7,446) (17,197) (11,648) (10,210) (15,737) Interest expense, net...... 1,257 1,652 1,418 945 1,586 Loss before income taxes... (10,008) (20,424) (13,499) (14,462) (20,593) Net loss................... (7,721) (16,366) (6,720) (9,216) (15,730) Other Data: Capital expenditures....... $ 11,389 $ 14,736 $ 9,486 $ 6,810 $ 4,951 Depreciation and amortization.............. 10,084 10,780 11,777 8,476 8,766 EBITDA (as defined)(1)..... 1,333 2,004 (274) (4,661) (10,330) EBITDA (as defined and adjusted)(2).............. 10,644 11,049 11,941 3,549 (1,328) Net cash provided from (used in) operations...... (6,583) 10,432 13,157 (3,241) (22,896) Net cash used in investing activities................ (11,997) (36,400) (10,268) 15,976 (4,591) Net cash provided from (used in) financing activities................ 21,630 25,179 (1,013) (16,101) 29,894
As of As of December 31, September 30, 1997 1998 ------------ ------------- Balance Sheet Data: Working capital.................................... $ 73,406 $101,282 Property, plant and equipment, net................. 32,183 31,735 Total assets....................................... 269,434 260,342 Total debt(3)...................................... 12,614 2,289 Equity and retained earnings (deficit)............. 154,270 178,805
- -------- (1) EBITDA (as used in this prospectus) represents earnings (loss) from continuing operations before income taxes and extraordinary loss, net interest expense, depreciation and amortization, merger and acquisition costs and other unusual items and minority interest. Management uses EBITDA as a financial indicator of the Company's ability to service debt, although the precise definition of EBITDA is subject to variation among companies. EBITDA should not be construed as an alternative to operating income or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. See the RPS Division combined statement of cash flows included elsewhere herein. (2) EBITDA (as defined and adjusted) is EBITDA (as defined) plus the add back of operating losses for the Abbeville facility, which was not purchased, of $700 for each twelve month period and $525 for each nine month period presented, management and technical fees charged by Schlumberger to its subsidiaries, of $9,177, $8,345 and $6,949 in 1997, 1996, and 1995, respectively and $6,080 and $6,559 for the nine months ended 1997 and 1998, respectively. In addition EBITDA (as defined and adjusted) excludes expenses, which management believes are non-recurring, of $2,338 and $1,662 for 1997 and 1995, respectively, and $1,605 and $1,918 for the nine months ended 1997 and 1998, respectively. (3) Total debt includes bank overdrafts and short-term loans plus the current portion of long-term debt. 20 RISK FACTORS You should consider the following risk factors, as well as the other information contained in this prospectus before making a decision to exchange your notes in the exchange offer. Debt Financing Risks Substantial Leverage and Variable Interest Rates As a result of the Transactions, we have a significant level of debt. As of February 28, 1999, we had approximately $459.3 million of debt and approximately $18.6 million of common shareholders' equity. After giving effect to the Transactions, as if consummated on December 1, 1997, pro forma earnings before income taxes and fixed charges would have been insufficient to cover fixed charges by approximately $48.0 million for the year ended November 30, 1998. You should read the discussions under the headings "Capitalization" and "Unaudited Pro Forma Consolidated Condensed Financial Statements" for further information regarding the Company's indebtedness. Our future operating performance and our ability to make cash payments with respect to the exchange notes and our other debt obligations will depend on future economic conditions, primarily interest rate levels, and on financial, business and other factors, many of which are beyond our control. We believe that, based on current levels of operations and anticipated cost savings and future growth, our expected cash flow from operations, together with available borrowings under the New Credit Agreement and our other sources of liquidity (including leases), will be adequate to meet our anticipated requirements for working capital, capital expenditures, lease payments and scheduled principal and interest payments. We can give no assurance, however, that we will continue to generate cash flow at or above current levels, that estimated cost savings or growth will be achieved or that we will be able to refinance our existing indebtedness in whole or in part. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as: . reducing or delaying capital or research and development expenditures; . selling assets; . restructuring or refinancing our indebtedness; or . seeking additional equity capital. We can give no assurance that we would be able to implement any of these strategies on satisfactory terms, if at all. In addition, our high level of debt, along with certain covenants in the New Credit Agreement and the indentures, may limit our ability to: . make capital and research and development expenditures; . use available funds for operations as opposed to debt service; . obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes, including refinancing our debt; . pay dividends or make other distributions; . compete effectively or take advantage of business opportunities; and . weather economic downturns. Borrowings under the New Credit Agreement bear interest at variable rates. If market interest rates increase, variable-rate debt will create higher debt service requirements, which would adversely affect our cash flow. While we intend to enter into one or more agreements limiting our exposure, any such agreements may 21 not offer complete protection from this risk. You should read "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity and Capital Resources" for more information. The indentures under which the outstanding notes were, and the exchange notes will be, issued will permit us, subject to certain conditions, to refinance the Schlumberger Junior Subordinated Notes and the Schlumberger Warrants with junior subordinated debt. Subordination The exchange notes will be general unsecured obligations of the Company, and will be subordinated in right of payment to all of our existing and future senior debt, including our obligations under the New Credit Agreement, and to all existing and future senior debt of our subsidiaries. As of February 28, 1999, we had approximately $212.4 million of senior debt, substantially all of which was secured by our assets and the assets of certain of our subsidiaries. We may incur additional senior debt under the indentures. If we declare bankruptcy, liquidate or reorganize, we must pay all senior debt in full before our assets will be available to pay our obligations on the exchange notes. There may not be sufficient assets remaining for us to be able to pay amounts due on some or all of the exchange notes then outstanding. In addition, under certain circumstances, we may not pay principal of, premium, if any, interest on, or any other amounts owing in respect of, the exchange notes, or purchase, redeem or otherwise retire the exchange notes, if a payment default or a non- payment default exists with respect to certain senior debt, and, in the case of a non-payment default, a payment blockage notice has been received by the trustee from the holders of senior debt. The exchange notes also will be effectively subordinated to all existing and future obligations, including trade payables, of our subsidiaries. Our obligations under the New Credit Agreement are guaranteed, jointly and severally, by all of our United States subsidiaries. Certain of our non-United States subsidiaries are direct borrowers under the New Credit Agreement, and we have guaranteed those borrowings. You should read "Description of the Exchange Notes" and "Description of Certain Indebtedness" for more information about our debt. Restrictions Imposed by Terms of Indebtedness The indentures and the New Credit Agreement contain a number of significant covenants. These covenants limit our (and most or all of our subsidiaries') ability to, among other things: . incur additional debt; . pay dividends on capital stock or repurchase capital stock or make certain other restricted payments; . use the proceeds of certain asset sales; . make certain investments; . create liens on our assets to secure debt; . enter into transactions with affiliates; . merge or consolidate with another company; and . transfer and sell assets. In addition, the New Credit Agreement prohibits us from prepaying the exchange notes and requires us to maintain specified financial ratios and satisfy certain financial tests. Our ability to meet such financial ratios and tests may be affected by events beyond our control. If we are unable to pay our debts or to comply with these covenants, we would default under the New Credit Agreement. If our creditors did not waive this default, our creditors could accelerate payments on our debt and terminate all commitments under the revolving credit facility. If we were unable to pay the accelerated debt, the lenders could proceed against the collateral granted to them. Substantially all of our assets and the assets of our U.S. subsidiaries are pledged as security under the 22 New Credit Agreement. We can give no assurance that our assets would be sufficient to repay our debt, including the exchange notes, if the New Credit Agreement indebtedness were to be accelerated. You should read "Description of the Exchange Notes--Certain Covenants," "Description of Certain Indebtedness," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information on these restrictions. Change of Control If there is a change of control (as defined in the indentures), we are required to make an offer to purchase all outstanding exchange notes at a purchase price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase. We can give no assurance that we will have sufficient funds available to purchase the exchange notes upon a change of control. In addition, any change of control, and any repurchase of the exchange notes required under the indentures upon a change of control, will constitute an event of default under the New Credit Agreement with the result that our obligations thereunder could be accelerated and declared due and payable by the lenders. The lenders would be entitled to receive payment of all outstanding amounts thereunder before we could repurchase any of the exchange notes tendered pursuant to an offer to repurchase the exchange notes upon such change of control. Upon the occurrence of an event of default, the lenders under the New Credit Agreement would have the ability to block repurchases of the exchange notes for a period of time. You should read "Description of Certain Indebtedness--The New Credit Agreement" and "Description of the Exchange Notes--Change of Control" for more information about the effects of a change of control. Fraudulent Conveyance Any of our creditors may file a lawsuit objecting to our obligations under the exchange notes or the use of proceeds of the outstanding notes. A court could void our obligations under the exchange notes (or the obligations of our guarantor subsidiaries under their guarantees), subordinate the exchange notes or guarantees to our or their other debt or order the holders to return any amounts paid for the outstanding notes to the Company or to a fund benefitting the creditors if the court finds we or they (1) intended to defraud a creditor or (2) did not receive fair value for the outstanding notes and we either (A) were insolvent or became insolvent by offering the outstanding notes, (B) did not have enough capital to engage in the acquisition of the RPS Division or (C) intended to or believed that we overextended our debt obligations. Creditors of the subsidiary guarantors may also object to their guarantee of the exchange notes. A court could order the relief outlined above for the same reasons outlined above. In addition, the guarantors' creditors could claim that since the guarantees were made for our benefit, the guarantors did not receive fair value for the guarantees. The measure of insolvency for fraudulent transfer purposes will vary depending upon the law of the jurisdiction that is being applied in any proceeding. Generally, however, we or a subsidiary guarantor would be considered insolvent if, at the time we or they incurred the debt, either (1) the sum of our or their debts (including contingent liabilities) is greater than our or their assets, at a fair valuation, or (2) the present fair salable value of our or their assets is less than the amount required to pay the probable liability on our or their total existing debts and liabilities (including contingent liabilities) as they become absolute and matured. We cannot give any assurance as to what standards a court would use to determine whether the Company or a subsidiary guarantor was solvent at the relevant time, or whether, whatever standard was used, the exchange notes would not be voided or further subordinated on another of the grounds set forth above. We believe that at the time we and the subsidiary guarantors incurred the debt constituting the outstanding notes and the subsidiary guarantees, we and they were (a) neither insolvent nor to be rendered insolvent as a result, (b) in possession of sufficient capital to run our businesses effectively, and (c) incurring debts within our ability to pay them as they become due. In addition, we believe that at such time we and they had sufficient assets to satisfy any probable money judgment against us in any pending action. In reaching this conclusion, we have relied upon our analyses of internal cash flow projections and estimated values of our assets and liabilities. We cannot assure you, however, that a court passing on the same questions would reach the same conclusions. 23 Risks Associated with the Operation of the Business Integration of Operations Achieving the full benefits from combining Tokheim and the RPS Division and capturing the efficiencies and cost reductions expected as a result of the acquisition of the RPS Division (as well as achieving the remaining benefits to be derived from the acquisition of Sofitam) depends, in large part, on our ability to coordinate and integrate the operations of each company. We can give no assurance that we will be successful in these efforts. The combination will require substantial attention of management, which has limited experience integrating the operations of companies the size of Tokheim and the RPS Division. Completing the integration of Sofitam's operations may be hindered as a result of the acquisition of the RPS Division. Business, competitive, financial, general economic and other factors, many of which will be beyond management's control, will affect the timing and ultimate success of the integration of the companies and the realization of such benefits. The diversion of management's attention, as well as any other difficulties which may be encountered in the transition and integration process, may adversely affect our business, financial condition or results of operation. If management is unable to effectively integrate the business of the two companies, the quality of our products and our business, financial condition or results of operations could be materially adversely affected. Although we expect that the business operations of Tokheim and the RPS Division will not be adversely affected by the acquisition of the RPS Division, we can give no assurance that there will be no unexpected difficulties that may have a material adverse effect on the Company. International Operations International sales represent a substantial portion of our total sales (pro forma for the Acquisition, 73% in 1998). Our business strategy includes continued expansion of international sales activity, which will require significant management attention and financial resources. In addition, foreign sales are subject to numerous risks, including: . political and economic instability in foreign markets; . restrictive trade policies of foreign governments; . inconsistent product regulation or sudden policy changes by government agencies or authorities; . the imposition of duties, taxes or government royalties; . foreign exchange rate risks; . exchange controls; . national and regional labor strikes; . potentially longer payment cycles; . increased costs of maintaining international marketing efforts; . difficulties in enforcing contractual obligations and intellectual property rights; . difficulties in collecting international accounts receivable; and . the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. Any of these factors could materially adversely affect our business, financial condition or results of operations. In addition, current local market conditions have slowed our business in Asia. We currently derive less than 2% of our net sales from the region as compared to 5% for the year ended November 30, 1997. We cannot predict when or if these market conditions will improve or whether they will spread to other regions. Our ability to pay our debt will depend, in substantial part, on our ability to obtain the cash flow generated by our international operations, including the RPS Division. We lent certain amounts and made capital 24 contributions to our subsidiaries in connection with the acquisition of the RPS Division. We expect payments of interest by our international subsidiaries on these intercompany loans to result in the repatriation of a portion of their cash flow. In addition, certain of our subsidiaries will pay us fees under management agreements executed at the same time as the acquisition of the RPS Division. We cannot predict whether these interest payments and management fees will be recharacterized in a way that has adverse tax or other consequences for us, or whether they will become subject to restrictions of exchange controls on the transfer of funds into or out of foreign countries, which would adversely affect our ability to pay our outstanding indebtedness, including the exchange notes. In addition, declines in the value of the French franc (or any other currency in which we make sales) relative to the U.S. dollar reduce the amount of funds (measured in U.S. dollars) that can be repatriated. Under French law, the trustee or receiver in bankruptcy or the court in any bankruptcy proceeding may also be in a position to seek either the nullification or the non- enforceability, depending on the situation, of any legal acts undertaken by a company with third parties (such as the increase of intercompany obligations, including intercompany notes, and the payment of management or other fees). Such an act may materially adversely affect our ability to satisfy our obligations, including the exchange notes. Dependence on the Retail Petroleum Industry Substantially all of our net sales are derived from the sale and servicing of petroleum dispensing equipment to the retail petroleum industry. Our results of operations depend on demand for equipment from the retail petroleum industry in developed and emerging markets. Several factors affect the demand for our equipment, including: . wholesale and retail prices for petroleum products; . taxation of petroleum products; . environmental regulations; . technological improvements; . consumer demand for new products; . changing retailing patterns in the retail petroleum industry; . consolidation trends among retailers in developed markets; . the pace of development in emerging markets; . changes in interest rates; and . general economic and industry conditions. Any of these factors could adversely affect the prices of or demand for our products and services and could have a material adverse effect on our business, financial condition or results of operations. Our customers include MOCs, nationals, jobbers, independents, convenience store stations, hypermarkets, other retailers and commercial users. Certain of these customers contribute a substantial amount to our revenues. The loss of any such customer, or class of customers, or decreases in such customers' capital expenditures, could have a material adverse effect on our business, financial condition or results of operation. Recently, MOCs and nationals have moved toward granting national, regional and global contracts, or tenders, and toward creating alliances and preferred supplier relationships with suppliers. Typically, a customer can terminate these arrangements at any time. The loss of a customer, or the award of a contract to a competitor, may have a more significant impact on the Company in the future as these arrangements become more common. As a result of consolidation in the oil industry, especially among MOCs, the Company is at risk of losing large customers through merger or consolidation. Foreign Currency; Common European Currency A substantial portion of our expenses and sales are denominated in foreign currencies. Thus, our revenues, cash flows and earnings are affected by fluctuations in certain exchange rates, primarily the rates between the U.S. dollar and the French franc or Euro and between the British pound and the U.S. dollar and the Euro. 25 During 1998, approximately 26% of Tokheim's total revenue was denominated in French francs, which have significantly depreciated against the U.S. dollar in recent years. Moreover, as a result of the acquisition of the RPS Division we conduct a substantial portion of our European manufacturing at our Dundee, Scotland facility, primarily for export. The British pound has recently appreciated against other European currencies, which makes exports from the United Kingdom more expensive for our European customers. If foreign currencies continue to decline in value relative to the U.S. dollar, our U.S. exports could become more expensive and potentially less competitive in those markets. You should read "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information on currency risks. 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. We are likely to be financially affected by the introduction of the Euro because we have subsidiaries and business in many of the member states. We could face substantial transition costs as we redesign our software systems to reflect the adoption of the new currency. In addition, we can give no assurance as to how the adoption of the Euro will affect our payment obligations under loan agreements denominated in currencies replaced by the Euro or how it will affect our commercial agreements denominated in these currencies. Our revenues, cash flows and earnings in western Europe may be affected by fluctuations of the British pound, because our Dundee plant is now a primary manufacturing facility, and the British pound was not replaced by the Euro. We can give no assurance as to how the United Kingdom's decision not to adopt the Euro will affect the Company. Our products manufactured in Dundee could become more expensive and potentially less competitive in markets outside the United Kingdom if the value of the British pound increases relative to the Euro. On the other hand, the amount of funds (measured in Euro) that can be repatriated for the service of debt would decrease if the value of the British pound declines relative to the Euro. Competition Competition within the retail petroleum dispensing equipment industry is intense, and has caused the average price of our products to fall significantly over the past few years. Prices may continue to fall in the future. Our primary competitors include, among others: . Gilbarco Inc. (a division of GEC Plc); . Wayne (a division of Halliburton Co.); . Scheidt & Bachmann GmbH; and . Tatsuno Corporation. Several of our current and potential future competitors have significantly greater financial, technical and marketing resources than we do because they are subsidiaries or divisions of much larger corporations. Our current or potential competitors may develop products that are superior to ours or integrate new technologies more quickly than we do. We could potentially lose market share if competitors are able to form alliances with MOCs or respond to their tender proposals more quickly or on more favorable terms than we can. Any of the factors listed above, or any other factors that increase competition, could cause price reductions, reduced gross margins and loss of market share for the Company, which could cause a materially adverse effect in our business, financial condition or results of operations. We cannot assure you that we will compete effectively. Application of Technology and Software in Products Our success depends, in significant part, on the continued market acceptance of our products. We must also develop and introduce new products and services and enhanced versions of current products that will be accepted by our customers. The technology and software being integrated into our products, including electronic components, point-of-sale systems and related products, are growing increasingly sophisticated and expensive. We can give no assurance that we will continue to develop successful new products in a timely fashion or that our current or future products will be marketed properly or satisfy the needs of the worldwide market. Certain of our assets could become obsolete or impaired in value as a result. 26 In addition, there is intense competition to develop new products and to establish proprietary rights to these products and the related technologies. Competitors may be successful in establishing proprietary rights to new technologies, and we cannot assure you that we will be able to obtain rights to such technology or that we will not face claims that our products infringe patents held by our competitors. Our commitment to customizing products to address particular needs of our customers could burden our resources or delay the delivery or installation of products. Any of these factors could adversely affect our relationship with customers, which in turn could materially adversely affect our business, financial condition or results of operations. Dependence on Key Personnel Our success depends in large part upon our ability to attract, retain and motivate highly skilled employees from a competitive labor market. We can give you no assurance that we will be able to continue to attract and retain sufficient numbers of highly skilled employees for the foreseeable future. The loss of Douglas K. Pinner, our Chairman of the Board, President and Chief Executive Officer, or other key personnel, could have a material adverse effect on our business, financial condition or results of operations. Product Liability A product defect could pose a significant risk of injury or environmental contamination because our products are used primarily in connection with highly combustible, toxic materials. We also face the possibility of a product recall if there are defects in the design or manufacture of our products. We can make no assurance about future losses due to product liability claims or recalls. Such cases could result in substantial claims against the Company and could material adversely affect our business, financial condition or results of operations. Potential "Year 2000" Problems Many computer systems, software products and other business systems with embedded chips or processors use only two digits to represent the year. As a result, they may be unable to accurately process certain data before, during or after the year 2000. As a result, business and governmental entities are at risk for possible miscalculations or system failures causing disruptions in their operations. This is commonly known as the Year 2000 issue and can arise at any point in our supply, manufacturing, processing, distribution and financial chains. We have conducted a review of our business systems, including our computer systems, and are querying our customers, vendors and resellers about their progress in identifying and addressing problems that their computer systems may face in correctly interrelating and processing date information as the year 2000 approaches and is reached. However, we can give no assurance that we will identify all such Year 2000 problems in our computer systems or those of our customers, vendors and resellers in advance of their occurrence or that we will be able to successfully remedy any problems that are discovered. Our expenses in identifying and addressing such problems, or the expenses or liabilities to which we may become subject as a result of such problems, could have a material adverse effect on the Company's business, financial condition and results of operations. Furthermore, we rely on outside vendors to provide computer hardware components that we in turn sell to customers, and many of our products and services are integrated or interface with other software systems of a customer at the time of initial installation or thereafter, and so to some degree Year 2000 readiness is beyond our control. As a result, the failure of systems (that were not designed by the Company) to be Year 2000 ready may also have a material adverse effect on our business, financial condition and results of operations. You should read "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources" for more information about Year 2000 issues. 27 Government Regulation Environmental Our operations, and those of our principal customers, are subject to local, regional and national regulations, laws and standards, including those concerning the environment. Changes in environmental regulation of the petroleum exploration, manufacturing, distribution and sales businesses (primarily in any of the geographic areas in which we compete) could require our customers to increase their capital spending to comply with such regulations and consequently decrease their capital spending on our products. Although we believe that the cost to comply with environmental regulations will not have a material adverse effect on the Company's financial condition or results of operations, we cannot assure you that significant costs and liabilities will be avoided. You should read "Business--Regulation-- Environment" for more information about environmental regulation. The Company recently reached a tentative settlement for certain environmental litigation relating to a building it sold. While the Company believes that it will enter into a final settlement consistent with the terms of the preliminary settlement, we cannot assure you that this will happen. You should read "Business--Legal Proceedings" for more information about this litigation. Emerging Markets Future sales to operators in emerging markets will depend upon the continued privatization and deregulation of energy and retail petroleum markets in eastern Europe, Latin America, Africa and Asia, as well as the strength of their local economies. Our operations in emerging markets will be subject to the inherent risks of doing business in markets with financial, political and legal systems that may be unstable or unpredictable. Hypermarkets A 1996 French regulation restricting the construction of new hypermarkets has limited new service station growth and our sales to this important segment of the French market. It is possible that other countries where hypermarkets operate will also adopt restrictive laws. Risks Associated with the Exchange Offer Consequences of a Failure to Exchange Outstanding Notes The Company did not register the outstanding notes under the Securities Act or any state securities laws, nor does it intend to after the exchange offer. As a result, the outstanding notes may only be transferred in limited circumstances under the securities laws. If the holders of the outstanding notes do not exchange their notes in the exchange offer, they lose their right to have the outstanding notes registered under the Securities Act, subject to certain limitations. A holder of outstanding notes after the exchange offer may be unable to sell the notes. To exchange the outstanding notes for the exchange notes, the appropriate exchange agent must receive: (i) certificates for the outstanding notes or a book-entry confirmation of the transfer of the outstanding notes into the appropriate exchange agent's account at DTC or with Euroclear or Cedel Bank, as applicable; (ii) a completed and signed letter of transmittal with any required signature guarantees, or an agent's message in the case of a book-entry transfer; and (iii) any other documents required by the letter of transmittal. Holders of outstanding notes who want to exchange their notes should allow enough time to guarantee timely delivery. The Company is under no duty to give notice of defective exchanges. 28 Lack of Public Market for Exchange Notes While the outstanding dollar notes are presently eligible for trading in the PORTAL market of the NASD by qualified institutional buyers, there is no existing market for the exchange notes. The initial purchasers of the outstanding notes have advised the Company that they currently intend to make a market in the exchange notes following the exchange offer, but they are not obligated to do so, and any market-making may be discontinued at any time without notice. The Company does not currently intend to apply for a listing of the exchange notes on any securities exchange. We do not know if an active public market for the exchange notes will develop or, if developed, will continue. If an active public market does not develop or is not maintained, the market price and liquidity of the exchange notes may be adversely affected. We cannot assure you of the liquidity of any markets that may develop for the exchange notes, of your ability to sell your exchange notes, or of the price at which you would be able to sell your exchange notes. Future trading prices of the exchange notes will depend on many factors, including, among other things: . prevailing interest rates; . our operating results; and . the market for similar securities. Procedures for Tender of Outstanding Notes The exchange notes will be issued in exchange for the outstanding notes only after timely receipt by the appropriate exchange agent of (i) the outstanding notes or a book-entry confirmation of the transfer of outstanding notes into the appropriate exchange agent's account at DTC, Euroclear or Cedel Bank, as applicable, (ii) a properly completed and executed letter of transmittal or an agent's message in the case of a book-entry transfer, and (iii) all other required documentation. If you want to tender your outstanding notes in exchange for exchange notes, you should allow sufficient time to ensure timely delivery. Neither the exchange agents nor the Company are under any duty to give you notification of defects or irregularities with respect to tenders of outstanding notes for exchange. Outstanding notes that are not tendered or are tendered but not accepted will, following the exchange offer, continue to be subject to the existing transfer restrictions. In addition, if you tender the outstanding notes in the exchange offer to participate in a distribution of the exchange notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. For additional information, please refer to the sections entitled "The Exchange Offer" and "Plan of Distribution" later in this prospectus. 29 THE EXCHANGE OFFER Purpose of the Exchange Offer On January 29, 1999, the Company privately placed $123.0 million of 11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Dollar Notes") and (Euro)75.0 million of 11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Euro Notes" and, together with the Outstanding Dollar Notes, the "Outstanding Notes"). Simultaneously with the sale of the Outstanding Notes, we entered into a registration rights agreement relating to the Outstanding Dollar Notes (the "Dollar Registration Rights Agreement") and a registration rights agreement relating to the Outstanding Euro Notes (the "Euro Registration Rights Agreement" and together with the Dollar Registration Rights Agreement, the "Registration Rights Agreements") with the subsidiary guarantors and the initial purchasers of the Outstanding Notes--BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder & Co. Inc. Under these Registration Rights Agreements, we agreed to file a registration statement regarding the exchange of the Outstanding Notes for notes (the "Dollar Exchange Notes" and the "Euro Exchange Notes" and, collectively, the "Exchange Notes") with terms identical in all material respects (such exchange, the "Exchange Offer"). We also agreed to use our reasonable best efforts to cause that registration statement to become effective with the Securities and Exchange Commission. Copies of the Registration Rights Agreements have been filed as exhibits to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 1999 and are incorporated by reference as exhibits to the registration statement of which this Prospectus is a part. We are conducting the Exchange Offer to satisfy our contractual obligations under the Registration Rights Agreements. The form and terms of the Exchange Notes are the same as the form and terms of the Outstanding Notes, except that the Exchange Notes will be registered under the Securities Act. As a result, the Exchange Notes will not bear legends restricting their transfer and will not contain the registration rights and liquidated damage provisions contained in the Outstanding Notes. The Outstanding Notes provide that, if a registration statement relating to the Exchange Offer has not been filed by April 29, 1999 and declared effective by June 28, 1999, we will pay liquidated damages on the Outstanding Notes. Upon the completion of the Exchange Offer, holders of Outstanding Notes will not be entitled to any liquidated damages on the Outstanding Notes or any further registration rights under the Registration Rights Agreements, except under limited circumstances. See "Risk Factors-- Consequences of a Failure to Exchange Outstanding Notes" and "Description of the Exchange Notes" for further information regarding the rights of holders of Outstanding Notes after the Exchange Offer. The Exchange Offer is not extended to Outstanding Note holders in any jurisdiction where the Exchange Offer does not comply with the securities or blue sky laws of that jurisdiction. In the event that applicable interpretations of the staff of the SEC do not permit the Company to conduct the Exchange Offer, or if the Exchange Offer is not consummated on or before August 12, 1999, or if certain holders of the Outstanding Notes notify the Company that they are not eligible to participate in, or would not receive freely tradeable Exchange Notes in exchange for tendered Outstanding Notes in, the Exchange Offer, the Company will use its best efforts to cause to become effective a shelf registration statement with respect to the resale of the Outstanding Notes. We also agreed to use our best efforts to keep the shelf registration statement effective until the earlier of three years after the issue date of the Outstanding Notes and such time as all of the applicable Outstanding Notes have been sold thereunder. The term "holder" as used in this section of the Prospectus entitled "The Exchange Offer" means (1) any person in whose name the Outstanding Notes are registered on the books of the Company, or (2) any other person who has obtained a properly completed bond power from the registered holder, or (3) any person whose Outstanding Notes are held of record by DTC, Euroclear or Cedel Bank and who wants to deliver such Outstanding Notes by book-entry transfer at DTC, Euroclear or Cedel Bank. 30 Terms of the Exchange Offer We are offering to exchange up to $123.0 million total principal amount of Dollar Exchange Notes for a like total principal amount of Outstanding Dollar Notes. The Outstanding Dollar Notes must be tendered properly on or before the Expiration Date (as hereinafter defined) and not withdrawn. In exchange for Outstanding Dollar Notes properly tendered and accepted, the Company will issue a like total principal amount of up to $123.0 million in Dollar Exchange Notes. In addition, we are offering to exchange up to (Euro)75.0 million total principal amount of Euro Exchange Notes for a like total principal amount of Outstanding Euro Notes. The Outstanding Euro Notes also must be tendered properly on or before the Expiration Date and not withdrawn. In exchange for Outstanding Euro Notes properly tendered and accepted, the Company will issue a like total principal amount of up to (Euro)75.0 million in Euro Exchange Notes. The Exchange Offer is not conditioned upon holders tendering a minimum principal amount of Outstanding Notes. As of the date of this Prospectus, $123.0 million aggregate principal amount of Dollar Notes are outstanding and (Euro)75.0 million aggregate principal amount of Euro Notes are outstanding. Holders of the Outstanding Notes do not have any appraisal or dissenters' rights in the Exchange Offer. If holders do not tender Outstanding Notes or tender Outstanding Notes that the Company does not accept, their Outstanding Notes will remain outstanding. Any Outstanding Notes will be entitled to the benefits of the indenture under which the Outstanding Dollar Notes were, and the Dollar Exchange Notes will be, issued (the "Dollar Notes Indenture") or the indenture under which the Outstanding Euro Notes were, and the Euro Exchange Notes will be, issued (the "Euro Notes Indenture" and, together with the Dollar Notes Indenture, the "Indentures"), as applicable, but will not be entitled to any further registration rights under the Registration Rights Agreements, except under limited circumstances. See "Risk Factors-- Consequences of a Failure to Exchange Outstanding Notes" for more information regarding notes outstanding after the Exchange Offer. After the Expiration Date, the Company will return to the holder any tendered Outstanding Notes that the Company did not accept for exchange. Holders exchanging Outstanding Notes will not have to pay brokerage commissions or fees or transfer taxes if they follow the instructions in the Letter of Transmittal. The Company will pay the charges and expenses, other than certain taxes described below, in the Exchange Offer. See "--Fees and Expenses" for further information regarding fees and expenses. Neither the Company nor the Company's board of directors recommends you to tender or not tender Outstanding Notes in the Exchange Offer. In addition, the Company has not authorized anyone to make any recommendation. You must decide whether to tender in the Exchange Offer and, if so, the aggregate amount of Outstanding Notes to tender. The expiration date (the "Expiration Date") is 5:00 p.m., New York City time (in the case of Outstanding Dollar Notes) or 5:00 p.m., London time (in the case of Outstanding Euro Notes), on , 1999 unless we extend the Exchange Offer. The Company has the right, in accordance with applicable law, at any time: . to delay the acceptance of the Outstanding Notes; . to terminate the Exchange Offer if the Company determines that any of the conditions to the Exchange Offer have not occurred or have not been satisfied; . to extend the Expiration Date of the Exchange Offer and keep all Outstanding Notes tendered other than those notes properly withdrawn; and . to waive any condition or amend the terms of the Exchange Offer. If the Company materially changes the Exchange Offer, or if the Company waives a material condition of the Exchange Offer, the Company will promptly distribute a prospectus supplement to the holders of the Outstanding Notes disclosing the change or waiver. The Company also will extend the Exchange Offer as required by Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 31 If the Company exercises any of the rights listed above, it will promptly give oral or written notice of the action to the Exchange Agents (as defined below under "--Exchange Agents") and will issue a release to appropriate news agencies. In the case of an extension, an announcement will be made no later than 9:00 a.m., New York City time (in the case of Outstanding Dollar Notes) or 9:00 a.m., London time (in the case of Outstanding Euro Notes), on the next business day after the previously scheduled Expiration Date. Acceptance for Exchange and Issuance of Exchange Notes The Company will issue to the Exchange Agents Exchange Notes for Outstanding Notes tendered and accepted and not withdrawn promptly after the Expiration Date. The Exchange Agents might not deliver the Exchange Notes to all tendering holders at the same time. The timing of delivery depends upon when the Exchange Agents receive and process the required documents. The Company will be deemed to have exchanged Outstanding Notes validly tendered and not withdrawn when the Company gives oral or written notice to the Exchange Agents of their acceptance. The Exchange Agents are agents for the Company for receiving tenders of Outstanding Notes, Letters of Transmittal and related documents. The Exchange Agents are also agents for tendering holders for receiving Outstanding Notes, Letters of Transmittal and related documents and transmitting Exchange Notes to validly tendering holders. If for any reason, the Company (1) delays the acceptance or exchange of any Outstanding Notes, (2) extends the Exchange Offer, or (3) is unable to accept or exchange notes, then the Exchange Agents may, on behalf of the Company and subject to Rule 14e-1(c) under the Exchange Act, retain tendered notes. Notes retained by the Exchange Agents may not be withdrawn, except according to the withdrawal procedures outlined in the section entitled "--Withdrawal Rights" below. In tendering Outstanding Notes, you must warrant in the Letter of Transmittal or in an Agent's Message (described below) that (1) you have full power and authority to tender, exchange, sell, assign and transfer Outstanding Notes, (2) the Company will acquire good, marketable and unencumbered title to the tendered Outstanding Notes, free and clear of all liens, restrictions, charges and other encumbrances, and (3) the Outstanding Notes tendered for exchange are not subject to any adverse claims or proxies. You also must warrant and agree that you will, upon request, execute and deliver any additional documents requested by the Company or the Exchange Agents to complete the exchange, sale, assignment, and transfer of the Outstanding Notes. Procedures for Tendering Outstanding Notes Valid Tender You may tender your Outstanding Notes by book-entry transfer or by other means. For book-entry transfer, you must deliver to the appropriate Exchange Agent either (1) a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, or (2) an Agent's Message, meaning a message transmitted to the appropriate Exchange Agent by DTC, Euroclear or Cedel Bank, as applicable, and forming a part of a book-entry confirmation, stating that you agree to be bound by the terms of the Letter of Transmittal. You must deliver your Letter of Transmittal or Agent's Message by mail, facsimile, hand delivery or overnight carrier to the appropriate Exchange Agent on or before the Expiration Date. In addition, to complete a book-entry transfer, you must also either (1) have DTC transfer the Outstanding Dollar Notes into the Dollar Exchange Agent's account at DTC using the ATOP procedures for transfer, and obtain a confirmation of such transfer, or have Euroclear or Cedel Bank transfer the Outstanding Euro Notes into the Euro Exchange Agent's account at Euroclear or Cedel Bank, as applicable, using their procedures for transfer, and obtain a confirmation of such transfer, or (2) follow the guaranteed delivery procedures described below under "-- Guaranteed Delivery." If you tender fewer than all of your Outstanding Notes, you should fill in the amount of notes tendered in the appropriate box on the Letter of Transmittal. If you do not indicate the amount tendered in the appropriate box, the Company will assume you are tendering all Outstanding Notes that you hold. 32 For tendering your Outstanding Notes other than by book-entry transfer, you must deliver a completed and signed Letter of Transmittal to the appropriate Exchange Agent. Again, you must deliver the Letter of Transmittal by mail, facsimile, hand delivery or overnight carrier to the appropriate Exchange Agent on or before the Expiration Date. In addition, to complete a valid tender you must either (1) deliver your Outstanding Dollar Notes to the Dollar Exchange Agent or deliver your Outstanding Euro Notes to the Euro Exchange Agent, as applicable, on or before the Expiration Date, or (2) follow the guaranteed delivery procedures set forth below under "--Guaranteed Delivery." Delivery of required documents by whatever method you choose is at your sole risk. Delivery is complete when the Exchange Agents actually receive the items to be delivered. Delivery of documents to DTC, Euroclear or Cedel Bank in accordance with their procedures or to the Company does not constitute delivery to the Exchange Agents. If delivery is by mail, registered mail, return receipt requested, properly insured, or an overnight delivery service is recommended. In all cases, you should allow sufficient time to ensure timely delivery. Signature Guarantees You do not need to endorse certificates for the Outstanding Notes or provide signature guarantees on the Letter of Transmittal unless (a) someone other than the registered holder tenders the certificate or (b) you complete the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" in the Letter of Transmittal. In the case of (a) or (b) above, you must sign your Outstanding Note or provide a properly executed bond power, with the signature on the bond power and on the Letter of Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution" (an "Eligible Institution"). Eligible Institutions include: (1) a bank; (2) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (3) a credit union; (4) a national securities exchange, registered securities association or clearing agency; or (5) a savings association that is a participant in a securities transfer association. Guaranteed Delivery If a holder wants to tender Outstanding Notes in the Exchange Offer and (1) the certificates for the Outstanding Notes are not immediately available or all required documents are unlikely to reach the Exchange Agents on or before the Expiration Date, or (2) a book-entry transfer cannot be completed in time, the Outstanding Notes may be tendered if the holder complies with the following guaranteed delivery procedures: (a) your tender is made by or through an Eligible Institution; (b) you deliver a properly completed and signed Notice of Guaranteed Delivery, like the form provided with the Letter of Transmittal, to the appropriate Exchange Agent on or before the Expiration Date; and (c) you deliver the certificates or a confirmation of book-entry transfer and a properly completed and signed Letter of Transmittal to the appropriate Exchange Agent within three New York Stock Exchange trading days after the Notice of Guaranteed Delivery is executed. You may deliver the Notice of Guaranteed Delivery by hand, facsimile or mail to the appropriate Exchange Agent and must include a guarantee by an Eligible Institution in the form described in the notice. The Company's acceptance of properly tendered Outstanding Notes is a binding agreement between the tendering holder and the Company upon the terms and subject to the conditions of the Exchange Offer. Determination of Validity The Company will resolve all questions regarding the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tendered Outstanding Notes. The Company's resolution of these questions as well as the Company's interpretation of the terms and conditions of the Exchange Offer 33 (including the Letter of Transmittal) is final and binding on all parties. A tender of Outstanding Notes is invalid until all irregularities have been cured or waived. Neither the Company, any affiliates or assigns of the Company, the Exchange Agents nor any other person is under any obligation to give notice of any irregularities in tenders nor will they be liable for failing to give any such notice. The Company reserves the absolute right, in its sole and absolute discretion, to reject any tenders determined to be in improper form or unlawful. The Company also reserves the absolute right to waive any of the conditions of the Exchange Offer or any condition or irregularity in the tender of Outstanding Notes by any holder. The Company need not waive similar conditions or irregularities in the case of other holders. If any Letter of Transmittal, endorsement, bond power, power of attorney, or any other document required by the Letter of Transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person must indicate that capacity when signing. In addition, unless waived by the Company, the person must submit proper evidence satisfactory to the Company, in its sole discretion, of his or her authority to so act. A beneficial owner of Outstanding Notes that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian should contact that entity promptly if the holder wants to participate in the Exchange Offer. Resales of Exchange Notes The Company is exchanging the Outstanding Notes for Exchange Notes based upon the Staff of the Securities and Exchange Commission's position, set forth in interpretive letters to third parties in other similar transactions. The Company will not seek its own interpretive letter. As a result, the Company cannot assure you that the Staff will take the same position on this Exchange Offer as it did in interpretive letters to other parties. Based on the Staff's letters to other parties, we believe that holders of Exchange Notes, other than broker-dealers, can offer the Exchange Notes for resale, resell and otherwise transfer the Exchange Notes without delivering a prospectus to prospective purchasers. However, prospective holders must acquire the Exchange Notes in the ordinary course of business and have no intention of engaging in a distribution of the Exchange Notes, as a "distribution" is defined by the Securities Act. Any holder of Outstanding Notes who is an "affiliate" of the Company or who intends to distribute Exchange Notes, or any broker-dealer who purchased Outstanding Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act: . cannot rely on the Staff's interpretations in the above mentioned interpretive letters; . cannot tender Outstanding Notes in the Exchange Offer; and . must comply with the registration and prospectus delivery requirements of the Securities Act to transfer the Outstanding Notes, unless the sale is exempt. In addition, if any broker-dealer acquired Outstanding Notes for its own account as a result of market-making or other trading activities and exchanges the Outstanding Notes for Exchange Notes, the broker-dealer must deliver a prospectus with any resales of the Exchange Notes. If you want to exchange your Outstanding Notes for Exchange Notes, you will be required to affirm that: . you are not an "affiliate" of the Company; . you are acquiring the Exchange Notes in the ordinary course of your business; . you have no arrangement or understanding with any person to participate in a distribution of the Exchange Notes (within the meaning of the Securities Act); and . you are not a broker-dealer, not engaged in, and do not intend to engage in, a distribution of the Exchange Notes (within the meaning of the Securities Act). 34 In addition, the Company may require you to provide information regarding the number of "beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) of the Outstanding Notes. Each broker-dealer that receives Exchange Notes for its own account must acknowledge that it acquired the Outstanding Notes for its own account as the result of market-making activities or other trading activities and must agree that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Notes. By making this acknowledgment and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" under the Securities Act. Based on the Staff's position in certain interpretive letters, we believe that broker-dealers who acquired Outstanding Notes for their own accounts as a result of market-making activities or other trading activities may fulfill their prospectus delivery requirements with respect to the Exchange Notes with a prospectus meeting the requirements of the Securities Act. Accordingly, a broker-dealer may use this Prospectus to satisfy such requirements. The Company has agreed that a broker-dealer may use this Prospectus for a period ending 180 days after the Expiration Date. See "Plan of Distribution" for further information. A broker-dealer intending to use this Prospectus in the resale of Exchange Notes must notify the Company, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. This notice may be given in the Letter of Transmittal or may be delivered to the appropriate Exchange Agent. Any Participating Broker-Dealer who is an "affiliate" of the Company may not rely on the Staff's interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act when reselling Exchange Notes. Each Participating Broker-Dealer exchanging Outstanding Notes for Exchange Notes agrees that, upon receipt of notice from the Company (a) that any statement contained or incorporated by reference in this Prospectus makes the Prospectus untrue in any material respect or that this Prospectus omits to state a material fact necessary to make the statements contained or incorporated by reference herein, in light of the circumstances under which they were made, not misleading or (b) of the occurrence of certain other events specified in the Registration Rights Agreements, the Participating Broker- Dealer will suspend the sale of Exchange Notes. A Participating Broker-Dealer will not resell the Exchange Notes until (1) the Company has amended or supplemented this Prospectus to correct such misstatement or omission and the Company furnishes copies to the Participating Broker-Dealer or (2) the Company gives notice that the sale of the Exchange Notes may be resumed. If the Company gives notice suspending the sale of Exchange Notes, it shall extend the 180-day period by the number of days between the date the Company gives notice of suspension and the date Participating Broker-Dealers receive copies of the amended or supplemented prospectus or the date the Company gives notice resuming the sale of Exchange Notes. Withdrawal Rights You can withdraw tenders of Outstanding Notes at any time on or before the Expiration Date. For a withdrawal to be effective, you must deliver a written, telegraphic, telex or facsimile transmission of a Notice of Withdrawal to the appropriate Exchange Agent on or before the Expiration Date. The Notice of Withdrawal must specify the name of the person tendering the Outstanding Notes to be withdrawn, the total principal amount of Outstanding Notes withdrawn, and the name of the registered holder of the Outstanding Notes if different from the person tendering the Outstanding Notes. If you delivered Outstanding Notes to an Exchange Agent, you must submit the serial numbers of the Outstanding Notes to be withdrawn and the signature on the Notice of Withdrawal must be guaranteed by an Eligible Institution, except in the case of Outstanding Notes tendered for the account of an Eligible Institution. If you tendered Outstanding Notes as a book-entry transfer, the Notice of Withdrawal must specify the name and number of the account at DTC, Euroclear or Cedel Bank, as applicable, to be credited with the withdrawal of Outstanding Notes and you must deliver the Notice of Withdrawal to the appropriate Exchange Agent by written, telegraphic, telex or facsimile transmission. You may not rescind withdrawals of tender. Outstanding Notes properly withdrawn may again be tendered at any time on or before the Expiration Date. We will determine all questions regarding the validity, form and eligibility of withdrawal notices. Our determination will be final and binding on all parties. Neither the Company, any affiliate or assign of the 35 Company, the Exchange Agents nor any other person is under any obligation to give notice of any irregularities in any Notice of Withdrawal, nor will they be liable for failing to give any such notice. Withdrawn Outstanding Notes will be returned to the holder after withdrawal. Interest on Exchange Notes The Dollar Exchange Notes will bear interest at a rate of 11 3/8% per annum and the Euro Exchange Notes will bear interest at a rate of 11 3/8% per annum, both payable semi-annually on February 1 and August 1 of each year, commencing August 1, 1999. Holders of Exchange Notes will receive interest on August 1, 1999 from the date of initial issuance of the Exchange Notes, plus an amount equal to the accrued interest on the Outstanding Notes. Interest on the Outstanding Notes accepted for exchange will cease to accrue upon issuance of the Exchange Notes. Conditions to the Exchange Offer The Company need not exchange any Outstanding Notes, may terminate the Exchange Offer or may waive any conditions to the Exchange Offer or amend the Exchange Offer, if any of the following conditions has occurred: (a) the Staff no longer allows the Exchange Notes to be offered for resale, resold and otherwise transferred by certain holders without compliance with the registration and prospectus delivery provisions of the Securities Act; or (b) a governmental body passes any law, statute, rule or regulation which, in the Company's opinion, prohibits or prevents the Exchange Offer; or (c) the Securities and Exchange Commission or any state securities authority issues a stop order suspending the effectiveness of the registration statement or initiates or threatens to initiate a proceeding to suspend the effectiveness of the registration statement; or (d) the Company is unable to obtain any governmental approval that the Company believes is necessary to complete the Exchange Offer. If the Company reasonably believes that any of the above conditions has occurred, it may (1) terminate the Exchange Offer, whether or not any Outstanding Notes have been accepted for exchange, (2) waive any condition to the Exchange Offer or (3) amend the terms of the Exchange Offer in any respect. If the Company's waiver or amendment materially changes the Exchange Offer, the Company will promptly disclose the waiver or amendment through a prospectus supplement, distributed to the registered holders of the Outstanding Notes. The prospectus supplement also will extend the Exchange Offer as required by Rule 14e-1 of the Exchange Act. Exchange Agents The Company appointed U.S. Bank Trust National Association as exchange agent (the "Dollar Exchange Agent") for the Outstanding Dollar Notes for the Exchange Offer. The Company appointed Midland Bank plc as exchange agent (the "Euro Exchange Agent" and, together with the Dollar Exchange Agent, the "Exchange Agents") for the Outstanding Euro Notes for the Exchange Offer. Holders should direct questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for a Notice of Guaranteed Delivery to the appropriate Exchange Agent addressed as follows: 36 Dollar Exchange Agent By Registered or Certified Confirm By Telephone: By Hand or Overnight Mail: (651) 244-4512 Delivery: U.S. Bank Trust National Facsimile Transmissions: U.S. Bank Trust National Association (651) 244-1537 Association P.O. Box 64485 (Eligible Institutions Fourth Floor--Bond Drop St. Paul, Minnesota 55164- Only) Window 9549 180 East Fifth Street Attention: Specialized St. Paul, Minnesota 55101 Finance Attention: Specialized Finance Euro Exchange Agent By Registered or Certified Confirm by Telephone: By Hand or Overnight Mail: Delivery: Midland Bank plc Facsimile Transmissions: Midland Bank plc Mariner House, Pepys Mariner House, Pepys Street (Eligible Institutions Street London, EC3N 4DA Only) London, EC3N 4DA Attention: Attention: If you deliver Letters of Transmittal and any other required documents to an address or facsimile number other than those listed above, your tender is invalid. Fees and Expenses The Company will pay the Exchange Agents reasonable and customary fees for their services and reasonable out-of-pocket expenses. The Company will also pay brokerage houses and other custodians, nominees and fiduciaries their reasonable out-of-pocket expenses for sending copies of this Prospectus and related documents to holders of Outstanding Notes, and for handling or tendering for their customers. The Company will pay the transfer taxes for the exchange of the Outstanding Notes in the Exchange Offer. If, however, Exchange Notes are delivered to or issued in the name of a person other than the registered holder, or if a transfer tax is imposed for any reason other than for the exchange of Outstanding Notes in the Exchange Offer, then the tendering holder will pay the transfer taxes. If a tendering holder does not submit satisfactory evidence of payment of taxes or exemption from taxes with the Letter of Transmittal, the taxes will be billed directly to the tendering holder. The Company will not make any payment to brokers, dealers or other nominees soliciting acceptances in the Exchange Offer. Accounting Treatment The Exchange Notes will be recorded at the same carrying value as the Outstanding Notes. Accordingly, the Company will not recognize any gain or loss on the exchange for accounting purposes. The Company intends to amortize the expenses of the Exchange Offer and issuance of the Outstanding Notes over the respective terms of the Dollar Notes and Euro Notes. 37 THE TRANSACTIONS The Acquisition and Related Financings On September 30, 1998, the Company completed the acquisition (the "Acquisition") of the RPS Division for a price equal to $330.0 million in cash, notes, and warrants, subject to certain post-closing adjustments. Of the $330.0 million purchase price, $100.0 million was paid in cash borrowed under the terms of the New Credit Agreement as well as $22.5 million of 12.5% Senior Notes. The seller note portion of the purchase price consisted of $40.0 million in ten year, 12.0% Schlumberger Junior Subordinated Notes, payable in kind, and $170.0 million in 12.0% Schlumberger Senior Subordinated Notes due January 29, 1999. The remaining $20.0 million of the purchase price was paid with warrants exercisable for five years, beginning January 30, 1999 to purchase at a nominal price 2,526,923 shares of our common stock. The Schlumberger Senior Subordinated Notes, along with the Senior Notes, were repaid on January 29, 1999 with the proceeds from the sale of the Outstanding Notes. The Company has the option, subject to bank approval, to redeem (in whole or in part) the Schlumberger Junior Subordinated Notes. The Company is to reimburse Schlumberger for cash that remained in the RPS Division on the effective date of the Acquisition, net of certain adjustments. We currently estimate this amount to be up to approximately $6.5 million. We anticipate that this payment to Schlumberger will be made in the second quarter of 1999 from funds available through the revolving working capital facility under the New Credit Agreement. On the closing date of the Acquisition, the Company entered into a technology and licensing agreement with Schlumberger under which Schlumberger will pay the Company a minimum fee of approximately $0.9 million a year, regardless of use, for a period of five years, payable monthly. The payments under the agreement are due in full even if Schlumberger terminates the agreement or discontinues use of the services at any time during the five year payment period. The New Credit Agreement currently provides for a six year, $110.0 million revolving working capital facility and a six year, $120.0 million term loan facility. An additional agreement provides for the assignment of a three year, $7.6 million ESOP loan facility. At February 28, 1999, the outstanding borrowings were $65.1 million under the revolving working capital facility, $120.0 million under the term loan, and $6.3 million under the ESOP facility. Available borrowings under the revolving working capital facility were $44.9 million at February 28, 1999. See "Description of Certain Indebtedness." Also, simultaneously with the Acquisition, the Company entered into a note purchase agreement, pursuant to which the Company issued $22.5 million aggregate principal amount of 12.5% Senior Notes. Proceeds from the Senior Notes were used in connection with the Company's refinancing of existing indebtedness. Also on September 30, 1998, the Company completed the repurchase of the final $55.0 million of its 11.5% Senior Subordinated Notes that were then outstanding. These notes were redeemed at an aggregate premium and consent payment of approximately $12.3 million along with accrued interest of approximately $1.1 million. The Indentures under which the Outstanding Notes were, and the Exchange Notes will be, issued will permit us, subject to certain conditions, to refinance the Schlumberger Junior Subordinated Notes and refinance the Schlumberger Warrants with junior subordinated debt. Since completing the Acquisition, the Company has begun to implement a plan to cut costs and integrate the RPS Division. See "Business--Business Strategy-- Realize Operating Synergies and Cost Savings." 38 SOURCES AND USES OF FUNDS The Exchange Offer will not generate cash proceeds for the Company. The net proceeds from the offering of the Outstanding Dollar Notes and the Outstanding Euro Notes were $119.2 million and $84.0 million (1), respectively, after discounts and expenses. These proceeds were used to redeem the Schlumberger Senior Subordinated Notes and the Senior Notes and to repay borrowings under the New Credit Agreement. The following table shows the sources and uses of funds for the Offering: Sources of Funds: Outstanding Dollar Notes..................................... $123.0 Outstanding Euro Notes....................................... 86.6(1) ------ Total sources of funds..................................... $209.6 ====== Uses of Funds: Refinancing of 12.0% Schlumberger Senior Subordinated Notes.. $170.0 Refinancing of 12.5% Senior Notes............................ 22.5 Payment of accrued interest.................................. 6.9 Premiums paid to redeem 12.5% Senior Notes................... 0.5 Reduce borrowings under the revolving working capital facility of the New Credit Agreement........................ 3.4 Fees and expenses............................................ 6.3 ------ Total uses of funds........................................ $209.6 ======
- -------- (1) Calculated using an exchange rate of (Euro)1.00=$1.1553. 39 CAPITALIZATION (dollars in millions) The following table sets forth the consolidated capitalization of the Company as of February 28, 1999 which gives effect to the Transactions. This table should be read in conjunction with the Company's interim Consolidated Condensed Financial Statements and the Unaudited Pro Forma Consolidated Condensed Financial Statements, and the respective notes related thereto, appearing elsewhere in this Prospectus.
As of February 28, 1999 ------------ Actual ------------ Total debt: Cash overdraft facilities................................. $ 15.0 New Credit Agreement: Revolving loans......................................... 65.1 Term loan............................................... 120.0 Guaranteed ESOP Obligation................................ 6.3 Other debt................................................ 6.0 11.375% Outstanding Dollar Notes.......................... 123.0 11.375% Outstanding Euro Notes (1)........................ 82.7 12.0% Schlumberger Junior Subordinated Notes.............. 41.2 ------ Total debt............................................ 459.3 Shareholders' equity: ESOP Preferred Stock, net................................. 12.9 Common shareholders' equity, net (30,000,000 shares authorized, 12,698,106 shares issued) (2)................ 18.6 ------ Total shareholders' equity............................ 31.5 ------ Total capitalization................................ $490.8 ======
- -------- (1) Calculated using an exchange rate of (Euro)1.00=$1.077. (2) Includes amounts attributable to the Schlumberger Warrants. The Indentures under which the Outstanding Notes were, and the Exchange Notes will be, issued will permit the Company, subject to certain conditions, to refinance the Schlumberger Junior Subordinated Notes and reacquire the Schlumberger Warrants with junior subordinated debt. 40 UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Amounts in thousands except amounts per share) The following unaudited pro forma consolidated condensed financial statements (the "Pro Forma Financial Statements") of the Company are derived from the audited and unaudited financial statements of the Company and the RPS Division (included elsewhere herein) and have been adjusted to illustrate the effects of the Transactions. The Pro Forma Financial Statements and accompanying notes should be read in conjunction with the consolidated financial statements of the Company and the combined financial statements of the RPS Division, including the notes thereto, appearing elsewhere in this Prospectus. The pro forma statements of earnings for the year ended November 30, 1998 includes the RPS Division's combined statement of income for the ten months ended September 30, 1998 and the Company's consolidated statement of earnings for the year ended November 30, 1998. The Company's unaudited interim balance sheet as of February 28, 1999, appearing elsewhere in this Prospectus, includes the effects of the Acquisition and related financing and the Offering. The pro forma adjustments necessary to give effect to the Exchange Offer would be to increase "Other noncurrent assets and deferred charges" by approximately $1,000 and to reduce "Cash" by $1,000 to reflect additional fees and expenses associated with this Exchange Offer. These pro forma statements of earnings give effect to the Common Stock Offering and the Transactions, and related purchase accounting adjustments, as if these events had taken place on December 1, 1997. The Pro Forma Financial Statements are not necessarily indicative of either future results of operations or the results that might have occurred if the foregoing Common Stock Offering and the Transactions had been consummated on December 1, 1997. The Acquisition has been accounted for using the purchase method of accounting. The allocation of the aggregate purchase price included in the Pro Forma Financial Statements is preliminary and therefore certain amounts will change when such allocation is finalized. 41 Unaudited Pro Forma Consolidated Condensed Statement of Earnings for the three months ended February 28, 1999
Tokheim (b) Corporation Tokheim And Corporation Offering Subsidiaries And Pro Forma Pro Forma Subsidiaries Adjustments Offering ------------ ----------- ------------ Net sales............................... $166,193 $ -- $166,193 Cost of sales, exclusive of items listed below.................................. 133,297 -- 133,297 Selling, general, and administrative expenses............................... 25,767 -- 25,767 Depreciation and amortization........... 6,892 -- 6,892 Merger and acquisition costs and other unusual items.......................... 1,123 -- 1,123 -------- ------ -------- Operating loss.......................... (886) -- (886) Interest expense, net................... 12,307 114 (g) 12,421 Other expense, net...................... 1,378 -- 1,378 -------- ------ -------- Loss before income taxes and extraordinary loss..................... (14,571) (114) (14,685) Income taxes............................ (393) -- (393) -------- ------ -------- Loss before extraordinary loss.......... (14,178) $ (114) (14,292) ====== Preferred stock dividends ($1.94 per share)................................. (374) (374) -------- -------- Loss before extraordinary loss applicable to common stock............. $(14,552) $(14,666) ======== ======== Loss per common share: Basic: Before extraordinary loss........... $ (1.15) $ (1.16) ======== ======== Weighted average shares outstanding. 12,662 12,662 ======== ======== Diluted: Before extraordinary loss........... $ (1.15) $ (1.16) ======== ======== Weighted average shares outstanding. 12,662 12,662 ======== ========
42 Unaudited Pro Forma Consolidated Condensed Statement of Earnings for the year ended November 30, 1998
Tokheim Tokheim Corporation Corporation And Acquisition And Subsidiaries (a) (b) Tokheim And Subsidiaries Pro Forma RPS RPS Corporation Financing Pro Forma Offering Acquisition, RPS Division Division and Pro Forma Acquisition Pro Forma Financing & Division Adjustments Adjusted Subsidiaries Adjustments & Financing Adjustments Offering -------- ----------- -------- ------------ ----------- ------------ ----------- ------------ Net sales.............. $277,183 $ -- $277,183 $466,440 $ -- $743,623 $-- $743,623 Cost of sales, exclusive of items listed below.......... 249,461 (5,893) 243,568 345,031 (708)(c) 587,891 -- 587,891 Selling, general, and administrative expenses.............. 38,110 (6,536) 31,574 79,819 -- 111,393 -- 111,393 Depreciation and amortization.......... 3,251 2,549 5,800 13,136 5,487 (d) 24,423 -- 24,423 Merger and acquisition costs and other unusual items......... -- 1,918 1,918 13,685 -- 15,603 -- 15,603 -------- ------- -------- -------- -------- -------- ---- -------- Operating profit (loss)................ (13,639) 7,962 (5,677) 14,769 (4,779) 4,313 -- 4,313 Interest expense, net.. 1,833 -- 1,833 19,257 29,537 (e) 50,627 (18)(g) 50,609 Other expense (income), net................... 3,555 (25) 3,530 (1,790) -- 1,740 -- 1,740 -------- ------- -------- -------- -------- -------- ---- -------- Earnings (loss) before income taxes and extraordinary loss.... (19,027) 7,987 (11,040) (2,698) (34,316) (48,054) 18 (48,036) Income taxes........... (5,353) 2,843 (2,510) 1,046 -- (1,464) -- (1,464) -------- ------- -------- -------- -------- -------- ---- -------- Earnings (loss) before extraordinary loss.... $(13,674) $ 5,144 $ (8,530) (3,744) $(34,316) (46,590) $ 18 (46,572) ======== ======= ======== ======== ==== Preferred stock dividends ($1.94 per share)................ (1,484) (1,484) (1,484) -------- -------- -------- Earnings (loss) before extraordinary loss applicable to common stock................. $ (5,228) $(48,074) $(48,056) ======== ======== ======== Earnings (loss) per common share: Basic: Before extraordinary loss................. $ (0.46) $ (3.81) $ (3.81) ======== ======== ======== Weighted average shares outstanding... 11,371 1,690 (f) 12,615 12,615 ======== ======== ======== ======== Diluted: Before extraordinary loss................. $ (0.46) $ (3.81) $ (3.81) ======== ======== ======== Weighted average shares outstanding... 11,371 1,690 (f) 12,615 12,615 ======== ======== ======== ========
43 Note 1: Though not reflected in the Unaudited Pro Forma Consolidated Condensed Financial Statements, the Company believes that through successful integration and consolidation of the RPS Division estimated cost savings of approximately $28,700 in the first year and $47,300 per annum after three years can be achieved. See Note 5 to the Summary Unaudited Pro Forma Consolidated Financial Data included elsewhere in this Prospectus. To date, the Company has initiated and accelerated various closures and consolidations which it believes will yield first year cost savings of approximately $30,000. These synergy programs include; the closure of manufacturing facilities in Bohnam, Texas and Glenrothes, Scotland and the consolidation of operations in Spain, Italy, France, the Netherlands, Germany and Belgium.
Three Months Ended Year Ended February 28, November 30, 1999 1998 ------------ ------------ (expense, (income)) (a) The adjustments to the RPS Division's financial statements reflect amounts that have been reclassified to conform to the Company's presentation and to remove certain costs associated with operations as a division of Schlumberger. The details of these reclassifications and adjustments are as follows: Cost of sales: Reclassification of manufacturing depreciation and amortization to depreciation and amortization..... $-- $(4,200) Reclassification of personnel reductions to merger and acquisition costs and other unusual items..... -- -- Reflects an adjustment to operations of Schlumberger's Abbeville facility for the ten months of 1998 which was not purchased by Tokheim. -- (700) Reclassification of nonrecurring warranty cost associated with design flaws in new product launches. These design flaws were corrected and are not expected to impact ongoing operations..... -- (993) ---- ------- Total adjustments and reclassifications from cost of sales........................................ -- (5,893) ---- ------- Selling, general, and administrative expenses: Adjustments to management and technical fees charged by Schlumberger to its subsidiaries net of expenses Tokheim expects to incur................. -- (4,011) Reclassification of selling, general and administrative depreciation and amortization to depreciation and amortization..................... -- (1,600) Reclassification of personnel reductions to merger and acquisition costs and other unusual items..... -- (475) Reclassification of other miscellaneous items to merger and acquisition costs and other unusual items............................................. -- (450) ---- ------- Total adjustments and reclassification from selling, general and administrative expenses.... -- (6,536) ---- ------- Depreciation and amortization: Reclassification of manufacturing depreciation and amortization...................................... -- 4,200 Reclassification of selling, general and administrative depreciation and amortization ..... -- 1,600 Elimination of preexisting RPS Division goodwill amortization that Tokheim did not purchase........ -- (3,251) ---- ------- Total adjustments and reclassifications to depreciation and amortization................... -- 2,549 ---- ------- Merger and acquisition costs and other unusual items: Reclassification of personnel reductions from selling, general and administrative expenses...... -- 475 Reclassification of nonrecurring warranty cost associated with design flaws in new product launches. These design flaws were corrected and are not expected to impact ongoing operations..... -- 993 Reclassification of other miscellaneous items from selling, general and administrative costs......... -- 450 ---- ------- Total adjustments and reclassification to merger and acquisition costs and other unusual items... -- 1,918 ---- ------- Other expense (income), net: Elimination of the minority interest expense in net earnings. Tokheim acquired 100% of all RPS subsidiaries...................................... $-- $ (25) ---- ------- Effect of all adjustments on pretax income........... -- (7,987) Tax effect on adjustments using the RPS Division's reported tax rate of 35.6%.......................... -- 2,843 ---- ------- Effect of all adjustments on net earnings........ $-- $(5,144) ==== =======
44
Three Months Ended Year Ended February 28, November 30, 1999 1998 ------------ ------------ (expense, (income)) (b) The Unaudited Pro Forma Consolidated Condensed Statement of Earnings for the three months ended February 28, 1999 includes the Acquisition and related financing and subsequent refinancing of the initial debt structure on January 29, 1999 with proceeds from the Offering. As such, interest expense is the only amount for the three months ended February 28, 1999 that requires a pro forma adjustment to reflect the new interest rates. The Unaudited Pro Forma Consolidated Condensed Statement of Earnings includes the Company's year ended November 30, 1998 audited Consolidated Statement of Earnings, which includes two months of operations for the newly acquired RPS Division since the date of its acquisition, September 30, 1998. (c) Reflects a pro forma adjustment for technology and licensing fees contractually payable by Schlumberger to Tokheim. These fees relate to certain services and licenses provided to Schlumberger by Tokheim. The contract is noncancelable and requires minimum annual payments of $850 per annum to Tokheim during the next 5 years.................................... $-- $708 ==== ==== (d) Reflects a pro forma adjustment for the amortization of purchased goodwill associated with the Acquisition as follows:
Anticipated Three Month Ten Month Gross Amortization Amortization Amortization Amount Period Amount Amount -------- ------------ ------------ ------------ Goodwill..................... $263,389 40 years $-- $5,487 ======== ==== ======
Three Months Ended Year Ended February 28, November 30, 1999 1998 ------------ ------------ (e) The pro forma adjustments to interest expense, net, for the Acquisition and related financing were calculated as follows: The Company's historical interest expense, net...... $-- $19,257 RPS Division's historical interest expense, net..... -- 1,833 ---- ------- Total............................................. -- 21,090 Plus: Interest expense for 10 additional months on borrowings under: New Credit Agreement (at interest rates ranging from 7.65% to 9.9%, spread among three different facilities)....................................... -- 14,836 12.0% Schlumberger Senior Subordinated Notes, increasing rate by 0.5% after 4 months and every 3 months thereafter............................... -- 17,496 12.5% Senior Notes, increasing rate by 0.5% after 2 months and every 3 months thereafter............ -- 2,550 12.0% Schlumberger Junior Subordinated Notes....... -- 4,117 ---- ------- Total............................................. -- 38,999 Less: Interest expense on: The Company's debt refinanced: Old credit agreement.............................. -- (1,717) 11.5% Senior Subordinated Notes................... -- (6,325) RPS Division...................................... -- (1,833) ---- ------- Total............................................. -- (9,875) ---- ------- Sub-total......................................... -- 50,214 Amortization of deferred financing costs: Remove: Old credit agreement.............................. -- (1,380) 11.5% Senior Subordinated Notes................... -- (307) Add: New Credit Agreement.............................. -- 1,413 12.5% Senior Notes................................ -- 566 12.0% Schlumberger Senior Subordinated Notes...... -- 121 ---- ------- Pro forma interest expense, net..................... -- 50,627 ---- ------- Pro forma adjustment to interest expense, net....... $-- $29,537 ==== =======
Interest expense, net, includes that portion of interest with respect to the Guaranteed ESOP Obligation which is not paid through dividends on, or redemptions of, the ESOP Preferred Stock. 45
Three Months Ended Year Ended February 28, November 30, 1999 1998 ------------ ------------ (f) Represents the incremental weighted average shares for the Company's March 1998 Common Stock Offering. In addition, per the terms of the letter agreement, the Company has financed $20,000 of the RPS Division purchase price by issuing Schlumberger Warrants to purchase, for a nominal value, 2,526,923 shares of Tokheim common stock. The Schlumberger Warrants are exercisable at any time up to and including January 29, 2003. The Company is currently in negotiations with Schlumberger to repurchase in whole or in part the outstanding warrants. The Schlumberger Warrants are considered potential common stock under the guidelines of SFAS No. 128 "Earnings Per Share" and will be reflected in the calculation of shares outstanding when the Company is in an earnings position. (g) The pro forma adjustments to interest expense, net, for the Offering were calculated as follows: The Company's actual interest expense, net for the three months ended February 28, 1999............... $12,307 -- Tokheim's pro forma interest expense, net for the Acquisition and related financing.................. -- $50,627 Plus: two and twelve months, respectively, of interest expense on borrowings under: 11.375% Senior Subordinated Dollar Notes........... 2,332 13,991 11.375% Senior Subordinated Euro Notes (calculated using a standard rate of exchange of 1.1553 Euro to 1 U.S. dollar)................................. 1,643 9,857 ------- ------- Less: two and twelve months, respectively, of interest expense on: 12.0% Schlumberger Senior Subordinated Notes, increasing rate by 0.5% after 4 months and every 3 months thereafter............................... (3,400) (20,896) 12.5% Senior Notes, increasing rate by 0.5% after 2 months and every 3 months thereafter............ (469) (3,019) ------- ------- Total............................................. (3,869) (23,915) ------- ------- Sub-total......................................... 12,413 50,560 Amortization of deferred financing costs: Remove: 12.5% Senior Notes................................. (113) (679) 12.0% Schlumberger Senior Subordinated Notes....... (24) (145) Add: 11.375% Senior Subordinated Dollar Notes........... 82 494 11.375% Senior Subordinated Euro Notes............. 63 379 ------- ------- Pro forma interest expense, net for the refinancing....................................... $12,421 $50,609 ======= ======= Pro forma adjustment to interest expense, net...... $ 114 $ (18) ======= =======
Interest expense, net, includes that portion of interest with respect to the Guaranteed ESOP Obligation which is not paid through dividends on, or redemptions of, the ESOP Preferred Stock. 46 SELECTED FINANCIAL DATA OF TOKHEIM CORPORATION AND SUBSIDIARIES (Amounts in thousands except dollars per share) The following table sets forth selected historical financial data of the Company. The statement of earnings data, other data and balance sheet data as of and for each of the fiscal years in the five-year period ended November 30, 1998 were derived from the audited consolidated financial statements of the Company. The information contained in this table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of the Company, including the notes thereto, appearing elsewhere or incorporated by reference in this Prospectus. The selected historical financial data as of and for the three months ended February 28, 1998 and 1999 were derived from unaudited interim financial statements of the Company. In the opinion of management, such unaudited interim consolidated condensed financial statements contain all adjustments (consisting of only normal recurring items with the exception of merger and acquisition costs and other unusual items and the extraordinary items) necessary to present fairly the Company's financial position and results of operations as of and for the periods presented.
Three Months Ended Year Ended November 30, February 28, ------------------------------------------------- ------------------ 1994 1995 1996(1) 1997 1998(1) 1998 1999 -------- -------- -------- -------- --------- -------- -------- (unaudited) Statement of Earnings Data: Net sales.............. $202,134 $221,573 $279,733 $385,469 $ 466,440 $ 90,852 $166,193 Merger and acquisition costs and other unusual items......... 820 2,680 6,459 3,493 13,685 5,987 1,123 Operating income (loss)(2)............. 3,780 5,811 6,356 20,645 14,769 (966) (866) Interest expense, net.. 2,806 3,319 7,191 16,451 19,257 4,011 12,307 Earnings (loss) before income taxes(3)....... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571) Earnings (loss)(3)..... 1,675 3,231 (2,009) 3,980 (3,744) (5,606) (14,178) Preferred stock dividends............. 1,617 1,580 1,543 1,512 1,484 374 374 Earnings (loss) applicable to common stock(3).............. 58 1,651 (3,552) 2,468 (5,228) (5,980) (14,552) Other Data: Capital expenditures... $ 2,757 $ 5,559 $ 3,061 $ 11,154 $ 14,548 $ 1,885 $ 4,996 Depreciation and amortization.......... 4,672 4,857 5,028 9,232 13,136 2,500 6,892 Interest expense and preferred stock dividends............. 4,219 4,604 9,336 18,800 21,563 4,518 12,842 EBITDA (as defined)(4). 10,230 14,126 17,842 34,767 43,707 7,265 5,845 Net cash provided from (used in) operations.. 2,408 3,347 5,897 21,202 9,790 (5,341) (1,308) Net cash used in investing activities.. (2,562) (4,910) (54,079) (10,394) (124,414) (12,526) (4,996) Net cash provided from (used in) financing activities............ (5,063) 754 57,016 (11,795) 125,669 19,806 13,330 Ratio of earnings to fixed charges(5)...... 1.4x 1.6x -- x 1.3x -- x -- x -- x
As of As of November 30, February 28, 1998 1999 ------------ ------------ Balance Sheet Data (at period end): (unaudited) Working capital..................................... $ 92,596 $ 88,868 Property, plant and equipment, net.................. 77,905 75,874 Total assets........................................ 776,642 724,906 Total debt(6)....................................... 443,331 459,259 ESOP preferred stock, net........................... 12,130 12,941 Common shareholders' equity, net.................... 64,631 18,572
- -------- (1)Results for 1996 include three months of Sofitam operations and results for 1998 include two months of the RPS Division's operations. (2) Operating income (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. (3) The amounts for the years ended November 30, 1998 and November 30, 1997 and the three months ended February 28, 1999 exclude $23,924, $1,886 and $6,249, respectively, for extraordinary loss on debt extinguishment. The amounts for the year ended November 30, 1994 exclude the cumulative effect of change in method of accounting for post-retirement benefits other than pensions of $13,416. 47 (4) EBITDA (as used in this Prospectus) represents earnings (loss) from continuing operations before income taxes and extraordinary loss, net interest expense, depreciation and amortization, merger and acquisition costs and other unusual items and minority interest. Management uses EBITDA as a financial indicator of the Company's ability to service debt, although the precise definition of EBITDA is subject to variation among companies. EBITDA should not be construed as an alternative to operating income or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." For additional information concerning the Company's historical cash flows, see the consolidated statement of cash flows included elsewhere herein. (5) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings (loss) before income taxes and extraordinary loss plus fixed charges. Fixed charges consist of interest expense, amortization of deferred debt issuance expense, the portion of rental expense assumed to represent interest and dividends on the ESOP Preferred Stock, which dividends service the Guaranteed ESOP Obligation. Earnings were insufficient to cover fixed charges by $1,229, $2,698, $5,306 and $14,571 for the fiscal years ended 1996 and 1998 and for the three months ended February 28, 1998 and 1999, respectively. (6) Total debt includes the 11.5% Senior Subordinated Notes, the Schlumberger Senior Subordinated Notes, the Senior Notes, the Schlumberger Junior Subordinated Notes, long-term borrowings under the old credit agreement and other credit agreements, the current portion of such borrowings, cash overdraft facilities and the Guaranteed ESOP Obligation. 48 SELECTED FINANCIAL DATA OF THE RPS DIVISION (dollars in thousands) The following table sets forth selected financial data of the RPS Division. The statement of income data, other data and balance sheet data as of and for each fiscal year in the three year period ended December 31, 1997 were derived from the audited combined financial statements of the RPS Division. The selected financial data as of and for the nine months ended September 30, 1997 and 1998 were derived from the unaudited combined financial statements of the RPS Division. The information contained in this table should be read in conjunction with the combined financial statements of the RPS Division, including the notes thereto, appearing elsewhere in this Prospectus.
Nine Months Ended Year Ended December 31, September 30, ---------------------------- ------------------ 1995 1996 1997 1997 1998 -------- -------- -------- -------- -------- (unaudited) Statement of Income Data: Net sales.................. $303,668 $333,915 $344,248 $231,978 $231,764 Restructuring charges...... -- 9,978 -- -- -- Operating loss............. (7,446) (17,197) (11,648) (10,210) (15,737) Interest expense, net...... 1,257 1,652 1,418 945 1,586 Loss before income taxes... (10,008) (20,424) (13,499) (14,462) (20,593) Net loss................... (7,721) (16,366) (6,720) (9,216) (15,730) Other Data: Capital expenditures....... $ 11,389 $ 14,736 $ 9,486 $ 6,810 $ 4,951 Depreciation and amortization.............. 10,084 10,780 11,777 8,476 8,766 EBITDA (as defined)(1)..... 1,333 2,004 (274) (4,661) (10,330) EBITDA (as defined and adjusted)(2).............. 10,644 11,049 11,941 3,549 (1,328) Net cash provided from (used in) operations...... (6,583) 10,432 13,157 (3,241) (22,896) Net cash used in investing activities................ (11,997) (36,400) (10,268) 15,976 (4,591) Net cash provided from (used in) financing activities................ 21,630 25,179 (1,013) (16,101) 29,894
As of As of December 31, September 30, 1997 1998 ------------ ------------- Balance Sheet Data: Working capital.................................... $ 73,406 $101,282 Property, plant and equipment, net................. 32,183 31,735 Total assets....................................... 269,434 260,342 Total debt(3)...................................... 12,614 2,289 Equity and retained earnings (deficit)............. 154,270 178,805
- -------- (1) EBITDA (as used in this Prospectus) represents earnings (loss) from continuing operations before income taxes and extraordinary loss, net interest expense, depreciation and amortization, merger and acquisition costs and other unusual items and minority interest. Management uses EBITDA as a financial indicator of the Company's ability to service debt, although the precise definition of EBITDA is subject to variation among companies. EBITDA should not be construed as an alternative to operating income or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. See the RPS Division combined statement of cash flows included elsewhere herein. (2) EBITDA (as defined and adjusted) is EBITDA (as defined) plus the add back of operating losses for the Abbeville facility, which was not purchased, of $700 for each twelve month period and $525 for each nine month period presented, management and technical fees charged by Schlumberger to its subsidiaries, of $9,177, $8,345 and $6,949 in 1997, 1996, and 1995, respectively and $6,080 and $6,559 for the nine months ended September 30, 1997 and 1998, respectively. In addition EBITDA (as defined and adjusted) excludes expenses, which management believes are non-recurring, of $2,338 and $1,662 for 1997 and 1995 and $1,605 and $1,918 for the nine months ended 1997 and 1998, respectively. (3) Total debt includes bank overdrafts and short-term loans plus the current portion of long-term debt. 49 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview On September 30, 1998, the Company completed the acquisition ("Acquisition") of the fuel dispenser systems and service business (the "RPS Division") of Schlumberger Limited ("Schlumberger") for a price equal to $330.0 million in cash, notes, and warrants, subject to certain post-closing adjustments. Of the $330.0 million purchase price, $100.0 million was paid in cash borrowed under the terms of the Company's new bank credit agreement (the "New Credit Agreement") as well as $22.5 million of 12.5% senior notes due 2005 (the "Senior Notes"). The $210.0 million seller note portion of the purchase price consisted of $40.0 million in ten year, 12.0% junior subordinated payment-in- kind notes (the "Schlumberger Junior Subordinated Notes") and $170.0 million in 12.0% senior subordinated notes due January 29, 1999 (the "Schlumberger Senior Subordinated Notes"). $20.0 million of the purchase price was paid with warrants (the "Schlumberger Warrants") exercisable for five years, beginning January 30, 1999 to purchase at a nominal price, 2,526,923 shares of the Company's common stock. The Acquisition has been accounted for using the purchase method of accounting, and the RPS Division's results of operations have been included in the consolidated financial statements of the Company from the date of acquisition. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the RPS Division's net book value of assets at September 30, 1998, as adjusted, which is estimated to approximate fair value. The purchase price allocated under this assumption exceeded the estimated fair value of the tangible net assets acquired by approximately $263.4 million, which is recognized as goodwill and is being amortized over forty years. The current purchase price allocation is preliminary due to the timing of the acquisition relative to the Company's year end. A more precise allocation of purchase price is currently being performed at various RPS Division locations to more accurately identify and value the assets, including intangibles, and liabilities assumed. The Company is to reimburse Schlumberger for cash that remained in the RPS Division on the effective date of the Acquisition, net of certain adjustments. This amount is currently estimated to be up to approximately $6.5 million. It is anticipated that this payment to Schlumberger will be made in the second quarter of 1999 from funds available through the revolving working capital facility under the New Credit Agreement. Simultaneously with the Acquisition, the Company entered into a note purchase agreement, pursuant to which the Company issued $22.5 million aggregate principal amount of Senior Notes. Proceeds from the Senior Notes were used in connection with the financing of the Acquisition and the refinancing of existing indebtedness. On January 29, 1999, the Company redeemed the Schlumberger Senior Subordinated Notes and the Senior Notes with the proceeds from the issuance of $123.0 in million aggregate principal amount of its 11.375% Senior Subordinated Notes due 2008 (the "Outstanding Dollar Notes") and (Euro)75.0 in million aggregate principal amount (approximately $87.0 million) of its 11.375% Senior Subordinated Notes due 2008 (the "Outstanding Euro Notes") in a private placement pursuant to Rule 144A and Regulation S (the "Offering"). The Schlumberger Senior Subordinated Notes were redeemed at an aggregate price of $176.7 million, representing principal of $170.0 million and accrued and unpaid interest thereon of $6.7 million. The Senior Notes were redeemed at an aggregate price of $23.2 million, representing principal of $22.5 million, accrued and unpaid interest thereon of $0.2 million and an applicable call premium of $0.5 million. Also simultaneously with the Acquisition, the Company executed the New Credit Agreement with a consortium of banks to pay a portion of the purchase price and to refinance previously existing indebtedness. 50 The New Credit Agreement currently provides for a six year, $110.0 million revolving working capital facility and a six year $120.0 million term loan facility. An additional agreement provides for the assignment of a three year $7.6 million ESOP loan facility. Also on September 30, 1998, the Company completed the repurchase of the final $55.0 million of 11.5% Senior Subordinated Notes due 2006 (the "11.5% Notes") that were then outstanding. These notes were redeemed at an aggregate premium and consent payment of $12.3 million along with accrued interest of $1.1 million. The premium and consent payment was aggregated with the write off of the remaining deferred issuance costs related to the 11.5% Notes and the Old Credit Agreement and reported as an extraordinary loss on debt extinguishment of approximately $19.0 million in the fourth quarter of 1998. In March 1998, the Company completed an 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 $39.4 million of the proceeds to redeem $35.0 million in aggregate principal amount of its 11.5% Notes. These 11.5% Notes were redeemed at the call price of 109.857%, expressed as a percentage of the original face value, resulting in premiums paid of $3.5 million along with accrued interest of $0.9 million. Following the redemption, $55.0 million in aggregate principal amount of the 11.5% Notes remained outstanding. The Company recorded an extraordinary loss on the extinguishment of the 11.5% Notes of approximately $5.0 million during the second quarter of 1998. This loss includes $3.5 million of premiums paid to purchase the 11.5% Notes and $1.5 million representing the write-off of a proportionate share of the original unamortized deferred issuance costs. The remaining $28.3 million was applied toward the Old Credit Agreement and general corporate purposes. The Company acquired Sofitam in September 1996 for $107.4 million less certain adjustments. The Company's 1996 financial statements include three months of Sofitam operations, and the 1997 and 1998 financial statements include a full year of Sofitam operations. A comparison of sales in 1997 versus 1996 of entities that were part of Tokheim before the acquisition is not meaningful because certain sales made by these entities were conducted through Sofitam in 1996 and 1997. International sales by foreign subsidiaries and exports from the U.S. totaled approximately 60%, 64%, and 47% of consolidated net sales in 1998, 1997, and 1996, respectively. The acquisition of Sofitam has significantly extended the Company's international distribution network, reducing its reliance on U.S. domestic sales. Furthermore the acquisition of the RPS Division will significantly increase the percentage of international sales in relation to future consolidated sales. In December 1997, the Company acquired Management Solutions, Inc. ("MSI"). MSI develops and distributes retail automation systems (including point-of-sale ("POS") software), primarily for the convenience store, petroleum dispensing and fast food service industries. The Company paid MSI's stockholders an initial amount of $12.0 million. The Company is also obligated to make contingent payments of up to $13.2 million over fiscal years 1998, 1999 and 2000 based on MSI's performance. The $13.2 million consists of $8.0 million of additional purchase price, $2.6 million related to a non-compete agreement, and $2.6 million of additional employee compensation. The Company borrowed funds for the initial purchase price under the old credit agreement. Results of Operations Quarter Ended February 28, 1999 compared to February 28, 1998 Consolidated sales for the three month period ended February 28, 1999 were $166.2 million compared to $90.9 million for the 1998 three month period. Sales for North America, excluding export sales, have increased 38.0% for the three month period from $36.1 million in 1998 to $49.9 million in 1999. International sales, including domestic export sales, have increased 112.6% for the three month period from $54.7 million in 1998 to $116.3 million in 1999. These increases in sales from the prior year are primarily attributable to the acquisition of the RPS Division, offset by decreased sales to major oil companies ("MOC's") due to their 51 merger activity and the low barrel price of crude oil which has resulted in a delay of capital spending. Those factors, however, were ameliorated by the purchasing momentum of the jobber and mini-major market segments, the growing importance of the hypermarket segments, demand in commercial and consumer products lines, and increased service revenues. Gross margins as a percent of sales (defined as net sales less cost of sales divided by net sales) decreased from 26.3% in the three month period ended February 28, 1998 to 19.8% in the 1999 three month period. This decline was primarily driven by historically lower margins recognized in the RPS Division. In addition, the first quarter sales mix is composed of a larger portion of service contracts, which provide lower margins than dispenser sales. Furthermore, the first three months of the Company's business cycle are generally lower sales volume months creating less opportunity to recover manufacturing fixed cost to the extent of other quarters. Selling, general, and administrative expenses as a percent of sales for the three month period ended February 28, 1999 were 15.5% compared to 17.9% for the 1998 three month period. This decline is primarily due to the inclusion of the RPS Division, elimination of redundant staffing positions and the closure of the RPS Division headquarters in Montrouge, France. All remaining Montrouge personnel and job functions were consolidated at the Company's existing European headquarters in Trembley, France. Net interest expense for the three month period ended February 28, 1999 was $12.3 million compared to $4.0 million in the comparable 1998 period. This increase is due to increased debt levels associated with the September 1998 acquisition and financing of the RPS Division. Depreciation and amortization expense for the three month period ended February 28, 1999 was $6.9 million compared to $2.5 million in the comparable 1998 period. The majority of the increase between periods is associated with the inclusion of the newly acquired RPS Division and increased amortization expense related to intangible assets recorded in connection with the acquisition of the RPS Division. Merger and acquisition costs and other unusual items for the three month period ended February 28, 1999 of $1.1 million, relates to closure expenses and severance payments incurred in connection with the closing and consolidation of certain pre-acquisition Tokheim facilities. Foreign currency loss for the three month period ended February 28, 1999 was $1.4 million compared to loss of less than $0.1 million in the comparable 1998 period. The increase in the loss is driven by short term receivables and payables being revalued at the currency rate of exchange in effect at February 28, 1999. Other income, net for the first quarter of 1999 was $0.2 million compared to net expense of $0.2 million for the comparable 1998 period. This difference is attributable to various income and expense items, which are individually insignificant. Income taxes for the three month period ended February 28, 1999 were a benefit of $0.4 million compared to an expense of $0.5 million in the comparable 1998 period. This change is due to earnings in subsidiaries where net operating loss carryforwards are available to offset book pretax earnings, and tax benefits being recorded in subsidiaries with first quarter losses who will recover these benefits in future 1999 quarters. During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6.2 million in connection with the refinancing of the Senior Notes and the Senior Subordinated Seller Notes. This amount consists of $0.5 million of premiums paid on the redemption of the Senior Notes and approximately $5.7 million of unamortized deferred issuance costs that were written off. As a result of the above mentioned items, loss before extraordinary item was $14.2 million or $1.15 per diluted common share for the three months ended February 28, 1999 compared to a loss of $5.6 million or $0.72 per diluted common share for the same period in 1998. Loss from extraordinary loss on debt extinguishment was $6.2 million or $0.49 per diluted common share for the three months ended February 28, 1999. Net loss for the three months ended February 28, 1999 was $1.64 per diluted common share compared to a net loss of $0.72 per diluted common share for the comparable 1998 period. 52 Fiscal Years 1998, 1997 and 1996 Net sales for 1998 were $466.4 million. Net sales excluding the current year acquisitions of MSI and the RPS Division (the "Acquisitions") were $390.4 million as compared to $385.5 million in 1997. After excluding the effects of the Acquisitions, net sales for 1998 increased by 1.3% from 1997 levels. Sales for North America, excluding export sales, increased 18.4% from $139.9 million in 1997 to $165.6 million in 1998. This increase was driven by a stronger demand in the Company's retail distribution, commercial dispensers and service parts sales. This demand was driven by new, more convenient products, such as credit/debit card readers, and environmental regulations, such as those requiring vapor recovery systems. During the current year the oil industry had various major oil companies merge together. It is currently unknown what the effect, if any, of these mergers will have on the Company's future sales levels or operations. International sales, including domestic export sales, were $224.8 million in 1998 compared to $245.5 million in 1997, representing a decrease of $20.7 million or 8.4%. This decrease is due in part to the continued decline in foreign currency exchange rates from prior year levels. International sales would have been $5.9 million higher if average exchange rates of European and African currencies remained consistent with 1997 rates. The other major contributing factor is a significant decline in current year domestic export sales to the Asia Pacific and Middle East regions compared to prior year levels. The depressed sales to the Asia Pacific region compared to prior year levels has been caused by a significant economic downturn in that region's economy. There can be no assurance as to when Asian market conditions will improve or whether they may worsen or spread to other regions. Net sales for 1997 were $385.5 million, an increase of 37.8% from 1996 sales of $279.7 million. Substantially all of this increase was due to the inclusion of a full year of Sofitam's results in 1997 compared to three months of Sofitam's results in 1996. These increases were offset by the impact of a decline in revenues due to a decline in foreign currency exchange rates. Sales for 1997 would have been $20.9 million higher if average exchange rates of European and African currencies had remained the same as in 1996. Gross margin as a percent of sales (defined as net sales less cost of sales, divided by net sales) was 26.0% in 1998 compared to 26.3% in 1997. This decline is due to the historically lower gross margins in the RPS Division's business, offset partially by manufacturing improvements made in certain of the Company's operations. During 1998 the Fort Wayne, Indiana manufacturing facility implemented operational improvements. The Company's operational excellence strategy provides an integrated process resulting in what the Company believes is a true world-class manufacturing facility. This comprehensive approach utilizes advanced operations techniques encompassing lean manufacturing, six sigma quality, high performance organizations, supplier partnerships, advanced materials management and strategies to gain the maximum amount of operational efficiencies. Once fully implemented at the Fort Wayne, Indiana facility, these same techniques will be implemented in all other manufacturing facilities. Gross margin for 1997 was 26.3%, up from 24.8% in 1996. This increase is due to (i) the inclusion of Sofitam's operations at higher margin levels for a full year, (ii) personnel reductions and related cost savings, (iii) reduction of warranty expense in North America, and (iv) the results of concentrated efforts to improve manufacturing efficiencies globally. These cost reductions were offset somewhat by decreasing sales prices. Selling, general and administrative expense ("SG&A") as a percentage of net sales was 17.1% for 1998. After removing the effects of the Acquisitions SG&A was 17.6% or $68.9 million in 1998 compared to 17.7% or $68.2 million in 1997. The slight increase in dollars is primarily attributed to increased costs associated with year 2000 corrective actions and increased incentive compensation related to sales and earnings performance. SG&A was 17.7% or $68.2 million in 1997, compared to 18.5% or $51.7 million in 1996. This increase over 1996 is largely attributable to a full year of Sofitam expenses. These increases were offset by a program implemented by the Company in 1997 to improve efficiency and reduce personnel, which translated into lower total compensation cost. 53 Net interest expense increased in 1998 to $19.2 million from $16.5 million in 1997. This increase is the direct result of higher levels of debt incurred to effect the acquisition of the RPS Division. Net interest expense increased in 1997 to $16.5 million from $7.2 million in 1996, reflecting a full year's interest expense on the Company's 11.5% Senior Subordinated Notes due 2006 issued to finance the acquisition of Sofitam. A net foreign currency exchange gain of $1.4 million was realized in 1998 compared to a net currency loss of less than $0.1 million in 1997 and a net currency loss of $0.2 million in 1996. During the second quarter of 1998 the Company realized a foreign currency gain of $0.8 million associated with the repayment of various French franc denominated borrowings previously entered into under the Company's old credit agreement. Due to the decline in the value of the French franc, the Company was able to repay these borrowings with less U.S. dollars than it had received when the original contracts were entered into. During the fourth quarter of 1998 the Company settled a foreign denominated obligation which resulted in a foreign currency gain of $0.6 million. The 1997 currency loss was due principally to the decline of the French franc against the U.S. dollar and was partially offset by a foreign currency gain of $0.5 million on the sale of a foreign currency option contract. Other income, net was $0.7 million in 1998 compared to $1.4 million in 1997. This decrease is principally due to lower gains realized on the sale of property, plant and equipment. Other income, net was $1.4 million in 1997 compared to $0.2 million in 1996. This increase is partly due to gains on the sale of property, plant and equipment that were $0.4 million greater in 1997 than 1996 and to the inclusion of Sofitam's other income for the full year. In addition, other income in 1996 of $0.2 million includes $0.3 million of expense for a litigation settlement of a non operating nature. Income tax expense for 1998 was $1.0 million, which is comparable with the prior year. As in prior years, the majority of this amount is comprised of foreign taxes and U.S. state taxes. The Company's domestic and foreign operations benefit from the use of net operating loss carryforwards generated in prior years. Income tax expense for 1997 was $1.2 million, an increase from $0.8 million in 1996. The increase was due to higher income, offset partially by utilization of net operating loss carryforwards and adjustments of prior year's taxes and refunds. At the end of 1998, the Company recorded a net deferred tax asset of $40.2 million, which was offset in full by a valuation allowance due largely to uncertainties associated with the Company's ability to fully use these tax benefits. The Company is continuing to evaluate the likelihood that all or part of the deferred tax asset will be realized through the generation of future taxable earnings. If, in the future, the Company is able to generate sufficient levels of taxable income, the valuation allowance will be adjusted accordingly. See Note 15 of the Consolidated Financial Statements of Tokheim Corporation and Subsidiaries for additional information concerning the Company's income tax position at November 30, 1998. Loss before extraordinary loss on debt extinguishment in 1998 was $3.7 million, or $0.46 loss per diluted common share, compared with 1997 earnings before extraordinary loss on debt extinguishment of $4.0 million or $0.27 earnings per diluted common share and a loss of $2.0 million or $0.45 loss per diluted common share in 1996. Net loss in 1998 included merger and acquisition costs and other unusual items of $13.7 million, compared to $3.5 million in 1997 and $6.5 million in 1996. For further discussion see Note 3 to the Consolidated Financial Statements of Tokheim Corporation and Subsidiaries. In 1998, the Company incurred a $23.9 million extraordinary loss, or $2.10 loss per diluted common share, as a result of redeeming all outstanding 11.5% Notes and refinancing borrowings under the old credit agreement. This loss includes $15.7 million of premiums paid to purchase these notes and $8.2 million of the remaining unamortized deferred issuance costs associated with the 11.5% Notes and the old credit agreement. In 1997, the Company incurred a $1.9 million extraordinary loss, or $0.21 loss per diluted common share, as a result of the open-market purchase and retirement of $10.0 million in aggregate principal amount of the 11.5% Notes. This loss includes $1.4 million of premiums paid to purchase the 11.5% Notes and $0.5 million representing the write-off of a proportionate share of the original unamortized deferred issuance costs. See further discussions under "--Liquidity and Capital Resources" and Note 7 to the Consolidated Financial Statements of Tokheim Corporation and Subsidiaries, "Senior Subordinated Notes." 54 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 has been, and 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 currency exchange rate risk; negotiating and amending licensing agreements and contracts; product pricing; and processing tax and accounting records. Conversion to the euro may reduce the Company's intra- European exposure to changes in foreign currency exchange rates. As a result, the Company's intra-European foreign currency translation and transaction gains and losses could be reduced. 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 successfully implemented 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 will be expensed as incurred and the Company does not expect these costs to 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 20 to the Consolidated Financial Statements of Tokheim Corporation and Subsidiaries, "Contingent Liabilities." Liquidity and Capital Resources Cash used in operations for the three month period ended February 28, 1999 was $1.3 million versus $5.3 million in the comparable period of 1998. During the first quarter of 1999, the Company was able to collect receivables and reduce inventory levels by a combined amount of $24.8 million. This cash inflow was used to reduce the outstanding payables by approximately $17.9 million. These working capital sources and uses are primarily related to the seasonality of the business. Cash used in investing activities for the three month period ended February 28, 1999 was $5.0 million compared to a cash usage of $12.5 million in the comparable 1998 period. The cash usage in the 1998 period is attributable to the acquisition of MSI. Cash provided from financing activities for the three month period ended February 28, 1999 was $13.3 million compared to cash provided in the comparable 1998 period of $19.8 million. The cash provided in 1998 is largely attributable to an increase in notes payable to banks of $20.6 million used primarily to finance the acquisition of MSI and for short term working capital needs. The most significant item in the 1999 period was the issuance of the Outstanding Dollar Notes and the Outstanding Euro Notes in the Offering, the proceeds of which were used to refinance the Schlumberger Senior Subordinated Notes and the Senior Notes which were originally issued in connection with the acquisition of the RPS Division and to refinance certain other debt of the Company at the date of the acquisition. On January 29, 1999, the Company issued $123.0 million aggregate principal amount of Outstanding Dollar Notes and Euro 75.0 million ($87.0 million equivalent) aggregate principal amount of Outstanding Euro Notes in the Offering. The Outstanding Notes will mature on August 1, 2008, and interest is payable semi-annually on February 1 and August 1 of each year, commencing August 1, 1999. Net proceeds from the issuance of the Outstanding Notes were used to redeem the Schlumberger Senior Subordinated Notes and the Senior Notes. The Schlumberger Senior Subordinated Notes were redeemed at an aggregate price of $176.7 million, representing principal of $170.0 million and accrued and unpaid interest thereon of $6.7 million. The Senior Notes were redeemed at an aggregate price of $23.2 million representing 55 principal of $22.5 million, accrued and unpaid interest thereon of $0.2 million and an applicable call premium of $0.5 million. In addition, the Company used approximately $9.1 million of the net proceeds to reduce borrowings under the revolving credit facility under the New Credit Agreement and to permanently reduce the bank working capital commitment from $120.0 million to $110.0 million. During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6.2 million in connection with the refinancing of the Senior Notes and the Schlumberger Senior Subordinated Notes with proceeds received from the Offering. This amount consists of $0.5 million of premiums paid on the redemption of the Senior Notes and approximately $5.7 million of unamortized deferred debt issuance costs that were written off. As part of the purchase price of the RPS Division, the Company has provided $20.3 million for certain costs it expects to incur to close down redundant operations in connection with the reorganization and rationalization of the RPS Division's operations. As of February 28, 1999 the Company has incurred and charged approximately $2.2 million against this accrual for projects initiated since the acquisition date, leaving a remaining balance of $18.1 million. The Company expects to incur approximately $5.0 million of expenditures during the second quarter of 1999 representing severance and closure costs related to the Bonham, Texas, Tulla, Ireland and Belgium facilities. In addition, at November 30, 1998 the Company set up a restructuring reserve related to the closure of its Glenrothes, Scotland facility in the amount of $5.1 million. During the first quarter of 1999 the Company charged approximately $3.0 million against the reserve. These charges relate to severance costs, facility closure expenses and the write down in value of impaired assets. The Company expects the closure of this facility to be completed during the second quarter of 1999. The Company has guaranteed loans to the Employees' Stock Ownership Plan ("ESOP") in the amounts of $6.4 million and $7.0 million at February 28, 1999 and November 30, 1998, respectively. The Trustee who holds the ESOP Preferred Stock, may elect to convert each preferred share to one common share in the event of a redemption by Tokheim, certain consolidations or mergers of Tokheim, or a redemption by the Trustee that is necessary to provide for distributions under the Company's Retirement Savings Plan. A participant may elect to receive a distribution from the plan in cash or common stock. If redeemed by the Trustee, the Company is responsible for purchasing the preferred stock at the twenty-five dollar floor value. The Company may elect to pay the redemption price in cash or an equivalent amount of common stock. Preferred stock dividends paid were $0.4 million for the three month periods ended February 28, 1999 and 1998, respectively. In December 1997, the Company initiated its Year 2000 plan, including the organization and staffing of a full-time Year 2000 program office. The Company has organized the process into the following sections: product certification (ensuring all products sold by the Company are Year 2000 ready); internal information systems (ensuring all internal hardware and software is Year 2000 ready through upgrades or replacement); suppliers, distributors and external agents (ensuring all suppliers, distributors and external agents used by the Company to purchase or sell goods and services are Year 2000 ready); and manufacturing and infrastructure (ensuring manufacturing and infrastructure systems are Year 2000 ready). As of February 28, 1999 most of the Company's products worldwide have been tested for Year 2000 readiness. A substantial majority of the Company's total product lines are Year 2000 ready, and the Company believes that the remaining products will be Year 2000 ready by December 1999. The Company's products presently being sold are Year 2000 ready. The Company is currently assessing which products in the field are not Year 2000 ready and its responsibility to the customers, if any, to remedy non-compliant products. This assessment is being done for all products sold by each entity with the assessment efforts focused on the recently acquired RPS Division locations. There is a possibility that certain third-party networks over which the POS systems must operate may not be Year 2000 ready, but the Company's products will still allow the pumping of petroleum products. The Company has surveyed its critical suppliers, and about half of the respondents have indicated that they are Year 2000 ready. The other half of those responding have indicated that they are still working to achieve Year 2000 readiness, but none has indicated that it expects not to be 56 ready. The Company believes that all of its information systems will be Year 2000 ready no later than the third quarter of 1999. To date, the Company has not uncovered any material Year 2000 problems. The total costs associated with required modifications to become Year 2000 ready are not expected to be material to the Company's financial position, results of operations or cash flows. The Company estimates that it will spend a total of approximately $3.7 million by December 31, 1999, of which approximately $1.3 million had been spent by February 28, 1999, to become Year 2000 ready. The Company has enlisted the assistance of a third-party consulting company to provide independent verification and validation of its entire Year 2000 plan. The failure to correct a material Year 2000 problem could result in an interruption in, or a failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operation, liquidity, and financial condition. The Company believes that the most likely failure scenario is that its POS systems that have not been corrected may fail, but the Company's dispensers will still allow the pumping of petroleum products. Under such a scenario, purchasers of petroleum products would still be able to use the dispensers but would be required to pay for their purchases at the cashier rather than at the pump. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers, customers, and devices that interface with the Company's products, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity, or financial condition. The Year 2000 plan is expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem and, in particular, about the Year 2000 readiness of its material external agents. The Company believes that with the implementation of new business systems and completion of the Year 2000 plan as scheduled, the possibility of significant interruptions of normal operations should be reduced. However, contingency planning for all sections discussed above commenced in the fourth quarter of 1998, and the Company is currently focusing on assessing the potential Year 2000 problems that may arise and the risks of not becoming Year 2000 ready for each section mentioned. The Company expects to have a contingency plan in place by the end of the second quarter of 1999. The Future The Company's principal sources of liquidity in the future are expected to be cash flow from operations, including cash flow anticipated to be generated from the RPS Division, and available borrowings under the New Credit Agreement. It is expected that the Company's principal uses of liquidity will be to provide working capital, finance capital expenditures, fund costs associated with the Company's integration and rationalization plan and meet debt service requirements. As a result of the acquisition of the RPS Division, the Company has a significant level of debt. Based upon current levels of operations and anticipated cost savings and future growth, the Company believes that its expected cash flow from operations, together with available borrowings under the New Credit Agreement and its other sources of liquidity, including leases, will be adequate to meet its anticipated requirements for working capital, capital expenditures, lease payments and scheduled principal and interest payments. There can be no assurance, however, that the Company's business will continue to generate cash flows at or above current levels, that estimated cost savings or growth will be achieved or that the Company will be able to refinance its existing indebtedness in whole or in part. The indentures under which the Dollar Notes and the Euro Notes were, and the Exchange Notes will be, issued (the "Indentures") and the New Credit Agreement contain a number of significant covenants. The New Credit Agreement requires the Company to maintain specified financial ratios and satisfy certain financial tests. The Company's ability to meet such financial ratios and tests may be affected by events beyond its control. There can be no assurance that the Company will meet such financial ratios and tests. In addition, the Indentures limit the ability of the Company and its subsidiaries to, among other things: incur additional debt; pay dividends on capital stock or repurchase capital stock or make certain other restricted payments; use the proceeds of certain asset sales; make certain investments; create liens on assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and transfer and sell assets. 57 New Accounting Pronouncements The Company has considered the impact that accounting pronouncements recently issued by the Financial Accounting Standards Board and American Institute of Certified Public Accountants will have on the Company's financial statements. None of the pronouncements that have been issued but not yet adopted by the Company are expected to have a material impact on the Company's financial position, results of operations or cash flows. See the notes to the Consolidated Condensed Financial Statements for additional information regarding recently issued accounting pronouncements. 58 BUSINESS The Company On September 30, 1998, the Company acquired the RPS Division and became the world's largest manufacturer and servicer of electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (including POS systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits. Customer service includes the installation, maintenance, certification and calibration of, and technical support for petroleum dispensers, pumps, electronic hardware and software systems. The Company provides products and services to customers in more than 80 countries. The Company is the largest supplier of petroleum dispensing systems in Europe, Africa, Canada and Mexico, and one of the largest in the United States. The Company also has established operations in Asia and Latin America. The Company believes that its global capabilities provide it with a competitive advantage to attract additional business and form alliances with customers. Petroleum dispensing systems are designed for and sold principally to owners of retail service stations. These owners include MOCs, nationals, jobbers, independents, convenience store stations, hypermarkets and other retailers, and to commercial customers. As a result of industry consolidation, management estimates that the top three manufacturers of petroleum dispensing equipment account for approximately 75% of worldwide annual sales. The Company estimates that the combined annual sales of the top five manufacturers in its industry is approximately $2 billion. In 1998, approximately 88% of the Company's net sales were to retail operators, such as Arco, BP Amoco, Elf Aquitaine, Esso, Fina, Marathon, Shell, SuperAmerica, Total and their affiliated jobbers, and approximately 12% of its net sales were to commercial customers, such as Federal Express, United Parcel Service, Penske Corporation and municipalities. In the United States, Canada, and western Europe, demand for the Company's products has been driven by demand for new, more convenient systems, such as credit/debit card readers, and by environmental regulations, such as those requiring vapor recovery systems and more secure underground storage tanks (often with electronic leak detection technology). In emerging markets, economic growth requires vehicle use and infrastructure development, which increase the demand for fuel and fuel dispensers. Deregulation of local markets and privatization of state-owned oil companies have also created additional growth opportunities in emerging markets. The Company believes that it offers superior customer service and support. In western Europe and Africa the Company provides support through its extensive, Company-direct service organization. Throughout the rest of the world, service is provided through ASRs and distributors. Customer service includes the installation, maintenance, certification and calibration of, and technical support for, petroleum dispensers, pumps, electronic hardware and software systems. The Company offers 24-hour, seven day-per-week support by telephone and over the Internet via its FASRLINK help desk to ASRs, distributors and customers in major markets. The Company believes its service and support capabilities are important factors in winning supply contracts and gaining new customers. Additionally, MOCs are more frequently entering into geographically broader service contracts, which the Company believes it is well-positioned to win. The Company is the world's largest manufacturer and servicer of electronic and mechanical petroleum dispensing systems. As of the date of issuance of the Notes, the Company's U.S. subsidiaries are: Envirotronic Systems, Inc.; Gasboy International, Inc.; Management Solutions, Inc.; Sunbelt Hose & Petroleum Equipment, Inc.; Tokheim Automation Corporation; Tokheim Equipment Corporation; Tokheim Investment Corp.; Tokheim RPS, LLC; and Tokheim Services LLC. As a result of its acquisition of Sofitam in September 1996 and the RPS Division in September 1998, the Company has positioned itself as the largest global competitor in the petroleum dispenser business, with an estimated 37% share of the world market, and the ability to provide both products and services to customers in over 80 countries. Tokheim was already one of the world's largest manufacturers and servicers of electronic and mechanical petroleum dispensing systems prior to its acquisition of the RPS Division. Between 1994 and 1998, Tokheim's revenues grew from approximately $202.1 million to 59 $466.4 million, and EBITDA (as defined above under Note 4 to the Summary Financial Data of Tokheim Corporation and Subsidiaries) increased from approximately $10.2 million to $43.7 million, in large part due to the Sofitam acquisition. Prior to the Acquisition, the RPS Division of Schlumberger Limited was headquartered in France, and was a leading manufacturer and servicer of fuel dispensing systems in western Europe. In 1992, it established a presence in North America with the acquisition of Southwest Energy Control Systems and continued to develop its North American position. The RPS Division is also present in eastern Europe and the former Soviet Union. The main manufacturing sites for Europe and North America are located in Dundee, Scotland and in Bonham, Texas, respectively. The Company recently announced that it will close the Bonham facility. History Tokheim The Company originated in 1898 in a hardware store in Thor, Iowa. Merchant John J. Tokheim, while searching to improve on the "drum-and-spigot" method of dispensing kerosene and gasoline, conceived of the idea of a pump dispenser. His invention became known as the Tokheim Dome Oil Pump. The pump's popularity led to the organization of the Tokheim Manufacturing Company in Cedar Rapids, Iowa in 1901. In 1918, the Company was purchased by a group of businessmen from Fort Wayne, Indiana. The Company moved to Fort Wayne and was incorporated in Indiana under the name Tokheim Oil Tank and Pump Company. The present name was adopted in December 1953. The Common Stock began trading on the New York Stock Exchange on September 8, 1978. In 1986, the Company acquired the business now operated as Gasboy International, Inc. ("Gasboy"). Gasboy has been designing and manufacturing products for fleet fuel dispensing for over 70 years and fluid management products for over 30 years. Gasboy sells primarily to commercial and governmental customers that maintain fleets. In September 1996, the Company acquired Sofitam for $107.4 million less certain adjustments. The acquisition included Sofitam's in-house service provider, Sogen S.A., as well as the two distinct brand names--EIN and Satam. Sofitam had and 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 strengthened its offerings of retail automation systems, including POS systems, with the acquisition of MSI. The RPS Division Schlumberger built the RPS Division mainly through acquisitions of other petroleum dispensing equipment companies. The French RPS Division was established in 1920 under the name Aster-Boutillon and became part of Schlumberger in 1972. In 1985, the RPS Division acquired Koppens Automatic, a manufacturer of fuel dispensers established in the Netherlands. In 1992, the RPS Division established a presence in North America with the acquisition of Southwest Energy Control Systems. The RPS Division developed a presence in Germany through the acquisitions of (i) Schwelm Tanksysteme GmbH and (ii) Paul Germann GmbH, which became part of the RPS Division in 1990 and 1996, respectively. The RPS Division expanded its European service business in 1996 by acquiring a leading French service business named Gueant and three Italian companies (CME Centro denominazione eletronica Srl, Borghetti snc and LA NUOVA RIMIC Srl). The RPS Division has approximately 125,000 fuel dispensers operating in the field, over 50,000 operational retail automation systems, over 20,000 operational payment terminals and over 20,000 service stations under a maintenance service contract. The RPS Division sells to MOCs mainly located in western Europe, including Shell, BP, Fina, Elf, Total and Repsol, and to independent retailers, distributors and hypermarkets, such as Palmetto (USA), Ten Hoeve Bros. (USA), Southwest Convenience (USA), Intermarche (France), Ocean (France) and Famila (Germany). Competitive Strengths The Company believes that a number of factors make it a premier manufacturer and servicer of petroleum dispensing systems. These factors include the Company's: 60 Global Capabilities. The Company is the world's largest manufacturer and servicer of petroleum dispenser systems, supplying products and services in more than 80 countries. As a result, the Company believes that it is able to satisfy the complete petroleum dispensing equipment needs of customers throughout the world. The Company's global capabilities provide a significant advantage when competing for sales to MOCs and nationals, including through tenders that MOCs and nationals are awarding more frequently to meet their fuel dispensing equipment needs. World's Largest Service Network. The Company offers service to customers in over 80 countries through its 414 distributors, 319 authorized service representatives ("ASRs") and over 3,800 trained field representatives. The Company believes its global distribution and service network also provides a significant advantage when competing for tenders. The Company believes that the reach of its European and African networks for distribution and service makes it a preferred partner for MOCs in these regions. The Company also recently launched an Internet-based help desk known as FASRLINK, which provides ASRs worldwide with 24-hour access to installation drawings, product updates and diagnostic procedures. The Company's service network enables it to strengthen existing customer relationships, attract new customers, increase its understanding of competitive products and customer needs, and augment sales. Strong Customer Relationships. The Company's strong relationships with MOCs, independents and hypermarkets are increasingly valuable. As these customers expand across regions, they commonly rely on their traditional suppliers to expand with them. The Company has established relationships with many such customers, including Arco, BP Amoco, Carrefour, Elf, Esso, Fina, Intermarche, Repsol, Shell, Statoil and Total. Furthermore, the Company's ability to customize its equipment and software to meet customer- and country-specific standards makes it attractive to MOCs and nationals as a single source of supply. Broad, Technologically Advanced Product Line. The Company manufactures and sells a wide variety of dispensers, pumps, meters, payment and retail automation systems, including POS systems (both hardware and software) and fleet fueling systems. The Company's acquisition of MSI in December 1997 provided additional depth to its retail automation system product line. The RPS Division's unique microprocessor-driven dispenser electronics platform further enhances the Company's product portfolio. The Company's commitment to invest in technology allows it to continue to satisfy diverse customer- and country- specific requirements. The Company considers itself an industry leader in the integration of electronics and software into its products and believes there is a significant potential demand for certain existing technologies. For example, in 1997, only 26% of all retail petroleum dispensers in the United States were estimated to have dispenser payment or "pay-at-the-pump" terminals. Proven Management Team. Since the Company's current management team was assembled in 1992, it has successfully implemented a strategic plan that has restored financial viability, strengthened MOC relationships, broadened product lines and reduced costs. As part of this strategy, the Company acquired Sofitam in 1996 and the RPS Division in 1998. Management has been successful to date in integrating Sofitam's operations into the Company and consolidating the Company's operations in Europe. In addition, management has already initiated numerous cost-cutting programs in connection with the acquisition of the RPS Division. See "--Business Strategy--Realize Operating Synergies and Cost Savings." Business Strategy The Company's business strategy has the following principal components: Leverage Global Platform. The Company intends to use its broad product portfolio and its understanding of the regulatory requirements of the countries where its customers operate to compete aggressively for national, regional and global tenders and new customers. The Company also believes it can obtain additional customers and increase sales to existing customers by offering comprehensive sales and service coverage worldwide through its extensive network. 61 Enhance Largest Service Organization. The Company's service organization provides it with information on customer needs and products, the opportunity to sell new products to service customers and a stable source of recurring revenues from product support. The Company intends to expand its service organization geographically. Maintain Technological Leadership. In developed markets, such as the United States, Canada and western Europe, the Company believes that improved technology will be the primary driver of sales of petroleum dispensing products. As a result, the Company has made a significant effort to maintain its competitive edge technologically and considers itself a leader in the integration of electronics and software into petroleum dispensing products. For example, the Company's new RFID technology (currently being test marketed in the U.S.), similar to the drive-through payment systems used at toll booths, permits consumers to pay for fuel purchases without using cash or credit cards. The Company also plans to continue to invest in developing new technologies, such as human interface displays, wireless forecourt systems, improved metering and robotic fueling. Maintain Top Quality. The Company strives to produce the highest quality products and is committed to continuously improving quality. An aggressive focus on product quality has reduced Tokheim's defect rate (measured in parts per million) by approximately 90% since 1995. Another indication of commitment to quality is the award of ISO-9000 certification to most of the Company's manufacturing facilities. Moreover, the Company's automated computerized dispenser testers comprehensively test each dispenser's electrical and fluid systems before shipment to the customer, further assuring the delivery of quality products. Realize Operating Synergies and Cost Savings. The Company believes that it will be able to achieve an additional $43.7 million in annual cash cost savings by the end of the third full year after the acquisition of the RPS Division of which the Company believes $28.7 million can be obtained in the first full fiscal year after the Acquisition. The principal remaining components of the Company's cost savings program are: . Combine Manufacturing Capabilities. The Company intends to consolidate substantially all of its dispenser manufacturing into three modern facilities. Management estimates that the Company can save $26.0 million on an annual basis from such consolidation. . Integrate Service Organizations. Tokheim is in the process of streamlining its European service organization. The Company plans to further reduce costs and improve service by integrating Tokheim's and the RPS Division's service organizations. Management estimates that the Company can save $9.0 million on an annual basis from such integration. . Eliminate General and Administrative Redundancies. Management expects to achieve further savings by eliminating redundant administrative staff and headquarter facilities. Management estimates that the Company can save $5.0 million on an annual basis from such reductions. . Reduce Raw Material Costs. Management expects to save $5.5 million annually due to increased purchasing leverage. . Reduce Foreign Currency Exposure. The RPS Division incurred a $2.5 million loss from currency exchange connected with intercompany purchases of inventory during fiscal 1997. Management expects to reduce these losses by approximately $1.8 million annually by using hedging techniques. To realize the $47.3 million of cost savings, management expects that approximately $32.2 million of expenditures will be required, most of which are yet to be incurred. Management believes that further cost savings may be achievable from: . reduced manufacturing costs resulting from product standardization and elimination of redundant products; 62 . productivity and efficiency improvements resulting from increased capacity utilization levels; . reduced administrative expense items such as insurance premiums and supplies; and . cost savings from bringing in-house various manufacturing operations, such as fabrication, that the RPS Division outsourced before the Acquisition. The savings described above are based on estimates and assumptions of the Company that are inherently uncertain, and are subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the Company's control. The Company can give no assurance as to what extent or when such savings will be achieved. See "Disclosure Regarding Forward-Looking Statements." Products The Company's principal product offerings include petroleum dispensers and pumps, retail automation systems (including POS systems) dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits. Petroleum dispensers and pumps transfer fuel from storage tanks to vehicles or portable containers. Dispensers include meters, which measure the quantity of fuel pumped and transfer the information to calculators which determine a sales price. Retail automation systems control in-store and at-the-pump fuel sales, pump activation and credit card transactions, monitor inventory, transmit data to a central management system and perform other management functions. Pay-at- the-pump terminals automate customer payment at the pump with cash or credit/debit cards. Upgrade kits permit owners to upgrade a dispenser's capabilities and functionality without incurring the cost of replacing the entire dispenser. The Company also offers services for its products through ASRs and Company-owned facilities. In the United States, Tokheim's most popular petroleum dispensers are the Premier(TM) series. Premier dispensers include a variety of sizes and models that dispense multiple grades of fuel and that offer advanced pay-at-the-pump terminals. Internationally, the Company offers a range of petroleum pumps, including its Consommateur, Bernice, ADONIS, Partner 3 and Eurotron Spectra models. One of the Company's distinguishing characteristics is its commitment to adapting products to local needs. For example, the Company produces a dispenser that permits multiple hoses on the same side of the pump to operate simultaneously. This model is targeted primarily at urban Asian markets with a high motorcycle population. The Company has also adapted its products to accommodate differences among markets which are driven more by custom than by need. For example, European dispensers usually have retractable hoses and suction pumps within the dispenser, while dispensers in the United States usually have high-hose units and pumps located within the underground storage tank. The Company provides both the software and hardware required for retail automation systems. The Company's Columbus(TM) system was introduced on a commercial basis in 1997. Columbus uses a touch-screen PC monitor and Windows NT software in an open architecture system that allows full integration with both existing and new equipment. The user-friendly, touch-screen cashier interface reduces both employer training time and customer wait time. Other POS solutions available from Tokheim include the Profit Point System, the Ruby System and the Check Point System in the United States and the Prisma and S- 2000 systems in the international market. MSI's principal product is the CVN(TM) (Convenience Management Solution), a comprehensive retail automation system, including POS, backroom and store management systems. The CVN integrates such features as advanced gas pump controls, barcode scanning, credit authorization, commercial and charge accounts, employee time clock, detailed inventory tracking and cash drawer controls. Among its dispenser features, the CVN displays up to 32 separate pumps at all times, with up to two customers per pump. Its "One Touch" controls allow service station employees to easily authorize, pre-pay and monitor pumps by pressing one button. The system can also automatically add merchandise purchases to the customer's fuel bill. 63 The CVN has the capacity to work with a monitoring system to automatically alert station owners of the status, fuel level, temperature, water content and presence of leaks in underground storage tanks. The system interfaces with almost every type of dispenser and control currently on the market, including those not manufactured by the Company. The system permits station owners to take a physical inventory or spot-check with a hand-held radio frequency scanner. It also can track customers, even those who pay cash, and can help manage fleet, commercial and in-house charge accounts. The Company believes that its retail automation systems comprise one of the broadest product ranges in the marketplace, from simple pump controllers to sophisticated convenience store and fast-food functions. The Company believes that by combining its retail automation resources under the leadership of MSI, the Company will strengthen its market position and better utilize these resources. The Company's newest dispenser payment terminal is INsight(TM), which can be used with any of the Premier dispenser models now in the market. INsight provides a flexible platform for merchandising at the dispenser, using a monitor that prompts the consumer, making transactions easier to initiate and complete. This product includes an animated graphic display for payment options (cash, credit card or debit card) and a larger display for text. Non-fuel items, such as car washes or food, can also be purchased through INsight. The Company has developed a graphic printer to provide such items as coupons, logos and barcodes on the consumer's receipt. In 1997, the Company began market testing of its RFID technology. Similar to the drive-through payment system at toll booths in major metropolitan areas, this technology automatically charges a consumer's account, which is read from either a microchip key ring tag or a microchip window tag. By eliminating the need to pay for fuel with cash or credit cards, the system speeds gas purchases, both increasing consumer convenience and enabling stations to fuel more cars in less time. The technology also permits the gathering of information about consumer buying habits to improve marketing techniques, such as promotion of food and car washes on pump-mounted displays. Tokheim's RFID system is compatible with all POS systems and with other manufacturer's dispensers (as an upgrade). The Company has entered into an agreement with Micron Communications to further develop its RFID system, which is currently being test marketed with consumers. Also in 1997, Tokheim introduced its Fuel Link(TM) wireless communication system. Fuel Link transmits information by radio frequency between the point of sale and the dispenser hardware, eliminating the cost of installing underground wiring to upgrade the functionality of the dispenser. For the commercial market, Tokheim's new Gasboy products include Astra(TM) and Fuel Point(TM). Astra is an electronic dispenser designed for the above- ground tank market. The Fuel Point system automatically reads information from the dispenser's nozzle, including vehicle identification, odometer data, fuel consumption and service record, and other operating and maintenance data, eliminating the risk of manually misentered data. In the United States, the RPS Division's most popular petroleum dispensers are from the Centurion(TM) series. Centurion are the first local area network- based dispensers with the electronics scheme called EZ BUS(TM) electronics. EZ BUS's compact design reduces the number of electronic components and connection points, making maintenance easier. In addition, customers can add options by simply upgrading the dispenser software without changing electronic hardware. The Highway POS is a highly sophisticated, open architecture, PC-based POS system designed to interface with dispensers of other major manufacturers. This product has the ability to drive multiple dispenser brands at a single site. In Europe, the RPS Division's most popular petroleum dispensers are the Eurotron Spectra, which are multiproduct dispensers designed to address the spectrum of petroleum requirements across European markets. The Eurotron Spectra dispensers are offered in a range of configurations, and the main components have approvals for use in all European markets. The OMEGA 2010(TM) forecourt equipment controller, which has also been designed for use throughout Europe, can adjust to different national and international regulations governing weights and measures and safety. 64 Service The Company believes that one of its strongest competitive advantages is its ability to offer comprehensive customer support and service. Service consists of installation, maintenance, certification and calibration of petroleum dispensers, pumps, electronic hardware and software systems. The Company offers service to customers in over 80 countries through its 414 distributors, 319 ASRs and over 3,800 trained field representatives. The Company's customer service division, which maintains a help desk in English, Spanish and other languages, is available 24 hours a day, 365 days a year, to respond immediately to service needs. Additionally, the customer service division maintains a continuing program of service clinics for customers and distributors, both in the field and at the Company's training centers. To improve efficiency, response time and customer convenience, the Company has begun to implement a system to collect performance data and coordinate the dispatch of service technicians. In addition, the Company recently launched an Internet-based help desk known as FASRLINK, which provides authorized service representatives worldwide immediate access to installation drawings, product updates, service bulletins and diagnostic procedures 24 hours a day. Customers The Company's products are sold primarily to retail service station operators and commercial customers which fall into seven categories. Major Oil Companies. 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. The Company's MOC customers include BP Amoco, Elf Aquitaine, Marathon Oil, Shell and Total, among others. National Oil Companies. A national is a non-U.S. oil Company that operates 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. For example, in Mexico, the market was previously controlled by the government-owned oil Company, Petroleos Mexicanos ("Pemex"). Initial deregulation occurred in 1995, allowing MOCs such as Amoco, Mobil and Conoco to enter that market. Increased local competition as well as the need for newly-privatized companies to earn profits has made once-insulated nationals more sensitive to costs and customer service. These new sensitivities often translate into demand for newer, more sophisticated dispenser equipment. Additionally, a number of privatized nationals are now expanding across borders. The Company's national customers include Pemex in Mexico, Petroleo Brasileiro S.A. ("Petrobras") in Brazil, Paz Oil in Israel and Deltaven S.A. in Venezuela, among others. Independent Oil Companies. 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. Independents that are Company customers include Merit Oil Corp., Getty Petroleum Corp., Amerada Hess Corp. and Phillips 66 Company, among others. Jobbers. Jobbers are independent service station owners that operate under the brand of a MOC. A station owned by a jobber looks substantially the same as one owned by a MOC, selling MOC-branded products and using standard MOC station layouts. Most jobbers own multiple stations. Some jobbers work exclusively with one MOC, while others have multiple MOC partners. 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 stations customers also include national and regional operators, as well as small, local businesses. 65 Hypermarkets. The Company is the leading supplier to French hypermarkets. The hypermarket is a retailing format pioneered in France, with a growing presence in the rest of Europe. A hypermarket is similar to a strip mall in the United States, with a supermarket as the anchor retailer. Hypermarkets typically offer competitively-priced, private label petroleum products to attract customers. In France, more than 50% of retail petroleum sales are through hypermarkets. The Company's hypermarket customers include Intermarche, Leclerc, Systeme U, Comptoirs Modernes, Promodes and Carrefour, among others. Commercial Customers. The commercial market is characterized by companies whose fuel consumption needs justify maintaining internal fueling capabilities, such as truck fleets and municipalities. Through its Gasboy subsidiary, the Company is the leading supplier of fuel dispensing equipment to the U.S. commercial market. The Company's commercial customers include Federal Express, United Parcel Service, Penske Corp. and municipalities and state agencies. Sales, Marketing and Distribution United States In the United States, the Company relies on two primary channels of distribution: (i) direct sales to national accounts such as MOCs and certain independents and (ii) indirect sales through a large network of independent distributors. The Company directly markets through national account managers who call on the MOCs, independents and large convenience store chains. National account managers work closely with the MOCs to develop technology, pricing and account strategies. The Company markets to jobbers and convenience stores through its 261 independent distributors. To coordinate its distributor marketing, the Company has regional district managers who are responsible for geographic coverage, training the district sales force and assisting in the development of sales and marketing strategies. International Markets Historically, the petroleum dispenser market outside of the U.S. has been served by local distributors. The Company has 153 international distributors serving customers that cannot be served cost-effectively by the Company's direct sales force. The Company generally requires letters of credit from its international distributors to limit any risk of non-payment by such distributor. However, as MOCs expand geographically and as nationals become more commercially competitive, they increasingly are purchasing directly from manufacturers, using national, regional and global "tenders," "alliances" and "preferred supplier" relationships. A "tender" is an award made by a MOC or national to a manufacturer to supply petroleum dispensing equipment and related services in a specific country or region (or even globally) for a specific period at specified prices and quantities. Tenders allow MOCs and nationals to reduce the number of their suppliers while improving relationships with those remaining. In response to the advent of tenders, manufacturers have expanded and adapted their product lines and service capabilities to satisfy the specific regulatory, marketing, and service demands of each country being supplied. Tenders are often nonexclusive and cancellable by the customer at any time. An "alliance" involves a closer relationship than a tender. Often, a MOC or national will ask only its alliance partner to submit a tender proposal. As part of an alliance, manufacturers can assist the MOC or national by tracking purchases, warranty coverage, service coverage and service response requirements on behalf of the MOC or national. The Company has also been able to expand its alliance with Amoco, for example, to obtain its Mexican business. "Preferred supplier" relationships are less committed arrangements than alliances. These arrangements typically involve a one-way commitment by the manufacturer on such matters as prices, service and available inventory. Usually, the MOC or national does not make any purchasing or other contractual commitments. Preferred supplier relationships are usually non-exclusive and are typically cancellable by the customer at any time. A MOC or national seeking to reduce the number of suppliers with which it deals while increasing volume purchasing discounts often will identify several manufacturers as preferred suppliers. The Company has an expanded preferred supplier relationship with Total. See "Risk Factors--Risks Associated with the Operation of the Business-- Dependence on the Retail Petroleum Industry." 66 Manufacturing and Quality The Company's manufacturing process consists of sheet metal fabrication, machining, assembly of electronic components and customer-specific painting. The Company's manufacturing and production are generally to order. To improve quality and productivity and to reduce costs, the Company employs a cellular manufacturing format and just-in-time process engineering. The majority of the Company's manufacturing operations are concentrated in the following cities: Fort Wayne, Indiana; Washington, Indiana; Lansdale, Pennsylvania; Grentheville, France; Kya Sand, Randburg, South Africa; Glenrothes, Scotland; Dundee, Scotland; Bladel, the Netherlands; Chesapeake, Virginia; Tulla, County of Clare, Ireland; and Bonham, Texas. Bladel and Chesapeake are engineering sites, and Dundee and Bonham are manufacturing sites. The Tulla facility is used only for the assembling and testing of electronic components. The headquarters of the RPS Division was, prior to the Acquisition, located in Montrouge, Paris, France. The Company recently announced that it will close the facilities in Glenrothes, Scotland and Bonham, Texas. Management anticipates that the Company has sufficient production capacity to meet demand over the next several years. The Company strives to produce the highest quality products and is committed to continuously improving the quality of its products and processes. An aggressive focus on product quality has reduced Tokheim's defect rate (measured in parts per million) by approximately 90% since 1995. One important element in reducing the defect rate has been the Company's effort to satisfy the standards for ISO-9000 certification at its manufacturing facilities. The International Organization for Standardization awards ISO-9000 certification on a facility- by-facility basis to manufacturers that adhere to strict quality standards. Companies must maintain these standards and supply supporting documentation to retain their ISO certification, and certified facilities are audited regularly. Independent third party registrars must nominate candidates for certification. Most of the Company's manufacturing facilities are ISO-9000 certified, and the Company is actively seeking certification for the uncertified manufacturing facilities. Another important aspect of the Company's efforts to improve quality is its automated computerized dispenser tester ("CDT"). The CDT monitors all fluid paths to detect leakage and, simulating real-world conditions, tests displays, keypads, valves, pulsers, totalizers, card readers, cash acceptors, printers, vapor recovery systems and other critical dispenser components. After each testing cycle, technicians review the data for any potential corrective actions. The CDT is networked to the Company's mainframe computer, allowing instantaneous access from the order entry, engineering, customer service and quality assurance departments, and permitting close monitoring of the manufacturing process. The Company has been recognized by third parties for its commitment to quality. In September 1998, the Company received the Manufacturer of the Year Award from the 1,639 member Petroleum Equipment Institute ("PEI"). The Manufacturer of the Year Award is the top honor presented by PEI each year. This award recognizes the Company's commitment to marketing through distributors, competitive pricing, honest business practices, good product availability and responsive customer service. 1998 was the third consecutive year the Company was recognized. In 1997 and 1996, the Company was one of five recipients (out of 350 candidates) of PEI's Circle of Excellence Award. The Company's principal manufacturing facility in Fort Wayne, Indiana and its electronic assembly plant in Washington, Indiana each received the 1996 State of Indiana Quality Improvement Award. Supplies The principal raw materials essential 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. At its U.S. facilities, the Company's purchasing strategy, which includes a comprehensive supplier quality assurance component, seeks to ensure that inventories are purchased at the lowest total cost-of- quality. In making purchasing decisions, the Company considers the quality of performance of the required items, as well as the supplier's delivery responsiveness and prices. The Company has significantly reduced the number of suppliers it uses to develop more effective relationships with 67 the remaining suppliers. The Company has also implemented point-of-use programs so that supplies are delivered directly to the proper usage points at the factory or to a storage facility. Properties The Company owns properties in: Fort Wayne, Indiana; Fremont, Indiana; Washington, Indiana; Lansdale, Pennsylvania; Brighton, Ontario, Canada; Kya Sand, Randburg, South Africa; Glenrothes, Scotland; Weilheim, Germany; Grentheville, France; Scurzolengo, Italy; Abidjan, Ivory Coast; Bonham, Texas; Dundee, Scotland; and Bladel, Holland. The Company leases properties in: Greenwood Village, Colorado; Tremblay, France; Casablanca, Morocco; Solothurn, Switzerland; West Sussex, United Kingdom; Vilvoorde, Belgium; Barcelona, Spain; La Soukra, Tunisia; Dakar, Senegal; Douala, Cameroon; Leiderdorp, the Netherlands; Scurzolengo, Italy; and additional sites in France, Austria, Denmark, Norway, Great Britain, Czech Republic, Slovakia, Hungary, Italy, Spain, Switzerland, Ireland, the Netherlands, Germany, Poland and the U.S. The majority of the Company's manufacturing operations are concentrated in the following cities: Fort Wayne, Indiana; Washington, Indiana; Lansdale, Pennsylvania; Grentheville, France; Kya Sand, Randburg, South Africa; Glenrothes, Scotland; Turnhout, Belgium; Bladel, the Netherlands; Dundee, Scotland; and Bonham, Texas. The Company recently announced that it will close the facilities in Glenrothes, Scotland and Bonham, Texas. The Company believes that it has sufficient production capacity to meet demand over the next several years. The Company also owns an engineering and design center and a corporate office building in Fort Wayne, Indiana. The remaining properties owned or leased by the Company are primarily for warehouse space or sales and service except that the Colorado facility is for software development. The Company is currently holding for sale facilities in Falaise, France, Jasper, Tennessee and Atlanta, Georgia, as well as a 109-acre tract of unimproved land located in Fort Wayne, Indiana. The Company has entered into a contract for the sale of 34 acres of the 109-acre tract of unimproved land. Employees As of February 28, 1999, the Company employed approximately 4,700 persons. Most employees are involved in manufacturing and production, with the balance engaged in administration, sales and clerical work. In the United States, approximately 500 of the employees are union members covered by collective bargaining agreements. The collective bargaining agreement covering factory employees expires in 2003, and the collective bargaining agreement covering office employees expires in 2000. The Company believes its relationship with its employees is good. It has not recently experienced any work stoppages at its facilities, and has been able to extend or renegotiate its collective bargaining agreement without disrupting production. Research and Development The Company continually seeks to enhance its existing product lines to offer increased functionality in new or existing products and has dedicated research and engineering staffs. The Company, not including the RPS Division for 1997 and 1996, spent approximately $21.1 million, $18.3 million and $15.9 million in 1998, 1997 and 1996, respectively, to improve existing products and manufacturing methods, develop new products and pursue other applied research and development. The RPS Division spent $16.6 million and $15.9 million in 1996 and 1997, respectively. The Company has also begun to form exclusive relationships with the MOCs to develop products that meet their specific needs and with electronics companies to develop advanced technologies. The Company revamped its product development process in 1996 to incorporate formal product development procedures. Each project now includes a cross- functional team of representatives from the engineering, manufacturing, quality, marketing, customer service, finance and service parts departments. The team reviews the project from a variety of aspects, including financial impact, design and production implications, and required after-sale support. 68 Legal Proceedings 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. The Company believes that the outcome of such pending claims will not, individually or in the aggregate, have a material adverse effect on the Company's business, financial condition or result of operations. The Company owns or leases, and has in the past owned or leased, numerous properties that for many years have been used in industrial and manufacturing operations. Although the Company has in the past utilized operating and disposal practices that were standard for the industry at the time, hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company, or on or under other locations where such wastes have been taken for disposal. The Company currently owns a facility near Atlanta, Georgia that was previously used to refurbish gasoline dispensers. As part of this operation, chlorinated solvents were inadvertently released to the soil and groundwater through the facility septic system. Migration of these releases has caused solvent concentrations above background levels in the groundwater under an adjacent residential property. The Company has completed the cleanup of this release under the oversight of the Georgia Environmental Protection Division of the Georgia Department of Natural Resources and is currently monitoring the property to ensure that additional cleanup work is not necessary. The Company has reached a tentative settlement with respect to certain environmental liabilities under an indemnity provision of a sale agreement concerning the sale of the die casting facility of a former subsidiary to a third party. Pursuant to the settlement agreement, the Company will repurchase the real property and will enter into a leaseback agreement with the third party. The Company has agreed to place the facility in the state site remediation program. Based on the Company's environmental consultant's report, the Company presently does not anticipate any material costs at the facility. Regulation The Company's operations are subject to national, regional and local laws and regulations, including those concerning product safety, weights and measures, and pollution and protection of the environment. Product Safety. In the United States, the Company's products are subject to standards set by Underwriters' Laboratories ("UL"). Standards for petroleum product dispensers govern design features such as frame sturdiness, corrosion resistance and hydrostatics of various parts. UL standards also apply to electronic devices used in the Company's dispensers. Other countries often either accept UL product standards or observe the standard of a comparable body including the Canadian Standards Association and the British Approval Service for Electrical Equipment and Flammable Atmosphere and Organization of International Meteorology League ("OIML") in Europe. Individual countries may vary the standards created by these groups. Weights and Measures. Meters and displays must meet certain accuracy standards. In the United States, "Handbook 44" from the National Institute on Weights and Measures, which all states have adopted, sets forth those standards. The standards generally require that the meter accurately measure the amount of fuel pumped to within 0.4%. Meters must be able to measure output at varying flow rates, ranging from almost zero to fifteen gallons per minute. Also, pumps must eliminate most of the vapor from the fuel to ensure that what is being measured is fuel. Dispensers in the U.S. are typically inspected every year by state inspectors. Outside the United States, similar standards govern meters and displays. Standards set by OIML are generally accepted throughout Europe, including in France. Environment. 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 69 of contaminated soil and groundwater, and the health and safety of employees. As such, the nature of the Company's operations exposes it to the risk of claims with respect to such matters. There can be no assurance that material costs or liabilities will not be incurred in connection with such claims. Based upon its experience to date, the Company believes that the future cost of compliance with existing environmental laws and regulations, and liability for known environmental claims pursuant to such laws and regulations, will not have a material adverse effect on the Company's financial condition or results of operations. However, future events, such as new information, changes in existing laws and regulations or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 18 to the Consolidated Financial Statements of Tokheim Corporation and Subsidiaries, "Contingent Liabilities." CERCLA, also known as the "Superfund" law, imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons with respect to the release of a "hazardous substance" into the environment. These persons include the owner or operator of the disposal site or sites where the release occurred and companies that disposed of or arranged for the disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the releases and for damages to natural resources. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury or property damages allegedly caused by the hazardous substances released into the environment. In addition, where the Company has sold properties used in its prior manufacturing operations, it may have contractual obligations to the new owner to remediate environmental contamination on the site arising from prior operations. The Company also generates or has in the past generated waste, including hazardous waste, that is subject to the federal Reserve Conservation and Recovery Act ("RCRA") and comparable state statutes. The U.S. Environmental Protection Agency ("EPA") and various state agencies have promulgated regulations that limit the disposal options for certain hazardous and nonhazardous waste. Such regulations may also require corrective action with respect to contamination of facilities caused by the past handling of industrial waste. Although no assurances can be given in this regard, the Company does not believe that any environmental cleanup activities will have a material adverse effect on its financial condition or results of operations. Environmental regulations also affect the Company's customers, their spending and their demand for the Company's products. In the United States, a number of states have adopted standards for the recovery of vapor coming from the nozzle as fuel is pumped. The most rigorous standards are those set by the California Air Resources Board ("CARB"), which has become the de facto governing body of such standards in the U.S. CARB's standards apply to vapor recovery systems on the nozzle. In general, a product that meets CARB's standards will pass the tests of other states. More recently, the U.S. federal government promulgated rules that required many gas stations to upgrade their underground tanks and pipes (to use various corrosion preventing tanks, pipes, materials or devices, self-containing mechanisms including an interior lining, and leak detection devices or tests) by the end of 1998. Since these gas stations temporarily closed to comply with these regulations, the Company believes that many choose to replace their aging gas pumps at the same time. The international operations of the Company and its customers are also subject to various environmental statutes and regulations of the countries in which they operate. In addition, many of the countries in which the Company and its customers operate are members of the European Union, which has promulgated and continues to promulgate environmental directives and regulations. Generally, these requirements are no more restrictive than those in effect in the United States. Although environmental protection and safety laws in the countries in which the Company manufactures and sells its products have an effect on product design, they apply equally to the Company's competitors and have not had, nor are they expected to have, a material adverse effect on the Company's competitive position. Environmental laws and regulations also significantly affect the Company's customers and their spending levels on Company products. See "Risk Factors--Risks Associated with the Operation of the Business--Dependence on Retail Petroleum Industry," "Risk Factors--Government Regulation-- Environmental" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 70 Since 1989, the RPS Division has conducted, with the assistance of an outside environmental consulting firm, extensive investigations on the Bladel site located in the Netherlands. These investigations have evidenced a significant level of soil and groundwater contamination with mineral oil and aromatic and chlorinated hydrocarbons. The RPS Division prepared a remediation plan for cleaning the premises in 1997. Before implementing the plan, the RPS Division has requested that local governmental authorities confirm that no further liabilities for any existing soil contamination will arise for the RPS Division in the future. Discussions between the RPS Division and the local governmental authorities are currently in process. The total capital cost of remediation measures is estimated to be $1.5 million, to be spent over three years. Operation and related costs for a groundwater treatment system could extend beyond eight years which is the period during which Schlumberger has agreed to arrange for and bear the cost for remediation and monitoring for known soil and groundwater contamination at Bladel. In addition to Bladel, pursuant to the terms of the purchase agreement, Schlumberger is required to arrange for and bear the cost of monitoring and remediating the soil and ground water contamination that Schlumberger knows of or discovers within a set period of time after the Acquisition, subject to a deductible limit of $700,000. Schlumberger is to take actions required to address this contamination in accordance with applicable environmental laws and under the oversight and with the approval of the appropriate governmental authorities. 71 MANAGEMENT Directors The following table sets forth certain information and ages as of February 26, 1999 regarding each of the Company's directors and executive officers:
Name Age Position ---- --- -------- Douglas K. Pinner....... 58 Chairman of the Board, President and Chief Executive Officer Gerald H. Frieling, 68 Vice Chairman of the Board Jr..................... John A. Negovetich...... 53 Executive Vice President, Finance and Administration, and Chief Financial Officer Norman L. Roelke........ 49 Vice President, Secretary and General Counsel Jacques St. Denis....... 41 Executive Vice President, Operations Scott A. Swogger........ 46 President, Tokheim U.S. Walter S. Ainsworth..... 70 Director Robert M. Akin, III..... 63 Director James K. Baker.......... 67 Director B. D. Cooper............ 56 Director Richard W. Hansen....... 61 Director Leo J. Hawk............. 66 Director Dr. Winfred M. 58 Director Phillips............... Ian M. Rolland.......... 65 Director
Douglas K. Pinner has been President and Chief Executive Officer since 1992, a Director since 1993 and Chairman of the Board since 1996. Gerald H. Frieling, Jr. has been Vice Chairman of the Board since 1996. From 1991 to 1996, he was Chairman of the Board. From 1991 to 1992, Mr. Frieling was Chief Executive Officer. Previously, he was Chairman of the Board, President and Chief Executive Officer of National-Standard, a diversified manufacturer of specialty wire, metal products and machinery. He is also a director of CTS Corporation. John A. Negovetich has been Executive Vice President, Finance and Administration and Chief Financial Officer since 1998. From 1996 to 1998, Mr. Negovetich was President, Tokheim North America. Form 1996 to 1997, Mr. Negovetich was Chief Financial Officer, Tokheim North America. From 1993 to 1995, Mr. Negovetich was Vice President, Finance, Chief Financial Officer and a member of the Board of Ardco, Inc. Norman L. Roelke has been Vice President and General Counsel of Tokheim since 1994 and Secretary since 1995. From 1987 to 1994, Mr. Roelke served as Corporate Counsel and Assistant Secretary. Jacques St. Denis has been Executive Vice President, Operations since 1998. From 1996 to 1998, he served as President and Director General of Tokheim- Sofitam S.A. (the Company subsidiary that was formerly Sofitam). During 1996, he served as Vice President, Tokheim International. From 1995 to 1996, Mr. St. Denis was Director of Export and International Operations for the Company. From 1994 to 1995, he was Tokheim's Director of Marketing, and from 1993 to 1994, he was Director of Worldwide Services. Previously, Mr. St. Denis served as Managing Director of European Operations, and National Sales and Marketing Director, USA, for Babson Brothers Company. Scott A. Swogger has been President, Tokheim U.S., since 1997. From 1995 to 1997, he served as Vice President, Quality Systems. From 1994 to 1995, he was Tokheim's Director of Quality Assurance. Previously, he served as the Company's Senior Manager of Quality Assurance. 72 Walter S. Ainsworth has been a Director since 1992. Before retiring in 1992, he served as President and Chief Executive Officer of Phelps Dodge Magnet Wire Company, an international producer of magnet wire, and as Senior Vice President of Phelps Dodge Corp. He is also a director of Fort Wayne National Corporation. Robert M. Akin, III has been a Director since 1993. Before his retirement in 1995, he served as President and Chief Executive Officer of Hudson Wire Company d/b/a Hudson International Conductors, a manufacturer of speciality wire products that became a subsidiary of Phelps Dodge Corp. James K. Baker has been a Director since 1993. Before his retirement in 1998, Mr. Baker served as Vice Chairman of the Board of Arvin Industries, Inc., a global manufacturer of automotive products. Previously, he was Chairman and Chief Executive Officer of Arvin Industries, Inc. Mr. Baker is also a director of First Chicago NBD Corp., Amcast Industrial Corp., the GEON Company and CINergy Corp. B.D. Cooper has been a Director since 1993. Mr. Cooper is Chairman of the Board of P.E.S. Inc., which sells and distributes petroleum equipment to the petroleum industry. He is also a director of Delhi Bancshares and Chairman of the Board of Heritage Banks. Richard W. Hansen has been a Director since 1995. Before his retirement in 1996, Mr. Hansen served as Chairman, President and Chief Executive Officer of Furnas Electric Company, a leading manufacturer of industrial electrical and electronic motor control products. Leo J. Hawk has been a Director since 1998. Since 1992, Mr. Hawk has been Chairman of the Board of Superior Metal Products, Inc. which manufactures functional and decorative hardware for major appliance, office furniture and automotive industries. Dr. Winfred M. Phillips has been a Director since 1986. Dr. Phillips is Dean of the College of Engineering and Associate Vice President, Engineering and Industrial Experiment Station of the University of Florida. Ian M. Rolland has been a Director since 1981. Before his retirement in 1998, Mr. Rolland served as Chairman and Chief Executive Officer of Lincoln National Corporation, which provides life insurance and annuities, property-casualty insurance and related services through its subsidiary companies. He is also a director of NIPSCO Industries, Inc. and Norwest Corporation. 73 PRINCIPAL SHAREHOLDERS Management Ownership The following table sets forth, as of February 26, 1999, the number of shares beneficially owned (or deemed to be beneficially owned pursuant to the rules of the Securities and Exchange Commission) by each director of the Company, each of the executive officers named in the Summary Compensation Table, included elsewhere herein, and the current directors and executive officers of the Company as a group. All references are to Common Stock unless otherwise noted: Amount and Nature of Beneficial Ownership
Common Stock Preferred Exercisable Percent Common in the Stock in Stock of Name Stock RSP the RSP Options Class ---- ------- ------ --------- ----------- ------- Walter S. Ainsworth......... 6,414(1) -- -- -- * Robert M. Akin, III......... 8,800 -- -- -- * James K. Baker.............. 3,600 -- -- -- * B. D. Cooper................ 3,800(2)(3) -- -- -- * Gerald H. Frieling, Jr...... 8,400 -- -- -- * Richard W. Hansen........... 27,400 -- -- -- * Leo J. Hawk................. 8,000 -- -- -- * John A. Negovetich.......... 10,500 379 600 22,500 * Winfred M. Phillips......... 5,600 -- -- -- * Douglas K. Pinner........... 79,034 4,305 1,940 26,250 * Norman L. Roelke............ 5,464 728 2,780 22,000 * Ian M. Rolland.............. 6,125 -- -- -- * Jacques St-Denis............ 11,897 424 1,733 20,000 * Scott A. Swogger............ -- 323 1,254 7,750 * Executive Officers and Directors as a Group (14 persons)................... 185,034 6,159 8,307 98,500 2.3
- -------- * Represents less than 1% of the Company's outstanding Common Stock. (1) In addition, Catherine Ainsworth, Mr. Ainsworth's wife, owns 478 shares, with respect to which Mr. Ainsworth disclaims any beneficial interest. (2) In addition, Barbara Cooper, Mr. Cooper's wife, owns 1,000 shares, with respect to which Mr. Cooper disclaims any beneficial interest. (3) In addition, P.E.S. Inc. Pension Plan owns 2,000 shares. Mr. Cooper is a participant and trustee of the Plan. 74 Other Beneficial Owners The following table sets forth the number of shares of Common Stock beneficially owned by the only persons known to the Company to own more than 5% of the outstanding shares of Common Stock and the holder of the Company's Convertible Preferred Stock:
Amount and Nature of Name of Individual Beneficial Class of Percent of or Identity of Group Ownership Shares Shares - -------------------- ---------- --------------- ---------- National City Bank...................... 771,479(1) Convertible 100.0 fka Fort Wayne National Bank Preferred Stock 110 West Berry Street Fort Wayne, Indiana 46802 Schlumberger Limited.................... 2,526,923(2) Common Stock 16.6 42 rue St Dominique 75007 Paris, France David L. Babson and Company, Inc........ 1,481,100 Common Stock 11.9 One Memorial Drive, Suite 1100 Cambridge, Massachusetts 02142 Dresdner RCM Global Investors........... 1,251,868 Common Stock 9.9 Four Embarcadero Center San Francisco, California 94111 Dimensional Fund Advisors, Inc.......... 718,700 Common Stock 5.7 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401
- -------- (1) Represents shares of the Company's 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 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 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. (2) Represents shares for which Schlumberger Warrants are exercisable. 75 DESCRIPTION OF CERTAIN INDEBTEDNESS The New Credit Agreement Tokheim and certain of its subsidiaries, including certain of the subsidiaries used to acquire the RPS Division (the "Borrowers"), have entered into a credit agreement (the "New Credit Agreement") with The First National Bank of Chicago, as administrative agent (the "Agent"), Credit Lyonnais, as Collateral Agent, and other institutions party thereto (the "Banks"). The New Credit Agreement currently consists of a six year working capital/letter of credit facility in favor of the Borrowers in an aggregate principal amount of $110.0 million and a six year term loan facility in favor of the Company, in an aggregate principal amount of $120.0 million. Pursuant to the New Credit Agreement, $20.0 million of the availability under the working capital facility may be utilized for issuance of standby letters of credit, and $10.0 million of the availability under the working capital facility may be utilized for swing line facilities to be provided to Tokheim and certain of the other Borrowers. The New Credit Agreement will permit borrowings in U.S. dollars, and, if certain additional conditions are met, in French francs, British pounds, Dutch gilders, German deutsche marks and Euros (so long as such non-U.S. currencies are freely traded, readily available and convertible into U.S. dollars) and such other currencies as agreed by each Bank. Each loan requested to be made in a non-U.S. currency which is capable of being made in the Euro will be made in the Euro unless the Agent otherwise consents. An additional agreement provides for the assignment of a three year $7.6 million ESOP loan facility with NBD Bank, N.A, and certain other banks (the "ESOP Credit Agreement") to the Agent and the Banks. This information relating to the New Credit Agreement is qualified in its entirety by reference to the complete text of the documents entered into or to be entered into in connection therewith. The following is a description of the general terms of the New Credit Agreement. Indebtedness of the Company under the New Credit Agreement (a) is secured by (i) a first perfected security interest in and lien on certain of the real and personal property assets of Tokheim (including claims against certain subsidiaries to which Tokheim has made intercompany loans) and Tokheim's direct and indirect material majority-owned U.S. subsidiaries, (ii) a pledge of 100% of the stock of Tokheim's direct and indirect material majority-owned U.S. subsidiaries, and (iii) a pledge of 65% of the stock of Tokheim's first-tier material foreign subsidiaries and (b) is guaranteed by all of Tokheim's direct and indirect material majority-owned U.S. subsidiaries. Certain indebtedness of Tokheim's foreign subsidiaries which are borrowers or become borrowers under the New Credit Agreement will be secured by certain of the personal property of such foreign subsidiaries. Indebtedness under the New Credit Agreement bears interest based upon (at the applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar denominated loans (defined as the higher of (x) the applicable prime rate and (y) the federal funds rate (as adjusted pursuant to the New Credit Agreement) plus 0.50%) plus an applicable margin based upon the Company's leverage ratio (with a range of 1.50% to 3.00% for Revolving Loans and 3.00% for term loans) or (ii) the applicable Eurocurrency Rate (as defined in the New Credit Agreement) for a deposit in the currency of, and for a maturity corresponding to, the applicable loan and interest period, plus an applicable margin based upon the Company's leverage ratio (with a range of 2.50% to 4.00% for revolving loans and 4.00% for term loans). The New Credit Agreement contains customary provisions relating to yield protection, availability and capital adequacy. The indebtedness under the New Credit Agreement matures as follows: $110.0 million revolving loans--September 30, 2004, and $120.0 million term loans will amortize with payments due on a quarterly basis commencing on February 28, 2000 and with a final principal payment due on September 30, 2004. Indebtedness under the ESOP Credit Agreement will amortize with a final principal payment on July 1, 2001. The unused portion of the commitment under the New Credit Agreement will be subject to a commitment fee in the range of 0.375% to 0.50% depending upon the leverage ratio of the Company. 76 The revolving loan commitment under the New Credit Agreement may be voluntarily permanently reduced by the Company in whole or in part on one day's notice without premium or penalty. The Borrower may prepay the term loans subject to a pre-payment penalty if the Borrowers prepay the entire amount of the term loans in the first 3 years after September 30, 1998. The Borrowers will be able to prepay the loans in accordance with the terms of the New Credit Agreement. Subject to the provisions of the New Credit Agreement, the Borrowers will be able to, from time to time, borrow, repay and reborrow under the working capital facility. The New Credit Agreement requires an amount equal to all net proceeds from asset sales by Tokheim or any of its subsidiaries (with certain exceptions) to be applied to repay the loans under the New Credit Agreement. The New Credit Agreement also requires the Company to prepay the loans under the New Credit Agreement in an amount equal to (i) all net proceeds from the sale or issuance of debt (with certain exceptions), (ii) all net proceeds from the sale or issuance of equity (with certain exceptions) and (iii) a percentage of Excess Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a range of 50% to 85%, based upon the Company's leverage ratio, commencing with the Company's fiscal year ending November 30, 1999. The New Credit Agreement requires the Company to meet certain consolidated financial tests, including minimum level of consolidated net worth, minimum level of EBITDA (as defined in the New Credit Agreement), minimum level of consolidated interest coverage, maximum consolidated leverage ratio and senior leverage ratio and minimum consolidated fixed charge coverage ratio. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments of certain other Indebtedness (including the Exchange Notes), amendments to certain other Indebtedness (including the Exchange Notes), liens and encumbrances and other matters customarily restricted in such agreements. These covenants are more restrictive than those in favor of holders of the Exchange Notes as described herein and as set forth in the Indentures. The New Credit Agreement contains events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross- default to certain other indebtedness, certain events of bankruptcy and insolvency, change in control, ERISA, judgment defaults and failure of any guarantee or security agreement supporting the New Credit Agreement to be in full force and effect. The Schlumberger Junior Subordinated Notes To pay part of the consideration for the Acquisition, the Company issued $40.0 million in ten year, 12.0% Schlumberger Junior Subordinated Notes due 2008. Interest on the Schlumberger Junior Subordinated Notes is payable quarterly and in-kind. All existing U.S. subsidiaries have guaranteed, and all future U.S. subsidiaries will guarantee, the Schlumberger Junior Subordinated Notes on a junior subordinated basis with unconditional guarantees that are or will be unsecured and subordinated to senior debt of such subsidiaries. The Schlumberger Junior Subordinated Notes are unsecured junior subordinated obligations of the Company and are junior to the Company's senior debt, including the Exchange Notes. The Schlumberger Junior Subordinated Notes were issued under an indenture (the "Junior Indenture") that limits the ability of the Company and its subsidiaries to, among other things: incur indebtedness; pay dividends and make certain other payments; make certain investments; sell certain assets; enter into certain transactions with affiliates; restrict distributions from subsidiaries; incur liens; and consolidate, merge or transfer all or substantially all of its or its subsidiaries' assets. Subject to the terms of the Junior Indenture, the Schlumberger Junior Subordinated Notes may be redeemed at any time, in whole or in part, at the option of the Company at a redemption price equal to the unpaid principal amount thereof plus accrued interest thereon to the redemption date. Upon a change of control (as defined in the Junior Indenture, and subject to certain conditions set forth in the Junior Indenture), any holder of Schlumberger Junior Subordinated Notes will have the right to cause the Company to repurchase all 77 or any part of the Schlumberger Junior Subordinated Notes of such Holder at a purchase price equal to 101% of the principal amount of the Schlumberger Junior Subordinated Notes to be repurchased plus accrued and unpaid interest thereon, if any, to the date of repurchase. The Schlumberger Junior Subordinated Notes are subject to a registration rights agreement which can be exercised any time after 120 days after their date of issuance. DESCRIPTION OF THE SCHLUMBERGER WARRANTS As part of the consideration paid in the Acquisition, the Company issued the Schlumberger Warrants to purchase up to 19.9% of the outstanding shares of the Company's common stock at an exercise price of $.01 per share. The actual number of shares issuable upon exercise is 2,526,923. The Schlumberger Warrants are exercisable for five years beginning January 30, 1999. The number of shares of the Company's common stock issuable upon exercise of the Schlumberger Warrants, along with the purchase price of the Schlumberger Warrants, will be further adjusted to reflect any stock splits, stock subdivisions or combinations of the Company's common stock, any reclassification of the Company's common stock, any capital reorganization, merger or consolidation of the Company, any issuance of common stock by the Company, and any issuance of convertible securities by the Company. 78 DESCRIPTION OF THE EXCHANGE NOTES The Outstanding Dollar Notes were, and the Dollar Exchange Notes will be, issued under the Dollar Notes Indenture, dated January 29, 1999, among the Company, certain subsidiary guarantors and U.S. Bank Trust National Association, as trustee (the "Dollar Note Trustee"). The Outstanding Euro Notes were, and the Euro Exchange Notes will be, issued under the Euro Notes Indenture, dated January 29, 1999, among the Company, certain subsidiary guarantors and U.S. Bank Trust National Association, as trustee (the "Euro Note Trustee," and together with the Dollar Note Trustee, the "Trustee"). The terms of the Exchange Notes are the same as the terms of the Outstanding Notes, except that (1) the Company registered the Exchange Notes under the Securities Act of 1933, as amended, and their transfer is not restricted like the Outstanding Notes and (2) holders of the Exchange Notes are not entitled to certain rights under the Registration Rights Agreements. The Outstanding Notes are, and the Exchange Notes will be, unsecured obligations of the Company, ranking subordinate in right of payment to all Senior Debt of the Company, including the New Credit Agreement, and senior in right of payment to the Schlumberger Junior Subordinated Notes and any Warrant Repurchase Indebtedness. The Dollar Exchange Notes will be issued in fully registered form only, without coupons, in denominations of $1,000 and integral multiples thereof. The Euro Exchange Notes will be issued only in registered form, without coupons, in denominations of (Euro)1,000 and integral multiples thereof. Initially, the Trustee will act as principal paying agent and registrar for the Exchange Notes at its office in New York, New York. The registrar, paying agent and transfer agent (the "Registrar," "Paying Agent," and "Transfer Agent," respectively) are appointed in accordance with the Indentures, and initially are as set forth on the inside back cover page hereof. The Company may change any Paying Agent and Registrar without notice to holders of the Exchange Notes (the "Holders"), provided that, for so long as the Exchange Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Company will cause notice of the change in the Transfer Agent in Luxembourg to be published in a daily newspaper with general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Any Outstanding Notes that remain outstanding after the completion of the Exchange Offer, together with the Exchange Notes issued in connection with the Exchange Offer, will be treated as a single class of securities under the applicable Indenture. The following summary of certain provisions of the Indentures does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and to all of the provisions of the Indentures, including the definitions of certain terms therein and those terms made a part of the Indentures by reference to the TIA as in effect on the date of the Indentures. Copies of the Dollar Notes Indenture, the Euro Notes Indenture and the Registration Rights Agreements can be obtained by following the instructions contained in this Prospectus under the headings "Where You Can Find More Information" and "Information Incorporated by Reference." The definitions of certain terms used in the following summary are set forth below under "--Certain Definitions." For purposes of this summary, references to the "Company" include only Tokheim and not its Subsidiaries. For the purposes of the remainder of this section entitled "Description of the Exchange Notes," the terms the "Notes," the "Dollar Notes" and the "Euro Notes" refer to the Exchange Notes, the Dollar Exchange Notes and the Euro Exchange Notes, respectively. Principal, Maturity and Interest The Dollar Notes are limited in aggregate principal amount to $123.0 million and will mature on August 1, 2008. The Euro Notes are limited in aggregate principal amount to (Euro)75.0 million and will mature on August 1, 2008. The Notes will be payable in each case at maturity at par, plus accrued and unpaid interest, if any. Interest on the Dollar Notes will accrue at the rate of 11.375% and interest on the Euro Notes will accrue at the rate of 11.375%. Interest on the Notes will be payable semiannually in cash on each February 1 and 79 August 1 commencing on August 1, 1999, to the persons who are registered Holders at the close of business on January 15 and July 15 immediately preceding the applicable interest payment date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance of the Outstanding Notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Where not all of the Notes represented by a certificated Note are the subject of a transfer, a new certificated Note in respect of the principal amount of the Notes that have not been so transferred will be issued to the transferor and will be available at the office of the Registrar in New York City or at the office of the Transfer Agent in Luxembourg, if any, as applicable. With respect to the Dollar Notes, payments of principal, premium, if any, and interest will be made (on presentation of such Notes if in certificated form) at the corporate trust office of the Paying Agent in New York City or, subject to any applicable laws and regulations, at the office of either the Paying Agent in Luxembourg (if the Notes are listed on the Luxembourg Stock Exchange) or the Paying Agent in London by United States dollar check drawn on, or wire transfer to a United States dollar account maintained by the Holder with, a bank located in New York City. Payments of any installment of interest on the Dollar Notes will be made by a United States dollar check drawn on a bank in New York City mailed to the Holder at such Holder's registered address or (if arrangements satisfactory to the Company and the Paying Agents are made) by wire transfer to a dollar account maintained by the Holder with a bank in New York City. With respect to the Euro Notes, payments of principal, premium, if any, and interest will be made (in the case of payments of principal, on presentation of such Notes if in certificated form) by credit or transfer to a Euro account maintained by the Holder in the place of payment specified by the Holder. Holders of Euro Notes who wish to receive payment in any currency other than Euros must make arrangements at their own expense. For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, the Company will maintain a Paying Agent and Transfer Agent in Luxembourg. If a payment date is not a Business Day (as defined in the Indentures) at a place of payment, payment may be made at that place on the next succeeding Business Day and no interest shall accrue for the intervening period. The Notes will not be entitled to the benefit of any mandatory sinking fund. Redemption Optional Redemption of Dollar Notes. The Dollar Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:
Year Percentage ---- ---------- 2004........................................................... 105.688% 2005........................................................... 103.792% 2006........................................................... 101.896% 2007 and thereafter............................................ 100.000%
Optional Redemption of Euro Notes. The Euro Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:
Year Percentage ---- ---------- 2004........................................................... 105.688% 2005........................................................... 103.792% 2006........................................................... 101.896% 2007 and thereafter............................................ 100.000%
80 For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Company will cause a notice of redemption of either the Euro Notes or the Dollar Notes to be published in a daily newspaper with general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Optional Redemption upon Public Equity Offerings. At any time, or from time to time, on or prior to February 1, 2002, the Company may, at its option, use the net cash proceeds of one or more Public Equity Offerings (as defined below) to redeem up to 35% of the original principal amount of the Dollar Notes issued in the Exchange Offer and up to 35% of the original principal amount of the Euro Notes issued in the Exchange Offer, each at a redemption price equal to 111.375% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that at least 55% of the original principal amount of the Dollar Notes issued in the Exchange Offer or the Euro Notes issued in the Exchange Offer, as the case may be, remains outstanding immediately after any such redemption and the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering. As used in the preceding paragraph, "Public Equity Offering" means an underwritten public offering of Qualified Capital Stock of the Company pursuant to a registration statement filed with the Commission in accordance with the Securities Act. Selection and Notice of Redemption In the event that less than all of the applicable Notes are to be redeemed at any time, selection of such Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed or, if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or (Euro)1,000, as the case may be, or less shall be redeemed in part; provided, further, that if a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC, Euroclear and Cedel Bank procedures, as applicable), unless such method is otherwise prohibited. Notice of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon delivery of the original Note to the Paying Agent and cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agents in New York, London and Luxembourg (if the Notes are listed on the Luxembourg Stock Exchange) funds in satisfaction of the applicable redemption price pursuant to the Indentures. Subordination The payment of all Obligations on the Notes is subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt, whether outstanding on the Issue Date or thereafter incurred. Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due upon all Senior Debt shall first be paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, by the Company or any of its Subsidiaries before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition by the Company or any of its Subsidiaries of any of the Notes for cash or property. If any default occurs and is continuing in the payment when due, 81 whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Senior Debt, no payment of any kind or character (other than payments by a trust previously established pursuant to the provisions described under "--Legal Defeasance and Covenant Defeasance" below) shall be made by the Company or any of its Subsidiaries with respect to any Obligations on the Notes or to acquire any of the Notes for cash or property. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Debt, as such event of default is defined in the instruments creating or evidencing such Designated Senior Debt, permitting the holders of such Designated Senior Debt then outstanding to accelerate the maturity thereof, and if the Representative for the respective issue of Designated Senior Debt gives written notice of the event of default to the Trustee (a "Default Notice"), then, unless and until all events of default have been cured or waived or have ceased to exist or the Trustee receives notice from the Representative for the respective issue of Designated Senior Debt terminating the Blockage Period (as defined below), during the 180 days after the delivery of such Default Notice (the "Blockage Period"), neither the Company nor any of its Subsidiaries shall (x) make any payment of any kind or character (other than payments by a trust previously established pursuant to the provisions described under "--Legal Defeasance and Covenant Defeasance" below) with respect to any Obligations on the Notes or (y) acquire any of the Notes for cash or property. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days from the date of the commencement of the Blockage Period, and only one such Blockage Period may be commenced within any 365 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Debt shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Debt whether or not within a period of 365 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). The occurrence of a Blockage Period will not prevent the occurrence of an Event of Default. By reason of such subordination, in the event of the insolvency of the Company, creditors of the Company who are not holders of Senior Debt, including the Holders of the Notes, may recover less, ratably, than holders of Senior Debt. The Notes will be general unsecured obligations of the Company and will be subordinated in right of payment to all existing and future Senior Debt of the Company, including the Company's obligations under the New Credit Agreement and to all indebtedness and other obligations of the Company's Subsidiaries. As of February 28, 1999 the Company had approximately $212.4 million of Senior Debt, substantially all of which was secured by the assets of the Company and certain of its subsidiaries. The Notes will rank senior in right of payment to the Schlumberger Junior Subordinated Notes and any Warrant Repurchase Indebtedness. See "Risk Factors--Debt Financing Risks--Substantial Leverage and Variable Interest Rates" and "Risk Factors--Debt Financing Risks--Subordination." Subsidiary Guarantees The Company's payment obligations under the Notes will be fully and unconditionally, jointly and severally guaranteed (the "Subsidiary Guarantees") on a senior subordinated basis by the Guarantors. As of the date of issuance of the Notes, the Guarantors are: Envirotronic Systems, Inc.; Gasboy International, Inc.; Management Solutions, Inc.; Sunbelt Hose & Petroleum Equipment, Inc.; Tokheim Automation Corporation; Tokheim Equipment Corporation; Tokheim Investment Corp.; Tokheim RPS, LLC; and Tokheim Services LLC. The Subsidiary Guarantee of each Guarantor with respect to the Notes will be subordinated to the prior payment in full in cash or Cash Equivalents of the Guarantor Senior Debt to the same extent that the Notes are 82 subordinated to Senior Debt of the Company. The obligations of each Guarantor under its Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. See "Risk Factors--Debt Financing Risks--Fraudulent Conveyance." Under the Indentures, so long as no Default or Event of Default has occurred and is continuing, if the sale or disposal of all of a Guarantor's assets or its capital stock in accordance with the terms of the Indentures constitutes an Asset Sale, then that Guarantor or the entity acquiring its property will be released and relieved of any obligations under its Subsidiary Guarantee. However, the Net Cash Proceeds of any such sale or other disposition must be applied in accordance with the Indentures. See "--Certain Covenants--Limitation on Asset Sales." Change of Control The Indentures provide that, upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. The Indentures provide that, prior to the mailing of the notice referred to below, but in any event within 30 days following any Change of Control, the Company covenants to (i) repay in full all Indebtedness and terminate all commitments under the New Credit Agreement and all other Senior Debt whose terms require repayment upon a Change of Control or offer to repay in full and terminate all commitments under all Indebtedness under the New Credit Agreement and all other such Senior Debt and to repay the Indebtedness owed to each lender which has accepted such offer or (ii) obtain the requisite consents under the New Credit Agreement and all other Senior Debt to permit the repurchase of the Notes as provided below. Within 30 days following the date upon which the Change of Control occurred, the Company must send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Company will cause a copy of such notice to be published in a daily newspaper with general circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the Luxembourg Stock Exchange will be advised of the Change of Control Offer. Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent, including, if applicable, the Paying and Transfer Agent in Luxembourg, at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. In the event the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would seek third party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing. In addition, the New Credit Agreement will restrict the ability of the Company to make a Change of Control Offer, and a Change of Control may result in an Event of Default under the New Credit Agreement. Neither the Board of Directors of the Company nor the Trustee may waive the covenant relating to a Holder's right to redemption upon a Change of Control. Restrictions in the Indentures described herein on the ability of the Company and its Subsidiaries to incur additional Indebtedness, to grant liens on its property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of 83 the Company, whether favored or opposed by the management of the Company. Consummation of any such transaction in certain circumstances may require redemption or repurchase of the Notes, and there can be no assurance that the Company or the acquiring party will have sufficient financial resources to effect such redemption or repurchase. Such restrictions and the restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its Subsidiaries by the management of the Company. While such restrictions cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the Indentures may not afford the Holders of Notes protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of the Indentures, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Change of Control" provisions of the Indentures by virtue thereof. Certain Covenants The Indentures contain, among others, the following covenants: Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Company may incur Indebtedness (including, without limitation, Acquired Indebtedness) and Subsidiaries of the Company may incur Acquired Indebtedness, in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.00 to 1.00 if incurred on or prior to the second anniversary of the Issue Date or greater than 2.25 to 1.00 if incurred thereafter. Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of the Company's Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock, (c) make any Investment (other than Permitted Investments) or (d) repurchase or redeem the Schlumberger Junior Subordinated Notes, the Schlumberger Warrants, any Warrant Repurchase Indebtedness or Refinancing Indebtedness the proceeds of which are used to repurchase or redeem the Schlumberger Junior Subordinated Notes, the Schlumberger Warrants or any Warrant Repurchase Indebtedness (other than a repurchase or redemption using proceeds of Refinancing Indebtedness), or make any cash payments of interest thereon during (l) a Blockage Period in effect with respect to any such junior Indebtedness or (2) the time when the Company could, by the terms of such Indebtedness, otherwise defer such interest or pay such interest in-kind, (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing, or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "--Limitation on Incurrence of Additional Indebtedness" covenant or (iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined reasonably and in good faith by the Board of Directors of the Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net Earnings (or if cumulative Consolidated Net Earnings shall be a loss, minus 100% of such 84 loss) of the Company earned subsequent to the Issue Date and on or prior to the date the Restricted Payment occurs (the "Reference Date"), treating such period as a single accounting period; plus (x) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company; plus (y) 100% of the net cash proceeds from the sale of Investments by the Company (other than Permitted Investments), provided that such Investment was made after the Issue Date; plus (z) without duplication of any amounts included in clause (iii)(x) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company after the Issue Date from a holder of the Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (z), any net cash proceeds from a Public Equity Offering to the extent used to redeem the Notes or from a sale as described in clause (2) (ii) of the next succeeding paragraph). Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration; or (2) the acquisition of any shares of Capital Stock of the Company or of any of the Indebtedness described in clause (d) of the immediately preceding paragraph, either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of the net cash proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company (excluding, in the case of clause 2(ii), any net cash proceeds from a Public Equity Offering to the extent used to redeem the Notes); or (3) dividends on, and redemptions of, the shares of the Company's preferred stock held by the trust of the Company's retirement savings plan in accordance with the terms thereof on the date of the Indentures; (4) payments to redeem or repurchase stock or similar rights from management of the Company in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees upon the termination of employment, death or disability of any such person; provided that such redemptions or repurchases shall not exceed $1.0 million; or (5) the purchase, redemption or acquisition of the Schlumberger Warrants with proceeds from the issuance of Warrant Repurchase Indebtedness; or (6) the purchase, redemption, acquisition, or refinancing of the Schlumberger Junior Subordinated Notes with Refinancing Indebtedness. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, amounts expended pursuant to clauses (1), (4) and (5) shall be included in such calculation. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an officers' certificate stating that such Restricted Payment complies with the Indentures and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's latest available internal quarterly financial statements. Limitation on Asset Sales. The Company will not, and will not permit any of its Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors), (ii) with respect to Asset Sales by the Company or any Wholly Owned Subsidiary of the Company, at least 80% of the consideration received by the Company or such Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition and (iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof (A) to prepay any Senior Debt or Indebtedness of any Subsidiary of the Company, (B) to make an investment in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties or assets that will be used in the business of the Company and its Subsidiaries as existing on the Issue Date or in businesses reasonably related thereto ("Replacement Assets") or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) and (iii)(B). On the 366th day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next 85 preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase. The Company may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5.0 million resulting from one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5.0 million, shall be applied as required pursuant to this paragraph). Notwithstanding the immediately preceding paragraph, the Company and its Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraph to the extent (i) at least 80% of the consideration for such Asset Sale constitutes Replacement Assets and the remainder in cash or Cash Equivalents and (ii) such Asset Sale is for fair market value; provided that any consideration not constituting Replacement Assets received by the Company or any of its Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of the immediately preceding paragraph. Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in the Indentures. For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Company will cause a copy of such notice to be published in a daily newspaper with general circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the Luxembourg Stock Exchange will be advised of the Net Proceeds Offer. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 or (Euro)1,000, as the case may be, in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the Indentures, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the Indentures by virtue thereof. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary of the Company to (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or pay or guarantee any Indebtedness or other obligation owed to the Company or any other Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) the Indentures; (3) customary non-assignment provisions of any contract or any lease governing a leasehold interest of any Subsidiary of the Company; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (5) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (6) the New Credit Agreement or the ESOP Credit Agreements; or (7) an agreement governing Indebtedness incurred to Refinance 86 the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (4), (5) or (6) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Refinancing Indebtedness are no less favorable to the Company in any material respect as determined by the Board of Directors of the Company in their reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (4), (5) or (6). Limitation on Preferred Stock of Subsidiaries. The Company will not permit any of its Subsidiaries to issue any Preferred Stock (other than to the Company or to a Wholly Owned Subsidiary of the Company) or permit any Person (other than the Company or a Wholly Owned Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the Company. Limitation on Liens. The Company will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company or any of its Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens and (ii) in all other cases, the Notes are equally and ratably secured, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date; (B) Liens securing Senior Debt and Liens securing Guarantor Senior Debt; (C) Liens securing the Notes and the Subsidiary Guarantees; (D) Liens of the Company or a Wholly Owned Subsidiary of the Company on assets of any Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under the Indentures and which has been incurred in accordance with the provisions of the Indentures; provided, however, that such Liens (x) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced and (y) do not extend to or cover any property or assets of the Company or any of its Subsidiaries not securing the Indebtedness so Refinanced; and (F) Permitted Liens. Prohibition on Incurrence of Senior Subordinated Debt. The Company will not incur or suffer to exist Indebtedness that is senior in right of payment to the Notes and subordinate in right of payment to any Senior Debt of the Company. The Guarantors will not incur or suffer to exist Indebtedness that is senior in right of payment to any Subsidiary Guarantees and subordinate in right of payment to any Guarantor Senior Debt. Merger, Consolidation or Sale of Assets of the Company. The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Company's Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless: (i) either (1) the Company shall be the surviving or continuing corporation or (2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant contained in the Notes, the Indentures and the Registration Rights Agreements to be performed or observed on the part of the Company; (ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction; (iii) immediately before and 87 immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and (iv) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with the applicable provisions of the Indentures and that all conditions precedent in the Indentures relating to such transaction have been satisfied. The Indentures provide that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indentures and the Notes with the same effect as if such surviving entity had been named as such. Each Guarantor (other than any Guarantor whose Subsidiary Guarantee is to be released in accordance with the terms of the Subsidiary Guarantee and the Indentures in connection with any transaction complying with the provisions of "--Limitation on Asset Sales") will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Company or any other Guarantor unless: (i) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) such entity assumes by supplemental indenture all of the obligations of the Guarantor on the Subsidiary Guarantee; (iii) immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (iv) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company could satisfy the provisions of clause (ii) of the first paragraph of this covenant. Any merger or consolidation of a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor of the Company need only comply with clause (iv) of the first paragraph of this covenant. Limitations on Transactions with Affiliates. (a) The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate Transactions on terms that are no less favorable to the Company or such Subsidiary than those that could reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Subsidiary. All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a fair market value in excess of $1.0 million shall be approved by the Board of Directors of the Company or such Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves aggregate payments or other property with a fair market value of more than $5.0 million, the Company or such Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to: (i) reasonable fees and compensation paid to, and indemnity provided on behalf of, officers, directors or employees of the Company or any Subsidiary of the Company as determined in good faith by the Company's Board of Directors; (ii) transactions exclusively 88 between or among the Company and any of its Wholly Owned Subsidiaries or exclusively between or among such Wholly Owned Subsidiaries; provided such transactions are not otherwise prohibited by the Indentures; (iii) Restricted Payments permitted by the Indentures; (iv) transactions permitted by, and complying with, the provisions of the covenant described under "Merger, Consolidation and Sale of Assets of the Company" above; (v) transactions with distributors or other purchases or sales of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indentures which are fair to the Company, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (vi) any management agreement as in effect as of the Issue Date or any amendment thereto or any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date and any similar agreements entered into after the Issue Date; and (vii) intercompany loans or capital contributions from the Company or any Subsidiary to any of the Company's Subsidiaries; provided such loans are otherwise in compliance with the terms of the Indentures. Reports to Holders. The Indentures provide that the Company will deliver to the Trustee within 15 days after the filing of the same with the Commission, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the Commission pursuant to Sections 13 or 15(d) of the Exchange Act. The Indentures further provide that, notwithstanding that the Company may not be subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act, the Company will file with the Commission, to the extent permitted, and provide the Trustee and Holders with, such annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will also comply with the other provisions of TIA (S) 314(a). For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, copies of all reports and information described above will be available during normal business hours at the office of the Transfer Agent in Luxembourg. Additional Subsidiary Guarantees. The Indentures provide that the Company will cause any current and future Subsidiary of the Company that Guarantees any Senior Debt of the Company or Indebtedness of the Company that is subordinated to the Notes to simultaneously execute and deliver supplemental indentures pursuant to which it will become a Guarantor under the Indentures. Limitation on Amendments to Schlumberger Junior Subordinated Notes and Warrant Repurchase Indebtedness. The Indentures provide that the Company shall not amend the indentures or other agreements governing the terms of the Schlumberger Junior Subordinated Notes or Warrant Repurchase Indebtedness, or any Refinancing Indebtedness thereof, in any way adverse to the Holders of the Notes. Events of Default The following events are defined in the Indentures as "Events of Default": (a) the failure to pay interest on, or Liquidated Damages (if any) with respect to, any Notes when the same become due and payable and the default continues for a period of 30 days (whether or not such payment shall be prohibited by the subordination provisions of the Indentures); (b) the failure to pay the principal on the Notes when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer), whether or not such payment shall be prohibited by the subordination provisions of the Indentures; (c) a default in the observance or performance of any other covenant or agreement contained in the Indentures which default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Dollar Notes or the Holders of at least 25% of the outstanding principal amount of the Euro Notes, as the case may be, (except in the case of a default with 89 respect to the "Merger, Consolidation and Sale of Assets of the Company" covenant, which will constitute an Event of Default with such notice requirement but without such passage of time requirement); (d) there shall be a default under any Indebtedness of the Company or any Subsidiary, whether such Indebtedness now exists or shall hereinafter be created, if both (A) such default either (1) results from the failure to pay any such Indebtedness at its stated final maturity or (2) relates to an obligation other than the obligation to pay such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated final maturity and (B) the amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity or the maturity of which has been so accelerated, aggregates $10.0 million or more at any one time outstanding; (e) one or more judgments in an aggregate amount in excess of $5.0 million (which are not covered by third party insurance as to which the insurer has not disclaimed coverage) shall have been rendered against the Company or any of its Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable; (f) except as permitted by the Indentures, any Subsidiary Guarantee shall be held in a judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee; or (g) certain events of bankruptcy affecting the Company or any of its Significant Subsidiaries. If an Event of Default (other than an Event of Default specified in clause (g) above with respect to the Company) shall occur and be continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Dollar Notes or the Holders of at least 25% in principal amount of the outstanding Euro Notes, as the case may be, may declare the principal of and accrued interest on all the Dollar Notes or the Euro Notes, as the case may be, to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same (i) shall become immediately due and payable or (ii) if there are any amounts outstanding under the New Credit Agreement or the ESOP Credit Agreements, shall become immediately due and payable upon the first to occur of an acceleration under the New Credit Agreement or the ESOP Credit Agreements or 5 business days after receipt by the Company and the Representative under the New Credit Agreement or the ESOP Credit Agreements of such Acceleration Notice. If an Event of Default specified in clause (g) above with respect to the Company occurs and is continuing, then all unpaid principal of, premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Indentures provide that, at any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraph, the Holders of a majority in principal amount of the outstanding Dollar Notes or the Euro Notes, as the case may be, may rescind and cancel such declaration and its consequences if (i) the rescission would not conflict with any judgment or decree, (ii) all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration, (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, (iv) the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (v) in the event of the cure or waiver of an Event of Default of the type described in clause (g) of the description of Events of Default above, the Trustee shall have received an officers' certificate and an opinion of counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. The Holders of a majority in aggregate principal amount of the applicable Notes then outstanding may waive any existing Default or Event of Default under the applicable Indenture, and its consequences, except a Default in the payment of the principal of or interest on any applicable Notes. 90 Holders of the Notes may not enforce the applicable Indenture or the Notes except as provided in the applicable Indenture and under the TIA. Subject to the provisions of the applicable Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the applicable Indenture at the request, order or direction of any of the applicable Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to all provisions of the applicable Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding applicable Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. Under the Indentures, the Company will be required to provide an officers' certificate to the Trustee promptly upon any such officer obtaining knowledge of any Default or Event of Default (provided that such officers shall provide such certification at least annually whether or not they know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof. Legal Defeasance and Covenant Defeasance Under each Indenture the Company may, at its option and at any time, elect to have its obligations, and the obligations of the Guarantors, discharged with respect to any outstanding Notes under such Indenture and the related Subsidiary Guarantees ("Legal Defeasance"). Such Legal Defeasance means that the Company and each Guarantor shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding applicable Notes and any Subsidiary Guarantees, except for (i) the rights of Holders of outstanding applicable Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (ii) the Company's obligations with respect to such Notes concerning issuance of temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments, (iii) the rights, powers, trust, duties and immunities of the Trustee and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the applicable Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and each Guarantor released with respect to certain covenants that are described in the Indentures ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to such Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to such Notes. In order to exercise either Legal Defeasance or Covenant Defeasance under the applicable Indenture, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the applicable Holders, cash in U.S. dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the applicable Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the applicable Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the applicable Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or, insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal 91 Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the applicable Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an officers' certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; and (vii) the Company shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with (except that the opinion of counsel shall speak only to clauses (ii), (iii) and (v) above). The Company in its sole discretion can defease the Dollar Notes and/or the Euro Notes. Satisfaction and Discharge Each Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes issued under such Indenture, as expressly provided for in the Indentures), and the Company and the Guarantors will be discharged from their obligations under the Notes and the Subsidiary Guarantees when: (i) either (a) all the applicable Notes theretofore authenticated and delivered (except mutilated, lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and therafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all applicable Notes not theretofore delivered to the Trustee for cancellation have become due and payable, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the applicable Notes to the date of such deposit (in the case of Notes that have become due and payable) or to the stated maturity or redemption date, as the case may be; (ii) the Company has paid or caused to be paid all other sums payable under the applicable Indenture by the Company; and (iii) the Company has delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent under the applicable Indenture relating to the satisfaction and discharge of the applicable Indenture have been complied with. Modification of the Indentures From time to time, the Company, the Guarantors and the Trustee, without the consent of the applicable Holders, may amend either Indenture for certain specified purposes, including, without limitation, curing ambiguities, defects or inconsistencies, so long as such change does not, in the opinion of the Trustee, adversely affect the rights of any of the applicable Holders in any material respect. In formulating its opinion on such matters, the Trustee will be entitled to rely on such evidence as it deems appropriate, including, without limitation, solely on an opinion of counsel. Other modifications and amendments of the Indentures may be made with the consent of the applicable Holders of a majority in principal amount of the then outstanding applicable Notes, except that, (A) without the consent of each Holder affected thereby, no amendment may: (i) reduce the amount of applicable Notes whose applicable Holders must consent to an amendment; (ii) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any applicable Notes; (iii) reduce the principal of or change or have the effect of changing the fixed maturity of any applicable Notes, or change the date on which any applicable Notes may be subject to redemption or repurchase, or reduce the redemption or repurchase price therefor; (iv) make any applicable Notes payable in money other than that stated in the applicable Notes; (v) make any change in provisions of the applicable Indenture protecting the right of each applicable Holder to receive payment of principal of, premium, if any, and interest on such Holder's Notes on or after the due date thereof or to bring suit to enforce such payment; (vi) modify or change any provision of the applicable Indenture or the related definitions affecting the subordination or ranking of the applicable Notes in a manner which adversely affects the applicable Holders; provided, however, that it is understood that any amendment, the purpose of which is to 92 permit the incurrence of additional Indebtedness under the applicable Indenture shall not be construed as adversely affecting the ranking of the applicable Notes or (vii) make any change to the Subsidiary Guarantees in any manner that adversely affects the rights of the applicable Holders and (B) without the consent of Holders of not less than 66 2/3% in aggregate principal amount of Dollar Notes then outstanding, in the case of the Dollar Notes Indenture, or Holders of not less than 66 2/3% in aggregate principal amount of Euro Notes then outstanding, in the case of the Euro Notes Indenture, no such amendment, supplement or waiver may amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate a Net Proceeds Offer with respect to any Asset Sale or modify any of the provisions or definitions with respect thereto. Governing Law Each Indenture provides that it and the applicable Notes will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. Under the Judiciary Law of the State of New York, a judgment or decree in an action based upon an obligation denominated in a currency other than U.S. dollars will be rendered in the foreign currency of the underlying obligation and converted into U.S. dollars at a rate of exchange prevailing on the date of entry of the judgment or decree. The Trustee Each Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the applicable Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the applicable Indenture, and use the same degree of care and skill in its exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. Each Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign. Additional Information Anyone who receives this Prospectus may obtain a copy of the Indentures and Registration Rights Agreements without charge by writing to Tokheim Corporation, 10501 Corporate Drive, Fort Wayne, Indiana, 46845 Attention: Executive Vice President, Finance and Administration and Chief Financial Officer. In addition, the Company filed the Registration Rights Agreements as exhibits to its Form 10-K filed with the SEC on March 1, 1999. The Company filed the Indentures in substantially final form as exhibits to its Form 10-K filed with the SEC on March 1, 1999, and will file the Indentures in final form as exhibits to the registration statement of which this Prospectus forms a part. See the section in this Prospectus entitled "Where You Can Find More Information" for information regarding how to obtain documents from the SEC. Form of Notes, Clearance and Settlement The Outstanding Dollar Notes are, and the Dollar Exchange Notes will be, represented by one or more notes in registered, global form (the "Dollar Global Notes"). The Dollar Global Notes will be deposited on the date of the acceptance for exchange of the Outstanding Dollar Notes and the issuance of the Dollar Exchange Notes (the "Closing Date") with the Trustee as custodian for the Depository Trust Company ("DTC") and registered in the name of Cede & Co. as nominee of DTC, in each case for credit to the accounts of DTC Participants and indirect participants (each as defined below) including, without limitation, Morgan Guaranty 93 Trust Company of New York, Brussels office, as operator (the "Euroclear Operator") of Euroclear, and Cedel Bank. The Outstanding Euro Notes are, and the Euro Exchange Notes will be, represented by a note in registered, global form (the "Euro Global Note," and together with the Dollar Global Notes, the "Global Notes"). The Euro Global Note will be deposited on the date of the acceptance for exchange of the Outstanding Euro Notes and the issuance of the Euro Exchange Notes with the Paying Agent in London as common depositary (such capacity, the "Common Depositary") for Euroclear and Cedel Bank. The Euro Exchange Notes will not be eligible for clearance through DTC, except indirectly through DTC's participation in Euroclear or Cedel. Except in the limited circumstances set forth below, Notes in certificated form will not be issued. Investors who purchased Outstanding Euro Notes pursuant to Rule 144A and investors who purchased Outstanding Euro Notes pursuant to Regulation S who exchange their Outstanding Euro Notes for Euro Exchange Notes in the Exchange Offer will each hold their interests through the Euro Global Note. Depositary Procedures DTC. DTC has advised the Company as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for persons who have accounts with it ("DTC Participants") and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly ("indirect participants"). Euroclear and Cedel. The Company understands as follows with respect to Euroclear and Cedel Bank: Euroclear and Cedel Bank each hold securities for their account holders and facilitate the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders, thereby eliminating the need for physical movements of certificates and any risk from lack of simultaneous transfers of securities. Euroclear and Cedel Bank each provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Each of Euroclear and Cedel Bank can settle securities transactions in any of more than 30 currencies, including Euros. Euroclear and Cedel Bank each also deal with domestic securities markets in several countries through established depository and custodial relationships. The respective systems of Euroclear and Cedel Bank have established an electronic bridge between their two systems across which their respective account holders may settle trades with each other. Account holders in both Euroclear and Cedel Bank are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to both Euroclear and Cedel Bank is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system. An account holder's overall contractual relations with either Euroclear or Cedel Bank are governed by the respective rules and operating procedures of Euroclear or Cedel Bank and any applicable laws. Both Euroclear and Cedel Bank act under such rules and operating procedures only on behalf of their respective account holders, and have no record of or relationship with any persons who are not direct account holders. Dollar Notes. With respect to the Dollar Global Notes, DTC has advised the Company that pursuant to procedures established by it, (i) upon initial deposit of a Dollar Global Note, DTC will credit the accounts of DTC Participants, designated by the Dollar Exchange Agent, with portions of the principal amount of such Dollar Global Note deposited, (ii) for DTC participants, initial ownership of interests in such Dollar Global Notes will be shown on, and the transfer of ownership thereof will be effected through, records maintained by DTC and (iii) for non-DTC participant owners, ownership interests in such Dollar Global Notes will only be 94 shown on, and the transfer of ownership thereof will only be effected through, the records of the DTC participants, including Euroclear and Cedel Bank, or others through which they hold their account. All interests in a Dollar Global Note deposited with DTC, including those held through Euroclear or Cedel Bank, are subject to the procedures and requirements of DTC. Those interests held through Euroclear or Cedel Bank are also subject to the procedures and requirements of such system. Euro Notes. With respect to the Euro Global Note, investors who hold accounts with the Euroclear Operator or Cedel Bank may acquire, hold and transfer security entitlements with respect to the Euro Global Note against the Euroclear Operator or Cedel Bank and their respective property by book-entry to accounts with the Euroclear Operator or Cedel Bank, each of which has an account with the Common Depositary and subject at all times to the procedures and requirements of Euroclear or Cedel Bank, as the case may be. "Security entitlement" means the rights and property interests of an accountholder against its securities intermediary under applicable law in or with respect to a security, including any ownership, co-ownership, contractual or other rights. Investors who do not have accounts with the Euroclear Operator or Cedel Bank may acquire, hold and transfer security entitlements with respect to the Euro Global Note against the securities intermediary and its property with which such investors hold accounts by book-entry to accounts with such securities intermediary, which in turn may hold a security entitlement with respect to the Euro Global Note through the Euroclear Operator or Cedel Bank. Investors electing to acquire security entitlements with respect to the Euro Global Note through an account with the Euroclear Operator or Cedel Bank or some other securities intermediary must follow the settlement procedures of their securities intermediary with respect to the settlement of new issues of securities. Security entitlements with respect to the Euro Global Note to be acquired through an account with the Euroclear Operator or Cedel Bank will be credited to such account as of the settlement date against payment in Euro for value as of the settlement date. Investors electing to acquire, hold or transfer security entitlements with respect to a Euro Global Note through an account with the Euroclear Operator, Cedel Bank or some other securities intermediary other than in connection with the initial distribution of the Euro Notes must follow the settlement procedures of their securities intermediary with respect to the settlement of secondary market transactions in securities. Except as described below, owners of interests in the Dollar Global Notes and the Euro Global Note will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or holders of Notes for any purpose. So long as DTC (or its nominee) or the Common Depositary, as the case may be, is the registered owner or holder of a Global Note, such party will be considered the sole owner or holder of the Notes represented by such Global Note for all purposes under the Indentures and the Notes. Accordingly, each person owning a beneficial interest in a Global Note must rely on the procedures of DTC, Euroclear and Cedel Bank, as the case may be, and their participants or account holders to exercise any rights and remedies of a holder of Notes under the Indentures. Payments of principal and interest on the Global Notes will be made to DTC or its nominee, or to the Common Depositary on behalf of Euroclear and Cedel Bank, as the case may be, as the registered owners thereof. The laws of some countries and some states in the United States require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such persons may be limited to that extent. Because DTC, Euroclear and Cedel Bank can act only on behalf of their respective participants or account holders, as the case may be, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons or entities that do not participate in the relevant clearing system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. Payments on the Global Notes Payments in respect of the principal of, premium, if any, and interest on a Global Note will be made through a paying agent appointed pursuant to the applicable Indenture and will be payable to DTC (or its nominee) or the Common Depositary on behalf of Euroclear and Cedel Bank, as the case may be, each in its 95 capacity as the registered holder of such Notes under such Indentures. Under the terms of the Indentures, the Company and the Trustee will treat the persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, none of the Company, the Trustee, or any agent of the Company or the Trustee has or will have any responsibility or liability for (i) any aspect or accuracy of the records of the relevant clearing system, the participants therein or the account holders thereof, as the case may be, relating to payments made on account of beneficial ownership interests in the Global Notes, or for maintaining, supervising or reviewing any records of such clearing system, participant or account holder relating to beneficial ownership interests in the Global Notes, or (ii) any other matter relating to the actions and practices of the relevant clearing system or the participants therein or the account holders thereof. DTC, Euroclear or Cedel Bank, as the case may be, upon receipt of any such payment, will immediately credit the accounts of their relevant participants or account holders, as the case may be, with payments in amounts proportionate to their respective holdings in principal amount of beneficial interests in the relevant Global Note, as shown on the records of DTC, Euroclear or Cedel Bank, as the case may be. The Company expects that payments by such participants or account holders, as the case may be, to the beneficial owners of Global Notes will be governed by standing instructions and customary practices and will be the responsibility of such participants or account holders. Neither the Company nor the Trustee will have responsibility or liability for the payment of amounts owing in respect of beneficial interests in the Global Notes held by DTC or by the Common Depositary for Euroclear and Cedel Bank. Transfers of Global Securities and Interests Therein Unless definitive securities are issued, (i) the Dollar Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee, and (ii) the Euro Global Note may be transferred, in whole and not in part, only by Euroclear and Cedel Bank to the Common Depositary, as the case may be, or by the Common Depositary to Euroclear and Cedel Bank, respectively, or to another nominee or successor thereof or a nominee of such successor. Transfers of beneficial interests in the Dollar Global Notes will be subject to the applicable rules and procedures of DTC and its direct and indirect participants (including, if applicable, those of Euroclear and Cedel Bank), which are subject to change from time to time. Transfers of beneficial interests in the Euro Global Note will be subject to the applicable rules and procedures of Euroclear and Cedel Bank, as the case may be, and their respective account holders and intermediaries. Any secondary market trading activity in beneficial interests in the Global Notes is expected to occur through the participants or account holders and intermediaries, as the case may be, of DTC, Euroclear and Cedel Bank, and the securities custody accounts of investors will be credited with their holdings against payment in same-day funds on the settlement date. No service charge will be made for any registration of transfer or exchange of Notes, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Although DTC, Euroclear and Cedel Bank have agreed to certain procedures to facilitate transfers of interests in the Global Notes among participants in DTC and account holders in Euroclear and Cedel Bank, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. None of the Company, the Trustee, nor any agent of the Company or the Trustee will have any responsibility for the nonperformance or misperformance (as a result of insolvency, mistake, misconduct or otherwise) by DTC, Euroclear or Cedel Bank or their respective participants, indirect participants, account holders or intermediaries of their respective obligations under the rules and procedures governing their operations. The Company understands that under existing industry practices, if either the Company or the Trustee requests any action of holders of Notes, or if an owner of a beneficial interest in a Global Note desires to give 96 instructions or take an action that a holder is entitled to give or take under the Indentures, DTC, Euroclear or Cedel Bank, as the case may be, would authorize their respective participants or account holders, as the case may be, owning the relevant beneficial interest to give instructions or take such action, and such participants or account holders would authorize indirect participants or intermediaries to give instructions or take such action, or would otherwise act upon the instructions of such indirect participants or intermediaries. The Company understands that under existing practices of DTC, Euroclear and Cedel Bank if less than all of the respective class of Notes are to be redeemed at any time, DTC, Euroclear or Cedel Bank, as the case may be, will credit their participants' or account holders' accounts on a proportionate basis (with adjustments to prevent fractions) or by lot or on such other basis as DTC, Euroclear or Cedel Bank, as the case may be, deems fair and appropriate, provided that no beneficial interests of less than $1,000 or (Euro)1,000, as the case may be, may be redeemed in part. Certificated Notes Beneficial interests in a Global Note are exchangeable for definitive Notes in registered certificated form only if: (i) in the case of the Dollar Global Notes, DTC (x) notifies the Company that it is unwilling or unable to continue as depositary for such Dollar Global Notes or (y) has ceased to be a "clearing agency" registered under the Exchange Act and, in each case, the Company thereupon fails to appoint a successor depositary within 90 days; (ii) in the case of the Euro Global Note, Euroclear and Cedel Bank are unwilling or unable to continue as depositary for such Euro Global Note and the Company thereupon fails to appoint a successor depositary within 90 days; or (iii) there shall have occurred and be continuing a Default or an Event of Default with respect to the applicable Notes. In all cases, certificated Notes delivered in exchange for any Global Note or beneficial interest therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of DTC, Euroclear or Cedel Bank, as the case may be, in accordance with their customary procedures. The Notes may not be issued in bearer form. In the case of the issuance of certificated Notes in the limited circumstances set forth above, the Holder of any such certificated Note may transfer such Note by surrendering it at the offices or agencies of the Company maintained for such purpose within the City and State of New York, and at the office of the transfer agent in London. Until otherwise designated by the Company, the Company's office or agency in the City and State of New York and London, England, respectively, will be the offices of the Trustee maintained for such purpose. In the event of a partial transfer of a holding of Notes represented by one certificate, or partial redemption of such a holding represented by one certificate, a new certificate shall be issued to the transferee in respect of the part transferred or redeemed and a further new certificate in respect of the balance of the holding not transferred or redeemed shall be issued to the transferor, provided that no certificate in denominations less than $1,000 or 1,000 as the case may be, shall be issued. Each new certificate to be issued shall be available for delivery within ten business days at the office of the Trustee or the transfer agent in London. The cost of preparing, printing, packaging and delivering the certificated Notes shall be borne by the Company. The Company shall not be required to register the transfer or exchange of certificated Notes for a period of 15 days preceding (a) the due date for any payment of principal of or interest on the Notes or (b) a selection of Notes to be redeemed. Also, the Company is not required to register the transfer or exchange of any Notes selected for redemption. In the event of the transfer of any certificated Note, the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and the Company may require a Holder to pay any taxes and fees required by law and permitted by the Indentures and the Notes. If certificated Notes are issued and a Holder of a certificated Note claims that the Note has been lost, destroyed or wrongfully taken or if such Note is mutilated and is surrendered to the Trustee, the Company shall issue and the Trustee shall authenticate a replacement Note if the Trustee's and the Company's requirements are met. If required by the Trustee or the Company, an indemnity bond sufficient in the judgment of both to protect the Company, the Trustee or any paying agent or authenticating agent appointed pursuant to the Indentures from any loss which any of them may suffer if a Note is replaced must be posted. The Company may charge for its expenses in replacing a Note. 97 In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, or is about to be redeemed or purchased by the Company pursuant to the provisions of the Indentures, the Company in its discretion may, instead of issuing a new Note, pay, redeem or purchase such Note, as the case may be. Registration Rights; Liquidated Damages The Company, the subsidiary guarantors and BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder & Co. Inc., as initial purchasers in the offering of the Outstanding Notes, entered into a Dollar Registration Rights Agreement and a Euro Registration Rights Agreement (together, the "Registration Rights Agreements"), each dated as of January 29, 1999. Pursuant to the Registration Rights Agreements, the Company and the subsidiary guarantors agreed to file with the Commission a registration statement with respect to the Exchange Notes, of which this Prospectus forms a part (the "Exchange Offer Registration Statement"). If applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer, or if for any other reason the Exchange Offer is not consummated within 195 days after January 29, 1999, or, under certain circumstances, if the initial purchasers of the Outstanding Notes so request, the Company will at its cost (a) as promptly as practicable, file a shelf registration statement covering resales of the Outstanding Notes (a "Shelf Registration Statement"), (b) use its best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act and (c) use its best efforts to keep effective such Shelf Registration Statement until the earlier of January 29, 2002 and such time as all of the applicable Outstanding Notes have been sold thereunder. The Company will, in the event of the filing of a Shelf Registration Statement, provide to each holder of the applicable Outstanding Notes copies of the prospectus which is a part of such Shelf Registration Statement, notify each such holder when such Shelf Registration Statement has become effective and take certain other actions as are required to permit unrestricted resales of such Outstanding Notes. A holder that sells its Outstanding Notes pursuant to a Shelf Registration Statement generally will be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreements which are applicable to such holder (including certain indemnification obligations). The Registration Rights Agreements provide that the Company will, at its own cost, (i) file an Exchange Offer Registration Statement with the Commission within 90 days after January 29, 1999, (ii) use its best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after January 29, 1999 and (iii) use its best efforts to consummate the Exchange Offer within 195 days after January 29, 1999. If (a) the Company fails to file any of the Registration Statements required by the Registration Rights Agreements on or before the date specified in the Registration Rights Agreements for such filing, (b) any of such Registration Statements is not declared effective on or prior to the date specified in the Registration Rights Agreements for such effectiveness (the "Effectiveness Target Date"), (c) the Company fails to exchange all applicable Outstanding Notes validly tendered in accordance with the terms of the Exchange Offer on or before the date specified in the Registration Rights Agreements for such exchange (the "Exchange Target Date") with respect to the Exchange Offer Registration Statement, or (d) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable for its intended purpose during the periods specified in the Registration Rights Agreements (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Company will pay liquidated damages in the form of additional interest ("Additional Interest"). In the case of a Registration Default, Additional Interest shall accrue on the applicable Outstanding Notes over and above the stated interest at a rate of 0.50% per annum for the first 90-day period immediately following the occurrence of the Registration Default, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; provided, however, that the Additional Interest rate on the applicable Outstanding Notes may 98 not exceed in the aggregate 1.0% per annum; provided further, that following the cure of all Registration Defaults, Additional Interest on the applicable Outstanding Notes as a result of such Registration Default shall cease to accrue. Any amounts of Additional Interest due in accordance with the immediately preceding paragraph will be payable in cash, on the same original interest payment dates as the applicable Outstanding Notes. The amount of Additional Interest will be determined by multiplying (x) the applicable Additional Interest rate by (y) the principal amount of the applicable Outstanding Notes by (z) a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. Holders of Outstanding Notes will be required to make certain representations to the Company (as described in the Registration Rights Agreements) in order to participate in the Exchange Offer and will be required to deliver information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreements in order to have their Outstanding Notes included in the Shelf Registration Statement and benefit from the provisions regarding liquidated damages set forth above. Holders of Outstanding Notes will also be required to suspend their use of the prospectus included in the Shelf Registration Statement under certain circumstances upon receipt of written notice to that effect from the Company. Certain Definitions Set forth below is a summary of certain of the defined terms used in the Indentures. Reference is made to the Indentures for the full definition of all such terms, as well as any other terms used herein for which no definition is provided. "Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Subsidiaries or assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary of the Company or such acquisition, merger or consolidation. "Acquisition" means the acquisition by the Company of the fuel dispenser, systems and services business of Schlumberger Limited. "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. "Asset Acquisition" means (a) an Investment by the Company or any Subsidiary of the Company in any other Person pursuant to which such Person shall become a Subsidiary of the Company or any Subsidiary of the Company, or shall be merged with or into the Company or any Subsidiary of the Company, or (b) the acquisition by the Company or any Subsidiary of the Company of the assets of any Person (other than a Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly Owned Subsidiary of the Company of (a) any Capital Stock of any Subsidiary of the Company or (b) any other property or assets of the Company or any Subsidiary of the Company other than in 99 the ordinary course of business; provided, however, that Asset Sales shall not include (i) a transaction or series of related transactions for which the Company or its Subsidiaries receive aggregate consideration of less than $500,000; (ii) sales of accounts receivable that the Company has classified as uncollectible; (iii) sales or other dispositions of Cash Equivalents; (iv) the sale of the stock of the Subsidiary of Tokheim Sofitam Applications, S.A. to which Tokheim Sofitam Applications S.A. has contributed its bulk meter business; and (v) the sale, lease, conveyance, disposition or other transfer (w) of all or substantially all of the assets of the Company as permitted under "Certain Covenants--Merger, Consolidation or Sale of Assets of the Company," (x) pursuant to any foreclosure of assets or other remedy provided by applicable law to a creditor of the Company or any Subsidiary of the Company with a Lien on such assets, which Lien is permitted under the Indentures; provided that such foreclosure or other remedy is conducted in a commercially reasonable manner or in accordance with any bankruptcy law, (y) involving only Cash Equivalents or inventory in the ordinary course of business or obsolete equipment in the ordinary course of business consistent with past practices of the Company or (z) involving only the lease or sublease of any real or personal property in the ordinary course of business. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Cash Equivalents" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit, eurodollar time deposits or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250.0 million; (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; and (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above. "Change of Control" means the occurrence of one or more of the following events: (i) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of the Indentures); (ii) any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act shall become the owner, directly or indirectly, beneficially or of record, of shares representing either more than 40% of the aggregate ordinary 100 voting power represented by the issued and outstanding Capital Stock of the Company or more than 40% of the aggregate issued and outstanding Common Stock of the Company; or (iii) the replacement of a majority of the Board of Directors of the Company over a two-year period from the directors who constituted the Board of Directors of the Company at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Company then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of (i) Consolidated Net Earnings and (ii) to the extent Consolidated Net Earnings has been reduced thereby, (A) all income taxes of such Person and its Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside the ordinary course of business or other transactions the effect of which has been excluded from Consolidated Net Earnings), (B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Earnings for such period, all as determined on a consolidated basis for such Person and its Subsidiaries in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four most recent full fiscal quarters for which financial information is available (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness of such Person or any of its Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital or revolving credit facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation) as a result of such Person or one of its Subsidiaries (including any Person who becomes a Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (provided that such Consolidated EBITDA shall be included only to the extent includable pursuant to the definition of "Consolidated Net Earnings") attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to 101 the rate of interest on such Indebtedness in effect on the Transaction Date; (2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person and its Subsidiaries (other than dividends paid in Qualified Capital Stock of the Company or dividends to the extent payable to the Company or its Subsidiaries) paid, accrued or scheduled to be paid or accrued during such period times (other than in the case of Preferred Stock of such Person and its Subsidiaries for which the dividends are tax deductible for federal income tax purposes) and (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum of, without duplication: (i) the aggregate of the interest expense of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation, (a) any amortization of debt discount (but excluding the amortization of debt issuance costs), (b) the net costs under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and (ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Earnings" means, with respect to any Person, for any period, the aggregate net earnings (or loss) of such Person and its Subsidiaries for such period on a consolidated basis (before preferred stock dividend requirements), determined in accordance with GAAP; provided that there shall be excluded therefrom (a) after-tax gains or losses from Asset Sales or abandonments or reserves relating thereto, (b) after-tax items classified as extraordinary or nonrecurring gains or losses, (c) the net earnings of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Subsidiary of the referent Person, (d) the net earnings (but not loss) of any Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by a contract, operation of law or otherwise, (e) the net earnings of any Person, other than a Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or to a Wholly Owned Subsidiary of the referent Person by such Person, (f) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Earnings accrued at any time following the Issue Date, (g) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued), (h) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets and (i) all gains or losses from the cumulative effect of any change in accounting principles. "Consolidated Net Worth" of any Person means the consolidated shareholders' equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) amounts attributable to Disqualified Capital Stock of such Person. "Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Subsidiaries reducing Consolidated Net Earnings of such Person and its Subsidiaries for such period, determined on a consolidated 102 basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge which requires an accrual of or a reserve relating to possible cash charges or expenditures for any future or past period). "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Designated Senior Debt" means (i) Indebtedness under or in respect of the New Credit Agreement or the ESOP Credit Agreements and (ii) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company. "Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof on or prior to the final maturity date of the Notes. "ESOP Credit Agreements" means those certain credit agreements among the Company, the Tokheim Employee Stock Ownership Plan, NBD Bank, N.A., and certain other banks, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder (provided that such increase in borrowings is permitted by the "Limitation on Incurrence of Additional Indebtedness" covenant above)) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders and any assignments thereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "Fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect as of the Issue Date. "Guarantor" means any Subsidiary of the Company which guarantees the Notes pursuant to the Indentures. "Guarantor Senior Debt" means with respect to any Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of a Guarantor, whether outstanding on the Issue Date or thereafter created, incurred 103 or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Subsidiary Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other monetary obligations of the Guarantors owing in respect of (x) all monetary obligations of every nature of the Company under the New Credit Agreement and the ESOP Credit Agreements including obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include (i) any Indebtedness of a Guarantor or any Affiliate of such Guarantor to a Subsidiary of the Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of a Guarantor or any Subsidiary of the Guarantor (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by a Guarantor, (vi) Indebtedness incurred in violation of the provisions set forth under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to a Guarantor, (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of a Guarantor and (ix) any guarantees of the Schlumberger Junior Subordinated Notes or any Warrant Repurchase Indebtedness, or guarantees of any Refinancing of the Schlumberger Junior Subordinated Notes or any Warrant Repurchase Indebtedness. "Holder" means the Person in whose name a Note is registered on the Registrar's books. "Indebtedness" means with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all indebtedness or other obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted), (v) all indebtedness for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all indebtedness of any other Person of the type referred to in clauses (i) through (vi) which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured, (viii) all indebtedness under Currency Agreements and Interest Swap Obligations of such Person and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indentures, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. "Independent Financial Advisor" means a firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company and (ii) which, in the 104 judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. "Investment" shall exclude extensions of trade credit by the Company and its Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Subsidiary, as the case may be. For the purposes of the "Limitation on Restricted Payments" covenant, the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Earnings. "Issue Date" means the date of original issuance of the Outstanding Notes. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Liquidated Damages" means all liquidated damages owing pursuant to the Registration Rights Agreements. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting, brokerage and investment banking fees and sales commissions), (b) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements, (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale and (d) appropriate amounts to be provided by the Company or any Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "New Credit Agreement" means the Second Amended and Restated Credit Agreement among the Company, certain of its Subsidiaries, the lenders party thereto in their capacities as lenders thereunder, NBD Bank, N.A., as administrative agent, and Credit Lyonnais, as collateral agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or 105 otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder (provided that such increase in borrowings is permitted by the "Limitation on Incurrence of Additional Indebtedness" covenant above)) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders. "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes and the Indentures; (ii) Indebtedness incurred pursuant to the New Credit Agreement and the ESOP Credit Agreements in an aggregate principal amount at any time outstanding not to exceed (A) $7.62 million with respect to the Indebtedness under the ESOP Credit Agreements, less the amount of all mandatory principal payments, if any (excluding any such payments to the extent refinanced at the time of payment under a replaced ESOP Credit Agreement) and (B) $250.0 million in the aggregate with respect to Indebtedness under the New Credit Agreement, reduced by any required permanent repayments, if any (which are accompanied by a corresponding permanent commitment reduction), thereunder; (iii) Other Indebtedness of the Company and its Subsidiaries outstanding on the Issue Date; (iv) Interest Swap Obligations of the Company covering Indebtedness of the Company or any of its Subsidiaries and Interest Swap Obligations of any Subsidiary of the Company covering Indebtedness of such Subsidiary; provided, however, that (x) (A) such Interest Swap Obligations are designed to protect the Company and its Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with the Indentures (and are used for bona fide hedging, and not speculative, purposes); and (B) the notional principal amount of such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates at the time entered into; or (y) such Interest Swap Obligations are required under the terms of the New Credit Agreement; (v) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements (x) (A) are designed to protect against fluctuations in currency value (and are used for bona fide hedging, and not speculative, purposes) and (B) do not increase the Indebtedness of the Company and its Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; or (y) are required under the terms of the New Credit Agreement; (vi) Indebtedness of a Wholly Owned Subsidiary of the Company to the Company or to a Wholly Owned Subsidiary of the Company for so long as such Indebtedness is held by the Company or a Wholly Owned Subsidiary of the Company, in each case subject to no Lien held by a Person other than the Company or a Wholly Owned Subsidiary of the Company other than a Lien required under the New Credit Agreement; provided that if as of any date any Person other than the Company or a Wholly Owned Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vii) Indebtedness of the Company to a Wholly Owned Subsidiary of the Company for so long as such Indebtedness is held by a Wholly Owned Subsidiary of the Company, in each case subject to no Lien other than a Lien required under the New Credit Agreement; provided that (a) any Indebtedness of the Company to any Wholly Owned Subsidiary of the Company is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Indentures and the Notes and (b) if as of any date any Person other than a Wholly Owned Subsidiary of the Company owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; 106 (viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within ten business days of incurrence; (ix) Indebtedness of the Company or any of its Subsidiaries represented by letters of credit for the account of the Company or such Subsidiary, as the case may be, in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; (x) Refinancing Indebtedness; (xi) Indebtedness incurred by the Company or any Subsidiary of the Company in connection with the purchase or improvement of property (real or personal) or equipment or other capital expenditures in the ordinary course of business or consisting of Capitalized Lease Obligations, provided that (i) at the time of the incurrence thereof, such Indebtedness, together with any other Indebtedness incurred during the most recently completed four fiscal quarter period in reliance upon this clause (xi) does not exceed, in the aggregate, 3% of the net sales of the Company and its Subsidiaries during the most recently completed four fiscal quarter period on a consolidated basis (calculated on a pro forma basis if the date of incurrence is prior to the end of the fourth fiscal quarter following the Issue Date) and (ii) such Indebtedness, together with all then outstanding Indebtedness incurred in reliance upon this clause (xi) does not exceed, in the aggregate, 3% of the aggregate net sales of the Company and its Subsidiaries during the most recently completed twelve fiscal quarter period on a consolidated basis (calculated on a pro forma basis if the date of incurrence is prior to the end of the twelfth fiscal quarter following the Issue Date); (xii) Indebtedness arising from agreements of the Company or a Subsidiary of the Company providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and the Subsidiary in connection with such disposition; (xiii) Obligations in respect of performance bonds and completion guarantees provided by the Company or any Subsidiary of the Company in the ordinary course of business; (xiv) Guarantees by the Company or a Subsidiary of the Company of Indebtedness incurred by the Company or a Subsidiary of the Company so long as the incurrence of such Indebtedness by the Company or any such Subsidiary of the Company is otherwise permitted by the terms of the Indentures; (xv) Schlumberger Junior Subordinated Notes; (xvi) Warrant Repurchase Indebtedness; (xvii) Indebtedness incurred by the Company or any Subsidiary of the Company in exchange for the use of Traits as collateral made in the ordinary course of business to financial institutions which Indebtedness has a value of no less than 90% of the face value of such Traits; (xviii) Indebtedness of the Company or a Subsidiary of the Company to a Subsidiary of the Company that is not a Wholly Owned Subsidiary in the aggregate principal amount not to exceed at any one time $10.0 million; provided that if as of any date any Person other than a Subsidiary of the Company that is not a Wholly Owned Subsidiary owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (xix) Indebtedness from bank overdraft facilities not to exceed $15.0 million at any time; and (xx) $10.0 million of other indebtedness of the Company or any of its Subsidiaries (which amount may, but need not, be incurred in whole or in part under the New Credit Agreement). 107 "Permitted Investments" means (i) Investments by the Company or any Subsidiary of the Company in any Person that is or will become immediately after such Investment a Wholly Owned Subsidiary of the Company or that will merge or consolidate into the Company or a Wholly Owned Subsidiary of the Company, (ii) Investments in the Company by any Subsidiary of the Company; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement and to the same extent that the Notes are subordinated to Senior Debt, to the Company's obligations under the Notes and the Indentures; (iii) Investments in cash and Cash Equivalents; (iv) loans and advances to employees and officers of the Company and its Subsidiaries totaling up to $5.0 million in the aggregate (A) in the ordinary course of business for bona fide business purposes or (B) to purchase the Company's Capital Stock; (v) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Subsidiaries' businesses and otherwise in compliance with the Indentures and in compliance with the New Credit Agreement; (vi) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (vii) Investments made by the Company or its Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with the "Limitation on Asset Sales" covenant; (viii) Investments existing on the Issue Date; (ix) Investments in an African Subsidiary in an aggregate amount not to exceed $2.0 million for which the Company is committed on the Issue Date; and (x) additional Investments in an aggregate amount not exceeding $5.0 million. "Permitted Liens" means the following types of Liens: (i) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) being contested in good faith by appropriate proceedings and as to which the Company or its Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent for a period of more than 60 days or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens securing letters of credit issued in the ordinary course of business consistent with past practice in connection with the items referred to in clause (iii), or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (v) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (vi) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Subsidiaries; (vii) any interest or title of a lessor under any Capitalized Lease Obligation; provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation; (viii) purchase money Liens to finance property or assets of the Company or any Subsidiary of the Company acquired in the ordinary course of business; provided, however, that (A) the related purchase money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any 108 property or assets of the Company or any Subsidiary of the Company other than the property and assets so acquired and (B) the Lien securing such Indebtedness shall be created within 90 days of such acquisition; (ix) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (x) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (xi) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Subsidiaries, including rights of offset and set-off; (xii) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under the Indentures; (xiii) Liens securing Indebtedness under Currency Agreements; (xiv) Liens securing Acquired Indebtedness incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant; provided that (A) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company and (B) such Liens do not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the Company; (xv) Leases or subleases granted to others not interfering in any material respect with the business of the Company or any of its Subsidiaries; (xvi) Any interest or title of a lessor in the property subject to any lease, whether characterized as capitalized or operating, other than any such interest or title resulting from or arising out of a default by the Company or any of its Subsidiaries on its obligations under such lease; (xvii) Liens arising from filing UCC financing statements for precautionary purposes in connection with true leases of personal property that are otherwise permitted under the Indentures and under which the Company or any of its Subsidiaries is lessee; (xviii) Liens placed on Traits used as collateral in exchange for loans provided to the Company or its Subsidiaries; and (xix) Liens in favor of the Trustee and any substantially equivalent Lien granted to any trustee or similar institution under any indenture governing Indebtedness permitted to be Incurred or outstanding under the Indentures. "Person" means an individual, partnership, corporation, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "Qualified Capital Stock" means any Capital Stock of the Company that is not Disqualified Capital Stock. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. 109 "Refinancing Indebtedness" means any Refinancing by the Company or any Subsidiary of the Company of Indebtedness incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant (other than pursuant to clause (iv), (v), (vi), (vii), (viii), (ix), (xi) or (xvii) of the definition of Permitted Indebtedness), in each case that does not (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium or penalty required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable fees and expenses incurred by the Company in connection with such Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided that (x) if such Indebtedness being Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced is the Schlumberger Junior Subordinated Notes, Warrant Repurchase Indebtedness or any Refinancing thereof, then such Refinancing Indebtedness shall (i) be subordinate or junior to the Notes at least to the same extent and in the same manner as the Schlumberger Junior Subordinated Notes as in effect on the Issue Date, (ii) provide for no cash interest payments prior to October 2004, (iii) have covenants no more adverse to the Company than the Schlumberger Junior Subordinated Notes and (iv) have an effective interest rate not greater than 14% provided, however, that prior to the incurrence of such Indebtedness, Moody's Investors Service, Inc. will have affirmed that its rating of the Notes will not decrease by one or more gradations below its rating in effect on the Issue Date. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt in respect of any Designated Senior Debt. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Subsidiary of the Company of any property, whether owned by the Company or any Subsidiary of the Company at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property. "Schlumberger Junior Subordinated Notes" means (i) the $40.0 million Junior Subordinated Notes issued by the Company to Schlumberger in connection with the Acquisition pursuant to the Junior Subordinated Notes Indenture, as amended up to the Issue Date, between the Company and Harris Trust and Saving Bank, as trustee and (ii) additional subordinated notes issued as payment of interest thereon. "Schlumberger Warrants" means the warrants issued by the Company to Schlumberger as part of the consideration for the Acquisition. "Securities Act" means the Securities Act of 1933, as amended, or any successor statute or statutes thereto. "Senior Debt" means, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other Obligations with respect to, any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing 110 of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other monetary obligations of the Company or any Subsidiary of the Company owing in respect of, (x) the New Credit Agreement and the ESOP Credit Agreements, including obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) Obligations under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include (i) any Indebtedness of the Company to a Subsidiary of the Company, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by the Company, (vi) Indebtedness incurred in violation of the provisions set forth under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company, (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company and (ix) the Schlumberger Junior Subordinated Notes, any Warrant Repurchase Indebtedness or any Refinancing of the Schlumberger Junior Subordinated Notes or any Warrant Repurchase Indebtedness. "Significant Subsidiary" shall have the meaning set forth in Rule 1.02(v) of Regulation S-X under the Securities Act. "Subsidiary," with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "Subsidiary Guarantee" shall mean any guarantee of the Notes by any Guarantor pursuant to the Indentures. "Traits" means "traites" (as defined under French law), accounts receivable or invoices. "Warrant Repurchase Indebtedness" means (i) up to $20.0 million of Indebtedness incurred by the Company to repurchase Schlumberger Warrants (or a pro rata portion of $20.0 million, if less than all the Schlumberger Warrants are repurchased) plus reasonable fees and expenses incurred in connection therewith, provided, however, that such Indebtedness (a) is subordinated to the Notes at least to the same extent as the Schlumberger Junior Subordinated Notes, (b) contains covenants no more adverse to the Company than the Schlumberger Junior Subordinated Notes, (c) bears interest at an effective rate not to exceed 14% per annum, which interest shall not be paid in cash prior to October 2004, (d) contains no mandatory prepayment provisions and (e) matures at least 6 months after the maturity of the Notes plus (ii) additional Indebtedness with the same terms incurred in payment of interest thereon; provided, however, that prior to the incurrence of such Indebtedness, Moody's Investors Service, Inc. will have affirmed that its rating of the Notes will not decrease by one or more gradations below its rating in effect on the Issue Date. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a foreign Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person. 111 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a discussion of certain U.S. federal income tax consequences of the purchase, ownership and disposition of the Exchange Notes as of the date hereof. It deals only with Exchange Notes held as capital assets by initial holders of the Outstanding Notes, and does not deal with special situations, such as those of dealers in securities or currencies, financial institutions, banks, tax-exempt organizations, insurance companies, holders that are partnerships or other pass-through entities and holders whose "functional currency" is not the U.S. dollar, or special rules with respect to "straddle," "conversion," "hedging" or "constructive sales" transactions. The discussion below is based upon the Internal Revenue Code of 1986, as amended (the "Code") and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified (possibly with retroactive effect) so as to result in federal income tax consequences different from those discussed below. This discussion is not binding on the Internal Revenue Service (the "IRS") or the courts. No ruling has been sought or will be sought from the IRS with respect to the positions and issues discussed herein, and there can be no assurance that the IRS will not take a different position concerning the tax consequences of the purchase, ownership or disposition of the Exchange Notes or that any such position would not be sustained. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF EXCHANGE NOTES THAT MAY BE SPECIFIC TO THEM, INCLUDING THE TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN LAWS. As used herein, the term "U.S. Holder" means a beneficial owner of an Exchange Note that is for United States federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation created or organized under the laws of the United States or any political subdivision thereof or therein, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of source, or (iv) a trust if both: (A) a U.S. court is able to exercise primary supervision over the administration of the trust, and (B) one or more U.S. persons have the authority to control all substantial decisions of the trust (a "U.S. Holder"). As used herein, the term "Non-U.S. Holder" means a holder of an Exchange Note that is not a U.S. Holder. U.S. Holders Interest Interest on the Exchange Notes generally will be taxable to a U.S. Holder as ordinary interest income at the time accrued or received in accordance with the U.S. Holder's regular method of accounting for federal income tax purposes. Under certain circumstances described above, the Company will be required to pay Additional Interest on the Outstanding Notes if it fails to comply with certain of its obligations under the Registration Rights Agreements. See "Description of the Exchange Notes--Registration Rights; Liquidated Damages." Although not certain, such additional amount should be taxable to a U.S. Holder as ordinary income at the time it accrues or is received in accordance with such holder's regular method of accounting for federal income tax purposes. It is possible, however, that the IRS may take a different position, in which case the timing and the amount of income on the Notes may be different. A U.S. Holder who uses the cash method of accounting for federal income tax purposes and who receives interest on a Euro Exchange Note in Euros will be required to include in income the U.S. dollar value of such Euros, determined using the spot rate in effect on the date such payment is received, regardless of whether the payment is in fact converted to U.S. dollars at that time. No exchange gain or loss will be recognized by such holder if the Euros are converted to U.S. dollars on the date received. The U.S. federal income tax consequences of the conversion of Euros into U.S. dollars are described below. See "Exchange of Foreign Currencies." 112 A U.S. Holder who uses the accrual method of accounting for federal income tax purposes (or who is otherwise required to accrue interest prior to receipt) will be required to include in income the U.S. dollar value of the amount of interest income accrued (or otherwise required to be taken into account) with respect to a EURO Note in a taxable year. The U.S. dollar value of such accrued income will be determined by translating such income at the average rate of exchange for the relevant interest accrual period, or with respect to an accrual period that spans two taxable years, at the average rate for the portion of such accrual period within the taxable year. The average rate of exchange for an interest accrual period (or portion thereof) is the simple average of the exchange rates for each business day of such period (or such other average that is reasonably derived and consistently applied). An accrual basis U.S. Holder may elect, however, to translate such accrued interest income using the spot rate of exchange in effect on the last day of the accrual period or, with respect to an accrual period that spans two taxable years, using the spot rate of exchange in effect on the last day of the taxable year. If the last day of an accrual period is within five business days of the receipt of the accrued interest, a U.S. Holder may translate such interest using the spot rate of exchange in effect on the date of receipt. The above election must be made in a statement filed with the U.S. Holder's U.S. tax return and will apply to other debt obligations held by the U.S. Holder at the beginning of the first taxable year in which the election applies or acquired thereafter and may not be changed without the consent of the IRS. Whether or not such election is made, a U.S. Holder may recognize exchange gain or loss (which will be treated as ordinary income or loss) with respect to accrued interest income on the date such interest income is received. The amount of ordinary income or loss recognized will equal the difference, if any, between the U.S. dollar value of the Euros received (determined using the spot rate in effect on the date such payment is received) in respect of such interest accrual period and the U.S. dollar value of the interest income that has accrued during such interest accrual period (as determined above). No additional exchange gain or loss will be recognized by such holder if the Euros are converted to U.S. dollars on the date received. The U.S. federal income tax consequences of the conversion of Euros into U.S. dollars are described below. See "--Exchange of Foreign Currencies." Exchange Offer The exchange of the Outstanding Notes for the Exchange Notes will not be treated as an "exchange" for U.S. federal income tax purposes. Accordingly, a U.S. Holder will not recognize any taxable gain or loss on the exchange of Outstanding Notes for Exchange Notes pursuant to the Exchange Offer, and a U.S. Holder will have the same adjusted tax basis and holding period in the Exchange Notes as the U.S. Holder had in the Outstanding Notes exchanged therefor. Dispositions Upon the sale, exchange, retirement or other disposition of an Exchange Note, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between the amount realized on the disposition (other than any amounts attributable to accrued but unpaid interest income) and such holder's adjusted tax basis in the Exchange Note. Such gain or loss generally will be capital gain or loss (except with respect to gains or losses attributable to changes in currency exchange rates, as described below). To the extent that the amount realized represents accrued but unpaid interest, however, such amounts must be taken into account as interest income, with exchange gain or loss computed as described above. If a U.S. Holder receives foreign currency on such a sale, exchange or retirement, the amount realized will be based on the U.S. dollar value of the foreign currency on the date of disposition assuming the Exchange Notes are not traded on an established securities market. If the Euro Exchange Notes are traded on an established securities market, there is a special rule for purchases and sales of Euro Exchange Notes by a cash basis taxpayer under which units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the settlement date of the purchase or sale. In that case, no exchange gain or loss will result from currency fluctuations between the trade date and the 113 settlement of such a purchase or sale. In such event, an accrual basis taxpayer may elect the same treatment required of cash basis taxpayers with respect to purchases and sales of Euro Exchange Notes, provided the election is applied consistently. Such election cannot be changed without the consent of the IRS. Gain or loss realized by a U.S. Holder upon the sale, exchange or retirement of an Exchange Note that is attributable to fluctuations in the rate of exchange between the U.S. dollar and the Euro will be ordinary income or loss and generally will not be treated as interest income or expense. Gain or loss attributable to fluctuations in exchange rates will equal the difference between the U.S. dollar value of the foreign currency principal amount of the Exchange Note, determined on the date such payment is received or the Exchange Note is disposed of, and the U.S. dollar value of the foreign currency principal amount of the Exchange Note, determined on the date the U.S. Holder acquired the Exchange Note. Such foreign currency gain or loss will be recognized only to the extent of the total gain or loss realized by the U.S. Holder on the sale, exchange or retirement of the Exchange Note. For certain non-corporate U.S. Holders (including individuals), the rate of taxation of capital gains will depend upon (i) the holder's holding period in the capital asset (with a preferential rate generally available for capital assets held for more than one year) and (ii) the holder's marginal tax rate for ordinary income. The deductibility of capital losses is subject to limitations. Exchange of Foreign Currencies A U.S. Holder will have a tax basis in any Euros received as interest or on the sale, exchange, retirement or other disposition of an Exchange Note equal to their U.S. dollar value at the time the interest is received or at the time payment is received in consideration of the sale, exchange or retirement. Any gain or loss realized by a U.S. Holder on a sale or other disposition of Euros will be ordinary income or loss. Non-U.S. Holders The following discussion is limited to the U.S. federal income tax consequences relevant to a holder of an Exchange Note that is a Non-U.S. Holder. Interest Payments of interest on an Exchange Note to any Non-U.S. Holder will generally not be subject to U.S. federal income or withholding tax, provided that (1) the holder is not (i) a direct or indirect owner (taking into account certain attribution rules) of 10% or more of the total voting power of all voting stock of the Company or (ii) a controlled foreign corporation related to the Company through stock ownership, (2) such interest payments are not effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States and (3) the Company or its paying agent receives (i) from the Non-U.S. Holder, a properly completed Form W-8 (or substitute Form W-8) under penalties of perjury which provides the Non-U.S. Holder's name and address and certifies that the Non-U.S. Holder of the Exchange Note is a Non-U.S. Holder or (ii) from a security clearing organization, bank or other financial institution that holds the Exchange Notes in the ordinary course of its trade or business (a "financial institution") on behalf of the Non-U.S. Holder, certification under penalties of perjury that such a Form W-8 (or substitute Form W-8) has been received by it, or by another such financial institution, from the Non-U.S. Holder, and a copy of the Form W- 8 (or substitute Form W-8) is furnished to the payor. A Non-U.S. Holder that does not qualify for exemption from withholding under the preceding paragraph generally will be subject to withholding of U.S. federal income tax at the rate of 30% (or lower applicable treaty rate) on payments of interest on the Exchange Notes. If the payments of interest on an Exchange Note are effectively connected with the conduct by a Non-U.S. Holder of a trade or business in the United States, such payments will be subject to U.S. federal income tax on a net basis at the rates applicable to United States persons generally (and, with respect to corporate holders, 114 may also be subject to a 30% branch profits tax). If payments are subject to U.S. federal income tax on a net basis in accordance with the rules described in the preceding sentence, such payments will not be subject to United States withholding tax so long as the holder provides the Company or its paying agent with a properly executed Form 4224. Non-U.S. Holders should consult any applicable income tax treaties, which may provide for a lower rate of withholding tax, exemption from or reduction of branch profits tax, or other rules different from those described above. Dispositions Any gain realized by a Non-U.S. Holder on the sale, exchange, retirement or other disposition of an Exchange Note generally will not be subject to U.S. federal income or withholding tax, unless (i) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business within the United States, (ii) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are satisfied, or (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law applicable to certain U.S. expatriates. Federal Estate Tax In general, Exchange Notes held (or treated as held) by an individual who is a Non-U.S. Holder at the time of his or her death will not be subject to U.S. federal estate tax provided that (i) the individual does not actually or constructively own 10% or more of the total voting power of all voting stock of the company and (ii) income on the Exchange Notes was not effectively connected with the conduct by such Non-U.S. Holder of a trade or business within the United States. Information Reporting and Backup Withholding Payments with respect to the Exchange Notes and the proceeds upon the sale or other disposition of the Exchange Notes may be subject to information reporting and possibly U.S. backup withholding at a 31% rate. Backup withholding will not apply to a U.S. Holder who furnishes its correct taxpayer identification number and provides other certification. Backup withholding and information reporting will not apply to payments made by the Company in respect to the Exchange Notes to a Non-U.S. Holder, if the holder certifies, under penalties of perjury, that it is not a U.S. person and provides its name and address (provided that neither the Company nor its paying agent has actual knowledge that the holder is a U.S. person) or the Non-U.S. Holder otherwise establishes an exemption. Copies of information returns may be made available, under the provisions of a specific treaty or agreement, to the tax authorities of the country in which the Non-U.S. Holder resides. Payment of proceeds from the disposition of Exchange Notes to or through the United States office of any broker, U.S. or foreign, will be subject to information reporting and backup withholding unless the owner certifies as to its non-U.S. status under penalty of perjury or otherwise establishes an exemption, provided that the broker does not have actual knowledge that the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of an Exchange Note to or through a non-U.S. office of a non-U.S. broker that is not a U.S. related person generally will not be subject to information reporting or backup withholding. For this purpose, a "U.S. related person" is (i) a "controlled foreign corporation" for U.S. federal income tax purposes or (ii) a foreign person 50% or more of whose gross income from all sources for the three year period ending with the close of its taxable year preceding the payment (or for such part of the period that the broker has been in existence) is derived from activities that are effectively connected with the conduct of a U.S. trade or business. In the case of the payment of proceeds from the disposition of Exchange Notes to or through a non-U.S. office of a broker that is a U.S. person or a U.S. related person, the regulations require information reporting, but not backup withholding, on the payment unless the broker has documentary evidence in its files that the owner is not a U.S. person and the broker has no knowledge to the contrary. 115 Amounts withheld under the backup withholding rules do not constitute a separate United States federal income tax. Rather, any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a holder's federal income tax liability, if any, provided that the requisite procedures are followed. The Treasury Department recently promulgated final regulations regarding the withholding and information reporting rules discussed above. In general, the final regulations do not significantly alter the substantive withholding and information reporting requirements but rather unify current certification procedures and forms and clarify certain standards governing the information upon which a withholding agent may rely. The final regulations are generally effective for payments made after December 31, 1999, subject to certain transition rules. Non-U.S. Holders should consult their own tax advisors with respect to the impact, if any, of the final regulations. 116 PLAN OF DISTRIBUTION Based on interpretations by the SEC set forth in no-action letters issued to third parties in similar transactions, the Company believes that the Exchange Notes issued in the Exchange Offer in exchange for the Outstanding Notes may be offered for resale, resold and otherwise transferred by holders without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the Exchange Notes are acquired in the ordinary course of such holders' business and the holders are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of Exchange Notes. This position does not apply to any holder that is (1) an "affiliate" of the Company within the meaning of Rule 406 under the Securities Act, (2) a broker-dealer who acquired Notes directly from the Company or (3) broker-dealers who acquired Notes as a result of market-making or other trading activities. Any broker-dealers ("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer are subject to a prospectus delivery requirement with respect to resales of the Exchange Notes. To date, the SEC has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as the exchange pursuant to the Exchange Offer (other than a resale of an unsold allotment from the sale of the Outstanding Notes to the initial purchasers) with this Prospectus. Each broker-dealer receiving Exchange Notes for its own account in the Exchange Offer must acknowledge that it will deliver a Prospectus in any resale of the Exchange Notes. Participating Broker-Dealers may use this Prospectus in reselling Exchange Notes, if the Outstanding Notes were acquired for their own accounts as a result of market-making activities or other trading activities. The Company has agreed that a Participating Broker-Dealer may use this Prospectus in reselling Exchange Notes for a period ending 180 days after the Expiration Date. A Participating Broker-Dealer intending to use this Prospectus in the resale of Exchange Notes must notify the Company, on or before the Expiration Date, that it is a Participating Broker-Dealer. This notice may be given in the space provided for in the Letter of Transmittal or may be delivered to the appropriate Exchange Agent. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus, and any amendment or supplement to this Prospectus, available to any broker-dealer that requests these documents in the Letter of Transmittal. See "The Exchange Offer--Resales of Exchange Notes" for more information. The Company will not receive any cash proceeds from the Exchange Notes. Broker-dealers acquiring Exchange Notes for their own accounts may sell the notes in one or more transactions in the over-the-counter market, in negotiated transactions, through writing options on the Exchange Notes or a combination of such methods. Any resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer and/or the purchasers of Exchange Notes. Any broker-dealer reselling Exchange Notes that it received in the Exchange Offer and any broker or dealer that participates in a distribution of Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act. Any profit on any resale of Exchange Notes and any commissions or concessions received by any persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver any by delivering a Prospectus, a broker- dealer will not admit that it is an "underwriter" within the meaning of the Securities Act. LEGAL MATTERS The validity of the Exchange Notes offered hereby will be passed upon for the Company by Norman L. Roelke, Esq., Vice President, Secretary and General Counsel of the Company. 117 INDEPENDENT ACCOUNTANTS The financial statements of Tokheim Corporation and Subsidiaries as of November 30, 1998 and 1997 and for each of the three years in the period ended November 30, 1998, included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given the authority of said firm as experts in auditing and accounting. The financial statements of Retail Petroleum Systems as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997, included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers, independent accountants, given the authority of said firm as experts in auditing and accounting. 118 GENERAL LISTING INFORMATION Listing The Certified Certificate of Incorporation of the Company and the legal notice relating to the issue of the Exchange Notes will be deposited prior to any listing on the Luxembourg Stock Exchange with the Registrar of the District Court in Luxembourg (Greffier en Chef du Tribunal d'Arrondissement a Luxembourg), where such documents are available for inspection and where copies thereof can be obtained upon request. As long as the Exchange Notes are listed on the Luxembourg Stock Exchange, an Agent for making payments on, and transfers of, Exchange Notes will be maintained in Luxembourg. Independent Accountants The consolidated accounts of Tokheim Corporation and Subsidiaries for the three years ended November 30, 1998 have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and have been audited by PricewaterhouseCoopers LLP in accordance with United States generally accepted auditing standards. The unaudited consolidated interim accounts for the three months ended February 28, 1998 and 1999 were prepared in accordance with U.S. GAAP. PricewaterhouseCoopers LLP has given and not withdrawn their written consent to the issue of this Prospectus with the inclusion in it of their report in the form and context in which it is included. The consolidated accounts of Retail Petroleum Systems for the three years ended December 31, 1997 have been prepared in accordance with United States generally accepted accounting principles and have been audited by PricewaterhouseCoopers in accordance with United States generally accepted auditing standards. The unaudited consolidated interim accounts for the nine months ended September 30, 1997 and 1998 were prepared in accordance with U.S. GAAP. PricewaterhouseCoopers has given and not withdrawn their written consent to the issue of this Prospectus with the inclusion in it of their report in the form and context in which it is included. Documents for Inspection For so long as the Exchange Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, copies of the following documents may be inspected at the specified office of the Paying Agent and Registrar in Luxembourg. .Certified Certificate of Incorporation of the Company; and .the Indentures relating to the Exchange Notes (which include the forms of the Exchange Note certificates). In addition, copies of the most recent consolidated financial statements of the Company for the preceding financial year, and any interim quarterly financial statements published by the Company, will be available at the specified office of the Paying Agent in Luxembourg for so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require. The Company publishes only consolidated financial statements. Notices All notices shall be deemed to have been given upon (i) the mailing by first class mail, postage prepaid, of such notices to Holders of the Exchange Notes at their registered addresses as recorded in the Register; and (ii) for so long as the Exchange Notes are listed on the Luxembourg Stock Exchange and it is required by the rules of the Luxembourg Stock Exchange, publication of such notice to the Holders of the Exchange Notes in English in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, if such publication is not practicable, in one other leading English language daily newspaper with general circulation in Europe, such newspaper being published on each business day in morning editions, whether or not it shall be published in Saturday, Sunday or holiday editions. 119 WHERE YOU CAN FIND MORE INFORMATION We have filed the Registration Statement regarding the Exchange Notes with the Commission. This Prospectus does not contain all of the information included in the Registration Statement. Any statement made in this Prospectus concerning the contents of any other document is not necessarily complete. If we have filed any other document as an exhibit to the Registration Statement, you should read the exhibit for a more complete understanding of the document or matter. Each statement regarding any other document does not necessarily contain all of the information important to you. We file annual, quarterly and special reports, proxy statements and other information with the Commission. You may read and copy any documents we file at the Commission's public reference rooms at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional offices located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, New York, New York 10048. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms. Our Commission filings are also available to the public at the SEC's web site at http://www.sec.gov. In addition, reports, proxy statements and other information about the Company (symbol: TOK) can be reviewed and copied at the offices of the New York Stock Exchange, on which our common stock is listed, at 20 Broad Street, New York, New York 10005. The Indentures require us to file reports and other information required to be filed under the Exchange Act with the Commission and provide such information to you, upon request, regardless of whether our Company is subject to the reporting requirements of the Exchange Act. See "Description of the Exchange Notes--Certain Covenants--Reports to Holders." INFORMATION INCORPORATED BY REFERENCE The Commission allows us to "incorporate by reference" the information we file with them, meaning that we can disclose important information by referring you to those documents. The information incorporated by reference is considered to be part of this Prospectus, and information filed later with the Commission will update and supersede the information then on file. We incorporate by reference our Commission filings listed below (File No. 001-06018) and any other documents we file with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the Exchange Offer is completed. 1. Annual Report on Form 10-K for the fiscal year ended November 30, 1998 (filed March 1, 1999); 2. Current Report on Form 8-K/A filed December 14, 1998; and 3. Quarterly Report on Form 10-Q for the quarter ended February 28, 1999 (filed April 14, 1999). On the request of any person to whom a copy of this Prospectus is delivered, we will provide, without charge, a copy of any or all of the documents incorporated herein by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference). Written requests for such copies should be directed to Tokheim Corporation, 10501 Corporate Drive, Fort Wayne, Indiana 46845, telephone number (219) 470-4600 Attention: Executive Vice President, Finance and Administration and Chief Financial Officer. For so long as the Exchange Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Company's quarterly and annual filings will be available free of charge in Luxembourg. You should rely only on the information incorporated by reference or provided in this Prospectus or any prospectus supplement. The Company has not authorized anyone to provide you with different or additional information. We are not making an offer to sell any notes in any state or country where the Exchange Offer is not permitted. You should not assume that the information in this Prospectus or any prospectus supplement is accurate as of any date other than the date on the front of this document. 120 INDEX TO FINANCIAL STATEMENTS Consolidated Financial Statements of Tokheim Corporation and Subsidiaries Consolidated Condensed Statement of Earnings for the three months ended February 28, 1999 and 1998 (unaudited)................................. F-2 Consolidated Condensed Balance Sheet as of February 28, 1999 (unaudited) and November 30, 1998.................................................. F-3 Consolidated Condensed Statement of Cash Flows for the three months ended February 28, 1999 and 1998 (unaudited)........................... F-4 Notes to the Consolidated Financial Statements.......................... F-5 Report of Independent Accountants....................................... F-14 Consolidated Statement of Earnings for the years ended November 30, 1998, 1997 and 1996.................................................... F-15 Consolidated Statement of Cash Flows for the years ended November 30, 1998, 1997 and 1996.................................................... F-16 Consolidated Balance Sheet as of November 30, 1998 and 1997............. F-17 Consolidated Statement of Shareholders' Equity for the years ended November 30, 1998, 1997 and 1996....................................... F-19 Notes to Consolidated Financial Statements.............................. F-20 Combined Financial Statements of Retail Petroleum Systems Combined Condensed Balance Sheets as of September 30, 1998 (unaudited) and December 31, 1997.................................................. F-56 Unaudited Combined Condensed Statements of Income for the nine months ended September 30, 1998 and 1997...................................... F-57 Unaudited Combined Statements of Cash Flows for the nine months ended September 30, 1998 and 1997............................................ F-58 Notes to the Combined Financial Statements (unaudited).................. F-59 Report of Independent Accountants....................................... F-61 Combined Statements of Income for the years ended December 31, 1997, 1996 and 1995.......................................................... F-62 Combined Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995.......................................................... F-63 Combined Balance Sheets as of December 31, 1997 and 1996................ F-64 Combined Statements of Equity for the years ended December 31, 1997, 1996 and 1995.......................................................... F-65 Notes to Financial Statements........................................... F-66
F-1 TOKHEIM CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (Amounts in thousands except amounts per share)
Three Months Ended ------------------------- February 28, February 28, 1999 1998 ------------ ------------ (Unaudited) Net sales................... $166,193 $90,852 Cost of sales, exclusive of items listed below......... 133,297 67,074 Selling, general, and administrative expenses.... 25,767 16,257 Depreciation and amortization............... 6,892 2,500 Merger and acquisition costs and other unusual items.... 1,123 5,987 -------- ------- Operating loss.............. (886) (966) -------- ------- Interest expense, net....... 12,307 4,011 Foreign currency loss....... 1,438 35 Minority interest........... 94 73 Other (income), net......... (154) 221 -------- ------- Loss before income taxes.... (14,571) (5,306) Income taxes................ (393) 300 -------- ------- Loss before extraordinary item....................... (14,178) (5,606) Extraordinary loss on debt extinguishment............. (6,249) -- -------- ------- Net loss.................... $(20,427) $(5,606) ======== ======= Preferred stock dividends... (374) (374) Loss applicable to common stock.................... $(20,801) $(5,980) Loss per common share: Basic: Before extraordinary loss................... $ (1.15) $ (0.72) Extraordinary loss on debt extinguishment.... (0.49) -- -------- ------- Net loss................ $ (1.64) $ (0.72) ======== ======= Weighted average shares outstanding............ 12,662 8,250 Diluted: Before extraordinary loss................... $ (1.15) $ (0.72) Extraordinary loss on debt extinguishment.... (0.49) -- -------- ------- Net loss................ $ (1.64) $ (0.72) ======== ======= Weighted average shares outstanding............ 12,662 8,250
F-2 TOKHEIM CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET (In thousands)
February 28, November 30, 1999 1998 ------------ ------------ (Unaudited) Assets Current assets: Cash and cash equivalents.......................... $ 34,720 $ 26,801 Accounts receivables, net.......................... 146,946 172,693 Inventories: Raw materials and supplies....................... 67,062 70,545 Work in process.................................. 22,557 27,418 Finished goods................................... 22,816 25,070 -------- -------- 112,435 123,033 Other current assets............................... 21,132 19,139 -------- -------- Total current assets........................... 315,233 341,666 Property, plant, and equipment, net.................. 75,874 77,905 Other tangible assets................................ 3,746 4,873 Goodwill, net........................................ 300,489 324,113 Other non-current assets and deferred charges, net... 29,564 28,085 -------- -------- Total assets................................... $724,906 $776,642 ======== ======== Liabilities and Shareholders' Equity Current maturities of long-term debt............... $ 1,911 $ 2,110 Notes payable to banks............................. 383 410 Cash overdrafts.................................... 15,012 15,064 Accounts payable................................... 74,908 95,322 Accrued expenses................................... 134,151 136,164 -------- -------- Total current liabilities...................... 226,365 249,070 Notes payable, bank credit agreement................. 185,146 182,145 Senior notes......................................... -- 22,500 Senior subordinated notes............................ 205,690 170,000 Junior subordinated payment in kind note............. 41,200 40,000 Other long-term debt, less current maturities........ 3,570 4,115 Guaranteed Employees' Stock Ownership Plan obligation.......................................... 6,347 6,987 Post-retirement benefit liability.................... 14,799 14,418 Minimum pension liability............................ 3,135 3,135 Other long-term liabilities.......................... 7,141 7,511 -------- -------- 693,393 699,881 -------- -------- Redeemable convertible preferred stock............... 24,000 24,000 Guaranteed Employees' Stock Ownership Plan obligation.......................................... (6,347) (6,987) Treasury stock, at cost.............................. (4,712) (4,883) -------- -------- 12,941 12,130 -------- -------- Common stock......................................... 90,354 90,354 Common stock warrants................................ 20,000 20,000 Minimum pension liability............................ (3,135) (3,135) Foreign currency translation adjustments............. (47,855) (22,598) Accumulated deficit.................................. (40,096) (19,295) -------- -------- 19,268 65,326 Less treasury stock, at cost......................... (695) (695) -------- -------- 18,572 64,631 -------- -------- Total liabilities and shareholders' equity..... $724,906 $776,642 ======== ========
F-3 TOKHEIM CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (In thousands)
Three Months Ended ------------------------- February 28, February 28, 1999 1998 ------------ ------------ (Unaudited) Cash flows from operating activities: Net loss........................................... $ (20,427) $ (5,606) Adjustments to reconcile net loss to cash used in operations: Write-off of in process research and development. -- 5,879 Payment in kind interest......................... 1,200 -- Extraordinary loss on debt extinguishment........ 6,249 -- Depreciation and amortization.................... 6,892 2,500 Gain on sale of equipment........................ (18) -- Deferred income taxes............................ (135) (183) Changes in assets and liabilities: Accounts receivables, net........................ 20,529 11,281 Inventories...................................... 4,247 (4,192) Other current assets............................. (2,774) (451) Accounts payable................................. (17,921) (6,707) Accrued expenses................................. 1,222 (8,340) Other............................................ (372) 478 --------- -------- Net cash used in operations.................... (1,308) (5,341) --------- -------- Cash flows from investing activities: Acquisition, net of cash acquired.................. -- (10,641) Plant and equipment additions...................... (4,996) (1,885) --------- -------- Net cash used in investing activities.......... (4,996) (12,526) --------- -------- Cash flows from financing activities: Redemption of senior notes......................... (22,500) -- Proceeds from senior subordinated notes............ 209,647 -- Redemption of senior subordinated notes............ (170,000) -- Decrease in other debt............................. (438) (122) Increase in notes payable, banks................... 3,001 20,644 Increase (decrease) in cash overdraft.............. 463 (504) Debt issuance costs................................ (6,084) -- Proceeds from issuance of common stock............. -- 158 Premiums paid on debt redemption................... (555) -- Treasury stock, net................................ 170 4 Preferred stock dividends.......................... (374) (374) --------- -------- Net cash provided from financing activities.... 13,330 19,806 --------- -------- Effect of translation adjustments on cash............ 893 (250) Cash and cash equivalents: Increase in cash................................... 7,919 1,689 Beginning of year.................................. 26,801 6,438 --------- -------- End of period...................................... $ 34,720 $ 8,127 ========= ========
F-4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The interim financial statements are unaudited and reflect all adjustments (consisting solely of normal recurring adjustments) that, in the opinion of management, are necessary for a fair statement of the interim periods presented. This report includes information in a condensed format and should be read in conjunction with the audited consolidated financial statements included in Tokheim Corporation's (the "Company") Annual Report to Shareholders for the year ended November 30, 1998. The results of operations for the three months ended February 28, 1999 are not necessarily indicative of the results to be expected for the full year or any other interim period. Amounts for interim periods are unaudited. Amounts for the year ended November 30, 1998 were derived from audited consolidated financial statements included in the 1998 Annual Report to Shareholders. Certain prior period amounts in these financial statements have been reclassified to conform with current year presentation. New Accounting Pronouncements SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," are effective for the year ending November 30, 1999. In the opinion of management, these statements will not have a material impact on the Company's financial position, results of operations, or cash flows since they are "disclosure only" standards. The Company is currently evaluating the impact that SFAS No. 131 will have on its current segment groupings. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998 and is effective for the year ending November 30, 2000. SFAS No. 133 establishes a new model for accounting for derivatives in the balance sheet as either assets or liabilities and measures them at fair value. Certain disclosures concerning the designation and assessment of hedging relationships are also required. Management has not yet determined the impact of this statement on the Company's consolidated financial statements. The Company will adopt SFAS No. 130, "Reporting Comprehensive Income," for the year ending November 30, 1999 by including a separate statement of comprehensive income as part of the consolidated financial statements. Total comprehensive loss for the three months ended February 28, 1999 and 1998 was $45.7 million and $7.9 million, respectively. The other components of comprehensive loss in addition to net loss for these three month periods consist of foreign currency translation adjustments and minimum pension liability. Senior Subordinated Notes On January 29, 1999, the Company issued $123.0 million aggregate principal amount of its 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes") and Euro 75.0 million ($87.0 million equivalent) aggregate principal amount of its 11.375% Senior Subordinated Notes due 2008 (the "Euro Notes," and together with the Dollar Notes, the "Notes") in a private placement pursuant to Rule 144A and Regulation S (the "Offering"). The Notes will mature on August 1, 2008, and interest is payable semi-annually on February 1 and August 1 of each year, commencing August 1, 1999. The Company used the net proceeds from the Offering to redeem in whole, the $170.0 million in 12.0% senior subordinated notes due January 29, 1999 (the "Senior Subordinated Seller Notes") and the $22.5 million of senior notes due 2005 (the "Senior Notes"). In addition, the Company used approximately $9.1 million of the net proceeds to reduce borrowings under the revolving credit facility under the Company's new bank credit agreement (the "New Credit Agreement") and to permanently reduce the bank working capital commitment from $120.0 million to $110.0 million. During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6.2 million in connection with the refinancing of the Senior Notes and the Senior Subordinated Seller Notes. This amount consists of $0.5 million of premiums paid on the redemption of the Senior Notes and approximately $5.7 million of unamortized deferred issuance costs that were written off. F-5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Each of the Dollar Notes and the Euro Notes will be redeemable, at the Company's option, in whole at any time, or in part from time to time, on and after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:
Year Percentage ---- ---------- 2004........................................................... 105.688% 2005........................................................... 103.792% 2006........................................................... 101.896% 2007 and thereafter............................................ 100.000%
Optional Redemption upon Public Equity Offerings At any time, or from time to time, on or prior to February 1, 2002, the Company may, at its option, use the net cash proceeds of one or more public equity offerings to redeem up to 35% of the original principal amount of the Dollar Notes issued in the Offering and up to 35% of the original principal amount of the Euro Notes issued in the Offering, each at a redemption price equal to 111.375% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that at least 55% of the original principal amount of the Dollar Notes issued in the Offering or the Euro Notes issued in the Offering, as the case may be, remains outstanding immediately after any such redemption and the Company shall make such redemption not more than 120 days after the consummation of any such public equity offering. The Notes are unsecured and subordinated to all of the Company's existing and future senior debt, including its obligations under the New Credit Agreement. All of the Company's current and future U.S. subsidiaries will guarantee the Notes with guarantees that will be unsecured and subordinated to senior debt of subsidiaries. The indentures under which the Notes were issued contain covenants limiting the Company's ability to, among other things, incur additional debt; pay dividends on capital stock, repurchase capital stock or make certain other restricted payments; make certain investments; create liens on its assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and transfer and sell assets. The Company and the subsidiary guarantors have entered into a Registration Rights Agreement pertaining to the Dollar Notes and another Registration Rights Agreement pertaining to the Euro Notes (together, the "Registration Rights Agreements"). Per the Registration Rights Agreements the Company will, at its own cost, (i) within 90 days after the issue date of the Notes, file a registration statement on the appropriate registration form (the "Exchange Offer Registration Statement") with the Securities and Exchange Commission (the "Commission") with respect to an exchange offer (the "Exchange Offer") to exchange the Euro Notes and Dollar Notes for new notes (the "Exchange Notes") which will have terms substantially identical in all material respects to the Dollar Notes or the Euro Notes, as the case may be, except that the Exchange Notes will not contain terms with respect to transfer restrictions or liquidated damages, (ii) use its best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after the issue date of the Notes and (iii) use its best efforts to consummate the Exchange Offer within 195 days after the issue date of the Notes. Upon the Exchange Offer Registration Statement being declared effective, the Company will offer the Exchange Notes in exchange for surrender of the Euro Notes and the Dollar Notes. Although the Company intends to file the registration statement described above, there can be no assurance that such registration statement will be filed, or, if filed, that it will become effective. If the Company fails to comply with the above provisions or if such registration statement fails to become effective, then, as liquidated damages, additional interest (the "Additional Interest") shall become payable with respect to the Euro Notes or the Dollar Notes, as applicable, at an increasing rate of 0.5% for every ninety days that the Company fails to register such notes. F-6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements In connection with the Acquisition and as part of the subsequent financing, the Company issued and sold $123,000 of 11.375% US dollar-denominated senior subordinated notes and (Euro)75,000 of 11.375% Euro denominated senior subordinated notes (together the "Outstanding Notes") in a private placement pursuant to Rule 144A and Regulation S. The Outstanding Notes are, and the Exchange Notes which will be issued in this Exchange Offer will be, general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company, and guaranteed on a full, unconditional, joint and several basis by the Company's wholly-owned domestic subsidiaries. The following condensed consolidating financial information presents: (1) Condensed consolidating financial statements as of February 28, 1999 and November 30, 1998 and for the three months ended February 28, 1999 and 1998, of (a) Tokheim Corporation, the parent; (b) the guarantor subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a consolidated basis, and (2) Elimination entries necessary to consolidate Tokheim Corporation, the parent, with guarantor and nonguarantor subsidiaries. Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements for the guarantor subsidiaries and the nonguarantor subsidiaries are not presented because management believes that such financial statements would not be meaningful to investors. F-7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements--(Continued) CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the three months ended February 28, 1999
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ (Amounts in thousands) Net sales............... $ 27,546 $ 31,235 $111,067 $(3,655) $166,193 Cost of sales, exclusive of items listed below.. 22,335 23,741 90,876 (3,655) 133,297 Selling, general, and administrative expenses............... 6,018 6,106 13,643 -- 25,767 Depreciation and amortization........... 1,268 1,097 4,527 -- 6,892 Merger and acquisition costs and other unusual items.................. -- 106 1,017 -- 1,123 -------- -------- -------- ------- -------- Operating profit (loss). (2,075) 185 1,004 -- (886) Interest expense, net... 6,844 (4,553) 10,016 -- 12,307 Foreign currency loss... 194 620 624 -- 1,438 Equity in (earnings) loss of consolidated subsidiaries........... 6,126 -- -- (6,126) -- Minority interest....... -- -- 94 -- 94 Other (income) expense, net ................... (1,079) (2,633) 3,558 -- (154) -------- -------- -------- ------- -------- Earnings (loss) before income taxes........... (14,160) 6,751 (13,288) 6,126 (14,571) Income taxes............ 18 (363) (48) -- (393) -------- -------- -------- ------- -------- Earnings (loss) before extraordinary item..... (14,178) 7,114 (13,240) 6,126 (14,178) Extraordinary loss on debt extinguishment.... (6,249) -- -- -- (6,249) -------- -------- -------- ------- -------- Net earnings (loss)..... $(20,427) $ 7,114 $(13,240) $ 6,126 $(20,427) ======== ======== ======== ======= ========
F-8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements--(Continued) CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the three months ended February 28, 1998
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total ------- ------------ ------------ ------------ ------------ (Amounts in thousands) Net sales............... $33,850 $16,312 $48,632 $ (7,942) $90,852 Cost of sales, exclusive of items listed below.. 25,664 11,337 38,015 (7,942) 67,074 Selling, general, and administrative expenses............... 7,229 2,247 6,781 -- 16,257 Depreciation and amortization........... 938 198 1,364 -- 2,500 Merger and acquisition costs and other unusual items.................. 5,879 -- 108 -- 5,987 ------- ------- ------- -------- ------- Operating profit (loss). (5,860) 2,530 2,364 -- (966) Interest expense, net... 1,335 6 2,670 -- 4,011 Foreign currency (gain) loss................... -- (51) 86 -- 35 Equity in (earnings) loss of consolidated subsidiaries........... 663 -- -- (663) -- Minority interest....... -- -- 73 -- 73 Other (income) expense, net ................... (2,281) 447 2,055 -- 221 ------- ------- ------- -------- ------- Earnings (loss) before income taxes........... (5,577) 2,128 (2,520) 663 (5,306) Income taxes............ 29 101 170 -- 300 ------- ------- ------- -------- ------- Earnings (loss) before extraordinary item..... (5,606) 2,027 (2,690) 663 (5,606) Extraordinary loss on debt extinguishment.... -- -- -- -- -- ------- ------- ------- -------- ------- Net earnings (loss)..... $(5,606) $ 2,027 $(2,690) $ 663 $(5,606) ======= ======= ======= ======== =======
F-9 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements--(Continued) CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the three months ended February 28, 1999
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ (Amounts in thousands) Cash flows from operating activities: Net cash provided from (used in) operations. $ (7,330) $ 1,576 $(2,078) $6,524 $ (1,308) Cash flows from investing activities: Plant and equipment additions............ (2,521) (746) (1,729) -- (4,996) Investments in and advances to subsidiaries, net.... (3,409) 4,418 5,515 (6,524) -- -------- ------- ------- ------ -------- Net cash provided from (used in) investing activities......... (5,930) 3,672 3,786 (6,524) (4,996) Cash flows from financing activities: Redemption of senior notes................ (22,500) -- -- -- (22,500) Proceeds from issuance of senior subordinated notes... 39,647 -- -- -- 39,647 Decrease in term debt. -- -- (438) -- (438) Increase in notes payable, banks....... 3,001 -- -- -- 3,001 Increase (decrease) in cash overdraft....... (131) 229 365 -- 463 Debt issuance costs... (6,084) -- -- -- (6,084) Premiums paid on debt extinguishment....... (555) -- -- -- (555) Treasury stock, net... 170 -- -- -- 170 Preferred stock dividends............ (374) -- -- -- (374) -------- ------- ------- ------ -------- Net cash provided from (used in) financing activities......... 13,174 229 (73) -- 13,330 Effect of translation adjustments on cash.... -- (7,955) 8,848 -- 893 -------- ------- ------- ------ -------- Cash and cash equivalents: Increase (decrease) in cash................. (86) (2,478) 10,483 -- 7,919 Beginning of year..... 849 5,381 20,571 -- 26,801 -------- ------- ------- ------ -------- End of period......... $ 763 $ 2,903 $31,054 $ -- $ 34,720 ======== ======= ======= ====== ========
F-10 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements--(Continued) CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the three months ended February 28, 1998
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ (Amounts In thousands) Cash flows from operating activities: Net cash provided from (used in) operations.......... $ (8,027) $1,919 $1,291 $ (524) $ (5,341) Cash flows from investing activities: Acquisition, net of cash acquired....... (10,641) -- -- -- (10,641) Plant and equipment additions........... (819) (537) (529) -- (1,885) Investments in and advances to subsidiaries, net... (772) -- 248 524 -- -------- ------ ------ ------ -------- Net cash provided from (used in) investing activities........ (12,232) (537) (281) 524 (12,526) Cash flows from financing activities: Decrease in term debt................ (13) -- (109) -- (122) Increase in notes payable, banks...... 19,000 -- 1,644 -- 20,644 Increase (decrease) in cash overdraft... 702 26 (1,232) -- (504) Proceeds from issuance of common stock............... 158 -- -- -- 158 Treasury stock, net.. 4 -- -- -- 4 Preferred stock dividends........... (374) -- -- -- (374) -------- ------ ------ ------ -------- Net cash provided from financing activities........ 19,477 26 303 -- 19,806 Effect of translation adjustments on cash... -- 320 (570) -- (250) -------- ------ ------ ------ -------- Cash and cash equivalents: Increase (decrease) in cash............. (782) 1,728 743 -- 1,689 Beginning of year.... 2,764 1,170 2,504 -- 6,438 -------- ------ ------ ------ -------- End of period........ $ 1,982 $2,898 $3,247 $ -- $ 8,127 ======== ====== ====== ====== ========
F-11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements--(Continued) CONSOLIDATED CONDENSED BALANCE SHEET As of February 28, 1999
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ (Amounts in thousands) Assets Current assets: Cash and cash equivalents.......... $ 763 $ 2,903 $ 31,054 $ -- $ 34,720 Accounts receivables, net.................. 60,175 62,415 106,772 (82,416) 146,946 Inventories, net...... 16,452 15,382 80,717 (116) 112,435 Other current assets.. 1,562 1,478 18,092 -- 21,132 -------- -------- -------- ---------- -------- Total current assets.. 78,952 82,178 236,635 (82,532) 315,233 Investments in subsidiaries......... 118,394 14,718 3,250 (136,362) -- Property, plant, and equipment, net....... 23,734 11,035 41,105 -- 75,874 Goodwill, net......... 16,451 92,029 192,009 -- 300,489 Other non-current assets and deferred charges, net......... 108,024 241,854 5,628 (322,195) 33,311 -------- -------- -------- ---------- -------- Total assets........ $345,555 $441,814 $478,627 $ (541,089) $724,907 ======== ======== ======== ========== ======== Liabilities and Shareholders' Equity Current maturities of long-term debt......... $ -- $ -- $ 1,911 $ -- $ 1,911 Notes payable to banks.. -- -- 383 -- 383 Cash overdrafts......... -- 238 14,774 -- 15,012 Accounts payable........ 40,877 40,377 78,675 (85,021) 74,908 Accrued expenses........ 16,926 42,599 74,626 -- 134,151 -------- -------- -------- ---------- -------- Total current liabilities............ 57,803 83,214 170,369 (85,021) 226,365 Notes payable, bank credit agreement....... 3,000 182,146 -- -- 185,146 Senior subordinated notes.................. 131,636 74,054 -- -- 205,690 Junior subordinated payment in kind note... 41,200 -- -- -- 41,200 Other long-term debt, less current maturities............. 6,000 -- 316,644 (319,074) 3,570 Guaranteed Employees' Stock Ownership Plan obligation............. 6,347 -- -- -- 6,347 Post-retirement benefit liability.............. 14,799 -- -- -- 14,799 Minimum pension liability.............. 3,135 -- -- -- 3,135 Other long-term liabilities............ 475 (241) 7,030 (123) 7,141 -------- -------- -------- ---------- -------- 264,395 339,173 494,043 (404,218) 693,393 Redeemable convertible preferred stock........ 24,000 -- -- -- 24,000 Guaranteed Employees' Stock Ownership Plan obligation............. (6,347) -- -- -- (6,347) Treasury stock, at cost. (4,712) -- -- -- (4,712) -------- -------- -------- ---------- -------- 12,941 -- -- -- 12,941 Common stock............ 90,354 107,267 14,960 (122,227) 90,354 Common stock warrants... 20,000 -- -- -- 20,000 Minimum pension liability.............. (3,135) -- -- -- (3,135) Foreign currency translation adjustments............ (8,522) (34,650) (4,683) -- (47,855) Retained earnings (accumulated deficit).. (29,783) 30,024 (25,693) (14,644) (40,096) -------- -------- -------- ---------- -------- 68,914 102,641 (15,416) (136,871) 19,268 Less treasury stock, at cost................... (695) -- -- -- (695) -------- -------- -------- ---------- -------- 68,219 102,641 (15,416) (136,871) 18,573 -------- -------- -------- ---------- -------- Total liabilities and shareholders' equity............. $345,555 $441,814 $478,627 $ (541,089) $724,907 ======== ======== ======== ========== ========
F-12 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Guarantor and Nonguarantor Financial Statements--(Continued) CONSOLIDATED CONDENSED BALANCE SHEET As of November 30, 1998
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ (Amounts In thousands) Assets Current assets: Cash and cash equivalents.......... $ 849 $ 5,381 $ 20,571 $ -- $ 26,801 Accounts receivables, net.................. 52,303 32,643 133,868 (46,121) 172,693 Inventories, net...... 16,720 18,255 88,369 (311) 123,033 Other current assets.. 1,921 759 16,459 -- 19,139 -------- -------- -------- --------- -------- Total current assets.. 71,793 57,038 259,267 (46,432) 341,666 Investments in subsidiaries......... 112,268 13,869 3,197 (129,334) -- Property, plant, and equipment, net....... 21,906 10,908 45,091 -- 77,905 Goodwill, net......... 15,765 89,590 218,758 -- 324,113 Other non-current assets and deferred charges, net......... 107,666 259,055 5,787 (339,550) 32,958 -------- -------- -------- --------- -------- Total assets........ $329,398 $430,460 $532,100 $(515,316) $776,642 ======== ======== ======== ========= ======== Liabilities and Shareholders' Equity Current maturities of long-term debt......... $ -- $ -- $ 2,110 $ -- $ 2,110 Notes payable to banks.. -- -- 410 -- 410 Cash overdrafts......... -- 21 15,043 -- 15,064 Accounts payable........ 32,782 24,750 84,107 (46,317) 95,322 Accrued expenses........ 16,458 42,193 77,513 -- 136,164 -------- -------- -------- --------- -------- Total current liabilities............ 49,240 66,964 179,183 (46,317) 249,070 Notes payable, bank credit agreement....... -- 182,145 -- -- 182,145 Senior notes............ 22,500 -- -- -- 22,500 Senior subordinated notes.................. 95,946 74,054 -- -- 170,000 Junior subordinated payment in kind note... 40,000 -- -- -- 40,000 Other long-term debt, less current maturities............. 9,409 -- 322,997 (328,291) 4,115 Guaranteed Employees' Stock Ownership Plan obligation............. 6,987 -- -- -- 6,987 Post-retirement benefit liability.............. 14,418 -- -- -- 14,418 Minimum pension liability.............. 3,135 -- -- -- 3,135 Other long-term liabilities............ 475 (217) 7,366 (113) 7,511 -------- -------- -------- --------- -------- 242,110 322,946 509,546 (374,721) 699,881 Redeemable convertible preferred stock........ 24,000 -- -- -- 24,000 Guaranteed Employees' Stock Ownership Plan obligation............. (6,987) -- -- -- (6,987) Treasury stock, at cost. (4,883) -- -- -- (4,883) -------- -------- -------- --------- -------- 12,130 -- -- -- 12,130 Common stock............ 90,354 107,243 14,960 (122,203) 90,354 Common stock warrants... 20,000 -- -- -- 20,000 Minimum pension liability.............. (3,135) -- -- -- (3,135) Foreign currency translation adjustments............ (12,547) (313) (9,738) -- (22,598) Retained earnings (accumulated deficit).. (18,819) 584 17,332 (18,392) (19,295) -------- -------- -------- --------- -------- 75,853 107,514 22,554 (140,595) 65,326 Less treasury stock, at cost................... (695) -- -- -- (695) -------- -------- -------- --------- -------- 75,158 107,514 22,554 (140,595) 64,631 -------- -------- -------- --------- -------- Total liabilities and shareholders' equity............. $329,398 $430,460 $532,100 $(515,316) $776,642 ======== ======== ======== ========= ========
F-13 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Directors, Tokheim Corporation In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, cash flows and shareholders' equity present fairly, in all material respects, the financial position of Tokheim Corporation and its subsidiaries at November 30, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 1998, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards 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 the opinion expressed above. PricewaterhouseCoopers LLP February 19, 1999 Fort Wayne, Indiana F-14 CONSOLIDATED STATEMENT OF EARNINGS for the years ended November 30, 1998, 1997, and 1996 (Amounts in thousands except dollars per share)
1998 1997 1996 -------- -------- -------- Net sales........................................ $466,440 $385,469 $279,733 Cost of sales, exclusive of items listed below... 345,031 283,932 210,223 Selling, general, and administrative expenses.... 79,819 68,167 51,667 Depreciation and amortization.................... 13,136 9,232 5,028 Merger and acquisition costs and other unusual items........................................... 13,685 3,493 6,459 -------- -------- -------- Operating profit................................. 14,769 20,645 6,356 Interest expense (net of interest income of $822, $837 and $602, respectively).................... 19,257 16,451 7,191 Foreign currency (gain) loss..................... (1,442) 48 159 Minority interest in subsidiaries................ 327 394 393 Other income, net................................ (675) (1,445) (158) -------- -------- -------- Earnings (loss) before income taxes and extraordinary loss.............................. (2,698) 5,197 (1,229) Income taxes..................................... 1,046 1,217 780 -------- -------- -------- Earnings (loss) before extraordinary loss........ (3,744) 3,980 (2,009) Extraordinary loss on debt extinguishment........ (23,924) (1,886) -- -------- -------- -------- Net earnings (loss).............................. (27,668) 2,094 (2,009) Preferred stock dividends ($1.94 per share)...... (1,484) (1,512) (1,543) -------- -------- -------- Earnings (loss) applicable to common stock....... $(29,152) $ 582 $ (3,552) ======== ======== ======== Earnings (loss) per common share: Basic Before extraordinary loss.................... $ (0.46) $ 0.31 $ (0.45) Extraordinary loss on debt extinguishment.... (2.10) (0.23) -- -------- -------- -------- Net earnings (loss).......................... $ (2.56) $ 0.08 $ (0.45) ======== ======== ======== Weighted average shares outstanding.......... 11,371 8,042 7,940 ======== ======== ======== Diluted Before extraordinary loss.................... $ (0.46) $ 0.27 $ (0.45) Extraordinary loss on debt extinguishment.... (2.10) (0.21) -- -------- -------- -------- Net earnings (loss).......................... $ (2.56) $ 0.06 $ (0.45) ======== ======== ======== Weighted average shares outstanding.......... 11,371 9,005 7,940 ======== ======== ========
The accompanying notes are an integral part of the financial statements. F-15 CONSOLIDATED STATEMENT OF CASH FLOWS for the years ended November 30, 1998, 1997, and 1996 (Amounts in thousands)
1998 1997 1996 -------- -------- -------- Cash Flows From Operating Activities: Net earnings (loss)............................ $(27,668) $ 2,094 $ (2,009) Adjustments to reconcile net earnings (loss) to net cash provided from operating activities: Write-off of in-process research and development................................. 5,879 -- -- Extraordinary loss on debt extinguishment.... 23,924 1,886 -- Depreciation and amortization................ 13,136 9,232 5,028 Gain on sale of property, plant, and equipment................................... (36) (408) (59) Deferred income taxes........................ (431) (139) (251) Changes in assets and liabilities (net of effects of the acquisitions in 1998 and 1996): Receivables, net........................... (21,439) 4,254 2,363 Inventories................................ 4,327 5,975 (2,626) Other current assets....................... 3,185 (2,001) 5,987 Accounts payable........................... 7,691 5,116 (1,425) Accrued expenses........................... 6,370 (3,395) 4,249 Other...................................... (5,148) (1,412) (5,360) -------- -------- -------- Net cash provided from operating activities.............................. 9,790 21,202 5,897 -------- -------- -------- Cash Flows From Investing Activities: Acquisitions, net of cash acquired............. (110,641) -- (52,105) Property, plant, and equipment additions....... (14,548) (11,154) (3,061) Proceeds from sale of property, plant and equipment..................................... 775 760 1,087 -------- -------- -------- Net cash used in investing activities.... (124,414) (10,394) (54,079) -------- -------- -------- Cash Flows From Financing Activities: Proceeds from senior notes..................... 22,500 -- -- Proceeds from senior subordinated notes........ -- -- 100,000 Redemption of senior subordinated notes........ (90,000) (10,000) -- Payments on term and other debt................ (4,267) (3,747) (31,800) Net increase (decrease) in notes payable, banks......................................... 158,769 1,770 (5,044) Net increase in cash overdraft................. 3,571 1,874 7,237 Debt issuance costs............................ (16,157) -- (11,506) Proceeds from issuance of common stock......... 74,057 1,706 42 Equity issuance costs.......................... (4,858) -- -- Treasury stock, net............................ (719) (496) (370) Premiums paid on debt extinguishment........... (15,743) (1,390) -- Preferred stock dividends...................... (1,484) (1,512) (1,543) -------- -------- -------- Net cash provided from (used in) financing activities.................... 125,669 (11,795) 57,016 -------- -------- -------- Effect of translation adjustments on cash........ 9,318 (2,389) (4,482) -------- -------- -------- Increase (decrease) in cash.................... 20,363 (3,376) 4,352 Cash and cash equivalents: Beginning of year.............................. 6,438 9,814 5,462 -------- -------- -------- End of year.................................... $ 26,801 $ 6,438 $ 9,814 ======== ======== ========
The accompanying notes are an integral part of the financial statements. F-16 CONSOLIDATED BALANCE SHEET as of November 30, 1998 and 1997 (Amounts in thousands)
1998 1997 -------- -------- Assets Current assets: Cash and cash equivalents.................................. $ 26,801 $ 6,438 Accounts receivable, less allowance for doubtful accounts of $2,115 and $1,392, respectively........................ 172,693 83,011 Inventories: Raw materials and supplies............................... 70,545 29,427 Work in process.......................................... 27,418 27,514 Finished goods........................................... 25,070 7,406 -------- -------- 123,033 64,347 Other current assets....................................... 19,139 6,705 -------- -------- Total current assets..................................... 341,666 160,501 Property, plant and equipment, at cost: Land and land improvements................................. 5,644 4,679 Buildings and building improvements........................ 41,803 27,956 Machinery and equipment.................................... 97,138 70,068 Construction in progress................................... 6,041 4,514 -------- -------- 150,626 107,217 Less accumulated depreciation............................ 72,721 64,682 -------- -------- 77,905 42,535 Other tangible assets........................................ 4,873 3,615 Goodwill, net................................................ 324,113 67,695 Other non-current assets and deferred charges, net........... 28,085 16,273 -------- -------- Total assets............................................. $776,642 $290,619 ======== ========
The accompanying notes are an integral part of the financial statements. F-17 CONSOLIDATED BALANCE SHEET as of November 30, 1998, and 1997 (Amounts in thousands except dollars per share)
1998 1997 -------- -------- Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term debt.................... $ 2,110 $ 2,391 Notes payable to banks.................................. 410 98 Cash overdrafts......................................... 15,064 10,575 Accounts payable........................................ 95,322 54,597 Accrued expenses........................................ 136,164 51,190 -------- -------- Total current liabilities............................. 249,070 118,851 Notes payable, bank credit agreement...................... 182,145 24,090 Senior notes.............................................. 22,500 -- Senior subordinated notes................................. 170,000 90,000 Junior subordinated payment-in-kind notes................. 40,000 -- Other long-term debt, less current maturities............. 4,115 4,397 Guaranteed Employees' Stock Ownership Plan (ESOP) obligation............................................... 6,987 9,429 Post-retirement benefit liability......................... 14,418 14,378 Minimum pension liability................................. 3,135 2,173 Other long-term liabilities............................... 7,511 6,830 -------- -------- 699,881 270,148 -------- -------- Commitments and contingencies (Note 21) Redeemable convertible preferred stock, at liquidation value of $25 per share, 1,700 shares authorized, 960 shares issued............................................ 24,000 24,000 Guaranteed Employees' Stock Ownership Plan (ESOP) obligation............................................... (6,987) (9,429) Treasury stock, at cost, 195 and 189 shares, respectively............................................. (4,883) (4,718) -------- -------- 12,130 9,853 -------- -------- Preferred stock, no par value; 3,300 shares authorized and unissued................................................. -- -- Common stock, no par value; 30,000 shares authorized, 12,698 and 8,232 shares issued, respectively............. 90,354 21,158 Common stock warrants..................................... 20,000 -- Minimum pension liability................................. (3,135) (2,173) Foreign currency translation adjustments.................. (22,598) (18,048) Retained earnings (accumulated deficit)................... (19,295) 9,821 -------- -------- 65,326 10,758 Treasury stock, at cost, 38 and 9 shares, respectively.... (695) (140) -------- -------- 64,631 10,618 -------- -------- Total liabilities and shareholders' equity............ $776,642 $290,619 ======== ========
The accompanying notes are an integral part of the financial statements. F-18 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the years ended November 30, 1998, 1997 and 1996 (Amounts in thousands)
Common Stock Foreign Retained Total -------------------- Guaranteed Minimum Currency Earnings Common Outstanding Treasury ESOP Pension Translation (Accumulated Shareholders' Amount Amount Warrants Obligation Obligation Adjustments Deficit) Equity ----------- -------- -------- ---------- ---------- ----------- ------------ ------------- Balance at November 30, 1995................... $19,409 $(231) $ -- $(786) $(3,868) $ (3,542) $ 12,815 $23,797 Stock options exercised............. 43 -- -- -- -- -- -- 43 Employee termination benefits.............. -- 11 -- -- -- -- -- 11 Treasury stock purchases............. -- 28 -- -- -- -- -- 28 Decrease in guaranteed ESOP obligation....... -- -- -- 483 -- -- -- 483 Minimum pension liability adjustment.. -- -- -- -- 620 -- -- 620 Foreign currency translation adjustments........... -- -- -- -- -- (3,729) -- (3,729) Net loss............... -- -- -- -- -- -- (2,009) (2,009) Treasury stock transactions.......... -- -- -- -- -- -- (23) (23) Preferred stock dividends............. -- -- -- -- -- -- (1,543) (1,543) ------- ----- ------- ----- ------- -------- -------- ------- Balance at November 30, 1996................... $19,452 $(192) $ -- $(303) $(3,248) $ (7,271) $ 9,240 $17,678 Stock options exercised............. 1,706 -- -- -- -- -- -- 1,706 Treasury stock purchases............. -- 52 -- -- -- -- -- 52 Decrease in guaranteed ESOP obligation....... -- -- -- 303 -- -- -- 303 Minimum pension liability adjustment.. -- -- -- -- 1,075 -- -- 1,075 Foreign currency translation adjustments........... -- -- -- -- -- (10,777) -- (10,777) Net earnings........... -- -- -- -- -- -- 2,094 2,094 Treasury stock transactions.......... -- -- -- -- -- -- (1) (1) Preferred stock dividends............. -- -- -- -- -- -- (1,512) (1,512) ------- ----- ------- ----- ------- -------- -------- ------- Balance at November 30, 1997................... $21,158 $(140) $ -- -- $(2,173) $(18,048) $ 9,821 $10,618 Stock options exercised............. 1,472 -- -- -- -- -- -- 1,472 Common stock offering.. 67,724 -- -- -- -- -- -- 67,724 Common stock warrants issued................ -- -- 20,000 -- -- -- -- 20,000 Treasury stock purchases............. -- (555) -- -- -- -- -- (555) Minimum pension liability adjustment.. -- -- -- -- (962) -- -- (962) Foreign currency translation adjustments........... -- -- -- -- -- (4,550) -- (4,550) Net (loss)............. -- -- -- -- -- -- (27,668) (27,668) Minority interest dividends............. -- -- -- -- -- -- 36 36 Preferred stock dividends............. -- -- -- -- -- -- (1,484) (1,484) ------- ----- ------- ----- ------- -------- -------- ------- Balance at November 30, 1998................... $90,354 $(695) $20,000 $ -- $(3,135) $(22,598) $(19,295) $64,631 ======= ===== ======= ===== ======= ======== ======== =======
The accompanying notes are an integral part of the financial statements. F-19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except dollars per share) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation--The Consolidated Financial Statements include the accounts of Tokheim Corporation and its wholly- and majority-owned subsidiaries (the "Company"). The Consolidated Financial Statements include 100% of the assets and liabilities of these subsidiaries, with the ownership interest of minority participants recorded as minority interest. All significant intercompany accounts and transactions have been eliminated in consolidation. In September 1996, the Company acquired the petroleum dispenser business ("Sofitam") of Sofitam, S.A., in December 1997, the Company acquired Management Solutions Inc ("MSI"), and in September 1998, the Company acquired the fuel dispenser systems and service business (the "RPS Division") of Schlumberger Limited. The accounts of these three acquired companies are included in the Consolidated Financial Statements since the respective dates listed above. (See Note 2.) Nature of Operations--The Company engages principally in the design, manufacture and servicing of electronic and mechanical petroleum dispensing marketing systems, including service station equipment, point-of-sale control systems, and card- and cash-activated transaction systems for customers around the world. The Company markets its products through subsidiaries located throughout the world and has major facilities in the United States, France, Canada, Germany, 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. Aggregate foreign currency transaction gains and losses are included in determining net earnings. Risks and Uncertainties--The Company is not dependent on any single customer, group of customers, market, geographic area or supplier of materials, labor or services. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The more significant areas requiring the use of management's estimates include allowances for obsolete inventory and uncollectible receivables, product warranty claims, environmental and product liabilities, postretirement, pension, and other employee benefits, valuation allowances for deferred tax assets, future obligations associated with the Company's restructuring plans, future cash flows associated with assets, and useful lives for depreciation and amortization. Actual results could differ from these estimates, making it reasonably possible that a change in certain of these estimates could occur in the near term. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times, cash in United States banks may exceed FDIC insurance limits. Concentration of credit risk with respect to trade receivables is considered to be minimal due to the Company's large customer base and ongoing control procedures, which monitor the credit worthiness of customers. Fair Value of Financial Instruments--The fair value of cash and cash equivalents, trade receivables, and accounts payable approximates the carrying value because of the short-term maturities of these financial instruments. The interest rate on the Company's bank credit agreement (the "New Credit Agreement") fluctuates with current market rates. Consequently, the carrying value of the New Credit Agreement approximates the market prices for the same or similar issues in future periods. The estimated fair value of the Company's 12.0% senior subordinated notes (the "Senior Subordinated Seller Notes") and the Company's 12.5% senior notes due 2005 (the "Senior Notes") approximated the carrying value at November 30, 1998 since both notes were redeemed at face value on January 29, 1999. The Company estimates that the fair value of the $40,000 Junior F-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) Subordinated 12.0% Payment-in-Kind notes (the "Junior Notes") approximated the carrying value at November 30, 1998 as there were no significant changes in the market conditions or risks related to these notes during the two month period between the time when the notes were issued on September 30, 1998 and November 30, 1998. The fair value of the Company's $20,000 common stock warrants (the "Warrants") approximates $21,795 at November 30, 1998. This amount is computed based on the Company's November 30, 1998 common stock price of $8.625 per share less the nominal consideration to be received if exercised. The fair value of the Company's convertible preferred stock, which is held in the Trust of the Company's Retirement Savings Plan ("RSP"), approximates the carrying value, as such stock is not traded in the open market, and the value at conversion is equal to a fixed redemption value in cash or equivalent amounts of common stock. Inventory Valuation--Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Property and Depreciation--Depreciation of plant and equipment is generally determined on a straight-line basis over the estimated useful lives of the assets. Upon retirement or sale of assets, the cost of the disposed assets and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income. These gains and losses are accumulated and shown as a component of other income, net in the statement of earnings. Buildings are generally depreciated over 40 years. Machinery and equipment are depreciated over periods ranging from five to ten years. Expenditures for normal repairs and maintenance are charged to expense as incurred. Expenditures for improving or rebuilding existing assets which extend the useful life of the assets are capitalized. Software and Research and Development Costs--Costs incurred to address year 2000 issues are expensed when incurred. 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. Amortization of capitalized software development costs offered for sale is provided over the estimated economic useful life of the software product on a straight-line basis, generally three to four years. Unamortized software costs included in other non-current assets were $8,711, and $1,089 at November 30, 1998 and 1997, respectively. The amounts amortized and charged to expense in 1998, 1997 and 1996 were $2,025, $260 and $163, respectively. Included in unamortized software costs at November 30, 1998 is approximately $4,850 related to software technology costs capitalized in connection with the acquisition of MSI. All other product development expenditures are charged to research and development expense in the period incurred. These expenses amounted to $21,080, $18,284 and $15,909 in 1998, 1997 and 1996, respectively. In addition to these expenses, the Company wrote off $5,879 of in-process research and development expenses in connection with the acquisition of MSI and the related purchase price allocation. See Note 2 for additional information. Goodwill and Other Intangible Assets--Goodwill is amortized on a straight- line basis over 40 years. The Company will continue to review facts and circumstances to determine whether the remaining estimated useful life of goodwill warrants revision or whether the carrying amount may not be recoverable, using profitability projections to assess whether future operating income on a non-discounted basis is likely to exceed the amortization over the remaining life of the goodwill. The amounts amortized and charged to expense in 1998, 1997 and 1996 were approximately $2,709, $1,490 and $420, respectively. Accumulated amortization of goodwill at November 30, 1998 and 1997 was $4,619 and $1,910, respectively. The Company is in the process of valuing certain tangible and intangible assets acquired with the RPS Division and will finalize the F-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) preliminary purchase price allocation upon completion of these valuations. The goodwill recorded in connection with the RPS Division is currently being amortized over 40 years. The Company will determine the appropriate amounts and useful lives of the identified intangible assets upon completion of the valuations. Finalization of the purchase price allocation is not expected to have a material impact on the Company's financial position or results of operations as of and for the year ended November 30, 1998. Other non-current assets and deferred charges consist primarily of debt issuance costs. These costs are amortized over the terms of the related debt agreements on a straight-line basis, which is not materially different from the effective interest method, with periods ranging from six to eight years. Amortization of these deferred charges included in interest expense at November 30, 1998, 1997 and 1996 was $1,658, $1,623, and $401, respectively. During 1998, the Company capitalized $16,160 of debt issuance costs incurred in connection with the acquisition of the RPS Division and related financing and charged $6,666 of deferred debt issuance costs to extraordinary loss on debt extinguishment. During 1997, the Company charged $496 of deferred bond issuance costs to extraordinary loss on debt extinguishment. This amount represents the write-off of a proportionate share of the original unamortized deferred issuance cost incurred in connection with the issuance of the senior subordinated notes for the acquisition of Sofitam. During 1996, the Company wrote-off approximately $233 of deferred debt issuance costs and capitalized approximately $11,506 of costs incurred in connection with the refinancing of the Company's preexisting debt and issuance of senior subordinated notes. Accumulated amortization of other non-current assets and deferred charges at November 30, 1998 and 1997 was $420 and $2,520, respectively. Advertising and Promotion--All costs associated with advertising and product promotion are expensed in the period incurred. These expenses amounted to $3,577, $2,687 and $2,268 in 1998, 1997 and 1996, respectively. Income Taxes--The Company accounts for income taxes under the liability method in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes." The provision for income taxes includes federal, foreign, state and local income taxes currently payable as well as deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. No additional U.S. income taxes or foreign withholding taxes have been provided on accumulated earnings of foreign subsidiaries approximating $20,543 which are expected to be reinvested indefinitely. (See Note 15). Environmental Cleanup Matters--The Company adopted The American Institute of Certified Public Accountants ("AICPA") Statement of Position ("SOP") No. 96-1, "Environmental Remediation Liabilities" during 1998. This SOP did not have a material impact on the Company's financial position, results of operations or cash flows for 1998. The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible. Expenditures which extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. The Company determines its liability on a site by site basis and records a liability at the time when the associated expenses can be reasonably estimated. New Accounting Pronouncements SFAS No. 129, "Disclosure of Information about Capital Structure," was adopted during the first quarter of the fiscal year ended November 30, 1998. This statement did not have a material impact on the Company's financial position, results of operations or cash flows as disclosure requirements did not change for the F-22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) Company with this new statement. SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," are effective for the year ending November 30, 1999. In the opinion of management, these statements will not have a material impact on the Company's financial position, results of operations, or cash flows since they are "disclosure only" standards. The Company is currently evaluating the impact that SFAS No. 131 will have on its current segment groupings. SFAS No. 130, "Reporting Comprehensive Income," is effective for the year ending November 30, 1999. Due to the significance of the foreign currency translation adjustments recorded, comprehensive income would have been less than reported net earnings or reduced net loss had SFAS No. 130 been adopted. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued in June 1998 and is effective for the year ending November 30, 2000. SFAS No. 133 establishes a new model for accounting for derivatives in the balance sheet as either assets or liabilities and measures them at fair value. Certain disclosures concerning the designation and assessment of hedging relationships are also required. Management has not yet determined the impact of this statement on the Company's consolidated financial statements. SOP No. 97-2 "Software Revenue Recognition," is effective for the Company for the year ended November 30, 1999. SOP No. 97-2 supersedes SOP No. 91-1 and provides more specific guidance on revenue recognition related to software products. The Company does not expect the adoption of SOP No. 97-2 to have a material impact on the Company's financial position, results of operations or cash flows. Product Warranty Costs--Anticipated costs related to product warranty are expensed in the period of sale. Cash Flows--For purposes of the Statement of Cash Flows, the Company considers all highly liquid investments purchased with an initial maturity of 90 days or less to be cash equivalents. Supplemental disclosures of cash flow information:
1998 1997 1996 -------- ------- -------- Cash paid during the year for interest............ $ 15,930 $15,204 $ 4,918 Cash paid during the year for income taxes........ 1,194 921 1,013 Senior Subordinated Seller Notes issued in connection with the RPS acquisition.............. 170,000 -- -- Junior Notes issued in connection with the RPS acquisition...................................... 40,000 -- -- Liabilities assumed in the Acquisitions including accrued merger and acquisition costs............. 101,830 -- 123,575
Reclassifications--Certain prior year amounts in these financial statements have been reclassified to conform with the current year presentation. 2. ACQUISITIONS Acquisition of MSI--In December 1997, the Company acquired MSI. MSI develops and distributes retail automation systems (including Point of Sale ("POS") software), primarily for the convenience store, petroleum dispensing and fast food service industries. The Company paid MSI's stockholders an initial amount of $12,000. The Company is also obligated to make contingent payments of up to $13,200 over the years 1998, 1999 and 2000 based upon MSI's performance. The $13,200 consists of $8,000 of additional purchase price, $2,600 related to a non-compete agreement, and $2,600 of additional employee compensation. The Company borrowed funds for the initial purchase price under the Company's Old Credit Agreement. F-23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) The MSI acquisition has been accounted for as a purchase, and accordingly, the results of operations of MSI have been included in the Company's Consolidated Financial Statements since the date of acquisition. Assets of approximately $2,700 were acquired and liabilities of approximately $1,400 were assumed and have been recorded at their determined fair values. An independent valuation was performed for intangible assets acquired. As such, intangible software technology was recorded which is being amortized over four years and $5,879 was allocated to in-process research and development projects that have not reached technological feasibility and have no alternative future use. This amount was charged to operations at the date of acquisition and is included in merger and acquisition costs and other unusual items in the consolidated statement of earnings. The portion of the contingent payments that do not relate to employee compensation will be allocated to various intangible assets and goodwill and amortized over periods ranging from four to twelve years, if payments are required. The Company was not required to make any contingent purchase price payments for the year ended November 30, 1998. As of the acquisition date, MSI was developing the CVN POS(TM) for Windows(R) solution (CVN Windows) in order to provide a next-generation comprehensive point of sale (POS) software application in the convenience store, petroleum dispensing and fast food service industries. CVN Windows will incorporate a graphical user interface with touch screen controls and allow the system to be used with most POS systems. CVN Windows was under development for approximately two years and was in the alpha testing stage at the time of the acquisition. At the date of acquisition, approximately 85% of the research and development costs related to CVN Windows had been incurred, based on remaining costs to complete development, testing and quality assurance. The Company expects to complete the development tasks for CVN Windows remaining at November 30, 1998 by May 31, 1999, with projected expenditures of approximately $1,000. To determine the fair value of acquired IPR&D and other identifiable intangible assets, the Company used an independent appraisal which utilized standard appraisal methodologies. The appraisal procedures performed to establish the fair value of IPR&D involved projected cash flows for CVN Windows over the next five years, commensurate with its useful life, net of capital charges for all employed intangible and tangible assets, and discounted to present value, using a discount rate that reflected a 700 basis point risk premium reflective of the in process nature of the remaining activities. This risk assessment reflects uncertainty related to the Company's ability to successfully integrate remaining functionality and performance features into the CVN Windows product, combined with the added complexity of porting legacy DOS functionality onto a Windows platform. If the Company is delayed in its market entry with the completed CVN Windows product, it could adversely affect future operations. RPS Division Acquisition--On September 30, 1998 the Company completed the Acquisition of the RPS Division for a purchase price equal to $330,000, of which $100,000 of which was paid in cash borrowed under the terms of the New Credit Agreement as well as $22,500 of Senior Notes. The $210,000 seller note portion of the purchase price consisted of $40,000 in Junior Notes, and $170,000 in Senior Subordinated Seller Notes. $20,000 of the purchase price was paid in the form of Warrants. See Note 7, 8 and 12 for additional information on the debt and warrant instruments used to finance the Acquisition. The RPS Division is a leading manufacturer and servicer of fuel dispensing systems in Western Europe. The Acquisition has been accounted for as a purchase and the RPS Division's results of operations have been included in the Consolidated Financial Statements of the Company from the date of acquisition. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the RPS Division's net book value of assets as of September 30, 1998, as adjusted, which is estimated to approximate fair value. The purchase price allocated under this assumption is preliminary and exceeded the estimated fair value of tangible net assets acquired by $263,389, which has been recorded as goodwill. The Company is in the F-24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) process of valuing certain tangible and intangible assets acquired with the RPS Division and will finalize the preliminary purchase price allocation upon completion of these valuations. The goodwill recorded in connection with the RPS Division is currently being amortized over 40 years. The Company will determine the appropriate amounts and useful lives of the identified intangible assets upon completion of the valuations. Finalization of the purchase price allocation is not expected to have a material impact on the Company's financial position or results of operations as of and for the year ended November 30, 1998. The Company is to reimburse Schlumberger Limited for cash (net of adjustments) that remained in the RPS Division at the date of closing of the Acquisition. This amount is currently estimated to be approximately $6,500. It is anticipated that this payment will be made in the second quarter of 1999 using the revolving working capital facility under the New Credit Agreement. Included in accrued liabilities are certain costs the Company will incur to effect an integration and rationalization plan for the RPS Division's operations. These costs represent involuntary termination costs and other closure costs in connection with closing redundant manufacturing and service operations. These accrued costs do not include costs associated with consolidation of previously existing Tokheim subsidiaries, which will be expensed as incurred or separately accrued once all criteria for accrual are met, nor do these costs benefit future periods. The Company expects the integration and rationalization plan to be completed by the end of the year 2001. The table below summarizes the accrued liability by major category and initiatives: Involuntary employee termination benefits for approximately 540 employees.......................................................... $18,617 Facility closure and other closure costs............................ 482 Lease and contract termination fees................................. 1,195 ------- Total accrued integration and rationalization costs............... $20,294 =======
During 1998, approximately $371 was charged against the accrual, primarily for employee termination costs. The table below summarizes the acquisition liabilities as they relate to the consolidation plan for Sofitam which was established in 1996. The amounts do not include costs associated with consolidation of previously-existing Tokheim subsidiaries, which were or will be expensed as incurred, nor do they reflect costs expected to provide benefits in future periods. The Company expects the consolidation plan to be completed by the end of 1999. (See Note 3 for additional information regarding the Company's consolidation plan.)
Charged to November 30, 1997 Acquisition November 30, 1998 Item Balance Accrual Balance ---- ----------------- ----------- ----------------- Involuntary employee termination benefits (A)...... $4,124 $2,279 $1,845 Asset write-off and disposal costs (B)..................... 2,232 154 2,078 Leases and other contract terminations costs............ 941 863 78 ------ ------ ------ $7,297 $3,296 $4,001 ====== ====== ======
November 30, 1996 Adjustments Original to Charged to Acquisition Acquisition Acquisition November 30, 1997 Item Accrual Accrual Accrual Balance ---- ----------------- ----------- ----------- ----------------- Involuntary employee termination benefits (A).................... $6,651 $(186) $2,341 $4,124 Asset write-off and disposal costs (B)..... 2,108 183 59 2,232 Leases and other contract terminations costs.................. 1,040 700 799 941 ------ ----- ------ ------ $9,799 $ 697 $3,199 $7,297 ====== ===== ====== ======
- -------- (A) Approximately 300 employees included in the original consolidation plan. (B) For 9 locations under the original consolidation plan. F-25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) The following unaudited pro forma information summarizes consolidated results of operations of Tokheim, the RPS Division and MSI as if the acquisitions had occurred at the beginning of 1998 and 1997. These unaudited pro forma results include certain adjustments, such as additional amortization expense as a result of goodwill and other intangible assets and increased interest expense on acquisition debt. They do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on December 1, 1997 or 1996, or future results of operations. The Company is in the process of closing several redundant manufacturing, sales, service and administrative operations as part of the integration and rationalization plans discussed above. Anticipated synergies from the merger of Tokheim, the RPS Division and MSI have been excluded from the amounts included in the pro forma summary information presented below.
Unaudited Years Ended November 30, ------------------ 1998 1997 -------- -------- Net sales................................................ $743,623 $737,520 Net loss................................................. (49,189) (37,966) Net loss per common share (Basic and Diluted)............ (4.67) (3.48)
3. MERGER AND ACQUISITION COSTS AND OTHER UNUSUAL ITEMS For the years ended November 30, 1998, 1997 and 1996, the Company identified certain expenses related primarily to the acquisition of the RPS Division in 1998 and the acquisition of Sofitam in 1996. These costs, although not uncommon to the Company's industry, are considered by the Company to be attributable to the purchase and integration of the acquired companies or otherwise significant enough in size or unusual enough in nature to warrant separate disclosure. These costs are shown in aggregate as a single operating line item, "Merger and acquisition costs and other unusual items," on the Consolidated Statement of Earnings. Merger and acquisition costs/Restructuring--During 1998, as a result of the acquisitions of the RPS Division and MSI, the Company initiated an integration and rationalization plan that entails the closure and reorganization of certain manufacturing, sales, service and administrative operations. Amounts charged to operations for involuntary employee termination costs and other exit costs incurred to execute certain projects of the integration and rationalization plan were approximately $7,700 in 1998. Of this amount, approximately $2,815 relates to employee severance and related costs for approximately 136 employees that served in various manufacturing, sales, service and administrative capacities. The other $4,885 represents accrued exit costs for the write off of certain assets and other miscellaneous closure costs. During 1997 and 1996 the Company implemented several corporate realignment initiatives, including work force reductions and reorganization of its domestic and international operations, related to the consolidation of Sofitam. Amounts charged to operations as incurred for the matters described above for the years ended November 30, 1997 and 1996 approximated $1,736 and $2,035, respectively. Litigation/Other--In connection with the purchase of MSI in the first quarter of fiscal 1998, the Company recorded a $5,879 charge relating to the write-off of in-process research and development ("IPR&D"). This amount represents the estimated fair value of acquired incomplete research and development projects of MSI at the date of acquisition. See Note 2 for additional information on the IPR&D. During 1997, the Company settled a claim against it directly associated with the purchase of Sofitam related to a personnel matter that resulted in an outcome adverse to the Company. The Company also favorably settled a claim that involved a former supplier, which resulted in the reversal of an accrued liability which had been charged to "Merger and acquisition costs and other unusual items" in 1996. In addition, during 1997 the Company recorded a charge for an impaired asset related to license technology. In 1996 the Company settled claims related to a prior distributor and a foreign distributor to extinguish an exclusive sales representative agreement. The Company also incurred a charge to operations for the adverse outcome in a Pension Benefit Guarantee Corporation inquiry with respect to a terminated benefit plan payout from 1991. In addition, the Company incurred charges F-26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) in 1996 related to customer satisfaction programs relating to dispensers sold in prior years. Amounts charged to merger and acquisition costs and other unusual items relating to litigation/other for 1998, 1997 and 1996 were $5,985, $1,757, and $4,424, respectively. 4. ACCRUED EXPENSES Accrued expenses consisted of the following at November 30, 1998 and 1997:
1998 1997 -------- ------- RPS Division integration and rationalization plan.......... $ 20,294 $ -- Schlumberger Limited....................................... 6,507 -- Sofitam integration plan................................... 4,001 7,297 Compensated absences....................................... 14,644 7,087 Salaries, wages, and commissions........................... 14,871 6,076 Retirement benefits and profit sharing..................... 9,625 5,921 Interest................................................... 4,984 3,755 Warranty................................................... 10,627 3,742 Legal and professional..................................... 3,788 3,102 Employee payroll taxes..................................... 5,634 2,708 Deferred revenue........................................... 5,645 2,453 Taxes (sales, VAT, and other).............................. 11,072 2,434 Other...................................................... 24,472 6,615 -------- ------- $136,164 $51,190 ======== =======
5. NOTES PAYABLE, BANK CREDIT AGREEMENT On September 30, 1998, Tokheim and certain of its subsidiaries, including certain of the subsidiaries used to acquire the RPS Division (the "Borrowers") entered into a credit agreement (the "New Credit Agreement") with certain lenders. The New Credit Agreement replaced the existing ("old credit agreement") and consists of a six year working capital/letter of credit facility and a six year term loan facility, each in an aggregate principal amount of $120,000. Pursuant to the New Credit Agreement, $20,000 of the availability under the working capital facility may be utilized for issuance of standby letters of credit, and $10,000 of the availability under the working capital facility may be utilized for swing line facilities to be provided to Tokheim and certain of the other Borrowers. The New Credit Agreement permits borrowings in U.S. dollars, and, if certain additional conditions are met, in French francs, British pounds, Dutch guilders, German marks and euros (so long as such non-U.S. currencies are freely traded, readily available and convertible into U.S. dollars) and such other currencies as agreed by each Bank. An additional agreement provides for the assignment of a three year $7,600 ESOP loan facility with certain banks (the "ESOP Credit Agreement"). At November 30, 1998, the outstanding borrowings were $62,145 under the revolving working capital facility, $120,000 under the term loan, and $6,987 under the ESOP facility. The term loan calls for equal quarterly principal payments aggregating to $7,500 in year 2000; $10,000 in year 2001; $12,500 in year 2002; $15,000 in year 2003; $37,500 in a single payment due first quarter 2004; and the remainder due at maturity. The revolving working capital facility is due on September 30, 2004. Available borrowings under the revolving working capital facility were $57,900 at November 30, 1998 subject to a borrowing base limitation and certain other loan covenant restrictions. Indebtedness of the Company under the New Credit Agreement (a) is secured by (i) a first perfected security interest in and lien on certain of the real and personal property assets of Tokheim (including claims F-27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) against certain subsidiaries to which Tokheim has made intercompany loans) and Tokheim's direct and indirect material majority-owned U.S. subsidiaries, (ii) a pledge of 100% of the stock of Tokheim's direct and indirect material majority- owned U.S. subsidiaries, and (iii) a pledge of 65% of the stock of Tokheim's first-tier material foreign subsidiaries and (b) is guaranteed by all of Tokheim's direct and indirect material majority-owned U.S. subsidiaries. Certain indebtedness of Tokheim's foreign subsidiaries which are Borrowers or become Borrowers under the New Credit Agreement will be secured by certain of the personal property of such foreign subsidiaries. Indebtedness under the New Credit Agreement bears interest based upon (at the applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar denominated loans (defined as the higher of (x) the applicable prime rate and (y) the federal funds rate (as adjusted pursuant to the New Credit Agreement) plus 0.50%) plus an applicable margin based upon the Company's leverage ratio (with a range of 1.50% to 3.00% for revolving loans and 3.00% for term loans) or (ii) the applicable Eurocurrency Rate (as defined in the New Credit Agreement) for a deposit in the currency of, and for a maturity corresponding to, the applicable loan and interest period, plus an applicable margin based upon the Company's leverage ratio (with a range of 2.50% to 4.00% for revolving loans and 4.00% for term loans). The unused portion of the commitment under the New Credit Agreement will be subject to a commitment fee in the range of 0.375% to 0.50% depending upon the leverage ratio of the Company. Indebtedness under the ESOP Credit Agreement will amortize with a final principal payment on July 1, 2001. The revolving loan commitment under the New Credit Agreement may be voluntarily permanently reduced by the Company in whole or in part on one day's notice without premium or penalty. The Borrower may prepay the term loans subject to a pre-payment penalty if the Borrowers prepay the entire amount of the term loans in the first 3 years after September 30, 1998. The Borrowers will be able to prepay the loans in accordance with the terms of the New Credit Agreement. Subject to the provisions of the New Credit Agreement, the Borrowers will be able to, from time to time, borrow, repay and reborrow under the working capital facility. The New Credit Agreement requires an amount equal to all net proceeds from asset sales by the Company or any of its subsidiaries (with certain exceptions) to be applied to repay the loans under the New Credit Agreement. The New Credit Agreement also requires the Company to prepay the loans under the New Credit Agreement in an amount equal to (i) all net proceeds from the sale or issuance of debt (with certain exceptions), (ii) all net proceeds from the sale or issuance of equity (with certain exceptions) and (iii) a percentage of Excess Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a range of 50% to 85%, based upon the Company's leverage ratio, commencing with the Company's fiscal year ending November 30, 1999. The New Credit Agreement requires the Company to meet certain consolidated financial tests, including minimum level of consolidated net worth, minimum level of EBITDA (as defined in the New Credit Agreement), minimum level of consolidated interest coverage, maximum consolidated leverage ratio and senior leverage ratio and minimum consolidated fixed charge coverage ratio. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments of certain other indebtedness, amendments to certain other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. At November 30, 1998 and 1997, the aggregate amounts outstanding under working capital facilities were $62,145 and $24,090, respectively. These amounts are classified as long-term debt because the Company had the ability (under the terms of the facility) and the intent to finance these obligations beyond one year. The total line of credit under the working capital facility was approximately $120,000 and $67,768, of which $57,855 F-28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) and $43,678 was unused at November 30, 1998 and 1997, respectively. The weighted average annual interest rates for these lines of credit were 7.1% and 7.6% for 1998 and 1997, respectively. The range of rates at November 30, 1998 and 1997 was 5.1% to 7.5% and 7.6% to 8.9%, respectively. 6. SENIOR NOTES As part of the financing for the acquisition of the RPS Division, the Company entered into a note purchase agreement, pursuant to which the Company issued $22,500 million aggregate principal amount of Senior Notes bearing an interest rate starting at 12.5% and increasing by 0.5% on December 1, 1998, and every three months thereafter to a maximum of 14.5%. The Company has the option, subject to bank approval, to redeem (in whole or in part) the Senior Notes. The Note Purchase Agreement is subject to certain restrictions and covenants common to such agreements. On January 29, 1999 the Senior Notes were repaid. See Note 21 for additional information. 7. SENIOR SUBORDINATED NOTES As part of the financing for the Acquisition of the RPS Division, the Company issued $170,000 in Senior Subordinated Seller Notes due one hundred twenty days after the Acquisition closing date. The Company has the option, subject to bank approval, to redeem (in whole or in part) the Senior Subordinated Seller Notes. Under the terms of the Senior Subordinated Seller Notes, to the extent the Company has not refinanced the Senior Subordinated Seller Notes within one hundred twenty days of the Acquisition closing date, such notes convert into an equal principal amount of eight year notes with an interest rate starting at 12.0% and increasing by 0.5% every three months to a maximum of 14.5%. Interest exceeding 12.0% will be payable in kind. The Senior Subordinated Seller Notes are subject to certain restrictions and covenants common to such agreements. On January 29, 1999 the Senior Subordinated Seller Notes were repaid. See Note 21 for additional information. In August 1996 the Company issued $100,000 aggregate principal amount of 11.5% Senior Subordinated Notes due 2006 (the "11.5% Notes") to finance the acquisition of Sofitam. Interest on these notes accrues at the rate of 11.5% per annum and is payable semi-annually in cash on each February 1 and August 1 to the registered holders at the close of business on January 15 and July 15 immediately preceding the applicable interest payment date. During the fourth quarter of 1997, the Company used proceeds from its Old Credit Agreement to purchase $10,000 face value of the 11.5% Notes. The Company purchased these 11.5% Notes on the open market at an aggregate price of $11,390 plus accrued interest and recorded an extraordinary loss of $1,886. This amount includes $1,390 of premiums paid to repurchase the 11.5% Notes and $496 representing the write-off of a proportionate share of the original unamortized deferred issuance costs. The Company used proceeds from the March 1998 Common Stock Offering of $39,356 to redeem $35,000 in aggregate principal amount of the 11.5% Notes. These 11.5% Notes were redeemed at a call price of 109.857%, expressed as a percentage of the original face value, resulting in premiums paid of $3,450 along with accrued interest of $906. Following the redemption, $55,000 in aggregate principal amount of the 11.5% Notes remained outstanding. The Company recorded an extraordinary loss on the extinguishment of the 11.5% Notes of approximately $4,965 during the second quarter of 1998. This loss includes $3,450 of premiums paid to purchase the 11.5% Notes and $1,515 representing the write-off of a proportionate share of the original unamortized deferred issuance costs. On September 30, 1998, the Company completed the repurchase of the final $55,000 of 11.5% Notes that were then outstanding. These 11.5% Notes were redeemed at an aggregate premium and consent payment of $12,332 along with accrued interest of $1,072. The company recorded an extraordinary loss on the extinguishment of the 11.5% Notes of approximately $14,940 in the fourth quarter of 1998. These notes were repurchased with proceeds from borrowings under the New Credit Agreement. See also Note 21. F-29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) 8. JUNIOR SUBORDINATED PIK NOTES In connection with the acquisition of the RPS Division, the Company issued $40,000 million in Junior Notes. Interest on the Junior Notes is payable quarterly in cash or in-kind at the Company's option. All existing U.S. subsidiaries have guaranteed, and all future U.S. subsidiaries will guarantee, the Junior Notes on a junior subordinated basis with unconditional guarantees that are or will be unsecured and subordinated to senior debt of such subsidiaries. The Junior Notes are unsecured junior subordinated obligations of the Company and are junior to the Company's senior debt. The Junior Notes were issued under an indenture (the "Junior Indenture") that limits the ability of the Company and its subsidiaries to, among other things: incur indebtedness; pay dividends and make certain other payments; make certain investments; sell certain assets; enter into certain transactions with affiliates; restrict distributions from subsidiaries; incur liens; and consolidate, merge or transfer all or substantially all of its or its subsidiaries' assets. Subject to the terms of the Junior Indenture, the Junior Notes may be redeemed at any time, in whole or in part, at the option of the Company at a redemption price equal to the unpaid principal amount thereof plus accrued interest thereon to the redemption date. Upon a change of control (as defined in the Junior Indenture, and subject to certain conditions set forth in the Junior Indenture), any holder of Junior Notes will have the right to cause the Company to repurchase all or any part of the Junior Notes of such Holder at a purchase price equal to 101% of the principal amount of the Junior Notes to be repurchased plus accrued and unpaid interest thereon, if any, to the date of repurchase. The Junior Notes are subject to a registration rights agreement, with registration rights that can be exercised any time after the date that is 120 days after the issue date of the Junior Notes. 9. OTHER LONG TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN (ESOP) OBLIGATION Term debt at November 30, 1998 and 1997 consisted of the following:
1998 1997 ------ ------ 0.0% Belgian government note due in 1999 (a)..................... $ 58 $ 93 3.5% German bonds, due in semiannual installments through 1998 (a)............................................................. -- 80 6.0% notes payable, due in semiannual installments through 2004 (a)............................................................. 679 -- 8.1% note payable, due in semiannual installments through 2001 (a)............................................................. -- 160 11.5% note payable, due in quarterly installments through 1998 (a)............................................................. -- 405 15.0% note payable, due in quarterly installments through 2002 (a)............................................................. 315 372 14.3% note payable, due in monthly installments through 2000 (a)............................................................. -- 149 27.5% note payable, due in monthly installments through 2000 (a)............................................................. 303 343 5.0% to 16.50% capital lease obligations, due in quarterly installments through 2002 (a)................................... 2,140 2,315 9.33% capital lease obligation, due in annual installments through 2004 (a)................................................ 2,356 2,559 Other............................................................ -- 311 5.0% to 15.0% notes payable, due in annual installments through 2004 (a)........................................................ 374 -- ------ ------ 6,225 6,787 Less: Current maturities......................................... 2,110 2,390 ------ ------ $4,115 $4,397 ====== ====== Guaranteed Employees' Stock Ownership Plan (ESOP) obligation at November 30, 1998 and 1997 consisted of the following: 1998 1997 ------ ------ Guaranteed Employees' Stock Ownership Plan (ESOP) obligation, variable rate, maturing $640 to $760 quarterly through 2001, rate of 7.41% at November 30, 1998 (b).......................... $6,987 $9,429
F-30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) Aggregate scheduled maturities of the above term debt and Guaranteed Employees' Stock Ownership Plan (ESOP) obligation during the upcoming five years approximate $4,747; $4,418; $2,272; $637; and $482, respectively. (a) Aggregate cost of plant and equipment pledged as collateral under revenue bonds and lease obligations is $6,231. (b) Per the New Credit Agreement as described in Note 5, the ESOP obligation matures on September 3, 2002. 10. OPERATING LEASES The Company leases certain manufacturing equipment, office equipment, computers, vehicles, and office and warehousing space under operating leases. These leases generally expire in periods ranging from one to five years. Amounts charged to expenses under operating leases in 1998, 1997 and 1996 were $6,364, $4,104, and $2,835, respectively. Future minimum rental payments under noncancelable operating leases during the upcoming five years approximate $6,158, $5,020, $2,865, $2,371 and $2,260. 11. STOCK OPTION PLANS The Company has three separate Stock Option Plans, as outlined below: 1992 Stock Incentive Plan (SIP) The Plan contains both incentive stock options (ISOs) and non-qualified stock options (NSOs). The price of each share under this Plan for an ISO or NSO shall not be less than the fair market value of Tokheim Corporation Common Stock on the date the option is granted. Options granted under the SIP become exercisable at the rate of 25% of the total options granted per year, beginning one year after the grant date. All options expire within ten years from the date on which they were granted. In addition, the SIP provides for the granting of Stock Appreciation Rights (SARs) and Restricted Stock Awards (RSAs). During 1998, there were no SARs or RSAs granted. 1982 Incentive Stock Option Plan (ISOP) and 1982 Unqualified Stock Option Plan (USOP) Effective January 21, 1992, no additional shares could be granted under these plans. All options expire within ten years from the date on which they were granted. The price of each share under the ISOP was not less than fair market value of Tokheim Corporation Common Stock on the date the option was granted, and under the USOP was not less than 85% of the fair market value of Tokheim Corporation Common Stock on the date the option was granted. Options granted under the respective plans during 1998, 1997, and 1996, are as follows:
1992 Stock Incentive Plan ------------------ Year of Grant ISO NSO RSA ------------- ------- --- ------ 1998.................................................. 2,000 -- -- 1997.................................................. 468,000 -- 42,500 1996.................................................. 45,000 -- --
F-31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) The following table sets forth the status of all outstanding options at November 30, 1998:
Exercisable In Total Options Option Price Options The Next One Authorized and Per Share Exercisable To Four Years Outstanding ------------ ----------- -------------- -------------- $20.0000 15,300 -- 15,300 $18.6875 -- 2,000 2,000 $18.1250 4,375 13,125 17,500 $12.2500 500 -- 500 $11.9375 2,500 -- 2,500 $9.0000 -- 1,000 1,000 $8.8800 36,250 -- 36,250 $8.6880 81,250 285,000 366,250 $8.5000 11,250 3,750 15,000 $7.9380 2,000 21,000 23,000 $7.1250 19,000 21,500 40,500 ------- ------- ------- 172,425 347,375 519,800 ======= ======= =======
154,982 and 335,388 options were exercisable as of November 30, 1997 and 1996 respectively. The weighted average exercise price was $9.25 and $9.10 and the weighted average remaining contractual life was 6.83 and 7.15 years for all outstanding options as of November 30, 1998, and 1997, respectively. Transactions in stock options under these plans are summarized as follows:
Shares Under Option Price Range ------------ ------------ Outstanding, November 30, 1995..................... 482,341 $6.81-$20.00 Granted............................................ 45,000 $7.13-$9.00 Exercised.......................................... (5,000) $8.75 Canceled or expired................................ (70,087) $6.81-$20.00 -------- Outstanding, November 30, 1996..................... 452,254 $6.81-$20.00 Granted............................................ 468,000 $7.94-$18.13 Exercised.......................................... (235,547) $6.81-$9.38 Canceled or expired................................ (58,225) $6.81-$20.00 -------- Outstanding, November 30, 1997..................... 626,482 $6.81-$20.00 Granted............................................ 2,000 $18.69 Exercised.......................................... (94,907) $6.81-$11.94 Canceled or expired................................ (13,775) $7.94-$20.00 -------- Outstanding, November 30, 1998..................... 519,800 ========
Reserved for the granting of new options:
Shares ------- November 30, 1996.................................................... 98,774 November 30, 1997.................................................... 133,274 November 30, 1998.................................................... 158,774
F-32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) Effective December 1, 1996, the Company adopted the disclosure-only provisions of SFAS No. 123. Accordingly, no compensation cost has been recognized for the existing stock option plans under the provisions of this statement. The Company continues to account for stock options at their intrinsic value under the provisions of APBO No. 25, which is allowed under SFAS No. 123. Under APBO No. 25, because the option terms are fixed and the exercise price of employee stock options equals the market price on the date of grant, no compensation expense is recorded. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date, consistent with the provisions of SFAS No. 123, the Company's net earnings (loss) would have been impacted as indicated below:
1998 1997 ------------------ ----------------- As Pro As Pro Reported Forma Reported Forma -------- -------- -------- ------- (in thousands except per share data) Earnings (loss) before extraordinary loss.................................... $ (3,744) $ (3,744) $ 3,980 $ 3,980 Estimated fair value of the year's option grants.................................. -- (4) -- (313) -------- -------- ------- ------- Earnings (loss) before extraordinary loss.................................... (3,744) (3,748) 3,980 3,667 Extraordinary loss on debt extinguishment.......................... (23,924) (23,924) (1,886) (1,886) -------- -------- ------- ------- Net earnings (loss)...................... $(27,668) $(27,672) $ 2,094 $ 1,781 ======== ======== ======= ======= Preferred stock dividends ($1.94 per share).................................. $ (1,484) $ (1,484) $(1,512) $(1,512) Earnings (loss) applicable to common stock................................... $(29,152) $(29,156) $ 582 $ 269 Earnings (loss) per common share: Basic Before extraordinary loss............ $ (0.46) $ (0.46) $ 0.31 $ 0.27 Extraordinary loss on debt extinguishment...................... (2.10) (2.10) (0.23) (0.23) -------- -------- ------- ------- Net earnings (loss).................. $ (2.56) $ (2.56) $ 0.08 $ 0.04 ======== ======== ======= ======= Weighted average number of shares outstanding......................... 11,371 11,371 8,042 8,042 ======== ======== ======= ======= Diluted Before extraordinary loss............ $ (0.46) $ (0.46) $ 0.27 $ 0.24 Extraordinary loss on debt extinguishment...................... (2.10) (2.10) (0.21) (0.21) -------- -------- ------- ------- Net earnings (loss).................. $ (2.56) $ (2.56) $ 0.06 $ 0.03 ======== ======== ======= ======= Weighed average number of shares outstanding......................... 11,371 11,371 9,005 9,005 ======== ======== ======= =======
For purposes of pro forma disclosures, the estimated fair value of the options (stock-based compensation) is amortized to expense on a straight-line basis over the options' vesting period. The pro forma information above only includes the effects of 1998 and 1997 grants. As such, the impacts are not necessarily indicative of the effects on reported net earnings (loss) of future years. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for 1998 and 1997:
Assumptions 1998 1997 ----------- ------- ------- Dividend yield............................................... -- -- Risk free interest rate...................................... 5.88% 6.37% Expected life of options..................................... 5 years 5 years Expected volatility.......................................... 38.76% 38.76% Estimated fair value of options granted per share............ $8.94 $9.01
F-33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) 12. COMMON AND PREFERRED STOCK Changes in common stock and common treasury stock are shown below:
Common Common Stock Treasury Stock ------------------ --------------- Shares Amount Shares Amount ---------- ------- ------- ------ Balance, November 30, 1995............... 7,949,000 $19,409 13,000 $ 231 Stock options exercised.................. 5,000 43 -- -- Employee termination benefits............ -- -- (1,000) (11) Other.................................... -- -- (1,000) (28) ---------- ------- ------- ----- Balance, November 30, 1996............... 7,954,000 19,452 11,000 192 Stock options exercised.................. 278,000 1,706 -- -- Shares purchased......................... -- -- 8,000 105 Other.................................... -- -- (10,000) (157) ---------- ------- ------- ----- Balance, November 30, 1997............... 8,232,000 $21,158 9,000 $ 140 Stock options exercised.................. 6,000 1,472 -- -- Shares purchased......................... -- -- 29,000 555 Equity Offering.......................... 4,370,000 67,724 -- -- ---------- ------- ------- ----- Balance, November 30, 1998............... 12,698,000 $90,354 38,000 $ 695 ========== ======= ======= =====
Changes in redeemable convertible preferred stock and related treasury stock are shown below:
Preferred Preferred Stock Treasury Stock --------------- --------------- Shares Amount Shares Amount ------- ------- ------- ------ Balance, November 30, 1995.................. 960,000 $24,000 151,000 $3,784 Shares redeemed............................. -- -- 31,000 771 RSP contributions........................... -- -- (15,000) (384) ------- ------- ------- ------ Balance, November 30, 1996.................. 960,000 $24,000 167,000 $4,171 Shares redeemed............................. -- -- 48,000 1,197 RSP contributions........................... -- -- (26,000) (650) ------- ------- ------- ------ Balance, November 30, 1997.................. 960,000 $24,000 189,000 $4,718 Shares redeemed............................. -- -- 43,000 1,079 RSP contributions........................... -- -- (37,000) (914) ------- ------- ------- ------ Balance, November 30, 1998.................. 960,000 $24,000 195,000 $4,883 ======= ======= ======= ======
On July 10, 1989, the Company sold 960,000 shares of redeemable convertible preferred stock (the "Preferred Stock") to the Trust of the Company's RSP at the liquidation value of $25 per share or $24,000. The Preferred Stock has a dividend rate of 7.75%. The Trustees who hold the Preferred Stock may elect to convert each preferred share to one common share in the event of redemption by Tokheim, certain consolidations or mergers of Tokheim, or a redemption by the Trustees which is necessary to provide for distributions under the RSP. A participant may elect to receive a distribution from the RSP in cash or common stock. If redeemed by the Trustees, the Company is responsible for purchasing the Preferred Stock at the $25 floor value. The Company may elect to pay the redemption price in cash or an equivalent amount of common stock. Due to the redemption characteristics of the stock, the aggregate amount of future redemptions for the next five years cannot be determined. See Note 18 for further discussions on the Company's Preferred Stock. F-34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) On March 1998, the Company completed a secondary public offering of 4,370,000 shares of Tokheim common stock at an initial offering price of $16.5625 per share. The net proceeds of the offering totaled $67,724. The Company used the proceeds to repurchase $35,000 in aggregate principal amount of outstanding 11.5% Notes, repayment of amounts outstanding under the Old Credit Agreement and general corporate purposes. As part of the consideration paid ($20,000) in the RPS Division Acquisition, the Company issued the Warrants, exercisable for up to 19.9% of the outstanding shares of the Company's common stock at an exercise price of $.01 per share. The actual number of shares issuable upon exercise is 2,526,923. The Warrants are exercisable for five years beginning January 30, 1999. The number of shares of the Company's common stock issuable upon exercise of the Warrants, along with the purchase price of the common stock Warrants, will be further adjusted to reflect any stock splits, stock subdivisions or combinations of the Company's common stock, any reclassification of the Company's common stock, any capital reorganization, merger or consolidation of the Company, any issuance of common stock by the Company, and any issuance of convertible securities by the Company. The Company may redeem the Warrants, in whole or in part, at any time on or before January 29, 1999, by paying $20.0 million (or an appropriate percentage thereof if the Warrants are redeemed in part). 13. EARNINGS PER SHARE The Company adopted SFAS No. 128, Earnings Per Share, during the first quarter of fiscal 1998. Under SFAS No. 128, the Company presents two earnings per share ("EPS") amounts, Basic and Diluted. Basic EPS is calculated based on earnings available to common shareholders and the weighted average number of 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 rants were not included in computing diluted EPS for the years ended November 30, 1998, and 1996, since the effect of such is antidilutive during periods when a loss from continuing operations applicable to common shareholders is reported. For the year ended November 30, 1998, the weighted average of potentially issuable common shares included 764,664 shares of convertible preferred stock outstanding, 210,488 shares for stock options and 428,938 shares related to the Warrants. During the year ended November 30, 1996, the weighted average of potentially issuable common shares included 800,400 shares of convertible preferred stock outstanding and 67,504 shares for stock options. EPS for the years ended November 30, 1997 and 1996 have been restated to apply the provisions of SFAS No. 128. Earnings per common share calculated for the years ended November 30, 1997 and 1996 on a primary and fully diluted basis under the provisions of Accounting Principles Board Opinion No. 15 differed by less than one cent per share from that calculated on a basic and diluted basis under SFAS No. 128 as there is no difference in the earnings amounts applicable to common stock and the difference between the weighted average shares outstanding used in the two calculations is not material. F-35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) The following table presents the share information necessary to calculate earnings (loss) per share for fiscal years ended November 30, 1998, 1997, and 1996:
1998 1997 1996 ------ ----- ----- Basic shares outstanding: Weighted average outstanding............................ 11,371 8,042 7,940 ====== ===== ===== Diluted shares outstanding: Weighted average outstanding............................ 11,371 8,042 7,940 Share equivalents....................................... -- 177 -- Weighted conversion of preferred stock.................. -- 786 -- ------ ----- ----- Adjusted outstanding.................................... 11,371 9,005 7,940 ====== ===== =====
The AICPA issued SOP No. 93-6, Employers' Accounting for Employee Stock Ownership Plans, in November 1993. As allowed by that statement, the Company has elected to continue its current accounting practices for the ESOP which are based on SOP No. 76-3 and subject to consensuses of the Emerging Issues Task Force of the Financial Accounting Standards Board. Dividends paid on Preferred Stock are deducted from EPS computations and Preferred Stock outstanding is converted at a ratio of one-for-one. 14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial information for 1998 and 1997 is as follows:
1998 --------------------------------------------------------- 1st 2nd 3rd 4th Total Quarter(A) Quarter Quarter Quarter(B) (A)(B) ---------- ------- -------- ---------- -------- Net sales............... $90,852 $99,652 $101,492 $174,443 $466,440 Cost of sales (C)....... 67,074 73,118 73,782 131,057 345,031 Earnings (loss) before extraordinary loss..... (5,606) 2,427 2,929 (3,496) (3,744) Extraordinary loss on debt extinguishment.... -- (4,965) -- (18,959) (23,924) Net earnings (loss)..... (5,606)(D) (2,538)(E) 2,929 (22,455)(F) (27,668) Earnings (loss) per common share: Basic: Before extraordinary loss............... (0.72) 0.17 0.20 (0.31) (0.46) Extraordinary loss on debt extinguishment..... -- (0.42) -- (1.50) (2.10) Net earnings (loss)............. (0.72) (0.25) 0.20 (1.81) (2.56) Diluted: Before extraordinary loss............... (072) 0.16 0.19 (0.31) (0.46) Extraordinary loss on debt extinguishment..... -- (0.39) -- (1.50) (2.10) Net earnings (loss)............. (0.72) (0.23) 0.19 (1.81) (2.56)
- -------- (A) Includes MSI's results of operations since December 31, 1997, the date of acquisition. (B) Includes the RPS Division's results of operations since September 30, 1998, the date of acquisition. (C) Includes product development expenses and excludes depreciation and amortization. (D) Includes a $5,879 write-off of in-process research and development in connection with the MSI acquisition (E) Includes a $4,965 extraordinary loss on debt extinguishment on the redemption of $35,000 of the 11.5% Notes, repurchased with proceeds from the Company's Common Stock Offering. Includes a currency gain of $770 associated with the repayment of various French franc denominated borrowings. F-36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) (F) Includes an extraordinary loss on debt extinguishment on the redemption of $55,000 of the 11.5% Notes and refinancing of the company's bank debt. In addition, the Company recorded merger and acquisition costs and other unusual items of $7,089 associated with various integration and rationalization plans for the RPS Division and Sofitam.
1997 -------------------------------------------- 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Total ------- ------- ------- -------- -------- Net sales........................ $92,024 $95,857 $91,781 $105,807 $385,469 Cost of products sold (A)........ 70,391 70,379 68,667 74,495 283,932 Earnings before extraordinary item............................ 125 1,210 152 2,493 3,980 Extraordinary loss on debt extinguishment.................. -- -- -- (1,886) (1,886) Net earnings..................... 125 1,210 152 607 2,094 Earnings (loss) per common share: Basic: Before extraordinary item.... (0.03) 0.10 (0.03) 0.26 0.31 Extraordinary loss on debt extinguishment.............. -- -- -- (0.23) (0.23) Net earnings (loss).......... (0.03) 0.10 (0.03) 0.03 0.08 Diluted: Before extraordinary item.... (0.03) 0.09 (0.03) 0.23 0.27 Extraordinary loss on debt extinguishment.............. -- -- -- (0.20) (0.21) Net earnings (loss).......... (0.03) 0.09 (0.03) 0.03 0.06
- -------- (A) Includes product development expenses and excludes depreciation and amortization. 15. INCOME TAXES Earnings (loss) before income taxes and extraordinary loss consists of the following:
1998 1997 1996 ------- ------ ------- Domestic............................................ $ 2,117 $4,209 $ (542) Foreign............................................. (4,815) 988 (687) ------- ------ ------- $(2,698) $5,197 $(1,229) ======= ====== ======= Income tax provision (benefit) consists of the following: 1998 1997 1996 ------- ------ ------- Current: Federal........................................... $ (340) $ 240 $ (460) State............................................. 747 311 277 Foreign........................................... 596 652 906 Deferred: Foreign........................................... 43 14 57 ------- ------ ------- Total tax provision............................. $ 1,046 $1,217 $ 780 ======= ====== =======
F-37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) A reconciliation of the reported tax expense (benefit) and the amount computed by applying the statutory U.S. federal income tax rate of 35% to earnings (loss) before income taxes and extraordinary loss is as stated below.
1998 1997 1996 ------ ------ ------ Computed "expected" tax expense (benefit)........... $ (944) $1,819 $ (430) Increase (decrease) in taxes resulting from: State income taxes net of federal tax benefit..... 487 202 180 Tax effect of dividends paid on stock held in Retirement Savings Plans......................... (519) (529) (540) Adjustments to prior year accruals and refunds.... -- (600) (111) Foreign income (losses) not tax effected at statutory rate................................... 2,030 917 1,248 Miscellaneous items, net.......................... (8) (592) 433 ------ ------ ------ Reported tax expense................................ $1,046 $1,217 $ 780 ====== ====== ======
The components of the deferred tax assets and liabilities as of November 30, 1998 and 1997 are as stated below.
1998 1997 -------- -------- Gross deferred tax assets: Accounts receivable................................... $ 958 $ 346 Compensation and benefit accruals..................... 7,453 7,336 Accrued expenses...................................... 5,065 1,234 Net operating loss carryforwards...................... 33,145 12,822 Tax credit............................................ 383 378 Inventory............................................. 4,238 -- Intangible assets..................................... 4,944 -- Valuation allowance................................... (48,211) (19,095) -------- -------- Total deferred tax asset............................ $ 7,975 $ 3,021 ======== ======== 1998 1997 -------- -------- Gross deferred tax liabilities: Property, plant and equipment......................... $ 1,494 $ 1,529 Pension assets........................................ 797 700 Inventory............................................. 1,819 476 Accrued expenses...................................... 3,865 -- Miscellaneous other, foreign.......................... -- 658 -------- -------- Total deferred tax liability........................ 7,975 3,363 -------- -------- Net deferred tax liability.............................. $ -- $ (342) ======== ========
For domestic federal income tax purposes, the net operating loss ("NOL") carryovers amount to $46,578 which will expire from 2006 to 2019. F-38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) At November 30, 1998, the Company recorded a net deferred tax asset of approximately $40,240, which was offset in full by a valuation allowance due largely to uncertainties associated with the Company's ability to fully use these tax benefits. The Company is continuing to evaluate the likelihood that all or part of the deferred tax asset will be realized through the generation of future taxable earnings. If, in the future, the Company is able to generate sufficient levels of taxable income, the valuation allowance will be adjusted accordingly. 16. GEOGRAPHICAL SEGMENTS Domestic and foreign operations information for the years ended November 30, 1998, 1997, and 1996 is as follows:
1998 1997 1996 -------- -------- -------- Net sales--unaffiliated customers: North America................................ $186,835 $139,928 $147,763 Export....................................... 30,744 46,529 38,541 Europe....................................... 226,587 176,402 80,370 Africa....................................... 22,274 22,610 13,059 -------- -------- -------- $466,440 $385,469 $279,733 ======== ======== ======== Inter-area sales eliminations: North America................................ $ 7,162 $ 8,432 $ 9,471 ======== ======== ======== Europe....................................... $ 3,470 $ 3,660 $ 1,100 ======== ======== ======== Africa....................................... $ 3 $ 286 $ 510 ======== ======== ======== Operating profit: North America................................ $ 2,198 $ 5,557 $ 494 Europe....................................... 11,666 10,259 2,649 Africa....................................... 1,052 1,444 633 Adjustments and eliminations................. (147) 3,385 2,580 -------- -------- -------- $ 14,769 $ 20,645 $ 6,356 ======== ======== ======== Identifiable assets: North America................................ $595,291 $207,209 $216,989 Europe....................................... 509,684 169,110 186,372 Africa....................................... 15,798 14,448 14,955 Adjustments and eliminations................. (345,311) (100,148) (108,455) -------- -------- -------- $775,642 $290,619 $309,861 ======== ======== ========
The Company's foreign operations are located in: Canada; South Africa; Scotland; Germany; France; Italy; Ivory Coast; Morocco; Switzerland; Spain; Tunisia; Senegal; Cameroon; the Netherlands; Belgium; Poland; Austria; Denmark; Norway; Great Britain; Czech Republic; Slovakia; Hungary and Ireland. Transfers between geographical areas are at cost plus an incremental amount intended to provide a reasonable profit margin to the selling enterprise. F-39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) 17. ALLOWANCE FOR DOUBTFUL ACCOUNTS Changes in the allowance for doubtful accounts are as follows:
1998 1997 1996 ------ ------ ------ Balance, beginning of year.......................... $1,392 $ 904 $1,150 Sofitam acquisition adjustments..................... -- 350 -- Charged to operations............................... 1,210 192 667 Uncollectible accounts written off, less recoveries......................................... (507) (34) (900) Foreign currency translation adjustments............ 20 (20) (13) ------ ------ ------ Balance, end of year.............................. $2,115 $1,392 $ 904 ====== ====== ======
18. RETIREMENT PLAN COST The Company has several retirement plans covering most employees, including certain employees in foreign countries. Charges to operations for the cost of the Company's retirement plans, including the RSP, were $2,470, $2,625 and $3,052 in 1998, 1997 and 1996, respectively. Defined Benefit Plans (U.S.)--The Company maintains two noncontributory defined benefit pension plans which cover certain union employees. 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' funded status and the amounts reflected in the accompanying Consolidated Balance Sheet as of November 30, 1998 and 1997:
Assets Exceed Accumulated Accumulated Benefits Benefits Exceed Assets -------------- ----------------- 1998 1997 1998 1997 ------ ------ -------- ------- Actuarial present value of accumulated plan benefits: Vested.................................... $1,562 $1,470 $ 9,837 $ 9,624 Non-vested................................ 84 80 672 662 ------ ------ -------- ------- Accumulated benefit obligations........... $1,646 $1,550 $ 10,509 $10,286 ====== ====== ======== ======= Projected benefit obligations............... $1,646 $1,550 $ 10,509 $10,286 Plan assets at fair value, principally common stocks, bonds, and guaranteed investment contracts, including $1,160 and $555 for 1998 and 1997, respectively, of the Company's common stock................. 2,179 2,149 8,924 9,477 ------ ------ -------- ------- Plan assets in excess of (less than) projected benefit obligations.............. 533 599 (1,585) (809) Unrecognized net loss....................... 366 238 3,202 2,262 Unrecognized net assets at December 1, 1991 and 1990 being recognized over 15 years.... (173) (202) (67) (89) Adjustment required to recognize minimum liability.................................. -- -- (3,135) (2,173) ------ ------ -------- ------- Prepaid pension cost (pension liability) recognized in the Consolidated Balance Sheet...................................... $ 726 $ 635 $ (1,585) $ (809) ====== ====== ======== =======
F-40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) The net periodic pension expense amounts were based on the following actuarial assumptions:
Assets Accumulated Exceed Benefits Accumulated Exceed Benefits Assets ----------- ----------- 1998 1997 1998 1997 ----- ----- ----- ----- Discount rate on plan liabilities.................... 6.75% 7.25% 6.75% 7.25% Rate of return on plan assets........................ 8.00% 8.00% 8.00% 8.00%
The Company has recorded an additional minimum pension liability for the underfunded plan of $3,135 and $2,173 at November 30, 1998 and 1997, respectively, representing the excess of unfunded accumulated benefit obligations over previously recorded pension cost liabilities. The net periodic pension cost of U.S. defined benefit plans for 1998, 1997, and 1996 includes the following components:
1998 1997 1996 ----- ------- ------- Interest cost on projected benefit obligations..... $ 818 $ 844 $ 842 Return on plan assets.............................. (335) (1,739) (1,204) Net amortization and deferral...................... (526) 1,056 619 ----- ------- ------- Net periodic pension expense....................... $ 43 $ 161 $ 257 ===== ======= =======
Defined Benefit Plans (Foreign)--Certain Sofitam subsidiaries in France offer unfunded defined benefit plans that cover all employees and provide lump-sum benefit payments upon retirement unless employment is terminated prior to retirement age. The following table sets forth the actuarial valuation information for 1998 and 1997:
1998 1997 ------- ------- Actuarial present value of accumulated plan benefits Vested................................................. -- -- Non-vested............................................. $ 2,549 $ 2,178 ------- ------- Accumulated benefit obligations........................ 2,549 2,178 Effect of future salary increases...................... 937 1,086 ======= ======= Projected benefit obligation........................... $ 3,486 $ 3,264 Plan assets at fair value................................ -- -- ------- ------- Funded status.......................................... (3,486) (3,264) Amortization of unrecognized net transition obligation............................................ 590 692 Unrecognized net (gain) loss........................... 359 324 ------- ------- Prepaid pension cost (pension liability)............... $(2,537) $(2,248) ======= ======= The net periodic pension expense amounts were based on the following actuarial assumptions: *Discount rate........................................... 4.77% 6.00% *Salary growth percentage................................ 2.50% 3.50%
F-41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) The net periodic pension cost of the foreign defined benefit plans includes the following components:
1998 1997 1996 ---- ---- ------- Service cost.......................................... $208 $222 $ 207 Interest cost on projected benefit obligation......... 166 201 219 Amortization.......................................... 105 114 120 ---- ---- ------- Net periodic pension cost........................... $493 $537 $ 546 ==== ==== =======
- -------- * In France The information presented above was calculated based on actuarial valuations of the plans as of August 31, 1998, 1997 and 1996, which approximates those as of November 30, 1998, 1997 and 1996, respectively. The Company's other foreign retirement plans represent an insignificant portion of the Company's total retirement plans. Defined Contribution Plan (U.S.)--The RSP covers substantially all U.S. employees of Tokheim and includes a common and preferred stock ESOP, which provide a retirement contribution of 2% (of salary) for factory and office employees, and 1.5% for all other participants in the plan and a matching contribution of at least two-thirds of the first 6% of employee contributions. The matching contribution can increase to 150% of the first 6% of contributions, depending on the performance of the Company. See Note 11 for a discussion of the Company's accounting for the ESOP pursuant to SOP 76-3. The number of shares of preferred stock in the RSP at November 30, 1998 and 1997 was 764,664 and 793,160 respectively, at a cost of $25 per share. The number of common shares in the RSP at November 30, 1998 and 1997 was 116,708 and 137,645, respectively, at an average cost of $17.17 and $18.22 per share, respectively. The dividend yield on the preferred stock is 7.75%, and the conversion rate is one share of preferred stock to one share of common stock. Each year, approximately 8% of the preferred stock held by the plan is allocated to participants' accounts. The Company has guaranteed the RSP loans as described in Note 7. A like amount entitled "Guaranteed Employees' Stock Ownership Plan (RSP) obligation" is recorded as a reduction of shareholders' equity. As the Company makes contributions to the RSP, these contributions, plus the dividends paid on the Company's preferred and common stock held by the RSP, are used to repay the loans. As the principal amounts of the loans are repaid, the RSP obligation in the equity and liability sections of the balance sheet is reduced accordingly. Company contributions in excess of dividends are allocated to interest and compensation expense on a basis proportional to the required debt service on RSP loans. Amounts allocated to interest expense were $565, $631, and $715 for 1998, 1997 and 1996 respectively.
1998 1997 1996 ------ ------ ------ Interest expense incurred by the Plan Trust(s) on ESOP debt.................................................. $ 511 $ 710 $1,075 Company contributions to the RSP....................... 2,513 2,464 2,541 Dividends on preferred stock used for debt service by the RSP............................................... 1,484 1,512 1,543
F-42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) 19. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company provides defined benefit postretirement health and life insurance benefits to most of its U.S. employees. Covered employees become eligible for these benefits at retirement, after meeting minimum age and service requirements. The Company continues to fund benefits on a pay-as-you-go basis, with some retirees paying a portion of the costs. The accumulated postretirement benefit obligations as of November 30, 1998 and 1997, respectively, consisted of unfunded obligations as follows:
1998 1997 ------- ------- Retirees and dependents..................................... $ 7,037 $ 6,890 Fully eligible active plan participants..................... 733 708 Other active plan participants.............................. 6,342 4,588 ------- ------- Total accumulated postretirement benefit obligations...... 14,112 12,186 Unrecognized net gain....................................... 1,477 3,092 ------- ------- Accrued postretirement benefit cost......................... 15,589 15,278 Less current portion........................................ (1,171) (900) ------- ------- $14,418 $14,378 ======= =======
Net postretirement benefit costs for 1998, 1997 and 1996 include the following components:
1998 1997 1996 ------ ------ ------ Service costs.......................................... $ 380 $ 323 $ 603 Interest costs on accumulated postretirement benefit obligation............................................ 901 860 1,108 ------ ------ ------ Net postretirement benefit costs....................... $1,281 $1,183 $1,711 ====== ====== ======
The assumptions used to develop the net postretirement benefit expense and the present value of benefit obligations are as follows:
1998 1997 ----- ----- Discount rate.................................................... 6.75% 7.25% Health care cost trend rate for the next year.................... 6.00% 6.50%
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 2002. A 1% increase in this annual trend rate would increase the accumulated postretirement benefit obligation as of November 30, 1998 by approximately $1,600 and the combined service and interest components of the annual net post- retirement health care cost by approximately $170. 20. CONTINGENT LIABILITIES The Company is defending various claims and legal actions which are common to its operations. These legal actions primarily involve claims for damages arising out of the Company's manufacturing operations, including environmental actions, patent infringement, product liability, 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 F-43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) of the Company's operations exposes it to the risk of claims with respect to such matters. There can be no assurance that material costs or liabilities will not be incurred in connection with such claims. Based upon its experience to date, the Company believes that the future 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 liability for the costs of cleaning up the releases and for damages to natural resources. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury or property damages allegedly caused by the hazardous substances released into the environment. In addition, where the Company has sold properties used in its prior manufacturing operations, it may have contractual obligations to the new owner to remediate environmental contamination on the site arising from prior operations. 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 three sites: the Fort Wayne Reduction Site in Fort Wayne, Indiana; the Moyer Landfill Site in Collegeville, Pennsylvania; and the I. Jones Recycling Site in Fort Wayne, Indiana. The Company believes that the clean-ups at these three sites are largely complete and that it has paid, or has currently accrued sufficient funds to pay, any liabilities it may have associated with the clean-up of these sites. The Company also owns or leases, and has in the past owned or leased, numerous properties that for many years have been used in industrial and manufacturing operations. Although the Company has in the past utilized operating and disposal practices that were standard for the industry at the time, hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company, or on or under other locations where such wastes have been taken for disposal. The Company currently owns a facility near Atlanta, Georgia that was previously used to refurbish gasoline dispensers. As part of this operation, chlorinated solvents were inadvertently released to the soil and groundwater through the facility septic system. Migration of these releases has caused solvent concentrations above background levels in the groundwater under an adjacent residential property. The Company has completed the cleanup of this release under the oversight of the Georgia Environmental Protection Division of the Georgia Department of Natural Resources, and is currently monitoring the property to ensure that additional cleanup work is not necessary. The Company is also involved in one lawsuit with respect to environmental liabilities under an indemnity provision of a sale agreement concerning the sale of the die casting facility of a former subsidiary to a third party. The Company has reached a settlement in this matter. Pursuant to the settlement agreement, the Company will repurchase the real property and then lease the property to the third party. The Company has agreed to place the facility into the state remediation program. The Company presently does not anticipate any material costs as a result of submitting the facility to the state site remediation program. F-44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) Total amounts included in accrued expenses related to environmental matters were $717 and $990 at November 30, 1998 and 1997, respectively. During 1995, the Company settled two actions with the EPA. In one matter, the Company settled for $627 as part of a global settlement with other PRPs, and the Company recorded the liability in full at November 30, 1994. The EPA approved this settlement in late 1997, and the Company paid one-half of the settlement amount in December 1997. The final payment was made in December 1998. The Company is pursuing recovery of these amounts from its insurance carriers and has received $150 to date. In the other matter, the Company settled as a participating generator as part of a global settlement. The Company received a favorable judgment with respect to the environmental oversight costs from the U.S. Court of Appeals for the 7th Circuit; the only outstanding liability is the potential natural resource damages. The Company's portion of these damages is estimated to be immaterial. Product Liability and Other Matters--The Company is subject to various other legal actions arising out of the conduct of its business, including actions relating to product liability, and claims for damages alleging violations of federal, state, or local statutes or ordinances dealing with civil rights, equal pay, and sex discrimination. Total amounts included in accrued expenses related to these actions were $1,718 and $1,330 at November 30, 1998 and 1997, respectively. The Company is also seeking to recover in excess of $1.0 million from its former outside legal firm for malpractice in handling a litigation matter for the Company. In addition the Company successfully appealed a jury verdict of $350 with respect to an equal pay act and sexual discrimination claim to the 7th U.S. Court of Appeals. In the opinion of the Company, amounts accrued for awards or assessments in connection with these matters at this time are adequate, and the ultimate resolution of environmental, product liability, and other legal matters will not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. The Company is not able to estimate accurately the additional loss or range of loss that is reasonably possible, in addition to the amounts accrued. The Company reassesses these matters as new facts and cases are brought to management's attention. 21. SUBSEQUENT EVENTS On January 26, 1999, the Company issued $123,000 aggregate principal amount of 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes") and (Euro)75,000 ($87,000 equivalent) aggregate principal amount of 11.375% Senior Subordinated Notes due 2008 (the "Euro Notes") in a private placement pursuant to Rule 144A (the "Offering"). The Notes will mature on August 1, 2008, and interest is payable semi-annually on February 1 and August 1 of each year, commencing August 1, 1999. The Company used the net proceeds from the Offering to redeem in whole, the $170,000 Senior Subordinated Seller Notes and the $22,500 Senior Notes. In addition, the Company used approximately $9,100 of the net proceeds to reduce borrowings under the revolving credit facility under the New Credit Agreement and to permanently reduce the bank working capital commitment from $120,000 to $110,000. During the first quarter of 1999, the Company incurred an extraordinary loss on debt extinguishment of approximately $6,500 in connection with the refinancing of the Senior Notes and the Senior Subordinated Seller Notes with proceeds received from the Offering. This amount consists of $500 of premiums on the Senior Notes and approximately $6,000 of unamortized deferred issuance costs. Each of the Dollar Notes and the Euro Notes will be redeemable, at the Company's option, in whole at any time, or in part from time to time, on and after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption: F-45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share)
Year Percentage ---- ---------- 2004........................................................... 105.688% 2005........................................................... 103.792% 2006........................................................... 101.896% 2007 and thereafter............................................ 100.000%
Optional Redemption upon Public Equity Offerings. At any time, or from time to time, on or prior to February 1, 2002, the Company may, at its option, use the net cash proceeds of one or more public equity offerings to redeem up to 35% of the original principal amount of the Dollar Notes issued in the Offering and up to 35% of the original principal amount of the Euro Notes issued in the Offering, each at a redemption price equal to 111.375% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that at least 55% of the original principal amount of the Dollar Notes issued in the Offering or the Euro Notes issued in the Offering, as the case may be, remains outstanding immediately after any such redemption and the Company shall make such redemption not more than 120 days after the consummation of any such public equity offering. The Notes are unsecured and subordinated to all of the Company's existing and future senior debt, including its obligations under the New Credit Agreement. All of the Company's current and future U.S. subsidiaries will guarantee the Notes with guarantees that will be unsecured and subordinated to senior debt of subsidiaries. The indentures under which the Notes were issued contain covenants limiting the Company's ability to incur additional debt; pay dividends on capital stock, repurchase capital stock or make certain other restricted payments; make certain investments; create liens on our assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and transfer and sell assets. The Company and the subsidiary guarantors have entered into a Registration Rights Agreement pertaining to the Dollar Notes and another Registration Rights Agreement pertaining to the Euro Notes (together, the "Registration Rights Agreements"). Per the registration rights agreement the Company will, at its own cost, (i) within 90 days after the Issue Date, file a registration statement on the appropriate registration form (the "Exchange Offer Registration Statement") with the Securities and Exchange Commission (the "Commission") with respect to the Exchange Offer to exchange the Euro and Dollar for the Exchange Notes which will have terms substantially identical in all material respects to the Dollar Notes or the Euro Notes, as the case may be, (except that the Exchange Notes will not contain terms with respect to transfer restrictions or liquidated damages), (ii) use its best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after the Issue Date and (iii) use its best efforts to consummate the Exchange Offer within 195 days after the Issue Date. Upon the Exchange Offer Registration Statement being declared effective, the Company will offer the Exchange Notes in exchange for surrender of the Euro and Dollar Notes. Although the Company intends to file the registration statement described above, there can be no assurance that such registration statement will be filed, or, if filed, that it will become effective. If the Company fails to comply with the above provisions or if such registration statement fails to become effective, then, as liquidated damages, additional interest (the "Additional Interest") shall become payable with respect to the applicable Euro and Dollar Notes at an increasing rate of 0.5% for every ninety days that the Company fails to register such notes. 22. SHAREHOLDER RIGHTS PLAN On January 22, 1997, the Board of Directors of the Company approved the extension of the benefits afforded by the Company's then-existing rights plan by adopting a new shareholder rights plan. Pursuant to the new Rights Agreement, dated as of January 22, 1997, and as amended by Amendment No. 1, dated as of F-46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) September 30, 1998, by and between the Company and Harris Trust and Savings Bank, as Rights Agent, one Right was issued for each outstanding share of Common Stock upon the expiration of the Company's then-existing rights (February 9, 1997). Each of the new Rights entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Preferred Stock at a price of $44.00 per one-thousandth of a share. The Rights will not become exercisable, however, unless and until, among other things, certain persons acquire 15% or more of the outstanding Common Stock of the Company or the Board of Directors of the Company determines that a person is an Adverse Person. A person who beneficially owns 10% or more of the outstanding shares of Common Stock of the Company will be declared an Adverse Person if the Board of Directors determines (a) that such beneficial ownership is intended to cause the Company to repurchase the Common Stock beneficially owned by such person or to pressure the Company to take action or enter into transactions intended to provide such person with short-term financial gain that are not in the best long-term interests of the Company and its shareholders or (b) such beneficial ownership is causing or reasonably likely to cause a material adverse impact on the Company to the detriment of the Company's shareholders, employees, suppliers, customers or community. If certain persons acquire 15% or more of the outstanding Common Stock or is declared an Adverse Person (subject to certain conditions and exceptions more fully described in the Rights Agreement), each Right will entitle the holder (other than the person who acquired 15% or more of the outstanding Common Stock or is declared an Adverse Person) to purchase Common Stock of the Company having a market value equal to twice the exercise price of a Right. The new Rights are redeemable under certain circumstances at $0.01 per Right and will expire, unless earlier redeemed, on February 9, 2007. 23. GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS In connection with the Acquisition and as part of the subsequent financing, the Company issued and sold $123,000 of 11.375% US dollar-denominated senior subordinated notes and (Euro)75,000 of 11.375% Euro denominated senior subordinated notes (together the "Outstanding Notes") in a private placement pursuant to Rule 144A and Regulation S. The Outstanding Notes are, and the Exchange Notes which will be issued in this Exchange Offer will be, general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company, and guaranteed on a full, unconditional, joint and several basis by the Company's domestic subsidiaries. The following condensed consolidating financial information presents: (1) Condensed consolidating financial statements as of November 30, 1998 and 1997 and for the years ended November 30, 1998, 1997 and 1996, of (a) Tokheim Corporation, the parent; (b) the guarantor subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a consolidated basis, and (2) Elimination entries necessary to consolidate Tokheim Corporation, the parent, with guarantor and nonguarantor subsidiaries. Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements for the guarantor subsidiaries and the nonguarantor subsidiaries are not presented because management believes that such financial statements would not be meaningful to investors. F-47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the year ended November 30, 1998
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Net sales............... $149,660 $83,788 $260,004 $(27,012) $466,440 Cost of sales, exclusive of items listed below.. 112,809 58,527 200,707 (27,012) 345,031 Selling, general, and administrative expenses............... 32,606 14,189 33,024 -- 79,819 Depreciation and amortization........... 4,419 1,302 7,415 -- 13,136 Merger and acquisition costs and other unusual items.................. 7,206 108 6,371 -- 13,685 -------- ------- -------- -------- -------- Operating profit (loss). (7,380) 9,662 12,487 -- 14,769 Interest expense, net... 4,650 1,283 13,324 -- 19,257 Foreign currency (gain) loss................... (996) 3 (449) -- (1,442) Equity in (earnings) loss of consolidated subsidiaries........... 2,032 -- -- (2,032) -- Minority interest....... -- -- 327 -- 327 Other (income) expense, net.................... (9,444) 1,745 7,024 -- (675) -------- ------- -------- -------- -------- Earnings (loss) before income taxes........... (3,622) 6,631 (7,739) 2,032 (2,698) Income taxes............ 122 287 637 -- 1,046 -------- ------- -------- -------- -------- Earnings (loss) before extraordinary item..... (3,744) 6,344 (8,376) 2,032 (3,744) Extraordinary loss on debt extinguishment.... (23,924) -- -- -- (23,924) -------- ------- -------- -------- -------- Net earnings (loss)..... $(27,668) $ 6,344 $ (8,376) $ 2,032 $(27,668) ======== ======= ======== ======== ========
F-48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the year ended November 30, 1997
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Net sales............... $149,124 $55,784 $211,972 $(31,411) $385,469 Cost of sales, exclusive of items listed below.. 113,234 39,879 162,230 (31,411) 283,932 Selling, general, and administrative expenses............... 31,606 7,259 29,302 -- 68,167 Depreciation and amortization........... 2,930 736 5,566 -- 9,232 Merger and acquisition costs and other unusual items.................. 2,952 -- 541 -- 3,493 -------- ------- -------- -------- -------- Operating profit (loss). (1,598) 7,910 14,333 -- 20,645 Interest expense, net... 5,344 5 11,102 -- 16,451 Foreign currency (gain) loss................... (808) -- 856 -- 48 Equity in (earnings) loss of consolidated subsidiaries........... (2,622) -- -- 2,622 -- Minority interest....... -- -- 394 -- 394 Other (income) expense, net.................... (5,760) 1,536 2,779 -- (1,445) -------- ------- -------- -------- -------- Earnings (loss) before income taxes........... 2,248 6,369 (798) (2,622) 5,197 Income taxes............ (1,732) 2,085 864 -- 1,217 -------- ------- -------- -------- -------- Earnings (loss) before extraordinary item..... 3,980 4,284 (1,662) (2,622) 3,980 Extraordinary loss on debt extinguishment.... (1,886) -- -- -- (1,886) -------- ------- -------- -------- -------- Net earnings (loss)..... $ 2,094 $ 4,284 $ (1,662) $ (2,622) $ 2,094 ======== ======= ======== ======== ========
F-49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED STATEMENT OF EARNINGS For the year ended November 30, 1996
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Net sales............... $153,016 $52,855 $107,863 $(34,001) $279,733 Cost of sales, exclusive of items listed below.. 119,528 41,076 83,620 (34,001) 210,223 Selling, general, and administrative expenses............... 29,289 6,956 15,422 -- 51,667 Depreciation and amortization........... 3,042 657 1,329 -- 5,028 Merger and acquisition costs and other unusual items.................. 5,230 -- 1,229 -- 6,459 -------- ------- -------- -------- -------- Operating profit (loss). (4,073) 4,166 6,263 -- 6,356 Interest expense, net... 3,162 2 4,027 -- 7,191 Foreign currency (gain) loss................... 50 (1) 110 -- 159 Equity in (earnings) loss of consolidated subsidiaries........... (1,904) -- -- 1,904 -- Minority interest....... -- -- 393 -- 393 Other (income) expense, net.................... (1,483) (276) 1,601 -- (158) -------- ------- -------- -------- -------- Earnings (loss) before income taxes........... (3,898) 4,441 132 (1,904) (1,229) Income taxes............ (1,889) 1,831 838 -- 780 -------- ------- -------- -------- -------- Net earnings (loss)..... $ (2,009) $ 2,610 $ (706) $ (1,904) $ (2,009) ======== ======= ======== ======== ========
F-50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the year ended November 30, 1998
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Cash flows from operating activities: Net cash provided from (used in) operations. $ (1,001) $ 13,634 $ 18,394 $(21,237) $ 9,790 Cash flows from investing activities: Acquisition, net of cash acquired........ (10,641) (100,000) -- -- (110,641) Plant and equipment additions............ (5,165) (2,743) (6,640) -- (14,548) Investments in and advances to subsidiaries, net.... 71,402 (87,676) (4,963) 21,237 -- Proceeds from sale of property and equipment............ 23 163 589 -- 775 -------- --------- -------- -------- --------- Net cash provided from (used in) investing activities......... 55,619 (190,256) (11,014) 21,237 (124,414) Cash flows from financing activities: Proceeds from issuance of senior notes...... 22,500 -- -- -- 22,500 Redemption of senior subordinated notes... (90,000) -- -- -- (90,000) Decrease in term debt. (39) -- (4,228) -- (4,267) Increase (decrease) in notes payable, banks. (24,090) 182,146 713 -- 158,769 Increase in cash overdraft............ -- 148 3,423 -- 3,571 Debt issuance costs... (16,157) -- -- -- (16,157) Proceeds from issuance of common stock...... 74,057 -- -- -- 74,057 Equity issuance costs. (4,858) -- -- -- (4,858) Premiums paid on debt extinguishment....... (15,743) -- -- -- (15,743) Treasury stock, net... (719) -- -- -- (719) Preferred stock dividends............ (1,484) -- -- -- (1,484) -------- --------- -------- -------- --------- Net cash provided from (used in) financing activities......... (56,533) 182,294 (92) -- 125,669 Effect of translation adjustments on cash.... -- (1,461) 10,779 -- 9,318 Cash and cash equivalents: Increase (decrease) in cash................. (1,915) 4,211 18,067 -- 20,363 Beginning of year..... 2,764 1,170 2,504 -- 6,438 -------- --------- -------- -------- --------- End of period......... $ 849 $ 5,381 $ 20,571 $ -- $ 26,801 ======== ========= ======== ======== =========
F-51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the year ended November 30, 1997
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Cash flows from operating activities: Net cash provided from operations..... $ 11,092 $ 2,109 $ 7,510 $491 $ 21,202 Cash flows from investing activities: Plant and equipment additions........... (4,708) (846) (5,600) -- (11,154) Investments in and advances to subsidiaries, net... (1,691) (319) 2,600 (590) -- Proceeds from sale of property and equipment........... 240 20 500 -- 760 -------- ------- ------- ---- -------- Net cash used in investing activities........ (6,159) (1,145) (2,500) (590) (10,394) Cash flows from financing activities: Redemption of senior subordinated notes.. (10,000) -- -- -- (10,000) Increase (decrease) in term debt........ (55) -- (3,692) -- (3,747) Increase (decrease) notes payable, banks............... 7,946 -- (6,176) -- 1,770 Increase (decrease) in cash overdraft... -- (355) 2,229 -- 1,874 Proceeds from issuance of common stock............... 1,706 -- -- -- 1,706 Premiums paid on debt extinguishment...... (1,390) -- -- -- (1,390) Treasury stock, net.. (496) -- (99) 99 (496) Preferred stock dividends........... (1,512) -- -- -- (1,512) -------- ------- ------- ---- -------- Net cash provided from (used in) financing activities........ (3,801) (355) (7,738) 99 (11,795) Effect of translation adjustments on cash... -- (6) (2,383) -- (2,389) Cash and cash equivalents: Increase (decrease) in cash............. 1,132 603 (5,111) -- (3,376) Beginning of year.... 1,632 567 7,615 -- 9,814 -------- ------- ------- ---- -------- End of period........ $ 2,764 $ 1,170 $ 2,504 $-- $ 6,438 ======== ======= ======= ==== ========
F-52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS For the year ended November 30, 1996
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Cash flows from operating activities: Net cash provided from (used in) operations. $ 9,266 $ 3,034 $ (8,689) $2,286 $ 5,897 Cash flows from investing activities: Acquisition, net of cash acquired........ (9,799) -- (42,306) -- (52,105) Plant and equipment additions............ (1,299) (654) (1,108) -- (3,061) Investments in and advances to subsidiaries, net.... (80,741) (2,500) 85,527 (2,286) -- Proceeds from sale of property and equipment............ 150 5 932 -- 1,087 -------- ------- -------- ------ -------- Net cash provided from (used in) investing activities......... (91,689) (3,149) 43,045 (2,286) (54,079) Cash flows from financing activities: Proceeds from senior subordinated notes... 100,000 -- -- -- 100,000 Decrease in term debt. (4,052) -- (27,748) -- (31,800) Decrease notes payable, banks....... (556) -- (4,488) -- (5,044) Increase (decrease) in cash overdraft....... -- -- 7,237 -- 7,237 Debt issuance costs .. (11,506) -- -- -- (11,506) Proceeds from issuance of common stock...... 42 -- -- -- 42 Treasury stock, net... (370) -- -- -- (370) Preferred stock dividends............ (1,543) -- -- -- (1,543) -------- ------- -------- ------ -------- Net cash provided from (used in) financing activities......... 82,015 -- (24,999) -- 57,016 Effect of translation adjustments on cash.... -- -- (4,482) -- (4,482) Cash and cash equivalents: Increase (decrease) in cash................. (408) (115) 4,875 -- 4,352 Beginning of year..... 2,040 682 2,740 -- 5,462 -------- ------- -------- ------ -------- End of period......... $ 1,632 $ 567 $ 7,615 $ -- $ 9,814 ======== ======= ======== ====== ========
F-53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED BALANCE SHEET As of November 30, 1998
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Assets Current assets: Cash and cash equivalents.......... $ 849 $ 5,381 $ 20,571 $ -- $ 26,801 Accounts receivables, net.................. 52,303 32,643 133,868 (46,121) 172,693 Inventories, net...... 16,720 18,255 88,369 (311) 123,033 Other current assets.. 1,921 759 16,459 -- 19,139 -------- -------- -------- --------- -------- Total current assets............. 71,793 57,038 259,267 (46,432) 341,666 Investments in subsidiaries........... 112,268 13,869 3,197 (129,334) -- Property, plant, and equipment, net......... 21,906 10,908 45,091 -- 77,905 Goodwill, net........... 15,765 89,590 218,758 -- 324,113 Other non-current assets and deferred charges, net.................... 107,666 259,055 5,787 (339,550) 32,958 -------- -------- -------- --------- -------- Total assets........ $329,398 $430,460 $532,100 $(515,316) $776,642 ======== ======== ======== ========= ======== Liabilities and Shareholders' Equity Current maturities of long-term debt......... $ -- $ -- $ 2,110 $ -- $ 2,110 Notes payable to banks.. -- -- 410 -- 410 Cash overdrafts......... -- 21 15,043 -- 15,064 Accounts payable........ 32,782 24,750 84,107 (46,317) 95,322 Accrued expenses........ 16,458 42,193 77,513 -- 136,164 -------- -------- -------- --------- -------- Total current liabilities........ 49,240 66,964 179,183 (46,317) 249,070 Notes payable, bank credit agreement....... -- 182,145 -- -- 182,145 Senior notes............ 22,500 -- -- -- 22,500 Senior subordinated notes.................. 95,946 74,054 -- -- 170,000 Junior subordinated Payment In Kind note... 40,000 -- -- -- 40,000 Other long-term debt, less current maturities............. 9,409 -- 322,997 (328,291) 4,115 Guaranteed Employees' Stock Ownership Plan obligation............. 6,987 -- -- -- 6,987 Post-retirement benefit liability.............. 14,418 -- -- -- 14,418 Minimum pension liability.............. 3,135 -- -- -- 3,135 Other long-term liabilities............ 475 (217) 7,366 (113) 7,511 -------- -------- -------- --------- -------- 242,110 322,946 509,546 (374,721) 699,881 Redeemable convertible preferred stock........ 24,000 -- -- -- 24,000 Guaranteed Employees' Stock Ownership Plan obligation............. (6,987) -- -- -- (6,987) Treasury stock, at cost. (4,883) -- -- -- (4,883) -------- -------- -------- --------- -------- 12,130 -- -- -- 12,130 Common stock............ 90,354 107,243 14,960 (122,203) 90,354 Common stock warrants... 20,000 -- -- -- 20,000 Minimum pension liability.............. (3,135) -- -- -- (3,135) Foreign currency translation adjustments............ (12,547) (313) (9,738) -- (22,598) Retained earnings (accumulated deficit).. (18,819) 584 17,332 (18,392) (19,295) -------- -------- -------- --------- -------- 75,853 107,514 22,554 (140,595) 65,326 Less treasury stock, at cost................... (695) -- -- -- (695) -------- -------- -------- --------- -------- 75,158 107,514 22,554 (140,595) 64,631 -------- -------- -------- --------- -------- Total liabilities and shareholders' equity............. $329,398 $430,460 $532,100 $(515,316) $776,642 ======== ======== ======== ========= ========
F-54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Amounts in thousands except dollars per share) CONSOLIDATED CONDENSED BALANCE SHEET As of November 30, 1997
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ Assets Current assets: Cash and cash equivalents.......... $ 2,764 $ 1,170 $ 2,504 $ -- $ 6,438 Accounts receivables, net.................. 27,755 10,005 56,867 (11,616) 83,011 Inventories, net...... 19,455 8,326 36,382 184 64,347 Other current assets.. 2,310 242 4,153 -- 6,705 -------- ------- -------- --------- -------- Total current assets............. 52,284 19,743 99,906 (11,432) 160,501 Investments in subsidiaries........... 32,488 7,089 3,440 (43,017) -- Property, plant, and equipment, net......... 19,180 4,119 19,236 -- 42,535 Goodwill, net........... 3,581 -- 64,114 -- 67,695 Other non-current assets and deferred charges, net.................... 99,423 55 1,756 (81,346) 19,888 -------- ------- -------- --------- -------- Total assets........ $206,956 $31,006 $188,452 $(135,795) $290,619 ======== ======= ======== ========= ======== Liabilities and Shareholders' Equity Current maturities of long-term debt......... $ 39 $ -- $ 2,352 $ -- $ 2,391 Notes payable to banks.. -- -- 98 -- 98 Cash overdrafts......... -- -- 10,575 -- 10,575 Accounts payable........ 22,994 6,387 36,364 (11,148) 54,597 Accrued expenses........ 14,662 4,453 32,075 -- 51,190 -------- ------- -------- --------- -------- Total current liabilities........ 37,695 10,840 81,464 (11,148) 118,851 Notes payable, bank credit agreement....... 24,090 -- -- -- 24,090 Senior subordinated notes.................. 90,000 -- -- -- 90,000 Other long-term debt, less current maturities............. -- -- 86,899 (82,502) 4,397 Guaranteed Employees' Stock Ownership Plan obligation............. 9,429 -- -- -- 9,429 Post-retirement benefit liability.............. 14,378 -- -- -- 14,378 Minimum pension liability.............. 2,173 -- -- -- 2,173 Other long-term liabilities............ 597 (362) 6,698 (103) 6,830 -------- ------- -------- --------- -------- 178,362 10,478 175,061 (93,753) 270,148 Redeemable convertible preferred stock........ 24,000 -- -- -- 24,000 Guaranteed Employees' Stock Ownership Plan obligation............. (9,429) -- -- -- (9,429) Treasury stock, at cost. (4,718) -- -- -- (4,718) -------- ------- -------- --------- -------- 9,853 -- -- -- 9,853 Common stock............ 21,158 27,147 5,032 (32,179) 21,158 Minimum pension liability.............. (2,173) -- -- -- (2,173) Foreign currency translation adjustments............ (11,735) 89 (6,402) -- (18,048) Retained earnings (accumulated deficit).. 11,631 (6,708) 14,761 (9,863) 9,821 -------- ------- -------- --------- -------- 18,881 20,528 13,391 (42,042) 10,758 Less treasury stock, at cost................... (140) -- -- -- (140) -------- ------- -------- --------- -------- 18,741 20,528 13,391 (42,042) 10,618 -------- ------- -------- --------- -------- Total liabilities and shareholders' equity............. $206,956 $31,006 $188,452 $(135,795) $290,619 ======== ======= ======== ========= ========
F-55 RPS DIVISION Combined Condensed Balance Sheets (Amounts in thousands)
As of -------------------------- September 30, December 31, 1998 1997 ------------- ------------ (Unaudited) Assets: Current assets: Cash and cash equivalents......................... $ 9,728 $ 7,321 Accounts receivables, net of allowance for doubtful accounts of $4,111 and $3,313, respectively..................................... 82,181 102,540 Inventory, net.................................... 69,317 58,859 Other current assets.............................. 13,669 11,872 -------- -------- Total current assets........................ 174,895 180,592 Property, plant & equipment, net.................... 31,735 32,183 Other tangible assets............................... 1,056 1,326 Goodwill............................................ 49,792 51,757 Other noncurrent assets and deferred charges (principally taxes on income)...................... 2,864 3,576 -------- -------- Total assets................................ $260,342 $269,434 ======== ======== Liabilities and Equity: Liabilities: Current liabilities: Current portion long-term debt.................. $ -- $ 46 Cash overdraft.................................. 2,289 12,614 Accounts payable and accruals................... 71,324 94,526 -------- -------- Total current liabilities................... 73,613 107,186 Postretirement benefits......................... 4,571 4,188 Minority interest............................... 162 133 Other long-term liabilities..................... 3,191 3,657 -------- -------- Total liabilities........................... 81,537 115,164 Equity and retained earnings (deficit): Equity........................................ 200,708 160,578 Retained earnings (deficit)................... (21,903) (6,308) -------- -------- Total liabilities and stockholders' equity.. $260,342 $269,434 ======== ========
F-56 RPS DIVISION Combined Condensed Statements of Income (Amounts in thousands)
Nine Months Ended --------------------------- September 30, September 30, 1998 1997 ------------- ------------- Unaudited Unaudited ------------- ------------- Net Sales........................................... $ 231,764 $ 231,978 Cost of sales....................................... 199,486 194,623 Selling, general, and administrative expenses....... 48,015 47,565 --------- --------- Operating loss...................................... (15,737) (10,210) Interest expense, net............................... 1,586 945 Other expense, net.................................. 3,270 3,307 --------- --------- Loss before income taxes............................ (20,593) (14,462) Income tax benefit.................................. (4,863) (5,246) --------- --------- Net loss............................................ $ (15,730) $ (9,216) ========= =========
F-57 RPS DIVISION Combined Condensed Statements of Cash Flows (Amounts in thousands)
Nine Months Ended --------------------------- September 30, September 30, 1998 1997 ------------- ------------- Unaudited Unaudited ------------- ------------- Cash flows from operating activities: Net loss........................................... $(15,730) $ (9,216) Adjustment to reconcile net loss to net cash used in operations: Depreciation and amortization..................... 8,766 8,476 Minority Interest................................. 29 11 Deferred income taxes............................. 151 1,659 Changes in assets and liabilities, net of effect of acquired businesses: Receivables, net................................. 18,009 29,355 Related party receivables........................ 2,350 1,106 Inventories...................................... (10,458) 588 Accounts payable................................. (16,811) (32,412) Related party payables........................... (6,254) (2,117) U.S. and foreign income taxes.................... (1,396) (2,989) Other............................................ (1,552) 2,298 -------- -------- Net cash used in operations................ (22,896) (3,241) -------- -------- Cash flows from investing activities: Property, plant and equipment additions.......... (4,951) (6,810) Investments...................................... 48 3,483 Other, net....................................... 312 19,303 -------- -------- Net cash provided by (used in) investing activities................................ (4,591) 15,976 -------- -------- Cash flows from financing activities: Net decrease in long-term debt................... (46) (694) Net decrease cash overdraft and short-term debt.. (10,325) (4,056) Capital contributions and other changes in equity, net..................................... 7,915 (20,286) Related party advances........................... 32,350 14,640 Dividends declared............................... -- (5,705) -------- -------- Net cash provided from (used in) financing activities................................ 29,894 (16,101) -------- -------- Cash and cash equivalents: Increase (decrease) in cash and cash equivalents. 2,407 (3,366) Cash and cash equivalents, beginning of year..... 7,321 5,445 -------- -------- Cash and cash equivalents, end of period......... $ 9,729 $ 2,079 ======== ========
F-58 RETAIL PETROLEUM SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION Retail Petroleum Systems ("RPS" or the "Company") provides the worldwide retail petroleum industry with integrated solutions for secured fuel dispenser transactions. These solutions are based on a range of products and services, including gasoline dispensers, payment terminals, service station management systems, maintenance and installation of equipment, turn-key construction, and renovation of service stations. RPS has 2,350 employees and its operations are principally focused in Europe and the United States. RPS is a wholly owned business of Schlumberger Limited (SL). The accompanying interim financial statements have been prepared as if the Company had operated as an independent stand-alone entity for the periods presented. These results of operations, however, may not be indicative of the future results of operations for RPS operating as a stand-alone entity. On June 19, 1998, SL signed a contract with Tokheim Corporation for the sale of the RPS operations. The accompanying interim financial statements do not include any adjustments which may result from this change in ownership. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The Combined Interim Financial Statements of RPS have been prepared in accordance with accounting principles generally accepted in the United States. Principles of consolidation The Combined Financial Statements include the accounts of all entities controlled by RPS. All significant intercompany accounts and transactions are eliminated. The equity method of accounting is used for investments in affiliates in which RPS owns between 20% and 50%. The combined balance sheet as of September 30, 1998, the combined statements of income for the nine months ended September 30, 1998 and 1997, and the combined statements of cash flows for the nine months ended September 30, 1998 and 1997 have been prepared by the Company, and are not audited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 1998, and the results of operations and cash flows at September 30, 1998 and September 30, 1997 have been made. The combined balance sheet at December 31, 1997 has been derived from the audited financial statements at that date. The results of operations for the nine months ended September 30, 1998 are not necessarily indicative of the results to be expected for any subsequent quarter or the entire year ending December 31, 1998. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While actual results could differ from these estimates, management believes that the estimates are reasonable. F-59 3. COMBINED STATEMENT OF EQUITY
Retained Total Equity Earnings Equity -------- -------- -------- Balance, December 31, 1996........................ $157,670 $ 6,396 $164,066 Net loss.......................................... -- (9,216) (9,216) Dividend declared................................. -- (5,705) (5,705) Capital contribution.............................. 3,628 -- 3,628 Related party advances............................ (6,298) -- 14,640 Other............................................. (3,359) -- (24,297) Currency translation adjustment................... 385 -- 385 -------- -------- -------- Balance, September 30, 1997....................... 152,026 (8,525) 143,501 Balance, December 31, 1997........................ 160,578 (6,308) 154,270 Net loss.......................................... -- (15,730) (15,730) Capital contribution.............................. 11,518 -- 11,518 Related party advances............................ 32,350 -- 32,350 Other............................................. (4,445) 135 (4,310) Currency translation adjustment................... 707 -- 707 -------- -------- -------- Balance, September 30, 1998....................... $200,708 $(21,903) $178,805 ======== ======== ========
F-60 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Schlumberger Limited In our opinion, the accompanying combined balance sheets and the related combined statements of income and equity and of cash flows present fairly, in all material respects, the financial position of Retail Petroleum Systems (a wholly owned business of Schlumberger Limited) at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards 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 the opinion expressed above. PricewaterhouseCoopers July 6, 1998 Paris, France F-61 RETAIL PETROLEUM SYSTEMS COMBINED STATEMENTS OF INCOME (Amounts in thousands)
For the Years Ended December 31, ---------------------------- 1997 1996 1995 -------- -------- -------- Net revenue...................................... $344,248 $333,915 $303,668 -------- -------- -------- Expenses Cost of goods sold and services................ 286,580 273,492 249,101 Research & engineering......................... 16,616 15,949 14,122 Marketing...................................... 25,520 24,111 21,364 General and administrative..................... 13,904 15,720 16,469 Goodwill amortization.......................... 3,902 3,255 2,594 Administrative fees allocated from parent...... 9,374 8,607 7,464 Restructuring charge........................... -- 9,978 -- -------- -------- -------- 355,896 351,112 311,114 -------- -------- -------- Loss from operations............................. (11,648) (17,197) (7,446) -------- -------- -------- Interest expense................................. (1,418) (1,652) (1,257) Other expense.................................... (403) (1,557) (1,305) -------- -------- -------- Loss before taxes and minority interest.......... (13,469) (20,406) (10,008) Income tax benefit............................... 6,779 4,058 2,287 Minority interest................................ (30) (18) -- -------- -------- -------- Net loss......................................... $ (6,720) $(16,366) $ (7,721) ======== ======== ========
The accompanying notes are an integral part of these financial statements. F-62 RETAIL PETROLEUM SYSTEMS COMBINED STATEMENTS OF CASH FLOWS (Amounts in thousands)
For the Years Ended December 31, -------------------------- 1997 1996 1995 ------- -------- ------- Cash flows from operating activities: Net loss......................................... $(6,720) $(16,366) $(7,721) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization.................. 11,777 10,780 10,084 Other.......................................... 8,276 (1,920) (2,966) Changes in operating assets and liabilities, net of effect of acquired businesses: Accounts receivable............................ (5,872) (22,210) (13,780) Inventories.................................... 3,128 (9,064) (1,796) Accounts payable and accrued liabilities....... (11,615) 38,668 10,012 Prepaid and refundable income taxes............ (3,558) 301 585 Other assets and liabilities, net.............. 17,741 10,243 (1,001) ------- -------- ------- Net cash provided by (used in) operating activities.................................. 13,157 10,432 (6,583) ------- -------- ------- Cash flows from investing activities: Capital expenditures............................. (9,486) (14,736) (11,389) Acquisition of businesses........................ (1,933) (20,224) (314) Other, net....................................... 1,151 (1,440) (294) ------- -------- ------- Net cash used in investing activities........ (10,268) (36,400) (11,997) ------- -------- ------- Cash flows from financing activities: Advances from related parties.................... 2,083 25,402 18,442 Long-term debt................................... (740) 466 (248) Capital contributions............................ 3,628 5,013 4,936 Dividends paid................................... (5,984) (5,702) (1,500) ------- -------- ------- Net cash provided by (used in) financing activities.................................. (1,013) 25,179 21,630 ------- -------- ------- Net change in cash and cash equivalents...... 1,876 (789) 3,050 Cash and cash equivalents, beginning of year. 5,445 6,234 3,184 ------- -------- ------- Cash and cash equivalents, end of year....... $ 7,321 $ 5,445 $ 6,234 ======= ======== =======
The accompanying notes are an integral part of these financial statements. F-63 RETAIL PETROLEUM SYSTEMS COMBINED BALANCE SHEETS (Amounts in thousands)
December 31, ------------------ 1997 1996 -------- -------- Assets Current assets: Cash and cash equivalents................................. $ 7,321 $ 5,445 Short-term investments.................................... 1,001 3,431 Accounts receivable, net of allowance for doubtful accounts of $3,313 and $3,397............................ 98,920 102,716 Receivables from related parties.......................... 3,620 2,076 Inventories............................................... 58,859 67,875 Deferred tax.............................................. 2,238 1,683 Prepaid and refundable income taxes....................... 4,631 1,420 Other current assets...................................... 4,002 2,964 -------- -------- Total current assets.................................... 180,592 187,610 -------- -------- Long-term investments and receivables....................... 988 2,383 Fixed assets, net of accumulated depreciation of $42,782 and $45,651.................................................... 32,183 32,599 Goodwill.................................................... 51,757 57,391 Deferred tax................................................ 3,576 2,891 Other assets................................................ 338 19,796 -------- -------- Total assets............................................ $269,434 $302,670 ======== ======== Liabilities and Equity Current liabilities: Bank overdrafts and short-term loans...................... $ 12,614 $ 11,433 Accounts payable and accrued liabilities.................. 87,608 110,516 Payables to related parties............................... 6,781 5,667 Dividends payable......................................... 137 -- Current portion of long-term debt......................... 46 203 -------- -------- Total current liabilities............................... 107,186 127,819 -------- -------- Long-term debt.............................................. -- 583 -------- -------- Other liabilities Postretirement benefits................................... 4,188 3,827 Other long-term liabilities............................... 3,657 6,257 -------- -------- Total liabilities....................................... 115,031 138,486 -------- -------- Commitments and contingencies (Note 15)..................... -- -- Minority interest in subsidiaries........................... 133 118 Equity and retained earnings (deficit) Equity.................................................... 160,578 157,670 Retained earnings (deficit)............................... (6,308) 6,396 -------- -------- 154,270 164,066 -------- -------- Total liabilities and equity............................ $269,434 $302,670 ======== ========
The accompanying notes are an integral part of these financial statements. F-64 RETAIL PETROLEUM SYSTEMS COMBINED STATEMENTS OF EQUITY (Amounts in thousands)
Retained Earnings Total Equity (Deficit) Equity -------- --------- -------- Balance, January 1, 1995......................... $107,245 $ 37,685 $144,930 Net loss....................................... (7,721) (7,721) Dividends paid................................. (1,500) (1,500) Capital contribution........................... 4,936 4,936 Related party advances......................... 18,442 18,442 Other.......................................... (315) (315) Currency translation adjustment................ 2,198 2,198 -------- -------- -------- 132,506 28,464 160,970 -------- -------- -------- Balance, December 31, 1995....................... 132,506 28,464 160,970 Net loss....................................... (16,366) (16,366) Dividends paid................................. (5,702) (5,702) Capital contribution........................... 5,013 5,013 Related party advances......................... 25,402 25,402 Other.......................................... (3,462) (3,462) Currency translation adjustment................ (1,789) (1,789) -------- -------- -------- 157,670 6,396 164,066 -------- -------- -------- Balance, December 31, 1996....................... 157,670 6,396 164,066 Net loss....................................... (6,720) (6,720) Dividends paid................................. (5,984) (26,922) Capital contribution........................... 3,628 3,628 Related party advances......................... 2,083 23,021 Other.......................................... (1,237) (1,237) Currency translation adjustment................ (1,566) (1,566) -------- -------- -------- Balance, December 31, 1997....................... $160,578 $ (6,308) $154,270 ======== ======== ========
The accompanying notes are an integral part of these financial statements. F-65 RETAIL PETROLEUM SYSTEMS Notes to Financial Statements (Dollars in thousands, unless otherwise indicated) 1. ORGANIZATION Retail Petroleum Systems ("RPS" or the "Company") provides the worldwide retail petroleum industry with integrated solutions for secured fuel dispenser transactions. These solutions are based on a range of products and services, including gasoline dispensers, payment terminals, service station management systems, maintenance and installation of equipment, turn-key construction, and renovation of service stations. RPS has 2,350 employees and its operations are principally focused in Europe and the United States. RPS's operations involve a single industry segment for financial reporting purposes. RPS is a wholly owned business of Schlumberger Limited (SL). The accompanying financial statements have been prepared as if the Company had operated as an independent stand-alone entity for the periods presented. These results of operations, however, may not be indicative of the future results of operations for RPS operating as a stand-alone entity. On June 19, 1998, SL signed a contract with Tokheim Corporation for the sale of the RPS operations. The accompanying financial statements do not include any adjustments which may result from this change in ownership. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Combined Financial Statements of RPS have been prepared in accordance with accounting principles generally accepted in the United States. Principles of Consolidation The Combined Financial Statements include the accounts of all entities controlled by RPS. All significant intercompany accounts and transactions are eliminated. The equity method of accounting is used for investments in affiliates in which RPS owns between 20% and 50%. Revenue Recognition Generally, revenue is recognized upon delivery of equipment to the customer, or in the case of installation, when installation is complete. Maintenance contracts revenue is recognized on a pro-rata basis over the life of the contract. On-call revenue is recognized in the month in which the service is provided. Turn-key station revenue is recognized using the "percentage of completion" method. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While actual results could differ from these estimates, management believes that the estimates are reasonable. Translation of Non-U.S. Currencies All assets and liabilities recorded in functional currencies other than US dollars are translated at current exchange rates. The resulting adjustments are charged or credited directly to the equity section of the balance sheet. Revenue and expenses are translated at the weighted-average exchange rates for the period. All realized F-66 and unrealized transaction gains and losses are included in income in the period in which they occur. Transaction losses included in results of operations were $3 million, $2 million, and $.1 million in 1997, 1996 and 1995, respectively. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less at date of purchase. Investments Short-term investments held to maturity are stated at cost plus accrued interest, which approximates market, and are comprised primarily of money market funds. For purposes of the Combined Statement of Cash Flows, the Company does not consider short-term investments to be cash equivalents as they generally have original maturities in excess of three months. Financial Instruments The fair value of cash, accounts receivable, trade accounts payable, short- term borrowings, and accrued expenses are not materially different than their carrying amounts as reported at December 31, 1997 and 1996. Inventories Inventories are stated at lower of average cost or market. Spares inventory includes new and repaired parts primarily for maintenance of dispensers. Spares are principally valued at average cost. Fixed Assets and Depreciation Fixed assets are stated at cost less accumulated depreciation, which is provided for by charges to income over the estimated useful lives of the assets by the straight-line method. Expenditures for renewals, replacements, and betterments are generally capitalized. Maintenance and repairs are charged to operating expense as incurred. Upon sale or other disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to income. Estimated useful lives of buildings and improvements range from ten to 30 years and machinery and equipment from three to ten years. Goodwill Goodwill represents cost in excess of net assets of purchased companies and is amortized on a straight-line basis over periods ranging from five to 40 years. Accumulated amortization was $23 million and $19 million at December 31, 1997 and 1996, respectively. The Company evaluates the recoverability of goodwill at each balance sheet date. Research and Engineering All research and engineering expenditures are expensed as incurred, including costs relating to patents or rights that may result from such expenditures. Taxes on Income Taxes on income are computed in accordance with the tax rules and regulations of the many taxing authorities where the income is earned. The income tax rates imposed by these taxing authorities vary substantially. In most countries, RPS is a division of the SL legal entity that is the ultimate tax payer in that F-67 jurisdiction. Taxable income may differ from pre-tax income for financial accounting purposes. To the extent that differences are due to revenue or expense items reported in one period for tax purposes and in another period for financial accounting purposes, an appropriate provision for deferred income taxes is made. Tax credits and other allowances are credited to current income tax expense on the flow-through method of accounting. 3. INVENTORIES Inventories at December 31, 1997 and 1996 consist of the following: Raw materials............................................. $18,071 $19,689 Work in progress.......................................... 6,038 9,793 Finished goods............................................ 9,321 13,246 Spares.................................................... 25,429 25,147 ------- ------- $58,859 $67,875 ======= =======
4. FIXED ASSETS Fixed assets at December 31, 1997 and 1996 consist of the following:
1997 1996 ------- ------- Land.................................................... $ 364 $ 392 Buildings and improvements.............................. 21,691 21,830 Machinery and equipment................................. 52,910 56,028 ------- ------- 74,965 78,250 Less: Accumulated depreciation.......................... (42,782) (45,651) ------- ------- Fixed assets............................................ $32,183 $32,599 ======= =======
Depreciation expense aggregated $7.9 million in 1997 and $7.5 million in both 1996 and 1995. 5. ACQUISITIONS AND GOODWILL In July 1996, RPS acquired for $7.0 million, GUEANT Pere & Fils and its subsidiary ETPM, a gasoline dispenser service company providing maintenance of service stations and project management of turn-key stations. In August 1996, RPS acquired for $13.0 million, GERMANN and its Polish subsidiary, a turn-key gasoline station provider located in Germany. Costs in excess of net assets acquired were respectively $5.0 million and $12.0 million, respectively, which are being amortized on a straight-line basis over ten and 20 years, respectively. In addition, between December 1995 and August 1996, RPS acquired three small service companies in Italy, Borghetti, CME, and Nuova Rimic, for an aggregate amount of $1.8 million. Costs in excess of net assets acquired were $1.0 million and are being amortized on straight-line basis over 10 years. All acquisitions were accounted for as purchases. 6. DEBT At December 31, 1996, the Company had $.5 million of long-term debt in French francs at variable rates up to 7% and $46,000 in German marks at a rate of 5.75%. All long-term debt was repaid in 1997, except for the $46,000 in German marks which is due on June 30, 1998. The carrying value of long-term debt at December 31, 1997 approximates the aggregate fair value. F-68 At December 31, 1997, the Company had available lines of credit of approximately $13.4 million. The Company, at December 31, 1997, borrowed $12.6 million under these lines of credit at fixed and variable rates up to 8%. 7. TAXES ON INCOME
For the Years Ended December 31, ----------------------- 1997 1996 1995 ------- ------- ------- U.S. loss before taxes........................... $ 1,932 $ 4,698 $ 1,808 Foreign loss before taxes........................ 11,537 15,708 8,200 ------- ------- ------- Total loss before taxes.......................... $13,469 $20,406 $10,008 ======= ======= =======
The following table shows the components of current and deferred income tax benefits by taxing jurisdiction, both domestic and foreign:
For the Years Ended December 31, ------------------------- 1997 1996 1995 ------- ------- ------- Current Federal..................................... $ 134 $ (992) $ 681 State and local............................. 10 (104) 65 Foreign..................................... (5,745) (2,682) (1,561) ------- ------- ------- (5,601) (3,778) (815) ------- ------- ------- Deferred Federal..................................... (645) (285) (968) State and local............................. (111) (49) (166) Foreign..................................... (422) 54 (338) ------- ------- ------- (1,178) (280) (1,472) Total income tax benefits................. $(6,779) $(4,058) $(2,287) ======= ======= =======
At December 31, 1997 and 1996, gross deferred tax assets were $6,695 and $5,202, respectively; gross deferred tax liabilities were $881 and $612, respectively. The principal components of net deferred tax assets (liabilities) were:
December 31, -------------- 1997 1996 ------ ------ Employee and retiree benefits............................. $3,059 $2,736 Accounts receivable....................................... 517 516 Warranty.................................................. 1,721 1,167 Property, plant and equipment............................. 670 191 Others, net............................................... (153) (36) ------ ------ $5,814 $4,574 ====== ======
A reconciliation between the U.S. federal income tax rate and the effective tax rate is:
December 31, ------------------ 1997 1996 1995 ---- ----- ----- Statutory tax rate...... 35.0% 35.0% 35.0% Difference in effective tax rate on foreign earnings............... 12.7 (16.9) (15.6) State and local taxes... 2.6 1.8 3.5 ---- ----- ----- Effective tax rate...... 50.3% 19.9% 22.9% ==== ===== =====
F-69 8. PENSION AND OTHER BENEFIT PLANS SL sponsors several defined benefit pension plans that cover substantially all U.S. employees. The benefits are based on years of service and compensation on a career-average pay basis. These plans are substantially fully funded with a trustee in respect to past and current service. Charges to expense are based upon costs computed by independent actuaries. The funding policy is to contribute annually amounts that are allowable for federal income tax purposes. These contributions are intended to provide for benefits earned to date and those expected to be earned in the future. In the U.S., the RPS employees are included in the SL Plan, and accordingly, $0.4 million was allocated to RPS for its share of pension expense for each of the years ended December 31, 1997, 1996 and 1995. At December 31, 1997 and December 31, 1996, accrued pension costs relating to the Company's participation in this plan were $1.3 million. Outside of the U.S., subsidiaries of SL sponsor several defined benefit and defined contribution plans that cover substantially all employees who are not covered by statutory plans. For defined benefit plans, charges to expense are based upon costs computed by independent actuaries. These plans are substantially fully funded with trustees in respect to past and current service. For all non-US defined benefit plans, pension expense was $1.0 million, $1.8 million, and $1.1 million in 1997, 1996 and 1995, respectively. For non-U.S. defined contribution plans, funding and costs are generally based upon a predetermined percentage of employee compensation, Charges to expense in 1997, 1996 and 1995, were $2.5 million, $2.4 million and $2.5 million, respectively. In accordance with France labor agreements, RPS is required to pay certain retirement benefits to employees who retire while working for the Company. The benefit consists of a lump sum payment depending upon seniority, age and salary level at retirement date. At both December 31, 1997 and 1996, accrued French retirement costs were $1.3 million. Health Care Benefits The Company provides health care benefits for certain active employees. The cost of providing these benefits is recognized as expense when incurred and aggregated $1 million, $1.1 million and $.9 million in 1997, 1996 and 1995, respectively. Outside the US, such benefits are mostly provided through government-sponsored programs. Postretirement Benefits other than Pensions The Company provides certain health care benefits to former employees who have retired under the US pension plans. The principal actuarial assumptions used to measure costs were a discount rate of 8% in 1997 and 7.5% in 1996 and 1995. The overall medical cost trend rate assumption beginning December 31, 1997, was 8% graded to 5% over the next six years and 5% thereafter. Previously, the overall assumption had been 9% graded to 6% over the next six years and thereafter. Net periodic Postretirement benefit cost in the U.S. for 1997, 1996 and 1995, included the following components:
1997 1996 1995 ---- ---- ---- Service cost--benefits earned during the period.......... $116 $181 $168 Interest cost on accumulated postretirement benefit obligation.............................................. 56 80 64 Amortization of unrecognized net gain and other.......... (13) -- -- ---- ---- ---- $159 $261 $232 ==== ==== ====
F-70 The funded status at December 31, 1997 and 1996, was as follows:
1997 1996 ------ ------ Accumulated postretirement benefit obligation: Retirees................................................. $ 144 $ 105 Actives.................................................. 824 607 ------ ------ 968 712 Unrecognized net gain...................................... 380 476 Unrecognized prior service cost............................ 14 15 ------ ------ Postretirement benefit liability....................... $1,362 $1,203 ====== ======
The assumed discount rate used to determine the accumulated Postretirement benefit obligation was 7.5% for 1997 and 8% for 1996. If the assumed medical cost trend rate was increased by one percentage point, health care cost in 1997 would have been $.2 million, and the accumulated postretirement benefit obligation would have been $1.2 million at December 31, 1997. 9. RESTRUCTURING CHARGE In 1996, the Company announced a charge of $6.8 million after tax, which included pre-tax charges of $9.6 million for severance and termination costs, and other asset impairments/charges of $.4 million. The severance and termination costs relate to less than 10% of the worldwide workforce, primarily in Europe, and pertain to both manufacturing and operating personnel in about five locations. At December 31, 1997, $8.1 million of the severance and termination costs had been spent. The remainder should be spent within the next nine months. 10. LEASES AND LEASE COMMITMENTS Minimum rental commitments under noncancellable operating leases, primarily real estate and office facilities, in effect at December 31, 1997 are as follows: Year ended December 31, 1998............................ $4,629 1999............................ 3,833 2000............................ 2,282 2001............................ 1,318 2002 and beyond................. 593
Operating lease rental expense aggregated $6.4 million, $5.1 million and $4.8 million for 1997, 1996 and 1995, respectively. These leases concern mostly office building rentals and service van rentals. F-71 11. GEOGRAPHIC INFORMATION During the years ended December 31, 1997, 1996 and 1995, neither sales to any government nor sales to any single customer exceeded 10% of operating revenue.
United States Europe Other Total ------- -------- ------ -------- Geographic Area 1997 Operating revenue........................ $72,064 $267,216 $4,968 $344,248 Operating loss........................... (1,312) (9,187) (1,149) (11,648) Identifiable assets at December 31....... 47,233 222,201 -- 269,434 Geographic Area 1996 Operating revenue........................ 56,291 275,718 1,906 333,915 Operating loss........................... (5,619) (10,010) (1,568) (17,197) Identifiable assets at December 31....... 42,331 260,339 -- 302,670 Geographic Area 1995 Operating revenue........................ 63,134 239,386 1,148 303,668 Operating loss........................... (1,479) (5,416) (551) (7,446) Identifiable assets at December 31....... 41,229 186,532 -- 227,831
12. STOCK OPTION PLANS As of December 31, 1997, SL administered stock option plans, which are described below. SL applies APB Opinion 25 and related Interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for its stock option plans. Had compensation cost for the SL plans been determined based on the fair value at the grant dates for awards under these plans, consistent with the methodology of SFAS 123, RPS net loss would have been the pro forma amounts indicated below.
1997 1996 1995 ------- -------- ------- Net loss As reported................................. $(6,720) $(16,366) $(7,721) Pro forma................................... (7,117) (16,619) (7,753)
As required by SFAS No. 123, the above pro-forma data reflect the effect of stock option grants during 1997, 1996, and 1995. During 1997, 1996, 1995 and in prior years, key employees of RPS were granted stock options under the SL stock option plans. The exercise price of each option equals the market price of SL stock on the date of grant; and option's maximum term is ten years, and options generally vest in 20% increments over five years. As required by SFAS No. 123, the fair value of each grant is estimated on the date of grant using the multiple option Black-Scholes option-pricing model with the following weighted-average assumptions used for 1997, 1996 and 1995: dividend of $0.75; expected volatility of 21% for 1997 grants and 20% for 1996 and 1995 grants; risk-free interest rates of 5.8%-6.77% for the 1997 grants; 5.09%-6.01% for the 1996 grants, and 5.70%-7.66% for the 1995 grants; and expected option lives of 5.09 years for RPS employees for 1997 grants and 5.39 years for the 1996 and 1995 grants. F-72 A summary of the status of the SL stock option plans for RPS as of December 31, 1997, 1996 and 1995, and changes during the years ending on those dates is presented below.
Weighted Weighted Weighted Average Average Average 1997 Exercise 1996 Exercise 1995 Exercise Fixed Options Shares Price Shares Price Shares Price ------------- ------- -------- ------- -------- ------- -------- Outstanding at beginning of year................. 179,600 $ 34.08 164,700 $ 30.04 148,000 $ 29.28 Granted................ 42,500 $ 81.03 62,000 $ 42.35 22,500 $ 32.07 Exercised.............. (32,750) $ 29.80 (47,100) $ 30.84 (5,800) $ 18.55 ------- ------- ------- Outstanding at end of year.................... 189,350 $ 45.36 179,600 $ 34.08 164,700 $ 30.04 ======= ======= ======= Options exercisable at year-end................ 60,550 56,600 79,400 Weighted-average fair value of options granted during the year......... $ 24.01 $ 11.25 $ 8.35
The following table summarizes information concerning currently outstanding and exercisable options at December 31, 1997.
Options Outstanding Options Exercisable ----------------------------------- ----------------------- Weighted Average Weighted Weighted Number Remaining Average Number Average Range of Outstanding contractual Exercise Exercisable Exercise Exercise Prices as of 12/31/97 Life Price as of 12/31/97 Price - --------------- -------------- ----------- -------- -------------- -------- $32.46-45.36....... $189,350 7.47 $45.36 60,550 $32.46
13. RELATED PARTY TRANSACTIONS In certain countries, RPS participates in SL's centralized treasury and cash processes. In these countries, cash is managed either through zero balance accounts or an interest-bearing offsetting mechanism. Cash disbursements for operations, acquisitions, and other investments are funded as needed from Schlumberger Limited. SL and its affiliates provide a number of administrative functions to RPS which resulted in charges of $9.4 million, $8.6 million, and $7.5 million being recorded in the results of operations for 1997, 1996 and 1995, respectively. Management believes that the method used to allocate such costs is reasonable under the circumstances and the expense is reasonable and adequate compared to the services provided. There are no formal tax sharing arrangements between RPS and any entity of SL. In most countries, RPS is a division of the SL legal entity that is the ultimate tax payer in that jurisdiction. Thus the income tax benefit recorded reflects the tax effect of the net operating losses incurred by RPS that are available to offset the income of the SL legal entity that is the ultimate taxpayer. 14. TRANSACTIONS WITH AFFILIATES In July 1997, SI SPA, a non-RPS Schlumberger company purchased the shares of Schlumberger Industries SPA, another Schlumberger company, from Koppens Holding Nederland BV, a RPS company. As this was a transaction within a party under common control, this transaction was recorded at net book value. The difference between net book value and sale proceeds was credited to equity in 1997. The sales proceeds were transferred through a dividend to Schlumberger Limited in 1997. In December 1997, RPS via Koppens Iberica, acquired the shares of GNC, a Portuguese subsidiary of SL for $5.8 million. This company was acquired to implement and develop RPS business in Portugal. The difference between purchase price and net book value was debited to equity in 1997. F-73 15. CONTINGENCIES The Company complies with government laws and regulations and responsible management practices for the protection of the environment. The Combined Balance Sheet includes accruals for the estimated future costs associated with certain environmental remediation activities related to the past use or disposal of hazardous materials. Due to a number of uncertainties, including uncertainty of timing, the scope of remediation, future technology, regulatory changes and other factors, it is possible that the ultimate remediation costs may exceed the amounts estimated. However, in the opinion of management, such additional costs are not expected to be material relative to consolidated liquidity, financial position or future results of operations. In addition, the Company is party to various other legal proceedings. Although the ultimate disposition of these proceedings is not presently determinable, in the opinion of the Company any liability that might ensue would not be material in relation to the Combined Financial Statements. 16. SUPPLEMENTARY INFORMATION Operating revenue and related cost of goods sold and services comprised the following:
Year Ended December 31, -------------------------- 1997 1996 1995 -------- -------- -------- Operating revenue Sales........................................ $185,702 $186,764 $191,439 Services..................................... 158,546 147,151 112,229 -------- -------- -------- $344,248 $333,915 $303,668 -------- -------- -------- Direct operating costs Goods sold................................... $148,257 $149,142 $156,374 Services..................................... 138,323 124,350 92,727 -------- -------- -------- $286,350 $273,492 $249,101 ======== ======== ========
Cash paid for interest and income taxes was as follows:
Year Ended December 31, -------------------- 1997 1996 1995 ------ ------ ------ Interest............................................. $1,414 $1,897 $1,649 Income taxes......................................... $1,926 $ 248 $ 516
Accounts payable and accrued liabilities are summarized as follows:
December 31, ---------------- 1997 1996 ------- -------- Payroll, vacation and employee benefits................. $12,056 $ 13,945 Trade................................................... 41,245 44,969 Taxes, other than on income............................. 8,988 10,398 Other................................................... 25,319 41,204 ------- -------- $87,608 $110,516 ======= ========
F-74 PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY Tokheim Corporation 10501 Corporate Drive Fort Wayne, Indiana 46801 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 490 Lincoln Tower Fort Wayne, Indiana 46802 LEGAL ADVISORS To the Company Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive Chicago, Illinois 60606 TRUSTEE, REGISTRAR, PRINCIPAL PAYING AND TRANSFER AGENT U.S. Bank Trust National Association 100 Wall Street 16th Floor New York, New York 10005 LISTING AGENT, PAYING AND TRANSFER AGENT (if the Notes are listed on the Luxembourg Stock Exchange) Bankers Trust Luxembourg S.A. P.O. Box 807 14, Boulevard F.D. Roosevelt L-2450 Luxembourg PAYING AGENT AND COMMON DEPOSITARY Midland Bank plc Mariner House, Pepys Street London, EC3N 4DA - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Until , all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. --------------- TABLE OF CONTENTS
Page ---- Prospectus Summary........................................................ 1 Risk Factors.............................................................. 21 Debt Financing Risks...................................................... 21 Risks Associated with the Operation of the Business....................... 24 Government Regulation..................................................... 28 Risks Associated with the Exchange Offer.................................. 28 The Exchange Offer........................................................ 30 The Transactions.......................................................... 38 Sources and Uses of Funds................................................. 39 Capitalization............................................................ 40 Unaudited Pro Forma Consolidated Condensed Financial Statements........... 41 Selected Financial Data of Tokheim Corporation and Subsidiaries........... 47 Selected Financial Data of the RPS Division............................... 49 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................... 50 Business.................................................................. 59 Management................................................................ 72 Principal Shareholders.................................................... 74 Description of Certain Indebtedness....................................... 76 Description of the Schlumberger Warrants.................................. 78 Description of the Exchange Notes......................................... 79 Certain United States Federal Income Tax Considerations................... 112 Plan of Distribution...................................................... 117 Legal Matters............................................................. 117 Independent Accountants................................................... 118 General Listing Information............................................... 119 Where You Can Find More Information....................................... 120 Information Incorporated by Reference..................................... 120 Index to Financial Statements............................................. F-1
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Tokheim Corporation $123,000,000 11 3/8% Senior Subordinated Notes due 2008 (Euro)75,000,000 11 3/8% Senior Subordinated Notes due 2008 --------------- PROSPECTUS --------------- , 1999 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers The following summary is qualified in its entirety by reference to the complete text of the statute, articles of incorporation and bylaws referred to below. Each of Tokheim Corporation and Envirotronic Systems, Inc. is empowered by Chapter 37 of the Indiana Business Corporation Law (the "IBCL"), subject to the procedures and limitations therein, to indemnify any person against expenses (including attorneys' fees) and the obligation to pay a judgment, settlement, penalty, fine or reasonable expenses incurred with respect to a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, in which such person is made a party by reason of such person's being or having been a director, officer, employee or agent of the corporation if his or her conduct was in good faith and he or she reasonably believed that, if acting in the individual's official capacity, the conduct was in the best interests of the corporation and in all other cases, the conduct was not opposed to the corporation's best interests. In the case of any criminal proceeding, the corporation is empowered to indemnify a person if he or she had reasonable cause to believe the conduct was lawful or had no reasonable cause to believe the conduct was unlawful. In addition, unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful in the defense of any proceeding to which the person was a party because the person is or was a director, officer, employee or agent against reasonable expenses incurred by him or her in connection with the proceeding. A corporation has the power to purchase and maintain insurance on behalf of any of the persons described above against any liability asserted against such person and incurred by such person in any of the capacities described above, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the IBCL. Article VII, Section 7.8 of Tokheim Corporation's Restated Articles of Incorporation, as amended, and Article VII, Section 7.8 of Envirotronic Systems, Inc.'s Articles of Incorporation, as amended, obligate each corporation to indemnify its past and present officers and directors in the manner contemplated by the IBCL. Any such person who is wholly successful with respect to any proceeding of the type described above is entitled to indemnification as of right. In addition, each corporation's Board of Directors is authorized to approve indemnification of any such person to the full extent permitted by applicable law, or to any other person as it may determine. Tokheim Corporation has directors' and officers' liability insurance which protects each director and officer from certain claims and suits, including shareholder derivative suits, even where the director may be determined to not be entitled to indemnification under the IBCL, and claims and suits arising under the Securities Act. The policy may also afford coverage under circumstances where the facts do not justify a finding that the director or officer acted in good faith and in a manner that was in or not opposed to the best interests of Tokheim Corporation. Article VII, Section 7.8(h) of Envirotronic Systems, Inc.'s Articles of Incorporation, as amended, permits its Board of Directors to authorize the corporation to purchase and maintain insurance on behalf of any eligible person against any liability asserted against such person or any liability or expense incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability or expense. Tokheim Corporation's and Envirotronic Systems, Inc.'s bylaws contain no indemnification or insurance provisions. The following summary is qualified in its entirety by reference to the complete text of the statute, articles of organization and limited liability company agreement referred to below. Tokheim Services LLC is empowered by Chapter 2, Section 2(14) of the Indiana Business Flexibility Act (the "IBFA") to indemnify and hold harmless any member, manager, agent or employee from and against any and all claims and demands, except in the case of action or failure to act by the member, agent, or employee which constitutes willful misconduct or recklessness and subject to any standards and restrictions set forth in a II-1 written operating agreement. Chapter 4, Section 4(2) of the IBFA provides that a written operating agreement may provide for indemnification of a member or manager for judgments, settlements, penalties, fines or expenses incurred in a proceeding to which a person is a party because the person is or was a member or manager. Tokheim Services LLC's articles of organization and limited liability company agreement contain no indemnification or insurance provisions. The following summary is qualified in its entirety by reference to the complete text of the statute, certificate of incorporation and bylaws referred to below. Tokheim Equipment Corporation is empowered by Section 145 of the Delaware General Corporation Law (the "DGCL"), subject to the procedures and limitations therein, to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action brought by or in the right of a corporation, the corporation may indemnify a director, officer, employee or agent of the corporation (or other entity if such person is serving in such capacity at the corporation's request) against expenses (including attorneys' fees) actually and reasonably incurred by him or her if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless a court determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses as the court shall deem proper. In addition, unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful in the defense of any proceeding to which the person was a party because the person is or was a director, officer, employee or agent against reasonable expenses incurred by him or her in connection with the proceeding. A corporation has the power to purchase and maintain insurance on behalf of any of the persons described above against any liability asserted against such person and incurred by such person in any of the capacities described above, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the DGCL. Article VIII, Section 1 of Tokheim Equipment Corporation's bylaws obligates it to indemnify its past and present officers and directors to the fullest extent permitted by the DGCL. In addition, the corporation may indemnify any other person whom it has the power or obligation to indemnify under the provisions of the DGCL, and if authorized by the Board of Directors, may indemnify employees and agents of the corporation on terms similar to those applicable to its directors and officers. Article VIII, Section 8 of Tokheim Equipment Corporation's bylaws authorizes it to purchase and maintain insurance on behalf of its past and present officers and directors against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power or the obligation to indemnify such person against such liability. Tokheim Equipment Corporation's certificate of incorporation contains no indemnification or insurance provisions. The following summary is qualified in its entirety by reference to the complete text of the statute, certificate of formation and limited liability company agreement referred to below. Tokheim RPS, LLC is empowered by Section 18-108 of the Delaware Limited Liability Company Act, subject to the procedures and limitations therein, to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever, subject to such standards and restrictions, if any, as are set forth in its limited liability company agreement. Tokheim RPS, LLC's certificate of formation and its limited liability company agreement contain no indemnification or insurance provisions. II-2 The following summary is qualified in its entirety by reference to the complete text of the statute, articles of incorporation and bylaws referred to below. Management Solutions, Inc. is empowered by Section 7-109 of the Colorado Business Corporations Act (the "CBCA"), subject to the procedures and limitations therein, to indemnify any person against liability for reasonable expenses incurred in connection with a proceeding in which such person is made a party by reason of such person's being or having been a director, officer, employee or agent if his or her conduct was in good faith and if he or she reasonably believed that, if acting in the individual's official capacity, the conduct was in the best interests of the corporation and in all other cases, the conduct was not opposed to the corporation's best interests. In the case of any criminal proceeding, the corporation is empowered to indemnify an individual if he or she had no reasonable cause to believe the conduct was unlawful. However, a corporation may not indemnify a director, officer, employee or other agent (a) in connection with a proceeding by or in the right of the corporation in which the person was adjudged liable to the corporation or (b) in connection with any other proceeding charging that the person derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the person was adjudged liable on the basis that he or she derived an improper personal benefit. In addition, unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful in the defense of any proceeding to which the person was a party because the person is or was a director, officer, employee or agent against reasonable expenses incurred by him or her in connection with the proceeding. A corporation is empowered to purchase and maintain insurance on behalf of any of the persons described above against liability asserted against or incurred by such person in the capacities described above or arising from his or her status as such, whether or not the corporation would have power to indemnify the person against the same liability under the CBCA. Article XI of Management Solutions, Inc.'s Articles of Incorporation, as amended, provides that Management Solutions, Inc. may indemnify any of its past or present directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by him or her in connection with the defense of any claim or demand against him or her or any action, suit or proceeding in which he or she is made a party by reason of having been or being such a director or officer, and against any judgment for damages rendered therein, except in relation to matters as to which he or she shall be adjudged in such action, suit or proceeding to be liable for willful negligence or intentional misconduct in the performance of duty. Management Solutions Inc.'s bylaws contain no indemnification or insurance provisions. The following summary is qualified in its entirety by reference to the complete text of the statute, articles of incorporation and bylaws referred to below. Sunbelt Hose & Petroleum Equipment, Inc. is empowered by Section 14-2-851 of the Georgia Business Corporation Code (the "GBCC"), subject to the procedures and limitations therein, to indemnify an individual who is a party to a proceeding because he or she is or was a director of the corporation or who, while a director of the corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee or agent of another corporation or entity, against liability incurred in the proceeding if (1) such individual conducted himself or herself in good faith; and (2) such individual reasonably believed (A) in the case of conduct in his or her official capacity, that such conduct was in the best interests of the corporation; (B) in all other cases, that such conduct was at least not opposed to the best interests of the corporation; and (C) in the case of any criminal proceeding, that the individual had no reasonable cause to believe such conduct was unlawful; provided that a corporation may not indemnify a director (a) in connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct; or (b) in connection with any proceeding with respect to conduct for which he or she was adjudged liable on the basis that personal benefit was improperly received by him or her, whether or not involving action in his or her official capacity. In addition, a corporation is obligated to indemnify a director who was wholly successful in such a proceeding. A corporation is empowered by the GBCC to indemnify an officer of the corporation who is a party to a proceeding because he or she is an officer of the corporation to the same extent as a director, except for liability arising out of II-3 conduct that constitutes appropriation of any business opportunity of the corporation, acts or omissions which involve intentional misconduct or a knowing violation of law, liability for unlawful distributions or receipt of an improper benefit. An officer is entitled to mandatory indemnification to the same extent as a director. A corporation may also indemnify an employee or agent who is not a director to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract. The GBCC empowers a corporation to purchase and maintain insurance on behalf of any person described above against liability asserted against or incurred by such person in any capacity described above or arising from his or her status as such, whether or not the corporation would have power to indemnify him or her against the same liability under the GBCC. Article Eight, Section 8.6 of Sunbelt Hose & Petroleum Equipment, Inc.'s bylaws obligates the corporation to indemnify any person who was or is a party or is threatened to be made a party of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or entity against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such proceeding if such person acted in a manner he or she reasonably believed to be in, or not opposed to, the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct unlawful. In the case of an action or proceeding brought by or in the right of a corporation, the corporation must indemnify a director, officer, employee or agent of the corporation (or other entity if such person is serving in such capacity at the corporation's request) against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the corporation, unless the court in which such proceeding was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses as the court shall deem proper. In addition, the corporation is obligated to indemnify any person described above that has been successful on the merits or otherwise in defense of any such proceeding against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Sunbelt Hose & Petroleum Equipment Inc.'s bylaws also authorize it to purchase and maintain insurance on behalf of its past and present officers, directors, employees or agents (or persons serving in such capacity for another entity at the request of the corporation) against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability. Sunbelt Hose & Petroleum Equipment, Inc.'s articles of incorporation, as amended, contain no indemnification or insurance provisions. The following summary is qualified in its entirety by reference to the complete text of the statute, articles of incorporation and bylaws referred to below. Gasboy International, Inc. is empowered by Section 1741 of the Pennsylvania Business Corporation Law (the "PBCL") to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he or she was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another corporation or entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action brought by or in the right of a corporation, the corporation may indemnify such persons against expenses (including attorneys' fees) actually and reasonably incurred by him or II-4 her if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless a court determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses as the court shall deem proper. In addition, a corporation shall indemnify a representative of such corporation who was successful on the merits or otherwise in the defense of any proceeding described above against reasonable expenses incurred by him or her in connection therewith. No indemnification under any bylaw, agreement or otherwise is permitted in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness, and the articles may not provide for indemnification in the case of willful misconduct or recklessness. A corporation has the power to purchase and maintain insurance on behalf of any of the persons described above against any liability asserted against such person and incurred by such person in any of the capacities described above, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the PBCL. Gasboy International, Inc.'s articles of incorporation and bylaws contain no indemnification or insurance provisions. The following summary is qualified in its entirety by reference to the complete text of the statute, articles of incorporation and bylaws referred to below. Tokheim Investment Corp. and Tokheim Automation Corporation are empowered by Section 2.02-1 of the Texas Business Corporation Act (the "TBCA") to indemnify a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding because the person is or was a director of the corporation or, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, employee, agent or other similar functionary of another corporation or entity against judgments, penalties, fines, settlements and reasonable expenses (including attorneys' fees) actually incurred by the person only if it is determined that the person (1) conducted himself or herself in good faith; (2) reasonably believed (a) in the case of conduct in his or her official capacity as a director of the corporation, that such conduct was in the corporation's best interests and (b) in all other cases, that his or her conduct was at least not opposed to the corporation's best interests; and (3) in the case of any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. A director may only be indemnified in respect of a proceeding in which the person is found liable on the basis that personal benefit was improperly received by him or her, whether or not the benefit resulted from an action taken in the person's official capacity, or in which the person is found liable to the corporation, for reasonable expenses actually incurred by the person in connection with the proceeding; provided that no indemnification shall be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his or her duty to the corporation. A corporation shall indemnify a director for the expenses described above incurred in connection with a proceeding described above if the person is wholly successful. Officers of a corporation are entitled to the same mandatory indemnification as directors, and officers, employees and agents of a corporation may be indemnified to the same extent as directors or to such further extent, consistent with law, as may be provided in the corporation's articles of incorporation, bylaws, general or specific action of its board of directors or contract. A corporation is empowered to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation (or who was serving in a similar capacity at the request of the corporation for another corporation or entity) against any liability asserted against such person and incurred by such person in such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify him or her against that liability under the TBCA. Article 8 of Tokheim Investment Corp.'s articles of incorporation, as amended, provide that it may indemnify any director or officer of the corporation, and any person who may have served at the request of the corporation as a director or officer of another corporation in which it owns shares or of which it is a creditor, against any costs and expenses, including counsel fees, actually and necessarily incurred (or reasonably expected to be incurred) in connection with the defense of any civil, criminal, administrative, investigative or II-5 other action, suit or proceeding (whether by or in the right of the corporation or otherwise) in which he or she may become involved or with which he or she may be threatened, by reason of such person being or having been such a director or officer, and against any payments in settlement of any such action, suit or proceeding or in satisfaction of any related judgment, fine or penalty. Tokheim Investment Corp.'s bylaws, and Tokheim Automation Corporation's articles of incorporation and bylaws, contain no indemnification or insurance provisions. Item21.Exhibits and Financial Statement Schedules a. Exhibits
Exhibit No. Document ------- -------- 1.1 Purchase Agreement, dated as of January 26, 1999 among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 2.1 Stock Purchase Agreement, dated as of December 29, 1997 between Tokheim Corporation and Arthur S. ("Rusty") Elston, Ronald H. Elston, Eric E. Burwell and Curt E. Burwell (incorporated herein by reference to the Registrant's Current Report on Form 8-K, dated December 31, 1997). 2.2 Master Agreement for Purchase and Sale of Shares, Assets, and Liabilities, dated as of June 19, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 2.3 Amendment No. 1 to the Master Agreement for Purchase and Sale of Shares, Assets and Liabilities, dated as of September 30, 1998 between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Registrant's Current Report on Form 8- K/A dated October 1, 1998). 3.1 Restated Articles of Incorporation of Tokheim Corporation, as amended, as filed with the Indiana Secretary of State on February 5, 1997 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K/A for the year ended November 30, 1996). 3.2 Bylaws of Tokheim Corporation, as restated on July 12, 1995 and amended March 2, 1998 (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the period ended May 31, 1998). 3.3 Articles of Incorporation of Monitec Corporation (now known as Envirotronic Systems, Inc.). 3.4 Articles of Amendment of the Articles of Incorporation of Monitec Corporation (changing name to Envirotronic Systems, Inc.). 3.5 Bylaws of Envirotronic Systems, Inc. 3.6 Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. (now known as Gasboy International, Inc.). 3.7 Amendment No. 1 to Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. 3.8 Amendment No. 2 to Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. 3.9 Amendment No. 2 to Amended and Restated Articles of Incorporation of William M. Wilson's Sons, Inc. (changing name to Gasboy International, Inc.).
II-6
Exhibit No. Document ------- -------- 3.10 Restated Bylaws of Gasboy International, Inc. 3.11 Articles of Incorporation of Management Solutions of Colorado, Inc. (now known as Management Solutions, Inc.). 3.12 Articles of Amendment to the Articles of Incorporation of Management Solutions of Colorado, Inc. (changing name to Management Solutions, Inc.). 3.13 Bylaws of Management Solutions, Inc. 3.14 Articles of Incorporation of ESCIA, Inc. (now known as Sunbelt Hose & Petroleum Equipment, Inc.). 3.15 Articles of Amendment of ESCIA, Inc. (changing name to Sunbelt Hose & Petroleum Equipment, Inc.). 3.16 Bylaws of Sunbelt Hose & Petroleum Equipment, Inc. 3.17 Articles of Incorporation of Tokheim Base Systems, Inc. (now known as Tokheim Automation Corporation). 3.18 Articles of Amendment to the Articles of Incorporation of Tokheim Base Systems, Inc. (changing name to Mini Base Systems, Inc.). 3.19 Articles of Amendment to the Articles of Incorporation of Mini Base Systems, Inc. (changing name to Tokheim Automation Corporation). 3.20 Bylaws of Tokheim Automation Corporation. 3.21 Certificate of Incorporation of Tokheim Equipment Corporation. 3.22 Bylaws of Tokheim Equipment Corporation. 3.23 Articles of Incorporation of Tokheim Investment Corp. 3.24 Bylaws of Tokheim Investment Corp. 3.25 Certificate of Formation of Tokheim RPS, LLC. 3.26 Limited Liability Company Agreement of Tokheim RPS, LLC. 3.27 Articles of Organization of Tokheim Services LLC. 3.28 Limited Liability Company Agreement of Tokheim Services LLC. 4.1 Rights Agreement, dated as of January 22, 1997, between Tokheim Corporation and Harris Trust and Savings Bank, as Rights Agent (incorporated herein by reference to the Registrant's Current Report on Form 8-K, filed February 23, 1997). 4.2 Amendment No. 1 to Rights Agreement, dated as of September 30, 1998, between Tokheim Corporation and Harris Trust and Savings Bank (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.3 Indenture, dated as of August 23, 1996, between Tokheim Corporation and Harris Trust and Savings Bank, as Trustee (incorporated herein by reference to the Registrant's Current Report on Form 8-K, filed September 23, 1996). 4.4 Credit Agreement, dated as of September 3, 1996, among Tokheim Corporation, certain subsidiaries of Tokheim Corporation, certain banks and NBD Bank, N.A. (incorporated herein by reference to the Registrant's Current Report on Form 8-K, filed September 6, 1996). 4.5 Amendment No. 1 to Credit Agreement, dated as of May 15, 1997 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1997, filed February 13, 1997). 4.6 Amendment No. 2 to Credit Agreement, dated as of June 30, 1997 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1997, filed February 13, 1997).
II-7
Exhibit No. Document ------- -------- 4.7 Amendment No. 3 to Credit Agreement, dated as of September 25, 1997 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1997, filed February 13, 1997). 4.8 Amendment No. 4 to Credit Agreement, dated as of December 29, 1997 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1997, filed February 13, 1997). 4.9 Amendment No. 5 to Credit Agreement, dated as of March 20, 1998 (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the period ended February 28, 1998). 4.10 Securities Purchase Agreement, dated September 30, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.11 12% Senior Subordinated Note due January 28, 1999 in the amount of $170,000,000 (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.12 Senior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim Corporation, Management Solutions, Inc., Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy International, Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as guarantors, and Harris Trust and Savings Bank, as trustee (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.13 12% Junior Subordinated Note due 2008 in the amount of $40,000,000 (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.14 Junior Subordinated Note Indenture, dated as of September 30, 1998, among Tokheim Corporation, Management Solutions, Inc., Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose & Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy International, Inc., Tokheim Automation Corporation, Tokheim Investment Corp., as guarantors, and Harris Trust and Savings Bank, as trustee (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.15 Amendment No. 1 to Junior Subordinated Note Indenture, dated as of January 25, 1999 (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.16 Warrant to Purchase up to 19.9% of the Shares of Common Stock of Tokheim Corporation (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.17 Form of Roll-Over Note (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.18 Registration Rights Agreement, dated September 30, 1998, between Tokheim Corporation and Schlumberger Limited (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.19 Note Purchase Agreement, dated as of September 30, 1998, among Tokheim Corporation, the Subsidiaries and the Purchasers (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998).
II-8
Exhibit No. Document ------- -------- 4.20 Amended and Restated Credit Agreement, dated as of September 30, 1998, among Tokheim Corporation, the Borrowing Subsidiaries, the Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais as documentation and collateral agent and Gleacher NatWest Inc. and Bankers Trust Company as co-syndication agents (incorporated herein by reference to the Registrant's Current Report on Form 8-K/A dated October 1, 1998). 4.21 Second Amended and Restated Credit Agreement, dated as of December 14, 1998, among Tokheim Corporation, the Borrowing Subsidiaries, the Lenders and NBD Bank, N.A. as administrative agent and Credit Lyonnais as documentation and collateral agent and Gleacher NatWest Inc. and Bankers Trust Company as co-syndication agents (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.22 Consent and Amendment No. 1 to Amended and Restated Credit Agreement, dated as of January 11, 1999 (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999). 4.23 Amendment No. 2 to Amended and Restated Credit Agreement, dated as of March 1, 1999 (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999). 4.24 Amendment No. 3 to Second Amended and Restated Credit Agreement, dated as of February 27, 1999 (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999). 4.25 Dollar Notes Indenture, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (to be filed by amendment). 4.26 Euro Notes Indenture, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (to be filed by amendment). 4.27 Dollar Registration Rights Agreement, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 4.28 Euro Registration Rights Agreement, dated as of January 29, 1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim Corporation (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended September 30, 1998, filed March 1, 1999). 5.1 Opinion of Norman L. Roelke, Vice President, Secretary and General Counsel of the Registrant. 10.1 Tokheim Corporation 1992 Stock Incentive Plan, established December 15, 1992 (incorporated herein by reference to the Registrant's Registration Statement on Form S-8, File No. 33- 52167, dated February 4, 1994).
II-9
Exhibit No. Document ------- -------- 10.2 Retirement Savings Plan for Employees of Tokheim Corporation and Subsidiaries (incorporated herein by reference to Amendment No. 1 to the Registrant's Registration Statement on Form S-8, File No. 33-29710, dated August 1, 1989). 10.3 Tokheim Corporation 1996 Key Management Incentive Bonus Plan (incorporated herein by reference to the Registrant's Report on Form 10-Q/A, for the quarter ended February 29, 1996, filed November 20, 1996). 10.4 Employment Agreement, dated December 10, 1997, between the Registrant and Douglas K. Pinner (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 10.5 Employment Agreement, dated December 23, 1997, between the Registrant and John A. Negovetich (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 10.6 Employment Agreement, dated December 23, 1997, between the Registrant and Jacques St-Denis (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 10.7 Employment Agreement, dated December 23, 1997, between the Registrant and Norman L. Roelke (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 10.8 Employment Agreement, dated December 23, 1997, between the Registrant and Scott A. Swogger. (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 10.9 Technology License Agreement, effective as of December 1, 1997, between Tokheim and Gilbarco, Inc. (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 10.10 Tokheim Corporation 1997 Incentive Plan (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 39, 1997). 10.11 Employment Agreement, dated December 31, 1997, between Management Solutions, Inc. and Arthur S. Elston (incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the year ended November 30, 1997). 11.1 Statement re computation of per share earnings (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999, and by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1998). 12.1 Statement re computation of ratios. 21.1 Subsidiaries of Tokheim Corporation (incorporated herein by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1998, filed March 1, 1999). 23.1 Consent of PriceWaterhouseCoopers LLP. 23.2 Consent of PriceWaterhouseCoopers. 24.1 Powers of Attorney (included in Signature page to registration statement). 25.1 Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939 of U.S. Bank Trust National Association, as Dollar Notes Trustee, under the Dollar Notes Indenture, relating to the 11 3/8% Dollar Notes due 2008. 25.2 Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939 of U.S. Bank Trust National Association, as Euro Notes Trustee, under the Euro Notes Indenture, relating to the 11 3/8% Euro Notes due 2008.
II-10
Exhibit No. Document ------- -------- 27.1 Financial Data Schedule (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q, for the quarter ended February 28, 1999, filed April 14, 1999, and by reference to the Registrant's Annual Report on Form 10-K, for the year ended November 30, 1998). 99.1 Form of Letter of Transmittal for the Dollar Notes. 99.2 Form of Notice of Guaranteed Delivery for the Dollar Notes. 99.3 Form of Tender Instruction for the Dollar Notes.
Item22.Undertakings (a) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-11 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrants have duly caused this registration statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of Fort Wayne, State of Indiana, as of April 26, 1999. Tokheim Corporation /s/ Douglas K. Pinner By: _________________________________ Name: Douglas K. Pinner Title:Chairman, President and Chief Executive Officer Envirotronic Systems, Inc. /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title:Secretary Gasboy International, Inc. /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title:Secretary Management Solutions, Inc. /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title:Secretary Sunbelt Hose & Petroleum Equipment, Inc. /s/ Norman L. Roelke By: ________________________________ Name: Norman L. Roelke Title:Secretary Tokheim Automation Corporation /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title:Secretary Tokheim Equipment Corporation /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title:Secretary II-12 Tokheim Investment Corp. /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title:Secretary Tokheim RPS, LLC /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title: Tokheim Services LLC /s/ Norman L. Roelke By: _________________________________ Name: Norman L. Roelke Title: II-13 We the undersigned directors and officers of the registrants do hereby constitute and appoint Douglas K. Pinner and Norman L. Roelke, and each of them, our true and lawful attorneys-in-fact and agents, to do any and all acts and things in our names and on our behalf in our capacities as directors and officers and to execute any and all instruments for us and in our name in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said corporations to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this registration statement, or any registration statement for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, including specifically, but without limitation, the power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto; and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated below on April 26, 1999. Tokheim Corporation
Signature Title --------- ----- /s/ Douglas K. Pinner Chairman of the Board, President and Chief ___________________________________________ Executive Officer and Director Douglas K. Pinner /s/ John A. Negovetich Executive Vice President, Finance and ___________________________________________ Administration and Chief Financial Officer John A. Negovetich /s/ Gerald H. Frieling, Jr. Vice Chairman of the Board and Director ___________________________________________ Gerald H. Frieling, Jr. /s/ Walter S. Ainsworth Director ___________________________________________ Walter S. Ainsworth /s/ Robert M. Akin, III Director ___________________________________________ Robert M. Akin, III /s/ James K. Baker Director ___________________________________________ James K. Baker /s/ B.D. Cooper Director ___________________________________________ B.D. Cooper /s/ Richard W. Hansen Director ___________________________________________ Richard W. Hansen /s/ Leo J. Hawk Director ___________________________________________ Leo J. Hawk /s/ Dr. Winfred M. Phillips Director ___________________________________________ Dr. Winfred M. Phillips /s/ Ian M. Rolland Director ___________________________________________ Ian M. Rolland
II-14 Envirotronic Systems, Inc.
Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Director ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer and Director ___________________________________________ John A. Negovetich /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke Gasboy International, Inc. Signature Title --------- ----- /s/ D. Michael Boone Principal Executive Officer and Director ___________________________________________ D. Michael Boone /s/ John A. Negovetich Principal Financial Officer and Director ___________________________________________ John A. Negovetich /s/ John Lotz Principal Accounting Officer ___________________________________________ John Lotz /s/ Douglas K. Pinner Director ___________________________________________ Douglas K. Pinner /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke /s/ Jacques St-Denis Director ___________________________________________ Jacques St-Denis Management Solutions, Inc. Signature Title --------- ----- /s/ Scott A. Swogger Principal Executive Officer ___________________________________________ Scott A. Swogger /s/ Richard B. Kendall Principal Financial Officer ___________________________________________ Richard B. Kendall /s/ John Lotz Principal Accounting Officer ___________________________________________ John Lotz /s/ Douglas K. Pinner Director ___________________________________________ Douglas K. Pinner
II-15 /s/ John A. Negovetich Director ___________________________________________ John A. Negovetich /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke Sunbelt Hose & Petroleum Equipment, Inc.
Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Director ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer and Director ___________________________________________ John A. Negovetich /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke Tokheim Automation Corporation Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Director ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer and Director ___________________________________________ John A. Negovetich /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke Tokheim Equipment Corporation Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Director ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer and Director ___________________________________________ John A. Negovetich /s/ John Lotz Principal Accounting Officer ___________________________________________ John Lotz /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke
II-16 Tokheim Investment Corp.
Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Director ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer, Principal ___________________________________________ Accounting Officer and Director John A. Negovetich /s/ Norman L. Roelke Director ___________________________________________ Norman L. Roelke Tokheim RPS, LLC Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Manager ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer, Principal ___________________________________________ Accounting Officer and Manager John A. Negovetich /s/ Norman L. Roelke Manager ___________________________________________ Norman L. Roelke Tokheim Services LLC Signature Title --------- ----- /s/ Douglas K. Pinner Principal Executive Officer and Manager ___________________________________________ Douglas K. Pinner /s/ John A. Negovetich Principal Financial Officer, Principal ___________________________________________ Accounting Officer and Manager John A. Negovetich /s/ Norman L. Roelke Manager ___________________________________________
Norman L. Roelke II-17 EX-3.3 2 ARTICLES OF INCORPORATION OF MONITEC CORP. Exhibit 3.3 ----------- ARTICLES OF INCORPORATION ------------------------- OF -- MONITEC CORPORATION ------------------- The undersigned incorporator, desiring to form a corporation (hereinafter referred to as the "Corporation") pursuant to the provisions of the Indiana Business Corporation Law, as amended (hereinafter referred to as the "Corporation Law"), executes the following Articles of Incorporation. ARTICLE I Name The name of the Corporation is Monitec Corporation. ARTICLE II Purposes and Powers Section 2.1 Purposes of the Corporation. The purposes for which the ----------- --------------------------- Corporation is formed are (a) to engage in the general business of marketing leak detectors for underground gasoline tanks and to carry on such activities of every kind or nature as may be allied or incidental to such general business, and (b) to engage in the transaction of any or all lawful business for which corporations may now or hereafter be incorporated under the Corporation Law. Section 2.2 Powers of the Corporation. The Corporation shall have ----------- ------------------------- (a) all powers now or hereafter authorized by or vested in corporations pursuant to the provisions of the Corporation Law, (b) all powers now or hereafter vested in corporations by common law or any other statute or act, and (c) all powers authorized by or vested in the Corporation by the provisions of these Articles of Incorporation or by the provisions of its By-Laws as from time to time in effect. ARTICLE III Term of Existence The period during which the Corporation shall continue is perpetual. ARTICLE IV Registered Office and Agent The street address of the Corporation's registered office is Baker & Daniels & Shoaff, 2400 Fort Wayne National Bank Building, Fort Wayne, Indiana 46802 and the name of its registered agent at such office is Lawrence E. Shine. ARTICLE V Shares Section 5.1 Authorized Class and Number of Shares. The capital ----------- ------------------------------------- stock of the Corporation shall be of one class and kind, which may be referred to as common shares. The total number of shares which the Corporation has authority to issue shall be 1000 shares. The Corporation's shares do not have any par or stated value, except that, solely for the purpose of any statute or regulation of any jurisdiction imposing any tax or fee based upon the capitalization of the Corporation, each of the Corporation's shares shall be deemed to have a par value of $1.00 per share. Section 5.2 Voting Rights of Shares. Except as otherwise provided ----------- ----------------------- by the Corporation Law and subject to such shareholder disclosure and recognition procedures (which may include voting prohibition sanctions) as the Corporation may by action of its Board of Directors establish, the Corporation's shares have unlimited voting rights and each outstanding share shall, when validly issued by the Corporation, entitle the record holder thereof to one vote at all shareholders' meetings on all matters submitted to a vote of the shareholders of the Corporation. Section 5.3 Other Terms of Shares. The Corporation's shares shall ----------- --------------------- be equal in every respect insofar as their relationship to the Corporation is concerned (but such equality of rights shall not imply equality of treatment as to redemption or other acquisition of shares by the Corporation). The holders of shares shall be entitled to share ratably in such dividend or other distributions (other than purchases, redemptions or other acquisitions of shares by the Corporation), if any, as are declared and paid from time to time on the shares at the discretion of the Board of 2 Directors. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of shares shall be entitled to share, ratably according to the number of shares held by them, in all remaining assets of the Corporation available for distribution to its shareholders. When the Corporation receives the consideration specified in a subscription agreement entered into before incorporation, or for which the Board of Directors authorized the issuance of shares, as the case may be, the shares issued therefor shall be fully paid and nonassessable. The Corporation shall have the power to declare and pay dividends or other distributions upon the issued and outstanding shares of the Corporation, subject to the limitation that a dividend or other distribution may not be made if, after giving it effect, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation's total assets would be less than its total liabilities. The Corporation shall have the power to issue shares as a share dividend or other distribution in respect of issued and outstanding shares. The Corporation shall have the power to acquire (by purchase, redemption or otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel or otherwise dispose of the shares of the Corporation in the manner and to the extent now or hereafter permitted by the laws of the State of Indiana (but such power shall not imply an obligation on the part of the owner or holder of any share to sell or otherwise transfer such share to the Corporation), including the power to purchase, redeem or otherwise acquire the Corporation's own shares, directly or indirectly, and without pro rata treatment of the owners or holders thereof, unless, after giving effect thereto, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation's total assets would be less than its total liabilities. Shares of the Corporation purchased, redeemed or otherwise acquired by it shall constitute authorized but unissued shares, unless the Board of Directors adopts a resolution providing that such shares constitute authorized and issued but not outstanding shares. The Board of Directors of the Corporation may dispose of, issue and sell shares in accordance with, and in such amounts as may be permitted by, the laws of the State of Indiana and the provisions of these Articles of Incorporation and for such consideration, at such price or prices, at such time or times and upon such terms and conditions (including the privilege of selectively repurchasing the same) as the Board of Directors of the Corporation shall determine, without the authorization or 3 approval by any shareholders of the Corporation. Shares may be disposed of, issued and sold to such persons, firms or corporations as the Board of Directors may determine, without any preemptive or other right on the part of the owners or holders of other shares of the Corporation to acquire such shares by reason of their ownership of such other shares. ARTICLE VI Directors Section 6.1 Number. The initial Board of Directors shall be ----------- ------ comprised of three (3) members, which number may be changed by amendment to the By-Laws. Section 6.2 Qualifications. Directors need not be shareholders of ----------- -------------- the Corporation or residents of this or any other state in the United States. Section 6.3 Vacancies. Vacancies occurring in the Board of ----------- --------- Directors shall be filled in the manner provided in the By-Laws or, if the By- Laws do not provide for the filling of vacancies, in the manner provided by the Corporation Law. The By-Laws may also provide that in certain circumstances specified therein, vacancies occurring in the Board of Directors may be filled by vote of the shareholders at a special meeting called for that purpose or at the next annual meeting of shareholders. Section 6.4 Liability of Directors. A Director's responsibility to ----------- ---------------------- the Corporation shall be limited to discharging his or her duties as a Director, including his duties as a member of any committee of the Board of Directors upon which he or she may serve, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Director reasonably believes to be in the best interests of the Corporation, all based on the facts then known to the Director. In discharging his or her duties, a Director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: 4 (a) One (1) or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented; (b) Legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within such person's professional or expert competence; or (c) A committee of the Board of which the Director is not a member if the Director reasonably believes the Committee merits confidence; but a Director is not acting in good faith if the Director has knowledge concerning the matter in question that makes reliance otherwise permitted by this Section 6.4 unwarranted. A Director may, in considering the best interests ----------- of the Corporation, consider the effects of any action on shareholders, employees, suppliers and customers of the Corporation, and communities in which offices or other facilities of the Corporation are located, and any other factors the Director considers pertinent. A Director shall not be liable for any action taken as a Director, or any failure to take any action, unless (a) the Director has breached or failed to perform the duties of the Director's office in compliance with this Section ------- 6.4, and (b) the breach or failure to perform constitutes willful misconduct or - --- recklessness. Section 6.5 Removal of Directors. Any one or more of the members ----------- -------------------- of the Board of Directors may be removed, with or without cause, only at a meeting of the shareholders called expressly for that purpose, by the affirmative vote of the holders of outstanding shares representing at least a majority of all the votes then entitled to be cast at an election of Directors. No Director may be removed except as provided in this Section 6.5. ----------- ARTICLE VII Provisions for Regulation of Business and Conduct of Affairs of Corporation Section 7.1 Meetings of Shareholders. Meetings of the shareholders ----------- ------------------------ of the Corporation shall be held at such time and at such place, either within or without the State of Indiana, as may be stated in or fixed in accordance with the By- 5 Laws of the Corporation and specified in the respective notices or waivers of notice of any such meetings. Section 7.2 Special Meetings of Shareholders. Special meetings of ----------- -------------------------------- the shareholders, for any purpose or purposes, unless otherwise prescribed by the Corporation Law, may be called at any time by the Board of Directors or the person or persons authorized to do so by the By-Laws and shall be called by the Board of Directors if the Secretary of the Corporation receives one (1) or more written, dated and signed demands for a special meeting, describing in reasonable detail the purpose or purposes for which it is to be held, from the holders of shares representing at least twenty-five percent (25%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. If the Secretary receives one (1) or more proper written demands for a special meeting of shareholders, the Board of Directors may set a record date for determining shareholders entitled to make such demand. Section 7.3 Meetings of Directors. Meetings of the Board of ----------- --------------------- Directors of the Corporation shall be held at such place, either within or without the State of Indiana, as may be authorized by the By-Laws and specified in the respective notices or waivers of notice of any such meetings or otherwise specified by the Board of Directors. Unless the By-Laws provide otherwise (a) regular meetings of the Board of Directors may be held without notice of the date, time, place, or purpose of the meeting and (b) the notice for a special meeting need not describe the purpose or purposes of the special meeting. Section 7.4 Action Without Meeting. Any action required or ----------- ---------------------- permitted to be taken at any meeting of the Board of Directors or shareholders, or of any committee of such Board, may be taken without a meeting, if the action is taken by all members of the Board or all shareholders entitled to vote on the action, or by all members of such committee, as the case may be. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each Director, or all the shareholders entitled to vote on the action, or by each member of such committee, as the case may be, and, in the case of action by the Board of Directors or a committee thereof, included in the minutes or filed with the corporate records reflecting the action taken or, in the case of action by the shareholders, delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Action taken under this Section 7.4 is effective when the last director, shareholder or ----------- committee member, as the case may be, signs the consent, unless the consent specifies a different prior or subsequent effective date, in which case the 6 action is effective on or as of the specified date. Such consent shall have the same effect as a unanimous vote of all members of the Board, or all shareholders, or all members of the committee, as the case may be, and may be described as such in any document. Section 7.5 By-Laws. The Board of Directors shall have the ----------- ------- exclusive power to make, alter, amend or repeal, or to waive provisions of, the By-Laws of the Corporation by the affirmative vote of a majority of the entire number of Directors at the time, except as expressly provided by the Corporation Law. Any provisions for the regulation of the business and management of the affairs of the Corporation not stated in these Articles of Incorporation may be stated in the By-Laws. The Board of Directors may adopt Emergency By-Laws of the Corporation and shall have the exclusive power (except as may otherwise be provided therein) to make, alter, amend or repeal, or to waive provisions of, the Emergency By-Laws by the affirmative vote of a majority of the entire number of Directors at such time. Section 7.6 Interest of Directors. ----------- --------------------- (a) A conflict of interest transaction is a transaction with the Corporation in which a Director of the Corporation has a direct or indirect interest. A conflict of interest transaction is not voidable by the Corporation solely because of the Director's interest in the transaction if any one (1) of the following is true: (1) The material facts of the transaction and the Director's interest were disclosed or known to the Board of Directors or a committee of the Board of Directors and the Board of Directors or committee authorized, approved, or ratified the transaction. (2) The material facts of the transaction and the Director's interest were disclosed or known to the shareholders entitled to vote and they authorized, approved, or ratified the transaction. (3) The transaction was fair to the Corporation. (b) For purposes of this Section 7.6, a Director of the ----------- Corporation has an indirect interest in a transaction if: 7 (1) Another entity in which the Director has a material financial interest or in which the Director is a general partner is a party to the transaction; or (2) Another entity of which the Director is a director, officer, or trustee is a party to the transaction and the transaction is, or is required to be, considered by the Board of Directors of the Corporation. (c) For purposes of Section 7.6(a)(1), a conflict of interest ----------------- transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single Director. If a majority of the Directors who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum shall be deemed present for the purpose of taking action under this Section 7.6. The presence of, or a ----------- vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under Section ------- 7.6(a)(1), if the transaction is otherwise authorized, approved, or --------- ratified as provided in such subsection. (d) For purposes of Section 7.6(a)(2), shares owned by or voted ----------------- under the control of a Director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in Section 7.6(b), may be counted in such a vote of -------------- shareholders to determine whether to authorize, approve or ratify a conflict of interest transaction. Section 7.7 Nonliability of Shareholders. Shareholders of the ----------- ---------------------------- Corporation are not personally liable for the acts or debts of the Corporation, nor is private property of shareholders subject to the payment of corporate debts. Section 7.8 Indemnification of Officers, Directors and Other ----------- ------------------------------------------------ Eligible Persons. - ---------------- 8 (a) To the extent not inconsistent with applicable law, every Eligible Person shall be indemnified by the Corporation against all Liability and reasonable Expense that may be incurred by him or her in connection with or resulting from any Claim, (i) if such Eligible Person is Wholly Successful with respect to the Claim, or (ii) if not Wholly Successful, then if such Eligible Person is determined, as provided in either Section 7.8(f) or 7.8(g), to have acted in good faith, in what he or she reasonably believed to be the best interests of the Corporation or at least not opposed to its best interests and, in addition, with respect to any criminal claim is determined to have had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful. The termination of any Claim, by judgment, order, settlement (whether with or without court approval), or conviction or upon a plea of guilty or of nolo contendere, or its ---- ---------- equivalent, shall not create a presumption that an Eligible Person did not meet the standards of conduct set forth in clause (ii) of this subsection (a). The actions of an Eligible Person with respect to an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 shall be deemed to have been taken in what the Eligible Person reasonably believed to be the best interests of the Corporation or at least not opposed to its best interests if the Eligible Person reasonably believed he or she was acting in conformity with the requirements of such Act or he or she reasonably believed his or her actions to be in the interests of the participants in or beneficiaries of the plan. (b) The term "Claim" as used in this Section 7.8 shall include ----------- every pending, threatened or completed claim, action, suit or proceeding and all appeals thereof (whether brought by or in the right of this Corporation or any other corporation or otherwise), civil, criminal, administrative or investigative, formal or informal, in which an Eligible Person may become involved, as a party or otherwise; (i) by reason of his or her being or having been an Eligible Person, or (ii) by reason of any action taken or not taken by him or her in his or her capacity as a Eligible Person, 9 whether or not he or she continued in such capacity at the time such Liability or Expense shall have been incurred. (c) The term "Eligible Person" as used in this Section 7.8 shall ----------- mean every person (and the estate, heirs and personal representatives of such person) who is or was a Director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other organization or entity, whether for profit or not. An Eligible Person shall also be considered to have been serving an employee benefit plan at the request of the Corporation if his or her duties to the Corporation also imposed duties on, or otherwise involved services by, him or her to the plan or to participants in or beneficiaries of the plan. (d) The terms "Liability" and "Expense" as used in this Section ------- 7.8 shall include, but shall not be limited to, counsel fees and --- disbursements and amounts of judgments, fines or penalties against (including excise taxes assessed with respect to an employee benefit plan), and amounts paid in settlement by or on behalf of, an Eligible Person. (e) The term "Wholly Successful" as used in this Section 7.8 ----------- shall mean (i) termination of any Claim against the Eligible Person in question without any finding of liability or guilt against him, (ii) approval by a court or agency, with knowledge of the indemnity herein provided, or a settlement of any Claim, or (iii) the expiration of a reasonable period of time after the threatened making of any Claim without commencement of an action, suit or proceeding and without any payment or promise made to induce a settlement. (f) Every Eligible Person claiming indemnification hereunder (other than one who has been Wholly Successful with respect to any Claim) shall be entitled to indemnification (i) if special independent legal counsel, which may be regular counsel of the Corporation or other disinterested person or persons, in either case selected by the Board of Directors, whether or not a disinterested quorum exists (such counsel or person or persons being hereinafter called the "Referee"), 10 shall deliver to the Corporation a written finding that such Eligible Person has met the standards of conduct set forth in Section ------- 7.8(a)(ii), and (ii) if the Board of Directors, acting upon such ---------- written finding, so determines. The Board of Directors shall, if an Eligible Person is found to be entitled to indemnification pursuant to the preceding sentence, also determine the reasonableness of the Eligible Person's Expenses. The Eligible Person claiming indemnification shall, if requested, appear before the Referee, answer questions that the Referee deems relevant and shall be given ample opportunity to present to the Referee evidence upon which he or she relies for indemnification. The Corporation shall, at the request of the Referee, make available facts, opinions or other evidence in any way relevant to the Referee's finding that are within the possession or control of the Corporation. (g) If an Eligible Person claiming indemnification pursuant to Section 7.8(f) is found not to be entitled thereto, or if the Board of -------------- Directors fails to select a Referee under Section 7.8(f) within a -------------- reasonable amount of time following a written request of an Eligible Person for the selection of a Referee, or if the Referee or the Board of Directors fails to make a determination under Section 7.8f) within a reasonable amount of time following the selection of a Referee, the Eligible Person may apply for indemnification with respect to a Claim to a court of competent jurisdiction, including a court in which the Claim is pending against the Eligible Person. On receipt of an application, the court, after giving notice to the Corporation and giving the Corporation ample opportunity to present to the court any information or evidence relating to the claim for indemnification that the Corporation deems appropriate, may order indemnification if it determines that the Eligible Person is entitled to indemnification with respect to the Claim because such Eligible Person met the standards of conduct set forth in Section 7.8(a)(ii). If the court ------------------ determines that the Eligible Person is entitled to indemnification, the court shall also determine the reasonableness of the Eligible Person's Expenses. (h) The rights of indemnification provided in this Section 7.8 ----------- shall be in addition to any rights to which any Eligible Person may otherwise be entitled. Irrespective of the provisions of this Section -------- 7.8, the Board of Directors may, at any time and from time to time, --- (i) approve indemnification of any Eligible Person to the full extent 11 permitted by the provisions of applicable law at the time in effect, whether on account of past or future transactions, and (ii) authorize the Corporation to purchase and maintain insurance on behalf of any Eligible Person against any Liability asserted against him or any Liability or Expense incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him against such Liability or Expense. (i) Expenses incurred by an Eligible Person with respect to any Claim, may be advanced by the Corporation (by action of the Board of Directors, whether or not a disinterested quorum exists) prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the Eligible Person to repay such amount if he or she is determined not to be entitled to indemnification. (j) The provisions of this Section 7.8 shall be deemed to be a ----------- contract between the Corporation and each Eligible Person, and an Eligible Person's rights hereunder shall not be diminished or otherwise adversely affected by any repeal, amendment or modification of this Section 7.8 ----------- that occurs subsequent to such person becoming an Eligible Person. (k) The provisions of this Section 7.8 shall be applicable to ----------- Claims made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after the adoption hereof. ARTICLE VII Initial Board of Directors The name and post office address of the members of the first Board of Directors of the Corporation are as follows:
Number and Street City, State Name or Building Zip Code - -------------------------------- ----------------------------- ----------------------- - ------------------------------------------------------------------------------------------
12 John E. Overmyer P.O. Box 360 Fort Wayne, IN 10501 Corporate Dr. 46801 Norman D. Hottman P.O. Box 360 Fort Wayne, IN 10501 Corporate Dr. 46801 James H. Gavin P.O. Box 360 Fort Wayne, IN 10501 Corporate Dr. 46801
ARTICLE IX Incorporator The name and post office address of the incorporator of the Corporation is as follows:
Number and Street City, State Name or Building Zip Code - -------------------------------- ----------------------------- ----------------------- Lawrence E. Shine 2400 Fort Wayne Fort Wayne, IN National Bank Bldg. 46802
ARTICLE X Miscellaneous Provisions Section 10. Amendment or Repeal. Except as otherwise expressly ----------- ------------------- provided for in these Articles of Incorporation, the Corporation shall be deemed, for all purposes, to have reserved the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation to the extent and in the manner now or hereafter permitted or prescribed by statute, and all rights herein conferred upon shareholders are granted subject to such reservation. Section 10.2 Headings. The headings of the Articles and Sections of ------------ -------- these Articles of Incorporation have been inserted for convenience of reference only and do not in any way define, limit, construe or describe the scope or intent of any Article or Section hereof. 13 IN WITNESS WHEREOF, the undersigned, being the incorporator designated in Article IX, executes these Articles of Incorporation this 26/th/ day of October, 1988. /s/ Lawrence E. Shine --------------------- Lawrence E. Shine This instrument was prepared by Lawrence E. Shine, attorney at law, Baker & Daniels & Shoaff, 2400 Fort Wayne National Bank Building, Fort Wayne, Indiana 46802. 14 EX-3.4 3 ARTICLES OF AMENDMENT OF THE ARTICLES OF INC. Exhibit 3.4 ----------- ARTICLES OF AMENDMENT OF THE Provided by EVAN BAYH ARTICLES OF INCORPORATION Secretary of State State Form 38333 (R3 / 1-88) Room 155 State House "Approved by State Board of Accounts, (Revised) 1988" Indianapolis, Indiana 46204 INSTRUCTIONS: Use 8 1/2 x 11 inch white paper for in (317) 232-6576 serts. Filing requirements - Present Indiana Code 23-1-38-1 et seq. original and one copy to address in upper right corner of this form. FILING FEE $30.00 ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF: - ----------------------------------------------------------------------------------------------------- MONITEC CORPORATION - ----------------------------------------------------------------------------------------------------- The undersigned officers of Monitec Corporation - ----------------------------------------------------------------------------------------------------- (hereinafter referred to as the "Corporation") existing pursuant to the provisions of: (Indicate appropriate act) [X] Indiana Business Corporation Law [ ] Indiana Professional Corporation Act of 1983 as amended (hereinafter referred to as the "Act"), desiring to give notice of corporate action effectuating amendment of certain provisions of its Articles of Incorporation, certify the following facts: - ----------------------------------------------------------------------------------------------------- ARTICLE 1 Amendment(s) - ----------------------------------------------------------------------------------------------------- SECTION 1 The date of incorporation of the corporation is: October 28, 1988 - ----------------------------------------------------------------------------------------------------- SECTION 2 The name of the corporation following this amendment to the Articles of Incorporation is: Envirotronic Systems, Inc. - ----------------------------------------------------------------------------------------------------- SECTION 3 l The exact text to Article(s)___________________________ of the Articles of Incorporation is now as follows: ARTICLE I Name The name of the Corporation is Envirotronic Systems, Inc. - -----------------------------------------------------------------------------------------------------
EX-3.5 4 BYLAWS OF ENVIROTRONIC SYSTEMS, INC. Exhibit 3.5 ----------- BY-LAWS OF ENVIROTRONIC SYSTEMS, INC. ARTICLE I Meetings of Shareholders ------------------------ Section 1.1 Annual Meetings. Annual meetings of the shareholders of ----------- --------------- the Corporation shall be held on such date between January 1/st/ and May 1/st/ of each year as the Board of Directors shall determine, beginning in the year 1989, at such hour and at such place within or without the State of Indiana as shall be designated by the Board of Directors. In the absence of designation, the meeting shall be held on the date established hereby at the principal office of the Corporation at 11:00 a.m., local time. The Board of Directors may, by resolution, change the date or time of such annual meeting. If the day fixed for any annual meeting of shareholders shall fall on a legal holiday, then such annual meeting shall be held on the first following day that is not a legal holiday. Section 1.2 Special Meetings. Special meetings of the shareholders ----------- ---------------- of the Corporation may be called at any time by the Board of Directors or the Chairman of the Board and shall be called by the Board of Directors if the Secretary receives written, dated and signed demands for a special meeting, describing in reasonable detail the purpose or purposes for which it is to be held, from the holders of shares representing at least twenty-five percent (25%) of all votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. If the Secretary receives one (1) or more proper written demands for a special meeting of shareholders, the Boards of Directors may set a record date for determining shareholders entitled to make such demand. The Board of Directors or the Chairman of the Board, as the case may be, calling a special meeting of shareholders shall set the date, time and place of such meeting, which may be held within or without the State of Indiana. Section 1.3 Notices. A written notice, stating the date, time and ----------- ------- place of any meeting of the shareholders, and in the case of a special meeting the purpose or purposes for which such meeting is called, shall be delivered or mailed by the Secretary of the Corporation, to each shareholder of record of the Corporation entitled to notice of or to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. In the event of a special meeting of shareholders required to be called as the result of a demand therefor made by shareholders, such notice shall be given no later than the sixtieth (60/th/) day after the Corporation's receipt of the demand requiring the meeting to be called. Notice of shareholders' meetings, if mailed, shall be mailed, postage prepaid, to each shareholder at his or her address shown in the Corporation's current record of shareholders. A shareholder or his or her proxy may at any time waive notice of a meeting if the waiver is in writing and is delivered to the Corporation for inclusion in the minutes or filing with the Corporation's records. A shareholder's attendance at a meeting, whether in person or by proxy, (a) waives objection to lack of notice or defective notice of the meeting, unless the shareholder or his or her proxy at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder or his or her proxy objects to considering the matter when it is presented. Each shareholder who has in the manner above provided waived notice or objection to notice of a shareholders' meeting shall be conclusively presumed to have been given due notice of such meeting, including the purpose or purposes thereof. If an annual or special shareholders' meeting is adjourned to a difference date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment, unless a new record date is or must be established for the adjourned meeting. Section 1.4 Voting. Except as otherwise provided by the Indiana ----------- ------ Business Corporation Law of the Corporation's Articles of Incorporation, each share of the capital stock of any class of the Corporation that is outstanding at the record date established for any annual or special meeting of shareholders and is outstanding at the time of and represented in person or by proxy at the annual or special meeting, shall entitle the record holder thereof, or his or her proxy, to one (1) vote on each matter voted on at the meeting. Section 1.5 Quorum. Unless the Corporation's Articles of ----------- ------ Incorporation or the Indiana Business Corporation Law provide otherwise, at all meetings of shareholders holders a majority of the votes entitled to be cast on a matter, repre- 2 sented in person or by proxy, constitutes a quorum for action on the matter. Action may be taken at a shareholders' meeting only on matters with respect to which a quorum exists; provided, however, that any meeting of shareholders, including annual and special meetings and any adjournments thereof, may be adjourned to a later date although less than a quorum is present. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. Section 1.6 Vote Required to Take Action. if a quorum exists as to a ----------- ---------------------------- matter to be considered at a meeting of shareholders, action on such matter (other than the election of Directors) is approved if the votes properly cast favoring the action exceed the votes properly cast opposing the action, except as the Corporation's Articles of Incorporation or the Indiana Business Corporation Law require a greater number of affirmative votes. Directors shall be elected by a plurality of the votes properly cast. Section 1.7 Record Date. Only those persons shall be entitled to ----------- ----------- notice of or to vote, in person or by proxy, at any shareholders' meeting who appear as shareholders upon the books of the Corporation as of the record date for such meeting set by the Board of Directors, which date may not be earlier than the date seventy (70) days immediately preceding the meeting. In the absence of such determination, the record date shall be the thirtieth (30/th/) day immediately preceding the date of such meeting. Unless otherwise provided by the Board of Directors, shareholders shall be determined as of the close of business on the record date. Section 1.8 Proxies. A shareholder may vote his or her shares either ----------- ------- in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder (including authorizing the proxy to receive, or to waive, notice of any shareholders' meetings within the effective period of such proxy) by signing an appointment form, either personally or by the shareholder's attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent authorized to tabulate votes and is effective for eleven (11) months unless a shorter or longer period is expressly provided in the appointment form. The proxy's authority may be limited to a particular meeting or may be general and authorize the proxy to represent the shareholder at any meeting of shareholders held within the time provided in the appointment form. Subject to the Indiana Business Corporation Law and to any express limitation on the proxy's authority appearing on the face of the appointment form, the Corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment. 3 Section 1.9 Removal of Directors. Any one or more of the members of ----------- -------------------- the Board of Directors may be removed, with or without cause, only at a meeting of the shareholders called expressly for that purpose, by a vote of the holders of shares representing a majority of the votes then entitled to be cast at an election of Directors. Section 1.1 Written Consents. Any action required or permitted to be ----------- ---------------- taken at a shareholders' meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one (1) or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Action taken under this Section 1.10 is effective when the last shareholder signs the consent, unless the consent specifies a different prior or subsequent effective date, in which case the action is effective on or as of the specified date. Such consent shall have the same effect as a unanimous vote of all shareholders and may be described as such in any document. Section 1.1 Participation by Conference Telephone. The President may ----------- ------------------------------------- authorize any or all shareholders to participate in any shareholders' meeting by, or through the use of, any means of communication, such as conference telephone, by which all shareholders participating may simultaneously hear each other during the meeting. Any shareholder participating in a meeting by such means is deemed to be present in person for all purposes at the meeting. ARTICLE II Directors --------- Section 2.1 Number and Term The business and affairs of the ----------- --------------- Corporation shall be managed under the direction of a Board of Directors. The number of Directors comprising the Board of Directors is four. Each Director shall be elected for a term of office to expire at the annual meeting of shareholders next following his or her election. Despite the expiration of a Director's term, the Director shall continue to serve until his or her successor is elected and qualified, or until the earlier of his or her death, resignation, disqualification or removal, or until there is a decrease in the number of Directors by action of the Board of Directors. Any vacancy occurring in the Board of Directors, 4 from whatever cause arising, shall be filled by selection of a successor by a majority vote of the remaining members of the Board of Directors (although less than a quorum); provided, however, that if such vacancy or vacancies leave the Board of Directors with no members or if the remaining members of the Board are unable to agree upon a successor or determine not to select a successor, such vacancy may be filled by a vote of the shareholders at a special meeting called for that purpose or at the next annual meeting of shareholders. The term of a Director elected or selected to fill a vacancy shall expire at the end of the term for which such Director's predecessor was elected. The Directors and each of them shall have no authority to bind the Corporation except when acting as a Board. Section 2.2 Quorum and Vote Required to Take Action. A majority of ----------- --------------------------------------- the whole Board of Directors shall be necessary to constitute a quorum for the transaction of any business, except the filling of vacancies. If a quorum is present when a vote is taken, the affirmative vote of a majority of the Directors present shall be the act of the Board of Directors, unless the act of a greater number is required by the Indiana Business Corporation Law, the Corporation's Articles of Incorporation or these By-Laws. Section 2.3 Annual and Regular Meetings. The Board of Directors ----------- --------------------------- shall meet annually, without notice, immediately following the annual meeting of the shareholders, for the purpose of transacting such business as properly may come before the meeting. Other regular meetings of the Board of Directors, in addition to said annual meeting, shall be held on such dates, at such times and at such places as shall be fixed by resolution adopted by the Board of Directors and specified in a notice of each such regular meeting, or otherwise communicated to the Directors. The Board of Directors may at any time alter the date for the next regular meeting of the Board of Directors. Section 2.4 Special Meetings. Special meetings of the Board of ----------- ---------------- Directors may be called by any member of the Board of Directors upon not less than twenty-four (24) hours' notice given to each Director of the date, time and place of the meeting, which notice need not specify the purpose or purposes of the special meeting. Such notice may be communicated in person (either in writing or orally), by telephone, telegraph, teletype or other form of wire or wireless communication, or by mail, and shall be effective at the earlier of the time of its receipt or, if mailed, five (5) days after its mailing. Notice of any meeting of the Board may be waived in writing at any time if the waiver is signed by the Director entitled to the notice and is 5 filed with the minutes or corporate records. A Director's attendance at or participation in a meeting waives any required notice to the Director of the meeting, unless the Director at the beginning of the meeting (or promptly upon the Director's arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. Section 2.5 Written Consents. Any action required or permitted to be ----------- ---------------- taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all members of the Board. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each Director, and included in the minutes or filed with the corporate records reflecting the action taken. Action taken under this Section 2.5 is effective ----------- when the last Director signs the consent, unless the consent specifies a different prior or subsequent effective date, in which cases the action is effective on or as of the specified date. A consent signed under this Section ------- 2.5 shall have the same effect as a unanimous vote of all members of the board - --- and may be described as such in any document. Section 2.6 Participation by Conference Telephone. The Board of ----------- ------------------------------------- Directors may permit any or all Directors to participate in a regular or special meeting by, or through the use of, any means of communication, such as conference telephone, by which all Directors participating may simultaneously hear each other during the meeting. A Director participating in a meeting by such means shall be deemed to be present in person at the meeting. Section 2.7 Committees. (a) The Board of Directors may create one ----------- ---------- (1) or more committees and appoint members of the Board of Directors to serve on them, by resolution of the Board of Directors adopted by a majority of all the Directors in office when the resolution is adopted. Each committee may have one (1) or more members, and all the members of a committee shall serve at the pleasure of the Board of Directors. (b) to the extent specified by the Board of Directors in the resolution creating a committee, each committee may exercise all of the authority of the Board of Directors; provided, however, that a committee may not: (1) authorize dividends or other distributions, except a committee (or an executive officer of the Corporation designated by the Board of Director) may authorize or approve a reacquisition of shares or other distribution if done according to a 6 formula or method, or within a range, prescribed by the Board of Directors; (2) approve or propose to shareholders action that is required to be approved by shareholders; (3) fill vacancies on the Board of Directors or on any of its committees; (4) except to the extent permitted by subdivision (7), amend the Corporation's Articles of Incorporation under IC 23-1-38-2; (5) adopt, amend, repeal, or waive provisions of these By-Laws; (6) approve a plan of merger not requiring shareholder approval; or (7) authorize or approve the issuance or sale or a contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except the Board of Directors may authorize a committee (or an executive officer of the Corporation designated by the Board of Directors) to take action described in this subdivision within limits prescribed by the Board of Directors. (c) Except to the extent inconsistent with the resolutions creating a committee, Sections 2.1 through 2.6 of these By-Laws, which govern meetings, action without meetings, notice and waiver of notice, quorum and voting requirements and telephone participation in meetings of the Board of Directors, apply to each committee and its members as well. Section 2.8 Compensation. The Board of Directors may fix the ----------- ------------ compensation of Directors. 7 ARTICLE III Officers -------- Section 3.1 Designation, Selection and Terms. The officers of the ----------- -------------------------------- Corporation shall consist of the President, the Secretary and the Treasurer. The Board of Directors may also elect such Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers or assistant officers as it may from time to time determine by resolution creating the office and defining the duties thereof. In addition, the President may, by a certificate of appointment creating the office and defining the duties thereof delivered to the Secretary for inclusion with the corporate records, from time to time create and appoint such assistant officers as the President deems desirable. The officers of the Corporation shall be elected by the Board of Directors (or in the case of assistant officers appointed by the President as provided above) and need not be selected from among the members of the Board of Directors. Any two (2) or more offices may be held by the same person. All officers shall serve at the pleasure of the Board of Directors and, with respect to the assistant officers appointed by the President, also at the pleasure of such officer. The election or appointment of an officer does not itself create contract rights. Section 3.2 Removal. The Board of Directors may remove any officer ----------- ------- at any time with or without cause. An assistant officer appointed by the President may also be removed at any time, with or without cause, by such officer. Vacancies in such offices, however occurring, may be filled by the Board of Directors at any meeting of the Board of Directors (or by appointment by the President, to the extent provided in Section 3.1 of these By-Laws). ----------- Section 3.3 President. The President shall exercise the powers and ----------- --------- perform the duties which ordinarily appertain to that office and shall manage and operate the business and affairs of the Corporation in conformity with the policies established by the Board of Directors, or as may be provided for in these By-Laws. Section 3.4 Vice Presidents. Each Vice President, if any, shall have ----------- --------------- such powers and perform such duties as the Board of Directors may, from time to time, prescribe and as the President may, from time to time, delegate to him or her. Section 3.5 Treasurer. The Treasurer shall perform all of the duties ----------- --------- customary to that office, including the duty of supervising the keeping of the records of the receipts and disbursements of the Corporation. The Treasurer shall submit to the Board of Directors at such times as the Board may require full statements 8 showing in detail the financial condition and affairs of the Corporation. The Treasurer shall submit to the Board of Directors at such times as the Board may require full statements showing in detail the financial condition and affairs of the Corporation. Section 3.6 Assistant Treasurer. In the absence or inability of the ----------- ------------------- Treasurer, the Assistant Treasurer, if any, shall perform only such duties as are specifically assigned to him or her, in writing, by the Board of Directors, the President, or the Treasurer. Section 3.7 Secretary. The Secretary shall be the custodian of the ----------- --------- books, papers and records of the Corporation and of its corporate seal, if any, and shall be responsible for seeing that the Corporation maintains the records required by the Indiana Business Corporation Law (other than accounting records) and that the Corporation files with the Indiana Secretary of State the annual report required by the Indiana Business Corporation Law. The Secretary shall be responsible for preparing minutes of the meetings of the shareholders and of the Board of Directors and for authenticating records of the Corporation, and shall perform all of the other duties usual in the office of Secretary of a corporation. Section 3.8 Assistant Secretary. In the absence or inability of the ----------- ------------------- Secretary, the Assistant Secretary, if any, shall perform only such duties as are provided herein or specifically assigned to him or her, in writing, by the Board of Directors, the President or the Secretary. Section 3.9 Salary. The Board of Directors may, at its discretion, ----------- ------ from time to time, fix the salary of any officer by resolution included in the minute book of the Corporation. ARTICLE IV Checks ------ All checks, drafts or other orders for payment of money shall be signed in the name of the Corporation by such officers or persons as shall be designated from time to time by resolution adopted by the Board of Directors and included in the minute book of the Corporation; and in the absence of such designation, such checks, drafts or other orders for payment shall be signed by either the President or the Treasurer. 9 ARTICLE V Loans ----- Such of the officers of the Corporation as shall be designated from time to time by any resolution adopted by the Board of Directors and included in the minute book, and in the absence of any such designation, the President of the Corporation shall have the power, with such limitations thereon as may be fixed by the Board of Directors, to borrow money in the Corporation's behalf, to establish credit, to discount bills and papers, to pledge collateral and to execute such notes, bonds, debentures or other evidences of indebtedness, and such mortgages, trust indentures and other instruments in connection therewith, as may be authorized from time to time by such Board of Directors. ARTICLE VI Execution of Documents ---------------------- The President may, in the Corporation's name, sign all deeds, leases, contracts or similar documents that may be authorized by the Board of Directors unless otherwise directed by the Board of Directors or otherwise provided herein or in the Corporation's Articles of Incorporation, or as otherwise required by law. ARTICLE VII Stock ----- Section 7.1 Execution. Certificates for shares of the capital stock ----------- --------- of the Corporation shall be signed by the President and the Secretary and the seal of the Corporation (or a facsimile thereof), if any, may be thereto affixed. Where any such certificate is also signed by a transfer agent or a registrar, or both, the signatures of the officers of the Corporation may be facsimiles. The Corporation may issue and deliver any such certificate notwithstanding that any such officer who shall have signed, or whose facsimile signature shall have been imprinted on, such certificate shall have ceased to be such officer. Section 7.2 Contents. Each certificate shall state on its face the ----------- -------- name of the Corporation and that it is organized under the laws of the State of Indiana, the name of the person to whom it is issued, the number and class of shares 10 that the certificate represents and such other information as may be required from time to time by resolution of the Board of Directors. Section 7.3 Transfers. Except as otherwise provided by law or by ----------- --------- resolution of the Board of Directors, transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof in person or by duly authorized attorney, on payment of all taxes thereon and surrender for cancellation of the certificate or certificates for such shares (except as hereinafter provided in the case of loss, destruction or mutilation of certificates) properly endorsed by the holder thereof or accompanied by the proper evidence of succession, assignment or authority to transfer, and delivered to the Secretary or Assistant Secretary, if any. Section 7.4 Stock Transfer Records. There shall be entered upon the ----------- ---------------------- stock records of the Corporation the number of each certificate issued, the name and address of the registered holder of such certificate, the number, kind and class of shares represented by such certificate, the date of issue, whether the shares are originally issued or transferred, the registered holder from whom transferred and such other information as is commonly required to be shown by such records. The stock records of the Corporation shall be kept at its principal office. Section 7.5 Loss, Destruction or Mutilation of Certificates. The ----------- ----------------------------------------------- holder of any of the capital stock of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of the certificate therefor, and the Board of Directors may, in its discretion, cause to be issued to him a new certificate or certificates of stock, upon the surrender of the mutilated certificate, or, in the case of loss or destruction, upon satisfactory proof of such loss or destruction. The Board of Directors may, in its discretion, require the holder of the lost or destroyed certificate or his or her legal representative to give the Corporation a bond in such sum and in such form, and with such surety or sureties as it may direct, to indemnify the Corporation, its transfer agents and registrars, if any, against any claim that may be made against them or any of them with respect to the capital stock represented by the certificate or certificates alleged to have been lost or destroyed, but the Board of Directors may, in its discretion, refuse to issue a new certificate or certificates, save upon the order of a court having jurisdiction in such matters. Section 7.6 Form of Certificates. The form of the certificates for ----------- -------------------- shares of the capital stock of the Corporation shall conform to the requirements of Section 7.2 of these By-Laws and be in such printed form as shall from time ----------- to time be approved by resolution of the Board of Directors. 11 ARTICLE VII Seal ---- The corporate seal of the Corporation shall, if the Corporation elects to have one, be in the form of a disc, with the name of the Corporation and "INDIANA" on the periphery thereof and the word "SEAL" in the center. ARTICLE IX Miscellaneous ------------- Section 9.1 Indiana Business Corporation Law. The provisions of the ----------- -------------------------------- Indiana Business Corporation Law, as amended, applicable to all matters relevant to, but not specifically covered by, these By-Laws are hereby, by reference, incorporated in and made a part of these By-Laws. Section 9.2 Fiscal year. The fiscal year of the Corporation shall ----------- ----------- end on the 30/th/ of November of each year. Section 9.3 Amendments. These By-Laws may be rescinded, changed or ----------- ---------- amended, and provisions hereof may be waived, at any meeting of the Board of Directors by the affirmative vote of a majority of the entire number of Directors at the time, except as otherwise required by the Corporation's Articles of Incorporation or by the Indiana Business Corporation Law. Section 9.4 Definition of Articles of Incorporation. The term ----------- --------------------------------------- "Articles of Incorporation" as used in these By-Laws means the Articles of Incorporation, the Amended or Restated Articles of Incorporation of the Corporation as from time to time are in effect. 12 EX-3.6 5 AMENDED AND RESTATED ARTICLES OF INC. Exhibit 3.6 ----------- ARTICLES OF AMENDMENT --------------------- TO THE DEPARTMENT OF STATE COMMONWEALTH OF PENNSYLVANIA In compliance with the requirements of Article VIII of the Business Corporation Law approved the 5/th/ day of May, 1933, P.L. 364, as amended, providing for amendments to the Articles of Incorporation of Pennsylvania corporations, WILLIAM M. WILSON'S SONS, INC., desiring to amend its Articles of Incorporation, hereby certifies under its corporate seal that: 1. The name of the corporation is WILLIAM M. WILSON'S SONS, INC. 2. The location of the corporation's registered office is 8/th/ Street and Franconia Avenue, Lansdale, Montgomery County, Pennsylvania. 3. The corporation was formed under the Act of May 5, 1933, P.L. 364, as amended. 4. The date of incorporation is July 30, 1945. 5. The following Amendments to the corporation's Articles of Incorporation authorizing the capital stock to be increased by 8,500 shares of Class A Preferred Stock and setting forth the Articles of Incorporation in their entirety were adopted by consents in writing signed by all the holders of Common Stock and all the holders of Preferred Stock, being all the shareholders entitled to vote thereon, which consents have been filed with the Secretary of the corporation. 6. At the time of the action of the shareholders 485 shares of Common Stock and 1105 shares of Preferred Stock of the corporation were issued and outstanding. 7. In the action taken by written consents of shareholders approving the said Amendments, 485 shares of Common Stock, as a class, and 1105 shares of Preferred Stock, as a class, were voted in favor of the adoption of the said Articles of Amendment and no shares of either class of stock were voted against such adoption. 8. The said Amendments, set forth in full, are as follows: RESOLVED, that the Articles of William M. Wilson's Sons, Inc. be and hereby are amended and restated in their entirety so as to read in full as follows: ARTICLES OF AMENDMENT --------------------- These Articles of Amendment set forth in their entirety the Articles of Incorporation of William M. Wilson's Sons, Inc. as the same shall exist upon the date these Articles of Amendment are approved and filed in the Department of State of the Commonwealth of Pennsylvania. ARTICLE 1 The name of the corporation is WILLIAM M. WILSON'S SONS, --------- INC. 2 ARTICLE 2 The location and post office address of the registered --------- office of this corporation is 8/th/ Street and Franconia Avenue, Lansdale, Montgomery County, Pennsylvania, 19446. ARTICLE 3 This corporation has been organized and is existing under --------- the Act of the General Assembly of Pennsylvania of May 5, 1933, P.L. 364, as amended. The purposes for which this corporation has been organized are: A. To buy, sell, manufacture, distribute, repair and lease equipment for the petroleum and chemical industries. B. To acquire, hold, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks, and trade names, relating to or useful in connection with any business of the corporation. C. To transact such other business as may be necessary or desirable in connection with the foregoing purposes. ARTICLE 4 The term of this corporation's existence is perpetual. --------- ARTICLE 5 The authorized capital stock of this corporation is --------- $1,010,500, divided into (A) 500 shares of Common Stock, par value $100.00 per share, (B) 1,105 shares of Preferred Stock, par value $100.00 per share, and (C) 8,500 shares of Class A Preferred Stock, par value $100.00 per share. The powers, preferences and rights of the shares of each class of this corporation's capital stock, and the qualifications, limitations and restrictions thereof, are as follows: A. Common Stock. ------------ 1. Each outstanding share of Common Stock of this corporation shall be entitled to one vote at all meetings of shareholders and as otherwise provided by law, and may be voted cumulatively at all elections of directors at which such shares are entitled to vote. The right of the holders of Common Stock to vote for the election or removal of directors shall be suspended upon the happening of any event described in Subsection C.9 of this Article 5 for such duration as is specified therein. 3 B. Preferred Stock. --------------- 1. Each share of Preferred Stock shall be entitled to cumulative dividends, as and when declared by the Board of Directors out of the surplus of the corporation available for dividends, at the rate of 5% of the par value per annum, before any dividends shall be paid upon the Class A Preferred Stock or upon the Common Stock. In addition thereto, each share of Preferred Stock shall be entitled to participate equally with each share of Common Stock in all dividends declared by the Board of Directors for any fiscal year after there has been paid (or provision made for payment) upon each share of Common Stock dividends for such year at the rate of 27 1/2% of the par value thereof; it being the intention hereof that the participating rights of the Preferred Stock shall afford return on investment, by way of dividends, equal to that received by the Common Stock after the Common Stock has received 27 1/2% of par value, subject to the right of Preferred Stock to a preference in cumulative dividends as above provided. 2. The corporation may at any time, or from time to time, as shall be permitted under the laws of the Commonwealth of Pennsylvania, redeem the whole or any part of the Preferred Stock at the par value thereof plus accumulated unpaid dividends to the date of redemption. At least thirty days notice of every redemption shall be given to the holders of record of the Preferred Stock to be redeemed, in such manner as shall be provided from time to time by resolution of the Board of Directors. If at any time the corporation shall determine to redeem less than the whole amount of the Preferred Stock then outstanding, the shares to be redeemed shall be ascertained in such equitable manner as shall be provided, from time to time, by the Board of Directors. The Board of Directors shall have full discretion to prescribe and regulate, from time to time, the procedure to be followed in and all details concerning the redemption of the Preferred Stock. If on or before the redemption date named in the notice of redemption the funds necessary for such redemption shall have been set aside by the corporation so as to be available for payment on demand to the holders of the Preferred Stock so called for redemption, then, notwithstanding that any certificate of the Preferred Stock so called for redemption shall not have been surrendered for cancellation, the right to dividends and all other rights in respect of such stock shall cease and determine from and after the date of redemption so designated, except only the right of the holder to receive the redemption price therefor but without interest. Certificates for shares redeemed shall be 4 surrendered to the corporation and the number of shares redeemed shall be cancelled. 3. Except as otherwise provided by law, no holder of Preferred Stock shall be entitled to cast any vote on account of ownership thereof or to receive notice of meetings of shareholders. 4. In the event of any liquidation, dissolution or winding up of the corporation, the assets available for distribution to shareholders shall be distributed first to the holders of Preferred Stock to the extent of the par value thereof plus unpaid dividends accumulated to the end of the calendar or fiscal year of the corporation immediately preceding the distribution or the first installment thereof before any sum shall be paid to, or assets distributed among, the holders of Class A Preferred Stock or the holders of Common Stock. C. Class A Preferred Stock. ----------------------- 1. The holders of record of each outstanding share of Class A Preferred Stock shall be entitled to receive out of the funds legally available for dividends, when and as declared by the Board of Directors, dividends in cash thereon at the rate of 5% of the par value thereof per annum, payable quarterly on the first day of January, April, July and October of each year, commencing April 1, 1966. All such dividends on the Class A Preferred Stock shall be cumulative so that, if for any quarterly period dividends at the rate of 5% per share per annum shall not have been declared and paid or set apart for payment on the Class A Preferred Stock outstanding, the deficiency shall be declared and paid or set apart for payment prior to the making of any dividend or other distribution on outstanding shares of Common Stock. Dividends on the Class A Preferred Stock shall accrue from the date of issue. 2. Anything in the foregoing Subsection C.1 to the contrary notwithstanding, the corporation shall be under no obligation to set apart or pay any dividends on Class A Preferred Stock prior to July 1, 1968. Dividends which, but for the provisions of Subsection C.1, would otherwise be payable before July 1, 1968 on each share of Class A Preferred Stock may be deferred by the corporation, at the option of the Board of Directors, and to the extent deferred shall accumulate during such period, and such dividends, hereafter called "accumulated deferred dividends," shall be payable in twenty 5 substantially equal quarterly installments to the holders of such shares beginning July 1, 1968. 3. Whenever but only when dividends, including the full accumulated deferred dividends for all past quarterly dividend periods, on all shares of Class A Preferred Stock at the time outstanding shall have been paid and the full dividend for the then current dividend period shall have been declared and a sum sufficient to pay same set apart therefor, then dividends may be declared and paid on the Common Stock out of funds available for dividends without the declaration or payment of any additional dividends on the Class A Preferred Stock. 4. Upon the dissolution or liquidation of the corporation or a sale of all of its assets, whether voluntary or involuntary, the holders of Class A Preferred Stock shall be paid in cash $100 per share plus an amount equal to all accrued and unpaid dividends thereon to the date of payment, including accumulated deferred dividends, whether or not such dividends shall have been earned or declared, and premium payable, if any; but no more, before any sum shall be paid to, or assets distributed among, the holders of Common Stock. Only after the holders of Class A Preferred Stock shall have been paid such amounts as they are entitled to receive may the remaining assets and funds of the corporation be paid to, or distributed among, the holders of Common Stock. In case the net assets of the corporation are insufficient to pay the holders of all outstanding shares of Class A Preferred Stock the full amount to which they are entitled, the entire net assets of the corporation shall be distributed ratably among the holders of all outstanding shares of Class A Preferred Stock. A consolidation or merger of the corporation with any other corporation or corporations shall not be deemed a dissolution or liquidation within the meaning of this Subsection C.4. 5. The corporation, at the option of its Board of Directors, may redeem at any time or from time to time all or any of the outstanding shares of Class A Preferred Stock upon payment in case of the redemption price of (i) the par value per share so to be redeemed, plus (ii) accrued dividends thereon to the date fixed for redemption, including all accumulated deferred dividends, whether or not same have been earned or declared, plus (iii) the following premium stated in percentage of par value: 6 If redeemed on or before January 1, 1967 ............... 5% or thereafter but on or before January 1, 1968 ......... 4% or thereafter but on or before January 1, 1969 ......... 3% or thereafter but on or before January 1, 1970 ......... 2% or thereafter but on or before January 1, 1971.......... 1% or thereafter .........................................none provided, however, that not less than thirty days prior to the date fixed for such redemption, written notice of the time and place thereof shall be mailed to the holders of record of the shares of Class A Preferred Stock so to be redeemed at their respective addresses as the same appear upon the books of the corporation. In case of redemption of less than all of the outstanding Class A Preferred Stock, the shares to be redeemed shall be chosen in such equitable manner as the Board of Directors may determine; provided, however, that at the option of any holder of Class A Preferred Stock called for redemption, the corporation shall redeem the entire amount of Class A Preferred Stock held by such holder. 6. Upon the death of any holder of Class A Preferred Stock the corporation shall upon the written request of the personal representative of such decedent redeem such number of shares of Class A Preferred Stock held by the decedent as may be necessary to pay estate, inheritance, legacy and succession taxes imposed because of the decedent's death and funeral and administration expenses incurred by the decedent's estate. Upon any such redemption, the redemption price shall not include the amount of premium specified in Subsection C.5, but shall otherwise be the redemption price stated therein. 7. At any time after notice of redemption has been given in the manner herein prescribed or, in the case of redemption of all the outstanding Class A Preferred Stock, after the corporation shall have delivered to any bank or trust company having its principal office in Philadelphia, Pennsylvania, and having capital and surplus of at least $5,000,000, an instrument in writing irrevocably authorizing such bank or trust company to give notice of redemption of Class A Preferred Stock in the name of the corporation and in the manner herein prescribed, the corporation may deposit the amount of the aggregate redemption price with any such bank or trust company named in such notice, in trust for the holders of the shares so to be redeemed, payable on the date fixed for redemption as aforesaid and in the amounts aforesaid to 7 the respective order of such holders on endorsement of their certificates to the corporation or otherwise, as may be required, and upon surrender of the certificates for such shares. Upon deposit of the aggregate redemption price as aforesaid or, if no such deposit be made, upon the date fixed for redemption (unless the corporation shall default in providing monies for payment of the redemption price as set forth in said notice) all dividends on the shares called for redemption shall cease to accrue and the holders thereof shall cease to accrue and the holders thereof shall cease to be shareholders with respect to said shares and shall be entitled only to receive the redemption price pursuant to notice as aforesaid, from such bank or trust company or from the corporation, without interest thereon, upon endorsement of certificates, if required, and upon the surrender of the certificates for such shares, and the corporation shall cancel the number of shares redeemed. Any moneys deposited for redemption and which shall remain unclaimed at the end of six years from the date fixed for redemption shall be repaid to the corporation upon its request, after which repayment the holders of such shares so called for redemption shall look only to the corporation for payment of the redemption price thereof. Any interest accrued on any funds so deposited shall belong to the corporation and shall be paid to it from time to time. 8. So long as any of the Class A Preferred Stock shall be outstanding, the corporation shall not, without the written consent or affirmative vote of the holders of at least 50% of the number of shares of Class A Preferred Stock at the time outstanding, such vote to be taken at a meeting duly called and held for that purpose: a. alter, change or repeal any of the provisions of the Articles of Incorporation or of any amendment thereto; or b. authorize or increase the authorized number of shares of any class of stock, or issue any shares of any class of stock, whether or not the same have any preference over the Class A Preferred Stock; or c. merge or consolidate with any other corporation, or sell, lease or convey all or substantially all of the property or the business of the corporation or sell or lease for a period longer than five years any of the real estate of the 8 corporation, or voluntarily dissolve, liquidate or wind up the corporation; or d. enter into loan agreements or incur debts for a term of longer than twelve months the aggregate principal amount of which shall exceed $190,000, at any one time outstanding. Upon any failure to comply with the provisions of this Subsection C.8, and upon the demand of any holders of Class A Preferred Stock, the par value of all outstanding shares of Class A Preferred Stock held by such holder, dividends accrued thereon, including accumulated deferred dividends, and premium, if any, shall become due and payable as a debt to such holder of the Class A Preferred Stock. 9. Holders of outstanding shares of Class A Preferred Stock shall have no right to vote such shares except (i) as provided by law (ii) as provided by Subsection C.8 above and (iii) as hereinafter stated. If any of the following events, hereinafter called "defaults", shall occur, to wit: a. dividends on the Class A Preferred Stock shall be in arrears and such arrears shall aggregate an amount equal to four quarterly dividends, which need not be consecutive; or b. the corporation shall during the period from and after July 1, 1968 to March 1, 1973 inclusive, default in the payment of any installment due with respect to accumulated deferred dividend; or c. the assets of the corporation shall at the end of any fiscal quarter be less than two times the corporation's liabilities; or d. the amount of the corporation's cash and receivables, the latter adjusted for bad debt loss, shall at the end of any fiscal quarter be less than the amount of the corporation's current liabilities; or 9 e. the amount of the corporation's unconsolidated net working capital shall at the end of any fiscal quarter be less than $790,000, the term "net working capital" to mean the excess of current assets of the corporation over its current liabilities, both to be determined as to classification and amount of items by reference to generally accepted accounting principles theretofore consistently applied to the corporation; or f. the corporation's net earnings in each of any two consecutive fiscal years, after deduction for all taxes, shall be less than two times the dividend requirements for such year and the redemption premiums if any, due on the Class A Preferred Stock in such year; then upon the request of the holders of not less than 10% of the shares of Class A Preferred Stock at the time outstanding filed in writing with the Secretary of the corporation, a special stockholders' meeting shall be called to be held within fifteen days after receipt of such request, at which meeting the holders of the outstanding shares of the Class A Preferred Stock, voting separately as a class, shall be entitled to elect all directors of the corporation, and the tenure of office of the then existing directors shall cease. Such voting rights of the holders of the Class A Preferred Stock shall continue until all dividends thereon which are unpaid and in arrears shall have been fully paid and the corporation shall have declared the dividend thereon for the then current period and set aside funds for the payment thereof, and until all due and unpaid installments of deferred accumulated dividends have been paid in full and the corporation shall have provided for the payment of the installment due for the then current period, and until any default with respect to paragraphs c. through f. of this Subsection C.9. shall have been cured, whereupon such voting rights shall cease, subject to being again revived from time to time upon the recurrence of any condition above described as giving rise thereto. 10. The corporation shall furnish to any holder of Class A Preferred Stock upon request as soon as available and in no event later than thirty days after the end of each fiscal quarter a balance sheet of the corporation as of the end of such period, setting forth in reasonable detail the financial condition of corporation, together with a statement of the earnings of the 10 corporation for such quarter, none of which need be audited, but which shall be certified by an authorized financial officer of the corporation. Such financial reports shall be accompanied by the certificate of such officer (i) setting forth a computation in reasonable detail of all ratios or financial requirements required to be maintained under the provisions of the foregoing Subsection C.9, and (ii) stating that to the best of such officer's knowledge and belief the corporations not in default in performance or observance of any of the terms or conditions of the foregoing Subsections C.8 or C.9, or if the corporation be in default, specifying the same. 11. As soon as available and in any event within ninety days after the end of a fiscal year the corporation will send to each holder of Class A Preferred Stock an auditor's report of the financial condition of the corporation, including balance sheets, profit and loss statement and reconciliation of surplus statement of the corporation for such year, setting forth in each case in comparative form corresponding figures from the proceeding annual audit, all in reasonable detail and certified by independent pubic accountants selected by the corporation. Such certificate shall include or be accompanied by the written statement of such accountants which shall (i) include a computation in reasonable detail of all ratios or financial requirements required to be maintained under the provisions of the forgoing Subsection C.9, and (ii) which shall state that in making the examination necessary to said certification they have obtained no knowledge of any default by the corporation in the performance or observance of any of the terms or conditions of the foregoing Subsection C.9, or if the accountants shall have obtained knowledge of any such default, they shall disclose such default in such statement. 12. A representative of the holders of at least 25% of the shares of outstanding Class A Preferred Stock may at such shareholders' expense inspect any of the properties, corporate books and financial records of the corporation and any subsidiary thereof and discuss the affairs, finances and accounts of such corporations with the principal officers at such times and as often as they may reasonably request. 13. Waiver by any holder of Class A Preferred Stock of his right to receive any dividend, or of his right to remove and elect directors upon the happening of any event described in Subsection C.9 above, or of his right to receive financial reports as provided in Subsections C.10 and C.11, shall not operate as a waiver of successive rights accruing to such holder. 11 IN WITNESS WHEREOF, the corporation has caused these Articles of Amendment to be signed by its President and its corporate seal, duly attested by its Secretary, to be hereunto affixed this 29th day of December, 1965. WILLIAM M. WILSON'S SONS, INC. By /s/ Ronald M. Wilson ------------------------------------------------- Ronald M. Wilson, President Corporate Seal Attest: /s/ Raymond C. Williamson - ----------------------------------------------- Raymond C. Williamson, Secretary Approved and filed in the Department of State on the 29th day of December, 1965. __________________________________ Secretary of the Commonwealth 12 EX-3.7 6 AMD. #1 TO AMENDED AND RESTATED ARTICLES OF INC. Exhibit 3.7 ------------ Commonwealth of Pennsylvania Department of State Corporation Bureau Articles of Amendment In compliance with the requirements of Article VIII of the Business Corporation Law approved the 5/th/ day of May, 1933, P.L. 364, as amended, the applicant desiring to amend its Articles hereby certifies, under its corporate seal that: 1. The name of the corporation is: William M. Wilson's Sons, Inc. 2. The location of its registered office is: 8/th/ and Franconia Avenue, Lansdale, Pennsylvania 19446 3. The corporation was formed under the Act of: May 5, 1933, P.L. 364, as amended 4. Its date of incorporation is: July 30, 1945 5. (Strike out (a) or (b) below, whichever is not applicable) (b) The amendment was adopted by a consent in writing, setting forth the action so taken, signed by all of the shareholders entitled to vote thereon and filed with the Secretary of the corporation. 6. At the time of the action of the shareholders: (a) The total number of shares outstanding was: 144 shares of Common Stock; 8,070 shares of Class A Preferred Stock and 412 shares of Preferred Stock (b) The number of shares entitled to vote was:* 144 shares of Common Stock; 8,070 shares of Class A Preferred Stock 7. In the action taken by the shareholders: (a) The number of shares voted in favor of the amendment was:** 144 shares of Common Stock; 8,070 shares of Class A Preferred Stock (b) The number of shares voted against the amendment was:** -0- * If the shares of any class were entitled to vote as a class, the number of shares of each class so entitled and the number of shares of all other classes entitled to vote should be set forth. ** If the shares of any class were entitled to vote as a class, the number of shares of such class and the number of shares of all other classes voted for and against such amendment respectively should be set forth. NOTE: If the effect of the amendment is to increase the authorized capital stock of the corporation, excise tax at the rate of 1/5 of 1% on the amount of increase will be due and payable with the filing of the amendment. NOTE: Filing fee - $30.00. (In addition to any amount of excise tax due and owing.) 8. The amendment adopted by the shareholders, set forth in full, is attached hereto as Exhibit A. IN TESTIMONY WHEREOF, the applicant has caused these Articles of Amendment to be signed by its President or Vice President and its corporate seal, duly attested by its Secretary or Treasurer, to be hereunto affixed this 2/nd/ day of February, 1970. William M. Wilson's Sons, Inc. -------------------------------------------- By: ---------------------------------------- (President) Attest: - -------------------------- (Secretary) Approved and filed in the Department of State on the 4/th/ day of February A.D. 1970. -------------------------------- Secretary of the Commonwealth 2 Exhibit A WILLIAM M. WILSON'S SONS, INC. ____________________________________________ RESOLUTION RELATING TO AMENDMENT OF ARTICLE 5/TH/ OF THE ARTICLES OF THE CORPORATION ____________________________________________ RESOLVED, that Article 5/th/ of the Articles of the Corporation be and hereby is amended so that it reads in its entirety as follows: ARTICLE 5/th/. The authorized capital stock of this corporation is -------------- $1,010,500, divided into (A) 500 shares of Common Stock, par value $100.00 per share, (B) 1,105 shares of Preferred Stock, par value $100.00 per share, and (C) 8,500 shares of Class A Preferred Stock, par value $100.00 per share. The powers, preferences and rights of the shares of each class of this corporation's capital stock, and the qualifications, limitations and restrictions thereof, are as follows: A. Common Stock. ------------ Each outstanding share of Common Stock of this corporation shall be entitled to one vote at all meetings of shareholders and as otherwise provided by law, and may be voted cumulatively at all elections of directors at which such shares are entitled to vote. The right of the holders of Common Stock to vote for the election or removal of directors shall be suspended upon the happening of any event described in Subsection C.9 of this Article 5/th/ for such duration as is specified therein. B. Preferred Stock. --------------- 1. Each share of Preferred Stock shall be entitled to cumulative dividends, as and when declared by the Board of Directors out of the surplus of the corporation available for dividends, at the rate of 5% of the par value per annum, 3 before any dividends shall be paid upon the Class A Preferred Stock or upon the Common Stock. In addition thereto, each share of Preferred Stock shall be entitled to participate equally with each share of Common Stock in all dividends declared by the Board of Directors for any fiscal year after there has been paid (or provision made for payment) upon each share of Common Stock dividends for such year at the rte of 27 1/2% of the par value thereof; it being the intention hereof that the participating rights of the Preferred Stock shall afford return on investment, by way of dividends, equal to theat received by the Common Stock after the Common Stock has received 27 1/2% of par value, subject to the right of Preferred Stock to a preference in cumulative dividends as above provided. 2. The corporation may at any time, or from time to time, as shall be permitted under the laws of the Commonwealth of Pennsylvania, redeem the whole or any part of the Preferred Stock at the par value thereof plus accumulated unpaid dividends to the date of redemption. At least thirty days' notice of every redemption shall be given to the holders of record of the Preferred Stock to be redeemed, in such manner as shall be provided from time to time by resolution of the Board of Directors. If at any time the corporation shall determine to redeem less than the whole amount of the Preferred Stock then outstanding, the shares to be redeemed shall be ascertained in such equitable manner as shall be provided, from time to time, by the Board of Directors. The Board of Directors shall have full discretion to prescribe and regulate, from time to time, the procedure to be followed in and all details concerning the redemption of the Preferred Stock. If on or before the redemption date named in the notice of redemption the funds necessary for such redemption shall have been set aside by the corporation so as to be available for payment on demand to the holders of the Preferred Stock so called for redemption, then, notwithstanding that any certificate of the Preferred Stock so called for redemption shall not have been surrendered for cancellation, the right to dividends and all other rights in respect of such stock shall cease and determine from and after the date of redemption so designated, except only the right of the holder to receive the redemption price therefor but without interest. Certificates for shares redeemed shall be surrendered to the corporation, and the number of shares redeemed shall be cancelled. 3. Except as otherwise provided by law, no holder of Preferred Stock shall be entitled to cast any vote on account of ownership thereof or to receive notice of meetings of shareholders. 4 4. In the event of any liquidation, dissolution or winding up of the corporation, the assets available for distribution to shareholders shall be distributed first to the holders of Preferred Stock to the extent of the par value thereof plus unpaid dividends accumulated to the end of the calendar or fiscal year of the corporation immediately preceding the distribution or the first installment thereof before any sum shall be paid to, or assets distributed among, the holders of Class A Preferred Stock or the holders of Common Stock. C. Class C Preferred Stock. ----------------------- 1. The holders of record or each outstanding share of Class A Preferred Stock shall be entitled to receive out of the funds legally available for dividends, when and as declared by the Board of Directors, dividends in cash thereon at the rate of 5% of the par value thereof per annum, payable quarterly on the first day of January, April, July and October of each year, commencing April 1, 1996. All such dividends on the Class A Preferred Stock shall be cumulative so that, if for any quarterly period dividends at the rate of 5% per share per annum shall not have been declared and paid or set apart for payment on the Class A Preferred Stock outstanding, the deficiency shall be declared and paid or set apart for payment prior to the making of any dividend or other distribution on outstanding shares of Common Stock. Dividends on the Class A Preferred Stock shall accrue from the date of issue. 2. Anything in the foregoing Subsection C.1 to the contrary notwithstanding, the corporation shall be under no obligation to set apart or pay any dividends on Class A Preferred Stock prior to July 1, 1968. Dividends which, but for the provisions of Subsection C.1 would otherwise be payable before July 1, 1968 on each share of Class A Preferred Stock may be deferred by the corporation, at the option of the Board of Directors, and to the extent deferred shall accumulate during such period, and such dividends, hereafter called "accumulated deferred dividends," shall be payable in twenty substantially equal quarterly installments to the holders of such shares beginning July 1, 1968. 3. Whenever but only when dividends, including the full accumulated deferred dividends for all past quarterly dividend periods, on all shares of Class A Preferred Stock at the time outstanding shall have been paid and the full dividend for the then current dividend period shall have been declared and a sum sufficient to py same set apart therefor, then dividends may be declared and paid on the Common 5 Stock out of funds available for dividends without the declaration or payment of any additional dividends on the Class A Preferred Stock. 4. Upon the dissolution or liquidation of the corporation or a sale of all of its assets, whether voluntary of involuntary, the holders of Class A Preferred Stock shall be paid in cash $100 per share plus an amount equal to all accrued and unpaid dividends thereon to the date of payment, including accumulated deferred dividends, whether or not such dividends shall have been earned or declared, and premium payable, if any, but no more, before any sum shall be paid to, or assets distributed among, the holders of Common Stock. Only after the holders of Class A Preferred Stock shall have been paid such amounts as they are entitled to receive may the remaining assets and funds for the corporation be paid to, or distributed among, the holders of Common Stock. In case the net assets of the corporation are insufficient to pay the holders of all outstanding shares of Class A Preferred Stock the full amount to which they are entitled, the entire net assets of the corporation shall be distributed ratably among the holders of all outstanding shares of Class A Preferred Stock. A consolidation or merger of the corporation with any other corporation or corporations shall not be deemed a dissolution or liquidation within the meaning of this Subsection C.4. 5. The corporation, at the option of its Board of Directors, may redeem at any time or from time to time all or any of the outstanding shares of Class A Preferred Stock upon payment in cash of the redemption price of (i) the par value per share so to be redeemed, plus (ii) accrued dividends thereon to the date fixed for redemption, including all accumulated deferred dividends, whether or not same have been earned or declared, plus (iii) the following premium stated in percentage of par value: If redeemed on or before January 1, 1967 ...................... 5% or thereafter but on or before January 1, 1968 ................ 4% or thereafter but on or before January 1, 1969 ................ 3% or thereafter but on or before January 1, 1970 ................ 2% or thereafter but on or before January 1, 1971 ................ 1% or thereafter ................................................ none provided, however, that not less than thirty days prior to the date fixed for such redemption, written notice of the time and place thereof shall be mailed to the holders of record of the shares of Class A Preferred Stock so to be redeemed at their respective addresses as the same appear upon the books of the corporation. In case 6 of redemption of less than all of the outstanding Class A Preferred Stock, the shares to be redeemed shall be chosen in such equitable manner as the Board of Directors may determine; provided, however, that at the option of any holder of Class A Preferred Stock called for redemption, the corporation shall redeem the entire amount of Class A Preferred Stock held by such holder. 6. Upon the death of any holder of Class A Preferred Stock the corporation shall upon the written request of the personal representative of such decedent redeem such number of shares of Class A Preferred Stock held by the decedent as may be necessary to pay estate, inheritance, legacy and succession taxes imposed because of the decedent's death and funeral and administration expenses incurred by the decedent's estate. Upon any such redemption, the redemption price shall not include the amount of premium specified in Subsection C.5 but shall otherwise be the redemption price stated therein. 7. At any time after notice of redemption has been given in the manner herein prescribed or, in the case of redemption of all the outstanding Class A Preferred Stock, after the corporation shall have delivered to any bank or trust company having its principal office in Philadelphia, Pennsylvania, and having capital and surplus of at least $5,000,000, an instrument in writing irrevocably authorizing such bank or trust company to give notice of redemption of Class A Preferred Stock in the name of the corporation and in the manner herein prescribed, the corporation may deposit the amount of the aggregate redemption price with any such bank or trust company named in such notice, in trust for the holders of the shares so to be redeemed, payable on the date fixed for redemption as aforesaid and in the amounts aforesaid to the respective order of such holders on endorsement of their certificates to the corporation or otherwise, as may be required, and upon surrender of the certificates for such shares. Upon deposit of the aggregate redemption price as aforesaid or, if no such deposit be made, upon the date fixed for redemption (unless the corporation shall default in providing monies for payment of the redemption price as set forth in said notice) all dividends on the shares called for redemption shall cease to accrue and the holders thereof shall cease to be shareholders with respect to said shares and shall be entitled only to receive the redemption price pursuant to notice as aforesaid, from such bank or trust company or from the corporation, without interest thereon, upon endorsement of certificates, if required, and upon the surrender of the certificates for such shares, and the corporation shall cancel the number of shares redeemed. Any moneys deposited for redemption and which shall remain unclaimed at the end of six years from the date fixed for redemption shall be repaid to the corporation upon its request, after which repayment the holders 7 of such shares so called for redemption shall look only to the corporation for payment of the redemption price thereof. Any interest accrued on any funds so deposited shall belong to the corporation and shall be paid to it from time to time. 8. So long as any of the Class A Preferred Stock shall be outstanding, the corporation shall not, without the written consent or affirmative vote of the holders of at least 50% of the number of shares of Class A Preferred Stock at the time outstanding, such vote to be taken at a meeting duly called and held for that purpose: (a) authorize or increase the authorized number of shares of any class of stock, or issue any shares of any class of stock, whether or not the same have any preference over the Class A Preferred Stock; or (b) merge or consolidate with any other corporation, or sell, lease or convey all or substantially all of the property or the business of the corporation or sell or lease for a period longer than five years any of the real estate of the corporation, or voluntarily dissolve, liquidate or wind up the corporation. Upon any failure to comply with the provisions of this Subsection C.8, and upon the demand of any holders of Class A Preferred Stock, the par value of all outstanding shares of Class A Preferred Stock held by such holder, dividends accrued thereon, including accumulated deferred dividends, and premium, if any, shall become due and payable as a debt to such holder of the Class A Preferred Stock. 9. Holders of outstanding shares of Class A Preferred Stock shall have no right to vote such shares except (i) as provided by law, (ii) as provided by Subsection C.8 above and (iii) as hereinafter stated. If any of the following events, hereinafter called "defaults," shall occur, to wit: (a) dividends on the Class A Preferred Stock shall be in arrears and such arrears shall aggregate an amount equal to four quarterly dividends, which need not be consecutive, or (b) the corporation shall, during the period from and after July 1, 1968 to March 1, 1973 inclusive, default in the payment of any installment due with respect to accumulated deferred dividend, 8 then upon the request of the holders of not less than 10% of the shares of Class A Preferred Stock at the time outstanding filed in writing with the Secretary of the corporation, a special stockholders' meeting shall be called to be held within fifteen days after receipt of such request, at which meeting the holders of the outstanding shares of the Class A Preferred Stock, voting separately as a class, shall be entitled to elect all directors of the corporation, and the tenure of office of the then existing directors shall cease. Such voting rights of the holders of the Class A Preferred Stock shall continue until all dividends thereon which are unpaid and in arrears shall have been fully paid and the corporation shall have declared the dividend thereon for the then current period and set aside funds for the payment thereof, and until all due and unpaid installments of deferred accumulated dividends have been paid in full and the corporation shall have provided for the payment of the installment due for the then current period, whereupon such voting rights shall cease, subject to being again revived from time to time upon the recurrence of any condition above described as giving rise thereto. 10. The corporation shall furnish to any holder of Class A Preferred Stock upon request as soon as available and in no event later than thirty days after the end of each fiscal quarter a balance sheet of the corporation as of the end of such period, setting forth in reasonable detail the financial condition or the corporation, together with a statement of the earnings of the corporation for such quarter, none of which need be audited, but which shall be certified by an authorized financial officer of the corporation. Such financial reports shall be accompanied by the certificate of such officer stating that to the best of such officer's knowledge and belief the corporation is not in default in performance or observance of any of the terms or conditions of the foregoing Subsection C.8 or C.9 or, if the corporation be in default, specifying the same. 11. As soon as available and in any event within ninety days after the end of a fiscal year the corporation will send to each holder of Class A Preferred Stock an auditor's report of the financial condition of the corporation, including balance sheets, profit and loss statement and reconciliation of surplus statement of the corporation for such year, setting forth in each case in comparative form corresponding figures from the preceding annual audit, all in reasonable detail and certified by independent public accountants selected by the corporation. Such certificate shall include or be accompanied by the written statement of such accountants which shall state that in making the examination necessary to said certification they have obtained no knowledge of any default by the corporation in the performance or observance of any of the terms or conditions of the foregoing Subsection 9 C.9, or if the accountants shall have obtained knowledge of any such default, they shall disclose such default in such statement. 12. A representative of the holders of at least 25% of the shares of outstanding Class A Preferred Stock may at such shareholders' expense inspect any of the properties, corporate books and financial records of the corporation and any subsidiary thereof and discuss the affairs, finances and accounts of such corporations with the principal officers at such times and as often as they may reasonably request. 13. Waiver by any holder of Class A Preferred Stock of his right to receive any dividend, or his right to remove and elect directors upon the happening of any event described in Subsection C.9 above, or of his right to receive financial reports as provided in Subsections C.10 and C.11, shall not operate as a waiver of successive rights accruing to such holder. 10 EX-3.8 7 AMD. #2 TO AMENDED AND RESTATED ARTICLES OF INC. Exhibit 3.8 ----------- Commonwealth of Pennsylvania Department of State Corporation Bureau Articles of Amendment In compliance with the requirements of Article VIII of the Business Corporation Law approved the 5/th/ day of May, 1933, P.L. 364, as amended, the applicant desiring to amend its Articles hereby certifies, under its corporate seal that: 1. The name of the corporation is: William M. Wilson's Sons, Inc. 2. The location of its registered office is: 8/th/ and Franconia Avenue, Lansdale, Pennsylvania 19446 3. The corporation was formed under the Act of: May 5, 1933, P.L. 364, as amended 4. Its date of incorporation is: July 30, 1945 5. (Strike out (a) or (b) below, whichever is not applicable) (b) The amendment was adopted by a consent in writing, setting forth the action so taken, signed by all of the shareholders entitled to vote thereon and filed with the Secretary of the corporation. 6. At the time of the action of the shareholders: (a) The total number of shares outstanding was: 144 shares of Common Stock; 5,758 shares of Class A Preferred Stock and 412 shares of Preferred Stock (b) The number of shares entitled to vote was:* 144 shares of Common Stock; 5,758 shares of Class A Preferred Stock 7. In the action taken by the shareholders: (a) The number of shares voted in favor of the amendment was:** 144 shares of Common Stock; 5,758 shares of Class A Preferred Stock (b) The number of shares voted against the amendment was:** -0- * If the shares of any class were entitled to vote as a class, the number of shares of each class so entitled and the number of shares of all other classes entitled to vote should be set forth. ** If the shares of any class were entitled to vote as a class, the number of shares of such class and the number of shares of all other classes voted for and against such amendment respectively should be set forth. NOTE: If the effect of the amendment is to increase the authorized capital stock of the corporation, excise tax at the rate of 1/5 of 1% on the amount of increase will be due and payable with the filing of the amendment. NOTE: Filing fee - $30.00. (In addition to any amount of excise tax due and owing.) 8. The amendment adopted by the shareholders, set forth in full, follows: RESOLVED, that Subsection C.6 of Article 5th of the Articles of the Corporation be and hereby is amended so that it reads in its entirety as follows: "6. At any time during a period of two years after the death of any holder of Class A Preferred Stock the corporation may redeem, and at any time after such period of two years has elapsed the corporation shall redeem, upon the written request of the personal representative of such decedent, such number of shares of Class A Preferred Stock held by the decedent as may be necessary to pay estate, inheritance, legacy and succession taxes imposed because of the decedent's death and funeral and administration expenses incurred by the decedent's estate. Upon any such redemption, the redemption price shall not included the amount of premium specified in Subsection C.5, but shall otherwise be the redemption price stated therein." 2 IN TESTIMONY WHEREOF, the applicant has caused these Articles of Amendment to be signed by its President or Vice President and its corporate seal, duly attested by its Secretary or Treasurer, to be hereunto affixed this 24th day of June, 1970. William M. Wilson's Sons, Inc. -------------------------------------------- By:_______________________________________________ (President) Attest: - ---------------------------------- (Secretary) Approved and filed in the Department of State on the 29th day of June, 1970. ---------------------------------- Secretary of the Commonwealth 3 EX-3.9 8 AMD. #2 TO AMENDED AND RESTATED ARTICLES OF INC. Exhibit 3.9 ----------- WILLIAM M. WILSON'S SONS, INC. UNANIMOUS CONSENT OF ALL DIRECTORS November 13, 1992 The undersigned, being all the Directors of WILLIAM M. WILSON'S SONS, INC., and being entitled to vote upon the resolution stated herein if the same had been submitted at a Board of Directors' Meeting duly called and held for the purpose of acting upon said resolution, do hereby consent that the resolution stated herein is adopted to the same extent and has the same force and effect as if adopted by unanimous vote at a Board of Directors' Meeting of said Corporation. RESOLVED, That the Articles of Incorporation be amended to change the name of the Corporation to Gasboy International, Inc. FURTHER RESOLVED, That the Officers of the Corporation are authorized to take all actions necessary and to execute the appropriate documents to change the name of the Corporation to Gasboy International, Inc. /s/ Jess B. Ford /s/ Raymond A. Geiger - ------------------------------------ ----------------------------- Jess B. Ford Raymond A. Geiger /s/ Douglas K. Pinner /s/ Raymond C. Williamson - ------------------------------------ ----------------------------- Douglas K. Pinner Raymond C. Williamson /s/ Stanley Wuic ----------------------------- Stanley Wuic Effective: November 13, 1992 EX-3.10 9 RESTATED BYLAWS OF GASBOY INTERNATIONAL, INC. Exhibit 3.10 ------------ RESTATED BYLAWS AS OF FEBRUARY 28, 1982 ARTICLE I - OFFICERS 1. The registered office of the corporation shall be at 8/th/ Street and Valley Forge Road, Landsdale, Montgomery County, Pennsylvania. 2. The corporation may also have offices at such other places as the Board of Directors may, from time to time, appoint or the business of the corporation may require. ARTICLE II - SEAL 1. The corporate seal shall have described thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Pennsylvania." ARTICLE III - SHAREHOLDERS' MEETING 1. Meetings of the shareholders shall be held at the office of the corporation at Lansdale, Montgomery County, Pennsylvania, or at such other place or places, either within or without the Commonwealth of Pennsylvania, as may, from time to time be selected. 2. The annual meeting of the shareholders shall be held on or before the end of April in each year, at such time as may be fixed in the call for such meeting, when they shall select a Board of Directors, and transact such other business as may properly be brought before the meeting. If the annual meeting shall not be called and held within six months after the designated time, any shareholder may call such meeting. 3. The presence, in person or by proxy, of the holders of a majority of the outstanding shares entitled to vote shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law, by Articles of Incorporation or by these Bylaws. If however, such quorum shall not be present or represented at any meeting of the shareholders, those entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite number of shares shall be present. In the case of any meeting called for the election of directors, adjournment or adjournments may be taken only from day to day until such directors have been elected, and those who attend the second of such adjourned meetings, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing directors. 4. At each meeting of the shareholders every shareholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing subscribed by such shareholder and delivered to the secretary at the meeting. No unrevoked proxy shall be valid after eleven months from the date of its execution, unless a longer time is expressly provided therein, but in no event shall a proxy, unless coupled with an interest, be voted on after three years from the date of its execution. In all elections for directors cumulative voting shall be allowed. Upon demand made by a shareholder at any election for directors before the voting begins, the election shall be by ballot. No share shall be voted at any meeting upon which any installment is due and unpaid. The original share ledger or transfer book or a 2 duplicate thereof kept in this Commonwealth shall be prima facie evidence of the right of the person named therein to vote thereon. 5. Written notice of the annual meeting shall be mailed to each shareholder entitled to vote thereat, at such address as appears on the books of the corporation, at least 10 days prior to the meeting. 6. In advance of any meeting of shareholders, the Board of Directors may appoint judges of election, who need not be shareholders, to act at such meeting or any adjournment thereof. If judges of election be not appointed, the chairman of any such meeting may and, on the request of any shareholder or his proxy, shall make such appointment at the meeting. The number of judges shall be one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares present and entitled to vote shall determine whether one or three judges are to be appointed. On request of the chairman of the meeting, or of any shareholder or his proxy, the judges shall make a report in writing of any challenge or question or matter determined by them and execute a certificate of any fact found by them. No person who is a candidate for office shall act as a judge. 7. Special meetings of the shareholders may be called at any time by the President, or the Board of Directors, or the holders of not less than one-fifth of all the shares outstanding and entitled to vote. At any time, upon written request of any person entitled to call a special meeting, it shall be the duty of the Secretary to call a special meeting of the shareholders, to be held at such time as the secretary may fix not less than ten nor more than sixty days after receipt of the request. 8. Business transacted at all special meetings shall be confined to objects stated in the call and matters germane thereto. 3 9. Written notice of a special meeting of shareholders stating the time and place and object thereof shall be mailed, postage prepaid, to each shareholder entitled to vote thereat at such address as appears on the books of the corporation, at least 10 days before such meeting, unless a greater period of notice is required by statute in a particular case. 10. The officer or agent having charge of the transfer books shall make, at least five days before each meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, with the address of and the number of shares held by each, which list shall be kept on file at the registered office of the corporation, and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share ledger or transfer book, or a duplicate thereof kept in this Commonwealth, shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book, or to vote in person or by proxy, at any meeting of shareholders. ARTICLE IV - DIRECTORS 1. The business of this corporation shall be managed by its Board of Directors which shall be comprised of a minimum of 5 directors in number and a maximum of 7 directors in number, who need not be residents of this Commonwealth or shareholders in the corporation. They shall be elected by the shareholders, at the annual meeting of shareholders of the corporation, and each director shall be 4 elected for a term of one year, and until his successor shall be elected and shall qualify. 2. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles or by these Bylaws directed or required to be exercised or done by the shareholders. 3. The meetings of the Board of Directors may be held at such place within the Commonwealth, or elsewhere, as a majority of the directors may from time to time appoint, or as may be designated in the notice calling the meeting. 4. Each newly elected Board may meet at such place and time as shall be fixed by the shareholders at the meeting at which such directors are elected, and no notice shall be necessary to the newly elected directors in order legally to constitute the meeting, or they may meet at such place and time as may be fixed by the consent in writing of all the directors. 5. In lieu of or in addition to the meeting referred to in section 4, a regular meeting of the newly elected Board shall be held during their terms of office at the call of the President, at the registered office of the company, or at such other time and places as shall be determined by the Board. 6. Special meetings of the Board may be called by the President on 10 days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of two directors. 7. A majority of the directors in office shall be necessary to constitute a quorum for the transaction of business and the acts of a majority of the directors 5 present at a meeting at which a quorum is present shall be the acts of the Board of Directors. If all the directors shall severally and collectively consent in writing to any action to be taken by the corporation, such action shall be as valid corporate action as though it had been authorized at a meeting of the Board of Directors. 8. Directors as such shall not receive any stated salary for their services, but by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board, provided, that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. ARTICLE V - OFFICERS 1. The executive officers of the corporation shall be chosen by the directors and shall be a President, Secretary, and Treasurer. The Board of Directors may also choose a Vice President and such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall have such authority and shall perform such duties as from time to time shall be prescribed by the Board. Any two or more offices may be held by the same person, except the offices of President and Secretary. It shall not be necessary for the officers to be directors. 2. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. 3. The officers of the corporation shall hold office for one year and until their successors are chosen and have qualified. Any officer elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in their judgment the best interests of the corporation will be served thereby. 6 4. The President shall be the chief executive officer of the corporation; he shall preside at all meetings of the shareholders and directors; he shall have general and active management of the business of the corporation, shall see that all orders and resolutions of the board are carried into effect, subject, however, to the right of the directors to delegate any specific powers, except such as may be by statute exclusively conferred on the President, to any other officer or officers of the corporation. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation. He shall be ex officio a member of all committees, and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. 5. The Secretary or Assistant Secretary shall attend all sessions of the Board and all meetings of the shareholders and act as clerk thereof and record all the votes of the corporation and the minutes of all its transactions in a book to be kept for this purpose; and shall perform like duties for all committees of the Board of Directors when required. He shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, and under whose supervision he shall be. He shall keep in safe custody the corporate seal of the corporation and, when authorized by the Board, affix the same to any instrument requiring it. 6. The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, and shall keep the moneys of the corporation in a separate account to the credit of the corporation. He shall disburse the funds of the corporation as may be ordered by the Board, taking proper vouchers for such disbursements, 7 and shall render to the President and Directors, at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation. ARTICLE VI - VACANCIES 1. If the office of any officer or agent, one or more, becomes vacant for any reason, the Board of Directors may choose a successor or successors, who shall hold office for the unexpired term in respect of which such vacancy occurred. 2. Vacancies in the Board of Directors shall be filled by a majority of the remaining members of the Board though less than a quorum, and each person so elected shall be a director until his successor is elected by the shareholders, who may make such election at the next annual meeting of the shareholders or at any special meeting duly called for that purpose and held prior thereto. ARTICLE VII - CORPORATE RECORDS 1. There shall be kept at the registered office of the corporation an original or duplicate record of the proceedings of the shareholders and of the directors, and the original or a copy of its bylaws, including all amendments or alterations thereto to date, certified by the Secretary of the corporation. An original or duplicate share register shall also be kept at the registered office, or at the office of a transfer agent or registrar within this Commonwealth, giving the names of the shareholders in alphabetical order, and showing their respective addresses, the number and classes of shares held by each, the number and date of certificates issued for the shares and the number and date of cancellation of every certificate surrendered for cancellation. 8 2. Every shareholder shall have a right to examine, in person or by agent or attorney, at any reasonable time or times, for any reasonable purpose, the share register, books or records of account, and records of the proceedings of the shareholders and directors, and make extracts therefrom. ARTICLE VII - SHARE CERTIFICATES, DIVIDENDS, ETC. 1. The share certificates of the corporation shall be numbered and registered in the share ledger and transfer books of the corporation, as they are issued. They shall be signed by the President and the Secretary and shall bear the corporate seal. 2. Transfers of shares shall be made on the books of the corporation upon surrender of the certificates therefor, endorsed by the person named in the certificate or by attorney, lawfully confirmed in writing. No transfer shall be made inconsistent with the provisions of Article 8 of the Uniform Commercial Code (Act No. 1) of the Commonwealth as amended from time to time. 3. The Board of Directors may fix a time not more than fifty days prior to the date of any meeting of shareholders, or the date fixed for the payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of shares will be made or go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at any such meeting, or entitled to receive payment of any such dividend or distribution or to receive any such allotment or rights, to exercise the rights in respect of any change, conversion, or exchange of shares. In such case, only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting, or to receive payment of such dividend or to receive such 9 allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after any record date fixed as aforesaid. The Board of Directors may close the books of the corporation against transfers of shares during the whole or any part of such period, and in such case written or printed notice thereof shall be mailed at least ten days before the closing thereof to each shareholder of record at the address appearing on the records of the corporation or supplied by him to the corporation for the purpose of notice. While the stock transfer books of the corporation are closed, no transfer of shares shall be made thereon. If no record date is fixed for the determination of shareholders entitled to receive notice of, or vote at, a shareholders' meeting, transferees of shares which are transferred on the books of the corporation within ten days next preceding the date of such meeting shall not be entitled to notice of or vote at such meeting. 4. Any person claiming a share certificate to be lost or destroyed and make an affidavit or affirmation of that fact and advertise the same in such manner as the Board of Directors may require, and shall give the corporation a bond of indemnity with sufficient surety to protect the corporation or any person injured by the issue of a new certificate from any liability or expense which it or they may incur by reason of the original certificate remaining outstanding, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed, but always subject to the approval of the Board of Directors. 5. Subject to the provisions of the statutes, the Board of Directors may declare and pay dividends upon the outstanding shares of the corporation out of its surplus from time to time and to such extent as they deem advisable, in cash, property or in shares of the corporation. 10 6. Before payment of any dividend there may be set aside out of the net profits of the corporation such sum or sums as the directors, from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interests of the corporation, and the directors may abolish any such reserve in the manner in which it was created. ARTICLE IX - MISCELLANEOUS PROVISIONS 1. All checks or demands for money and notes of the corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate. 2. The fiscal year shall end the 30/th/ day of November in each year or at the end of any other month as the directors may from time to time determine. 3. Whenever written notice is required to be given to any person, it may be given to such person, either personally or by sending a copy thereof through the mail, or by telegram, charges prepaid, to his address appearing on the books of the corporation, or supplied by him to the corporation for the purpose of notice. If the notice is sent by mail or by telegraph, it shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a telegraph office for transmission to such person. Such notice shall specify the place, day and hour of the meeting and, in the case of a special meeting, the general nature of the business to be transacted. 11 4. Whenever any written notice is required by statute, or by the Articles or Bylaws of this corporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Except in the case of a special meeting, neither the business to be transacted at nor the purpose of the meeting need be specified in the waiver of notice of such meeting. Attendance of a person, either in person or by proxy, at any meeting shall constitute a waiver of notice of such meeting, except where a person attends a meeting for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened. ARTICLE X - ANNUAL STATEMENT 1. The President and Board of Directors shall present at each annual meeting a full and complete statement of the business and affairs of the corporation for the preceding year. Such statement shall be prepared and presented in whatever manner the Board of Directors shall deem advisable and need not be verified by a certified public accountant. ARTICLE XI - AMENDMENTS 1. These Bylaws may be altered, amended or repealed by the affirmative vote of a majority of the shares issued and outstanding and entitled to vote thereat at any regular or special meeting of the shareholders if notice of proposed alteration, amendment or repeal be contained in the notice of the meeting, or by unanimous written consent of all the shareholders. 12 EX-3.11 10 ARTICLES OF INC. OF MANAGEMENT SOLUTIONS OF COLO. Exhibit 3.11 ------------ ARTICLES OF INCORPORATION OF MANAGEMENT SOLUTIONS OF COLORADO, INC. The undersigned natural person of the age of twenty-one years or more does hereby act as an incorporator of Management Solutions of Colorado, Inc., by signing, verifying and delivering in duplicate to the Secretary of State of the State of Colorado these articles of incorporation for such corporation. ARTICLE 1 --------- The name of the corporation is: Management Solutions of Colorado, Inc. ARTICLE 11 ---------- The period of duration of the corporation is perpetual. ARTICLE III ----------- The purposes for which the corporation is organized are: 1. To provide management services and consultation to various businesses. 2. To engage in all lawful businesses and occupations permitted by law and for which a corporation may be organized under the Colorado Corporation Code. 3. To do all things necessary or convenient in connection with implementing and carrying out the aforementioned purposes of the corporation. ARTICLE IV ---------- The corporation shall have each and every one of the corporate powers conferred as general powers upon each corporation incorporated under the Colorado Corporation Code as said Code exists on the date of issuance of the Certificate of Incorporation of the corporation and such additional or broader powers as may be subsequently granted by law to corporations organized under the Colorado Corporation Code. ARTICLE V --------- The aggregate number of shares which the corporation shall have power to create and issue shall be 1,000,000 shares. Such shares shall consist of one class only and said class of shares is designated as the common stock of the corporation. All shares shall have no par value. ARTICLE VI ---------- Cumulative voting shall not be allowed in the election of directors. ARTICLE VII ----------- Shareholders shall have no pre-emptive right to acquire unissued or treasury shares of the corporation or securities convertible into shares. ARTICLE VIII ------------ The address of the initial registered office of the corporation is 6500 South Quebec, Suite 250, Englewood, Colorado 80111. The name of the initial registered agent at such address is Arthur B. Walsh. ARTICLE IX ---------- The affairs of the corporation shall be governed by a Board of Directors who shall be elected in accordance with the Bylaws of the Corporation. The number of directors shall be not less than three (3) nor more than nine (9) as fixed by or in the manner provided in the Bylaws; provided, however, that there need be only as many directors as there are shareholders in the event that the outstanding shares are held of record by fewer than three (3) shareholders. The names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their successors be elected and qualify are: Arthur Elston, 16418 B East Rice Place, Aurora, Colorado 80015 William McCabe, 3945 East Warren Avenue, Denver, Colorado 80210 Ronald H. Elston, 600 Paseo Del Curso, Green Valley, Arizona. 2 ARTICLE X --------- The name and the address of the incorporator is: Arthur B. Walsh, 6500 South Quebec, Suite 250, Englewood, Colorado 80111. ARTICLE XI ---------- The Corporation may indemnify any director or officer or former director or officer of the Corporation, or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, and the personal representatives of all such persons, against expenses actually and necessarily incurred by him or her in connection with the defense of any claim or demand against him or her or any action, suit or proceeding in which he or she is made a party by reason of having been or being such a director or officer, and against any judgment for damages rendered therein, except in relation to matters as to which he or she shall be adjudged in such action, suit or proceeding to be liable for willful negligence or intentional misconduct in the performance of duty. In the event of a settlement of any such action, suit or proceeding, or of any claim or demand which was precursor of any such action, suit or proceeding, indemnification shall be provided but only in relation to matters as to which and then only if and when the Corporation shall be advised by counsel that the person to be indemnified was not guilty of willful negligence or intentional misconduct in the performance of duty. 3 WITNESS the signature of the incorporator affixed at Englewood, Colorado, this 4th day of December, 1985. /s/ Arthur B. Walsh -------------------------------- Arthur B. Walsh STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) Arthur B. Walsh, being sworn severally, deposes and says that he is the person who executed the foregoing instrument, which are the Articles of Incorporation for Management Solutions of Colorado, Inc., that he has read the same and knows the contents therein, and that the matters stated therein are true to his own best knowledge. /s/ Arthur B. Walsh -------------------------------- Arthur B. Walsh SUBSCRIBED AND SWORN to before me this 4th day of December, 1985. Witness my hand and official seal. My commission expires: -------------------------------- Notary Public 4 EX-3.12 11 ARTICLES OF AMENDMENT TO THE ARTICLES OF INC. Exhibit 3.12 ------------ ARTICLES OF AMENDMENT to the ARTICLES OF INCORPORATION Pursuant to the provisions of the Colorado Corporation Code, the undersigned corporation adopts the following Articles of Amendment to the Articles of Incorporation: FIRST: The name of the corporation is (note 1) Management Solutions of Colorado, Inc.. SECOND: The following amendment to the Articles of Incorporation was adopted on December 4, 1987, as permitted by the Colorado Corporation Code, in the manner marked with an X below: X Such amendment was adopted by the board of directors where no -------- shares have been issued. Such amendment was adopted by a vote of the shareholders. The -------- number of shares voted for the amendment was sufficient for approval. The name of the corporation will be changed from "Management Solutions of Colorado, Inc." to: Management Solutions, Inc. THIRD: The manner, if not set forth in such amendment, in which any exchange, reclassification, or cancellation of issued shares provided for in the amendment shall be effected as follows: FOURTH: The manner in which such amendment effects a change in the amount of stated capital, and the amount of stated capital as changed by such amendment, are as follows: Management Solutions of Colorado, Inc. By ------------------------------- and ------------------------------ --------------------------------- EX-3.13 12 BYLAWS OF MANAGEMENT SOLUTIONS, INC. Exhibit 3.13 ------------ BYLAWS OF MANAGEMENT SOLUTIONS, INC. ARTICLE I SHAREHOLDERS' MEETING Section 1. Annual Meeting. The annual meeting of the shareholders for the -------------- election of directors and the transaction of such other business as may properly come before it shall be held at the principal office of the Corporation or at such place within or without the State of Colorado as shall be set forth in the notice of meeting. The meeting shall be held on the last Monday in the month of December of each and every year, at 2:30 p.m. The Secretary shall give personally or by mail, not less than ten nor more than 50 days before the date of the meeting to each shareholder entitled to vote at such meeting, written notice stating the place, date, and hour of the meeting. If mailed, the notice shall be addressed to the shareholder at his address as it appears on the record of shareholders of the Corporation unless he shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to a different address, in which case it shall be mailed to the address designated in the request. Any notice of meetings may be waived by a shareholder by submitting a signed waiver either before or after the meeting, or by attendance at the meeting. Section 2. Special Meeting. Special meetings of shareholders, other than --------------- those regulated by statute, may be called at any time by a majority of the directors or the President, and must be called by the President upon written request of the holders of 10% of the outstanding shares entitled to vote at such meeting. Written notice of such meetings stating the place within or without the State of Colorado, the date and hour of the meeting, the purpose or purposes for which it is called, and the name of the person by whom or at whose director the meeting is called shall be given not less than ten nor more than 50 days before the date set for the meeting. The notice shall be given to each shareholder of record in the same manner as notice of the annual meeting. No business other than that specified in the notice of meeting shall be transacted at any such special meeting. Notice of special meeting may be waived by submitting a signed waiver or by attendance at the meeting. Section 3. Quorum. The presence, in person or by proxy, of the holders of a ------ majority of the outstanding shares entitled to vote thereat shall be necessary to constitute a quorum for the transaction of business at all meetings of shareholders. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting to a future date at which a quorum shall be present or represented. At such adjourned meeting, any business may be transacted which might have been transacted at the meeting as originally called. Section 4. Record Date. The directors may fix in advance a date not less ----------- than ten nor more than 50 days, prior to the date of any meeting of the shareholders or prior to the last day on which the consent or dissent of or action by the shareholders may be effectively expressed for any purpose without a meeting, as the record date for the determination of shareholders. Section 5. Voting. A shareholder entitled to vote at a meeting may vote at ------ such meeting in person or by proxy. Except as otherwise provided by law or the Certificate of Incorporation, every shareholder shall be entitled to one vote for each share standing in his name on the record of shareholders. Except as herein or in the Certificate of Incorporation otherwise provided, all corporate action shall be determined by vote of a majority of the votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon. Section 6. Proxies. Every proxy must be dated and signed by the ------- shareholder or by his attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date of its execution, unless otherwise provided therein. Every proxy shall be revocable at the pleasure of the shareholder executing it. Section 7. Consents. Whenever by a provision of statute or of the -------- Certificate of Incorporation or by these Bylaws the vote of shareholders is required or permitted to be taken at a meeting thereof in connection with any corporate action, the meeting and the vote of shareholders may be dispensed with, if all the shareholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken. ARTICLE II DIRECTORS Section 1. Number and Qualifications. The entire Board of Directors shall ------------------------- consist of three persons all of whom shall be of full age unless the shares of the 2 Corporation are owned by less than three shareholders, in which instance the number of directors shall equal the number of its shareholders. The directors need not be shareholders of the Corporation. The number of directors may be changed by an amendment to the Bylaws, adopted by the shareholders. Section 2. Manner of Election. The directors shall be elected at the annual ------------------ meeting of shareholders by a plurality vote. Section 3. Term of Office. The term of office of each director shall be -------------- until the next annual meeting of the shareholders and until his successor has been duly elected and has qualified. Section 4. Duties and Powers. The Board of Directors shall have control and ----------------- management of the affairs and business of the Corporation. The directors shall in all cases act as a Board, regularly convened, and, in the transaction of business the act of a majority present at a meeting except as otherwise provided by law or the Certificate of Incorporation shall be the act of the Board, provided a quorum is present. The directors may adopt such rules and regulations for the conduct of their meetings and the management of the Corporation as they may deem proper, not inconsistent with law or these Bylaws. Section 5. Meetings. The Board of Directors shall meet for the election or -------- appointment of officers and for the transaction of any other business as soon as practicable after the adjournment of the annual meeting of the shareholders, and other regular meetings of the Board shall be held at such times as the Board may from time to time determine. Special meetings of the Board of Directors may be called by the President at any time; and he must, upon the written request of any two directors, call a special meeting to be held not more than seven days after the receipt of such request. Section 6. Notice of Meetings. No notice need be given of any regular ------------------ meeting of the Board. Notice of special meetings shall be served upon each director in person or by mail addressed to him at his last-known post office address, at least two days prior to the date of such meeting, specifying the time and place of the meeting and the business to be transacted thereat. At any meeting at which all of the directors shall be present, although held without notice, any business may be transacted which might have been transacted if the meeting had been duly called. Section 7. Place of Meeting. The Board of Directors may hold its meeting ---------------- either within or without the State of Colorado, at such place as may be designated in the notice of any such meeting. 3 Section 8. Quorum. At any meeting of the Board of Directors, the presence ------ of a majority of the Board shall be necessary to constitute a quorum for the transaction of business. However, should a quorum not be present, a lesser number may adjourn the meeting to some further time, not more than seven days later. Section 9. Voting. At all meetings of the Board of Directors, each director ------ shall have one vote irrespective of the number of shares that he may hold. Section 10. Compensation. Each director shall be entitled to receive for ------------ attendance at each meeting of the Board or of any duly constituted committee thereof which he attends such fee as is fixed by the Board. Section 11. Vacancies. Any vacancy occurring in the Board of Directors by --------- death, resignation, or otherwise shall be filled promptly by a majority vote of the remaining directors at a special meeting which shall be called for that purpose within 30 days after the occurrence of the vacancy. The director thus chosen shall hold office for the unexpired term of his predecessor and the election and qualification of his successor. Section 12. Removal of Directors. Any director may be removed either with -------------------- or without cause, at any time, by a vote of the shareholders holding a majority of the shares then issued and outstanding and who were entitled to vote for the election of the director sought to be removed, at any special meeting called for that purpose, or at the annual meeting. Except as otherwise prescribed by statute, a director may be removed for cause by vote of a majority of the entire Board. Section 13. Resignation. Any director may resign his office at any time, ----------- such resignation to be made in writing and to take effect immediately without acceptance. ARTICLE III OFFICERS Section 1. Officers and Qualifications. The officers of the Corporation --------------------------- shall be a President, and a Secretary/Treasurer, and such other officers as the Board of Directors may determine. Any two offices, except the offices of President and Secretary, may be held by the same person. Section 2. Election. All officers of the Corporation shall be elected -------- annually by the Board of Directors at its meeting held immediately after the annual meeting of share holders. The initial officers to serve until the first annual meeting may be elected at the organization meeting. 4 Section 3. Term of Office. All officers shall hold office until their -------------- successors have been duly elected and have qualified, or until removed as hereinafter provided. Section 4. Removal of Officers. Any officer may be removed either with or ------------------- without cause by the vote of a majority of the Board of Directors. Section 5. Duties of Officers. The duties and powers of the officers of the ------------------ Corporation shall be as follows and as shall hereafter be set by resolution of the Board of Directors: President A. The President shall preside at all meetings of the Board of Directors. He shall also preside at all meetings of the shareholders. B. He shall present at each annual meeting of the shareholders and directors a report of the condition of the business of the Corporation. C. He shall cause to be called regular and special meetings of the shareholders and directors in accordance with the requirements of the statute and of these Bylaws. D. He shall appoint, discharge, and fix the compensation of all employees and agents of the Corporation other than the duly elected officers, subject to the approval of the Board of Directors. E. He shall sign and execute all contracts in the name of the Corporation, and all notes, drafts, or other orders for the payment of money. F. He shall sign all certificates representing shares. G. He shall cause all books, reports, statements, and certificates to be properly kept and filed as required by law. H. He shall enforce these Bylaws and perform all the duties incident to his office and which are required by law, and, generally, he shall supervise and control the business and affairs of the Corporation. Secretary/Treasurer A. The Secretary shall keep the minutes of the meetings of the Board of Directors and of the shareholders in appropriate books. 5 B. He shall attend to the giving of notice of special meetings of the Board of Directors and of all the meetings of the shareholders of the Corporation. C. He shall be custodian of the records and seal of the Corporation and shall affix the seal to the certificates representing shares and other corporate papers when required. D. He shall keep at the principal office of the Corporation a book or record containing the names, alphabetically arranged, of all persons who are shareholders of the Corporation, showing their places of residence, the number and class of shares held by them respectively, and the dates when they respectively became the owners of record thereof. He shall keep such book or record and the minutes of the proceedings of its shareholders open daily during the usual business hours, for inspection, within the limits prescribed by Law, by any person duly authorized to inspect such records. At the request of the person entitled to an inspection thereof, he shall prepare and make available a current list of the officers and directors of the Corporation and their current resident addresses. E. He shall sign all certificates representing shares and affix the corporate seal thereto. F. He shall attend to all correspondence and present to the Board of Directors at its meetings all official communications received by him. G. He shall perform all the duties incident to the office of Secretary of the Corporation. H. The Treasurer shall have the care and custody of and be responsible for all the funds and securities of the Corporation, and shall deposit such funds and securities in the name of the Corporation in such banks or safe deposit companies as the Board of Directors may designate. I. He shall make, sign, and endorse in the name of the Corporation all checks, drafts, notes, and other orders for the payment of money, and pay out and dispose of such under the direction of the President or the Board of Directors. J. He shall keep at the principal office of the Corporation accurate books of account of all its business and transactions and shall at all reasonable hours exhibit books and accounts to any director upon application at the office of the Corporation during business hours. 6 K. He shall render a report of the condition of the finances of the Corporation at each regular meeting of the Board of Directors and at such other times as shall be required by him, and he shall make a full financial report at the annual meeting of the shareholders. L. He shall further perform all duties incident to the office of Treasurer of the Corporation. M. If required by the Board of Directors, he shall give such bond as it shall determine appropriate for the faithful performance of his duties. Other Officers Other officers shall perform such duties and have such powers as may be assigned to them by the Board of Directors. Section 6. Vacancies. All vacancies in any office shall be filled promptly --------- by the Board of Directors, either at regular meetings or at a meeting specially called for that purpose. Section 7. Compensation of Officers. The officers shall receive such salary ------------------------ or compensation as may be fixed by the Board of Directors. ARTICLE IV Seal Section 1. Seal. The seal of the Corporation shall be as follows: ---- [Affix an imprint of the corporation seal] ARTICLE V Shares Section 1. Certificates. The shares of the Corporation shall be represented ------------ by certificates prepared by the Board of Directors and signed by the President or the Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation or a facsimile. The certificates shall be numbered consecutively and in the order in which they are issued; they shall be bound in a book and shall be issued in consecutive order therefrom, and in the margin thereof shall be entered the name of the person to whom the shares represented by each such certificate are issued, the number and class or series of such 7 shares, and the date of issue. Each certificate shall state the registered holder's name, the number and class of shares represented thereby, the date of issue, the par value of such shares, or that they are without par value. Section 2. Subscriptions. Subscriptions to the share shall be paid at such ------------- times and in such installments as the Board of Directors may determine. If default shall be made in the payment of any installment as required by such resolution, the Board may declare the shares and all previous payments thereon forfeited for the use of the Corporation, in the manner prescribed by statute. Section 3. Transfer of Shares. The shares of the Corporation shall be ------------------ assignable and transferable only on the books and records of the Corporation by the registered owner, or by his duly authorized attorney, upon surrender of the certificate duly and properly endorsed with proper evidence of authority to transfer. The Corporation shall issue a new certificate for the shares surrendered to the person or persons entitled hereto. Section 4. Return Certificates. All certificates for shares changed or ------------------- returned to the Corporation for transfer shall be marked by the Secretary "Cancelled," with the date of cancellation, and the transaction shall be immediately recorded in the certificate book opposite the memorandum of their issue. The returned certificate may be inserted in the certificate book. ARTICLE VI DIVIDENDS Section 1. Declaration of Dividends. The Board of Directors at any regular ------------------------ or special meeting may declare dividends payable out of the surplus of the Corporation, whenever in the exercise of its discretion it may deem such declaration advisable. Such dividends may be paid in cash, property, or shares of the Corporation. ARTICLE VII BILLS, NOTES, ETC. Section 1. Execution. All bills payable, notes, checks, drafts, warrants, --------- or other negotiable instruments of the Corporation shall be made in the name of the Corporation and shall be signed by such officer or officers as the Board of Directors shall from time to time by resolution direct. No officer or agent of the Corporation, either singly or jointly with others, shall have the power to make any bill payable, note, check, draft, or warrant, or other negotiable instrument, or endorse the same in the name of the Corporation, or contract 8 or cause to be contracted any debt or liability in the name and on behalf of the Corporation except as herein expressly prescribed and provided. ARTICLE VIII OFFICES The principal office of the Corporation shall be located in the City of Aurora, County of Arapaho, State of Colorado. The Board of Directors may change the location of the principal office of the Corporation and may, from time to time, designate other offices within or without the state as the business of the Corporation may require. ARTICLE IX AMENDMENTS Section 1. Manner of Amending. These Bylaws may be altered, amended, ------------------ repealed, or added to by the affirmative vote of the holders of a majority of the shareholders entitled to vote in the election of any director at an annual meeting or at a special meeting called for that purpose, provided that a written notice shall have been sent to each shareholder of record entitled to vote at such meeting at his last-known post office address at least ten days before the date of such annual or special meeting, which notice shall state the alterations, amendments,, additions, or changes which are proposed to be made in such Bylaws. Only such changes shall be made as have been specified in the notice. The Bylaws may also be altered, amended, repealed, or new Bylaws adopted by a majority of the entire Board of Directors at a regular or special meeting of the Board. However, any Bylaws adopted by the Board may be altered, amended, or repealed by the shareholders. 9 ARTICLE X WAIVER OF NOTICE Section 1. Authority to Waive Notice. Whenever under the provisions of ------------------------- these Bylaws or of any statute any shareholder or director is entitled to notice of any regular or special meeting or of any action to be taken by the Corporation, such meeting may be held or such action may be taken without the giving of such notice, provided every shareholder or director entitled to such notice in writing waives the requirements of these Bylaws in respect thereto. ----------------------------- Secretary Approved: - ------------------------------- Chairman 10 EX-3.14 13 ARTICLES OF INCORPORATION OF ESCIA, INC. Exhibit 3.14 ------------ ARTICLES OF INCORPORATION OF ESCIA, INC. I. The name of the Corporation is: "ESCIA, INC." II. The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code. III The Corporation has perpetual duration. IV. The Corporation is a corporation for profit and is organized for the following purposes: To distribute gasoline pumps and other types of equipment; To do any and all acts and things necessary, convenient, expedient, ancillary or helpful to the accomplishment of the foregoing; and To engage in any other lawful act or activity for which corporations may be organized under the Georgia Business Corporation Code. V. The Corporation has authority to issue not more than 10,000 shares of common stock of $.10 par value. VI. None of the holders of shares of common stock shall be entitled as a matter of preemptive right to purchase, subscribe for or otherwise acquire any new or additional shares of stock of the corporation of any class, or any options or warrants to purchase, subscribe for or otherwise acquire any such new or additional shares, or any shares, evidences of indebtedness or other securities convertible into or carrying options or warrants to purchase, subscribe for or otherwise acquire any such new or additional shares. VII. The Corporation shall not commence business until it shall have received not less than five hundred ($500.00) dollars in payment for the issue of shares of stock. 2 VIII. The initial registered office of the Corporation is 771 Spring Street, N.W., Atlanta, Georgia 30308. The initial registered agent of the Corporation is Scott D. Calhoun. IX. The initial Board of Directors shall consist of one who is: J.E. Overmyer P.O. Box 360 Fort Wayne, Indiana 46801 X. The name and address of the Incorporator is; Scott D. Calhoun 771 Spring Street, N.W. Atlanta, Georgia 30308 IN WITNESS WHEREOF, the undersigned executes these Articles of Incorporation. /s/ Scott D. Calhoun -------------------- Incorporator 3 EX-3.15 14 ARTICLES OF AMENDMENT OF ESCIA, INC. Exhibit 3.15 ------------ ARTICLES OF AMENDMENT OF ESCIA, INC. (HENCEFORTH KNOWN AS SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.) The Sole shareholder of ESCIA, Inc., a corporation organized and existing under the laws of the State of Georgia, did on August 27, 1986 adopt an Amendment to the Articles of Incorporation of said Corporation as follows: I. The name of the Corporation is ESCIA, INC. II. An Amendment to the Articles of Incorporation of said Corporation has been adopted, changing the name of the Corporation to "SUNBELT HOSE & PETROLEUM EQUIPMENT, INC." III. Said Amendment was adopted by the written consent of the sole holder of all shares of the capital stock of the Corporation currently issued and outstanding. IV. From and after the effective date of these Articles of Amendment, each share of the outstanding capital stock of ESCIA, Inc. shall be automatically reclassified as a share of the same class in Sunbelt Hose & Petroleum Equipment, Inc., and each holder shall be entitled to receive a certificate representing shares in Sunbelt hose & Petroleum Equipment, Inc. upon presentation and surrender to the Corporation of shares in ESCIA, Inc. Notwithstanding any failure of any Shareholder to present and surrender any such shares, each unsurrendered share certificate shall be deemed to represent the same number of shares in Sunbelt Hose & Petroleum Equipment, Inc. as it represented in ESCIA, Inc. prior to the effective date of these Articles of Amendment. IN WITNESS WHEREOF, ESCIA, INC. has caused these Articles of Amendment to be executed and its corporate seal to be affixed and has caused the foregoing to be attested, all by its duly authorized officers on the 27th day of August, 1986. ESCIA, INC. (Henceforth known as SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.) By: ------------------------------------ Its President Attest: - -------------------------------- Secretary [Corporate Seal] 2 EX-3.16 15 BYLAWS OF SUNBELT HOSE & PETROLEUM EQUIPMENT, INC. Exhibit 3.16 ------------ BY-LAWS OF SUNBELT HOSE & PETROLEUM EQUIPMENT, INC. ARTICLE 1 OFFICES 1.1 The corporation shall at all times maintain a registered office and a registered agent in the State of Georgia, both of which may be changed by resolution of the Board of Directors. 1.2 The corporation may have offices at such place or places (within or without the State of Georgia) as the Board of Directors may from time to time appoint or the business of the corporation may require or make desirable. ARTICLE 2 SHAREHOLDERS MEETINGS 2.1 All meetings of the stockholders shall be held at the registered office of the corporation in the State of Georgia or at such other place within or without the State of Georgia or as may be determined by the Board of Directors or the President and as shall be designated in the notice of said meeting. 2.2 An annual meeting of the shareholders shall be held on the second Wednesday in April in each year, if not a legal holiday, and if a legal holiday, then on the next following day not a legal holiday, at 10:00 o'clock a.m., at which the shareholders shall elect by a plurality vote a Board of Directors and transact such other business as may properly be brought before the meeting. 2.3 Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or the Articles of Incorporation, may be called by the President, and shall be called by the President or the Secretary when so directed by the Board of Directors, or at the request in writing of any two or more directors, or at the request in writing of shareholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. 2.4 Except as otherwise required by statute or the Articles of Incorporation, written notice of each meeting of the shareholders, whether annual or special, shall be served, either personally or by mail, upon each shareholder of record entitled to vote at such meeting, not less than ten nor more than fifty days before such meeting. If mailed, such notice shall be directed to a shareholder at his post office address last shown on the records of the corporation. Notice of any special meeting of shareholders shall state the purpose or purposes for which the meeting is called. Notice of any meeting of shareholders shall not be required to be given to any shareholder who, in person or by his attorney thereunto authorized, either before or after such meeting, shall waive such notice. Attendance of a shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to the place of the meeting, the time of the meeting, and the manner in which it has been called or convened, except when a shareholder attends a meeting solely for the purpose of stating, at the beginning of the meeting, any such objection or objections to the transaction of business. No waiver of notice of a shareholders meeting with respect to a plan of merger or a plan of consolidation shall be effective unless the provisions of paragraph (1) of subsection (d) of Section 14-2-113 of the Georgia Business Corporation Code are followed. Notice of any adjourned meeting need not be given otherwise than by announcement at the meeting at which the adjournment is taken. 2.5 The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws. If, however, such majority shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of voting stock shall be present. At such adjourned meeting at which a quorum shall be present in person or by proxy, any business may be transacted that might have been transacted at the meeting as originally called. 2 2.6 At every meeting of the shareholders, including (but without limitation of the generality of the foregoing language) meetings of the shareholders for the election of directors, any shareholder having the right to vote shall be entitled to vote in person, or by proxy, but no proxy shall be voted after eleven months from its date, unless said proxy provides for a longer period. Each shareholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, except as otherwise provided by law, by the Articles of Incorporation or by these By-Laws. 2.7 Whenever the vote of shareholders at a meeting thereof is required or permitted to be taken in connection with any corporate action, the meeting and vote of the shareholders may be dispensed with if all of the shareholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken. No such consent shall be effective as approval of a plan of merger or plan of consolidation unless the provisions of subparagraph (d) of Section 14-2-112 of the Georgia Business Corporation Code are followed. ARTICLE 3 DIRECTORS 3.1 Except as may be otherwise provided by any legal agreement among shareholders, the property and business of the corporation shall be managed by its Board of Directors. In addition to the powers and authority by these By- Laws expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by law, by any legal agreement among shareholders, by the Articles of Incorporation, or by these By-Laws directed or required to be exercised or done by the shareholders. 3.2 The Board of Directors shall consist of at least one (but if the Board of Directors consists of only one member then at least fifty-one percent of the stock of the corporation must be held by one person) but not more than eleven members, the precise number to be fixed by resolution of the shareholders from time to time. Each director (whether elected at an annual meeting of shareholders or otherwise) shall hold office until the annual meeting of shareholders held next after 3 his election and until a qualified successor shall be elected, or until his earlier death, resignation, incapacity to serve or removal. Directors need not be shareholders. 3.3 If any vacancy shall occur among the directors by reason of death, resignation, incapacity to serve, increase in the number of directors, or otherwise, the remaining directors shall continue to act, and such vacancies may be filled by a majority of the directors then in office, though less than a quorum, and, if not theretofore filled by action of the directors, may be filled by the shareholders at any meeting held during the existence of such vacancy. 3.4 The Board of Directors may hold its meetings at such place or places (within or without the State of Georgia) as it or the President may from time to time determine and as shall be designated in the notice of said meeting. 3.5 Directors may be allowed such compensation for attendance at regular or special meetings of the Board of Directors and of any special or standing committees thereof as may be from time to time determined by resolution of the Board of Directors. 3.6 Any director may be removed from office, with or without cause, upon the majority vote of the shareholders, at a meeting with respect to which notice of such purpose is given. ARTICLE 4 COMMITTEES 4.1 (a) The Board of Directors may by resolution adopted by a majority of the entire Board, designate an Executive Committee of three or more directors. Each member of the Executive Committee shall hold office until the first meeting of the Board of Directors after the annual meeting of shareholders next following his election and until his successor member of the Executive Committee is elected or until his death, resignation, or removal, or until he shall cease to be a director. (b) During the intervals between the meetings of the Board of Directors, the Executive Committee may exercise all of the powers of the Board of Directors in the management of the business affairs of the corporation, including all powers herein or in the Articles of Incorporation specifically granted to the Board of 4 Directors, and may authorize the seal of the corporation to be affixed to all papers which may require it; provided, however, that the Executive Committee shall not have the power to amend or repeal any resolution of the Board of Directors that by its terms shall not be subject to amendment or repeal by the Executive Committee, and the Executive Committee shall not have the authority of the Board of Directors in reference to (1) amending the Articles of Incorporation or By-Laws of the corporation; (2) adopting a plan of merger or consolidation; (3) the sale, lease, exchange or other disposition of all or substantially all the property and assets of the corporation; or (4) a voluntary dissolution of the corporation or a revocation of any such voluntary dissolution. (c) The Executive committee shall meet from time to time on call of the President or of any two or more members of the Executive Committee. Meetings of the Executive Committee may be held at such place or places, within or without the State of Georgia, as the Executive Committee shall determine or as may be specified or fixed in the respective notices or waivers of such meetings. The Executive Committee may fix its own rules of procedure, including provision for notice of its meetings. It shall keep a record of its proceedings and shall report these proceedings to the Board of Directors at the meeting thereof held next after they have been taken, and all proceedings shall be subject to revision or alteration by the Board of Directors except to the extent that action shall have been taken pursuant to or in reliance upon such proceedings prior to any such revision or alteration. (d) The Executive Committee shall act by majority vote of its members. (e) The Board of Directors, by resolution adopted in accordance with paragraph (a) of this section, may designate one or more directors as alternate members of any such committee, who may act in the place and stead of any absent member or members or any meeting of such committee. 4.2 The Board of Directors, by resolution adopted by a majority of the entire Board, may designate one or more additional committees, each committee to consist of two or more of the directors of the corporation, which shall have such name or names and shall have and may exercise such powers of the Board of Directors, except the powers denied to the Executive Committee, as may be determined from time to time by the Board of Directors. 5 4.3 The Board of Directors shall have power at any time to remove any member of any committee, with or without cause, and to fill vacancies in and to dissolve any such committee. ARTICLE 5 MEETINGS OF THE BOARD OF DIRECTORS 5.1 Each newly elected Board of Directors shall meet at the place and time which shall have been determined, in accordance with the provisions of these By-laws, for the holding of the regular meeting of the Board of Directors scheduled to be held next following the annual meeting of the shareholders at which the newly elected Board of Directors shall have been elected, or, if no place and time shall have been fixed for the holding of such meeting of the Board of Directors, then immediately following the close of such annual meeting of shareholders and at the place thereof, or such newly elected Board of Directors may hold such meeting at such place and time as shall be fixed by the consent in writing of all the directors. In any such case no notice of such meeting to the newly elected directors shall be necessary in order legally to constitute the meeting. 5.2 Regular meetings of the Board of Directors may be held without notice at such time and place (within or without the State of Georgia) as shall from time to time be determined by the Board of Directors. 5.3 Special meetings of the Board of Directors may be called by the President on not less than two days' notice by mail, telegram, cablegram or personal delivery to each director and shall be called by the President or the Secretary in like manner and on like notice on the written request of any two or more directors. Any such special meeting shall be held at such time and place (within or without the State of Georgia) as shall be stated in the notice of meeting. 5.4 No notice of any meeting of the Board of Directors need state the purposes thereof. 5.5 At all meetings of the Board of Directors, the presence of one- third of the authorized number of directors, but not less than two directors, shall be necessary and sufficient to constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically 6 provided by law, by the Articles of Incorporation or by these By-Laws. In the absence of a quorum, a majority of the directors present at any meeting may adjourn the meeting from time to time until a quorum be had. Notice of any adjourned meeting need only be given by announcement at the meeting at which the adjournment is taken. 5.6 Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of the proceedings of the Board or committee. 5.7 Members of the Board of Directors, or any committee designate by such Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this paragraph shall constitute presence in person at such meeting. ARTICLE 6 OFFICERS 6.1 The Board of Directors at the first meeting after each annual meeting of shareholders shall elect the following officers: a President, one or more Vice-Presidents (one of whom may be designated Executive Vice-President), if desired, a Secretary and a Treasurer. The Board of Directors at any time and from time to time may appoint such other officers as it shall deem necessary, including one or more Assistant Vice-Presidents, one ore more Assistant Treasurers, and one or more Assistant Secretaries, who shall hold their offices for such terms as shall be determined by the Board of Directors and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. 6.2 Any person may hold any two or more offices, except that no person may hold both the officers of President and Secretary. No officer need be a shareholder. 6.3 The salaries of the officers of the corporation shall be fixed by the Board of Directors, except that the Board of Directors may delegate to any officer 7 or officers the power to fix the compensation of any officer appointed in accordance with the second sentence of Section 6.1 of these By-Laws. 6.4 Each officer of the corporation shall hold office until his successor is chosen or until his earlier resignation, death or removal, or the termination of his office. Any officer may be removed by the Board of Directors whenever in its judgment the best interests of the corporation will be served thereby. PRESIDENT 6.5 The President shall be the chief executive officer of the corporation and shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall be ex officio a member of all standing committees, unless otherwise provided in the resolution appoint the same. The President shall call meetings of the shareholders, the Board Directors, and the Executive Committee to order and shall act as Chairman of such meetings. VICE-PRESIDENTS 6.6 The Vice-President shall perform such duties as are generally performed by vice-presidents. The Vice-Presidents shall perform such other duties and exercise such other powers as the Board of Directors shall request or delegate. The Assistant Vice-Presidents shall have such powers, and shall perform such duties, as may be prescribed from time to time by the Board of Directors, or the President. SECRETARY 6.7 The Secretary shall attend all sessions of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in books to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, any notice required to be given of any meetings of the shareholders and of the Board of Directors, and shall perform such other duties is may be prescribed by the Board of Directors, under whose supervision he shall be. The Assistant Secretary or Assistant Secretaries shall, in the absence or disability of the Secretary, or at his request, perform his duties and exercise his powers and authority. TREASURER 8 6.8 The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the corporation, and shall deposit, or cause to be deposited, in the name of the corporation, all monies or other valuable effects, in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors, he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the corporation, and in general, he shall perform all the duties incident to the office of a Treasurer of a corporation, and shall perform such other duties as may be assigned to him by the Board of Directors, or the President. 6.9 In case of the absence of any officer of the corporation, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may delegate, for the time being, any or all the powers or duties of such officer to any officer or to any director. ARTICLE 7 CAPITAL STOCK 7.1 The interest of each shareholder shall be evidenced by a certificate or certificates representing shares or stock of the corporation which shall be in such form as the Board of Directors may from time to time adopt and shall be numbered and shall be entered in the books of the corporation as they are issued. Each certificate shall exhibit the holder's name, the number of shares and class of shares and series, if any, represented thereby, a statement that the corporation is organized under the laws of the State of Georgia, and the par value of each share or a statement that the shares are without par value. Each certificate shall be signed by the President or a Vice- President and the Secretary or an Assistant Secretary and shall be sealed with the seal of the corporation; provided, however, that where such certificate is signed by a transfer agent, or by a transfer clerk acting on behalf of the corporation and a registrar, the signature of any such officer and such seal, may be facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. 9 7.2 The corporation shall keep a record of the shareholders of the corporation which readily shows, in alphabetical order or by alphabetical index, and by classes of stock, the names of the shareholders entitled to vote, with the address of and the number of shares held by each. Said record shall be presented at all meetings of the shareholders. 7.3 Transfers of stock shall be made on the books of the corporation only by the person named in the certificate, or by attorney lawfully constituted in writing, and upon surrender of the certificate therefor, or in the case of a certificate alleged to have been lost, stolen or destroyed, upon compliance with the provisions of Section 7.7 of these By-Laws. 7.4 (a) For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. (b) In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date to be not more than fifty days, and in case of a meeting of shareholders, not less than ten days, prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. 7.5 The corporation shall be entitled to treat the holder of any share of stock of the corporation as the person entitled to vote such share, to receive any dividend or other distribution with respect to such share, and for all other purposes and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. 7.6 The Board of Directors may appoint one or more transfer agents and one or more registrars and may require each stock certificate to bear the signature or signatures of a transfer agent or a registrar or both. 10 7.7 Any person claiming a certificate of stock to be lost, stolen, or destroyed shall make an affidavit or affirmation of the fact in such manner as the Board of Directors may require and shall, if the directors so require, give the corporation a bond or indemnity in form and amount and with one or more sureties satisfactory to the Board of Directors, whereupon an appropriate new certificate may be issued in lieu of the one alleged to have been lost, stolen or destroyed. ARTICLE 8 MISCELLANEOUS Inspection of Books 8.1 (a) No shareholder of the corporation shall be permitted to copy, examine, inspect or have access to any of the books or records of the corporation, except as is herein provided. (b) The Minute Books, Stock Transfer Ledger and Main Account Ledger (excluding all subsidiary account ledgers) of the corporation shall be open for examination by any shareholder only under and upon the following conditions: (1) Any shareholder desiring to copy, examine, inspect or have access to the aforesaid records shall submit to the Secretary of the corporation a written request, accompanied by a sworn affidavit; (1) that he has been a shareholder of record for not less than six calendar months preceding the date of the request, or that he is the holder of record of or has certified authorizations from the holders of record of, not less than five percent of all the outstanding shares of any class or series of the corporation; (2) stating in full detail the purpose or purposes of the inspection and that the inspection is not desired for a purpose which is in the interest of a business or object other than the business of this corporation; and (3) that neither he nor any of those under whose authority he is proceeding, if any, have within five years preceding the date of the affidavit and request, sold, offered for sale or aided or abetted any person in selling or offering for sale, any list of the shareholders of any corporation, nor do they, or any of them, currently plan to sell or offer for sale any list of the shareholders of the corporation. 11 (2) If the Secretary or a majority of the Directors or members of the Executive Committee of the corporation find the request proper, the Secretary shall notify the shareholder within thirty days after receipt of said request of the time, which shall not be more than thirty days after such notification, and place at which the inspection may be conducted. (3) If said request is found by the Secretary, the Board of Directors or the Executive Committee not to be proper, the Secretary shall so notify the requesting shareholder within thirty days after receipt of the request. The Secretary shall specify in said notice the basis for rejection of the shareholder's request. (4) The Secretary, the Board of Directors and the Executive Committee shall at all times be entitled to rely on the corporation records in making any determination hereunder. (c) Each paragraph and subparagraph contained in this Section 8.1 is separable and in the event any paragraph is held invalid it shall not affect the validity of any other paragraph or subparagraph. Fiscal Year 8.2 The fiscal year of the corporation shall be determined by the appropriate officers of the corporation upon such outside advice and counsel as they may deem necessary. Seal 8.3 The corporate seal shall be in such form as the Board of Directors may from time to time determine but now exists as follows: Annual Statements 12 8.4 Not later than four months after the close of each fiscal year, and, in any case, prior to the next annual meeting of shareholders, the corporation shall prepare: (1) A balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its fiscal year; and (2) A profit and loss statement showing the results of its operation during its fiscal year. Upon written request, the corporation promptly shall mail to any shareholders of record a copy of the most recent such balance sheet and profit and loss statement. Appointments of Agents 8.5 The President or any Vice-President shall be authorized and empowered in the name and as the act and deed of the corporation to name and appoint general and special agents, representatives and attorneys to represent the corporation in the United State or in any foreign country or countries and to name and appoint attorneys and proxies to vote any shares of stock in any other corporation as any time owned or held of record by the corporation, and to prescribe, limit and define the powers and duties of such agents, representatives, attorneys and proxies and to make substitution, revocation or cancellation in whole or in part of any power or authority conferred on any such agent, representative, attorney or proxy. All powers of attorney or other instruments under which such agents, representatives, attorneys or proxies shall be so named and appointed shall be signed and executed by the President or a Vice-President, and the corporate seal shall be affixed thereto. Any substitution, revocation or cancellation shall be signed in like manner, provided always that any agent, representative, attorney or proxy when so authorized by the instrument appointing him may substitute or delegate his powers in whole or in part and revoke and cancel such substitutions or delegations. No special authorization by the Board of Directors shall be necessary in connection with the foregoing, but this By-Law shall be deemed to constitute full and complete authority to the officers above designated to do all the acts and things as they deem necessary or incidental thereto or in connection therewith. Indemnification 13 8.6 (a) Under the circumstances prescribed in paragraphs (c) and (d) of this Section, the corporation shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct unlawful. the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, or with respect to any criminal action or proceeding, in a manner which he had reasonable cause to believe was lawful. (b) Under the circumstances prescribed in paragraphs (c) and (d) of this section, the corporation shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact he is or was serving at the request of the corporation as a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. 14 (c) To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) of this section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. (d) Except as provided in paragraph (c) of this section and except as may be ordered by a court, any indemnification under paragraphs (a) and (b) of this section shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by the firm of independent legal counsel then employed by the corporation, in a written opinion, or (3) the affirmative vote of a majority of the shares entitled to vote thereon. (e) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized in this section. (f) The indemnification provided by this section shall not be deemed exclusive or any other right to which the persons indemnified hereunder shall be entitled and shall inure to the benefit of the heirs, executors or administrators of such persons. (g) The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation 15 would have the power to indemnify him against such liability under the provisions of this section. (h) If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or by an insurance carrier pursuant to insurance maintained by the corporation, the corporation shall, not later than the next annual meeting of the shareholders, unless such meeting is held within three months from the date of such payment, and, in any event, within fifteen months from the date of such payment, sent by first class mail to its shareholders of record at the time entitled to vote for the election of directors, a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation. Disallowed Deductions 8.7 Any payments made to an officer of the corporation such as a salary, commission, bonus, interest, rent, or entertainment expense incurred by him which shall be disallowed in whole or in part as a deductible expense by the Internal Revenue Service shall be reimbursed by such officer to the corporation to the full extent of such disallowances. It shall be the duty of the Directors, as a Board, to enforce payment of each such amount disallowed. In lieu of payment by the officer, subject tot he determination of the Directors, proportionate amounts may be withheld from his future compensation payments until the amount owed to the corporation has been recovered. ARTICLE 9 NOTICES: WAIVERS OF NOTICE 9.1 Except as otherwise specifically provided by these By-Laws, whenever under the provisions of these By-Laws notice is required to be given to any shareholder, director or officer, it shall not be construed to mean personal notice, but such notice may be given either by personal notice or by radio, cable or telegraph, or by mail by depositing the same in the post office or letter box in a postpaid sealed wrapper, addressed to such shareholder, officer or director at such address as appears on the books of the corporation, and such notice shall be deemed to be given at the time when the same shall be thus sent or mailed. 16 9.2 When any notice whatever is required to be given by law, by the Articles of Incorporation or by these By-Laws, a waiver thereof by the person or persons entitled to said notice given before or after the time stated therein, in writing, which shall include a waiver given by telegraph, radio, or cable, shall be deemed equivalent thereto. No notice of any meeting need be given to any person who shall attend such meeting, except when a shareholder attends a meeting solely for the purpose of stating at the beginning of the meeting any objection to the transaction of business, and so states his objection at the beginning of the meeting, or when a director states, at the beginning of the meeting, any such objection to the transaction of business. ARTICLE 10 EMERGENCY POWERS 10.1 The Board of Directors may adopt emergency By-Laws subject to repeal or change by action of the shareholders, which shall, notwithstanding any provision of law, the Articles of Incorporation or these By-Laws, be operative during any emergency in the conduct of the business of the corporation resulting from an attack on the United States or on a locality in which the corporation conducts its business or customarily holds meetings of its Board of Directors or its shareholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a standing committee thereof cannot readily be convened for action. The emergency By-Laws may make any provision that may be practical and necessary for the circumstances of the emergency. 10.2 The Board of Directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties. 10.3 The Board of Directors, either before or during any such emergency, may, effective in the emergency, change the head office or designate several alternative head offices or regional offices, or authorize the officers so to do. 10.4 To the extent not inconsistent with any emergency By-Laws so adopted, these By-Laws shall remain in effect during any such emergency and upon its termination the emergency By-Laws shall cease to be operative. 17 10.5 Unless otherwise provided in emergency By-Laws, notice of any meeting of the Board of Directors during any such emergency may be given only to such of the directors as it may be feasible to reach at the time, and by such means as may be feasible at the time, including publication, radio or television. 10.6 To the extent required to constitute a quorum at any meeting of the Board of Directors during any such emergency, the officers of the corporation who are present shall, unless otherwise provided by emergency By- Laws, be deemed, in order of rank and within the same rank in order of seniority, directors for such meeting. 10.7 No officer, director, agent or employee acting in accordance with any emergency By-Laws shall be liable except for willful misconduct. No officer, director, agent, or employee shall be liable for any action taken by him in good faith in such an emergency in furtherance of the ordinary business affairs of the corporation even though not authorized by the By-Laws then in effect. ARTICLE 11 AMENDMENTS 11.1 The By-Laws of the corporation may be altered or amended and new By-Laws may be adopted by the shareholders at any annual or special meeting of the shareholders or by the Board of Directors at any regular or special meeting of the Board of Directors; provided, however, that if such action is to be taken at a meeting of the shareholders, notice of the general nature of the proposed change in the By-Laws shall have been given in the notice of the meeting. Any By-Laws adopted by the Board of Directors may be altered, amended or repealed, and new By-Laws adopted, by the shareholders. The shareholders may prescribe that any By-Law or By-Laws adopted by them shall not be altered, amended or repealed by the Board of Directors. 18 EX-3.17 16 ARTICLES OF INCORPORATION OF TOKHEIM BASE SYSTEMS Exhibit 3.17 ------------ ARTICLES OF INCORPORATION OF TOKHEIM BASE SYSTEMS, INC. The undersigned, a natural person of the age of eighteen (18) years or more, acting as incorporator of a corporation under the Texas Business Corporation Act, hereby adopts the following Articles of incorporation: ARTICLE I NAME ---- The name of the corporation is Tokheim Base Systems, Inc. ARTICLE II DURATION -------- The period of the corporation's duration is perpetual. ARTICLE III PURPOSE ------- The purpose or purposes for which the corporation is organized are to transact any and all lawful business for which corporations may be incorporated under the Texas Business Corporation Act; to buy, sell, lease, own, and deal in and to transact business with respect to real and personal property and services; and in general, to have and exercise all the powers conferred by the laws of Texas upon corporations formed under the Texas Business Corporation Act, and to do any and all of the things hereinbefore set forth to the same extent as natural persons might or could. ARTICLE IV AUTHORIZED SHARES ----------------- The aggregate number of shares which the corporation shall have authority to issue is 10,000 shares at no par value per share. The shares are designated as Common Stock and have identical rights and privileges in every respect. ARTICLE V COMMENCEMENT OF BUSINESS ------------------------ The corporation will not commence business until it has received for the issuance of its shares consideration of the value of $1,000 consisting of money, labor done, or property actually received, ARTICLE VI PREEMPTIVE RIGHTS AND CUMULATIVE VOTING --------------------------------------- The shareholders of the corporation shall not have preemptive rights to acquire additional, unissued, or treasury shares of the corporation or securities of the corporation convertible into or carrying a right to subscribe to or acquire shares. Cumulative voting of shares of the corporation shall not be permitted. 2 ARTICLE VII AGENT FOR PROCESS ----------------- The address of the corporation's initial registered office is 10857 Rockley Road, Houston, Texas 77099, and the name of its initial registered agent at such address is Donald J. Drapp. ARTICLE VII DIRECTORS --------- The number of directors constituting the initial board of directors of the corporation is three (3), and the name and address of the persons who are to serve as directors until the first meeting of the shareholders or until their successors are elected and have qualified are: NAME ADDRESS ---- ------- Randolph J. Straka 10857 Rockley Road Houston, Texas 77099 John E. Overmyer 10857 Rockley Road Houston, Texas 77099 Donald J. Drapp 10857 Rockley Road Houston, Texas 77099 A director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for an act or omission in the director's capacity as a director of the corporation, except for: 3 (1) a breach of a director's duty of loyalty to the corporation or its shareholders: (2) an act or omission not in good faith or that involves intentional misconduct or a knowing violation of the law; (3) a transaction from which a director receives an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office; (4) an act or omission for which the liability of a director is expressly provided for by statute; or (5) an act related to an unlawful stock repurchase or payment of a dividend. ARTICLE IX INCORPORATORS ------------- The name and address of the incorporator of the corporation is: NAME ADDRESS ---- ------- Edward K. Clark 1300 Capitol Center 919 Congress Avenue Austin, Texas 78701 4 EXECUTED on the 26th day of September, 1988. /s/ Edward K. Clark _________________________________________ Edward K. Clark, Incorporator STATE OF TEXAS (S) (S) COUNTY OF TRAVIS (S) Before me, a Notary Public, on the ______ day of September, 1988, personally appeared Edward K. Clark, who, being by me first duly sworn, said that he is the person who signed the foregoing document as incorporator, and that the statements therein contained are true and correct. _________________________________________ Notary Public, State of Texas 5 EX-3.18 17 ARTICLES OF AMENDMENT TO THE ARTICLES OF INC. Exhibit 3.18 ------------ ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF TOKHEIM BASE SYSTEMS, INC. Pursuant to the provisions of Article 4.04 of the Texas Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation which changes the name of the corporation. I. NAME ---- The name of the corporation is TOKHEIM BASE SYSTEMS, INC. II. DATE OF ADOPTION ---------------- The following amendment to the Articles of Incorporation was adopted by the shareholders and the Board of Directors of the corporation on the 17th day of October, 1988. Articles I of the Articles of Incorporation is hereby amended to change the name of the corporation to read as follows: The name of the corporation is MINI BASE SYSTEMS, INC. 1 III. SHAREHOLDER VOTE ---------------- The number of the shares of the corporation outstanding at the time of the adoption of this Amendment was 1,000 shares of the common capital stock of the corporation; and the number of shares entitled to vote thereon was 1,000 shares of the common capital stock of the corporation. The holders of all of the shares of common capital stock outstanding and entitled to vote an the foregoing Amendment have signed a Consent in Writing adopting this Amendment. SIGNED this 17th day of October, 1988. /s/ Vickroy E. Stone -------------------- VICKROY E. STONE President /s/ Carol Bell -------------- CAROL BELL Assistant Secretary THE STATE OF TEXAS (S) COUNTY OF HARRIS (S) I, the undersigned Notary Public, do hereby certify that on the 18th day of October, 1988, personally appeared before me VICKROY E. STONE, who declared to me that he is the President of TOKHEIM BASE SYSTEMS, INC., a Texas corporation, and being first duly sworn, acknowledged that he executed the foregoing instrument in the capacity therein set forth and declares that the statements contained therein are true and correct. 2 IN WITNESS WHEREOF, I hereunto set my hand and seal the day and year before written. ------------------------------------ NOTARY PUBLIC, STATE OF TEXAS ------------------------------------ (printed name of notary) Commission Expires ------------------ 3 EX-3.19 18 ARTICLES OF AMENDMENT TO THE ARTICLES OF INC. Exhibit 3.19 ------------ ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF MINI BASE SYSTEMS, INC. - ------------------------------------------------------------------------------- Pursuant to the provisions of Article 4.04 of the Texas Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation which changes the name of the corporation. I. NAME ---- The name of the corporation is MINI BASE SYSTEMS, INC. II. DATE OF ADOPTION ---------------- The following amendment to the Articles of Incorporation was adopted by the shareholders and the Board of Directors of the corporation on the 28th day of November, 1989. Article I of the Articles of Incorporation is hereby amended to change the name of the corporation to read as follows: The name of the corporation is TOKHEIM AUTOMATION CORPORATION. III SHAREHOLDER VOTE ---------------- The number of the shares of the corporation outstanding at the time of the adoption of this Amendment was 10,000 shares of the common capital stock of the corporation; and the number of shares entitled to vote thereon was 10,000 shares of the common capital stock of the corporation. The holders of all of the shares of common capital stock outstanding and entitled to vote on the foregoing Amendment have signed a Consent in Writing adopting this Amendment. SIGNED this 28th day of November, 1989. /s/ Donald J. Drapp -------------------------- DONALD J. DRAPP Chairman of the Board and Chief Executive Officer THE STATE OF TEXAS (S) COUNTY OF HARRIS (S) I, the undersigned Notary Public, do hereby certify that on the 28th day of November, 1989, personally appeared before me DONALD J. DRAPP, who declared to me that he is the Chairman of the Board and Chief Executive Officer of MINI BASE SYSTEMS, INC., a Texas corporation, and being first duly sworn, acknowledged that he executed the foregoing instrument in the capacity therein set forth and declares that the statements contained therein are true and correct. 2 IN WITNESS WHEREOF, I hereunto set my hand and seal the day and year before written. /s/ Carol Bell -------------------------------- NOTARY PUBLIC, STATE OF TEXAS Carol Bell -------------------------------- (printed name of notary) Commission Expires 4/23/92 ----- 3 EX-3.20 19 BYLAWS OF TOKHEIM AUTOMATION CORP. Exhibit 3.20 ------------ BYLAWS OF TOKHEIM AUTOMATION CORPORATION ARTICLE 1 OFFICES ------- 1.01 The registered and principal office of the Corporation is 10857 Rockley Road, and the name of the registered agent of the Corporation at such address is Donald J. Drapp. The Corporation may also have offices at such other places both within and without the State of Texas as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE 2 SHAREHOLDERS' MEETINGS ---------------------- Place of Meetings 2.01 All meetings of the Shareholders shall be held at the registered office of the Corporation, or any other place within or without this State, as may be designated for that purpose from time to time by the Board of Directors. Time of Annual Meeting 2.02 The annual meeting of the Shareholders shall be held each year within one hundred fifty (150) days after the end of the Corporation's fiscal year on such date as the Board of Directors shall designate. Special Meetings 2.03 Special meetings of the Shareholders for any purpose or purposes whatsoever may be called at any time by the CEO or President; or by the Board of Directors; or by any two (2) or more Directors, or if there are two or less Directors, by any Director; or by one or more Shareholders, holding not less than one-tenth (1/10th) of all the shares entitled to vote at the meeting. Notice of Meeting 2.04 Notice of a meeting of the Shareholders, stating the place, day and hours of the meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called, unless waived in writing, shall be given in writing to each Shareholder entitled to vote at the meeting at least ten (10) but not more than fifty (50) days before the date of the meeting either personally or by mail or other means of written communication, addressed to the Shareholder at his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice. Notice of the adjourned meetings is not necessary unless the meeting is adjourned for thirty (30) days or more, in which case notice of the adjourned meeting shall be given as in the case of any special meeting. Quorum 2.05 A majority of the voting shares represented in person or by proxy constitutes a quorum for the transaction of business. Business may be continued until adjournment after withdrawal of enough Shareholders to leave less than a quorum. Voting 2.06 When a quorum is present at a meeting, the vote of a majority of the shares having voting power, present in person, or represented by proxy, shall decide any question brought before the meeting, unless the question is one on which a higher vote is required by statutes, the Articles of Incorporation, or these Bylaws, in which case the express provision shall govern. Only persons in whose names shares appear on the share records of the Corporation on the date on which notice of the meeting is mailed shall be entitled to vote at such meeting, unless some other day is fixed by the Board of Directors for the determination of Shareholders of record. Cumulative voting denied to all Shareholders. Each Shareholder of record may cast one vote for each director's position for each share of stock of which he is the record owner. The candidates receiving the highest number of votes up to the number of Directors to be elected are elected. 2 Voting by Voice or Ballot 2.07 Voting for the election of Directors shall be by voice unless any Shareholder demands a ballot vote before the voting begins. Proxies 2.08 Every person entitled to vote or execute consents may do so either in person or by written proxy executed in writing by the Shareholder or his duly authorized attorney in fact. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy. Each proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Consent of Absentees 2.09 No defect in the calling or noticing of a Shareholders' meeting will affect the validity of any action at the meeting if a quorum was present, and if each Shareholder not present in person or by proxy signs a written waiver of notice, consents to the holding of the meeting, or approval of the minutes, either before or after the meeting, and such waivers, consents, or approvals are filed with the corporate records or made a part of the minutes of the meeting. Action Without Meeting 2.10 Any action required to be taken at a meeting of the Shareholders, or any other action which may be taken at a meeting of the Shareholders, may be taken by Shareholder without a meeting if each Shareholders entitled to vote signs a written consent to the action and such consents are filed with the Secretary of the Corporation. Telephone and Similar Meetings 2.11 Shareholders, Directors and committee members may participate in and hold a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. 3 Conduct of Meetings 2.12 At every meeting of the Shareholders, the CEO, or in his or her absence, the President or Vice President designated by the CEO, or, in the absence of such designation, a chairperson (who shall be the President or one of the Vice Presidents, if any is present) chosen by a majority in interest of the Shareholders of the Corporation present in person or by proxy and entitled to vote, shall act as chairperson. The Secretary of the Corporation, or in his or her absence, an Assistant Secretary, shall act as Secretary of all meetings of the Shareholders. In the absence at such meeting of the Secretary or Assistant Secretary, the chairperson may appoint another person to act as Secretary of the meeting. The chairperson of any meeting of Shareholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seen to him or her in order. ARTICLE 3 DIRECTORS --------- Powers 3.01 The Directors shall act only as a board, and an individual Director shall have no power as such unless there is at the time only one Director. All corporate powers of the Corporation shall be exercised by, or under the authority of, and the business and affairs of the Corporation shall be controlled by, the Board of Directors, subject, however, to such limitations as are imposed by law, the Articles of Incorporation, or these Bylaws, as to actions to be authorized or approved by the Shareholders. The Board of Directors may be contract or otherwise, give general or limited or special power and authority to the officers and employees of the Corporation to transact the general business, or any special business, of the Corporation to transact any special business requiring such authorization. Number and Qualification of Directors 3.02 The authorized number of Directors of this Corporation shall be three (3). The Directors need not be Shareholders of this Corporation or residents of Texas. The number of Directors may be increased or decreased from time to time by 4 amendment to these Bylaws, but an decrease shall have the effect of shortening the term of any incumbent Director. Any directorship to be filled by election at an annual meeting or at a special meeting of Shareholders called for that purpose. Election and Term of Office 3.03 The Directors shall be elected annually by the Shareholders entitled to vote and shall hold office until their respective successor are elected, or until their death, resignation or removal. Vacancies 3.04 Vacancies in the Board of Directors may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director. The Shareholders may elect a Director at any time to fill any vacancy not filled by the Directors. A Director elected to fill a vacancy shall be for the unexpired term of the predecessor Director. Removal of Directors 3.05 The entire Board of Directors or any individual Director may be removed from office by a vote of Shareholders holding a majority of the outstanding shares entitled to vote at an election of Directors. If any or all Directors are so removed, new Directors may be elected at the same meeting. Place of Meetings 3.06 All meetings of the Board of Directors shall be held at the principal office of the Corporation or at such place within or without the state as may be designated from time to time by resolution of the Board or by written consent of all of the members of the Board. Regular Meetings 3.07 Regular meetings of the Board of Directors shall be held, without call or notice, immediately following each annual meeting of the Shareholders of this Corporation, and at such other times as the Directors may determine. The meetings may be held by conference telephone. 5 Special Meetings--Call and Notice 3.08 Special meetings of the Board of Directors for any purpose shall be called at any time by the President, or if he or she is absent or unable or refuses to act, by any Vice President or any two Directors, or if there are two or less Directors, by any Director. Written notices of the special meetings, stating the time, and, in general, the purpose or purposes thereof, shall be mailed or telegraphed or personally delivered to each Director, as provided below, not later than three days before the day appointed for the meetings. Special meetings of the Board may be held by conference telephone. If the address or a Director is not shown on the records and is not readily ascertainable, notice shall be addressed to him at his last known address. Validation of Meeting Defectively Called or Noticed 3.09 The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are valid as though a meeting had been duly held after regular call and notice, if a quorum is present and if, either before or after the meeting, each of the Directors not present signs a waiver of notice, a consent to holding the meeting, or an approval of the minutes thereof. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance by a Director at the meeting shall constitute a waiver of notice of the meeting, unless the express purpose for such attendance is to present the objection that the meeting is not lawfully called or convened. Quorum 3.10 A majority of the authorized number of Directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the Directors present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. Each Director who is present at a meeting will be deemed to have assented to any action taken at such meeting unless his or her dissent to such action is entered in the minutes of the meeting, or unless he or she shall file his or her written dissent thereto with the Secretary of the meeting or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after such meeting. 6 Board Action Without Meeting 3.11 Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and shall have the same force and effect as a unanimous vote of Directors, if all members of the Board shall individually consent in writing to such action. As permitted by Article 9.10C of the Texas Business Corporation Act, members of the Board of Directors, or members of any committee designated by such Board, may participate and hold a meeting of the Board of Directors or any committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such meeting pursuant to a conference call or similar communications equipment shall constitute presence in person at such meeting. Adjournment--Notice 3.12 A quorum of the Directors may adjourn any Directors' meeting to meet again at a stated day and hour. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place is fixed at the meeting adjourned, but shall be supplied on request. In the absence of a quorum, a majority of the Directors present at any Directors' meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board. Conduct of Meetings 3.13 The President, or, in his or her absence, any Director selected by the Directors present, shall preside at meetings of the Board of Directors. The Secretary of the Corporation, or in his absence, any person appointed by the presiding officer, shall act as Secretary of the Board of Directors. Compensation 3.14 Directors shall serve without compensation for their services as directors, but may receive from the Corporation such fees for attendance at meetings and such reimbursement for expenses as may be fixed or determined by resolution of the Board. Any Director may serve the Corporation in any other capacity as an officer, agent, employee or otherwise and receive compensation therefor. 7 ARTICLE 4 OFFICERS -------- Title and Appointment 4.01 The officers of the Corporation shall be a President, Vice President, Secretary, and Treasurer and such other assistants and other officers as the Board of Directors shall from time to time determine. Any two offices, except President and Secretary, may be held by one person. All officers shall be elected by and hold office at the pleasure of the Board of Directors, which shall fix compensation (if any) and tenure of all officers. Vacancies 4.02 If the office of the President, Vice President, Secretary, Assistant Secretary (if any), Treasurer, or Assistant Treasurer (if any) becomes vacant by reason of death, resignation, removal, or otherwise, the Board of Directors shall elect a successor who shall hold office for the unexpired term, and until his or her successor is elected. President 4.03 The CEO shall be the chief executive officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and officers of the Corporation, and shall have the general powers and duties of management usually vested in the general powers and duties of management usually vested in the office of CEO of a Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws. Within this authority and in course of his or duties he or she shall: (1) Preside at all meetings of the Shareholders and at all meetings of the Board of Directors, and shall be ex officio a member of all the standing committees, if any. (2) Sign all certificates of stock of the Corporation, in conjunction with the Secretary or Assistant Secretary, unless otherwise ordered by the Board of Directors. (3) When authorized by the Board of Directors or required by law, execute, in the name of the Corporation, deeds, conveyances, notices, leases, checks, 8 drafts, bills of exchange, warrants, promissory notes, bonds, debentures, contracts, and other papers and instruments in writing, and unless the Board of Directors shall order otherwise by resolution, make such contracts as the ordinary conduct of the Corporation's business may require. (4) Appoint and remove, employ and discharge, and prescribe the duties and fix the compensation of all agents, employees, and clerks of the Corporation other than the duly appointed officers, subject to the approval of the Board of Directors, and control, subject to the direction of the Board of Directors, all of the officers, agents, and employees of the Corporation. 4.04 The President shall be the Chief Operating Officer of the Corporation and shall, subject to the control of the Board of Directors and the CEO, have day to day supervision, direction, and control of the business and officers of the Corporation. The President shall have such other powers and duties as prescribed by the Board of Directors, the CEO or the Bylaws. Vice President 4.05 In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions on, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors of the Bylaws. Secretary 4.06 The Secretary shall: (1) Sign, with the CEO, or President or a Vice President, certificates for shares of the Corporation. (2) Attest and keep at the principal office of the Corporation the original or a copy of its Bylaws as amended or otherwise altered to date. (3) Keep at the principal office of the Corporation or such other place as the Board of Directors may order, a book of minutes of all meetings of its Directors 9 and Shareholders, executive committee, and other committees, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present or represented at Shareholders' meetings, and the proceedings thereof. (4) Sign or attest such documents as may be required by law or the business of the Corporation, and keep the corporate seal and affix it to such instruments as may be necessary or proper. (5) See that all notices are duly given in accordance with the provisions of these Bylaws as required by law. (6) Be custodian of the records and of the seal of the Corporation and see that it is engraved, lithographed, printed, stamped, impressed upon or affixed to all certificates for shares prior to their issuance. (7) Keep at the principal office of the Corporation a share register or duplicate share register showing the names of the Shareholders and their addresses; the number, date of issue, and class of shares represented by each outstanding share certificate; and the number and date of cancellation of each certificate surrendered for cancellation. (8) See that the books, reports, statements, certificates and all other documents and recordi required by law are properly kept and filed. (9) In general, perform all duties incident to the office of Secretary, and such other duties as from time to time may be assigned to him or her by the Board of Directors. (10) In case of the absence or disability of the Secretary or his or her refusal or neglect to act, the Assistant Secretary may perform all of the functions of the Secretary. In the absence or inability to act, or refusal or neglect to act of both the Secretary and the Assistant Secretary, any person there unto authorized by the President or Vice President or by the Board of Directors may perform the functions of the Secretary. Assistant Secretary 10 4.07 At the request of the Secretary, or in his or her absence or disability, the Assistant Secretary, shall perform all the duties of the Secretary, and when so acting, he or she shall have all the powers of, and be subject to all the restrictions on, the Secretary. The Assistant Secretary shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors, or the Secretary. Treasurer 4.08 The Treasurer shall: (1) Be the custodian of the corporate funds and securities, keep full and accurate accounts of receipts and disbursements of the Corporation, and deposit all moneys and other valuables in the name and to the credit of the Corporation in depositories designated by the Board of Directors. (2) Disburse the funds of the Corporation as ordered by the board of Directors, and prepare financial statements as they direct. (3) If required by the Board of Directors, give the Corporation a bond (in such form, in such sum, and with such surety or sureties as shall be satisfactory to the Board of Directors) for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement, or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation. (4) Perform such other duties and have such other authority and powers as the Board of Directors may from time to time prescribe or as the President may from time to time delegate. Assistant Treasurer 4.09 The assistant treasurers in the order of their seniority, unless otherwise determined by the Board of Directors, shall in the absence or disability of the Treasurer, perform the duties and have the authority and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe or the President may from time to time delegate. 11 ARTICLE 5 EXECUTION OF INSTRUMENTS ------------------------ Authority for Execution of Instruments 5.01 The Board of Directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized (including authorization by other provisions of these Bylaws), no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or in any amount. Execution of Instruments 5.02 Unless otherwise specifically determined by the Board of Directors or otherwise required by law, formal contracts of the Corporation, promissory notes, deeds of trust, mortgages and other evidences of indebtedness of the Corporation, and other corporate instruments or documents, and certificates of shares of stock owned by the Corporation, shall be executed, signed or endorsed by a Director, CEO, or the President or any Vice President and by the Secretary or any Assistant Secretary, and may have the corporate seal affixed thereto. ARTICLE 6 ISSUANCE AND TRANSFER OF SHARES ------------------------------- Certificates for Paid and Unpaid Shares 6.01 Certificates for shares (both treasury and authorized but unissued) of the Corporation shall be issued for such consideration (not less than par value) and to such persons as the Board of Directors may determine from time to time. Shares may not be issued until the full amount of the consideration, fixed as provided by law, has been fully paid. 12 Share Certificates 6.02 The Corporation shall deliver certificates representing all shares to which Shareholders are entitled, which certificates shall be in such form not inconsistent with that required by law and the Articles of Incorporation, as shall be approved and provided by the Board of Directors. Each certificate shall bear upon its face the statement that the Corporation is organized in Texas, the name in which it is issued, the number and class of shares and series, and the par value. Certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued. The certificate shall be signed by the President or a Vice President and a Secretary or an Assistant Secretary, which signatures may be in facsimile if the certificates are to be countersigned by a transfer agent or registered by a registrar, (either of which is other than the Corporation or an employee of the Corporation), and the seal of the Corporation shall be affixed thereto. The certificates shall contain on the faces or backs such recitations or references as are required by law. Share Certificates If More Then One Class of Shares Ever Authorized 6.03 If the Corporation is ever authorized to issue more than one class of shares, then each certificate of stock representing shares issued by the Corporation shall contain the information required by Article 2.19B of the Texas Business Corporation Act in the form prescribed by said Article. Payment for Shares 6.04 The consideration for the issuance of shares shall consist of money paid, labor done (including services actually performed for the Corporation, or property (tangible or intangible) actually received. Neither promissory notes nor the promise of future services shall constitute payment for shares. In the absence of fraud in the transaction, the judgment of the Board of Directors as to the value of consideration received shall be conclusive. When consideration, fixed as provided by law, has been paid, the share shall be deemed to have been issued and shall be considered fully paid and nonassessable. The consideration received for shares shall be allocated by the Board of Directors, in accordance with law, between stated capital and capital surplus accounts. 13 Replacement of Certificates 6.05 No new certificates shall be issued until the former certificate for the share represented thereby shall have been surrendered and cancelled, except in the case of lost or destroyed certificates for which the Board of Directors may order new certificates to be issued upon such terms, conditions, and guarantees as the Board may see fit to impose, including the filing of sufficient indemnity. Transfer of Shares 6.06 Share of the Corporation may be transferred by endorsement by the signature of the owner, his or her agent, attorney, or legal representative, and the delivery of the certificate. The transferee in any transfer of shares shall be deemed to have full notice of, and to consent to, the Bylaws of the Corporation to the same extent as if he or she had signed a written assent thereto. Conditions of Transfer 6.07 A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the Corporation; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, and written notice thereof shall be given to the Secretary of the Corporation or its transfer agent, if any, such fact shall be stated in the entry of the transfer. Reasonable Doubts as to Right to Transfer 6.08 When a transfer of shares is requested and there is reasonable doubt as to the right of the person seeking the transfer, the Corporation or its transfer agent, before recording the transfer of the share on its books or issuing any certificate therefor, may require from the person seeking the transfer reasonable proof of his or her right to the transfer, the Corporation may refuse a transfer unless the person gives adequate security or a bond of indemnity executed by a corporate surety or by two individual sureties satisfactory to the Corporation as to form, amount, and responsibility of sureties. The bond shall be agents, and registrars, or any of them, against any loss, damage, expense, or other liability to the owner of the shares by reason of the recordation of the transfer or the issuance of a new certificate for shares. 14 ARTICLE 7 DIVIDENDS --------- 7.01 The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares, in cash or property. However, no dividends may be declared which would render the Corporation insolvent. Dividends may be declared and paid only out of the unreserved and unrestricted earned surplus of the Corporation. Dividends may be paid with the shares of the Corporation's stock, whether Treasury shares or unissued shares, upon compliance with the provisions of Article 2.38 of the Texas Business Corporation Act. Corporate Seal 7.02 The Board of Directors shall provide a suitable seal, containing the name of the Corporation. The Secretary shall have charge of the seal. Relation to Articles of Incorporation 7.03 These Bylaws are subject to, and governed by, the Articles of Incorporation. ARTICLE 8 AMENDMENT OF BYLAWS ------------------- 8.01 The power to alter, amend, or reveal these Bylaws is vested in the Directors by majority vote, subject to repeal or charge by action of the Shareholders. 15 Signatures and Attestation Adopted by the Board of Directors on ___________________, 19__, but effective back to _____________________, 19__, the date of incorporation of the Corporation. --------------------------------------------- CEO --------------------------------- ATTEST - ------------------------------------ Secretary - ------------------------- CORPORATE SEAL 16 EX-3.21 20 CERTIFICATE OF INC. OF TOKHEIM EQUIPMENT CORP. Exhibit 3.21 ------------ CERTIFICATE OF INCORPORATION OF TOKHEIM EQUIPMENT CORPORATION FIRST: The name of the Corporation is Tokheim Equipment ----- Corporation (hereinafter the "Corporation"). SECOND: The address of the registered office of the Corporation ------ in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful ----- act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL"). FOURTH: The total number of shares of stock which the Corporation ------ shall have authority to issue is One Thousand (1000) shares of Common Stock, each having a par value of one penny ($.01). FIFTH: The name and mailing address of the Sole Incorporator is ----- as follows: Name Address ---- ------- Mary E. Keogh P.O. Box 636 Wilmington, DE 19899 SIXTH: The following provisions are inserted for the management ----- of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (2) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. (3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide. (4) No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article SIXTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. (5) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. 2 SEVENTH: Meetings of stockholders may be held within or without ------- the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. EIGHTH: The Corporation reserves the right to amend, alter, ------ change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the GCL, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 21st day of September, 1998. /s/ Mary Keogh ---------------------------------- Mary Keogh Sole Incorporator 3 EX-3.22 21 BYLAWS OF TOKHEIM EQUIPMENT CORP. Exhibit 3.22 ------------ BY-LAWS OF TOKHEIM EQUIPMENT CORPORATION (hereinafter called the "Corporation") ARTICLE I OFFICES ------- Section 1. Registered Office. The registered office of the --------- ----------------- Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. Other Offices. The Corporation may also have offices at --------- ------------- such other places both within and without the State of Delaware as the Board of Directors may from time to time determine. ARTICLE II MEETINGS OF STOCKHOLDERS ------------------------ Section 1. Place of Meetings. Meetings of the stockholders for the --------- ----------------- election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors. Section 2. Annual Meetings. The Annual Meetings of Stockholders for --------- --------------- the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders. Section 3. Special Meetings. Unless otherwise required by law or by --------- ---------------- the certificate of incorporation of the Corporation, as amended and restated from time to time (the "Certificate of Incorporation"), Special Meetings of Stockholders, for any purpose or purposes, may be called by either (i) the Chairman, if there be one, or (ii) the President, (iii) any Vice President, if there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be one, and shall be called by any such officer at the request in writing of (i) the Board of Directors, (ii) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings or (iii) stockholders owning a majority of the capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto). Section 4. Notice. Whenever stockholders are required or permitted --------- ------ to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special 2 meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 5. Adjournments. Any meeting of the stockholders may be --------- ------------ adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 6. Quorum. Unless otherwise required by law or the --------- ------ Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to 3 vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 5, until a quorum shall be present or represented. Section 7. Voting. Unless otherwise required by law, the Certificate --------- ------ of Incorporation or these By-laws, any question brought before any meeting of stock holders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the capital stock represented and entitled to vote thereat, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 5 of Article V hereof, each stock holder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in such officer's discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 8. Consent of Stockholders in Lieu of Meeting. Unless --------- ------------------------------------------ otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken at any Annual or Special Meeting of Stockholders of the Corporation, may be taken without a meeting, without prior notice and without a 4 vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this Section 8 to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the state of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had 5 been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as provided above in this section. Section 9. List of Stockholders Entitled to Vote. The officer of the --------- ------------------------------------- Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. Section 10. Stock Ledger. The stock ledger of the Corporation shall ---------- ------------ be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 9 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. Section 11. Conduct of Meetings. The Board of Directors of the ---------- ------------------- Corporation may adopt by resolution such rules and regulations for the conduct of 6 the meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants. 7 ARTICLE III DIRECTORS --------- Section 1. Number and Election of Directors. The Board of Directors --------- -------------------------------- shall consist of not less than one nor more than fifteen members, the exact number of which shall initially be fixed by the Incorporator and thereafter from time to time by the Board of Directors. Except as provided in Section 2 of this Article III, directors shall be elected by a plurality of the votes cast at the Annual Meetings of Stockholders and each director so elected shall hold office until the next Annual Meeting of Stockholders and until such director's successor is duly elected and qualified, or until such director's earlier death, resignation or removal. Any director may resign at any time upon written notice to the Corporation. Directors need not be stockholders. Section 2. Vacancies. Unless otherwise required by law or the --------- --------- Certificate of Incorporation, vacancies arising through death, resignation, removal, an increase in the number of directors or otherwise may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining direc tor, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, or until their earlier death, resignation or removal. Section 3. Duties and Powers. The business and affairs of the --------- ----------------- Corporation shall be managed by or under the direction of the Board of Directors 8 which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders. Section 4. Meetings. The Board of Directors may hold meetings, both --------- -------- regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, if there be one, the President, or by any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone or telegram on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as otherwise required by law or the --------- ------ Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the 9 meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present. Section 6. Actions by Written Consent. Unless otherwise provided in --------- -------------------------- the Certificate of Incorporation, or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 7. Meetings by Means of Conference Telephone. Unless --------- ----------------------------------------- otherwise provided in the Certificate of Incorporation, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. The Board of Directors may designate one or --------- ---------- more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of 10 a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required. Section 9. Compensation. The directors may be paid their expenses, --------- ------------ if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 10. Interested Directors. No contract or transaction between ---------- -------------------- the Corporation and one or more of its directors or officers, or between the Corpora- 11 tion and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because the director or officer's vote is counted for such purpose if (i) the material facts as to the director or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the director or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 12 ARTICLE IV OFFICERS -------- Section 1. General. The officers of the Corporation shall be chosen --------- ------- by the Board of Directors and shall be a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chairman of the Board of Directors (who must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law or the Certificate of Incorporation. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation. Section 2. Election. The Board of Directors, at its first meeting --------- -------- held after each Annual Meeting of Stockholders (or action by written consent of stockholders in lieu of the Annual Meeting of Stockholders), shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of the Board of Directors. Any vacancy occurring in any 13 office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors. Section 3. Voting Securities Owned by the Corporation. Powers of --------- ------------------------------------------ attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. Section 4. Chairman of the Board of Directors. The Chairman of the --------- ---------------------------------- Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation, unless the Board of Directors designates the President as the Chief Executive Officer, and, except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the 14 same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors. Section 5. President. The President shall, subject to the control of --------- --------- the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the President. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the President shall preside at all meetings of the stockholders and the Board of Directors. If there be no Chairman of the Board of Directors, or if the Board of Directors shall otherwise designate, the President shall be the Chief Executive Officer of the Corporation. The President 15 shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws or by the Board of Directors. Section 6. Vice Presidents. At the request of the President or in --------- --------------- the President's absence or in the event of the President's inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President, or the Vice Presidents if there is more than one (in the order designated by the Board of Directors), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Section 7. Secretary. The Secretary shall attend all meetings of the --------- --------- Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for committees of the Board of Directors when required. The 16 Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board of Directors or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer's signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. Section 8. Treasurer. The Treasurer shall have the custody of the --------- --------- corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in 17 such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of the Treasurer and for the restoration to the Corporation, in case of the Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Treasurer's possession or under the Treasurer's control belonging to the Corporation. Section 9. Assistant Secretaries. Assistant Secretaries, if there be --------- --------------------- any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of the Secretary's disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. 18 Section 10. Assistant Treasurers. Assistant Treasurers, if there be ---------- -------------------- any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of the Treasurer's disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of Assistant Treasurer and for the restoration to the Corporation, in case of the Assistant Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Assistant Treasurer's possession or under the Assistant Treasurer's control belonging to the Corporation. Section 11. Other Officers. Such other officers as the Board of ---------- -------------- Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. 19 ARTICLE V STOCK ----- Section 1. Form of Certificates. Every holder of stock in the --------- -------------------- Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chairman of the Board of Directors, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation. Section 2. Signatures. Any or all of the signatures on a certificate --------- ---------- may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Section 3. Lost Certificates. The Board of Directors may direct a --------- ----------------- new certificate to be issued in place of any certificate theretofore issued by the Corpo ration alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, 20 require the owner of such lost, stolen or destroyed certificate, or the owner's legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate. Section 4. Transfers. Stock of the Corporation shall be transferable --------- --------- in the manner prescribed by law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person's attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. Section 5. Record Date. --------- ----------- (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than 21 ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preced ing the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; providing, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in this State, its principal place of business, or an officer or agent of the Corporation having 22 custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolutions taking such prior action. (c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 6. Record Owners. The Corporation shall be entitled to --------- ------------- recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls 23 and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law. ARTICLE VI NOTICES ------- Section 1. Notices. Whenever written notice is required by law, the --------- ------- Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person's address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, telex or cable. Section 2. Waivers of Notice. Whenever any notice is required by --------- ----------------- law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, 24 present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE VII GENERAL PROVISIONS ------------------ Section 1. Dividends. Dividends upon the capital stock of the --------- --------- Corporation, subject to the requirements of the DGCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 6 of Article III hereof), and may be paid in cash, in property, or in shares of the Corporation's capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. 25 Section 2. Disbursements. All checks or demands for money and notes --------- ------------- of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 3. Fiscal Year. The fiscal year of the Corporation shall be --------- ----------- fixed by resolution of the Board of Directors. Section 4. Corporate Seal. The corporate seal shall have inscribed --------- -------------- thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII INDEMNIFICATION --------------- Section 1. Power to Indemnify in Actions, Suits or Proceedings other --------- --------------------------------------------------------- than Those by or in the Right of the Corporation. Subject to Section 3 of this - ------------------------------------------------ Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, em- 26 ployee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful. Section 2. Power to Indemnify in Actions, Suits or Proceedings by or --------- --------------------------------------------------------- in the Right of the Corporation. Subject to Section 3 of this Article VIII, the - ------------------------------- Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, 27 officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 3. Authorization of Indemnification. Any indemnification --------- -------------------------------- under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such determination shall be made (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) if there are no such directors, or if such directors so direct, by inde- 28 pendent legal counsel in a written opinion or (iii) by the stockholders. To the extent, however, that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case. Section 4. Good Faith Defined. For purposes of any determination --------- ------------------ under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceed ing, to have had no reasonable cause to believe such person's conduct was unlawful, if such person's action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, 29 trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be. Section 5. Indemnification by a Court. Notwithstanding any contrary --------- -------------------------- determination in the specific case under Section 3 of this Article VIII, and notwith standing the absence of any determination thereunder, any director or officer may apply to the Court of Chancery in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indem nification of the director or officer is proper in the circumstances because such person has met the applicable standards of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If 30 successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. Section 6. Expenses Payable in Advance. Expenses incurred by a --------- --------------------------- director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Section 7. Nonexclusivity of Indemnification and Advancement of --------- ---------------------------------------------------- Expenses. The indemnification and advancement of expenses provided by or - -------- granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 1 or 2 of this Article VIII but whom the 31 Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. Section 8. Insurance. The Corporation may purchase and maintain --------- --------- insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII. Section 9. Certain Definitions. For purposes of this Article VIII, --------- ------------------- references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the 32 same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VIII. Section 10. Survival of Indemnification and Advancement of Expenses. ---------- ------------------------------------------------------- The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 11. Limitation on Indemnification. Notwithstanding anything ---------- ----------------------------- contained in this Article VIII to the contrary, except for proceedings to enforce 33 rights to indemnification (which shall be governed by Section 5 hereof), the Corporation shall not be obligated to indemnify any director or officer in connection with a pro ceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation. Section 12. Indemnification of Employees and Agents. The Corporation ---------- --------------------------------------- may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation. ARTICLE IX AMENDMENTS ---------- Section 1. Amendments. These By-Laws may be altered, amended or --------- ---------- repealed, in whole or in part, or new By-Laws may be adopted by the stockholders or by the Board of Directors, provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of stockholders or Board of Directors as the case may be. All such amendments must be approved by either the holders of a majority of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office. 34 Section 2. Entire Board of Directors. As used in this Article IX and --------- ------------------------- in these By-Laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. 35 EX-3.23 22 ARTICLES OF INCORPORATION OF TOKHEIM INVEST. CORP. Exhibit 3.23 ------------ ARTICLES OF INCORPORATION OF TOKHEIM INVESTMENT CORP. The undersigned, a natural person of the age of eighteen years or more, acting as sole incorporator of a corporation under the provisions of the Texas Business Corporation Act, adopts the following Articles of Incorporation: ARTICLE I The name of the Corporation is TOKHEIM INVESTMENT CORP. ARTICLE II The period of duration of the Corporation is perpetual. ARTICLE III The purposes for which the Corporation is organized are as follows: (1) Subject to Part Four of the Texas Miscellaneous Corporation Act, to buy or otherwise acquire, own, hold, manage and(or) control real and personal property of every kind, nature and description and securities and interests of every kind and nature, including its own stock and stock in any of its subsidiaries or other corporations, and to sell, convey, mortgage, pledge, lease or otherwise dispose of such property or any part thereof; (2) To transact the business of investing, on behalf of itself or others, any part of its capital and such additional funds as it may have or obtain, or any interest therein, howsoever held, and to sell or otherwise dispose of the same or any part thereof and(or) any interest therein; (3) To coordinate, manage, oversee and otherwise deal with both the domestic and international interests of the Corporation, including any and all subsidiaries thereof, as may be permitted by law and deemed to be in the interests of the Corporation; (4) To secure and employ such investment counseling or services as it may deem appropriate and to maintain such brokerage, trading, investment, security, banking or other interests, seats or accounts as it shall deem appropriate and of assistance in the management, control, acquisition, transfer or divestiture of investments on behalf of the Corporation; (5) To do any and all of the acts and interests herein set forth, and every other act and thing incidental thereto or connected therewith, to the same extent as a natural person could do, and in any part of the world, to act as principal, factor, agent, or otherwise, either alone or in partnership with any person, association, corporation, or others, to exercise all or any of its corporate powers and rights in the State of Texas, and in any and all other states, territories, districts, possessions, or other countries or places, provided that the same not be forbidden by law; and 2 (6) To do any and transact all lawful business. ARTICLE IV Section 4.1 Authorized Shares. The aggregate number of shares of all ----------------- classes of stock which the corporation has authority to issue is 5,000 shares of common stock with a par value of $1.00 per share. Section 4.2 Denial of Preemptive Rights. No shareholder or other --------------------------- person shall have any preemptive right whatsoever. Section 4.3 Denial of Cumulative Voting. Cumulative voting shall not --------------------------- be permitted. ARTICLE V The Corporation will not commence business until it has received for the issuance of its shares consideration of the value of at least $1,000. ARTICLE VI Without necessity for action by its shareholders, the Corporation may purchase, directly or indirectly, its own shares to the extent of the aggregate of unrestricted capital surplus available therefor and unrestricted reduction surplus available therefor. ARTICLE VII Section 7.1 Voting Requirement. Notwithstanding any provision of the ------------------ Texas Business Corporation Act which requires the vote or concurrence of the 3 holders of more than a majority of the shares of the Corporation entitled to vote to take an action, the vote or concurrence of the holders of a majority of the shares of the Corporation entitled to vote shall be sufficient to take such action. Section 7.2 Quorum Requirement. The holders of at least fifty ------------------ percent of the shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders of the Corporation. Section 7.3 Interested Transactions. No contract or other ----------------------- transaction between the Corporation and one or more of its directors, officers or securityholders or between the Corporation and another corporation, partnership, joint venture, trust or other enterprise of which one or more of the Corporation's directors, officers or securityholders are members, officers, securityholders, directors or employees or in which they are otherwise interested, directly or indirectly, shall be invalid solely because of such relationship, or solely because such a director, officer or security holder is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or other transaction, or solely because his or their votes are counted for such purpose, if (A) the material facts as to his relationship or interest and as to the contract or other transaction are known or disclosed to the Board of Directors or committee thereof, and such board or committee in good faith aurhorizes the contract or other transaction by the affirmative vote of a majority of the disinterested directors even though the disinterested directors be 4 less than a quorum, or (B) the material facts as to his relationship or interest and as to the contract or other transaction are known or disclosed to the shareholders entitled to vote thereon, and the contract or other trans action is approved in good faith by vote of the shareholders, or (C) as of the time it is entered into, the contract or other transaction is fair as to the Corporation. ARTICLE VIII Section 8.1 Indemnification. The Corporation, by action of its Board --------------- of Directors, may indemnify any director or officer of the Corporation, and any person who may have served at the request of the Corporation as a director or officer of another corporation in which it owns shares or of which it is a creditor, against any costs and expenses, including counsel fees, actually and necessarily incurred (or reasonably expected to be incurred) in connection with the defense of any civil, criminal, administrative, investigative or other action, suit or proceeding (whether by or in the right of the Corporation or otherwise) in which he may become involved or with which he may be threatened, by reason of his being or having been such a director or officer, and against any payments in settlement of any such action, suit or proceeding or in satisfaction of any related judgment, fine or penalty, provided that the Board of Directors shall, in the exercise of its business judgment, determine that such indemnification is in the best interests of the Corporation. 5 Section 8.2 Advance Payment of Expenses. Expenses incurred in --------------------------- defending a civil, criminal, administrative, investigative or other action, suit, or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case on receipt of an undertaking by or on behalf of the director or officer to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation. Section 8.3 Non-Exclusivity. The agreement of the Corporation to --------------- indemnify any officer, director or other person pursuant to Section 8.1 of this Article 8 shall not be deemed exclusive of any other rights to which any such director, officer or other person may be entitled under any other agreement, pursuant to a vote of shareholders, as a matter of law or otherwise, either as to action in his official capacity or as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. No person shall be entitled to indemnification pursuant to this Article 8 in relation to any matter as to which indemnification shall not be permitted by law. 6 ARTICLE IX In performing his duties, a director of the Corporation shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by (A) one or more officers or employees of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented, (B) counsel, public accountants or other persons as to matters which the director reasonably believes to be within such person's professional or expert competence, or (C) a committee of the Board of Directors upon which he does not serve, duly designated in accordance with a provision of the by-laws, as to matters within its designated authority, which committee the director deems to merit confidence, but he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his duties shall have no liability to the Corporation (whether asserted directly or derivatively) by reason of being or having been a director of the Corporation. ARTICLE X The address of the initial registered office of the Corporation is 811 Dallas Avenue, Houston, Texas 77002, and the name of the initial registered agent of the Corporation at such address is C T Corporation System. 7 ARTICLE XI The initial Board of Directors shall consist of three members who shall serve as directors until the first annual meeting of shareholders or until their successors shall have been elected and qualified, and whose names and addresses are as follows: Name Address ---- ------- Richard S. Doner 10412 Antelope Court Fort Wayne, Indiana 46804 Joseph J. Guidrey 6829 Mohican Trail Fort Wayne, Indiana 46804 J. E. Overmyer Route 1 Spencerville, Indiana 46788 8 ARTICLE XII The name and address of the incorporator of the Corporation are as follows; Name Address ---- ------- C. Christopher Scruggs 2900 South Tower Pennzoil Place Houston, Texas 77002 IN WITNESS WHEREOF, I have hereunto set my hand this 11/th/ day of November, l980. /s/ G/ Christopher Scruggs -------------------------------- G. Christopher Scruggs Sworn to on November 11/th/, 1980 by the above named incorporator. /s/ Ruthanne Rauls -------------------------------- Notary Public in and for [SEAL] Harris County, Texas Ruthanne Rauls -------------------------------- Print Name My commission expires: 11/30/84 -------------------------------- 9 EX-3.24 23 BYLAWS OF TOKHEIM INVESTMENT CORP. Exhibit 3.24 ------------ BY-LAWS OF TOKHEIM INVESTMENT CORP. ARTICLE I Offices and Agent The Corporation may have such offices, either within or without the State of Texas, as the Board of Directors may designate or as the business of the Corporation may require from time to time. The registered office of the Corporation required by the Texas Business Corporation Act to be maintained in the State of Texas may be, but need not be, identical with the principal office in the State of Texas, as designated by the Board of Directors. The address of the registered office or the identity of the registered agent may be changed from time to time by the Board of Directors. The address of the initial registered office of the Corporation is 811 Dallas Avenue, Houston, Texas 77002, and the name of the initial registered agent of the Corporation at such address is C T Corporation System. ARTICLE II Shareholders SECTION 1. Annual Meeting. The annual meeting of the shareholders -------------- shall be held on such date in each year and at such time and place as may be determined by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Texas, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated for any annual meeting of the shareholders or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as may be convenient. SECTION 2. Special Meetings. Special meetings of the shareholders, ---------------- for any purpose or purposes, may be called by the President or by the Board of Directors, and shall be called by the President at the request of the holders of not less than one-tenth of all the outstanding shares of the Corporation entitled to vote at the meeting. SECTION 3. Place of Meeting. The Board of Directors may designate ---------------- any place, either within or without the State of Texas, as the place of meeting for any annual or special meeting called by the Board of Directors. If no designation is made, or if a special meeting be called otherwise than by the Board of Directors, the place of meeting shall be the registered office of the Corporation in the State of Texas. SECTION 4. Notice of Meeting. Written or printed notice stating the ----------------- place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. Attendance by the shareholder, whether in person or by proxy, at a shareholder's meeting shall constitute a waiver of notice of such meeting of which he has had no notice. SECTION 5. Closing of Transfer Books and Fixing of Record Date. For --------------------------------------------------- the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period not to exceed fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may, by resolution, fix in advance a date as the record date for any such determination of shareholders, such 2 date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. SECTION 6. Voting Lists. The officer or agent having charge of the ------------ stock transfer books of the Corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each, which list, for a period of ten days prior to such meeting, shall be kept on file at the registered office of the Corporation, and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and opened at the time and place of the meeting and shall be subject to the inspection by any shareholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. SECTION 7. Quorum. A majority of the outstanding shares of the ------ Corporation entitled to vote, and represented in person or by proxy, shall constitute a quorum at a meeting of shareholders unless a lesser number is specified in the Articles of Incorporation of the Corporation (Quorum). If less than a Quorum is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a Quorum shall be present or represented, any business may be transacted which might have been transacted as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a Quorum. 3 SECTION 8. Proxies. At all meetings of shareholders, a shareholder ------- may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Each proxy shall be revocable unless expressly provided therein to be irrevocable. SECTION 9. Voting of Shares. Unless otherwise expressly provided in ---------------- the Articles of Incorporation of the Corporation, each outstanding share entitled to vote shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. SECTION 10. Actions Without a Meeting. Any action required or ------------------------- permitted to be taken at a meeting of shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, and such consent shall have the same force and effect as a unanimous vote of the shareholders. Such writing, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consent transmitted by telegraph, telex, telecopy or similar means of visual data transmission. SECTION 11. Telephone Meetings. Meetings of the shareholders of the ------------------ Corporation may be conducted by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can hear and speak to each other. ARTICLE III Board of Directors SECTION 1. General Power. The business and affairs of the Corporation ------------- shall be managed by its Board of Directors except as the Board of Directors shall delegate the power to so manage to the Executive Committee or other committee. SECTION 2. Number, Tenure and Qualifications. The number of directors --------------------------------- composing the initial Board of Directors shall be three. Upon resolution of 4 the Board of Directors the number of directors may be increased or decreased, but no decrease shall have the effect of shortening the term of any incumbent director. Each director shall hold office until the next annual meeting of shareholders, unless earlier removed, and until his successor shall have been elected and qualified. A director need not be a resident of the State of Texas or a shareholder of the Corporation. SECTION 3. Regular Meetings. A regular meeting of the Board of ---------------- Directors shall be held without notice other than this by-law immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Texas, for the holding of additional regular meetings without notice other than such resolution. SECTION 4. Special Meetings. Special meetings of the Board of ---------------- Directors may be called by or at the request of the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Texas, as the place for holding any special meeting called by them. SECTION 5. Notice. Notice of any special meeting shall be given at ------ least two days prior thereto by written notice delivered personally or mailed to each director at his business address, or by telegram, telex, telecopy or similar means of visual date transmission. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, telex, telecopy or similar means of visual data transmission, such notice shall be deemed to be delivered when transmitted for delivery to the recipient. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because that meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular or special meeting of the Board of Directors need be specified in the notice, or waiver of notice of such meeting. SECTION 6. Quorum. A majority of the number of directors fixed in ------ accordance with Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn 5 the meeting from time to time without further notice. SECTION 7. Manner of Acting. ---------------- (a) Actions at the Meeting. Except as provided in Paragraph (b) of ---------------------- this Section 7, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. (b) Actions Without a Meeting. Any action required or permitted to ------------------------- be taken at a meeting of the Board of Directors or the Executive Committee or any other committee may be taken without a meeting, if a consent in writing, setting forth the action so taken, is signed by all of the members of the Board of directors, Executive Committee or other committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote at a meeting. Such writing, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consent transmitted by telegraph, telex, telecopy, or similar means of visual data transmission. (c) Telephone Meetings. Meetings of the Board of Directors of the ------------------ Corporation may be conducted by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can hear and speak to each other. SECTION 8. Vacancies. Any vacancy occurring in the Board of Directors --------- may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors shall be filled only by action of the shareholders. A vacancy shall be deemed to exist by reason of the death or resignation of the person elected, or upon the failure of shareholders to elect directors to fill the unexpired term of directors removed in accordance with the provisions of Section 9 of this Article III. SECTION 9. Removal. At any meeting of shareholders called expressly ------- for the purpose of removal, any director or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of a majority of the 6 shares then entitled to vote at an election of directors. Removal of directors with or without cause may also be accomplished by unanimous written consent of the shareholders without a meeting. In the case the entire board or any one or more of the directors are so removed, new directors may be elected at the same meeting, or by the same written consent, for the unexpired term of the director or directors so removed. Failure to elect directors to fill the unexpired term of the directors so removed shall be deemed to create a vacancy or vacancies in the Board of Directors. SECTION 10. Compensation. By resolution of the Board of Directors, ------------ the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 11. Presumption of Assent. A director of the Corporation who --------------------- is present at a meeting of the Board of Directors in which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as Secretary of the meeting before the adjournment thereof, or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 12. Executive and Other Committees. There may be established ------------------------------ an Executive Committee, and one or more other committees, composed of one or more directors designated by resolution adopted by majority of the full number of directors of the Board of Directors as fixed in accordance with Section 2 of this Article III. The Executive Committee or such other committees may meet at stated times, or on notice to all members by any one member. Vacancies in the membership of the Executive Committee or such other committees shall be filled by a majority vote of the full number of directors on the Board of Directors at a regular meeting or at a special meeting called for that purpose. During the intervals between meetings of the Board, the Executive Committee, if it shall have been established, may advise and aid the officers of the Corporation in all matters concerning its interest and the management of its business, and shall generally perform such duties and exercise such powers as may be directed or delegated by the Board of Directors from time to time. The Board of Directors may delegate to the Executive Commit- 7 tee or such other committees the authority to exercise all the powers of the Board of Directors, including the power to declare dividends or to authorize the issuance of shares of the Corporation except where action of the full Board of Directors is required by the Texas Business Corporation Act. The designation of and delegation of power to the Executive Committee shall not operate to relieve the Board of Directors, or any members thereof, of any responsibility imposed upon it or him by law. ARTICLE IV Officers SECTION 1. Number. The officers of the corporation shall be a ------ President, one or more Vice-Presidents (the number thereof to be determined by the Board of Directors), a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person except the offices of President and Secretary. SECTION 2. Election and Term of Office. The officers of the --------------------------- Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until his successor shall have been duly elected and shall have been qualified, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Removal. Any officer may be removed by the Board of ------- Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. President. The President shall be the principal --------- 8 executive officer of the Corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. He shall, when present, preside at all meetings of the shareholders and of the Board of Directors. He shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. SECTION 6. The Vice Presidents. In the absence of the President or in ------------------- the event of his death, inability or refusal to act, the Vice President (or should there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation then in the order of their election) shall perform the duties of President, and when so acting, shave have all the powers of and be subject to all the restrictions upon the President. He shall perform such other duties as from time to time may be assigned to him by the President or the Board of Directors. SECTION 7. The Secretary. The Secretary shall: (a) keep the minutes ------------- of the shareholders' and the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws, or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation, and see that the seal of the Corporation is affixed to all documents as may be necessary or appropriate; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general, perform all duties incident to the office of Secretary, and such other duties as from time to time may be designated to him by the President or the Board of Directors. SECTION 8. The Treasurer. If required by the Board of Directors, the ------------- Treasurer shall give a bond for the faithful discharge of his duties in such sum, and with such surety or sureties, as the Board of Directors shall determine. He shall: (a) have charge and custody of, and be responsible for, all funds and securities of the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies, or other depositories as shall be selected by the Board of Directors; and (b) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. 9 SECTION 9. Assistant Secretaries and Assistant Treasurers. The ---------------------------------------------- Assistant Secretaries when authorized by the Board of Directors may sign with the President, or a Vice President, certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall, respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. SECTION 10. Salaries. The salaries, if any, of the officers shall be -------- fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE V Certificate for Shares, Transfer and Replacement SECTION 1. Certificate for Shares. Certificate representing shares of ---------------------- the Corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the President or a Vice President, and by the Secretary or an Assistant Secretary. If such certificates are signed or countersigned by a transfer agent or registrar, other than the Corporation, such signature of the President or a Vice President and Secretary or Assistant Secretary, and the seal of the Corporation, or any of them, may be executed in facsimile, engraved or printed. If any officer who has signed or whose facsimile signature has been placed on any certificate shall have ceased to be such officer before the certificate is issued, it may be issued by the Corporation with the same effect as if the officer has not ceased to be such at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, stolen or destroyed certificate a new one may be issued therefor provided in Section 3 of this Article V. 10 SECTION 2. Transfer of Shares. Transfer of shares of the Corporation ------------------ shall be made only on the stock transfer books of the Corporation by the holder of record thereof, or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney, duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. SECTION 3. Lost, Stolen or Destroyed Certificates. The Corporation -------------------------------------- shall issue a new certificate in place of any certificate for shares previously issued if the registered owner of the certificate: (a) makes proof in affidavit form that it has been lost, destroyed or wrongfully taken; (b) requests the issuance of a new certificate before the Corporation has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim; (c) gives a bond in such form, and with such surety or sureties, with fixed or open penalty, as the Corporation may direct, to indemnify the Corporation (and its transfer agent and registrar, if any) against any claim that may be made on account of the alleged loss, destruction or theft of the certificate; and (d) satisfies any other reasonable requirements imposed by the Corporation. When a certificate has been lost, apparently destroyed or wrongfully taken, and the holder of record fails to notify the Corporation within a reasonable time after he has notice of it, and the Corporation registers a transfer of the Shares represented by the certificate before receiving such notification, the holder of record is precluded from making any claim against the Corporation for the transfer or for a new certificate. ARTICLE VI Fiscal Year The Board of Directors shall, by resolution, fix the fiscal year of the corporation. ARTICLE VII Dividends 11 The Board of Directors or the Executive Committee, if so authorized by a resolution of the Board of Directors, may from time to time declare that the Corporation may pay dividends on its outstanding shares in the manner provided by law. ARTICLE VII Seal The Board of Directors shall provide a corporate seal, which shall be circular in form and shall have inscribed thereon the name of the Corporation, the state of incorporation, and the five-pointed Texas star. ARTICLE IX Waiver of Notice Whenever any notice is required to be given to any shareholder or director of the Corporation under the provisions of these by-laws, the Articles of Incorporation or the Texas Business Corporation Act, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE X Procedure Meetings of the shareholders and of the Board of Directors shall be conducted in accordance with the procedure as contained in Robert's Rules of Order, to the extent applicable. ARTICLE XI Participation of Directors and Officers in Related Business Unless otherwise provided by contract, officers and directors of this 12 Corporation may hold positions as officers and directors of other corporations, in related businesses, and their efforts to advance the interest of those corporations will not create a breach of fiduciary duty to this Corporation in the absence of bad faith. ARTICLE XII Amendments The power to alter, amend, or repeal the By-Laws or adopt new By-Laws shall be vested in the Board of Directors. 13 EX-3.25 24 CERTIFICATE OF FORMATION OF TOKHEIM RPS, LLC Exhibit 3.25 ------------ CERTIFICATE OF FORMATION OF TOKHEIM RPS, LLC 1. The name of the limited liability company is Tokheim RPS, LLC. 2. The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Tokheim RPS, LLC on this 21st day of September, 1998. TOKHEIM RPS, LLC By: /s/ Mary E. Keogh ----------------------------------- Name: Mary E. Keogh Title: Authorized Person EX-3.26 25 LIMITED LIABILITY CO. AGREEMENT OF TOKHEIM RPS,LLC Exhibit 3.26 ------------ LIMITED LIABILITY COMPANY AGREEMENT OF TOKHEIM RPS, LLC A DELAWARE LIMITED LIABILITY COMPANY The undersigned Member hereby forms a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act, 6 Del. (S) 18-101, et seq. (the "Act"), and hereby agrees and declares as follows: -- --- 1. Name. The name of the limited liability company formed hereby is ---- Tokheim RPS, LLC (the "LLC"). 2. Purpose. The purpose of the LLC is to engage in any and all ------- lawful activities to which the Members deem appropriate. 3. Registered Office. The registered office of the LLC in the State ----------------- of Delaware is located at 1209 Orange Street, Wilmington, Delaware. 4. Registered Agent. The name and address of the registered agent ---------------- of the LLC for service of process on the LLC in the State of Delaware is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware. 5. Capital Accounts. An account shall be established in the LLC's ---------------- books for each Member (each a "Capital Account") in accordance with the rules of Section 704 of the Internal Revenue Code of 1986 and Treasury Regulation Section 1.704-1(b)(2)(iv). 6. Percentage Interest and Allocations of Profits and Losses. Each --------------------------------------------------------- Member's interest in the LLC shall be expressed as a percentage equal to the ratio on any date of such Member's Capital Account on such date to the aggregate Capital Accounts of all Members on such date, such Capital Accounts to be determined after giving effect to all contributions of property or money, distributions and allocations for all periods ending on or prior to such date (as to any Member, his or her "Percentage Interest"). The LLC's profits and losses shall be allocated in accordance with the Percentage Interests of the Members. Each member's Capital Account and Percentage Interest will be reflected on Schedule A hereto. 7. Admission and Capital Contributions. Simultaneously with the ----------------------------------- execution and delivery of this Agreement, Gasboy International, Inc. is admitted as the initial Member of the LLC. The address of Gasboy International, Inc. is: 707 North Valley Forge Road, Lansdale, PA 19446. The initial Member's initial capital contribution is listed on Schedule A hereto, which will be updated as appropriate. 8. Additional Contributions. Except as otherwise required by law or ------------------------ agreed in writing by all of the Members, no Member shall be required to make any additional capital contributions to the LLC. Each additional capital contribution shall be made payable to the LLC, in immediately available funds, at its principle office. No Member shall be entitled to receive interest on its capital contributions. 9. Distributions. From time to time, as determined by the Members ------------- owning a majority of the Percentage Interests (the "Majority Members"), the Majority Members shall have the right to cause the LLC to distribute to the Members, pro rata based on their respective Percentage Interests, any cash held by it which is neither reasonably necessary for the operation of the LLC nor in violation of Sections 18-607 or 18-804 of the Act. 10. Managers. The number of Managers shall initially be three (3), -------- and thereafter shall be such number as shall be fixed from time to time by the Majority Members. The initial Managers shall be Douglas K. Pinner, John A. Negovetich and Norman L. Roelke. The Managers shall hold office during the lifetime of the LLC until its termination as herein provided; except any Manager (a) may resign or retire by written instrument signed by him and delivered to each other Manager, which shall take effect upon such delivery or upon such later date as is specified therein; (b) who be comes physically or mentally incapacitated by reason of disease or otherwise, or is otherwise unable to serve, may be removed by written instrument signed in good faith by at least two-thirds (2/3) of the other Managers, specifying the date of his removal; or (c) may be removed by the Majority Members at any meeting of the Members duly called for such purpose. The death of a Manager shall end his or her term and create an automatic vacancy. Any vacancy among the Managers, whether created by an increase in the number of Managers, by the death, resignation or removal of a Manager or otherwise, shall be filled by the Majority Members. Except as otherwise provided herein or by law, the Managers shall have exclusive and absolute control over the business of the LLC. The Managers shall have the power to conduct the business of the LLC and to carry on its operations in any and all of its offices and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the LLC, although such things are not herein specifically mentioned. Any determination as to 2 what is in the interests of the LLC made by the Managers in good faith shall be conclusive. All instruments, contracts, agreements and documents providing for the acquisition, mortgage or disposition of property of the LLC shall be valid and binding on the LLC if executed by Douglas K. Pinner, John A. Negovetich, Norman L. Roelke or Mary E. Keogh, each of whom shall be an "authorized person" within the meaning of the Act for purposes of executing the LLC's Certificate of Formation. All actions previously taken by Mary E. Keogh in forming the LLC are hereby ratified and approved. 11. Powers of Members. The number of Members shall initially be one ----------------- (1), and thereafter shall be such number as shall be fixed from time to time by the Majority Members. The Members shall have the right and authority to take all actions specifically enumerated in the Certificate of Formation or this Agreement. 12. Compensation. No Member shall receive compensation for services ------------ rendered to the LLC. Managers shall receive such compensation for services rendered to the LLC as the Majority Members shall determine. 13. Term. The LLC shall dissolve, and its affairs shall be wound up, ---- upon the earliest to occur of (a) the execution of a written consent by all Members or (b) an event of dissolution of the LLC under the Act. 14. Assignments. No Member may assign, pledge and/or otherwise ----------- encumber its ownership or control of all or any part of, or any interest in, the Member's Percentage Interest, without the prior written consent of each other Member. Any permitted assignee of a Member's Percentage Interest shall, as a condition to such assignment, comply with the requirements for becoming an additional Member set forth in Section 17. 15. Withdrawal. Any Member may withdraw from the LLC only with the ---------- prior written consent of all other Members. Upon any such permitted withdrawal, the withdrawing Member shall receive the lesser of (x) the book value of such Member's then-current Percentage Interest in the LLC and (y) the aggregate amount of any contributions of property or money made by such Member to the LLC. 16. Limited Liability. No Member shall have liability for the ----------------- obligations of the LLC, except to the extent provided in the Act. 17. Additional Members. No additional Member shall be admitted to ------------------ the LLC without the prior written consent of each of the other Members, which consent may be evidenced by, among other things, the execution of an amendment to 3 this Agreement. Each additional Member, as a condition to its admission, shall (i) execute and deliver to each of the other Members a counterpart to this Agreement, agreeing for the benefit of the other Members to be bound by this Agreement to the same extent as if the additional Member had been an original party to the Agreement as a Member and (ii) take all action and execute all instruments required by the LLC in order to comply with any applicable federal or state law and regulations. 18. Amendments. This Agreement may be amended only in a writing ---------- signed by all of the Members. 19. Governing Law. This Agreement shall be governed by and construed ------------- under the laws of the State of Delaware. 4 IN WITNESS WHEREOF, the undersigned has duly executed this Limited Liability Company Agreement as of the 21st day of September, 1998. GASBOY INTERNATIONAL, INC. /s/ Norman L. Roelke -------------------------- By: Norman L. Roelke Its: Secretary 5 Schedule A Capital Account Member Capital Account Percentage Interest - ------ --------------- ------------------- Gasboy International, Inc. $250.2 million 100% 6 EX-3.27 26 ARTICLES OF ORGANIZATION OF TOKHEIM SERVICES LLC EXHIBIT 3.27 ------------ ARTICLES OF ORGANIZATION OF TOKHEIM SERVICES LLC The undersigned person, acting as an organizer of the limited liability company hereinafter named, sets forth the following statements: FIRST: The name of the limited liability company (the "Company") is ----- Tokheim Services LLC. SECOND: The address of its registered office in the State of Indiana ------ and the name of the Company's registered agent at that address are Corporation Service Company, 251 East Ohio Street, Suite 500, Indianapolis, Indiana 46204. THIRD: The duration of the Company is perpetual until dissolution in ------ accordance with the provisions of the Indiana Business Flexibility Act. FOURTH: The management of the business and affairs of ------- the Company is vested in a board of managers. IN WITNESS WHEREOF, the undersigned has executed these Articles of Organization this 18th day of November, 1998. By /s/ M. Martha Sherry ----------------------------- Name: M. Martha Sherry Title: Authorized Person EX-3.28 27 LIMITED LIABILITY CO.AGREEMENT OF TOKHEIM SERVICES Exhibit 3.28 ------------ LIMITED LIABILITY COMPANY AGREEMENT OF TOKHEIM SERVICES LLC AN INDIANA LIMITED LIABILITY COMPANY The undersigned Members hereby form a limited liability company pursuant to and in accordance with the Indiana Business Flexibility Act, 23 Ind. (S) 18-1-1, et seq. (the "Act"), and hereby agree and declare as follows: -- --- 1. Name. The name of the limited liability company formed hereby is ---- Tokheim Services LLC (the "LLC"). 2. Purpose. The purpose of the LLC is to engage in any and all ------- lawful activities to which the Members deem appropriate. 3. Registered Office. The registered office of the LLC in the State ----------------- of Indiana is located at 251 East Ohio Street, Suite 500, Indianapolis, Indiana 46204. 4. Registered Agent. The name and address of the registered agent ---------------- of the LLC for service of process on the LLC in the State of Indiana is Corporation Trust Company, 251 East Ohio Street, Suite 500, Indianapolis, Indiana 46204. 5. Capital Accounts. An account shall be established in the LLC's ---------------- books for each Member (each a "Capital Account") in accordance with the rules of Section 704 of the Internal Revenue Code of 1986 and Treasury Regulation Section 1.704-1(b)(2)(iv). 6. Percentage Interest and Allocations of Profits and Losses. Each --------------------------------------------------------- Member's interest in the LLC shall be expressed as a percentage equal to the ratio on any date of such Member's Capital Account on such date to the aggregate Capital Accounts of all Members on such date, such Capital Accounts to be determined after giving effect to all contributions of property or money, distributions and allocations for all periods ending on or prior to such date (as to any Member, his or her "Percentage Interest"). The LLC's profits and losses shall be allocated in accordance with the Percentage Interests of the Members. Each member's Percentage Interest will be reflected on Schedule A hereto. 7. Admission and Capital Contributions. Simultaneously with the ----------------------------------- execution and delivery of this Agreement, Tokheim Corporation and Tokheim Investment Corp. are admitted as the initial Members of the LLC. The address of Tokheim Corporation is: 10501 Corporate Drive, Fort Wayne, IN 46845. The address of Tokheim Investment Corp. is: c/o CT Corporation System, 350 North St. Paul Street, Dallas, TX 75201. 8. Additional Contributions. Except as otherwise required by law or ------------------------ agreed in writing by all of the Members, no Member shall be required to make any additional capital contributions to the LLC. Each additional capital contribution shall be made payable to the LLC, in immediately available funds, at its principle office. No Member shall be entitled to receive interest on its capital contributions. 9. Distributions. From time to time, as determined by the Members ------------- owning a majority of the Percentage Interests (the "Majority Members"), the Majority Members shall have the right to cause the LLC to distribute to the Members, pro rata based on their respective Percentage Interests, any cash held by it which is neither reasonably necessary for the operation of the LLC nor in violation of Sections 18-5-4, 18-5-5 or 18-9-6 of the Act. 10. Managers. The number of Managers shall initially be three (3), -------- and thereafter shall be such number as shall be fixed from time to time by the Majority Members. The initial Managers shall be Douglas K. Pinner, John A. Negovetich and Norman L. Roelke. The Managers shall hold office during the lifetime of the LLC until its termination as herein provided; except any Manager (a) may resign or retire by written instrument signed by him and delivered to each other Manager, which shall take effect upon such delivery or upon such later date as is specified therein; (b) who be comes physically or mentally incapacitated by reason of disease or otherwise, or is otherwise unable to serve, may be removed by written instrument signed in good faith by at least two-thirds (2/3) of the other Managers, specifying the date of his removal; or (c) may be removed by the Majority Members at any meeting of the Members duly called for such purpose. The death of a Manager shall end his or her term and create an automatic vacancy. Any vacancy among the Managers, whether created by an increase in the number of Managers, by the death, resignation or removal of a Manager or otherwise, shall be filled by the Majority Members. Except as otherwise provided herein or by law, the Managers shall have exclusive and absolute control over the business of the LLC. The Managers shall have the power to conduct the business of the LLC and to carry on its operations in any and all of its offices and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the LLC, 2 although such things are not herein specifically mentioned. Any determination as to what is in the interests of the LLC made by the Managers in good faith shall be conclusive. All instruments, contracts, agreements and documents providing for the acquisition, mortgage or disposition of property of the LLC shall be valid and binding on the LLC if executed by Douglas K. Pinner, John A. Negovetich, Norman L. Roelke or M. Martha Sherry. All actions previously taken by M. Martha Sherry in forming the LLC are hereby ratified and approved. 11. Powers of Members. The number of Members shall initially be two ----------------- (2), and thereafter shall be such number as shall be fixed from time to time by the Majority Members. The Members shall have the right and authority to take all actions specifically enumerated in the Certificate of Organization or this Agreement. 12. Compensation. No Member shall receive compensation for services ------------ rendered to the LLC. Managers shall receive such compensation for services rendered to the LLC as the Majority Members shall determine. 13. Term. The LLC shall dissolve, and its affairs shall be wound up, ---- upon the earliest to occur of (a) the execution of a written consent by all Members or (b) an event of dissolution of the LLC under the Act. 14. Assignments. No Member may assign, pledge and/or otherwise ----------- encumber its ownership or control of all or any part of, or any interest in, the Member's Percentage Interest, without the prior written consent of each other Member. Any permitted assignee of a Member's Percentage Interest shall, as a condition to such assignment, comply with the requirements for becoming an additional Member set forth in Section 17. 15. Withdrawal. Any Member may withdraw from the LLC only with the ---------- prior written consent of all other Members. Upon any such permitted withdrawal, the withdrawing Member shall receive the lesser of (x) the book value of such Member's then-current Percentage Interest in the LLC and (y) the aggregate amount of any contributions of property or money made by such Member to the LLC. 16. Limited Liability. No Member shall have liability for the ----------------- obligations of the LLC, except to the extent provided in the Act. 17. Additional Members. No additional Member shall be admitted to ------------------ the LLC without the prior written consent of each of the other Members, which consent may be evidenced by, among other things, the execution of an amendment to this Agreement. Each additional Member, as a condition to its admission, shall (i) 3 execute and deliver to each of the other Members a counterpart to this Agreement, agreeing for the benefit of the other Members to be bound by this Agreement to the same extent as if the additional Member had been an original party to the Agreement as a Member and (ii) take all action and execute all instruments required by the LLC in order to comply with any applicable federal or state law and regulations. 18. Amendments. This Agreement may be amended only in a writing ---------- signed by all of the Members. 19. Governing Law. This Agreement shall be governed by and construed ------------- under the laws of the State of Indiana. 4 IN WITNESS WHEREOF, the undersigned has duly executed this Limited Liability Company Agreement as of the _____ day of January, 1999. TOKHEIM CORPORATION /s/ John A. Negovetich ---------------------- By: John A. Negovetich Its: Executive Vice President, Finance & Administration & CFO TOKHEIM INVESTMENT CORP. /s/ John A. Negovetich ------------------------------------------ By: John A. Negovetich Its: Executive Vice President, Finance & Administration & CFO 5 Schedule A Percentage Interest Member Percentage Interest - ------ ------------------- Tokheim Corporation 99.0% Tokheim Investment Corp. 1.0% 6 EX-5.1 28 OPINION OF NORMAN L. ROELKE Exhibit 5.1 ----------- April 28, 1999 Tokheim Corporation 10501 Corporate Drive Fort Wayne, IN 46845 Re: Tokheim Corporation Registration Statement on Form S-4 Ladies and Gentlemen: I am Vice President, Secretary and General Counsel of Tokheim Corporation, an Indiana corporation (the "Company"), and its direct and indirect wholly-owned subsidiaries, Envirotronic Systems, Inc., an Indiana corporation, Gasboy International, Inc., a Pennsylvania corporation, Management Solutions, Inc., a Colorado corporation, Sunbelt Hose & Petroleum Equipment, Inc., a Georgia corporation, Tokheim Services LLC, an Indiana limited liability company, Tokheim Equipment Corporation, a Delaware corporation, Tokheim Automation Corporation, a Texas corporation, Tokheim Investment Corp., a Texas corporation, and Tokheim RPS, LLC, a Delaware limited liability company (collectively, the "Subsidiary Guarantors"). In my capacity as General Counsel, I am authorized to furnish opinions on behalf of the Company and the Subsidiary Guarantors that may be required in connection with various matters, including the Company's offer to exchange (the "Exchange Offer") up to $123,000,000 aggregate principal amount of its outstanding Series A 11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Dollar Notes") and related subsidiary guarantees, for its Series B 11 3/8% Senior Subordinated Exchange Notes due 2008 (the "Dollar Exchange Notes") and related subsidiary guarantees (the "Dollar Subsidiary Guarantees"), and up to Euro 75,000,000 aggregate principal amount of its outstanding Series A 11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Euro Notes," and, together with the Outstanding Dollar Notes, the "Outstanding Notes") and related subsidiary guarantees, for its Series B 11 3/8% Senior Subordinated Exchange Notes due 2008 (the "Euro Exchange Notes," and, together with the Dollar Exchange Notes, the "Exchange Notes") and related subsidiary guarantees (the "Euro Subsidiary Guarantees" and, together with the Dollar Guarantees, the "Subsidiary Guarantees"). The Dollar Exchange Notes and Dollar Subsidiary Guarantees will be issued under a Dollar Note Indenture, dated as of January 29, 1999, Tokheim Corporation April 28, 1999 Page 2 among the Company, the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee. The Euro Exchange Notes and Euro Subsidiary Guarantees will be issued under a Euro Note Indenture (together with the Dollar Note Indenture, the "Indentures"), dated as of January 29, 1999, among the Company, the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee. This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act"). In connection with this opinion, I have examined originals or copies, certified or otherwise identified to my satisfaction, of the following documents: (i) the Registration Statement on Form S-4 (File No. 333- ) as filed with the Securities and Exchange Commission (the "Commission") on the date hereof (the "Registration Statement"); (ii) copies of the Indentures; (iii) the forms of the Exchange Notes and Subsidiary Guarantees and specimen certificates thereof; and (iv) such other documents, certificates and records as I have deemed necessary or appropriate as the basis for the opinions set forth herein. I have also examined originals or copies, certified or otherwise identified to my satisfaction, of such records of the Company and the Subsidiary Guarantors and such agreements, certificates of public officials, certificates of officers or other representatives of the Company, the Subsidiary Guarantors and others, and such other documents, certificates and records, all as I have deemed necessary or appropriate as a basis for the opinions set forth herein, including, without limitation, (i) the charter and bylaws (or similar organization documents), each as amended to date, of the Company and each Subsidiary Guarantor and (ii) certain resolutions adopted by the Board of Directors or Managers, as applicable, of the Company and the Subsidiary Guarantors. For purposes of my opinion, I have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified, facsimile, conformed or photostatic copies and the authenticity of the originals of such copies. As to any facts material to the opinions expressed herein which I did not Tokheim Corporation April 28, 1999 Page 3 independently establish or verify, I have relied upon the statements and representations of officers and other representatives of the Company and others. I am admitted to the practice of law in the State of Indiana. Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth herein, I am of the opinion that: 1. When (i) the Registration Statement becomes effective and the Indentures have been qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), and (ii) the Exchange Notes have been duly executed and authenticated in accordance with the terms of the Indentures and delivered in exchange for the Outstanding Notes in accordance with the Exchange Offer, the Exchange Notes will constitute valid and binding obligations of the Company, entitled to the benefits of the Indentures and enforceable against the Company in accordance with their terms, except that (a) the enforcement thereof may be subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law ) or the discretion of the court before which any proceeding therefor may be brought, (b) the enforceability of the indemnification and contribution provisions thereof may be limited by applicable law or public policy, and (c) I express no opinion as to the enforceability of Section 4.09 of the Indentures. 2. When (i) the Registration Statement becomes effective and the Indentures have been qualified under the TIA and (ii) the Exchange Notes have been duly executed and authenticated and the Subsidiary Guarantees endorsed thereon have been executed by the Subsidiary Guarantors in accordance with the terms of the Indentures and delivered in exchange for the Outstanding Notes in accordance with the Exchange Offer, the Subsidiary Guarantees will be valid and binding obligations of the Subsidiary Guarantors entitled to the benefits of the Indentures and enforceable against the Subsidiary Guarantors in accordance with their terms, except that (a) the enforcement thereof may be subject to (i) Tokheim Corporation April 28, 1999 Page 4 bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law ) or the discretion of the court before which any proceeding therefor may be brought, (b) the enforceability of the indemnification and contribution provisions thereof may be limited by applicable law or public policy, and (c) I express no opinion as to the enforceability of Section 4.09 of the Indentures. I hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. I also consent to the reference to me under the caption "Legal Matters" in the Registration Statement. In giving this consent, I do not thereby admit that I am included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. Very truly yours, /s/ Norman L. Roelke EX-12.1 29 STATEMENT RE COMPUTATION OF RATIOS Exhibit 12.1 ------------ Tokheim Corporation and Subsidiaries Computation of Ratio of Earnings to Fixed Charges (Amounts in thousands except ratios)
Three Months Ended Year Ended November 30, February 28, 1994 1995 1996 1997 1998 1998 1999 ------ ------ ------- ------- ------- ------- -------- Fixed charges: Interest expense....................... $3,058 $3,588 $ 7,793 $17,288 $20,079 $ 4,144 $ 12,468 Rent expense........................... 359 662 945 1,368 2,121 530 513 Preferred stock dividends.............. 1,617 1,580 1,543 1,512 1,484 374 374 ------ ------ ------- ------- ------- ------- -------- Total fixed charges.................. 5,034 5,830 10,281 20,168 23,684 5,048 13,355 ------ ------ ------- ------- ------- ------- -------- Earnings available for fixed charges: Earnings (loss) before income taxes.... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571) Add: fixed charges..................... 5,034 5,830 10,281 20,168 23,684 5,048 13,355 ------ ------ ------- ------- ------- ------- -------- Total earnings available for fixed charges............................ $6,966 $9,100 $ 9,052 $25,365 $20,986 $ (258) $ (1,216) ====== ====== ======= ======= ======= ======= ======== Ratio of earnings to fixed charges....... 1.4x 1.6x 0.9x 1.3x 0.9x (0.1)x (0.1)x ====== ====== ======= ======= ======= ======= ========
Note: For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of debt issuance costs, the portion of rental expense assumed to represent interest and dividends on the ESOP Preferred Stock which services the Guaranteed ESOP Obligation. Earnings were insufficient to cover fixed charges by $1,229, $2,698, $5,306, and $14,571 for the fiscal years ended November 30, 1996 and 1998, and the three months ended February 28, 1998 and 1999, respectively. EX-23.1 30 CONSENT OF PRICEWATERHOUSECOOPERS Exhibit 23.1 Consent of Independent Accountants We hereby consent to the use in this Registration Statement on Form S-4 of Tokheim Corporation of our report dated February 19, 1999, relating to the financial statements of Tokheim Corporation and Subsidiaries, which appear in such Registration Statement. We also consent to the reference to us under the heading "Independent Accountants" in such Registration Statement. PriceWaterhouseCoopers LLP Fort Wayne, Indiana April 27, 1999 EX-23.2 31 CONSENT OF PRICEWATERHOUSECOOPERS Exhibit 23.2 Consent of Independent Accountants We hereby consent to the use in this Registration Statement on Form S-4 of Tokheim Corporation of our report dated July 6, 1998 relating to the financial statements of Retail Petroleum Systems, which appear in such Registration Statement. We also consent to the reference to us under the heading "Independent Accountants" in such Registration Statement. PriceWaterhouseCoopers Paris, France April 27, 1999 EX-25.1 32 STATEMENT OF ELIGIBILITY OF TRUSTEE ON FORM T-1 Exhibit 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ---------------- FORM T - 1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305 (b) (2) _________ U.S. BANK TRUST NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 13-3781471 (I. R. S. Employer Identification No.) 100 Wall Street, New York, NY 10005 (Address of principal executive offices) (Zip Code) ---------------- For information, contact: Dennis Calabrese, President U.S. Bank Trust National Association 100 Wall Street, 16th Floor New York, NY 10005 Telephone: (212) 361-2506 TOKHEIM CORPORATION (Exact name of obligor as specified in its charter) Indiana 35-0712500 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 10501 Corporate Drive 46845 Fort Wayne, Indiana (Address of principal executive offices) (Zip Code) ---------------- DEBT SECURITIES Item 1. General Information. Furnish the following information as to the trustee -- (a) Name and address of each examining or supervising authority to which it is subject. Name Address ---- ------- Comptroller of the Currency Washington, D. C. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits. Exhibit 1. Articles of Association of U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 1 of Form T-1, Registration No. 333-51961. Exhibit 2. Certificate of Authority to Commence Business for First Trust of New York, National Association now known as U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 2 of Form T-1, Registration No. 33-83774. Exhibit 3. Authorization to exercise corporate trust powers for U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 3 of Form T-1, Registration No. 333-51961. Exhibit 4. By-Laws of U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 4 of Form T-1, Registration No. 333-51961. Exhibit 5. Not applicable. Exhibit 6. Consent of First Trust of New York, National Association now known as U.S. Bank Trust National Association, required by Section 321(b) of the Act, incorporated herein by reference to Exhibit 6 of Form T-1, Registration No. 33-83774. Exhibit 7. Report of Condition of U.S. Bank Trust National Association, as of the close of business on December 31, 1998, published pursuant to law or the requirements of its supervising or examining authority. Exhibit 8. Not applicable. Exhibit 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, U.S. Bank Trust National Association, a national banking association organized and existing under the laws of the United States, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 23rd day of April, 1999. U.S. BANK TRUST NATIONAL ASSOCIATION By: /s/ Glenn W. Andersen --------------------- Glenn W. Andersen Vice President Exhibit 7 --------- U.S. Bank Trust National Association Statement of Financial Condition As of 12/31/98 ($000's)
12/31/98 -------- Assets Cash and Due From Depository Institutions $ 42,823 Federal Reserve Stock 3,384 Fixed Assets 486 Intangible Assets 68,104 Other Assets 7,261 -------- Total Assets $122,058 Liabilities Other Liabilities $ 9,462 -------- Total Liabilities $ 9,462 Equity Common and Preferred Stock $ 1,000 Surplus 120,932 Undivided Profits (9,336) -------- Total Equity Capital $112,596 Total Liabilities and Equity Capital $122,058
- --------------------------------------------------------------- To the best of the undersigned's determination, as of this date the above financial information is true and correct. U.S. Bank Trust National Association /s/ Glenn W. Andersen By: _____________________ Vice President Date: April 23, 1999 EX-25.2 33 STATEMENT OF ELIGIBILITY OF TRUSTEE ON FORM T-1 Exhibit 25.2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------- FORM T - 1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305 (b) (2) _________ U.S. BANK TRUST NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 13-3781471 (I. R. S. Employer Identification No.) 100 Wall Street, New York, NY 10005 (Address of principal executive offices) (Zip Code) ------------------- For information, contact: Dennis Calabrese, President U.S. Bank Trust National Association 100 Wall Street, 16th Floor New York, NY 10005 Telephone: (212) 361-2506 TOKHEIM CORPORATION (Exact name of obligor as specified in its charter) Indiana 35-0712500 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 10501 Corporate Drive 46845 Fort Wayne, Indiana (Address of principal executive offices) (Zip Code) ------------------- DEBT SECURITIES Item 1. General Information. Furnish the following information as to the trustee -- (a) Name and address of each examining or supervising authority to which it is subject. Name Address ---- ------- Controller of the Currency Washington, D. C. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits. Exhibit 1. Articles of Association of U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 1 of Form T-1, Registration No. 333-51961. Exhibit 2. Certificate of Authority to Commence Business for First Trust of New York, National Association now known as U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 2 of Form T-1, Registration No. 33-83774. Exhibit 3. Authorization to exercise corporate trust powers for U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 3 of Form T-1, Registration No. 333-51961. Exhibit 4. By-Laws of U.S. Bank Trust National Association, incorporated herein by reference to Exhibit 4 of Form T-1, Registration No. 333-51961. Exhibit 5. Not applicable. Exhibit 6. Consent of First Trust of New York, National Association now known as U.S. Bank Trust National Association, required by Section 321(b) of the Act, incorporated herein by reference to Exhibit 6 of Form T-1, Registration No. 33-83774. Exhibit 7. Report of Condition of U.S. Bank Trust National Association, as of the close of business on December 31, 1998, published pursuant to law or the requirements of its supervising or examining authority. Exhibit 8. Not applicable. Exhibit 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, U.S. Bank Trust National Association, a national banking association organized and existing under the laws of the United States, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 23rd day of April, 1999. U.S. BANK TRUST NATIONAL ASSOCIATION /s/ Glenn W. Andersen By: _____________________ Glenn W. Andersen Vice President Exhibit 7 --------- U.S. Bank Trust National Association Statement of Financial Condition As of 12/31/98 ($000's)
12/31/98 -------- Assets Cash and Due From Depository Institutions $ 42,823 Federal Reserve Stock 3,384 Fixed Assets 486 Intangible Assets 68,104 Other Assets 7,261 -------- Total Assets $122,058 Liabilities Other Liabilities $ 9,462 -------- Total Liabilities $ 9,462 Equity Common and Preferred Stock $ 1,000 Surplus 120,932 Undivided Profits (9,336) -------- Total Equity Capital $112,596 Total Liabilities and Equity Capital $122,058
- ---------------------------------------------------------------- To the best of the undersigned's determination, as of this date the above financial information is true and correct. U.S. Bank Trust National Association /s/Glenn W. Andersen By: ____________________ Vice President Date: April 23, 1999 EX-99.1 34 LETTER OF TRANSMITTAL FOR THE DOLLAR NOTES EXHIBIT 99.1 LETTER OF TRANSMITTAL TOKHEIM CORPORATION Offer to Exchange its Series B 11 3/8% Senior Subordinated Notes due 2008 for any and all of its outstanding Series A 11 3/8% Senior Subordinated Notes due 2008 Pursuant to the Prospectus dated , 1999 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. The Exchange Agent for The Exchange Offer Is: U.S. Bank Trust National Association Facsimile Transmissions By Registered or Certified Mail: (Eligible Institutions Only) U.S. Bank Trust National Association Attn: Specialized Finance P.O. Box 64485 (651) 244-1537 St. Paul, Minnesota 55164-9549 Attention: Specialized Finance To Confirm by Telephone or for Information Call: By Hand or Overnight Delivery (651) 244-4512 U.S. Bank Trust National Association Fourth Floor--Bond Drop Window 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Specialized Finance ---------------- DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below). This Letter of Transmittal is to be completed either if (a) certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth under "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and an Agent's Message (as defined below) is not delivered. Certificates, or book- entry confirmation of a book-entry transfer of such Outstanding Notes into the Exchange Agent's account at The Depository Trust Company ("DTC"), as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter of Transmittal. The term "book-entry confirmation" means a confirmation of a book- entry transfer of Outstanding Notes into the Exchange Agent's account at DTC. The term "Agent's Message" means a message, transmitted by DTC to and received by the Exchange Agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by this Letter of Transmittal and that Tokheim Corporation, an Indiana corporation (the "Company"), may enforce this Letter of Transmittal against such participant. Holders (as defined below) of Outstanding Notes whose certificates (the "Certificates") for such Outstanding Notes are not immediately available or who cannot deliver their Certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus) or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY ALL TENDERING HOLDERS COMPLETE THIS BOX: DESCRIPTION OF OUTSTANDING NOTES - --------------------------------------------------------------------------------
If blank, please print name and address of registered Outstanding Notes Holder(s) (Attach additional list if necessary) - --------------------------------------------------------------- Principal Aggregate Amount of Principal Outstanding Amount of Notes Tendered Certificate Outstanding (if less than Number(s)* Notes all)** --------------------- --------------------- --------------------- --------------------- --------------------- Total - ---------------------------------------------------------------
*Need not be completed by book-entry Holders. ** Outstanding Notes may be tendered in whole or in part in multiples of $1,000. All Outstanding Notes held shall be deemed tendered unless a lesser number is specified in this column. See Instruction 4. (BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY) [_]CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution DTC Account Number Transaction Code Number [_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING (SEE INSTRUCTION 1): Name(s) of Registered Holder(s) Window Ticket Number (if any) ______________________________________________ Date of Execution of Notice of Guaranteed Delivery _________________________ Name of Institution which Guaranteed Delivery ______________________________ If Guaranteed Delivery is to be made by Book-Entry Transfer: Name of Tendering Institution ______________________________________________ DTC Account Number Transaction Code Number 3 [_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE. [_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OUTSTANDING NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: __________________________________________________________________________ Address: _______________________________________________________________________ 4 Ladies and Gentlemen: The undersigned hereby tenders to Tokheim Corporation, an Indiana corporation (the "Company"), the above described principal amount of the Company's Series A 11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Notes") in exchange for an equivalent amount of the Company's Series B 11 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") which have been registered under the Securities Act of 1933 (the "Securities Act"), upon the terms and subject to the conditions set forth in the Prospectus dated , 1999 (as the same may be amended or supplemented from time to time, the "Prospectus"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Exchange Offer"). Subject to and effective upon the acceptance for exchange of all or any portion of the Outstanding Notes tendered herewith in accordance with the terms and conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to such Outstanding Notes as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent is also acting as agent of the Company in connection with the Exchange Offer) with respect to the tendered Outstanding Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) subject only to the right of withdrawal described in the Prospectus, to (i) deliver Certificates for Outstanding Notes to the Company together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of the Series B Notes to be issued in exchange for such Outstanding Notes, (ii) present Certificates for such Outstanding Notes for transfer, and to transfer the Outstanding Notes on the books of the Company, and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding Notes, all in accordance with the terms and conditions of the Exchange Offer. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, sell, assign and transfer the Outstanding Notes tendered hereby and that, when the same are accepted for exchange, the Company will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and that the Outstanding Notes tendered hereby are not subject to any adverse claims or proxies. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company or the Exchange Agent to be necessary or desirable to complete the exchange, assignment and transfer of the Outstanding Notes tendered hereby, and the undersigned will comply with its obligations under the Dollar Registration Rights Agreement. The undersigned has read and agrees to all of the terms of the Exchange Offer. The name(s) and address(es) of the registered Holder(s) of the Outstanding Notes tendered hereby should be printed above, if they are not already set forth above, as they appear on the Certificates representing such Outstanding Notes. The Certificate number(s) and the Outstanding Notes that the undersigned wishes to tender should be indicated in the appropriate boxes above. If any tendered Outstanding Notes are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Outstanding Notes than are tendered or accepted for exchange, Certificates for such nonexchanged or nontendered Outstanding Notes will be returned (or, in the case of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes will be credited to an account maintained at DTC), without expense to the tendering Holder, promptly following the expiration or termination of the Exchange Offer. The undersigned understands that tenders of Outstanding Notes pursuant to any one of the procedures described in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and in the instructions attached hereto will, upon the Company's acceptance for exchange of such tendered Outstanding 5 Notes, constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Outstanding Notes tendered hereby. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, the undersigned hereby directs that the Exchange Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Outstanding Notes, that such Exchange Notes be credited to the account indicated above maintained at DTC. If applicable, substitute Certificates representing Outstanding Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Outstanding Notes, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery Instructions," please deliver Exchange Notes to the undersigned at the address shown below the undersigned's signature. By tendering Notes and executing this Letter of Transmittal or effecting delivery of an Agent's Message in lieu thereof, the undersigned hereby represents and agrees that (i) the undersigned is not an "affiliate" of the Company, (ii) any Exchange Notes to be received by the undersigned are being acquired in the ordinary course of its business, (iii) the undersigned has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of Exchange Notes to be received in the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act) of such Exchange Notes. The Company may require the undersigned, as a condition to the undersigned's eligibility to participate in the Exchange Offer, to furnish to the Company (or an agent thereof) in writing information as to the number of "beneficial owners" within the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the undersigned holds the Outstanding Notes to be exchanged in the Exchange Offer. By tendering Outstanding Notes pursuant to the Exchange Offer and executing this Letter of Transmittal or effecting delivery of an Agent's Message in lieu thereof, a Holder of Outstanding Notes which is a broker-dealer represents and agrees, consistent with certain interpretive letters issued by the Staff of the Division of Corporation Finance of the Securities and Exchange Commission to third parties, that such Outstanding Notes were acquired by such broker-dealer for its own account as a result of market-making activities or other trading activities, and it will deliver a Prospectus (as amended or supplemented from time to time) meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes (provided that, by so acknowledging and by delivering a Prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act). The Company has agreed that, subject to the provisions of the Dollar Registration Rights Agreement, the Prospectus, as it may be amended or supplemented from time to time, may be used by a participating broker-dealer (as defined below) in connection with resales of Exchange Notes received in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such participating broker-dealer for its own account as a result of market- making activities or other trading activities, for a period ending 180 days after the Expiration Date (subject to extension under certain limited circumstances described in the Prospectus). In that regard, each broker-dealer who acquired Outstanding Notes for its own account as a result of market-making or other trading activities (a "participating broker-dealer"), by tendering such Outstanding Notes and executing this Letter of Transmittal or effecting delivery of an Agent's Message in lieu thereof, agrees that, upon receipt of notice from the Company of the occurrence of any event or the discovery of any fact which makes any statement contained or incorporated by reference in the Prospectus untrue in any material respect or which causes the Prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference therein, in light of the circumstances under which they were made, not misleading or of the occurrence of certain other events specified in the Dollar Registration Rights Agreement, such participating broker-dealer will suspend the sale of Exchange Notes pursuant to the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented Prospectus to the participating broker-dealer or the Company 6 has given notice that the sale of the Exchange Notes may be resumed, as the case may be. If the Company gives such notice to suspend the sale of the Exchange Notes, it shall extend the 180-day period referred to above during which participating broker-dealers are entitled to use the Prospectus in connection with the resale of Exchange Notes by the number of days during the period from and including the date of the giving of such notice to and including the date when participating broker-dealers shall have received copies of the supplemented or amended Prospectus necessary to permit resales of the Exchange Notes or to and including the date on which the Company has given notice that the sale of Exchange Notes may be resumed, as the case may be. As a result, a participating broker-dealer who intends to use the Prospectus in connection with resales of Exchange Notes received in exchange for Outstanding Notes pursuant to the Exchange Offer must notify the Company, or cause the Company to be notified, on or prior to the Expiration Date, that it is a participating broker-dealer. Such notice may be given in the space provided above or may be delivered to the Exchange Agent at the address set forth in the Prospectus under "The Exchange Offer--Exchange Agents." The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Outstanding Notes tendered hereby. All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. Except as stated in the Prospectus, this tender is irrevocable. The undersigned, by completing the box entitled "Description of Outstanding Notes" above and signing this letter, will be deemed to have tendered the Outstanding Notes as set forth in such box. 7 IMPORTANT HOLDERS: SIGN HERE (Please Complete Substitute Form W-9 herein) --------------------------------------------------------------------------- --------------------------------------------------------------------------- Signature(s) of Holder(s) Date: _______________________________ (Must be signed by the registered holder(s) exactly as name(s) appear(s) on Certificate(s) for the Outstanding Notes tendered or on a security position listing or by person(s) authorized to become the registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 2 below.) Name(s): __________________________________________________________________ --------------------------------------------------------------------------- --------------------------------------------------------------------------- (Please Print) Capacity (full title): ____________________________________________________ --------------------------------------------------------------------------- --------------------------------------------------------------------------- Address: __________________________________________________________________ --------------------------------------------------------------------------- Area Code and Telephone No.: ______________________________________________ Taxpayer Identification or Social Security No.: ___________________________ (See Substitute Form W-9 herein) GUARANTEE OF SIGNATURE(S) (See Instruction 2 below) Authorized Signature: _____________________________________________________ Name: _____________________________________________________________________ --------------------------------------------------------------------------- (Please Type or Print) Title: ____________________________________________________________________ Name of Firm: _____________________________________________________________ Address: __________________________________________________________________ --------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No.: ______________________________________________ Date: _______________________________ 8 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (Signature Guarantee Required--See (Signature Guarantee Required--See Instruction 2) Instruction 2) TO BE COMPLETED ONLY if Exchange TO BE COMPLETED ONLY if Exchange Notes or Outstanding Notes not Notes or Outstanding Notes not tendered are to be issued in the tendered are to be sent to someone name of someone other than the other than the registered Holder registered Holder of the of the Outstanding Notes whose Outstanding Notes whose name(s) name(s) appear(s) above, or such appear(s) above. registered Holder at an address other than that shown above. [_] Outstanding Notes not tendered to: [_] Outstanding Notes not tendered to: [_] Exchange Notes to: Name ______________________________ [_] Exchange Notes to: (Please Print) Name ______________________________ Address ___________________________ (Please Print) __________________________________ Address ___________________________ __________________________________ __________________________________ (Include Zip Code) __________________________________ __________________________________ (Include Zip Code) Tax Identification or Social Security Number 9 INSTRUCTIONS Forming Part of the Terms and Conditions of the Exchange Offer 1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed either if (a) Certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus and an Agent's Message is not delivered. Certificates, or timely confirmation of a book-entry transfer of such Outstanding Notes into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu thereof. Outstanding Notes may be tendered in whole or in part in integral multiples of $1,000. Holders who wish to tender their Outstanding Notes and (i) whose Outstanding Notes are not immediately available or (ii) who cannot deliver their Outstanding Notes, this Letter of Transmittal and all other required documents to the Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Outstanding Notes by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Company, must be received by the Exchange Agent on or prior to the Expiration Date; and (iii) the Certificates (or a book- entry confirmation) representing all tendered Outstanding Notes, in proper form for transfer, together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in "The Exchange Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile or mail to the Exchange Agent, and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. For Outstanding Notes to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration Date. As used herein and in the Prospectus, "Eligible Institution" means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association. The method of delivery of Certificates, this Letter of Transmittal and all other required documents is at the option and sole risk of the tendering Holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, or overnight delivery service is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. The Company will not accept any alternative, conditional or contingent tenders. Each tendering Holder, by execution of a Letter of Transmittal (or facsimile thereof), waives any right to receive any notice of the acceptance of such tender. 2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if: i. this Letter of Transmittal is signed by the registered Holder (which term, for purposes of this document, shall include any participant in DTC whose name appears on a security position listing as the 10 owner of the Outstanding Notes (the "Holder"')) of Outstanding Notes tendered herewith, unless such Holder(s) has completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" above, or ii. such Outstanding Notes are tendered for the account of a firm that is an Eligible Institution. In all other cases, an Eligible Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. 3. Inadequate Space. If the space provided in the box captioned "Description of Outstanding Notes" is inadequate, the Certificate number(s) and/or the principal amount of Outstanding Notes and any other required information should be listed on a separate signed schedule which is attached to this Letter of Transmittal. 4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will be accepted only in integral multiples of $1,000. If less than all the Outstanding Notes evidenced by any Certificate submitted are to be tendered, fill in the principal amount of Outstanding Notes which are to be tendered in the box entitled "Principal Amount of Outstanding Notes Tendered." In such case, new Certificate(s) for the remainder of the Outstanding Notes that were evidenced by your old Certificate(s) will only be sent to the Holder of the Outstanding Note, promptly after the Expiration Date. All Outstanding Notes represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided herein, tenders of Outstanding Notes may be withdrawn at any time on or prior to the Expiration Date. In order for a withdrawal to be effective on or prior to that time, a written, telegraphic, telex or facsimile transmission of such notice of withdrawal must be timely received by the Exchange Agent at one of its addresses set forth above or in the Prospectus on or prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Outstanding Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to be withdrawn, and (if Certificates for Outstanding Notes have been tendered) the name of the registered Holder of the Outstanding Notes as set forth on the Certificate for the Outstanding Notes, if different from that of the person who tendered such Original Notes. If Certificates for the Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, then prior to the physical release of such Certificates for the Outstanding Notes, the tendering Holder must submit the serial numbers shown on the particular Certificates for the Outstanding Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Outstanding Notes tendered for the account of an Eligible Institution. If Outstanding Notes have been tendered pursuant to the procedures for book-entry transfer set forth in the Prospectus under "The Exchange Offer--Procedures for Tendering Outstanding Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Outstanding Notes, in which case a notice of withdrawal will be effective if delivered to the Exchange Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any subsequent time on or prior to the Expiration Date by following any of the procedures described in the Prospectus under "The Exchange Offer--Procedures for Tendering Outstanding Notes." All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Company, in its sole discretion, whose determination shall be final and binding on all parties. The Company, any affiliates or assigns of the Company, the Exchange Agent or any other person shall not be under any duty to give any notification of any irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Outstanding Notes which have been tendered but which are withdrawn will be returned to the Holder thereof without cost to such Holder promptly after withdrawal. 5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this Letter of Transmittal is signed by the registered Holder(s) of the Outstanding Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) without alteration, enlargement or any change whatsoever. 11 If any of Outstanding Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Outstanding Notes are registered in different name(s) on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are different registrations of Certificates. If this Letter of Transmittal or any Certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Company, must submit proper evidence satisfactory to the Company, in its sole discretion, of each such person's authority so to act. When this Letter of Transmittal is signed by the registered owner(s) of the Outstanding Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or separate bond power(s) are required unless Exchange Notes are to be issued in the name of a person other than the registered Holder(s). Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Outstanding Notes listed, the Certificates must be endorsed or accompanied by appropriate bond powers, signed exactly as the name or names of the registered owner(s) appear(s) on the Certificates, and also must be accompanied by such opinions of counsel, certifications and other information as the Company or the Trustee for the Outstanding Notes may require in accordance with the restrictions on transfer applicable to the Outstanding Notes. Signatures on such Certificates or bond powers must be guaranteed by an Eligible Institution. 6. Special Issuance and Delivery Instructions. If Exchange Notes are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if Exchange Notes are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Certificates for Outstanding Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. See Instruction 4. 7. Irregularities. The Company will determine, in its sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Outstanding Notes, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance of which, or exchange for which, may, in the view of counsel to the Company be unlawful. The Company also reserves the absolute right, subject to applicable law, to waive any of the conditions of the Exchange Offer set forth in the Prospectus under "The Exchange Offer-- Conditions to the Exchange Offer" or any conditions or irregularity in any tender of Outstanding Notes of any particular Holder whether or not similar conditions or irregularities are waived in the case of other Holders. The Company's interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of Outstanding Notes will be deemed to have been validly made until all irregularities with respect to such tender have been cured or waived. The Company, any affiliates or assigns of the Company, the Exchange Agent, or any other person shall not be under any duty to give notification of any irregularities in tenders or incur any liability for failure to give such notification. 8. Questions, Requests for Assistance and Additional Copies. Questions and requests for assistance may be directed to the Exchange Agent at its address and telephone number set forth on the front of this Letter of Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 12 9. 31% Backup Withholding; Substitute Form W-9. Under the U.S. Federal income tax law, a Holder whose tendered Outstanding Notes are accepted for exchange is required to provide the Exchange Agent with such Holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not provided with the correct TIN, the Internal Revenue Service (the "IRS") may subject the Holder or other payee to a $50 penalty. In addition, payments to such Holders or other payees with respect to Outstanding Notes exchanged pursuant to the Exchange Offer may be subject to 31% backup withholding. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering Holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the Holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent. The Exchange Agent will retain such amounts withheld during the 60-day period following the date of the Substitute Form W- 9. If the Holder furnishes the Exchange Agent with its TIN within 60 days after the date of the Substitute Form W-9, the amounts retained during the 60-day period will be remitted to the Holder and no further amounts shall be retained or withheld from payments made to the Holder thereafter. If, however, the Holder has not provided the Exchange Agent with its TIN within such 60-day period, amounts withheld will be remitted to the IRS as backup withholding. In addition 31% of all payments made thereafter will be withheld and remitted to the IRS until a correct TIN is provided. The Holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered owner of the Outstanding Notes or of the last transferee appearing on the transfers attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes are registered in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. Certain Holders (including, among others, corporations, financial institutions and certain foreign persons) may not be subject to the backup withholding and reporting requirements. Such Holders should nevertheless complete the attached Substitute Form W-9 below, and write "exempt" on the face thereof, to avoid possible erroneous backup withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that Holder's exempt status. Please consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which Holders are exempt from backup withholding. Backup withholding is not an additional U.S. Federal income tax. Rather, the U.S. Federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 10. Waiver of Conditions. The Company reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus. 11. No Conditional Tenders. No alternative, conditional or contingent tenders will be accepted. All tendering Holders of Outstanding Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of Outstanding Notes for exchange. Neither the Company, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Outstanding Notes nor shall any of them incur any liability for failure to give any such notice. 12. Lost, Destroyed or Stolen Certificates. If any Certificate(s) representing Outstanding Notes have been lost, destroyed or stolen, the Holder should promptly notify the Exchange Agent. The Holder will then be 13 instructed as to the steps that must be taken in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Certificate(s) have been followed. 13. Security Transfer Taxes. Holders who tender their Outstanding Notes for exchange will not be obligated to pay any transfer taxes in connection therewith. If, however, Exchange Notes are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Outstanding Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes in connection with the Exchange Offer, then the amount of any such transfer tax (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. 14 PAYER'S NAME: U.S. BANK TRUST NATIONAL ASSOCIATION Part I--Taxpayer Identification Number-- ------------------------- For all accounts, enter Social Security Number taxpayer identification number in the box at right. (For most individuals, this is your social security number. If you do not have a number, see Obtaining a Number in the enclosed Guidelines.) Certify by signing and dating below. SUBSTITUTE Form W-9 OR Department of the ------------------------- Treasury Employer Identification Internal Revenue Number Service (If awaiting TIN, write "Applied For") - -------------------------------------------------------------------------------- Certification--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and ------------------------------------------------------- Part II:--For Payees exempt from backup withholding, see the enclosed Guidelines and complete as instructed therein. (2) I am not subject to backup withholding either because (a) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup withholding. Note: If the account is in more than one name, check in the enclosed Guidelines to determine which number to give the payer. Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if, after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) - -------------------------------------------------------------------------------- Signature Date______________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU IN CONNECTION WITH THE MERGER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER. 15 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. ---------------------------------------- Give the SOCIAL For this type SECURITY of account: number of-- ---------------------------------------- 1. Individual The individual ---------------------------------------- Give the EMPLOYER For this type IDENTIFICATION of account: number of-- ---------------------------------------- 6. Sole proprietorship The owner(1) 7. A valid trust, Legal entity(3) estate, or pension trust 2. Two or more The actual owner individuals of the account (joint account) or, if combined funds, the first individual on the account.(2) 8. Corporate The corporation 9. Association, club, The organization religious, charitable, educational or other tax-exempt organization 3. Custodian account of The minor(4) a minor (Uniform Gift to Minors Act) 4.a. The usual revocable The grantor- savings trust trustee(2) (grantor is also trustee) 10. Partnership The partnership 11. A broker or The broker or registered nominee nominee b. So-called trust The actual account that is not a owner(2) legal or valid trust under State law 12. Account with the The public Department of entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments - ------- 5. Sole proprietorship The owner(1) (1) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your SSN or EIN. (2) List first and circle the name of the person whose number you furnish. (3) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) (4) Circle the minor's name and furnish the minor's social security number. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER PAGE 2 Obtaining a Number If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Backup Withholding The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in items (1) through (13) and a person registered under the Investment Advisers Act of 1940 U.C. who regularly acts as a broker are exempt. Payments subject to reporting under Sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. Only payees described in items (2) through (6) are exempt from backup withholding for barter exchange transactions and patronage dividends. (1) A corporation. (2) An organization exempt from tax under Section 501(a), or an individual retirement plan or custodial account under Section 403(b)(7). (3) The United States or any agency or instrumentality thereof. (4) A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. (5) A foreign government, a political subdivision of a foreign government, or an agency or instrumentality thereof. (6) An international organization or any agency or instrumentality thereof. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under Section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc. Nominee List. (15) An exempt charitable remainder trust, or a non-exempt trust described in Section 4947. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under Section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. . Payments of patronage dividends not paid in money. . Payments made by certain foreign organizations. . Section 404(k) payments made by an ESOP. Interest payments that are generally exempt from back-up withholding include: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under Section 852). . Payments described in Section 6049(b)(5) to nonresident aliens. . Payments on tax-free covenant bonds under Section 1451. . Payments made by certain foreign organizations. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, royalties, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Sections 6041, 6041A(a), 6045, and 6050A. Privacy Act Notice. Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. Penalties (1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil Penalty for False Information with Respect to Withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal Penalty for Falsifying Information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.2 35 NOTICE OF GUARANTEED DELIVERY FOR THE DOLLAR NOTES EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY TOKHEIM CORPORATION Offer to Exchange its Series B 11 3/8% Senior Subordinated Notes due 2008 for any and all of its outstanding Series A 11 3/8% Senior Subordinated Notes due 2008 Pursuant to the Prospectus dated , 1999 This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be used to accept the Exchange Offer (as defined below) if (i) certificates for the Company's Series A 11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Notes") are not immediately available, (ii) Outstanding Notes, the Letter of Transmittal and all other required documents cannot be delivered to U.S. Bank Trust National Association (the "Exchange Agent") on or prior to the Expiration Date or (iii) the procedures for delivery by book- entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand, overnight courier or mail, or transmitted by facsimile transmission, to the Exchange Agent. See "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. In addition, in order to utilize the guaranteed delivery procedure to tender Outstanding Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal relating to the Outstanding Notes (or facsimile thereof) must also be received by the Exchange Agent on or prior to the Expiration Date. Capitalized terms not defined herein have the meanings assigned to them in the Prospectus. The Exchange Agent For The Exchange Offer Is: U.S. Bank Trust National Association By Registered or Certified Mail: Facsimile Transmissions (Eligible Institutions Only) U.S. Bank Trust National Association P.O. Box 64485 Attn: Specialized Finance St. Paul, Minnesota 55164-9549 (651) 244-1537 Attn: Specialized Finance To Confirm by Telephone By Hand or Overnight Delivery or for Information Call: U.S. Bank Trust National Association (651) 244-4512 Fourth Floor--Bond Drop Window 180 East Fifth Street St. Paul, Minnesota 55101 Attn: Specialized Finance ---------------- DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to Tokheim Corporation, an Indiana corporation (the "Company"), upon the terms and subject to the conditions set forth in the Prospectus dated , 1999 (as the same may be amended or supplemented from time to time, the "Prospectus"), and the related Letter of Transmittal (which together constitute the "Exchange Offer"), receipt of which is hereby acknowledged, the aggregate principal amount of Outstanding Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Procedures for Tendering Outstanding Notes." Aggregate Principal Amount Name(s) of Registered Holder(s): ____ Amount Tendered: $ * ------------------------------------- Certificate No(s) (if available): ______________________________________________ - -------------------------------------------------------------------------------- $ ______________________________________________________________________________ (Total Principal Amount Represented by Outstanding Notes Certificate(s)) If Outstanding Notes will be tendered by book-entry transfer, provide the following information: DTC Account Number: ____________________________________________________________ Date: __________________________________________________________________________ - -------- *Must be in integral multiples of $1,000. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. PLEASE SIGN HERE X ___________________________________ ------------------------------------- X ___________________________________ ------------------------------------- Signature(s) of Owner(s) or Authorized Signatory Date Area Code and Telephone Number: ________________________________________________ Must be signed by the holder(s) of the Outstanding Notes as their name(s) appear(s) on certificates for Outstanding Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in- fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below and, unless waived by the Company, provide proper evidence satisfactory to the Company of such person's authority to so act. 2 Please print name(s) and address(es) Name(s): --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- Capacity: --------------------------------------------------------------------- Address(es): --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- GUARANTEE OF DELIVERY (Not to be used for signature guarantee) The undersigned, a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor institution," including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities broker, government securities broker or government securities dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association (each of the foregoing being referred to as an "Eligible Institution"), hereby guarantees to deliver to the Exchange Agent, at one of its addresses set forth above, either the Outstanding Notes tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of such Outstanding Notes to the Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case together with one or more properly completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and any other required documents within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery. The undersigned acknowledges that it must deliver the Letter(s) of Transmittal (or facsimile thereof) and the Outstanding Notes tendered hereby to the Exchange Agent within the time period set forth above and that failure to do so could result in a financial loss to the undersigned. - ------------------------------------- ------------------------------------- Name of Firm Authorized Signature - ------------------------------------- ------------------------------------- Address Title - ------------------------------------- ------------------------------------- Zip Code (Please Type or Print) Area Code and Telephone Number: _____ Date: _______________________________ NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM. CERTIFICATES FOR ORIGINAL NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.3 36 TENDER INSTRUCTIONS FOR THE DOLLAR NOTES EXHIBIT 99.3 TOKHEIM CORPORATION Instruction to Registered Holder and/or Depository Trust Company Participant from Beneficial Owner for Offer to Exchange its Series B 11 3/8% Senior Subordinated Notes due 2008 for any and all of its outstanding Series A 11 3/8% Senior Subordinated Notes due 2008 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. To Registered Holder and/or Depository Trust Company Participant: The undersigned hereby acknowledges receipt of the Prospectus dated , 1999 (the "Prospectus") of Tokheim Corporation, an Indiana corporation (the "Company"), and the accompanying Letter of Transmittal (the "Letter of Transmittal"), that together constitute the Company's offer (the "Exchange Offer") to exchange its Series B 11 3/8% Senior Subordinated Notes Due 2008 (the "Exchange Notes") for all of its outstanding Series A 11 3/8% Senior Subordinated Notes Due 2008 (the "Outstanding Notes"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus. This will instruct you, the registered holder and/or Depository Trust Company Participant, as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned. The aggregate face amount of the Outstanding Notes held by you for the account of the undersigned is (FILL IN AMOUNT): $ of the 11 3/8% Senior Subordinated Notes Due 2008. With respect to the Exchange Offer, the undersigned hereby instructs you (CHECK APPROPRIATE BOX): [_] To TENDER the following Outstanding Notes held by you for the account of the undersigned (INSERT PRINCIPAL AMOUNT OF ORIGINAL NOTES TO BE TENDERED (IF LESS THAN ALL)): $ [_] NOT to TENDER any Outstanding Notes held by you for the account of the undersigned. If the undersigned instructs you to tender the Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representation and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that (i) the undersigned is not an "affiliate" of the Company, (ii) any Exchange Notes to be received by the undersigned are being acquired in the ordinary course of its business, (iii) the undersigned has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of Exchange Notes to be received in the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act) of such Exchange Notes. The Company may require the undersigned, as a condition to the undersigned's eligibility to participate in the Exchange Offer, to furnish to the Company (or an agent thereof) in writing information as to the number of "beneficial owners" within the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the undersigned holds the Outstanding Notes to be exchanged in the Exchange Offer. By tendering Outstanding Notes pursuant to the Exchange Offer, a holder of Outstanding Notes which is a broker-dealer represents and agrees, consistent with certain interpretive letters issued by the staff of the Division of Corporation Finance of the Securities and Exchange Commission to third parties, that such Outstanding Notes were acquired by such broker-dealer for its own account as a result of market-making activities or other trading activities, and it will deliver a Prospectus (as amended or supplemented from time to time) meeting the requirements of the Securities Act in connection with any resale of such Exchanges Notes (provided that, by so acknowledging and by delivering a Prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act). SIGN HERE - -------------------------------------------------------------------------------- Name of beneficial owner(s) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Name(s) (please print) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Address) - -------------------------------------------------------------------------------- (Telephone Number) - -------------------------------------------------------------------------------- (Taxpayer Identification or Social Security Number) - -------------------------------------------------------------------------------- Date 2 -----END PRIVACY-ENHANCED MESSAGE-----