-----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, PXqKxcslCKqpt8OW2cMH3jklGQBNJhqIokBhfTStBMrZpyddw/eWxQ5NvpfjTfPw hY5TO7W4zyr0SxzNI3zO+A== 0000950172-01-000480.txt : 20010416 0000950172-01-000480.hdr.sgml : 20010416 ACCESSION NUMBER: 0000950172-01-000480 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010228 FILED AS OF DATE: 20010413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOKHEIM CORP CENTRAL INDEX KEY: 0000098559 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 350712500 STATE OF INCORPORATION: IN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06018 FILM NUMBER: 1602409 BUSINESS ADDRESS: STREET 1: 10501 CORPORATE DRIVE CITY: FORT WAYNE STATE: IN ZIP: 46845 BUSINESS PHONE: 2194704600 MAIL ADDRESS: STREET 1: 10501 CORPORATE DRIVE CITY: FORT WAYNE STATE: IN ZIP: 46845 10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2001 Commission File Number 1-6018 TOKHEIM CORPORATION (Exact Name of Registrant as Specified in its Charter) INDIANA 35-0712500 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 10501 CORPORATE DRIVE, FORT WAYNE, IN 46845 (Address of Principal Executive Offices) (Zip Code) (Registrant's Telephone Number Including Area Code): (219) 470-4600 NOT APPLICABLE (Former Name, Former Address, and Former Fiscal Year if Changed Since Last Report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No Indicate by check mark whether the Registrant has filed all reports required to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes (X) No As of February 28, 2001, 2,552,907 shares of voting common stock were outstanding. The exhibit index is located on page 10. Item 1. Financial Statements
TOKHEIM CORPORATION & SUBSIDIARIES =================================================================================================== Consolidated Condensed Balance Sheet (Amounts in thousands except data per share) Successor Company -------------------------------------- February 28, 2001 November 30, 2000 ----------------- ----------------- Assets Current assets: Cash and cash equivalents $ 12,308 $ 8,946 Accounts receivable, net 112,409 110,820 Inventories: Raw materials, service parts and supplies 64,334 57,498 Work in process 12,531 12,497 Finished goods 7,173 8,485 -------------- ------------- 84,038 78,480 Other current assets 12,571 9,767 -------------- ------------- Total current assets 221,326 208,013 Property, plant and equipment, at cost: Land and land improvements 5,571 5,536 Buildings and building improvements 24,589 23,950 Machinery and equipment 40,823 37,355 Construction in progress 3,903 5,493 -------------- ------------- 74,886 72,334 Less:Accumulated Depreciation 4,041 310 -------------- ------------- 70,845 72,024 Reorganization value in excess of amounts allocable to identifiable assets, net 157,332 161,401 Intangible assets, net 10,720 9,496 Other assets 10,077 10,927 -------------- ------------- Total assets $ 470,300 $ 461,861 ============== ============= Liabilities and Shareholders' Equity Current maturities of other long term debt $ 3,121 $ 2,512 Cash overdrafts 14,654 12,061 Accounts payable 63,776 61,609 Accrued expenses 70,872 72,608 -------------- ------------- Total current liabilities 152,423 148,790 Notes payable, bank credit agreement 251,746 240,238 Other long term debt, less current maturities 2,450 2,988 Post-retirement benefit liability 19,281 18,880 Other long-term liabilities 1,251 1,164 -------------- ------------- 427,151 412,060 Redeemable convertible preferred stock, at liquidation value of $25 per share, 1,700 shares authorized, 960 shares issued 12,619 12,619 New preferred stock, at liquidation preference of $10 per share, 100 authorized and issued 100 100 Treasury stock, at cost (2,429) (2,494) -------------- ------------- Total preferred equity 10,290 10,225 New common stock, no par value; 30,000 shares authorized* 4,500 4,500 Common stock warrants 8,199 8,199 Accumulated comprehensive income (loss) 4,418 (623) Retained earnings (accumulated deficit) (11,334) 424 Additional paid in capital 27,076 27,076 -------------- ------------- Total shareholders' equity 32,859 39,576 -------------- ------------- Total liabilities and shareholders' equity $ 470,300 $ 461,861 ============== ============= *4,500 shares to be issued upon the exchange of the old Tokheim securities. The accompanying notes are an integral part of the financial statements.
TOKHEIM CORPORATION & SUBSIDIARIES =========================================================================================================================== Consolidated Condensed Statement of Earnings (Amounts in thousands except data per share) Successor Predecessor Company Company -------------------------- --------------------------- Three months ended Three months ended February 28, 2001 February 29, 2000 -------------------------- --------------------------- Net sales $ 121,239 $ 132,412 Cost of sales, exclusive of items listed below 95,759 104,362 Selling, general, and administrative expenses 19,829 25,721 Depreciation and amortization 7,909 6,074 Merger and acquisition costs and other unusual items 732 2,725 -------------------------- --------------------------- Operating loss (2,990) (6,470) Interest expense, net 9,222 14,648 Foreign currency gain (255) (169) Minority interest in subsidiaries 9 (2) Other income, net (1,053) (290) -------------------------- --------------------------- Loss before income taxes (10,913) (20,657) Income tax expense (benefit) 462 (106) -------------------------- --------------------------- Net loss (11,375) (20,551) Preferred stock dividends (383) (388) -------------------------- --------------------------- Loss applicable to common stock $ (11,758) $ (20,939) ========================== =========================== Loss per common share: Basic Net loss $ (2.61) $ (1.65) ========================== =========================== Weighted average shares outstanding* 4,500 12,669 ========================== =========================== Diluted Net loss $ (2.61) $ (1.65) ========================== =========================== Weighted average shares outstanding* 4,500 12,669 ========================== =========================== *4,500 shares to be issued upon the exchange of the old Tokheim securities. The accompanying notes are an integral part of the financial statements.
TOKHEIM CORPORATION & SUBSIDIARIES =========================================================================================================================== Consolidated Condensed Statement of Cash Flows (Amounts in thousands except data per share) Successor Predecessor Company Company ------------------------ ----------------------- Three months ended Three months ended February 28, 2001 February 29, 2000 ------------------------ ----------------------- Cash flows from operating activities: Net loss $ (11,375) $ (20,551) Adjustments to reconcile net earnings (loss) to net cash provided from (used in) operating activities: Payment in kind interest 4,073 1,351 Depreciation and amortization 7,909 6,074 (Gain) loss on sale of equipment 4 (30) Deferred income taxes 73 (21) Changes in assets and liabilities: Receivables, net 2,895 44,291 Inventories (3,263) (1,477) Other current assets (2,372) (5,826) Accounts payable 102 (16,128) Accrued expenses (2,679) (14,328) Other 1,487 (1,401) ------------------------ ----------------------- Net cash used in operations (3,146) (8,046) ------------------------ ----------------------- Cash flows from investing activities: Property, plant, and equipment additions (1,594) (1,361) Proceeds from the sale of property, plant, and equipment 53 80 Other (288) (1,173) ------------------------ ----------------------- Net cash used in investing activities (1,829) (2,454) ------------------------ ----------------------- Cash flows from financing activities: Decrease in other debt (196) (2,312) Net increase in notes payable banks 7,085 8,253 Net increase in cash overdraft 1,901 1,230 Debt issuance costs - (521) Other 65 (84) Preferred stock dividends (383) (388) ------------------------ ----------------------- Net cash provided from financing activities 8,472 6,178 ------------------------ ----------------------- Effect of translation adjustments on cash (135) 3,135 Increase (decrease) in cash and cash equivalents 3,362 (1,187) Cash and cash equivalents: Beginning of period 8,946 14,437 ------------------------ ----------------------- End of period $ 12,308 $ 13,250 ======================== ======================= The accompanying notes are an integral part of the financial statements.
Notes to the Consolidated Condensed Financial Statements 1. Basis of Presentation All dollar amounts presented are in thousands, except for per share data. The consolidated condensed financial statements are unaudited for the periods indicated herein. In accordance with the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures have been condensed or omitted; therefore, such financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended November 30, 2000. The consolidated financial statements include the accounts of Tokheim Corporation and its wholly and majority-owned subsidiaries ("Tokheim" or the "Company"). The consolidated condensed financial statements in this Report reflect all adjustments and accruals that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented; all such adjustments were of a normal recurring nature. The results of operations for the three month interim period ended February 28, 2001 are not necessarily indicative of the results of operations for the year ending November 30, 2001. Tokheim (the "Predecessor Company") filed a Joint Prepackaged Plan of Reorganization (the "Plan") for the Company and its U.S. subsidiaries pursuant to Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on August 28, 2000. The Bankruptcy Court confirmed the Company's Plan on October 4, 2000, and the Plan became effective as of October 20, 2000 (the "Effective Date"). See Note 2 to the consolidated condensed financial statements for additional information. All discussion of events prior to the Effective Date refers to the Predecessor Company. The unaudited consolidated condensed financial statements prepared subsequent to the Effective Date reflect accounting principles and practices set forth in American Institute of Certified Public Accountants Statement of Position ("SOP") 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code, which provides guidance for financial reporting by entities that have filed voluntary petitions for relief under, and have reorganized in accordance with, the Bankruptcy Code. As such, the Company adopted "fresh start accounting" as of October 31, 2000. The Company's emergence from Chapter 11 proceedings resulted in a new reporting entity. Accordingly, the accompanying condensed consolidated Statements of Earnings and Cash Flows for periods prior to the Predecessor Company's emergence from bankruptcy are not comparable to the Statements of Earnings and Cash Flows of the Company subsequent to emergence from bankruptcy and the adoption of fresh start accounting (the "Successor Company"). 2. Plan of Reorganization The Plan provided that, among other things, (i) the existing bank credit agreement was restructured to comprise a four year, eleven month senior term facility of $137,177 and a four year, eleven month special facility of $100,000 on which interest will be accrued but not paid until at least November 30, 2002; (ii) the Company's bank group provided, in addition to the $237,177 facilities detailed above, a post-petition credit agreement (the "DIP Agreement") facility with available borrowings of $47,765 which was converted into a revolving credit facility upon the Company's emergence from the reorganization; (iii) members of the bank group received Series A Warrants with a five year term to purchase 678,334 shares of the Company's new common stock, no par value (the "New Common Stock") at an exercise price of $0.01 per share and Series A Preferred Stock with a total liquidation preference of $100, quarterly dividends at the rate of 16% per annum, and the right to elect two directors to the Company's Board of Directors (and to elect a majority of the directors upon certain defaults under the credit agreement); (iv) in exchange for their Notes, the holders of approximately $190,438 of senior subordinated notes and certain other unsecured creditors received 4,410,000 shares of New Common Stock representing approximately 85% of the equity value of the reorganized Company, subject to dilution for warrants to existing shareholders and management options; (v) in exchange for their Notes, the holders of $49,195 of junior subordinated notes received 90,000 shares of New Common Stock representing approximately 2% of the equity value of the reorganized Company, subject to dilution for warrants to existing shareholders and management options, and Series B Warrants giving them the right to acquire an aggregate of 555,556 shares of New Common Stock of the reorganized Company at an exercise price of $30.00 per share; (vi) the Company's employees' rights under the Retirement Savings Plan ("RSP") were preserved; and (vii) the Company's approximately 12,669,000 shares of previously outstanding common stock (the "Old Common Stock") were cancelled and existing holders of Old Common Stock received "out of the money" Series C warrants with a six year term giving them the right to acquire an aggregate of 549,451 shares of New Common Stock of the reorganized Company at an exercise price of approximately $49.46 per share (each Series C Warrant entitles the holder to purchase 0.04326865 of a share of New Common Stock at a price of $2.14, thereby requiring a holder to exercise approximately 23.111 Series C Warrants at an aggregate exercise price of approximately $49.46 to purchase one share of New Common Stock). 3. Notes Payable, Bank Credit Agreement In connection with the Chapter 11 proceedings discussed above, the Company entered into a post-confirmation credit agreement (the "New Credit Agreement") as of the Effective Date, which replaced all then-existing credit agreements. The New Credit Agreement comprises a four-year, eleven month revolving credit facility and three four-year, eleven month term facilities: the Tranche A Term Loan, the Tranche B Term Loan and the Special Loan. The revolving credit facility is in a maximum amount of $47,765 with availability based upon the amount of the Company's plant and machinery, inventory and receivables. Up to $5,000 of the facility may be utilized for the issuance of letters of credit, of which not more than $3,000 may be standby letters of credit. Borrowings under the revolving credit facility may be in U.S. Dollars or Euro, and bear interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 2.5% in the case of U.S. Dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) as defined in the New Credit Agreement plus 4% in the case of Euro denominated loans. The Tranche A Term Loan and the Tranche B Term Loan are in the amounts of $36,509 and $100,668, respectively, and bear interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 3.5% in the case of U.S. Dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) as defined in the New Credit Agreement plus 5% in the case of Euro denominated loans. On December 15, 2000, the Company made a principal prepayment of $915 on the Tranche A Term Loan, bringing the outstanding balance to $35,594. The Special Loan is in the amount of $100,000 and bears interest at the rate of 16%, which is capitalized as part of the principal balance in lieu of being paid in cash. The loan is repayable in four annual installments of $25,000 plus capitalized interest thereon, commencing November 30, 2002. Any time an event of default (as defined in the New Credit Agreement) exists, the interest rates on the loans may be increased by 3%. In consideration for establishing the New Credit Agreement, the Company paid certain fees and expenses to the bank group, including Series A Warrants to purchase 678,334 shares of New Common Stock of the Company at an exercise price of $0.01 per share. The Company also issued to the bank group New Preferred Stock with an aggregate liquidation preference of $100 and quarterly dividends at an annual rate of 16%. The holders of the New Preferred Stock are entitled to appoint two directors to the board of directors of the Company. In the event the Company defaults under the New Credit Agreement, the holders of the New Preferred Stock, voting as a separate class, will be entitled to elect a majority of the directors on the board of directors of the Company. Indebtedness of the Company under the New Credit Agreement is secured by (i) a first perfected security interest in and lien on substantially all of the real and personal property assets of the Company's direct and indirect material majority-owned U.S. subsidiaries, (ii) a pledge of 100% of the stock of the Company's direct and indirect material majority-owned U.S. subsidiaries, and (iii) a pledge of 65% of the stock of the Company's first-tier material foreign subsidiaries and (b) was guaranteed by all of the Company's direct and indirect material majority-owned U.S. subsidiaries. The Company may voluntarily prepay the loans, in whole or in part, without penalty except for the Special Loan, which carries a prepayment penalty if paid off prior to August 2002. The Company is also required to apply against the loans (i) all net cash proceeds from sales of assets, (ii) all insurance proceeds (with certain exceptions), (iii) all net proceeds from the sale or issuance of debt or equity (with certain exceptions) and (iv) the percentage of excess cash flow (as defined in the New Credit Agreement) for each fiscal year commencing with the year ending November 30, 2002. The New Credit Agreement requires the Company to meet certain consolidated financial tests, including the maintenance of minimum levels of EBITDA, the maintenance of a fixed charge coverage ratio and interest coverage ratio (all as defined in the New Credit Agreement), to stay below certain maximum senior debt and total debt leverage ratios, and to stay below certain maximum levels of capital expenditures. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, payment of dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments and amendments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. As at February 28, 2001, the Company had satisfied its financial tests. While the Company currently expects to remain in compliance with the covenants and to satisfy the financial tests in the future, its ability to do so may be affected by events beyond its control. Therefore, there can be no assurance that the Company will satisfy such financial tests or that it will be able to obtain amendments to the New Credit Agreement, if so needed, to avoid a default. In the event of a default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable immediately. At February 28, 2001, the aggregate amount outstanding under the revolving facility was $17,613. This amount is classified as long-term debt as the Company has the ability (under the terms of the agreement) and the intent to finance this obligation beyond one year. Total availability under the revolving facility at February 28, 2001 was $47,765, of which $30,152 was unused. Any balances outstanding under the New Credit Agreement are repayable in full on September 20, 2005. 4. New Accounting Pronouncements Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998. 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. Additionally, the Securities and Exchange Commission has issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition", that deals with principles of revenue recognition. The Financial Accounting Standards Board Emerging Issues Task Force ("EITF") has released Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10 creates a framework for accounting for shipping and handling fees and costs. The adoption of these statements as of November 1, 2000 had no material impact on the Company's financial statements. 5. Segment Reporting For the three month periods ended February 28, 2001 and February 29, 2000, the Company had only one reportable industry segment-the design, manufacture and servicing of petroleum dispensing systems. The Company has two reportable operating segments: North America and Europe/Africa. The accounting policies of these segments are the same as described in the summary of significant accounting policies in the Company's Form 10-K for the year ended November 30, 2000. The Company evaluates the performance of each operating segment based upon income from operations before merger and acquisition costs and other unusual items. The Company's selling, general, and administrative expenses are charged to each segment based upon the operating segment where the costs are incurred. Segment results for the three month periods ended February 28, 2001 and February 29, 2000 are summarized in the tables below. SEGMENT REPORTING
Successor Company Three months ended North February 28, 2001 America (1) Europe/Africa Eliminations Consolidated ---------------- ---------------- ---------------- ----------------- Customer sales $ 44,146 $ 77,093 $ - $ 121,239 Intercompany sales 598 615 (1,213) - Depreciation and amortization 2,021 2,722 3,166 7,909 Operating profit (loss), before merger and aquisition costs and other unusual items (2,251) 3,134 (3,141) (2,258) Total assets $ 565,555 $ 336,286 $ (431,541) $ 470,300 Predecessor Company Three months ended North February 29, 2000 America (1) Europe/Africa Eliminations Consolidated ---------------- ---------------- ---------------- ----------------- Customer sales $ 50,463 $ 81,949 $ - $ 132,412 Intercompany sales 754 413 (1,167) - Depreciation and amortization 2,758 3,316 - 6,074 Operating profit (loss), before merger and acquisition costs and other unusual items (5,590) 2,006 (161) (3,745) Total assets $ 609,048 $ 381,491 $ (356,034) $ 634,505 (1) Includes corporate headquarters
Reconciliation from segment information to consolidated statement of earnings:
Successor Predecessor Company Company ---------------- ---------------- Three months ended ---------------------------------- February 28, 2001 February 29, 2000 ----------------- ------------------ Segment operating profit $ (2,258) $ (3,745) Merger and acquisition costs and other unusual items (732) (2,725) ---------------- ---------------- Consolidated operating profit $ (2,990) $ (6,470)
6. Comprehensive Loss The table below summarizes comprehensive loss for the three month periods ended February 28, 2001 and February 29, 2000.
Successor Predecessor Company Company ----------------------- ----------------------- Three months ended Three months ended February 28, 2001 February 29, 2000 ----------------------- ----------------------- Net loss $ (11,375) $ (20,551) Other comprehensive income (loss): Foreign currency translation adjustments 5,041 (5,253) ----------------------- ----------------------- Comprehensive loss $ (6,334) $ (25,804)
7. Restructuring Charges 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 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 are expensed as incurred or separately accrued once all criteria for accrual are met, nor do these costs benefit future periods. The integration and rationalization plan was completed at November 30, 2000. The Company expects the final cash payments related to the integration and rationalization plan to be completed by the end of fiscal 2001. The table below summarizes the accrued liability activity by major category and initiative for the three month period ended February 28, 2001. Approximately $4,312 of the original liability was unused at October 31, 2000 and recorded as a reduction of goodwill.
November 30, Charges February 28, 2000 to Accrual 2001 ---------------------------------------------------------- Involuntary employee termination benefits................ $ 1,122 $ (1,068) $ 54 Facility closure and other closure costs................. - - - Lease and contract termination fees...................... - - - ---------------------------------------------------------- Total accrued integration and rationalization costs...... $ 1,122 $ (1,068) $ 54 ==========================================================
During 1999, as a result of the continuing integration and rationalization of the RPS Division with other business units, the Company accrued approximately $2,700 as a charge to operations to establish an accrual for involuntary termination benefits and related costs for approximately 69 employees that served in primarily service and administration roles at various service facilities in France. This amount also included amounts for lease termination and other exit costs and was added to an amount of $340 that remained accrued at November 30, 1999 for pension payments due to retirees who formerly worked at the Company's Glenrothes, Scotland facility. The table below summarizes the accrued liability activity by major category and initiative for the three month period ended February 28, 2001.
November 30, Charges February 28, 2000 to Accrual 2001 ----------------------------------------------------------- Involuntary employee termination benefits................ $ 341 $ (3) 338 Facility closure and other closure costs................. 209 (37) 172 Lease and contract termination fees...................... - - - ----------------------------------------------------------- Total accrued integration and rationalization costs...... $ 550 (40) $ 510 ===========================================================
The balance in the accrual at February 28, 2001 was $338 for involuntary termination and related costs and $172 for facility closure and other closure costs. These balances related directly to initiatives begun in 1999 or 1998 that were complete at November 30, 2000. The Company expects the final cash payments related to the finalization of these initiatives to be made during 2001. 8. Earnings per Share 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 common shares outstanding during the reported period. Diluted EPS includes additional dilution from potential common stock, such as stock issuable pursuant to conversion of preferred stock or the exercise of stock options and warrants outstanding. The incremental shares from the conversion of preferred stock and exercise of stock options and warrants were not included in computing diluted EPS for the three month periods ended February 28, 2001 and February 29, 2000 since the effect of such is antidilutive during periods when a loss from continuing operations is reported. Pursuant to the Plan, 4,500,000 shares of New Common Stock were authorized at the Effective Date. These shares are being issued upon the exchange of old Tokheim securities. For the three months ended February 28, 2001, the weighted average of potentially issuable common shares included 678,334 shares related to warrants issued to the bank group. For the three months ended February 29, 2000, the weighted average of potentially issuable common shares included 793,881 shares of convertible preferred stock outstanding and 2,519,724 shares related to warrants issued to Schlumberger. 9. Change in Senior Management The Company announced on March 29, 2001 that Douglas K. Pinner had announced his intention to step down as Chairman, President and Chief Executive Officer and that the Company was initiating a search for a new Chief Executive Officer. In conjunction with this decision, the Company's Board of Directors has selected George A. Helland, Jr., an existing Board member, to serve as Chairman and Chief Executive Officer while Tokheim conducts this search. While the Company intends to name a new Chief Executive Officer as soon as practicable, there can be no assurance that the change in senior management and related uncertainties will not adversely affect the Company's operating results and financial condition during the period until a new Chief Executive Officer is appointed and afterward. In conjunction with this change in senior management, outstanding stock options issued to Douglas K. Pinner will be terminated, as the required vesting period had not yet passed. The terms of Mr. Pinner's separation agreement have not been finalized; thus, any costs related thereto will be recorded during the three month period ended May 31, 2001. 10. Fresh Start Accounting In connection with the emergence from bankruptcy, the Company adopted fresh start accounting, as of October 31, 2000, in accordance with the requirements of SOP 90-7. In applying "fresh start accounting", the value of the Successor Company was allocated to the Company's net assets in conformity with the guidance specified by Accounting Principles Board Opinion No. 16, Business Combinations. SOP 90-7 required a determination of the Company's reorganization value, representing the fair value of all of the Company's assets and liabilities, and an allocation of such values to the assets and liabilities based on their relative fair values with the excess in reorganization value over market values recorded as an intangible asset. As a result, the carrying values of the Company's assets and liabilities were adjusted to fair value as of October 31, 2000. Reorganization value in excess of amounts allocable to identifiable assets of approximately $162,757 was recorded at October 31, 2000 and is being amortized on a straight-line basis over ten years. The application of SOP 90-7 resulted in the creation of a new reporting entity having no retained earnings or accumulated deficit. For the purpose of the Plan, the reorganization equity value was estimated to be $50,000, based in part on management's estimate of future operating results. The reorganization value necessarily assumes that the Successor Company will achieve its estimated future operating results in all material respects. If such results are not achieved, the value of the Successor Company that is ultimately realized could be materially different. The Plan had a significant impact on the financial statements of the Successor Company, including the creation of a new reporting entity upon emergence from bankruptcy through the application of fresh start accounting pursuant to SOP 90-7. Accordingly, the Company's post-reorganization balance sheets, statements of earnings and statements of cash flows, which reflect the application of fresh start accounting, have not been prepared on a consistent basis with the pre-reorganization financial statements and are not comparable in all respects to the financial statements prior to the reorganization. For accounting purposes, the inception date of the Successor Company is deemed to be November 1, 2000. 11. Merger and Acquisition Costs and Other Unusual Items The components of merger and acquisition costs and other unusual items for the three month periods ended February 28, 2001 and February 29, 2000 are as follows:
Three months Three months ended ended February 28, February 29, 2001 2000 Employee compensation and expenses related to the RPS integration plan................................ $ 373 $ 543 Lease cancellation and other facility expenses...... 46 47 Increased warranty and other product related COSTS.. - 259 Legal and professional fees......................... 14 288 Credit agreement fees............................... - 1,556 Reorganization...................................... 297 - Other............................................... 2 32 -------------- -------------- Total $ 732 $ 2,725 ============== ==============
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Tokheim Corporation, including its subsidiaries ("Tokheim" or the "Company"), is the world's largest manufacturer and servicer of electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (including point-of-sale ("POS") systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts and upgrade kits. The Company provides products and services to customers in more than 80 countries. The Company is the largest supplier of petroleum dispensing systems in Europe, Africa, Canada, and Mexico, and one of the largest in the United States. The Company also has established operations in Asia and Latin America. Results of Operations The Company emerged from its Chapter 11 proceeding and adopted "fresh start accounting" as of October 31, 2000 (see Note 2 to the consolidated condensed financial statements). Therefore, the Company's financial statements after this date reflect a new reporting entity (the "Successor Company") and are not directly comparable to the financial statements of prior periods. The principal comparative differences between the three month periods ended February 28, 2001 and February 29, 2000 relate to the impact of the changes to the Company's capital structure, changes in indebtedness, and the revaluation of the Company's assets and liabilities to reflect the reorganization value at the Effective Date. The changes primarily affect depreciation and amortization expense and interest expense in the Company's results of operations after the Effective Date. However, for the purposes of comparative analysis, the following discussion of the operating results of the Company compares the operating results of the three month period ended February 28, 2001 for the Successor Company and the results of the three month period ended February 29, 2000 for the Predecessor Company. The operations (net sales, gross margin, and selling, general and administrative expenses) of the Successor and Predecessor Companies were substantially similar and the comparison of those items is meaningful to the understanding of the business. Consolidated net sales for the three month period ended February 28, 2001 were $121,239 compared to $132,412 for the comparable 2000 three month period. Sales for North America decreased by 12.5% for the period to $44,146 in 2001 from $50,463 in 2000. Higher sales to Major Oil Companies, Nationals, and export markets were offset by a decline in the distributor (Jobber) channel. European and African sales decreased 5.9% to $77,093 in 2001 from $81,949 in 2000. Of the $4,856 reduction, $4,290 was attributable to weakening foreign currency rates relative to the U.S. Dollar, particularly in Europe, for the three months ended February 28, 2001. Gross margins as a percent of sales (defined as net sales less cost of sales, divided by net sales) decreased to 21.0% in the three month period ended February 28, 2001 from 21.2% in the 2000 three month period. Selling, general, and administrative ("SG&A") expenses as a percent of sales for the three month period ended February 28, 2001 were 16.4 % compared to 19.4% for the 2000 three month period. This decrease as a percentage of sales is due to the realization of the plan of integration and rationalization. Depreciation and amortization expense for the three month period ended February 28, 2001 was $7,909 compared to $6,074 in the comparable 2000 period. This increase was primarily attributable to the reorganization of the Predecessor Company and the associated revaluation of fixed assets to fair value, which has resulted in higher depreciation expense for 2001. The Successor Company also recorded reorganization value in excess of amounts allocable to identifiable assets, which has a shorter amortization period than goodwill recorded by the Predecessor Company, resulting in higher levels of amortization. Merger and acquisition costs and other unusual items were $732 for the three months ended February 28, 2001 compared to $2,725 for the three months ended February 29, 2000. Higher costs were incurred in 2000 related to the plan of integration and rationalization and the write off of credit agreement fees related to prior credit agreements. Net interest expense for the three month period ended February 28, 2001 was $9,222 compared to $14,648 in the comparable 2000 period. This decrease is primarily attributable to reduced debt levels resulting from the discharge of the Predecessor Company's senior and junior subordinated notes. Foreign currency gain for the three month period ended February 28, 2001 was $255 compared to $169 in the comparable 2000 period. Other income, net for the three month period ended February 28, 2001 was $1,053 compared to $290 in the comparable 2000 period. This increase was due to proceeds from life insurance policies and the elimination of a prior year over-accrual for foreign Value Added Tax. Income tax for the three month period ended February 28, 2001 was an expense of $462 compared to a benefit of $106 in the comparable 2000 period. This increase is related to profits earned in foreign tax jurisdictions. As a result of the above mentioned items, loss applicable to common stock of the Successor Company was $11,758 or $2.61 per diluted common share for the three months ended February 28, 2001 compared to a loss applicable to common stock of the Predecessor Company of $20,939 or $1.65 per diluted common share for the same period in 2000. Liquidity and Capital Resources Cash used in operations for the three month period ended February 28, 2001 was $3,146 versus $8,046 in the comparable period of 2000. During the first quarter of 2001, the Company's loss before income taxes was $10,913 compared to $20,657 in the first quarter of 2000. Cash used in investing activities for the three month period ended February 28, 2001 was $1,829 compared to $2,454 in the comparable 2000 period. Cash provided from financing activities for the three month period ended February 28, 2001 was $8,472 compared to $6,178 in the comparable 2000 period. The cash provided in the 2001 period is attributable to increased borrowings from the Company's revolving credit facility and various overdraft facilities. The Reorganization The Company's Chapter 11 reorganization became effective as of October 20, 2000. Under the Plan: o the holders of approximately $190,438 of senior subordinated notes and other unsecured creditors will receive, assuming a full exchange, 4,410,000 shares of New Common Stock representing approximately 85% of the equity value of the reorganized Company; o the holders of approximately $49,194 of junior subordinated notes will receive, assuming a full exchange, 90,000 shares of New Common Stock representing approximately 2% of the equity value of the reorganized Company, as well as Series B Warrants to acquire 555,556 shares of New Common Stock at an exercise price of $30.00 per share; o members of the bank group received Series A Warrants to acquire 678,334 of New Common Stock at an exercise price of $0.01 per share; o members of the bank group received Series A Senior Preferred Stock with an aggregate liquidation preference of $100 and dividends with an annual rate of 16%. The Company also entered into a New Credit Agreement as of the Effective Date. A portion of the proceeds from these facilities was used to repay all outstanding borrowings under the Company's bank loans. The New Credit Agreement, totaling $284,942, consists of: o Tranche A Term Loan in an amount of $36,509 due in September 2005; o Tranche B Term Loan in an amount of $100,668 due in September 2005; o Special Loan in an amount of $100,000 in four annual installments of $25,000 plus interest thereon, commencing in November 2002; o Revolving credit facility in an amount of $47,765 due in September 2005, of which $17,613 was outstanding at February 28, 2001. Interest rates on the new credit facilities are as follows: o the Tranche A and Tranche B Term Loans bear interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 3.5% in the case of U.S. Dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) as defined in the New Credit Agreement plus 5% in the case of Euro denominated loans; o the Special Loan bears interest at the rate of 16%, which is capitalized as part of the principal balance in lieu of being paid in cash; o the revolving credit facility bears interest based upon (at the Company's option) (i) the Base Rate (defined as the higher of (a) the prime rate and (b) the federal funds rate plus 0.5%) plus 2.5% in the case of U.S. Dollar denominated loans or (ii) the Eurodollar Rate (Reserve Adjusted) as defined in the New Credit Agreement plus 4% in the case of Euro denominated loans. On December 15, 2000, the Company made a prepayment of $915 on the Tranche A Term Loan. The Future The Company's principal sources for liquidity in the future are expected to be cash flow from operations and available borrowings under the New Credit Agreement. There can be no guarantee, however, that the Company's business will continue to generate cash flow at or above current levels, that estimated cost savings or growth will be achieved or that financial ratios and financial tests under the New Credit Agreement will be met or that the Company will be able to refinance its existing indebtedness in whole or in part. While the Company was in compliance at February 28, 2001, the Company's ability to meet financial ratios and tests in the future may be affected by events beyond its control. While the Company currently expects to be in compliance with the covenants and satisfy the financial ratios and tests in the future, there can be no guarantee that the Company will meet such financial ratios and tests or that it will be able to obtain future amendments to the New Credit Agreement, if so needed, to avoid a default. In the event of a default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable immediately. In addition, the New Credit Agreement limits 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. New Accounting Pronouncements Accounting pronouncements recently issued by the Financial Accounting Standards Board, American Institute of Certified Public Accountants and Financial Accounting Standards Board Emerging Issues Task Force had no material impact on the Consolidated Condensed Financial Statements as of February 28, 2001. PART II. OTHER INFORMATION Item 1. Legal Proceedings On February 29, 2000, a three-member arbitration panel ruled in favor of Bennett Pump Company ("Bennett") concerning arbitration between the Company and Bennett. The dispute concerned the minimum purchase requirements by the Company for Bennett's products over a five-year period beginning September 1, 1996. The Company maintained that it could reduce the minimum purchase commitment by not ordering any pumping units and pay Bennett for the lost profit on the pumping units not ordered. The arbitration panel ruled that the minimum purchase agreement entered into as part of the Sofitam acquisition could not be reduced. The Company was required to make a one time payment of $1,200 for the shortfall in purchases in 1998 and 1999 and $1,600 for the shortfall in purchases in 2000 and 2001, which were discounted to present value. The payment of $2,800 was charged against a previously established liability. The Company had elected not to purchase any additional units from Bennett due to quality and delivery problems that it had experienced with Bennett. The Company is currently building the required pumping unit in-house. On August 11, 2000, the Company settled out of court a claim asserted by the four former shareholders of Management Solutions, Inc. for an amount of $7,000. As a condition of the settlement, the award was treated as an impaired claim, similar to the treatment of the senior and junior subordinated notes in the bankruptcy proceeding. This award was accrued for and included as an impaired claim in the calculation of extraordinary gain on discharge of debt. In September 1998, the Company acquired the RPS Division ("RPS") of Schlumberger Limited ("Schlumberger"). One of Tokheim's primary competitors, Gilbarco, now known as Marconi, filed suit, claiming that a fuel dispenser manufactured by RPS violates its electronics design patent for fuel dispensers and its programmable multiple blender patent. Tokheim denies liability for any infringement of the patents and believes that this infringement breaches Schlumberger's warranty regarding ownership of the technology. Marconi filed suit in federal court in North Carolina. Marconi named Schlumberger as a Defendant in this lawsuit and Schlumberger failed to answer. Marconi moved for a summary judgement against Schlumberger. A tentative settlement agreement has been reached between Tokheim, Schlumberger and Marconi regarding this matter. Schlumberger has agreed to pay a lump sum to Marconi. Tokheim and Marconi have agreed to an allowed and liquidated claim in the bankruptcy proceeding. Marconi has agreed to have its claim for infringement impaired in accordance with the distribution scheme contained in Tokheim's Plan. In addition, Tokheim will pay a royalty of $50.00 per blender on any blenders used in the Centurion product on or after November 30, 2000. Tokheim will receive a paid-up license with respect to the electronics design patent in question. On October 18, 2000, Schlumberger filed a claim with the Bankruptcy Court with respect to the Company's acquisition of RPS. The claim, which was subsequently modified on January 12, 2001, is for various sums allegedly due to Schlumberger, totaling $10,000. The Company believes that $6,507 of the claim is valid and had previously provided for that amount. If the claim were to be upheld, it would be treated similarly to the claims of other impaired unsecured creditors. The Company has not paid this claim as it has a counter-claim against Schlumberger for amounts due and alleged to be due to the Company on account of Schlumberger's material breach of various representations and warranties in connection with the acquisition. The amount of the Company's claim is substantially higher than the amount of Schlumberger's claim. The parties have entered into a stipulation staying proceedings between the parties for a period of 60 days in order to attempt to resolve the respective claims. The period of the stay will end on April 30, 2001. If the respective claims are not resolved during the period of the stay, the Company intends to commence arbitration proceedings in the International Court of Arbitration. As more fully described in Note 21 to the consolidated financial statements, "Contingent Liabilities," in the Company's Form 10-K, the Company is defending various claims and legal actions, including claims relating to the U.S. Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and other environmental laws, product liability and various contract and employee matters, some of which may be impaired in the bankruptcy proceeding. These legal actions primarily involve claims for damages arising out of the Company's manufacturing operations, product liability and various contractual and employment issues. Management believes that the outcome of such pending claims will not, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations, or cash flows. Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit No. Document ------- -------- 2.1 Filing of a Joint Prepackaged Plan of Reorganization for the Company and its U.S. subsidiaries pursuant to chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (incorporated herein by reference to the Company's Current Report on Form 8-K/A dated September 11, 2000). 2.2 Confirmation of the Joint Prepackaged Plan of Reorganization for the Company and its U.S. subsidiaries pursuant to chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (incorporated herein by reference to the Company's Current Report on Form 8-K dated October 16, 2000). 3.1 Amended and Restated Articles of Incorporation of Tokheim Corporation, as filed with the Indiana Secretary of State as of October 20, 2000 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 3.2 Amended and Restated Bylaws of Tokheim Corporation, as amended and restated as of October 20, 2000 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.1 Post-Confirmation Credit Agreement, dated as of October 20, 2000, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as Administrative Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.2 Series A Warrant Agreement, dated as of October 20, 2000, among Tokheim Corporation and the holders of Series A Warrant Certificates (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.3 Series B Warrant Agreement, dated as of October 20, 2000, among Tokheim Corporation and Computershare Investor Services, LLC, as Warrant Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.4 Series C Warrant Agreement, dated as of October 20, 2000, among Tokheim Corporation and Computershare Investor Services, LLC, as Warrant Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.5 Registration Rights Agreement, dated as of October 20, 2000, among Tokheim Corporation and the Holders of Stock to be listed on Schedule 1 (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 4.6 Amendment No. 1 to the Post-Confirmation Credit Agreement, dated as of March 14, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as Administrative Agent. 10.1 Tokheim Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.2 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Douglas K. Pinner (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.3 Employment Agreement, dated May 15, 2000, between Tokheim Corporation and Robert L. Macdonald (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q/A, for the quarter ended May 31, 2000). 10.4 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Jacques St-Denis (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.5 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Norman L. Roelke (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.6 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Scott A. Swogger (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.7 Technology License Agreement, effective as of December 1, 1997, between Tokheim Corporation and Gilbarco, Inc. (incorporated herein by reference to the Company's Annual Report on Form 10-K, for the year ended November 30, 1997). 10.8 Tokheim Corporation Management Option Plan (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 10.9 Form of Incentive Stock Option Agreement under Tokheim Corporation Management Option Plan (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). 10.10 Incentive Stock Option Agreement under Tokheim Corporation Management Option Plan, dated as of October 20, 2000, among Tokheim Corporation and Douglas K. Pinner (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended August 31, 2000). b. Reports on Form 8-K No reports have been filed on form 8-K since the Company's last annual report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TOKHEIM CORPORATION Date: April 13, 2001 /S/ GEORGE A. HELLAND, JR. --------------------------- Acting Chairman and Chief Executive Officer Date: April 13, 2001 /S/ ROBERT L. MACDONALD ---------------------------- Executive Vice-President, Finance and Chief Financial Officer Exhibit Index 4.6 Amendment No. 1 to the Post-Confirmation Credit Agreement, dated as of March 14, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as Administrative Agent. EX-4 2 0002.txt EXHIBIT 4.6 - FIRST AMENDMENT FIRST AMENDMENT THIS FIRST AMENDMENT dated as of March 14, 2001 (this "Amendment") is to the Post- Confirmation Credit Agreement (the "Credit Agreement") dated as of October 20, 2000 among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), various subsidiaries thereof as Borrowers, various financial institutions (the "Lenders"), AMSOUTH BANK, as documentation agent, and ABN AMRO BANK N.V., as administrative agent for the Lenders (the "Administrative Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as defined in the Credit Agreement. WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1 AMENDMENT. On (and subject to the occurrence of) the Amendment Effective Date (as defined below), the Credit Agreement shall be amended effective as of February 28, 2001 in the following manner: 1.1 Section 10.6.3 of the Credit Agreement shall be amended by replacing the ratio "9.30:1.0" appearing opposite the date "February 28, 2001" with the ratio "10.40:1.0". 1.2 Section 10.6.4 of the Credit Agreement shall be amended by replacing the ratio "10.45:1.0" appearing opposite the date "February 28, 2001" with the ratio "11.60:1.0". 1.3 Section 10.6.5 of the Credit Agreement shall be amended by replacing the figure "$28,000,000" appearing opposite the date "February 28, 2001" with the figure "$25,500,000". SECTION 2 WAIVER. Effective as of February 28, 2001 and subject to the occurrence of the Amendment Effective Date, the Required Lenders hereby waive any Event of Default created by the Borrowers' failure to timely comply with Sections 10.1.1 and 10.1.3 of the Credit Agreement with respect to the end of the Company's Fiscal Year ended November 30, 2000, provided that the financial statements and compliance certificate required by such Sections are delivered to the Administrative Agent (with sufficient copies to provide one to each Lender) no later than March 23, 2001. SECTION 3 REPRESENTATIONS AND WARRANTIES. The Borrowers jointly and severally represent and warrant to the Administrative Agent and the Lenders that after giving effect to this Amendment (a) the representations and warranties made in Section 9 of the Credit Agreement are true and correct in all material respects on and as of the Amendment Effective Date with the same effect as if made on and as of the Amendment Effective Date (except to the extent relating solely to an earlier date, in which case they were true and correct as of such earlier date); (b) no Event of Default or Unmatured Event of Default exists or will result from the execution and delivery of this Amendment by the Borrowers; (c) the execution and delivery by the Borrowers of this Amendment and the performance by the Borrowers of their obligations under the Credit Agreement as amended hereby (as so amended, the "Amended Credit Agreement") (i) are within the corporate or limited liability company, as applicable, powers of each Borrower, (ii) have been duly authorized by all necessary corporate or limited liability company action, as applicable, (iii) have received all necessary approvals from any governmental authority having jurisdiction over any Borrower and (iv) do not and will not conflict with any provision of any law or any administrative order or decree which is binding on the Company or any of its Subsidiaries or of any provision of the certificate of incorporation or bylaws or other organizational documents of any Borrower or of any agreement which is binding on the Company or any of its Subsidiaries; (d) the Amended Credit Agreement is the legal, valid and binding obligation of each Borrower, enforceable against such Borrower in accordance with its terms, subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding at law or in equity); (e) as of February 28, 2001, the aggregate outstanding principal balance of the Tranche A Term Loans is $36,508,368.48, the aggregate outstanding principal balance of the Tranche B Term Loans is $100,668,187.24, the aggregate outstanding principal balance of the Special Loans is $105,895,111,11 and the aggregate Revolving Outstandings are $17,613,286.95; and (f) the obligation of the Borrowers and the other Loan Parties to repay the Loans and the other obligations under the Loan Documents is absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim or defense of any nature whatsoever to payment of such obligations. SECTION 4 EFFECTIVENESS. The amendments set forth in Section 1 above and the waiver set forth in Section 2 above shall become effective as of the date hereof (the "Amendment Effective Date") when the Administrative Agent shall have received (a) a counterpart of this Amendment executed by the Borrowers and the Required Lenders, (b) a counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit A, executed by each Loan Party, (c) an amendment fee from the Company in an amount equal to $50,000, for the account of the Lenders party hereto that have executed and delivered counterparts of this Amendment to counsel for the Administrative Agent by 5:00 p.m. (New York City time) on March 14, 2001 (to be allocated among such Lenders ratably to each Lender that has so executed and delivered a counterpart hereof in accordance with the proportion which the Revolving Commitment and Term Loans of such Lender bears to the aggregate Revolving Commitments and Term Loans of all Lenders that have so executed and delivered counterparts hereof) and (d) such other documents as the Administrative Agent or any Lender may reasonably request. The Administrative Agent shall give notice to the Borrowers upon the occurrence of the Amendment Effective Date. SECTION 5 MISCELLANEOUS. 5.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the Amendment Effective Date, all references in the Credit Agreement, the Notes, each other Loan Document and any similar document to the "Credit Agreement" or similar terms shall refer to the Amended Credit Agreement. 5.2 Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment. 5.3 Expenses. The Company agrees to pay the reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) in connection with the preparation, execution and delivery of this Amendment. 5.4 Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York. 5.5 Successors and Assigns. This Amendment shall be binding upon the Borrowers, the Lenders and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of the Borrowers, the Lenders and the Administrative Agent and the successors and assigns of the Borrowers, the Lenders and the Administrative Agent; provided that no Borrower shall have any right to assign this Amendment without the prior written consent of the Administrative Agent and the Required Lenders. SECTION 6. RELEASE OF CLAIMS. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF LIABILITY OF SUCH BORROWER TO REPAY ANY AGENT OR ANY LENDER AS PROVIDED IN THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ANY AGENT OR ANY LENDER. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND EACH LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS OR EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, AND SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION AND EXECUTION OF THIS AMENDMENT. Delivered as of the day and year first above written. TOKHEIM CORPORATION ------------------------------- Title ---------------------------- By ------------------------------- Title ---------------------------- GASBOY INTERNATIONAL, INC. By ------------------------------- Title ---------------------------- TOKHEIM INVESTMENT CORP. By ------------------------------- Title ---------------------------- MANAGEMENT SOLUTIONS, INC. By ------------------------------- Title ---------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------- Title ---------------------------- TOKHEIM SERVICES LLC By ------------------------------- Title ---------------------------- TOKHEIM RPS, LLC By ------------------------------- Title ---------------------------- ABN AMRO BANK N.V., as Administrative Agent, as Issuing Lender and as a Lender By ------------------------------- Title ---------------------------- By ------------------------------- Title ---------------------------- AMSOUTH BANK, as Documentation Agent and as a Lender By ------------------------------- Title ---------------------------- BANK ONE, INDIANA, NATIONAL ASSOCIATION, as a Lender By ------------------------------- Title ---------------------------- CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By ------------------------------- Title ---------------------------- CREDIT AGRICOLE INDOSUEZ, as a Lender By ------------------------------- Title ---------------------------- By ------------------------------- Title ---------------------------- BEAR, STEARNS & CO., INC., as a Lender By ------------------------------- Title ---------------------------- BANKERS TRUST COMPANY, as a Lender By ------------------------------- Title ---------------------------- SENIOR DEBT PORTFOLIO, as a Lender By: Boston Management and Research, as Investment Advisor By ------------------------------- Title ---------------------------- EATON VANCE SENIOR INCOME TRUST, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------- Title ---------------------------- OXFORD STRATEGIC INCOME FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------- Title ---------------------------- EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender By: Eaton Vance Management, as Investment Advisor By ------------------------------- Title ---------------------------- CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender By ------------------------------- Title ---------------------------- By ------------------------------- Title ---------------------------- FINOVA CAPITAL CORPORATION, as a Lender By ------------------------------ Title --------------------------- BANK POLSKA KASA OPIEKI S.A., NEW YORK BRANCH, as a Lender By ------------------------------ Title --------------------------- OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By ------------------------------- Title ---------------------------- OAKTREE CAPITAL MANAGEMENT, LLC, as a Lender By ------------------------------- Title ---------------------------- ARES LEVERAGED INVESTMENT FUND II, L.P., as a Lender By: ARES Management II, L.P., its General Partner By ------------------------------- Title ---------------------------- WHIPPOORWILL/TOKHEIM OBLIGATIONS TRUST-2000, as a Lender By: Whippoorwill Associates, Incorporated, as its investment representative and advisor By ------------------------------- Title ---------------------------- BARCLAYS BANK PLC, as a Lender By ------------------------------- Title ---------------------------- GOLDMAN SACHS CREDIT PARTNERS, as a Lender By ------------------------------ Title --------------------------- EXHIBIT A FORM OF REAFFIRMATION OF LOAN DOCUMENTS March __, 2001 ABN AMRO Bank N.V., as Administrative Agent and the other parties to the Credit Agreement referred to below Re: Reaffirmation of Loan Documents Ladies and Gentlemen: Please refer to: 1. The Guaranty dated as of October 20, 2000 (the "Guaranty") executed in favor of the Administrative Agent and various other parties by the undersigned; 2. The Security Agreement dated as of October 20, 2000 (the "Security Agreement") among the undersigned and the Administrative Agent; and 3. The Pledge Agreement dated as of October 20, 2000 (the "Pledge Agreement") among certain of the undersigned and the Administrative Agent. Capitalized terms not otherwise defined herein will have the meanings given in the Credit Agreement referred to below. Each of the undersigned acknowledges that the Borrower, the Banks and the Administrative Agent have executed the First Amendment (the "Amendment") to the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as so amended and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Each of the undersigned hereby (i) confirms that each Loan Document to which such undersigned is a party remains in full force and effect after giving effect to the effectiveness of the Amendment and that, upon such effectiveness, all references in such Loan Document to the "Credit Agreement" shall be references to the Credit Agreement as amended by the Amendment, (ii) acknowledges and agrees that its obligations under the Loan Documents are absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim or defense of any nature whatsoever thereto and (iii) VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, OR EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE FOREGOING AMENDMENT IS EXECUTED, WHICH IT MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, AND SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR OTHER CREDIT DOCUMENTS, AND NEGOTIATION AND EXECUTION OF THE FOREGOING AMENDMENT. The letter agreement may be signed in counterparts and by the various parties as herein on separate counterparts. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. TOKHEIM CORPORATION By ------------------------------ Title --------------------------- By ------------------------------ Title --------------------------- GASBOY INTERNATIONAL, INC. By ------------------------------ Title --------------------------- TOKHEIM INVESTMENT CORP. By ------------------------------ Title --------------------------- MANAGEMENT SOLUTIONS, INC. By ------------------------------ Title --------------------------- SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------ Title --------------------------- TOKHEIM SERVICES LLC By ------------------------------ Title --------------------------- TOKHEIM RPS, LLC By ------------------------------ Title --------------------------- PAXCIS NETWORKS, INC. By ------------------------------ Title --------------------------- -----END PRIVACY-ENHANCED MESSAGE-----