-----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, Otp6WFZ07xBF7pmWZtcLqP4EyLySIBC3IXfOmUCjbdG+tRpOEHGC4h4oVolS+c73 6p2eG9yk2jCAY2HU6Hkk1w== 0000950172-01-500576.txt : 20010725 0000950172-01-500576.hdr.sgml : 20010725 ACCESSION NUMBER: 0000950172-01-500576 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010531 FILED AS OF DATE: 20010724 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: 1686505 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 s274294.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 May 31, 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 May 31, 2001, 2,751,166 shares of voting common stock were outstanding. The exhibit index is located on page 15. Item 1. Financial Statements
TOKHEIM CORPORATION & SUBSIDIARIES - ---------------------------------------------------------------------------------------------------------------------------- Consolidated Condensed Statement of Earnings (Amounts in thousands except data per share) Unaudited ---------------------------------------------------------------------- Successor Predecessor Successor Predecessor Company Company Company Company ---------------------------------- ---------------------------------- Three months ended Six months ended May 31, May 31, 2001 2000 2001 2000 ---------------------------------- ---------------------------------- Net sales $ 121,786 $ 134,837 $ 243,026 $ 267,249 Cost of sales, exclusive of items listed below 94,157 105,851 189,916 210,214 Selling, general, and administrative expenses 20,132 24,456 39,961 50,176 Depreciation and amortization 9,044 6,510 16,953 12,584 Merger and acquisition costs and other unusual items 2,218 2,723 2,950 5,448 --------------- ---------------- ---------------- ---------------- Operating loss (3,765) (4,703) (6,754) (11,173) Interest expense, net 8,835 14,875 18,057 29,522 Foreign currency (gain) loss 762 (28) 507 (197) Minority interest in subsidiaries 173 51 182 49 Other income, net (940) (718) (1,992) (1,008) --------------- ---------------- ---------------- ---------------- Loss before income taxes (12,595) (18,883) (23,508) (39,539) Income tax expense (benefit) 431 (1,532) 893 (1,683) --------------- ---------------- ---------------- ---------------- Net loss (13,026) (17,351) (24,401) (37,856) Preferred stock dividends (368) (381) (750) (768) --------------- ---------------- ---------------- ---------------- Loss applicable to common stock $ (13,394) $ (17,732) $ (25,151) $ (38,624) =============== ================ ================ ================ Loss per common share: Basic Net loss $ (2.98) $ (1.40) $ (5.59) $ (3.05) =============== ================ ================ ================ Weighted average shares outstanding* 4,500 12,669 4,500 12,669 =============== ================ ================ ================ Diluted Net loss $ (2.98) $ (1.40) $ (5.59) $ (3.05) =============== ================ ================ ================ Weighted average shares outstanding* 4,500 12,669 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 Balance Sheet (Amounts in thousands except data per share) Successor Company ---------------------------------- Unaudited May 31, 2001 November 30, 2000 -------------- ----------------- Assets Current assets: Cash and cash equivalents $ 13,660 $ 8,946 Accounts receivable, net 109,740 110,820 Inventories: Raw materials, service parts and supplies 60,399 57,498 Work in process 12,675 12,497 Finished goods 7,566 8,485 -------------- -------------- 80,640 78,480 Other current assets 14,248 9,767 -------------- -------------- Total current assets 218,288 208,013 Property, plant and equipment, at cost: Land and land improvements 5,522 5,536 Buildings and building improvements 23,562 23,950 Machinery and equipment 39,632 37,355 Construction in progress 4,215 5,493 -------------- -------------- 72,931 72,334 Less: Accumulated depreciation 6,264 310 -------------- -------------- 66,667 72,024 Reorganization value in excess of amounts allocable to identifiable assets, net 153,263 161,401 Intangible assets, net 10,885 9,496 Other assets 9,576 10,927 -------------- -------------- Total assets $ 458,679 $ 461,861 ============== ============== Liabilities and Shareholders' Equity Current maturities of other long term debt $ 1,967 $ 2,512 Cash overdrafts 13,100 12,061 Accounts payable 61,638 61,609 Accrued expenses 76,700 72,608 -------------- -------------- Total current liabilities 153,405 148,790 Notes payable, bank credit agreement 259,925 240,238 Other long term debt, less current maturities 2,422 2,988 Post-retirement benefit liability 19,039 18,880 Other long-term liabilities 1,467 1,164 -------------- -------------- 436,258 412,060 Redeemable convertible preferred stock, liquidation value of $25 per share, 1,700 shares authorized, 960 shares issued 12,619 12,619 New preferred stock, liquidation preference of $1 per share, 100 authorized and issued 100 100 Treasury stock, at cost (3,087) (2,494) -------------- -------------- Total preferred equity 9,632 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) (2,259) (623) Retained earnings (accumulated deficit) (24,727) 424 Additional paid in capital 27,076 27,076 -------------- -------------- Total common shareholders' equity 12,789 39,576 -------------- -------------- Total liabilities and shareholders' equity $ 458,679 $ 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 Cash Flows (Amounts in thousands except data per share) Unaudited -------------------------------------------------- Successor Predecessor Company Company ------------------------ ----------------------- Six months ended Six months ended May 31, 2001 May 31, 2000 ------------------------ ----------------------- Cash flows from operating activities: Net loss........................................................... $ (24,401) $ (37,856) Adjustments to reconcile net loss to net cash provided from (used in) operating activities: Payment in kind interest..................................... 8,403 2,742 Amortization of debt issuance costs.......................... 699 - Depreciation and amortization................................ 16,953 12,584 Gain on sale of fixed assets................................. (635) (94) Deferred income taxes........................................ 551 - Changes in assets and liabilities: Receivables, net............................................. (1,086) 43,566 Inventories.................................................. (3,940) 4,608 Other current assets......................................... (4,706) (3,438) Accounts payable............................................. 1,146 (14,347) Accrued expenses............................................. 5,593 (17,649) Other........................................................ 1,544 (353) ----------------------- ----------------------- Net cash provided from (used in) operations............................. 121 (10,237) ------------------------ ----------------------- Cash flows from investing activities: Property, plant, and equipment additions..................... (5,172) (5,090) Proceeds from the sale of property, plant, and equipment..... 716 593 Other........................................................ (253) - ------------------------ ----------------------- Net cash used in investing activities................................... (4,709) (4,497) ------------------------ ----------------------- Cash flows from financing activities: Increase (decrease) in other debt............................ (971) 147 Net increase in notes payable, banks......................... 10,585 16,490 Net increase in cash overdraft............................... 1,405 2,976 Debt issuance costs.......................................... - (177) Other........................................................ (593) (156) Preferred stock dividends.................................... (750) (768) ------------------------ ----------------------- Net cash provided from financing activities............................. 9,676 18,512 ------------------------ ----------------------- Effect of translation adjustments on cash............................... (374) 2,504 Increase (decrease) in cash and cash equivalents............. 4,714 6,282 Cash and cash equivalents: Beginning of period.......................................... 8,946 14,437 ------------------------ ----------------------- End of period................................................ $ 13,660 $ 20,719 ======================== ======================= 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 and six month periods ended May 31, 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 Euros, 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 and issued to them 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 of a default under the New Credit Agreement, the holders of the New Preferred Stock, voting as a separate class, would 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 capital 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) a 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, fixed charge coverage ratios and interest coverage ratios (all as defined in the New Credit Agreement), the maintenance of maximum senior debt and total debt leverage ratios, and maximum levels of capital expenditures. The New Credit Agreement also contains covenants which, among other things, limit the incurrence of additional indebtedness, payment of dividends, transactions with affiliates, asset sales, acquisitions, investments, mergers and consolidations, prepayments and amendments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. At May 31, 2001, the Company was in violation of two of its financial covenants under the bank credit agreement. The bank group permanently waived this violation and modified, or suspended the requirement for compliance with, the financial covenants relating to the remainder of fiscal 2001 and the first three quarters of fiscal 2002. The Company agreed to reduce the total availability under the revolving facility from $47,765 to $35,000. This reduction of $12,765 represents a portion of that part of the facility for which the Company believes it will have no use in the forseeable future. While the Company currently expects to remain in compliance with the adjusted 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 default. In the event of default, the lenders could elect to declare all amounts borrowed under the New Credit Agreement to be due and payable immediately. At May 31, 2001, the aggregate amount outstanding under the revolving facility was $21,249, including $1,749 of outstanding letters of credit. 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 May 31, 2001 was $47,765, of which $26,516 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 and six month periods ended May 31, 2001 and 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 and six month periods ended May 31, 2001 and 2000 are summarized in the tables below.
SEGMENT REPORTING Successor Company Three months ended North May 31, 2001 America (1) Europe/Africa Eliminations Consolidated - ------------ ---------------- ---------------- ---------------- ---------------- Customer sales $ 45,218 $ 76,568 $ - $ 121,786 Intercompany sales 583 4 (587) - Depreciation and amortization 5,302 4,996 (1,254) 9,044 Operating profit (loss), before merger and acquisition costs and other unusual items (6,456) 3,776 1,133 (1,547) Total assets $ 534,589 $ 239,452 $ (315,362) $ 458,679 Predecessor Company Three months ended North May 31, 2000 America (1) Europe/Africa Eliminations Consolidated - ------------ ---------------- ---------------- ---------------- ---------------- Customer sales $ 50,343 $ 84,494 $ - $ 134,837 Intercompany sales 1,395 59 (1,454) - Depreciation and amortization 2,799 3,711 - 6,510 Operating profit (loss), before merger and acquisition costs and other unusual items (5,076) 3,094 2 (1,980) Total assets $ 607,268 $ 359,854 $ (352,133) $ 614,989 Successor Company Six months ended North May 31, 2001 America (1) Europe/Africa Eliminations Consolidated - ------------ ---------------- ---------------- ---------------- ---------------- Customer sales $ 89,365 $ 153,661 $ - $ 243,026 Intercompany sales 1,181 619 (1,800) - Depreciation and amortization 7,323 7,717 1,913 16,953 Operating profit (loss), before merger and acquisition costs and other unusual items (8,707) 6,910 (2,007) (3,804) Total assets $ 534,589 $ 239,452 $ (315,362) $ 458,679 Predecessor Company Six months ended North May 31, 2000 America (1) Europe/Africa Eliminations Consolidated - ------------ ---------------- ---------------- ---------------- ---------------- Customer sales $ 100,805 $ 166,444 $ - $ 267,249 Intercompany sales 2,148 472 (2,620) - Depreciation and amortization 5,557 7,027 - 12,584 Operating profit (loss), before merger and acquisition costs and other unusual items (10,667) 5,097 (155) (5,725) Total assets $ 607,268 $ 359,854 $ (352,133) $ 614,989 (1) Includes corporate headquarters Reconciliation from segment information to consolidated statement of earnings:
Successor Predecessor Successor Predecessor Company Company Company Company ---------------------------------- ---------------------------------- Three months ended Six months ended May 31, May 31, ---------------------------------- ---------------------------------- 2001 2000 2001 2000 ---------------- ---------------- ---------------- ---------------- Segment operating loss $ (1,547) $ (1,980) $ (3,804) $ (5,725) Merger and acquisition costs and other unusual items (2,218) (2,723) (2,950) (5,448) ---------------- ---------------- ---------------- ---------------- Consolidated operating loss $ (3,765) $ (4,703) $ (6,754) $ (11,173)
6. Comprehensive Loss The table below summarizes comprehensive loss for the three and six month periods ended May 31, 2001 and 2000.
Successor Predecessor Successor Predecessor Company Company Company Company ---------------------------------------------------------------------- Three months ended Six months ended May 31, May 31, 2001 2000 2001 2000 ---------------------------------- ---------------------------------- Net loss $ (13,026) $ (17,351) $ (24,401) $ (37,856) Other comprehensive loss: Foreign currency translation adjustments (6,677) (5,679) (1,636) (10,933) ---------------- --------------- ---------------- --------------- Comprehensive loss $ (19,703) $ (23,030) $ (26,037) $ (48,789) ================ =============== ================ ===============
7. Restructuring Charges In 1998, the Company acquired the RPS division of Schlumberger ("RPS"). Included in accrued liabilities are certain costs the Company will incur to effect an integration and rationalization plan for the RPS 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 and six month periods ended May 31, 2001. Approximately $4,312 of the original liability was unused at October 31, 2000 and recorded as a reduction of goodwill. Charges to the accrual for the three month period ended May 31, 2001 amounted to approximately $17, offset by $1,063, due to currency fluctuations.
November 30, Charges February 28, Charges May 31, 2000 to Accrual 2001 to Accrual 2001 ------------------------------------------------------------------------------ Involuntary employee termination benefits....... $ 1,122 $ (1,068) $ 54 $ 1,046 $ 1,100 ----------------------------------------------------------------------------- Total accrued integration and rationalization costs.......................................... $ 1,122 $ (1,068) $ 54 $ 1,046 $ 1,100 =============================================================================
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 and six month periods ended May 31, 2001.
November 30, Charges February 28, Charges May 31, 2000 to Accrual 2001 to Accrual 2001 ---------------------------------------------------------------------------- Involuntary employee termination benefits......... $ 341 $ (3) $ 338 $ (43) $ 295 Facility closure and other closure costs.......... 209 (37) 172 (30) 142 ------------------------------------------------------------------------------- Total accrued integration and rationalization costs............................................ $ 550 $ (40) $ 510 $ (73) $ 437 ===============================================================================
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 and six month periods ended May 31, 2001 and 2000, since the effect of such is antidilutive during periods when a loss from continuing operations is reported. Pursuant to the Plan, the Old Common Stock was cancelled and 4,500,000 shares of New Common Stock were to be issued and outstanding following the exchange of the junior and senior subordinated notes of the Old Tokheim. For the three and six months ended May 31, 2001, the weighted average of potentially issuable common shares included 678,334 shares related to warrants issued to the bank group. For the three and six months ended May 31, 2000, the weighted average of potentially issuable common shares included 785,702 shares of convertible preferred stock outstanding and 2,517,605 shares related to warrants issued to Schlumberger. 9. Change in Senior Management The Company intimated 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 were cancelled, as the required vesting period had not passed. The terms of Mr. Pinner's separation agreement have been finalized and all additional related liabilities have been accrued in the quarter ended May 31, 2001. 10. Fresh Start Accounting In connection with its 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 of 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 basis consistent 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 and six month periods ended May 31, 2001 and May 31, 2000 are as follows:
Three months ended Six months ended May 31, May 31, ------------------------------- ------------------------------- 2001 2000 2001 2000 -------------- ------------- -------------- ------------- Employee compensation and expenses related to the RPS integration plan................................ $ 1,830 $ 665 $ 2,203 $ 1,208 Lease cancellation and other facility expenses...... 49 27 95 74 Increased warranty and other product related costs... 149 408 Legal and professional fees.......................... 12 33 26 321 Credit agreement fees................................ 1,556 Reorganization....................................... 132 549 429 549 Litigation settlements............................... 123 123 Other................................................ 195 1,177 197 1,209 -------------- ------------- -------------- ------------- Total $ 2,218 $ 2,723 $ 2,950 $ 5,448 ============== ============= ============== =============
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 proceedings 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 and six month periods ended May 31, 2001 and 2000 relate to the impact of the changes to the Company's capital structure, changes in indebtedness, and the revaluation of the Company's assets and liabilities to reflect the reorganization value at the Effective Date. The changes primarily affect depreciation and amortization expense and interest expense in the Company's results of operations after the Effective Date. However, for the purposes of comparative analysis, the following discussion of the operating results of the Company compares the operating results of the three and six month periods ended May 31, 2001 for the Successor Company and the results of the three and six month periods ended May 31, 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 May 31, 2001 were $121,786 compared to $134,837 for the comparable 2000 three month period. Sales for North America decreased by 10.2% for the period to $45,218 in 2001 from $50,343 in 2000. This decrease was primarily due to a decline in the distributor (Jobber) channel. European and African sales decreased by 9.4% to $76,568 in 2001 from $84,494 in 2000. Of the $7,926 reduction, $7,598 was attributable to weakening foreign currency rates relative to the U.S. Dollar, particularly in Europe. Consolidated net sales for the six month period ended May 31, 2001 were $243,026 compared to $267,249 for the comparable 2000 six month period. Sales for North America decreased by 11.3% for the period to $89,365 in 2001 from $100,805 in 2000. This decrease was primarily due to a decline in the distributor (Jobber) channel. European and African sales decreased by 7.7% to $153,661 in 2001 from $166,444 in 2000. Of the $12,783 reduction, $9,895 was attributable to weakening foreign currency rates relative to the U.S. Dollar, particularly in Europe, for the six months ended May 31, 2001. Gross margins as a percent of sales (defined as net sales less cost of sales, divided by net sales) increased to 22.7% in the three month period ended May 31, 2001 from 21.5% in the 2000 three month period. For the six month period ended May 31, gross margins increased from 21.3% in 2000 to 21.9% in 2001. Selling, general, and administrative ("SG&A") expenses as a percent of sales for the three and six month periods ended May 31, 2001 were 16.5% and 16.4%, respectively, compared to 18.1% and 18.8% in the three and six month periods of 2000. This decrease as a percentage of sales is due to the realization of the plan of integration and rationalization. SG&A expenses have decreased from $24,456 in the three month period ended May 31, 2000 to $20,132 in the three month period ended May 31, 2001. SG&A expenses have decreased from $50,176 in the six month period ended May 31, 2000 to $39,961 in the six month period ended May 31, 2001. These decreases are due to the realization of the plan of integration and rationalization and foreign currency fluctuations. Depreciation and amortization expense for the three and six month periods ended May 31, 2001 was $9,044 and $16,953, respectively, in contrast with $6,510 and $12,584 in the comparable 2000 periods. These increases were 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 $2,218 and $2,950 for the three and six month periods ended May 31, 2001, respectively, compared to $2,723 and $5,448 for the same periods in 2000. This decrease is due to higher costs having been 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 and six month periods ended May 31, 2001 was $8,835 and $18,057, respectively, compared to $14,875 and $29,522 in the same periods of 2000. 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 loss for the three and six month periods ended May 31, 2001 was $762 and $507, respectively, in contrast with foreign currency gains of $28 and $197 in the same periods of 2000. Other income, net for the three and six month periods ended May 31, 2001 was $940 and $1,992, respectively, compared to $718 and $1,008 in the same periods of 2000. This increase was due to proceeds from life insurance policies and the reduction in estimates of certain liabilites, such as foreign Value Added Tax. Income tax for the three and six month periods ended May 31, 2001 was an expense of $431 and $893, respectively, compared to benefits of $1,532 and $1,683 in the same periods of 2000. These increases are 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 $13,394 or $2.98 per diluted common share for the three months ended May 31, 2001, compared to a loss applicable to common stock of the Predecessor Company of $17,732 or $1.40 per diluted common share for the same period in 2000. Loss applicable to common stock of the Successor Company was $25,151 or $5.59 per diluted common share for the six months ended May 31, 2001, compared to a loss applicable to common stock of the Predecessor Company of $38,624 or $3.05 per diluted common share for the same period in 2000. Liquidity and Capital Resources Cash provided from operations for the six month period ended May 31, 2001 was $121 versus cash used in operations of $10,237 in the same period of 2000. This increase was caused principally by a decrease in the net loss from $37,856 in the six month period ended May 31, 2000 to $24,401 in the six month period ended May 31, 2001. Cash used in investing activities for the six month period ended May 31, 2001 was $4,709 compared to a cash usage of $4,497 in the same period of 2000. Cash provided from financing activities for the six month period ended May 31, 2001 was $9,676 compared to cash provided in the same 2000 period of $18,512. The cash provided in the 2000 period was primarily attributable to increased borrowings from the Company's revolving credit facility. 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 subject to dilution for warrants to existing shareholders and management options; 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 due 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, as required under the terms of the loan agreement, the Company made a prepayment of $915 on the Tranche A Term Loan, representing net proceeds from the sale of long term assets. 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. 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 May 31, 2001. PART II. OTHER INFORMATION Item 1. Legal Proceedings 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. These impaired claims were paid out in the form of common stock in the second quarter of 2001. 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. This settlement is awaiting approval by the Bankruptcy Court. 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. For accounting purposes, the $6,507 has been 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 in excess of $50,000. The Company has commenced arbitration proceedings before the International Court of Arbitration in Paris, France. 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 First Amendment to the Credit Agreement, dated as of March 14, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as Documentation Agent, and ABN AMRO Bank N.V., as Administrative Agent (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q, for the quarter ended February 28, 2001). 4.7 Second Amendment to the Credit Agreement, dated as of July 23, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as a Lender and as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. 10.1 Tokheim Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.2 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Douglas K. Pinner (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.3 Employment Agreement, dated May 15, 2000, between Tokheim Corporation and Robert L. Macdonald (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q/A, for the quarter ended May 31, 2000). 10.4 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Jacques St-Denis (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.5 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Norman L. Roelke (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.6 Employment Agreement, dated July 15, 1999, between Tokheim Corporation and Scott A. Swogger (incorporated herein by reference to the Company's Report on Form 10-Q, for the quarter ended August 31, 1999). 10.7 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 1.1 Tokheim filed a Current Report on Form 8K, pursuant to Item 4 thereof, on May 25, 2001, reporting the resignation of PricewaterhouseCoopers LLP as the Company's independent public accountant. 1.2 Tokheim filed a Current Report on Form 8K/A, pursuant to Item 4 thereof, on May 30, 2001, reporting the resignation of PricewaterhouseCoopers LLP as the Company's independent public accountant. 1.3 Tokheim filed a Current Report on Form 8K, pursuant to Item 4 thereof, on June 18, 2001, reporting the engagement of Ernst & Young LLP as the Company's independent public accountant, effective June 12. 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: July 23, 2001 /S/ ROBERT L. MACDONALD ------------------------------- Executive Vice-President, Finance and Chief Financial Officer Exhibit Index 4.7 Second Amendment to the Credit Agreement, dated as of July 23, 2001, among Tokheim Corporation, various subsidiaries thereof as Borrowers, various financial institutions, AmSouth Bank, as a Lender and as Documentation Agent, and ABN AMRO Bank N.V., as a Lender and as Administrative Agent. EX-4.7 2 exh4pt7.txt Exhibit 4.7 SECOND Amendment and Waiver THIS SECOND AMENDMENT AND WAIVER dated as of July 23, 2001 (this "Amendment and Waiver") is to the Post-Confirmation Credit Agreement dated as of October 20, 2000 (as amended pursuant to the First Amendment dated as of March 14, 2001 and as further hereby amended (the "Credit Agreement")), among TOKHEIM CORPORATION, an Indiana corporation (the "Company"), and various subsidiaries thereof as borrowers (together with the Company, the "Borrowers"), various financial institutions as lenders (the "Lenders"), AMSOUTH BANK, as a Lender and as documentation agent for the Lenders (the "Documentation Agent"), and ABN AMRO BANK N.V., as a Lender and as administrative agent for the Lenders (the "Administrative Agent"; the Documentation Agent and the Administrative Agent being collectively referred to as the "Agents"). W I T N E S S E T H: ------------------- WHEREAS, Events of Default under Section 12.1.5 of the Credit Agreement have occurred and are continuing as a result of the failure of the Company to comply with the provisions of Sections 10.6.3 and 10.6.5 of the Credit Agreement for the Computation Period ended May 31, 2001 (the "Existing Events of Default"); WHEREAS, the Borrowers have requested that the Lenders waive the Existing Events of Default, amend certain covenants through August 31, 2002 and suspend compliance with certain financial covenants through September 1, 2002; and WHEREAS, the Lenders are willing to agree to such waiver, amendment and suspension with compliance but only subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. WAIVER . In reliance on the representations and warranties set forth in this Amendment and Waiver and subject to satisfaction of the conditions set forth in Section 5 hereof, the Agents and the Lenders hereby (i) waive permanently effective as of May 31, 2001 the Existing Events of Default and (ii) suspend, from the Amendment and Waiver Effective Date (as hereinafter defined) through September 1, 2002, inclusive (the "Compliance Suspension Date"), compliance by the Borrowers with Sections 10.6.1, 10.6.2, 10.6.3 and 10.6.4 of the Credit Agreement; provided that commencing with the Computation Period ending on November 30, 2002 and thereafter all of the covenants and provisions of the Credit Agreement referred to in part (ii) above shall apply to and be effective against the Loan Parties, and all rights, privileges and remedies of the Agents and the Lenders relating thereto under the Credit Agreement and the other Loan Documents shall be fully effective and enforceable. SECTION 2. AMENDMENTS. In reliance on the representations and warranties set forth in this Amendment and Waiver and subject to satisfaction of the conditions set forth in Section 5 hereof, the Lenders hereby consent to this Amendment and Waiver pursuant to Section 14.1 of the Credit Agreement, and the Credit Agreement shall be amended effective as of July 15, 2001 (the "Amendment and Waiver Effective Date") in the following manner: 2.1 The definition of "Interest Period" set forth in Section 1.1 of the Credit Agreement shall be amended by replacing the phrase "one, two, three or six months" with the phrase "one, two or three months". 2.2 A new subsection (c) shall be added to Section 10.1.7 of the Credit Agreement to read in its entirety as follows: "(c) By no later than December 31, 2001, a detailed business plan of the Company and its subsidiaries which sets forth strategic alternatives with respect to their ongoing operations and capital structure, including, but not limited, to recapitalization, refinancing and asset disposition, in form and substance satisfactory to the Administrative Agent." 2.3 A new Section 9.25 shall be added to the Credit Agreement to read in its entirety as follows: "Section 9.25 Deposit Accounts. Set forth on Schedule 9.25 is a complete and accurate list of all bank and other deposit accounts maintained by any Loan Party with any bank or other financial institution in the United States, including the account number of such account, a brief description of the usage and type of such account, the name and address of the depository bank or other financial institution and the name of the accountholder. The Borrowers shall not, without the prior written consent of the Administrative Agent, maintain or establish, or permit to be maintained or established with any bank or other financial institution in the United States any bank or other deposit accounts other than as set forth on Schedule 9.25 unless the Borrowers shall have executed and delivered or cause to be executed and delivered such Deposit and Pledge Agreements and Control Agreements with respect thereto as the Administrative Agent shall require in order to encumber such accounts in its favor." 2.4 Schedule 9.25 attached to this Amendment and Waiver shall constitute Schedule 9.25 to the Credit Agreement. 2.5 Section 10.6.5 of the Credit Agreement shall be amended by (i) replacing the number "$33,000,000" set forth opposite the date "May 31, 2001" with the number "$28,000,000"; (ii) replacing the number "$42,000,000" set forth opposite the date "August 31, 2001" with the number "$23,200,000"; (iii) replacing the number "$43,000,000" set forth opposite the date "November 30, 2001" with the number "$25,700,000"; and (iv) replacing the designation "TBN" set forth opposite the period "February 28, 2002 through August 31, 2002" with the number "$26,000,000". SECTION 3. LOANS, LETTERS OF CREDIT NOT REQUIRED. In consideration of the waiver and amendment hereinabove set forth, and notwithstanding any provision to the contrary set forth in the Credit Agreement or any of the other Loan Documents, each of the Borrowers hereby acknowledges and agrees that: (a) no Lender is required or otherwise obligated to make, and no Borrower shall request that any Lender make, any Loan or otherwise extend credit to any Borrower, and (b) the Issuing Lender and the Lenders are not be required or otherwise obligated to issue, and no Borrower shall request that the Issuing Lender or any Lender issue, any Letters of Credit other than Letters of Credit (or renewals thereof) issued to renew Letters of Credit outstanding on the date hereof in accordance with the requirements of Section 2.3 of the Credit Agreement; except in either case to the extent that after giving effect to such Loan or issuance of Letter of Credit, the aggregate Revolving Outstandings shall not exceed the lesser of: (i) $35,000,000 plus the amount of any Additional Availability, but in no event in excess of $40,000,000 and (ii) the Borrowing Base. For purposes of this Section 3, "Additional Availability" means the amount, if any, by which EBITDA with respect to the three month period ending August 31, 2001 (based on the Company's financial statements for such period) exceeds $3,200,000, plus the amount, if any, by which EBITDA with respect to the three month period ending November 30, 2001 (based on the Company's financial statements for such period) exceeds $11,200,000. SECTION 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Agents and the Lenders to enter into this Amendment and Waiver, the Borrowers jointly and severally represent and warrant (which representations and warranties shall survive the execution and delivery hereof) to the Agents and the Lenders that: (a) the representations and warranties in the Credit Agreement are true and correct in all material respects on and as of the Amendment and Waiver Effective Date with the same effect as if made on and as of the Amendment and Waiver 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) after giving effect to this Amendment and Waiver, no Event of Default or Unmatured Event of Default exists or will exist or will result from the execution and delivery of this Amendment and Waiver by the Borrowers; (c) the execution and delivery of this Amendment and Waiver by the Borrowers and the performance by the Borrowers of their obligations under the Credit Agreement and the other Loan Documents: (i) are within the corporate or limited liability company, as applicable, powers of each Borrower, (ii) have been duly authorized by all necessary corporate or limited liability company action, as applicable, (iii) have been approved by all necessary governmental authorities having jurisdiction over any Borrower and (iv) do not and will not conflict with any provision of any law, rule, regulation, requirement, administrative order, decree or agreement that is binding on the Company or any of its Subsidiaries or with any provision of the certificate of incorporation or bylaws or other organizational documents of any Borrower; (d) the Credit Agreement and the other Loan Documents are the legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their terms, subject to bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether considered in a proceeding at law or in equity); (e) as of July 13, 2001, 2001, (i) the aggregate outstanding principal balance of the Tranche A Term Loans is $34,725,398.56, (ii) the aggregate outstanding principal balance of the Tranche B Term Loans is $100,668,187.24, (iii) the aggregate outstanding principal balance of the Special Loans is $110,225,044.54, and (iv) the aggregate outstanding principal amount of all Revolving Loans is $23,444,308.06, including the Stated Amount of all Letters of Credit in the aggregate amount of $1,444,308.06; and (f) the obligations of the Borrowers and the other Loan Parties to repay the Loans and the other obligations under the Loan Documents are absolute and unconditional, and there exists no right of setoff, recoupment, counterclaim or defense of any nature whatsoever to payment of such obligations. SECTION 5. EFFECTIVENESS. This Amendment and Waiver shall become effective as of the Amendment and Waiver Effective Date (and any earlier effective date herein expressly provided), subject to satisfaction of the following conditions: (a) receipt by the Administrative Agent of: (i) a counterpart of this Amendment and Waiver executed by the Borrowers and the Required Lenders and the Required Revolving Lenders; (ii) a counterpart of the Reaffirmation of Loan Documents, substantially in the form of Exhibit A, executed by each Loan Party; (iii) in immediately available funds, $100,000 of the Amendment and Waiver Fee referred to in Section 7(b) below; (iv) in immediately available funds, payment of all outstanding amounts, if any, that have been invoiced by the Administrative Agent and unpaid as of the date hereof with respect to all reimbursable fees, charges or expenses payable in accordance with the terms and provisions of the Credit Agreement and the other Loan Documents, including, without limitation, all Attorney Costs of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, and all fees and disbursements of FTI Policano & Manzo, financial advisor to such counsel; and (v) such other documents as the Administrative Agent may reasonably request; (b) all legal matters in connection with this Amendment and Waiver, the Credit Agreement and the other Loan Documents shall be reasonably satisfactory to Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent; and (c) no Event of Default shall have occurred and be continuing, and no Unmatured Event of Default shall occur or be continuing upon the effectiveness of this Amendment and Waiver. The Administrative Agent shall give notice to the Borrowers upon the occurrence of the Amendment and Waiver Effective Date. Except as provided in Section 9 below, this Amendment and Waiver shall be of no force and effect if the preceding conditions have not been satisfied by July 23, 2001. SECTION 6. POST-CLOSING COVENANTS. The Borrowers jointly and severally covenant and agree that on or before August 31, 2001: (i) the Borrowers shall execute and deliver or cause to be executed and delivered (or, with respect to execution and delivery by unaffiliated third parties of documents referred to in part (a) below, shall use commercially reasonable efforts to cause such third parties to execute and deliver) to the Administrative Agent the following, each of which shall be in form and substance satisfactory to the Administrative Agent: (a) duly executed Deposit Pledge and Security Agreements and Control Agreements encumbering such of the deposit accounts set forth on Schedule 9.25 to the Credit Agreement as the Administrative Agent shall determine; (b) such documentation as shall be required by the Administrative Agent to effectuate fully the pledge of collateral by Tokheim Investment Corp. of its shares in Tokheim Sofitam S.A. under French law; (c) an opinion of Texas counsel to Tokheim Investment Corp. with respect to execution and delivery of the Reaffirmation of Loan Documents; and (ii) the Company shall employ a chief executive officer or professional management consultant, each of which shall be reasonably acceptable to the Administrative Agent and the Required Lenders; it being expressly acknowledged and agreed that any failure to keep, perform and satisfy such undertakings shall constitute an Event of Default under the Credit Agreement. SECTION 7. LIMITED AMENDMENT AND WAIVER/WAIVER FEE. --------------------------------------- (a) This Amendment and Waiver shall be limited precisely as written and shall not be deemed (i) to be an amendment, waiver or modification of, or consent granted pursuant to, any other term or condition of the Credit Agreement, any other Loan Document or any of the instruments or agreements referred to in any such document or, except as expressly set forth herein, a waiver of any Unmatured Event of Default or Event of Default under the Credit Agreement, whether or not known to any of the Agents or the Lenders or (ii) to prejudice any other right or rights that the Agents or the Lenders may now or in the future have under or in connection with the Credit Agreement, any other Loan Document or any instruments or agreements referred to in any such document. (b) The Borrowers agree, jointly and severally, to pay in consideration of the amendment and waiver set forth herein, an Amendment and Waiver Fee in an amount equal to $1,750,000, for the account of Lenders party hereto that have executed and delivered counterparts of this Amendment and Waiver to counsel for the Administrative Agent by 12:00 p.m. (New York City time) on July 23, 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 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). The Amendment and Waiver Fee shall be payable, subject to execution and delivery of this Amendment and Waiver by the Required Lenders and the Borrowers, as follows: (i) $100,000 of such fee shall be payable on the Amendment and Waiver Effective Date, (ii) $250,000 of such fee shall be payable on November 30, 2002 and the remaining unpaid amount of such fee shall be payable on the Termination Date. The Amendment and Waiver Fee is fully earned and non-refundable, regardless of the failure of any Borrower to satisfy any post-closing conditions to this Amendment and Waiver. SECTION 8. MISCELLANEOUS. ------------- 8.1 Continuing Effectiveness, etc. The Credit Agreement and the other Loan Documents shall remain in full force and effect after giving effect to this Amendment and Waiver and are hereby ratified and confirmed in all respects. After the Amendment and Waiver Effective Date, all references to the "Credit Agreement" or similar terms in the Credit Agreement, the Notes, each other Loan Document and any similar document shall refer to the Credit Agreement as hereby amended and as previously amended, modified or supplemented. This Amendment and Waiver shall constitute a Loan Document as defined in the Credit Agreement and the provisions of this Amendment and Waiver may be amended, modified or supplemented, and the provisions hereof may only be waived, in accordance with and subject to the provisions of the Credit Agreement, provided, however, that notwithstanding anything to the contrary in Section 14.1, the provisions of Section 3 of this Amendment and Waiver may only be amended, modified or supplemented, or any provision thereof waived, with the consent of the Required Lenders and the Required Revolving Lenders. 8.2 Further Assurances. Each of the Loan Parties expressly acknowledges and agrees (i) to enter into such other or further documents, and to take such other or further actions that may be necessary or, in the opinion of the Administrative Agent, desirable to perfect, preserve or protect the liens and security interests created under the Loan Documents and (ii) to grant liens on such other or further property or assets of the Loan Parties not currently encumbered to secure all obligations of the Loan Parties as the Administrative Agent may require; provided that no Loan Party shall have any obligation to grant liens on any such other or further property to the extent that such Loan Party can demonstrate, to the reasonable satisfaction of the Administrative Agent, that the granting of such lien would have a material and adverse tax consequence to the Loan Parties. 8.3 Counterparts. This Amendment and Waiver may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Amendment and Waiver. Delivery of an executed counterpart of a signature page of this Amendment and Waiver by facsimile shall be as effective as delivery of a manually executed counterpart of this Amendment and Waiver. 8.4 Expenses. The Company agrees to pay the reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) in connection with the preparation, execution and delivery of this Amendment and Waiver. 8.5 GOVERNING LAW. THIS AMENDMENT AND WAIVER SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. 8.6 Successors and Assigns. This Amendment and Waiver shall be binding upon the Borrowers, the Lenders and the Agents and their respective successors and assigns and shall inure to the benefit of the Borrowers, the Lenders and the Agents and their respective successors and assigns; provided that no Borrower shall have any right to assign this Amendment and Waiver without the prior written consent of the Administrative Agent and the Required Lenders. 8.7 Consultation with Advisors. The Loan Parties acknowledge that they have consulted with counsel and with such other experts and advisors as they have deemed necessary in connection with the negotiation, execution and delivery of this Amendment and Waiver. This Amendment and Waiver shall be construed without regard to any presumption or any rule requiring that it be construed against the party causing this Amendment and Waiver or any part hereof to be drafted. 8.8 Entire Agreement. This Amendment and Waiver sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. Each of the parties hereto acknowledges that, except as otherwise expressly stated in this Amendment and Waiver, no representations, warranties or commitments, express or implied, have been made by any party to any other party with respect to the subject matter of this Amendment and Waiver. None of the terms or conditions of this Amendment and Waiver may be changed, modified, waived or cancelled, orally or otherwise, except as provided in the Credit Agreement. 8.9 Enforceability. Should any one or more of the provisions of this Amendment and Waiver be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 8.10 Invalidity; Severability. Whenever possible, each provision of this Amendment and Waiver shall be interpreted in such manner as to be effective and valid under all applicable laws, rules and regulations. Any provision of this Amendment and Waiver that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 8.11 Headings. The headings of this Amendment and Waiver are for the purpose of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment and Waiver. 8.12 Definitions. Capitalized terms used in this Amendment and Waiver that are not defined herein but are defined in the Credit Agreement shall have the meaning given to such terms in the Credit Agreement. SECTION 9. RELEASE OF CLAIMS. EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THE LIABILITY OF SUCH BORROWER TO REPAY ANY AGENT OR ANY LENDER AS PROVIDED IN THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ANY AGENT OR ANY LENDER, OR ANY OF THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENTS AND THE LENDERS, AND EACH AGENT'S AND EACH LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT AND WAIVER IS EXECUTED, THAT SUCH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, OR SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THIS AMENDMENT AND WAIVER. THE RELEASES AND DISCHARGES IN THIS SECTION 9 SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT AND WAIVER ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. [Remainder of page intentionally left blank; signatures on following pages.] Delivered as of the day and year first above written. TOKHEIM CORPORATION By ------------------------------------------ Title ------------------------------------------ By ------------------------------------------ Title ------------------------------------------ GASBOY INTERNATIONAL, INC. By ------------------------------------------ Title ------------------------------------------ TOKHEIM INVESTMENT CORP. By ------------------------------------------ Title ------------------------------------------ MANAGEMENT SOLUTIONS, INC. By ------------------------------------------ Title ------------------------------------------ SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------------------ Title ------------------------------------------ TOKHEIM SERVICES LLC By ------------------------------------------ Title ------------------------------------------ TOKHEIM RPS, LLC By ------------------------------------------ Title ------------------------------------------ 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 PEKAO SA (FORMERLY KNOWN AS BANK POLSKA KASA OPIEKI S.A., NEW YORK BRANCH), as a Lender By ------------------------------------------ Title ------------------------------------------ OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender By ------------------------------------------ Title ------------------------------------------ OAKTREE CAPITAL MANAGEMENT, LLC, on behalf of certain funds and accounts, as a Lender By ------------------------------------------ Title ------------------------------------------ ARES LEVERAGED INVESTMENT FUND II, L.P., as a Lender By: ARES Management II, L.P., its General Partner By ------------------------------------------ Title ------------------------------------------ WHIPPOORWILL/TOKHEIM OBLIGATIONS TRUST-2000, as a Lender By: Whippoorwill Associates, Incorporated, as its investment representative and advisor By ------------------------------------------ Title ------------------------------------------ BARCLAYS BANK PLC, as a Lender By ------------------------------------------ Title ------------------------------------------ GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender By ------------------------------------------ Title ------------------------------------------ A-3 EXHIBIT A FORM OF REAFFIRMATION OF LOAN DOCUMENTS July [ ], 2001 ABN AMRO Bank N.V., as Administrative Agent and the other parties to the Credit Agreement referred to below Re: Reaffirmation of Loan Documents Ladies and Gentlemen: Please refer to: 1. The Guaranty dated as of October 20, 2000 (the "Guaranty") executed in favor of the Administrative Agent and various other parties by certain of the undersigned; 2. The Security Agreement dated as of October 20, 2000 (the "Security Agreement") among the undersigned and the Administrative Agent; and 3. The Pledge Agreement dated as of October 20, 2000 (the "Pledge Agreement") among certain of the undersigned and the Administrative Agent. 4. The Post-Confirmation Pledge Agreement dated March 14, 2001 (the "German Pledge Agreement") between the Company and the Administrative Agent. 5. The Deed of Pledge of Registered Shares dated April 27, 2001 (the "Dutch Pledge Agreement") among Tokheim Investment Corp., Tokheim Holding Netherlands B.V. and the Administrative Agent. 6. The Scots Pledge Agreement dated as of June 12, 2001 (the "Scots Pledge Agreement") between Tokheim Investment Corp. and the Administrative Agent. Capitalized terms not otherwise defined herein will have the meanings given to such terms in the Credit Agreement referred to below. Each of the undersigned acknowledges that the Borrowers, the Lenders and the Agents have executed the Second Amendment and Waiver (the "Amendment and Waiver") 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 Waiver 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 and Waiver, (ii) acknowledges and agrees that its obligations under the Loan Documents are absolute and unconditional, and that it does not have any right of setoff, recoupment, claim, counterclaim or defense of any kind or nature whatsoever that can be asserted to reduce or eliminate such obligations or to seek affirmative relief or damages of any kind or nature from any Agent or any Lender, or any of their predecessors, agents, employees, successors and assigns 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, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, MATURED OR UNMATURED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE FOREGOING AMENDMENT AND WAIVER IS EXECUTED, THAT IT MAY NOW OR HEREAFTER HAVE AGAINST ANY SUCH AGENT OR LENDER, OR SUCH AGENT'S OR LENDER'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHT OR REMEDY UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND NEGOTIATION AND EXECUTION OF THE FOREGOING AMENDMENT AND WAIVER. THE RELEASES AND DISCHARGES IN THIS LETTER AGREEMENT SHALL BE EFFECTIVE REGARDLESS OF WHETHER THE CONDITIONS TO THE EFFECTIVENESS OF THE AMENDMENT AND WAIVER ARE SATISFIED AND REGARDLESS OF ANY OTHER EVENT THAT MAY OCCUR OR NOT OCCUR AFTER THE DATE HEREOF. This letter agreement may be signed in counterparts and by the various parties hereto on separate counterparts. Each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same letter agreement. Delivery of an executed counterpart of a signature page of this letter agreement by facsimile shall be as effective as delivery of a manually executed counterpart of this letter agreement. This letter agreement shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely within such State. TOKHEIM CORPORATION By ------------------------------------------ Title ------------------------------------------ By ------------------------------------------ Title ------------------------------------------ GASBOY INTERNATIONAL, INC. By ------------------------------------------ Title ------------------------------------------ TOKHEIM INVESTMENT CORP. By ------------------------------------------ Title ------------------------------------------ MANAGEMENT SOLUTIONS, INC. By ------------------------------------------ Title ------------------------------------------ SUNBELT HOSE & PETROLEUM EQUIPMENT INC. By ------------------------------------------ Title ------------------------------------------ TOKHEIM SERVICES LLC By ------------------------------------------ Title ------------------------------------------ TOKHEIM RPS, LLC By ------------------------------------------ Title ------------------------------------------ PAXCIS NETWORKS, INC. By ------------------------------------------ Title ------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----