TOKHEIM CORP, S-3/A, 1998-02-25

TOKHEIM CORP
S-3/A, 1998-02-25
REFRIGERATION & SERVICE INDUSTRY MACHINERY

Previous: STRALEM FUND INC, NSAR-B/A, 1998-02-25

Next: TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES, 24F-2NT, 1998-02-25

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1998

REGISTRATION NO. 333-46351

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------

TOKHEIM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

INDIANA 35-0712500
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)

10501 CORPORATE DRIVE
FORT WAYNE, IN 46845
(219) 470-4600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES)

DOUGLAS K. PINNER
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
10501 CORPORATE DRIVE
FORT WAYNE, IN 46845
(219) 470-4600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:
WILLIAM R. KUNKEL KEITH R. FULLENWEIDER
SKADDEN, ARPS, SLATE, VINSON & ELKINS L.L.P.
MEAGHER & FLOM (ILLINOIS) 1001 FANNIN
333 WEST WACKER DRIVE HOUSTON, TX 77002-6760
CHICAGO, IL 60606

----------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the Registration Statement has become effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED FEBRUARY 25, 1998

3,800,000 SHARES

LOGO

COMMON STOCK

-----------

All of the 3,800,000 shares of Common Stock offered hereby are being sold by
Tokheim Corporation ("Tokheim" or the "Company"). The Common Stock is listed on
the New York Stock Exchange under the symbol "TOK." On February 24, 1998, the
last closing price of the Common Stock, as reported on the New York Stock
Exchange, was $16.75 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.......................... $ $ $
- ------------------------------------------------------------------------------
Total.............................. $ $ $
- ------------------------------------------------------------------------------
Total Assuming Full Exercise of
Over-Allotment Option(3).......... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) See "Underwriting."
(2) Before deducting expenses estimated at $650,000, which are payable by the
Company.
(3) Assuming exercise in full of the 30-day option granted by the Company to
the Underwriters to purchase up to 570,000 additional shares, on the same
terms, solely to cover over-allotments. See "Underwriting."

-----------

The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and
subject to their right to reject orders in whole or in part. It is expected
that delivery of the Common Stock will be made in New York City on or about
, 1998.

-----------

PAINEWEBBER INCORPORATED
BT ALEX. BROWN
SCHRODER & CO. INC.

-----------

THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>

[Inside Front Cover: Artist's rendition of a retail service station,
highlighting the Company's products]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the reporting and other information requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). The reports,
information statements and other information that the Company files pursuant
to the Exchange Act may be inspected and copied (at prescribed rates) at the
public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, New
York, New York 10048. In addition, reports, proxy statements and other
information concerning the Company (symbol: TOK) can be inspected and copied
at the offices of the New York Stock Exchange, on which the Common Stock of
the Company is listed. The Commission also maintains a Web site
(http://www.sec.gov) containing reports, proxy materials, information
statements and other items regarding registrants that file electronically with
the Commission.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, filed by the Company with the Commission under the
Exchange Act, are hereby incorporated by reference into this Prospectus:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1997 (filed February 13, 1998);

2. The Company's Current Report on Form 8-K filed January 15, 1998; and

3. The Company's Current Report on Form 8-K/A filed February 13, 1998.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby (the "Offering") will be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in any subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits thereto). Written and telephone requests for such copies should
be directed to the Company's principal office: Tokheim Corporation, 10501
Corporate Drive, P.O. Box 360, Fort Wayne, Indiana 46801, Attention: Executive
Vice President, Finance and Administration (telephone: (219) 470-4600).

3
<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus, including, without
limitation, statements containing the words "believes," "anticipates,"
"expects" and words of similar import, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
(the "PSLRA"). Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: loss of key members of management; increases in
interest rates or the Company's cost of borrowing or a default under any
material debt agreement; inability to achieve future sales levels or other
operating results; fluctuation in foreign currency valuation; unavailability
of funds for capital expenditures or research and development; changes in
customer spending levels and demand for new products; changes in governmental,
environmental or other regulations, especially as they may affect the capital
expenditures of the Company's customers; failure of the Company to comply with
governmental regulations; inability of the Company to successfully make and
integrate acquisitions; adverse publicity; contingent liabilities and other
claims asserted against the Company; competition; loss of significant
customers or suppliers; fluctuations and difficulty in forecasting operating
results; changes in business strategy or development plans; business
disruptions; inability to protect technology or to integrate new technologies
quickly into new products; claims relating to intellectual property
infringement; changes in general economic conditions; and other factors
referenced in this Prospectus. Certain of these factors are discussed in more
detail elsewhere in this Prospectus, including, without limitation, under the
captions "Risk Factors," "The Company" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Given these
uncertainties, prospective purchasers are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to announce publicly the result of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.

4
<PAGE>

SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Consolidated Financial
Statements of Tokheim, including the notes thereto, appearing elsewhere in this
Prospectus. As used in this Prospectus, unless otherwise stated, the "Company"
or "Tokheim" refers to Tokheim Corporation and its consolidated subsidiaries.
Certain capitalized terms used and not defined in this Summary have the
meanings given to them elsewhere in this Prospectus. Unless otherwise
indicated, (i) the information in this Prospectus does not give effect to the
Underwriters' over-allotment option and (ii) references to years in this
Prospectus are to the Company's fiscal years ended November 30th.

THE COMPANY

Tokheim is one of the world's largest manufacturers and servicers of
electronic and mechanical petroleum dispensing systems. These systems include
petroleum dispensers and pumps, retail automation systems (including point-of-
sale ("POS") systems), dispenser payment or "pay-at-the-pump" terminals,
replacement parts and upgrade kits. As a result of its acquisition of the
petroleum dispenser business ("Sofitam") of Sofitam S.A. in September 1996,
Tokheim has positioned itself as a global competitor in the petroleum dispenser
business, with the ability to provide both products and services to customers
in over 80 countries. Tokheim is a leading supplier of petroleum dispensing
systems in the United States, France, Canada, Mexico and Africa, and has strong
market positions in Italy, the United Kingdom, Germany and Spain. The Company
also has operations established in Asia, eastern Europe and Latin America.

Petroleum dispensing systems are designed for and sold principally to owners
of retail service stations, which include major oil companies ("MOCs"),
national oil companies ("nationals"), independent owners operating under a MOC
brand ("jobbers"), independent oil companies ("independents"), convenience
store stations, hypermarkets and other retailers, and to commercial customers.
In 1997, approximately 89% of Tokheim's net sales were to retail operators,
such as Amoco, Elf Aquitaine, Marathon, Royal Dutch/Shell ("Shell"),
SuperAmerica, Total and their affiliated jobbers, and approximately 11% of net
sales were to commercial customers, such as Federal Express, United Parcel
Service, Penske Corporation and municipalities. In the United States, Canada
and western Europe, demand for the Company's products is driven by new, more
convenient systems, such as credit/debit card readers, and by environmental
regulations, such as those requiring vapor recovery systems and more secure
underground storage tanks. In emerging markets, such as eastern Europe, Africa
and southeast Asia, economic growth is promoting vehicle use and infrastructure
development, which increase the demand for fuel and fuel dispensers.
Deregulation of local markets and privatization of state-owned oil companies
have created additional growth opportunities in emerging markets.

The Company believes that it offers superior customer support and service
through its extensive international network of distributors and trained field
representatives. The Company offers 24-hour, seven-day-per-week on-line and
telephone support to both authorized field service representatives and
customers in its major markets. Additionally, the Company has begun to provide
centralized service support to customers through regional service offices. The
Company believes that the quality and availability of its service have been
important factors in winning contracts and gaining new customers. The Company
also recently began to offer a financing service that allows certain customers
the option to lease the Company's products through a third party.

Between 1993 and 1997, the Company's revenues grew from approximately $172.3
million to $385.5 million, and EBITDA (as defined herein) increased from
approximately $2.9 million to $34.8 million. Growth of revenue and EBITDA is
partly attributable to the Company's increased global presence as a result of
the Sofitam acquisition. Revenue growth is also attributable to increased
demand due to new product development, technological improvements, strengthened
customer relationships, changing environmental regulations and growth in
emerging markets. EBITDA improvements resulted primarily from increased sales
volume, consolidation of manufacturing operations, enhanced manufacturing
efficiency, product redesign and the sale of non-core businesses.

5
<PAGE>

COMPETITIVE STRENGTHS

As one of the world's largest manufacturers and servicers of petroleum
dispenser systems, Tokheim believes it has the following principal competitive
strengths:

STRONG CUSTOMER RELATIONSHIPS. The Company's strong customer relationships
are increasingly valuable as MOCs and nationals form alliances with suppliers
to deliver products and services across large geographic regions. MOCs and
nationals frequently solicit proposals for national, regional or global supply
contracts ("tenders") that specify product and service requirements. The
Company's global network of distributors and service providers, which was
significantly expanded by the Sofitam acquisition, enables the Company to
distribute products and provide reliable service to customers in over 80
countries. The Company's ability to customize its equipment and software to
meet customer- and country-specific standards makes the Company attractive to
MOCs and nationals as a single source of supply. In recent years, Shell has
awarded its southeast Asia and western and eastern Africa tenders to Tokheim
and has named the Company as a preferred supplier in Europe and Canada. Tokheim
has also renewed its alliance with Paz Oil, an Israeli national, until the year
2000 and has been selected to supply Amoco's U.S. and Mexican retail
operations.

BROAD, TECHNOLOGICALLY ADVANCED PRODUCT LINE. The Company manufactures and
sells a wide variety of dispensers, pumps, meters, payment and retail
automation systems, including POS systems (both hardware and software), and
fleet fueling systems. The Company's recent acquisition of Management
Solutions, Inc. ("MSI") has provided additional depth to its retail automation
system product line. See "Recent Developments." This extensive product
portfolio allows the Company to satisfy diverse customer- and country-specific
requirements. The Company considers itself an industry leader in the
integration of electronics and software into its products and believes there is
a significant potential demand for certain existing technologies. For example,
only 26% of all retail petroleum dispensers in the United States are estimated
to have dispenser payment or "pay-at-the-pump" terminals.

GLOBAL DISTRIBUTION AND SERVICE NETWORK. The Company's global distribution
and service network provides a significant advantage when competing for
national, regional and global tenders. Tokheim can provide products and
services to customers in over 80 countries through its 138 U.S. distributors,
114 international distributors, 298 service companies, and over 1,400 trained
field representatives. The Company believes that the reach of its European and
African networks for distribution and service makes it a preferred partner for
MOCs in these regions. The Company continues to focus on its service network as
a competitive advantage. Tokheim recently launched an on-line help desk which
allows authorized service representatives worldwide access to its service
database using the Internet.

LEADING POSITIONS IN DEVELOPED MARKETS. The Company has the leading market
share in France and large market shares in the United States and Canada. The
Company also has significant market positions in other developed markets,
including Italy, the United Kingdom, Germany and Spain. These strong market
positions have provided the Company with a significant base of recurring sales
of equipment, retrofit kits and service contracts.

PRESENCE ESTABLISHED IN EMERGING MARKETS. The Company has the leading market
position in Africa and Mexico and has operations established in many countries
in Asia, Latin America and eastern Europe. Consequently, the Company believes
that it is well-positioned to grow as local economies expand and as MOCs enter
emerging and newly privatized petroleum markets which require petroleum
dispensing equipment and services.

PROVEN MANAGEMENT TEAM. Since 1992, Tokheim's management team has
successfully implemented a strategic plan that restored financial flexibility,
strengthened MOC relationships, broadened product lines and reduced costs. In
addition, management has successfully begun to integrate Sofitam's operations
into the Company by consolidating operations in Europe. Management has also
begun to re-engineer its manufacturing process to improve quality and increase
efficiency.

6
<PAGE>

BUSINESS STRATEGY

The Company's business strategy has five principal components:

LEVERAGE GLOBAL PLATFORM. Tokheim has a worldwide presence with a significant
market share on three continents. As a result, the Company is able to satisfy
the complete petroleum dispensing equipment and servicing needs of customers
throughout the world and has an understanding of the regulatory requirements of
countries where its customers operate. The Company intends to obtain additional
customers and increase sales to existing customers by offering comprehensive
sales and service coverage worldwide through its extensive networks.

MAINTAIN TECHNOLOGICAL LEADERSHIP. In developed markets, such as the United
States, Canada and western Europe, the Company believes that improved
technology will be the primary driver of sales of petroleum dispensing
products. As a result, the Company has made a significant effort to maintain
its competitive edge technologically and considers itself a leader in the
integration of electronics and software into petroleum dispensing products. For
example, the Company's new Radio Frequency Identification ("RFID") technology,
similar to the drive-through payment systems used at toll booths, permits
consumers to pay for fuel purchases without using cash or credit cards. Tokheim
also continues to invest in developing new technologies, such as touch-screen
technology, wireless POS systems, improved meter technology and robotic
fueling. The MSI acquisition is expected to broaden both Tokheim's range of
retail automation systems and its customer base for such products. See "Recent
Developments."

PROVIDE INTEGRATED SALES, SERVICE AND PRODUCT DEVELOPMENT. The Company
believes that it provides an integrated service solution for the marketplace.
By offering a full range of petroleum dispensing equipment and services, the
Company addresses its customers' demands for a single source of supply and a
reduction of the total costs incurred over the life cycle of a petroleum
dispensing system. In addition, Tokheim is partnering with certain MOCs to
develop or customize products to meet their specific needs.

INCREASE OPERATIONAL EFFICIENCY. Beginning in 1992, the Company initiated an
aggressive program to consolidate manufacturing operations, enhance
manufacturing efficiency, redesign existing products and divest non-core
businesses. In addition, since the Sofitam acquisition, the Company has begun
to implement a plan to combine manufacturing facilities, integrate product
lines, re-engineer the manufacturing process and eliminate general and
administrative redundancies. The Company is continually looking for
opportunities to redesign its products and manufacturing processes to increase
efficiency.

MAINTAIN TOP QUALITY. Tokheim strives to produce the highest quality products
and is committed to continuous quality improvement. Since 1995, an aggressive
focus on product quality has reduced the defect rate (measured in parts per
million) by approximately 90%. Another indication of the Company's commitment
to quality is the award of ISO-9000 certification to all of the Company's
domestic and most of its international manufacturing facilities. The
International Organization for Standardization awards ISO-9000 certification on
a facility-by-facility basis to those adhering to strict quality standards.
Moreover, the Company's automated Computerized Dispenser Testers
comprehensively test each dispenser's electrical and fluid systems before
shipment to the customer, further improving the quality assurance process.

Tokheim was formed in 1901 and its principal executive offices are located at
10501 Corporate Drive, Fort Wayne, Indiana, 46845. Its telephone number is
(219) 470-4600.

7
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the 3,800,000 shares.
Company...........................
Common Stock to Be Outstanding 12,095,523 shares.
after the Offering(1).............
Use of Proceeds.................... The Company intends to use the net proceeds
of $59.7 million from the Offering as
follows: (i) approximately $39.1 million to
redeem (the "Note Redemption") $35.0
million in aggregate principal amount of
the Company's 11 1/2% Senior Subordinated
Notes due 2006 (the "Notes"), including
accrued and unpaid interest and redemption
premiums; and (ii) approximately $20.6
million to repay indebtedness under the
Company's bank credit facility (the "Bank
Credit Facility"), which had an outstanding
balance of approximately $32.6 million as
of December 31, 1997.
New York Stock Exchange Symbol..... "TOK."
</TABLE>
- --------

(1) Based on the number of shares outstanding as of February 4, 1998. Does not
include (i) 551,421 shares issuable upon the exercise of outstanding
options, of which 79,921 are exercisable or (ii) 771,263 shares into which
the Company's ESOP preferred stock is convertible. See "Capitalization" and
Notes 10 and 11 to the Consolidated Financial Statements.

----------------

RISK FACTORS

See "Risk Factors," which begins on page 11, for a discussion of certain
factors that should be considered in evaluating an investment in the Common
Stock.

RECENT DEVELOPMENTS

MSI's principal product is the CVN(TM) (Convenience Management Solution), a
comprehensive retail automation system, including POS, backroom and store
management systems. The CVN(TM) integrates such features as advanced gas pump
controls, barcode scanning, credit authorization, commercial and charge
accounts, employee time clock, detailed inventory tracking and cash drawer
controls. Among its dispenser features, the CVN(TM) displays up to 32 separate
pumps at all times, with up to two customers per pump. Its "One Touch" controls
allow service station employees to easily authorize, pre-pay and monitor pumps
by pressing one button. In addition, the system can automatically add
merchandise and/or fast-food purchases to the customer's fuel bill.

The CVN(TM) also has the capacity to work with a monitoring system to
automatically alert station owners of the status, fuel level, temperature,
water content, and presence of leaks in underground storage tanks. The system
interfaces with almost every dispenser and control currently on the market,
including those not manufactured by the Company. The system permits station
owners to take a physical inventory or spot check with a hand-held radio
frequency scanner. It also can track customers, even those who pay cash, and
can help manage fleet, commercial and in-house charge accounts. See "Recent
Developments."

8
<PAGE>

SUMMARY FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)

The following table sets forth summary historical and pro forma financial
information of the Company. The summary historical statement of operations data
for each of the three fiscal years in the period ended November 30, 1997 were
derived from the Company's audited Consolidated Financial Statements. The
information contained in this table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements and Unaudited
Pro Forma Financial Statements, including the notes thereto. In the opinion of
the Company, such financial statements contain all adjustments (consisting of
only normal recurring items) necessary to present fairly its financial position
and results of operations as of and for the periods presented.

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------------
PRO FORMA
1995 1996(1) 1997 1997(2)
-------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................. $221,573 $279,733 $385,469 $393,272
Operating income(3).................... 5,811 6,356 20,645 21,509
Interest expense, net.................. 3,319 7,191 16,451 11,161
Earnings (loss) before income taxes(4). 3,270 (1,229) 5,197 11,387
Earnings (loss)(4)..................... 3,231 (2,009) 3,980 9,551
Preferred stock dividends.............. 1,580 1,543 1,512 1,512
Earnings (loss) applicable to common
stock(4).............................. 1,651 (3,552) 2,468 8,039
Earnings per common share(4):
Primary
Earnings (loss)...................... $ 0.21 $ (0.45) $ 0.31 $ 0.68
Weighted average number of shares
outstanding......................... 7,911 7,981 8,083 11,883
Fully diluted
Earnings (loss)...................... $ 0.17 $ (0.45) $ 0.27 $ 0.62
Weighted average number of shares
outstanding......................... 9,500 7,981 9,067 12,867
OTHER DATA:
Capital expenditures................... $ 5,559 $ 3,061 $ 11,154 $ 11,355
EBITDA (as defined)(5)................. 14,126 17,842 34,767 36,925
</TABLE>

<TABLE>
<CAPTION>
AS OF NOVEMBER 30,
1997
--------------------
PRO
ACTUAL FORMA(2)
-------- -----------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................ $ 41,650 $ 43,288
Total assets............................................... 290,619 296,570
Total debt(6).............................................. 130,405 86,867
ESOP preferred stock, net.................................. 9,853 9,853
Common shareholders' equity, net........................... 10,618 59,405
</TABLE>
- --------
(1) Results for 1996 include three months of Sofitam operations. In addition,
the financial statements presented have been restated for an accounting
change in the method of valuing inventory, as more fully described in Note
1 to the Consolidated Financial Statements, "Summary of Significant
Accounting Policies."

(2) The summary unaudited pro forma statement of operations data and other data
give effect to the Offering and the MSI acquisition as if they had occurred
on December 1, 1996. The pro forma balance sheet data give effect to the
Offering and the MSI acquisition as if they had occurred on November 30,
1997.

9
<PAGE>

(3) Operating income equals net sales less cost of sales, selling, general and
administrative expenses, depreciation and amortization, and merger and
acquisition costs and other unusual items.

(4) The 1997 amount excludes $1,886 for extraordinary loss from debt
retirement. The 1997 pro forma excludes $1,886 and $4,964, both for
extraordinary loss from debt retirement.
(5) EBITDA (as used herein) represents earnings (loss) from continuing
operations before income taxes, extraordinary loss from debt retirement,
net interest expense, depreciation and amortization, merger and acquisition
costs and other unusual items and minority interest. Management uses EBITDA
as a financial indicator of Company's ability to service debt, although the
precise definition of EBITDA is subject to variation among companies.
EBITDA should not be construed as an alternative to operating income or
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as an
indication of the Company's operating performance or as a measure of
liquidity. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." For additional information concerning the
Company's historical cash flows, see the Consolidated Statement of Cash
Flows included elsewhere herein.

(6) Total debt includes the Notes, long-term borrowings under the Bank Credit
Facility and other credit agreements, the current portion of such
borrowings and the guarantee of certain debt incurred by the Company's
Employee Stock Ownership Plan (the "ESOP") to purchase Tokheim preferred
stock, the dividends of which are used by the ESOP to service such debt
(the "Guaranteed ESOP Obligation").

10
<PAGE>

RISK FACTORS

Prospective investors should consider carefully the following risk factors
in addition to the other information set forth in this Prospectus before
purchasing any shares of Common Stock offered hereby.

DEPENDENCE ON THE RETAIL PETROLEUM INDUSTRY

For the year ended November 30, 1997, 89% of the Company's net sales were
derived from the sale and servicing of petroleum dispensing equipment to the
retail petroleum industry. The Company's future results of operations will
depend on demand for equipment from the retail petroleum industry in developed
and emerging markets. Factors affecting demand for such equipment include
wholesale and retail prices for petroleum products, taxation of petroleum
products, environmental regulations, technological improvements, consumer
demand for new products, changing retailing patterns in the retail petroleum
industry, consolidation trends among retailers in developed markets, the pace
of development in emerging markets, changes in interest rates and general
economic and industry conditions. Factors adversely affecting the prices of or
demand for the Company's products and services could have a material adverse
effect on the Company's business, financial condition or results of
operations.

The Company's customers include MOCs, nationals, jobbers, independents,
convenience store stations, hypermarkets, other retailers and commercial
users. Certain of these customers contribute substantially to the Company's
revenues. The loss of any such customer, or class of customers, or decreases
in such customers' capital expenditure levels, could have a material adverse
effect on the Company's business, financial condition or results of operation.
Recently, MOCs and nationals have moved both toward granting national,
regional and global contracts, or tenders, and toward creating alliances and
preferred supplier relationships with suppliers. Typically, a customer can
terminate these arrangements at any time. Because of anticipated increasing
reliance on such arrangements, the loss of a customer, or the award of a
contract to a competitor, may have a more significant impact on the Company in
the future.

APPLICATION OF TECHNOLOGY AND SOFTWARE IN PRODUCTS

The Company's success will depend, in significant part, on the continued
market acceptance of the Company's existing products and the successful
development, introduction and customer acceptance of new products and services
and enhanced versions of the Company's current products. The technology and
software being integrated into the Company's products, including electronic
components, POS systems and related products, are growing increasingly
sophisticated and expensive. There can be no assurance that the Company will
successfully continue to develop new products in a timely fashion or that the
Company's current or future products will be marketed properly or satisfy the
needs of the worldwide market. Certain assets of the Company could become
obsolete or become impaired in value as a result. In addition, the competition
in the Company's industry to develop new products, and to establish
proprietary rights to these products and the related technology, is intense.
Competitors may be successful in establishing proprietary rights to new
technologies, and there can be no assurance that the Company will be able to
obtain rights to such technology or that it will not face claims that its
products infringe patents held by its competitors. See "The Company--Legal
Proceedings." Certain customers demand customized products to address
particular characteristics of their businesses. The Company's commitment to
customization could burden its resources or delay the delivery or installation
of products. Any of these factors could adversely affect the Company's
relationship with its customers, which in turn could materially adversely
affect its business, financial condition or results of operations.

COMPETITION

The market for petroleum dispensing equipment is competitive and sensitive
to new product introductions and pricing pressure. Intense competition has
significantly reduced the average price on the Company's products over the
past few years. Prices may continue to fall in the future. The Company
competes with Gilbarco, Inc. (a division of GEC, Plc), Wayne (a division of
Dresser Industries, Inc.), Schlumberger Limited, Tankanlagen Salzkotten GmbH,
Scheidt & Bachmann GmbH and Tatsuno Corporation, among others. Several of the
Company's current and potential competitors, as subsidiaries or divisions of
much larger corporations, have significantly greater financial,

11
<PAGE>

technical and marketing resources than the Company. There can be no assurance
that the Company's current or potential competitors will not develop products
superior to those developed by the Company or integrate new technologies more
quickly than the Company. Competitors may be able to form alliances with MOCs
or respond to their tender proposals faster than the Company, potentially
causing the Company to lose market share. Increased competition could cause
price reductions, reduced gross margins or loss of market share, which in turn
could materially adversely affect the Company's business, financial condition
or results of operations. There can be no assurance that the Company will be
able to compete effectively against current and future competitors.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company intends to continue to expand its international sales activity,
which currently represents a substantial portion (approximately 64% for 1997)
of its total sales. This expansion will require significant management
attention and financial resources. In addition, foreign sales are subject to
numerous risks, including political and economic instability in foreign
markets, restrictive trade policies of foreign governments, inconsistent
product regulation or sudden policy changes by foreign agencies or
governments, the imposition of duties, taxes and governmental royalties,
foreign exchange rate risks, exchange controls, national and regional labor
strikes, potentially longer payment cycles, increased costs associated with
maintaining international marketing efforts, difficulties in enforcing
contractual obligations (including the collection of accounts receivable) and
intellectual property rights and the burdens of complying with a wide variety
of international and U.S. export laws and differing regulatory requirements.
Any of these factors could materially adversely affect the Company's business,
financial condition or results of operations. In particular, the Company has
experienced a business slowdown in Asia due to current market conditions
(although the Company currently derives only a minor portion of its sales from
the region). There can be no assurances as to when Asian market conditions
will improve or whether they may worsen.

The Company's ability to satisfy its obligations depends, in substantial
part, on its ability to obtain the cash flow generated by its international
operations, whether such cash flow is in the form of payments on account of
intercompany obligations, dividends or advances. The Company loaned certain
amounts to its international subsidiaries to acquire Sofitam and to refinance
certain debt of Sofitam. Payments of interest by the Company's international
subsidiaries to the Company on such intercompany loans have resulted and are
expected to continue to result in the repatriation of a portion of the cash
flow of such subsidiaries. Certain of the Company's subsidiaries also pay fees
to the Company under management agreements. There can be no assurance that the
interest payments on such intercompany loans or the management fees will not
be characterized as dividends or otherwise, so as to have adverse tax or other
consequences to the Company, or become subject to restrictions or exchange
controls on the transfer of funds in or out of the respective countries, thus
adversely affecting the Company's ability to service its outstanding
indebtedness. In addition, declines in the value of the French franc relative
to the U.S. dollar have the effect of reducing the amount of funds (measured
in U.S. dollars) which can be repatriated. Under French law, in case of
bankruptcy proceedings, the trustee or receiver in bankruptcy or the court,
among others, may also be in a position to seek either the nullification or
the non-enforceability, depending on the situation, of any legal acts
undertaken by a company with third parties, including affiliates (such as the
increase of intercompany obligations, including intercompany notes, and the
payment of management or other fees). Such an act may materially adversely
affect the Company's ability to satisfy its obligations.

CURRENCY RISK

A substantial portion of the Company's expenses and sales are denominated in
foreign currencies. Accordingly, the Company's revenues, cash flows and
earnings are affected by fluctuations in certain exchange rates, principally
between the U.S. dollar and the French franc. For 1997, approximately 29% of
the Company's total revenue was denominated in French francs, which over the
past year has significantly depreciated against the U.S. dollar. Decreases in
the value of foreign currencies relative to the U.S. dollar could make the
Company's exports from the U.S. more expensive and potentially less
competitive in those markets. As a result of the expansion of the Company's
international operations, sales denominated in currencies other than U.S.
dollars will become more significant and will comprise an increasing
percentage of the Company's net sales. The Company has entered into currency
hedging transactions in the past, and may continue to do so in the future.

12
<PAGE>

LEVERAGE

As set forth under "Capitalization," on a pro forma basis (assuming
completion of the Offering and the use of the proceeds therefrom as set forth
herein), as of November 30, 1997, the Company would have had approximately
$86.9 million of total debt and approximately $59.4 million of common
shareholders' equity. The Company's future operating performance and ability
to service or refinance its indebtedness will be subject to future economic
conditions and to financial, business and other factors, many of which are
beyond its control. Consequently, the Company may be unable to service all of
its debt in the future. There can be no assurance that the Company's future
operating performance and the availability under the Bank Credit Facility will
suffice to service such indebtedness or that the Company will be able to
refinance its indebtedness in whole or in part.

The degree to which the Company is leveraged could have other important
consequences to the Company and its shareholders, including but not limited to
the following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions or general
corporate purposes, including refinancing its debt, may be significantly
impaired; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to debt service, thereby reducing funds available
for operations; (iii) borrowings under the Bank Credit Facility are at
floating rates of interest, causing the Company to be vulnerable to increases
in interest rates; and (iv) the Company's leverage may make it more vulnerable
to economic downturns and limit its ability to withstand competitive pressures
or to take advantage of business opportunities. The Company's ability to make
scheduled payments of the principal of or interest on, or to refinance, its
indebtedness will depend on its future operating performance and cash flow,
which are subject to prevailing economic conditions, primarily interest rate
levels and financial, competitive, business, and other factors, many of which
are beyond its control.

RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS

The indenture (the "Indenture") relating to the Notes and the Bank Credit
Facility contain covenants imposing significant operating and financial
restrictions on the Company. The Indenture restricts the ability of the
Company and its subsidiaries to, among other things, incur additional
indebtedness, incur liens, pay dividends on Common Stock or make certain other
restricted payments or investments, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company. The Bank Credit Facility
contains other and more restrictive covenants. The Bank Credit Facility also
requires the Company to maintain specific financial ratios and to satisfy
certain financial tests. A breach of any of these covenants could result in an
event of default under the Bank Credit Facility. If such an event of default
occurs, the lenders could elect to declare that all amounts borrowed under the
Bank Credit Facility are immediately due and payable. If the Company were
unable to repay all amounts declared due and payable, the lenders could
proceed against the collateral granted to them to satisfy the indebtedness and
other obligations due and payable. Substantially all of the assets of the
Company and its U.S. subsidiaries have been pledged as security under the Bank
Credit Facility. If the Bank Credit Facility indebtedness were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full such indebtedness and the other indebtedness of
the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

GOVERNMENT REGULATION

Environmental. Both the Company and its principal customers are subject to
local, regional and national regulations, laws and standards, including those
concerning the environment. Changes in environmental regulation applicable to
petroleum exploration, manufacturing, distribution and sales businesses
(principally in any of the geographic areas where the Company competes) could
require the Company's customers to increase their capital spending to comply
with such regulations and substantially decrease their capital spending on the
Company's products. Although the Company believes that the cost to comply with
environmental regulations applicable to its business will not have a material
adverse effect on its financial condition or results of operations, there can
be no assurance that significant costs and liabilities will not be incurred.
See "The Company--Regulation--Environment."

Emerging Markets. Future sales to operators in emerging markets will depend
upon the continued privatization and deregulation of energy and retail
petroleum markets in eastern Europe, Latin America, Africa and Asia. The

13
<PAGE>

Company's operations in emerging markets will be subject to the inherent risks
of doing business in markets with financial, political and legal systems that
may be unstable or unpredictable.

Hypermarkets. A 1996 French regulation that restricted the construction of
new hypermarkets has limited new service station growth and the Company's
sales to this important segment of the French market. It is possible that
other countries where hypermarkets operate will also adopt restrictive laws.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends in large part upon its ability to attract,
retain and motivate highly skilled employees. There is significant competition
for employees with the skills required to perform the services that the
Company provides. There can be no assurance that the Company will be able to
continue to attract and retain sufficient numbers of highly skilled employees
for the foreseeable future. The loss of Douglas K. Pinner, the Company's
Chairman of the Board, President and Chief Executive Officer, or other key
personnel, could have a material adverse effect on the Company's business,
financial condition or results of operations.

PRODUCT LIABILITY

Because the Company's products are used primarily in connection with highly
combustible, toxic materials, a product defect could pose a significant risk
of injury or environmental contamination. The Company also faces the
possibility that defects in the design or manufacture of its products might
necessitate a product recall. There can be no assurance that the Company will
not experience losses due to product liability claims or recalls in the
future. Such cases could result in substantial claims against the Company and
could materially adversely affect the Company's business, financial condition
or results of operations.

POTENTIAL VOLATILITY OF STOCK PRICE

In recent months, the market price of the Common Stock has been, and may
continue to be, volatile. Certain factors have had, and may continue to have,
a significant impact on the market price of the Common Stock, including:
quarterly fluctuations in the Company's results of operations; the
announcement of technological innovations; new products or acquisitions by the
Company or its competitors; general conditions in the retail petroleum
industry; changes in financial estimates by securities analysts; and market
fluctuations. In addition, financial markets have experienced extreme price
and volume volatility that have substantially affected the market prices of
securities of many companies for reasons frequently unrelated or
disproportionate to the operating performance of such companies or have
resulted from the failure of the operating performance of such companies to
meet the market expectations in a particular quarter. These broad market
fluctuations or failure of the Company's quarterly operating results to meet
market expectations may adversely affect the market price of the Common Stock.
In the past, securities class action litigation has sometimes been instituted
against companies following periods of volatility in the market price of their
securities. Such litigation could result in substantial costs and a diversion
of management's attention and resources, which could materially adversely
affect the Company's business, financial condition or results of operations.

POTENTIAL "YEAR 2000" PROBLEMS

It is possible that the Company's currently installed computer systems,
software products or other business systems, or those of the Company's
customers, vendors or resellers, working either alone or in conjunction with
other software systems, will not accept input of, store, manipulate and output
dates for the years 1999, 2000 or thereafter without error or interruption
(commonly known as the "Year 2000" problem). The Company has conducted a
review of its business systems, including its computer systems, and is
querying its customers, vendors and resellers as to their progress in
identifying and addressing problems that their computer systems may face in
correctly interrelating and processing date information as the year 2000
approaches and is reached. However, there can be no assurance that the Company
will identify all such Year 2000 problems in its computer systems or those of
its customers, vendors and resellers in advance of their occurrence or that
the Company will be able to successfully

14
<PAGE>

remedy any problems that are discovered. The expenses of the Company's efforts
to identify and address such problems, or the expenses or liabilities to which
the Company may become subject as a result of such problems, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

ANTI-TAKEOVER PROVISIONS

In January 1997, the Company's Board of Directors adopted a revised
Shareholder Rights Plan (the "Plan"). The Plan and/or certain provisions of
the Company's Restated Articles of Incorporation and Bylaws may delay,
discourage or prevent a change in control of the Company. The Plan and/or such
provisions may discourage bids for the Common Stock at a premium over the
market price of the Common Stock and may adversely affect the market price and
the voting and other rights of the holders of Common Stock. In addition, the
Board of Directors has the authority (without any action by the Company's
shareholders) to fix the rights, privileges and preference of, and to issue
shares of, the Company's preferred stock, which may have the effect of
delaying, deterring or preventing a change in control of the Company. Certain
provisions of the Indiana Business Corporation Law could also delay or make
more difficult a merger, tender offer or proxy contest involving the Company.
Such provisions could limit the price that investors are willing to pay in the
future for shares of the Common Stock. See "Description of Capital Stock."

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS

The Company has not paid any dividends on the Common Stock in recent years.
Currently, the Bank Credit Facility and the Indenture both restrict the
Company's ability to pay dividends. The Company does not anticipate paying any
cash dividends on the Common Stock in the foreseeable future. See "Dividend
Policy."

RECENT DEVELOPMENTS

THE MSI ACQUISITION

In December 1997, the Company acquired MSI, located near Denver, Colorado.
MSI develops and distributes retail automation systems, including POS systems,
primarily for the convenience store, petroleum dispensing and fast-food
service industries. The Company paid the MSI shareholders an initial amount of
$12.0 million. The Company is also obligated to make contingent payments of up
to $13.2 million over the next three years based upon MSI's performance. The
$13.2 million consists of $8.0 million of additional purchase price which will
be allocated to certain assets to be amortized over their appropriate lives,
$2.6 million related to a non-compete agreement to be amortized over the term
of the covenant, and $2.6 million of additional employee compensation to be
expensed as incurred. The $12.0 million amount was funded through the
Company's existing Bank Credit Facility.

As part of the transaction, the Company entered into an employment
relationship with Arthur S. Elston, the president of MSI, pursuant to which he
will oversee the Company's retail automation systems business.

MSI'S RETAIL AUTOMATION SYSTEM

15
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,800,000 shares of
Common Stock offered hereby (assuming an offering price of $16.75 a share)
will be approximately $59.7 million ($68.7 million if the Underwriters' over-
allotment option is exercised in full), after underwriting discounts,
commissions and estimated Offering expenses.

The Company intends to use the net proceeds to redeem approximately $35.0
million in aggregate principal amount of the Notes issued by the Company in
August 1996. The Notes bear interest at 11 1/2% per annum and mature on August
1, 2006. The Indenture provides that at any time before August 1, 1999, the
Company may use the net cash proceeds from one or more public equity offerings
to redeem up to an aggregate of 35% of the principal amount of the Notes
originally issued at prices specified in the Indenture. The cost to redeem the
$35.0 million in Notes will be approximately $39.1 million, which includes
accrued and unpaid interest and redemption premiums. In connection with this
partial redemption of the Notes, the Company will record an extraordinary
charge in the fiscal quarter in which this Offering is consummated of
approximately $5.0 million. See Note (o) of Notes to Unaudited Pro Forma
Financial Statements.

The Company also intends to use the net proceeds to repay approximately
$20.6 million of indebtedness outstanding under the Bank Credit Facility upon
the closing of the Offering. As of December 31, 1997, approximately $32.6
million was outstanding under the Bank Credit Facility at a weighted average
interest rate of 7.6%. In December 1997, approximately $12.0 million of this
debt was incurred to finance the MSI acquisition. See "Recent Developments."
In addition, approximately $11.7 million of this debt was incurred in the
fourth quarter of 1997 in connection with the purchase by the Company of $10.0
million in aggregate principal amount of the Notes. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
additional information.

16
<PAGE>

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the New York Stock Exchange under the symbol
"TOK." The following table sets forth for the periods indicated the high and
low sales prices per share for the Common Stock as reported on the New York
Stock Exchange:

<TABLE>
<CAPTION>
HIGH LOW
--------- -------
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1996
First Quarter......................................... $ 9 1/2 $ 6 1/8
Second Quarter........................................ 10 3/4 8 3/4
Third Quarter......................................... 10 7 1/2
Fourth Quarter........................................ 10 8 1/2
YEAR ENDED NOVEMBER 30, 1997
First Quarter......................................... $ 9 7/8 $ 7 1/4
Second Quarter........................................ 10 1/8 8
Third Quarter......................................... 14 3/8 9 3/4
Fourth Quarter........................................ 18 13/16 13 1/4
YEAR ENDED NOVEMBER 30, 1998
First Quarter (through February 24)................... $21 $15 7/8
</TABLE>

The number of shareholders of record of Common Stock on February 4, 1998,
was approximately 7,200. On February 24, 1998, the closing price of the Common
Stock, as reported on the New York Stock Exchange, was $16.75 per share.

DIVIDEND POLICY

The Company has not declared or paid any dividends on the Common Stock in
recent years. The Company currently intends to retain future earnings to fund
the development and growth of its businesses and to repay indebtedness, and
therefore does not anticipate paying any cash dividends on the Common Stock in
the foreseeable future. In addition, the Bank Credit Facility and the
Indenture governing the Notes restrict the payment of dividends. Any future
determination to declare and pay dividends will be made by the Board of
Directors of the Company in light of the Company's earnings, financial
position, capital requirements, credit agreements and other factors that the
Board of Directors deems relevant.

17
<PAGE>

CAPITALIZATION

(AMOUNTS IN THOUSANDS)

The following table sets forth the capitalization of the Company (i) on an
actual basis as of November 30, 1997, (ii) pro forma for the MSI acquisition
and (iii) pro forma to reflect the MSI acquisition and the Offering and the
application of the estimated net proceeds therefrom (after deducting
underwriting discounts and commissions and estimated Offering expenses payable
by the Company). This table should be read in conjunction with the Company's
Consolidated Financial Statements and the Unaudited Pro Forma Financial
Statements, and respective notes related thereto.

<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1997
-----------------------------------
PRO FORMA FOR
THE MSI PRO
ACTUAL ACQUISITION(1) FORMA(1)
-------- -------------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Total long-term debt, including
current portion:
Bank Credit Facility(2)............ $ 24,090 $ 36,090 $ 15,552
Senior Subordinated Notes due 2006. 90,000 90,000 55,000
Guaranteed ESOP Obligation......... 9,429 9,429 9,429
Other debt......................... 6,886 6,886 6,886
-------- -------- --------
Total long-term debt............. 130,405 142,405 86,867
Total equity:
ESOP Preferred Stock, net(3)....... 9,853 9,853 9,853
Common shareholders' equity, net
(30,000 shares authorized, 8,232
shares issued and 12,032 shares
pro forma)(4)..................... 10,618 4,710 59,405
-------- -------- --------
Total equity..................... 20,471 14,563 69,258
-------- -------- --------
Total capitalization............. $150,876 $156,968 $156,125
======== ======== ========
</TABLE>
- --------
(1) The detailed calculations to arrive at the Pro Forma columns are further
explained in the notes to the "Unaudited Pro Forma Condensed Financial
Statements" elsewhere in this Prospectus.

(2) The Bank Credit Facility provides for a $12.2 million term loan and a
$67.8 million revolving credit facility (of which approximately $33.1
million was available as of November 30, 1997. An additional $9.0 million
is available to the Company if it meets the borrowing base requirements.
The actual borrowings outstanding under the revolving credit facility
depend in part on daily fluctuations in the Company's working capital
needs. Subsequent to November 30, 1997, the Company borrowed an additional
$12.0 million to fund the MSI acquisition. Borrowings under the Bank
Credit Facility are secured by substantially all of the assets of Tokheim
and certain of its subsidiaries.
(3) See the Company's Consolidated Financial Statements, for information as to
the components of ESOP Preferred Stock, net, and common shareholders'
equity, net.

(4) Pro Forma reflects the write-off of (i) $5.9 million of in-process
research and development in connection with the MSI acquisition and (ii)
$5.0 million of deferred financing fees and premiums related to the Note
Redemption.

18
<PAGE>

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following unaudited pro forma financial statements of the Company have
been adjusted to reflect the effects of the MSI acquisition and the Offering.
The Unaudited Pro Forma Consolidated Condensed Statement of Earnings gives
effect to the MSI acquisition and the Offering as if they had occurred on
December 1, 1996. The Unaudited Pro Forma Consolidated Condensed Balance Sheet
gives effect to the MSI acquisition and the Offering as if they had occurred
on November 30, 1997. The statements do not purport to represent what the
Company's results of operations or financial position actually would have been
if the MSI acquisition and the Offering had occurred as of such dates and are
not necessarily indicative of future operating results or financial position.
The Unaudited Pro Forma Consolidated Condensed Statement of Earnings for the
year ended November 30, 1997 and Pro Forma Consolidated Condensed Balance
Sheet as of November 30, 1997 were derived from the Company's audited
Consolidated Financial Statements.

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS

FOR THE YEAR (FOR TOKHEIM) AND FOR THE ELEVEN MONTHS (FOR MSI) ENDED NOVEMBER
30, 1997
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)

19
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF NOVEMBER 30, 1997
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
TOKHEIM
MSI TOKHEIM PRO PRO FORMA
ACQUISITION FORMA FOR OFFERING FOR OFFERING
PRO FORMA MSI PRO FORMA AND MSI
TOKHEIM MSI ADJUSTMENTS ACQUISITION ADJUSTMENTS ACQUISITION
-------- ------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash
equivalents........... $ 6,438 $1,020 $ -- (i) $ 7,458 $ -- $ 7,458
Accounts receivable,
net................... 83,011 2,002 (850)(j) 84,163 -- 84,163
Net inventory.......... 64,347 161 -- 64,508 -- 64,508
Other current assets... 6,705 7 -- 6,712 -- 6,712
-------- ------ ------- -------- -------- --------
Total current
assets............ 160,501 3,190 (850) 162,841 -- 162,841
Property, plant &
equipment, net......... 41,966 255 -- 42,221 -- 42,221
Other tangible assets... 9,184 7 -- 9,191 -- 9,191
Goodwill................ 62,695 -- -- 62,695 -- 62,695
Other noncurrent assets
and deferred charges... 16,273 42 4,821 (k) 21,136 (1,514)(n) 19,622
-------- ------ ------- -------- -------- --------
Total assets....... $290,619 $3,494 $ 3,971 $298,084 $ (1,514) $296,570
======== ====== ======= ======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Liabilities:
Current liabilities:
Current portion of
long-term debt...... $ 2,391 $ -- $ -- $ 2,391 $ -- $ 2,391
Notes payable, bank.. 98 -- -- 98 -- 98
Cash overdraft....... 10,575 -- -- 10,575 -- 10,575
Accounts payable..... 54,597 170 -- 54,767 -- 54,767
Accruals & reserves.. 51,190 1,203 -- 52,393 (671)(o) 51,722
-------- ------ ------- -------- -------- --------
Total current
liabilities....... 118,851 1,373 120,224 (671) 119,553
Long-term debt......... 4,397 -- -- 4,397 4,397
Bank credit facility... 24,090 -- 12,000 (l) 36,090 (20,538)(p) 15,552
Senior subordinated
notes................. 90,000 -- -- 90,000 (35,000)(o) 55,000
Guaranteed ESOP
obligation............ 9,429 -- -- 9,429 -- 9,429
Postretirement
benefits.............. 14,378 -- -- 14,378 -- 14,378
Minimum pension
liability............. 2,173 -- -- 2,173 -- 2,173
Minority interest...... 1,319 -- -- 1,319 -- 1,319
Other long-term
liabilities........... 5,511 -- -- 5,511 -- 5,511
-------- ------ ------- -------- -------- --------
Total liabilities.. 270,148 1,373 12,000 283,521 (56,209) 227,312
Redeemable convertible
preferred stock........ 24,000 -- -- 24,000 -- 24,000
Guaranteed ESOP
obligation............. (9,429) -- -- (9,429) -- (9,429)
Preferred treasury stock
at cost................ (4,718) -- -- (4,718) -- (4,718)
-------- ------ ------- -------- -------- --------
Total preferred
equity............ 9,853 9,853 9,853
Common stock............ 21,158 300 (300)(m) 21,158 59,659 (q) 80,817
Minimum pension
liability.............. (2,173) -- -- (2,173) -- (2,173)
Foreign currency
translation
adjustments............ (18,048) -- -- (18,048) -- (18,048)
Retained earnings
(accumulated deficit).. 9,821 1,821 (7,729)(m) 3,913 (4,964)(o) (1,051)
Common treasury stock at
cost................... (140) -- -- (140) -- (140)
-------- ------ ------- -------- -------- --------
Total common
equity............ 10,618 2,121 (8,029) 4,710 54,695 59,405
-------- ------ ------- -------- -------- --------
Total liabilities
and shareholders'
equity............ $290,619 $3,494 $ 3,971 $298,084 $ (1,514) $296,570
======== ====== ======= ======== ======== ========
</TABLE>

20
<PAGE>

<TABLE>
<S> <C>
(a) Reflects additional compensation paid to the President of MSI
pursuant to an employment agreement entered into at the time of
the MSI acquisition.............................................. $ 100
(b) Reflects additional amortization expense related to $4,821 of the
purchase price that has been allocated to internally developed
software, which is being amortized over a 4 year period.......... $ 1,205
(c) Reflects the elimination of a non-recurring charge of $980 that
relates to a bonus paid to the principal shareholder of MSI. Also
reflects the elimination of bonuses paid to employees of MSI in
anticipation of the sale to Tokheim, offset by expected bonuses
anticipated to be paid by Tokheim to senior management of MSI.... $(1,347)
(d) Additional interest expense related to the $12,000 of additional
borrowings under the Bank Credit Facility to fund the purchase of
MSI at a 7.6% weighted average interest rate..................... $ 912
(e) MSI will be incorporated into Tokheim's consolidated federal tax
return. As such, Tokheim has available approximately $24,669 of
NOL carryforwards, which are offset by a corresponding valuation
allowance. Therefore, federal tax provisions are only recorded
for book purposes equal to the expected Alternative Minimum Tax
("AMT") liability. The pro forma provision for taxes is
calculated as follows:
State and local tax provision for MSI's pre-tax earnings at an
8.0% effective tax rate....................................... $ 71
Federal tax provision for MSI's pre-tax pro forma earnings
reduced by 90% for utilization of Tokheim's Net Operating Loss
("NOL") carryforwards with the remaining amount taxed at a 20%
AMT rate...................................................... 18
Reduction of state and local tax provision for pre-tax pro forma
earnings at an 8.0% effective tax rate........................ (70)
Federal tax provision for MSI's pre-tax pro forma earnings
reduced by 90% for utilization of NOL carryforwards, with the
remaining amount taxed at a 20% AMT rate...................... (17)
-------
$ 2
=======

Note: In addition to the above Pro Forma adjustments, the Company will incur a
one-time charge to operations for the writedown of in-process research and
development, of which technological feasibility has not yet been determined and
which has no alternative future use. This charge to earnings of approximately
$5,908 will be recorded in the first quarter of 1998.
(f) Pro forma adjustments to interest expense:
Decreased interest expense related to a portion of the $12,000 of
additional borrowings under the Bank Credit Facility to fund the
purchase of MSI at a 7.6% interest rate......................... $ (801)
Decreased interest expense related to the $35,000 of Notes
redeemed at 11.5%............................................... (4,025)
Decreased interest expense related to the $10,000 of Notes
repurchased using proceeds from the Bank Credit Facility
($10,000 at 11.5% for 10.5 months, $10,000 at 7.6% for 1.5
months)......................................................... (1,101)
Decrease in amortization expense related to a pro rata share of
deferred issuance cost written off to extraordinary loss on debt
retirement...................................................... (247)
-------
$(6,174)
=======
(g) Pro forma provision for taxes:
State and local tax provision at an 8.0% effective tax rate...... $ 494
Federal tax provision for pre-tax earnings reduced by 90% for
utilization of NOL carry-forwards, with the remaining amount
taxed at a 20% AMT rate....................................... 123
-------
$ 617
=======

</TABLE>

21
<PAGE>

<TABLE>
<S> <C>
(h) Pro forma adjustment reflecting the additional shares issued in
the Offering..................................................... 3,800

Note: In addition to the pro forma adjustments, the Company will incur a one-
time extraordinary loss of $4,964 which reflects the premiums paid to redeem
the Notes and to write off a pro rata share of the original deferred issuance
cost.

(i) Pro forma adjustment to cash:
Reflects the repayment of a loan from a minority shareholder..... $ 850
Reflects an adjustment to record a distribution of cash dividends
to MSI shareholders prior to the acquisition.................... $ (850)
--------
$ --
========
(j) Reflects the repayment of a loan from a minority shareholder..... $ (850)
(k) Reflects the purchase price allocation to capitalized software
costs to be amortized
over a four-year life............................................ $ 4,821
(l) To record additional borrowings under the Bank Credit Facility to
fund the MSI acquisition......................................... $ 12,000
(m) Pro forma adjustment to shareholders' equity:
Elimination of MSI's common stock................................ $ (300)
--------
To record the one-time write down of in-process research and
development..................................................... (5,908)
Reflects an adjustment to record a distribution of cash dividends
to MSI shareholders prior to the acquisition.................... (850)
Elimination of MSI's retained earnings........................... (971)
--------
Total adjustment to retained earnings........................... $ (7,729)
--------
Total adjustment to shareholders' equity........................ $ (8,029)
========
(n) Decrease in deferred issuance cost related to a 35% write down of
the unamortized balance.......................................... $ (1,514)
(o) Redemption of Notes
Redemption of Notes with Offering proceeds....................... $(35,000)
Elimination of two months of accrued interest on the $35,000 of
redeemed Notes................................................ (671)
Redemption premiums, charged to equity........................... (3,450)
Pro rata write-off of deferred debt issuance costs, charged to
equity........................................................ (1,514)
--------
$(40,635)
========
(p) Pro forma adjustments to Bank Credit Facility:
Repayment of funds borrowed to repurchase $10,000 of Notes....... $(10,000)
Repayment of funds borrowed to purchase MSI...................... (10,538)
--------
$(20,538)
========
(q) Increase in Common Stock reflecting net proceeds of the Offering. $ 59,659
</TABLE>

22
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)

The following table sets forth summary financial information of the Company.
The statement of operations data for each of the five years in the period
ended November 30, 1997 were derived from the Company's audited Consolidated
Financial Statements. The information contained in this table should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's Consolidated Financial
Statements, including the notes thereto.

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------
1993 1994 1995 1996(1) 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................... $172,306 $202,134 $221,573 $279,733 $385,469
Operating income (loss)(2)...... (2,324) 3,780 5,811 6,356 20,645
Interest expense, net........... 3,443 2,806 3,319 7,191 16,451
Earnings (loss) before income
taxes(3)....................... (5,745) 1,932 3,270 (1,229) 5,197
Earnings (loss)(3) ............. (5,867) 1,675 3,231 (2,009) 3,980
Preferred stock dividends....... 1,663 1,617 1,580 1,543 1,512
Earnings (loss) applicable to
common stock(3)................ (7,530) 58 1,651 (3,552) 2,468
Earnings per common share(3):
Primary:
Earnings (loss)................ $ (1.09) $ 0.01 $ 0.21 $ (0.45) $ 0.31
Weighted average number of
shares outstanding............ 6,940 7,801 7,911 7,981 8,083
Fully diluted:
Earnings (loss)................ $ (1.09) $ 0.01 $ 0.17 $ (0.45) $ 0.27
Weighted average number of
shares outstanding............ 6,940 7,801 9,500 7,981 9,067
OTHER DATA:
Capital expenditures............ $ 2,503 $ 2,757 $ 5,559 $ 3,061 $ 11,154
EBITDA (as defined)(4).......... 2,931 10,230 14,126 17,842 34,767
</TABLE>

<TABLE>
<CAPTION>
AS OF
NOVEMBER 30,
1997
------------
<S> <C>
BALANCE SHEET DATA (AT PERIOD END):
Working capital.................................................... $41,650
Total assets....................................................... 290,619
Total debt(5)...................................................... 130,405
ESOP preferred stock, net.......................................... 9,853
Common shareholders' equity, net................................... 10,618
</TABLE>
- --------
(1) 1996 includes three months of Sofitam operations. In addition, the
financial statements presented have been restated for an accounting change
in the method of valuing inventory, as more fully described in Note 1 to
the Consolidated Financial Statements, "Summary of Significant Accounting
Policies."

(2) Operating income equals net sales less cost of sales, selling, general and
administrative expenses, depreciation and amortization, and merger and
acquisition costs and other unusual items.

(3) The 1997 amount excludes $1,886 for extraordinary loss from debt
retirement. The 1994 amount excludes the cumulative effect of change in
method of accounting for postretirement benefits other than pensions of
$13.4 million.
(4) EBITDA (as used herein) represents earnings (loss) from continuing
operations before income taxes, extraordinary loss from debt retirement,
net interest expense, depreciation and amortization, merger and
acquisition costs and other unusual items and minority interest.
Management uses EBITDA as a financial indicator of Company's ability to
service debt, although the precise definition of EBITDA is subject to
variation among companies. EBITDA should not be construed as an
alternative to operating income or cash flows from operating activities
(as determined in accordance with generally accepted accounting
principles) and should not be construed as an indication of the Company's
operating performance or as a measure of liquidity. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
For additional information concerning the Company's historical cash flows,
see the Consolidated Statement of Cash Flows included elsewhere herein.

(5) Total debt includes the Notes, long-term borrowings under the Bank Credit
Facility and other credit agreements, the current portion of such
borrowings and the guarantee of certain debt incurred by the Company's
Employee Stock Ownership Plan (the "ESOP") to purchase Tokheim preferred
stock, the dividends of which are used by the ESOP to service such debt
(the "Guaranteed ESOP Obligation").

23
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The Company's petroleum dispensing systems are designed for and sold
principally to owners of retail service stations, which include major oil
companies ("MOCs"), national oil companies ("nationals"), independent owners
operating under a MOC brand ("jobbers"), independent oil companies
("independents"), convenience store stations, hypermarkets and other
retailers, and to commercial customers. In 1997, approximately 89% of
Tokheim's net sales were to retail operators, and approximately 11% of net
sales were to commercial customers, such as municipalities and truck fleets.
Unless otherwise noted, references herein to years are to the Company's fiscal
years ended November 30th. In the United States, Canada and western Europe,
demand is driven by new, more convenient products, such as credit/debit card
readers, and by environmental regulations, such as those requiring vapor
recovery systems and more secure underground storage tanks. In emerging
markets, such as eastern Europe, Africa and southeast Asia, economic growth is
promoting vehicle use and infrastructure development, which increase the
demand for fuel and fuel dispensers. Deregulation of local markets and
privatization of state-owned oil companies have created additional growth
opportunities in emerging markets.

Beginning in 1992, the Company initiated an aggressive program to
consolidate manufacturing operations, enhance manufacturing efficiency,
redesign existing products and divest non-core businesses. In addition, since
the Sofitam acquisition, the Company has begun to implement a plan to combine
manufacturing facilities, integrate product lines, re-engineer the
manufacturing process and eliminate general and administrative redundancies.
The Company is continually looking for opportunities to redesign its products
and manufacturing processes to increase efficiency.

The Company has entered into a licensing agreement, effective as of December
1, 1997 (the "Licensing Agreement"). Under the terms of the Licensing
Agreement, the Company will pay a $3.0 million fixed royalty fee, payable in
12 quarterly installments, plus earned royalties on patented devices used in
Company products until the patents expire. The Company expects that these
earned royalties will total approximately $1.1 million in 1998, based on
projected sales. These licensing expenses may offset in part savings from the
Company's restructuring efforts.

The Company acquired Sofitam in September 1996 for $107.4 million less
certain adjustments. The Company's 1996 financial statements include three
months of Sofitam operations, and the 1997 financial statements include a full
year of Sofitam operations. A comparison of sales in 1997 versus 1996 of
entities that have been part of Tokheim since before the acquisition are not
meaningful because certain sales that had been made by these entities were
conducted through Sofitam in 1996 and 1997.

International sales by foreign subsidiaries and exports from the U.S.
totaled approximately 64%, 47%, and 38% of consolidated net sales in 1997,
1996, and 1995, respectively. The acquisition of Sofitam has significantly
extended the Company's international distribution network, reducing its
reliance on U.S. domestic sales.

Sales of petroleum dispenser equipment have historically been seasonal,
primarily due to the construction season and MOC purchasing which typically is
highest at the end of the calendar year. Historically, approximately 30% of
Tokheim's annual net sales volume has been recorded in the fourth quarter of
its fiscal year, with no significant variation among the other three quarters.
The acquisition of Sofitam has diminished such seasonality, with the 1997
fourth quarter representing 27% of consolidated annual sales. Because of the
Company's relatively low profit margins, the relatively higher sales in the
fourth quarter have translated into a disproportionately high contribution to
the Company's annual earnings. See Note 12 to the Consolidated Financial
Statements.

In December 1997, the Company acquired Management Solutions, Inc. ("MSI").
MSI develops and distributes retail automation systems, including POS systems,
primarily for the convenience store, petroleum dispensing and fast-food
service industries. The Company paid MSI's stockholders an initial amount of
$12.0 million. The Company is also obligated to make contingent payments of up
to $13.2 million over the next three years based upon MSI's performance. The
$13.2 million consists of $8.0 million of additional purchase price, $2.6
million related to a non-

24
<PAGE>

compete agreement, and $2.6 million of additional employee compensation. The
Company borrowed funds for the initial purchase price under the Bank Credit
Facility.

RESULTS OF OPERATIONS

Consolidated sales for 1997 were $385.5 million, an increase of 37.8% from
1996 consolidated sales of $279.7 million. Substantially all of this increase
was due to the inclusion of a full year of Sofitam's results in 1997 compared
to three months of Sofitam's results in 1996. These increases were offset by
the impact of a decline in revenues due to a decline in foreign currency
exchange rates. Sales for 1997 would have been $20.9 million higher if average
exchange rates of European and African currencies had remained the same as in
1996. Consolidated sales of $279.7 million in 1996 represented an increase of
26.3% from $221.6 million in 1995. The increase was due principally to the
inclusion of three months of Sofitam's operations as well as unit volume
increases. Both domestic and international sales contributed to this gain in
sales.

The gross margin (defined as net sales less cost of sales divided by net
sales) for 1997 was 26.3%, up from 24.8% in 1996 and 24.6% in 1995. The
increase from 1996 to 1997 is due to (i) the inclusion of Sofitam at higher
margin levels for a full year, (ii) personnel reductions and related cost
savings, (iii) reduction of warranty expense in North America, and (iv) the
results of concentrated efforts to improve manufacturing efficiencies
globally. Cost reductions were offset somewhat by decreasing sales prices. The
1996 increase over 1995 was achieved by higher sales volume and improvements
in the Company's cost structure, offset, in part, by lower sales prices.

Selling, general and administrative expenses as a percentage of net sales
were 17.7% in 1997, compared to 18.5% in 1996 and 18.6% in 1995. Such expenses
increased to $68.2 million in 1997 compared to $51.7 million in 1996 and $41.3
million in 1995. The 1997 expense increase over 1996 is largely attributable
to a full year of Sofitam expenses. These increases were offset by a program
implemented by the Company in 1997 to improve efficiency and reduce personnel,
which translated into lower total compensation cost.

Net interest expense increased in 1997 to $16.5 million from $7.2 million in
1996, reflecting a full year's interest expense on the Company's 11 1/2%
Senior Subordinated Notes due 2006 (the "Notes") issued to finance the
acquisition of Sofitam. Interest expense for 1997 is net of interest income of
$0.8 million, which includes $0.5 million of interest on tax refunds. The
increase in interest expense of $3.3 million in 1996 compared to 1995 reflects
approximately three months of interest on the Notes.

A net foreign currency exchange loss of less than $0.1 million was incurred
in 1997 versus a loss of $0.2 million incurred in 1996 and a gain of $0.1
million in 1995. The 1997 loss was due principally to the decline of the
French franc against the U.S. dollar and was partially offset by a foreign
currency gain of $0.5 million on the sale of a foreign currency option
contract.

Other income, net was $1.4 million in 1997 compared to $0.2 million in 1996.
This increase is partly due to gains on the sale of property, plant and
equipment that were $0.4 million greater in 1997 than 1996 and to the
inclusion of Sofitam's other income for the full year. In addition, other
income in 1996 of $0.2 million includes $0.3 million of expense for a
litigation settlement of a nonoperating nature. In 1995, the Company sold a
non-core product line and related assets that resulted in a net gain of $0.5
million.

Income tax expense for 1997 was $1.2 million, an increase from $0.8 million
in 1996. The increase was due to higher income, offset by utilization of net
operating loss carryforwards and adjustments of prior year's taxes and
refunds. At the end of 1997, the Company recorded a net deferred tax asset of
$14.9 million, which was offset in full by a valuation allowance due largely
to uncertainties associated with the Company's ability to fully use these tax
benefits. The Company is continuing to evaluate the likelihood that all or
part of the deferred tax asset will be realized through the generation of
future taxable earnings. If, in the future, the Company is able to generate
sufficient levels of taxable income, the valuation allowance will be adjusted
accordingly. See Note 13 of the Consolidated Financial Statements for
additional information concerning the Company's income tax position at
November 30, 1997.

25
<PAGE>

Earnings before extraordinary loss on debt extinguishment in 1997 were $4.0
million, or $0.27 per fully diluted common share, compared with a loss of $2.0
million or $0.45 loss per fully diluted common share in 1996. Earnings in 1995
were $3.2 million, or $0.17 per fully diluted common share. Earnings in 1997
included merger and acquisition costs and other unusual items of $3.5 million,
compared to $6.5 million in 1996 and $2.7 million in 1995.

In 1997, the Company incurred a $1.9 million extraordinary loss, or $0.21
loss per fully diluted common share, as a result of the open-market purchase
and retirement of $10.0 million in aggregate principal amount of the Notes.
This loss includes $1.4 million of premiums paid to purchase the Notes and
$0.5 million representing the write-off of a proportionate share of the
original unamortized deferred issuance costs. See further discussions under
"--Liquidity and Capital Resources" and Note 6 to the Consolidated Financial
Statements, "Senior Subordinated Notes."

Inflation has not had a significant impact on the Company's results of
operations.

The Company is a party to various legal matters, and its operations are
subject to federal, state, and local environmental laws and regulations. For
further details, see Note 18 to the Consolidated Financial Statements,
"Contingent Liabilities."

During 1996, the Company changed its method of valuing domestic inventories
from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. The change did not have a material impact on earnings from operations.

LIQUIDITY AND CAPITAL RESOURCES

The Company has available to it various internal and external sources of
liquidity and capital resources. These resources provide funds required for
current operations, interest payments, debt retirement, capital expenditures
and other requirements. Working capital at November 30, 1997 was $41.7 million
compared to $54.4 million on November 30, 1996. The Company's current ratio
was 1.4 at November 30, 1997 and 1996.

In September 1996, Tokheim entered into the Bank Credit Facility, an $80
million revolving credit facility with five domestic and international banks
for a six-year term. This facility allows the Company to borrow in several
currencies. The Company has pledged as collateral substantially all of its
assets, including intercompany notes and receivables and intangibles. The
facility includes numerous covenants, including minimum levels of earnings and
interest coverage and restrictions on capital expenditures, rentals and
dividend payments. The Company must be in compliance with the terms and
conditions of the facility before making interest and principal payments on
the Notes. The Company had $33.1 million available under the Bank Credit
Facility as of November 30, 1997. Subsequent to November 30, 1997, the Company
borrowed an additional $12.0 million to fund the MSI acquisition. Availability
of revolving credit under this facility is subject to borrowing base
requirements and compliance with covenants as described in Note 5 to the
Consolidated Financial Statements, "Notes Payable to Banks." The Company was
in full compliance with all covenants as of November 30, 1997.

In August 1996, the Company sold $100 million in aggregate principal amount
of the Notes in a private placement pursuant to Rule 144A. The offering of the
Notes was made in connection with the Company's acquisition of Sofitam. In
January 1997, the Company completed an offer to exchange the original Notes
for registered notes. The terms of the registered Notes are similar in all
material respects to those of the original Notes, except that the registered
Notes are registered under the Securities Act of 1933, as amended, and thus do
not bear legends restricting transfer. All of the original Notes were
exchanged before the expiration of the exchange offer. During the fourth
quarter of 1997, the Company used proceeds from the Bank Credit Facility to
purchase $10.0 million in aggregate principal amount of the Notes on the open-
market at an aggregate price of $11.4 million, plus accrued interest.

Cash provided from operations was $21.2 million in 1997 compared to $5.9
million in 1996 and $3.3 million in 1995. The increase in 1997 was achieved
primarily through improved earnings, reductions in receivables and

26
<PAGE>

inventory, and an increase in accounts payable. The improved cash flow is the
result of continued efforts to increase the efficiency of the two consolidated
businesses (Sofitam and Tokheim) and improved working capital management. Cash
flow from operations in 1996 was enhanced by improved receivables collection
and increased accrued expenses.

In 1997, the Company's French subsidiaries participated as needed, in the
practice of selling traits (selling accounts receivable without recourse) to
financial institutions. Under this arrangement, the subsidiaries present
traits to financial institutions and receive 95% of the face value in the form
of short-term loans. These loans bear interest at a variable rate, which was
3.8% at November 30, 1997. When the subsidiaries receive payment from the
customers, they remit 95% of the amount received back to the financial
institutions plus the accrued interest. The amount outstanding at November 30,
1997 was approximately $3.6 million.

The Company's capital expenditures amounted to $11.2 million in 1997, $3.1
million in 1996 and $5.6 million in 1995. The increase in 1997 relates
primarily to capital requirements for implementing both the consolidation plan
for Sofitam and improvements at the Company's Fort Wayne, Indiana
manufacturing facility. At November 30, 1997, no significant contractual
commitments existed for future capital expenditures. The Company expects to
commit approximately $8.0 million for capital expenditures during 1998.

In connection with the continued implementation of the Sofitam consolidation
plan, the Company expects to incur a number of charges. During 1997, the
Company charged $3.2 million against the acquisition accrual recorded for
estimated costs necessary to realign the Sofitam operations in Europe and to
close redundant operations. This realignment also resulted in $1.7 million of
charges against operating income in 1997. With respect to the consolidation,
the Company anticipates charging $7.3 million against the remaining
acquisition accrual during the next eighteen to twenty-four months. The
Company also expects to charge $0.1 million and $1.6 million in 1998 and 1999,
respectively, against operating income for the realignment. See Notes 2 and 3
to the Consolidated Financial Statements for additional information concerning
the Company's consolidation plan.

As part of the MSI acquisition, the Company is obligated to make contingent
payments of up to $13.2 million over the next 3 years based on MSI's
performance. The $13.2 million consists of $8.0 million of additional purchase
price, $2.6 million related to a non-compete agreement, and $2.6 million of
additional employee compensation. See Note 19 to the Consolidated Financial
Statements, "Recent Events."

The Company has guaranteed loans to the ESOP in the amounts of $9.4 million
and $11.7 million at November 30, 1997 and 1996, respectively. The Trustee,
who holds the ESOP Preferred Stock, may elect to convert each preferred share
to one common share in the event of redemption by Tokheim, certain
consolidations or mergers of Tokheim, or a redemption by the Trustee that is
necessary to provide for distributions under the Company's Retirement Savings
Plan. A participant may elect to receive a distribution from the Plan in cash
or common stock. If redeemed by the Trustee, the Company is responsible for
purchasing the preferred stock at the $25 floor value. The Company may elect
to pay the redemption price in cash or an equivalent amount of common stock.
Preferred stock dividends paid were $1.5 million, $1.5 million, and $1.6
million in 1997, 1996, and 1995, respectively. See Note 16 to the Consolidated
Financial Statements, "Retirement Plan Cost."

The Company also satisfies various capital needs through operating leases
for machinery and equipment, computer systems, vehicles and other items.
Expenses related to such leases aggregated approximately $4.9 million in 1997.
See Note 8 to the Consolidated Financial Statements for further additional
information concerning commitments related to leases.

The Company is completing the initial phase of assessment and is developing
a project plan of tasks, resources, time schedules and estimated costs to
replace or upgrade those computer programs which are not year 2000 compliant.
This initiative includes activities to test and certify all Company-wide
business systems, infrastructure, and internal and external products and
services. Based on preliminary estimates, the Company expects to spend a total
of approximately $1.7 million in 1998 and 1999 to modify its computer
information systems enabling proper processing of transactions relating to the
year 2000 and beyond. The Company continues to evaluate appropriate

27
<PAGE>

courses of corrective action, including replacement of certain systems whose
associated cost would be recorded under capital or operating leases.

The Company's long-term investments and long-term loans to foreign
subsidiaries, when translated at 1997 conversion rates, resulted in a
translation adjustment that is reflected as a reduction to shareholders'
equity of $18.0 million in 1997 and $7.3 million in 1996. The adjustments
represent the effect of changes in the current rate of exchange from the
beginning to the end of the year used in translating the net assets of foreign
subsidiaries, including certain long-term intercompany loans of foreign
subsidiaries, into U.S. dollar amounts. The majority of the 1997 and 1996
adjustments are the result of translating long-term loans to foreign
affiliates which were established to complete the acquisition of Sofitam.

In summary, the Company believes that it has adequate financial resources,
both from internal and external sources, to meet its liquidity needs over the
next 12 months.

NEW ACCOUNTING PRONOUNCEMENTS

The Company has considered the impact that accounting pronouncements
recently issued by the Financial Accounting Standards Board and American
Institute of Certified Public Accountants will have on the Consolidated
Financial Statements as of November 30, 1997. See Note 1 to the Consolidated
Financial Statements for additional information regarding recently issued
accounting pronouncements.

28
<PAGE>

THE COMPANY

Tokheim is one of the world's largest manufacturers and servicers of
electronic and mechanical petroleum dispensing systems. Those systems include
petroleum dispensers and pumps, retail automation systems (including POS
systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts
and upgrade kits. As a result of its acquisition of Sofitam in September 1996,
Tokheim has positioned itself as a global competitor in the petroleum
dispenser business, with the ability to provide both products and services to
customers in over 80 countries. Tokheim is a leading supplier of petroleum
dispensing systems in the United States, France, Canada, Mexico and Africa,
and has strong market positions in Italy, the United Kingdom, Germany and
Spain. The Company also has operations established in Asia, eastern Europe and
Latin America.

Petroleum dispensing systems are designed for and sold principally to owners
of retail service stations, which include MOCs, nationals, jobbers,
independents, convenience store stations, hypermarkets and other retailers,
and to commercial customers. In 1997, approximately 89% of Tokheim's net sales
were to retail operators, such as Amoco, Elf Aquitaine, Marathon, Shell,
SuperAmerica, Total and their affiliated jobbers and approximately 11% of net
sales were to commercial customers, such as Federal Express, United Parcel
Service, Penske Corporation and municipalities. In the United States, Canada
and western Europe, demand for the Company's products is driven by new, more
convenient systems, such as credit/debit card readers, and by environmental
regulations, such as those requiring vapor recovery systems and more secure
underground storage tanks. In emerging markets, such as eastern Europe, Africa
and southeast Asia, economic growth is promoting vehicle use and
infrastructure development, which increase the demand for fuel and fuel
dispensers. Deregulation of local markets and privatization of state-owned oil
companies have created additional growth opportunities in emerging markets.

Between 1993 and 1997, the Company's revenues grew from approximately $172.3
million to $385.5 million, and EBITDA (as defined herein) increased from
approximately $2.9 million to $34.8 million. Growth of revenue and EBITDA
growth is partly attributable to the Company's increased global presence
following the Sofitam acquisition. Revenue growth is also attributable to
increased demand due to new product development, technological improvements,
strengthened customer relationships, changing environmental regulations and
growth in emerging markets. EBITDA improvements resulted primarily from
increased sales volume, consolidation of manufacturing operations, enhanced
manufacturing efficiency, product redesign and the sale of non-core
businesses.

COMPETITIVE STRENGTHS

As one of the world's largest manufacturers and servicers of petroleum
dispenser systems, Tokheim believes it has the following principal competitive
strengths:

STRONG CUSTOMER RELATIONSHIPS. The Company's strong customer relationships
are increasingly valuable as MOCs and nationals form alliances with suppliers
to deliver products and services across large geographic regions. MOCs and
nationals frequently solicit proposals for national, regional or global
tenders that specify product and service requirements. The Company's global
network of distributors and service providers, which was significantly
expanded by the Sofitam acquisition, enables the Company to distribute
products and provide reliable service to customers in over 80 countries. The
Company's ability to customize its equipment and software to meet customer-
and country-specific standards makes the Company attractive to MOCs and
nationals as a single source of supply. In recent years, Shell has awarded its
southeast Asia, and western and eastern Africa tenders to Tokheim and has
named

29
<PAGE>

the Company as a preferred supplier in Europe and Canada. Tokheim has also
renewed its alliance with Paz Oil, an Israeli national, until the year 2000
and has been selected to supply Amoco's U.S. and Mexican retail operations.

BROAD, TECHNOLOGICALLY ADVANCED PRODUCT LINE. The Company manufactures and
sells a wide variety of dispensers, pumps, meters, payment and retail
automation systems, including POS systems (both hardware and software), and
fleet fueling systems. The Company's recent acquisition of Management
Solutions, Inc. ("MSI") has provided additional depth to its retail automation
system product line. See "Recent Developments." This extensive product
portfolio allows the Company to satisfy diverse customer- and country-specific
requirements. The Company considers itself an industry leader in the
integration of electronics and software into its products and believes there
is a significant potential demand for certain existing technologies. For
example, only 26% of all retail petroleum dispensers in the United States are
estimated to have dispenser payment or "pay-at-the-pump" terminals.

GLOBAL DISTRIBUTION AND SERVICE NETWORK. The Company's global distribution
and service network provides a significant advantage when competing for
national, regional and global tenders. Tokheim can provide products and
services to customers in over 80 countries through its 138 U.S. distributors,
114 international distributors, 298 service companies, and over 1,400 trained
field representatives. The Company believes that the reach of its European and
African networks for distribution and service makes it a preferred partner for
MOCs in these regions. The Company continues to focus on its service network
as a competitive advantage. Tokheim recently launched an on-line help desk
which allows authorized service representatives worldwide access to its
service database using the Internet.

BUSINESS STRATEGY

The Company's business strategy has five principal components:

LEVERAGE GLOBAL PLATFORM. Tokheim has a worldwide presence with a
significant market share on three continents. As a result, the Company is able
to satisfy the complete petroleum dispensing equipment and servicing needs of
customers throughout the world and has an understanding of the regulatory
requirements of countries where its customers operate. The Company intends to
obtain additional customers and increase sales to existing customers by
offering comprehensive sales and service coverage worldwide through its
extensive networks.

30
<PAGE>

developing new technologies, such as touch-screen technology, wireless POS
systems, improved meter technology and robotic fueling. The MSI acquisition is
expected to broaden both Tokheim's range of retail automation systems and its
customer base for such products. See "Recent Developments."

MAINTAIN TOP QUALITY. Tokheim strives to produce the highest quality
products and is committed to continuous quality improvement. Since 1995, an
aggressive focus on product quality has reduced the defect rate (measured in
parts per million) by approximately 90%. Another indication of the Company's
commitment to quality is the award of ISO-9000 certification to all of the
Company's domestic and most of its international manufacturing facilities. The
International Organization for Standardization awards ISO-9000 certification
on a facility-by-facility basis to those adhering to strict quality standards.
Moreover, the Company's automated Computerized Dispenser Testers
comprehensively test each dispenser's electrical and fluid systems before
shipment to the customer, further improving the quality assurance process.

HISTORY

Tokheim originated in 1898 in a hardware store in Thor, Iowa. Merchant John
J. Tokheim, while searching to improve on the "drum-and-spigot" method of
dispensing kerosene and gasoline, conceived of the idea of a pump dispenser.
His invention became known as the Tokheim Dome Oil Pump. The pump's popularity
led to the organization of the Tokheim Manufacturing Company in Cedar Rapids,
Iowa in 1901. In 1918, Tokheim was purchased by a group of businessmen from
Fort Wayne, Indiana. Tokheim moved to Fort Wayne and was incorporated in
Indiana under the name Tokheim Oil Tank and Pump Company. The present name was
adopted in December 1953. The Common Stock began trading on the New York Stock
Exchange on September 8, 1978. In 1986, the Company acquired the business now
operated as Gasboy International, Inc. ("Gasboy"). Gasboy has been designing
and manufacturing products for fleet fuel dispensing for over 70 years and
fluid management products for over 30 years. Gasboy sells primarily to
commercial and governmental customers that maintain fleets.

In September 1996, the Company acquired Sofitam for $107.4 million less
certain adjustments. The acquisition included Sofitam's in-house service
provider, Sogen S.A., as well as the two distinct brand names--EIN and Satam.
Sofitam had and continues to have a leading market position in France and
northern Africa, as well as a strong market position in southern Europe. In
December 1997, the Company strengthened its offerings of retail automation
systems, including POS systems, with the acquisition of MSI. See "Recent
Developments."

PRODUCTS

The Company's principal product offerings include petroleum dispensers and
pumps, retail automation systems, including POS systems, dispenser payment or
"pay-at-the-pump" terminals, replacement parts and upgrade kits. Petroleum
dispensers and pumps transfer fuel from storage tanks to vehicles or portable
containers. Dispensers include meters, which measure the quantity of fuel
pumped and transfer the information to calculators which determine a sales
price. Retail automation systems control in-store and at-the-pump fuel sales,
pump activation and credit card transactions, monitor inventory, transmit data
to a central management system and perform other

31
<PAGE>

management functions. Pay-at-the-pump terminals automate customer payment at
the pump with cash and credit/debit cards. Upgrade kits permit owners to
upgrade a dispenser's capabilities and functionality without incurring the
cost of replacing the entire dispenser. The Company also offers services for
its products through authorized service representatives and Company-owned
facilities.

In the United States, the Company's most popular petroleum dispensers are
the Premier(TM) series. Premier(TM) dispensers include a variety of sizes and
models that dispense multiple grades of fuel and that offer advanced pay-at-
the-pump terminals. Internationally, the Company offers a range of petroleum
pumps, including its compact Consommateur, Bernice, ADONIS and Partner 3
models.

One of the Company's distinguishing characteristics is its commitment to
adapting products to local needs. For example, the Company produces a
dispenser that permits multiple hoses on the same side of the pump to operate
simultaneously. This model is targeted primarily at urban Asian markets with a
high motorcycle population. The Company has also adapted its products to
accommodate differences among markets which are driven more by custom than by
need. For example, European dispensers usually have retractable hoses and
suction pumps within the dispenser, while dispensers in the United States
usually have high-hose units and pumps located within the underground storage
tank.

The Company provides both the software and hardware required for retail
automation systems. The Company's Columbus(TM) system was introduced on a
commercial basis in 1997. Columbus(TM) uses a touch-screen PC monitor and
Windows NT software in an open architecture system that allows full
integration with both existing and new equipment. The user-friendly, touch-
screen cashier interface reduces both employer training time and customer wait
time. Other POS solutions available from Tokheim include the Profit Point
System, the Ruby System and the Check Point System in the United States and
the Prisma and S-2000 systems in the international market.

MSI's principal product is the CVN(TM) (Convenience Management Solution), a
comprehensive retail automation system, including POS, backroom and store
management systems. The CVN(TM) integrates such features as advanced gas pump
controls, barcode scanning, credit authorization, commercial and charge
accounts, employee time clock, detailed inventory tracking and cash drawer
controls. Among its dispenser features, the CVN(TM) displays up to 32 separate
pumps at all times, with up to two customers per pump. Its "One Touch"
controls allow service station employees to easily authorize, pre-pay and
monitor pumps by pressing one button. The system can automatically add
merchandise purchases to the customer's fuel bill.

The CVN(TM) also has the capacity to work with a monitoring system to
automatically alert station owners of the status, fuel level, temperature,
water content and presence of leaks in underground storage tanks. The system
interfaces with almost every dispenser and control currently on the market,
including those not manufactured by the Company. The system permits station
owners to take a physical inventory or spot check with a hand-held radio
frequency scanner. It also can track customers, even those who pay cash, and
can help manage fleet, commercial and in-house charge accounts.

The Company believes that its product offerings in the retail automation
systems market provide its customers one of the broadest product ranges in the
marketplace, from simple pump controllers to sophisticated convenience store
and fast-food functions. The Company believes that by combining its retail
automation resources under the leadership of MSI, the Company will strengthen
its market position and better utilize these resources.

The Company's newest dispenser payment terminal is INsight(TM), which can be
used with any of the Premier(TM) dispenser models now in the market.
INsight(TM) provides a flexible platform for merchandising at the dispenser,
using a monitor that automatically prompts the consumer, making transactions
easier to initiate and complete. This product includes an animated graphic
display for payment options (credit card, cash or debit) and a larger display
for text. Non-fuel items, such as car washes or food, can also be purchased
through INsight(TM). The Company has developed a graphic printer to provide
such items as coupons, logos and barcodes on the consumer's receipt.

32
<PAGE>

In 1997, the Company began market testing of its RFID technology. Similar to
the drive-through payment system at toll booths in major metropolitan areas,
this technology automatically charges a consumer's account, which is read from
either a microchip key ring tag or a microchip window decal. By eliminating
the need to pay for fuel with cash or credit cards, the system speeds gas
purchases, both increasing consumer convenience and enabling stations to fuel
more cars in less time. The technology also permits service station owners to
gather information about consumer buying habits to improve marketing
techniques, such as promotion of food and car washes on pump-mounted displays.
Tokheim's RFID system is compatible with all POS systems and with other
manufacturer's dispensers (as an upgrade). The Company has entered into an
agreement with Micron Communications to further develop its RFID system.

Also in 1997, the Company introduced its Fuel Link(TM) wireless
communication system. Fuel Link(TM) transmits information by radio frequency
between the point of sale and the dispenser hardware, eliminating the cost of
installing underground wiring to upgrade the functionality of the dispenser.

For the commercial market, the Company's new Gasboy products include
Astra(TM) and Fuel Point(TM). Astra(TM) is an electronic dispenser designed
for the above-ground tank market. The Fuel Point(TM) system automatically
reads information from the dispenser's nozzle including vehicle
identification, odometer data, fuel consumption and service record, and other
operating and maintenance data, eliminating the risk of manually misentered
data.

SERVICE

The Company believes that one of its strongest competitive advantages is its
ability to offer comprehensive customer support and service. Tokheim offers
support through a network of 138 U.S. distributors, 114 international
distributors and 298 service companies. In addition, the Company has over
1,400 trained field service representatives acting as independent contractors,
many of whom maintain a service parts inventory. The Company's customer
service division, which maintains a help desk in English, Spanish and other
languages, is available 24 hours a day, 365 days a year, to respond
immediately to service needs. Additionally, the customer service division
maintains a continuing program of service clinics for customers and
distributors, both in the field and at the Company's training centers.

To improve efficiency, response time and customer convenience, the Company
has begun to implement a system to collect performance data and coordinate the
dispatch of service technicians. In addition, the Company recently launched an
Internet-based help desk known as FASRLINK(TM), which provides authorized
service representatives worldwide immediate access to installation drawings,
product updates, service bulletins and diagnostic procedures 24 hours a day.

CUSTOMERS

The Company's products are sold primarily to retail service station
operators and commercial customers which fall into seven categories.

Major Oil Companies--MOCs are typically large multinational companies that
are vertically integrated with retail operations in developed and emerging
markets. They sell "branded" products and typically have standard station
formats, including dispenser design and proprietary credit card networks. The
Company's MOC customers include Amoco, Elf Aquitaine, Marathon Oil, Shell and
Total, among others.

National Oil Companies--A national is an oil company that operates
exclusively (or almost exclusively) in a single national market (other than
the United States). Most nationals are, or until recently were, state-owned.
In recent years, a number of nationals have been privatized or have
relinquished their monopolies over the local retail petroleum markets. For
example, in Mexico, the market was previously controlled by the government-
owned oil company, Petroleos Mexicanos ("Pemex"). Initial deregulation
occurred in 1995, allowing MOCs such as Amoco, Mobil and Conoco to enter that
market. Increased local competition as well as the need for newly-privatized
companies to earn profits has made once-insulated nationals more sensitive to
costs and customer service. These new

33
<PAGE>

sensitivities often translate into demand for newer, more sophisticated
dispenser equipment. Additionally, a number of privatized nationals are now
expanding across borders. The Company's national customers include Pemex in
Mexico, Petroleo Brasileiro S.A. ("Petrobras") in Brazil, Paz Oil in Israel
and Deltaven S.A. in Venezuela, among others.

Independent Oil Companies--Independents are usually U.S. companies that sell
"branded" products regionally rather than nationally. They typically have
station and dispenser designs which are standardized, similar to MOCs.
Independents that are Company customers include Merit Oil Corp., Getty
Petroleum Corp., Amerada Hess Corp. and Phillips 66 Company, among others.

Jobbers--Jobbers are independent service station owners that operate under
the brand of a MOC. A station owned by a jobber looks substantially the same
as one owned by a MOC, selling MOC-branded products and using standard MOC
station layouts. Most jobbers own multiple stations. Some jobbers work
exclusively with one MOC, while others have multiple partners. Moreover,
jobbers can change their MOC affiliation within the contractual limitations
between the jobber and the MOC. Usually, jobbers are not required to purchase
their petroleum dispensing equipment from the same manufacturers as their
affiliated MOC.

Convenience Store Stations--Convenience store stations are petroleum
retailers who source over 50% of their sales from merchandise rather than from
petroleum products. A significant number of convenience store stations are
owned by MOCs. The Company's convenience store stations customers also include
national and regional operators, as well as small, local businesses.

Hypermarkets--The Company is the leading supplier to French hypermarkets.
The hypermarket is a retailing format pioneered in France, with a growing
presence in the rest of Europe. A hypermarket is similar to a strip mall in
the United States, with a supermarket as the anchor retailer. Hypermarkets
typically offer competitively-priced, private label petroleum products to
attract customers. In France, more than 50% of retail petroleum sales are
through hypermarkets. The Company's hypermarket customers include Intermarche,
Leclerc, Systeme U, Comptoirs Modernes, Promodes and Carrefour, among others.

Commercial Customers--The commercial market is characterized by companies
whose fuel consumption needs justify maintaining internal fueling
capabilities, such as truck fleets and municipalities. Through its Gasboy
subsidiary, Tokheim is the leading supplier of fuel dispensing equipment to
the U.S. commercial market. The Company's commercial customers include Federal
Express, United Parcel Service, Penske Corp. and municipalities and state
agencies.

SALES, MARKETING AND DISTRIBUTION

United States

In the United States, the Company relies on two primary channels of
distribution: (i) direct sales to national accounts such as MOCs and certain
independents and (ii) indirect sales through a large network of independent
distributors. The Company directly markets through seven national account
managers who call on the MOCs, independents and large convenience store
chains. National account managers work closely with the MOCs to develop
technology, pricing and jobber account strategies. The Company markets to
jobbers and convenience stores through its 138 independent distributors. To
coordinate its distributor marketing, the Company has regional district
managers who are responsible for geographic coverage, training the district
sales force and assisting in the development of sales and marketing
strategies.

International Markets

Historically, the petroleum dispenser market outside of the U.S. has been
served by local distributors. The Company has 114 international distributors
serving customers that cannot be served cost-effectively by the Company's
direct sales force. The Company generally requires letters of credit from its
international distributors. However, as MOCs expand geographically and as
nationals become more commercially competitive, they increasingly

34
<PAGE>

are purchasing directly from manufacturers, using national, regional and
global "tenders," "alliances" and "preferred supplier" relationships. A
"tender" is an award made by a MOC or national to a manufacturer to supply
petroleum dispensing equipment and related services in a specific country or
region (or even globally) for a specific period at specified prices and
quantities. Tenders allow MOCs and nationals to reduce the number of their
suppliers while improving relationships with those remaining. In response to
the advent of tenders, manufacturers have expanded and adapted their product
lines and service capabilities to satisfy the specific regulatory, marketing,
and service demands of each country being supplied. Tenders are often
nonexclusive and cancellable by the customer at any time. The Company recently
won tenders from Shell for southeast Asia and western and eastern Africa.

An alliance involves a closer relationship than a tender. Often, a MOC or
national will ask only its alliance partner to submit a tender proposal. As
part of an alliance, manufacturers can assist the MOC or national by tracking
purchases, warranty coverage, service coverage and service response
requirements on behalf of the MOC or national. The Company has also been able
to expand its alliance with Amoco, in particular, to obtain its Mexican
business.

"Preferred supplier" relationships are less committed arrangements than
alliances. These arrangements typically involve a one-way commitment by the
manufacturer on such matters as prices, service and available inventory.
Usually, the MOC or national does not make any purchasing or other contractual
commitments. Preferred supplier relationships are usually non-exclusive and
are typically cancellable by the customer at any time. A MOC or national
seeking to reduce the number of suppliers with which it deals while increasing
volume purchasing discounts often will identify several manufacturers as
preferred suppliers. The Company has an expanded preferred supplier
relationship with Total. See "Risk Factors--Dependence on the Retail Petroleum
Industry."

Leasing

The Company recently began supplying petroleum dispensing systems through a
capital leasing program. The Company sells dispensing systems through third
party leasing agents, who then lease them to service stations. The Company
supports and services the leased units which provide customers with financial
flexibility and the ability to obtain the latest petroleum dispensing
technology without the up-front purchase cost.

MANUFACTURING AND QUALITY

The Company's manufacturing process consists of sheet metal fabrication,
machining, assembly of electronic components and customer-specific painting.
The Company's manufacturing and production are generally to order. To improve
quality and productivity and to reduce costs, the Company employs a cellular
manufacturing format and just-in-time process engineering. The majority of the
Company's manufacturing operations are concentrated in the following cities:
Fort Wayne, Indiana; Washington, Indiana; Lansdale, Pennsylvania;
Grentheville, France; Kya Sand, Randburg, South Africa and Glenrothes,
Scotland. Management anticipates that the Company has sufficient production
capacity to meet demand over the next several years.

The Company strives to produce the highest quality products, and is
committed to continuous quality improvement of its products and processes.
Since 1995, an aggressive focus on product quality has reduced the defect rate
(measured in parts per million) by approximately 90%. One important element in
reducing the defect rate has been the Company's effort to satisfy the
standards for ISO-9000 certification at its manufacturing facilities. The
International Organization for Standardization awards ISO-9000 certification
on a facility-by-facility basis to manufacturers that adhere to strict quality
standards. Companies must maintain these standards and supply supporting
documentation to retain their ISO certification, and certified facilities are
audited regularly. Independent third party registrars must nominate candidates
for certification. All of the Company's domestic and most of its international
manufacturing facilities are ISO-9000 certified, and the Company is actively
seeking certification for the uncertified facilities.

Another important aspect of the Company's efforts to improve quality is its
automated Computerized Dispenser Tester ("CDT"). The CDT monitors all fluid
paths to detect leakage, and simulating real-world conditions, tests displays,
keypads, valves, pulsers, totalizers, card readers, cash acceptors, printers,
vapor recovery systems and other

35
<PAGE>

critical dispenser components. After each testing cycle, technicians review
the data for any potential corrective actions. The CDT is networked to the
Company's mainframe computer, allowing instantaneous access from the order
entry, engineering, customer service and quality assurance departments, and
permitting close monitoring of the manufacturing process.

The Company has been recognized by third parties for its commitment to
quality. In October 1997, the Company was one of five recipients (out of 350
candidates) of the Circle of Excellence Award from the 1,500-member Petroleum
Equipment Institute. This award recognizes the Company's commitment to
competitive pricing, honest business practices, good product availability and
responsive customer service. This was the second consecutive year that the
Company has received the Circle of Excellence Award. The Company's principal
manufacturing facility in Fort Wayne, Indiana and its electronic assembly
plant in Washington, Indiana each received the 1996 State of Indiana Quality
Improvement Award.

SUPPLIES

The principal raw materials essential to the Company's business are flat
sheet steel, aluminum, copper tubing, iron castings and electronic, POS, and
computer components, all of which are generally available through competitive
sources of supply. At its U.S. facilities, the Company's purchasing strategy,
which includes a comprehensive supplier quality assurance component, seeks to
ensure that inventories are purchased at the lowest total cost-of-quality. In
making purchasing decisions, the Company considers the quality of performance
of the required items, as well as the supplier's delivery responsiveness and
prices. The Company has significantly reduced the number of suppliers it uses
to develop more effective relationships with the remaining suppliers. The
Company has also implemented point-of-use programs so that supplies are
delivered directly to the proper usage points at the factory or to a storage
facility.

PROPERTIES

The Company owns properties in: Fort Wayne, Indiana; Fremont, Indiana;
Washington, Indiana; Lansdale, Pennsylvania; Brighton, Ontario, Canada; Kya
Sand, Randburg, South Africa; Glenrothes, Scotland; Weilheim, Germany;
Grentheville, France; Fribourg, Switzerland; Scurzolengo, Italy; Abidjan,
Ivory Coast, and Halstenbek, Germany. The Company leases properties in:
Greenwood Village, Colorado; Mexico City, Mexico; Tremblay, France;
Casablanca, Morocco; Solothurn, Switzerland; West Sussex, United Kingdom;
Vilvoorde, Belgium; Barcelona, Spain; La Soukra, Tunisia; Dakar, Senegal;
Douala, Cameroon; Leiderdorp, the Netherlands, and Hamburg, Germany. The
majority of the Company's manufacturing operations are concentrated in the
following cities: Fort Wayne, Indiana; Washington, Indiana; Lansdale,
Pennsylvania; Grentheville, France; Kya Sand, Randburg, South Africa and
Glenrothes, Scotland. The Company believes that it has sufficient production
capacity to meet demand over the next several years. The Company also owns an
engineering and design center and a corporate office building in Fort Wayne,
Indiana. The remaining properties owned or leased by the Company are primarily
for warehouse space or sales and service except that the Colorado facility is
for software development. The Company is currently holding for sale facilities
in Falaise, France, Jasper, Tennessee and Atlanta, Georgia, as well as a 109-
acre tract of unimproved land located in Fort Wayne, Indiana.

EMPLOYEES

As of November 30, 1997, the Company employed approximately 2,900 persons.
Most employees are involved in manufacturing and production, with the balance
engaged in administration, sales and clerical work. In the United States,
approximately 870 the Company employees are union members covered by
collective bargaining agreements that expire in the year 2000. The Company
believes its relationship with its employees is good. It has not recently
experienced any work stoppages at its facilities, and has been able to extend
or renegotiate its collective bargaining agreement without disrupting
production.

RESEARCH AND DEVELOPMENT

The Company continually seeks to enhance its existing product lines to offer
increased functionality in new or existing products and has dedicated research
and engineering staffs. The Company spent approximately $18.3 million, $15.9
million and $12.7 million in 1997, 1996 and 1995, respectively, to improve
existing products and

36
<PAGE>

manufacturing methods, develop new products and pursue other applied research
and development. The Company has also begun to form partnerships with the MOCs
to develop products that meet their specific needs and with electronics
companies to develop advanced technologies.

The Company revamped its product development process in 1996 to incorporate
formal product development procedures. Each project now includes a cross-
functional team of representatives from the engineering, manufacturing,
quality, marketing, customer service, finance and service parts departments.
The team reviews the project from a variety of aspects, including financial
impact, design and production implications, and required after-sale support.

LEGAL PROCEEDINGS

The Company is defending various claims and legal actions, including claims
relating to CERCLA and other environmental laws, product liability and various
contract and employee matters. The Company believes that the outcome of such
pending claims will not, individually or in the aggregate, have a material
adverse effect on the Company's business, financial condition or result of
operations.

In addition, the Company was a defendant in litigation filed by a
competitor, Gilbarco, Inc., ("Gilbarco"), which alleged infringement of
patents on its vapor recovery system and certain vapor recovery improvements,
blender, printed receipt severing and filter housing. Gilbarco also alleged
violation of the North Carolina Fair Practice Claims Act. The plaintiff sought
injunctions and treble unspecified damages. The Company, in addition to
asserting other defenses, counterclaimed with an antitrust claim. The lawsuit
was filed on August 3, 1995 in federal court in the Middle District of North
Carolina. The parties have signed a settlement agreement which includes a non-
exclusive, world-wide license relating to the disputed technology (the
"License Agreement") effective December 1, 1997.

Under the terms of the Licensing Agreement, the Company will pay an annual
fixed royalty of $1.0 million for three years, plus earned royalties on
patented devices used in Company products until the patents expire. The
Company expects that these earned royalties will total approximately $1.1
million in 1998, based on projected sales. The court has entered a consent
judgment regarding the settlement.

SEASONALITY

Sales of petroleum dispenser equipment have historically been seasonal,
primarily due to the construction season and seasonal MOC purchasing which
typically is highest at the end of the calendar year. Historically,
approximately 30% of Tokheim's annual net sales volume has been recorded in
the fourth quarter of its fiscal year, with no significant variation among the
other three quarters. The acquisition of Sofitam has diminished such
seasonality, with the 1997 fourth quarter representing 27% of consolidated
annual sales. See Note 12 to the Consolidated Financial Statements, "Quarterly
Financial Information (unaudited)" and Management's Discussion and Analysis of
Financial Condition and Results of Operations.

REGULATION

The Company's operations are subject to national, regional and local laws
and regulations, including those concerning product safety, weights and
measures, and pollution and protection of the environment.

Product Safety. In the United States, the Company's products are subject to
standards set by Underwriters' Laboratories ("UL"). Standards for petroleum
product dispensers govern design features such as frame sturdiness, corrosion
resistance and hydrostatics of various parts. UL standards also apply to
electronic devices used in the Company's dispensers. Other countries often
either accept UL product standards or observe the standard of a comparable
body including the Canadian Standards Association and the British Approval
Service for Electrical Equipment and Flammable Atmosphere and Organization of
International Meterology League ("OIML") in Europe. Individual countries may
vary the standards created by these groups.

37
<PAGE>

Weights and Measures. Meters and displays must meet certain accuracy
standards. In the United States, "Handbook 44" from the National Institute on
Weights and Measures, which all states have adopted, sets forth those
standards. The standards generally require that the meter accurately measure
the amount of fuel pumped to within 0.4%. Meters must be able to measure
output at varying flow rates, ranging from almost zero to fifteen gallons per
minute. Also, pumps must eliminate most of the vapor from the fuel to ensure
that what is being measured is fuel. Dispensers in the U.S. are typically
inspected every year by state inspectors. Outside the United States, similar
standards govern meters and displays. Standards set by OIML are generally
accepted throughout Europe, including in France.

Environment. The Company's operations and properties are subject to a
variety of complex and stringent federal, state, and local laws and
regulations, including those governing the use, storage, handling, generation,
treatment, emission, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater,
and the health and safety of employees. As such, the nature of the Company's
operations exposes it to the risk of claims with respect to such matters.
There can be no assurance that material costs or liabilities will not be
incurred in connection with such claims. Based upon its experience to date,
the Company believes that the future cost of compliance with existing
environmental laws and regulations, and liability for known environmental
claims pursuant to such laws and regulations, will not have a material adverse
effect on the Company's financial condition or results of operations. However,
future events, such as new information, changes in existing laws and
regulations or their interpretation, and more vigorous enforcement policies of
regulatory agencies, may give rise to additional expenditures or liabilities
that could be material. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 18 to Consolidated Financial
Statements "Contingent Liabilities."

The U.S. Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), also known as the "Superfund" law, imposes liability, without
regard to fault or the legality of the original conduct, on certain classes of
persons with respect to the release of a "hazardous substance" into the
environment. These persons include the owner or operator of the disposal site
or sites where the release occurred and companies that disposed of or arranged
for the disposal of the hazardous substances found at the site. Persons who
are or were responsible for releases of hazardous substances under CERCLA may
be subject to joint and several liability for the costs of cleaning up the
releases and for damages to natural resources. It is not uncommon for
neighboring landowners and other third parties to file claims for personal
injury or property damages allegedly caused by the hazardous substances
released into the environment. In addition, where the Company has sold
properties used in its prior manufacturing operations, it may have contractual
obligations to the new owner to remediate environmental contamination on the
site arising from prior operations.

The Company also generates or has in the past generated waste, including
hazardous waste, that is subject to the federal Reserve Conservation and
Recovery Act ("RCRA") and comparable state statutes. The U.S. Environmental
Protection Agency ("EPA") and various state agencies have promulgated
regulations that limit the disposal options for certain hazardous and
nonhazardous waste. Such regulations may also require corrective action with
respect to contamination of facilities caused by the past handling of
industrial waste.

The Company has been named as a potentially responsible party ("PRP") under
CERCLA or similar state Superfund laws at three sites: the Fort Wayne
Reduction Site in Fort Wayne, Indiana; the Moyer Landfill Site in
Collegeville, Pennsylvania; and the I. Jones Recycling Site in Fort Wayne,
Indiana. The Company believes that the cleanups at these three sites are
largely complete and that the Company has paid, or has currently accrued on
its balance sheet sufficient funds to pay, any liabilities it may have
associated with the cleanup of these sites. The Company also owns or leases,
and has in the past owned or leased, numerous properties that for many years
have been used in industrial and manufacturing operations. Although the
Company has in the past utilized operating and disposal practices that were
standard for the industry at the time, hazardous substances may have been
disposed of or released on or under the properties owned or leased by the
Company, or on or under other locations where such wastes have been taken for
disposal. The Company currently owns a facility near Atlanta, Georgia that was
previously used to refurbish gasoline dispensers. As part of this operation,
chlorinated solvents were inadvertently released to the soil and groundwater
through the facility septic system. Migration of these releases has caused
solvent concentrations

38
<PAGE>

above background levels in the groundwater under an adjacent residential
property. The Company has completed the cleanup of this release under the
oversight of the Georgia Environmental Protection Division of the Georgia
Department of Natural Resources, and is currently monitoring the property to
ensure that additional cleanup work is not necessary.

The Company is also involved in one lawsuit with respect to environmental
liabilities under an indemnity provision of a sale agreement concerning the
sale of the die casting facility of a former subsidiary to a third party.
Negotiations with the other party to settle this matter to avoid litigation
expenses ceased when the other party could not show its expenses were a direct
result of environmental matters related to the indemnity agreement. Discovery
is now being conducted in this matter.

Although no assurances can be given in this regard, the Company does not
believe that any environmental cleanup activities will have a material adverse
effect on its financial condition or results of operations.

Environmental regulations also affect the Company's customers, their
spending and their demand for the Company's products. In the United States, a
number of states have adopted standards for the recovery of vapor coming from
the nozzle as fuel is pumped. The most rigorous standards are those set by the
California Air Resources Board ("CARB"), which has become the de facto
governing body of such standards in the U.S. CARB's standards apply to vapor
recovery systems on the nozzle. In general, a product that meets CARB's
standards will pass the tests of other states. More recently, the U.S. federal
government has promulgated rules requiring many gas stations to upgrade their
underground tanks and pipes (to use various corrosion preventing tanks, pipes,
materials or devices, self-containing mechanisms including an interior lining,
and leak detection devices or tests) by the end of 1998. Since these gas
stations temporarily close to comply with these regulations, the Company
believes that many choose to replace their aging gas pumps at the same time.
The international operations of the Company and its customers are also subject
to various environmental statutes and regulations of the countries in which
they operate. In addition, many of the countries in which the Company and its
customers operate are members of the European Union, which has promulgated and
continues to promulgate environmental directives and regulations. Generally,
these requirements are no more restrictive than those in effect in the United
States. Although environmental protection and safety laws in the countries in
which the Company manufactures and sells its products have an effect on
product design, they apply equally to the Company's competitors and have not
had, nor are they expected to have, a material adverse effect on the Company's
competitive position. Environmental laws and regulations also significantly
affect the Company's customers and their spending levels on Company products.
See "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

39
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information and ages as of February
4, 1998 regarding each of Tokheim's directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Douglas K. Pinner....... 57 Chairman of the Board, President and
Chief Executive Officer
Gerald H. Frieling, Jr.. 67 Vice Chairman of the Board
John A. Negovetich...... 52 Executive Vice President, Finance and Administration
Norman L. Roelke........ 48 Vice President, Secretary and General Counsel
Jacques St. Denis....... 40 Executive Vice President, Operations
Scott A. Swogger........ 45 President, Tokheim U.S.
Walter S. Ainsworth..... 69 Director
Robert M. Akin, III..... 61 Director
James K. Baker.......... 66 Director
B. D. Cooper............ 55 Director
Richard W. Hansen....... 60 Director
Dr. Winfred M. Phillips. 57 Director
Ian M. Rolland.......... 64 Director
</TABLE>

Douglas K. Pinner has been President and Chief Executive Officer of Tokheim
since 1992, a Director since 1993 and Chairman of the Board since 1996.
Previously, he was President of Slater Steel's Fort Wayne Specialty Alloys, a
wholly-owned subsidiary of Slater Industrial of Toronto, which manufactures
stainless steel bar.

Gerald H. Frieling, Jr. has been Vice Chairman of the Board since 1996. From
1991 to 1996, he was Chairman of the Board. From 1991 to 1992, Mr. Frieling
was Chief Executive Officer of Tokheim. Previously, he was Chairman of the
Board, President and Chief Executive Officer of National-Standard, a
diversified manufacturer of specialty wire, metal products and machinery. He
is also a director of CTS Corporation.

John A. Negovetich has been Executive Vice President, Finance and
Administration since 1998. From 1996 to 1998, Mr. Negovetich was President,
Tokheim North America. From 1993 to 1995, Mr. Negovetich was Vice President,
Finance, Chief Financial Officer and a member of the Board of Ardco, Inc. From
1987 to 1992, he served as Vice President and Chief Financial Officer of
Hawker-Siddeley Investments, Inc.

Norman L. Roelke has been Vice President and General Counsel of Tokheim
since 1994 and Secretary since 1995. From 1987 to 1994, Mr. Roelke served as
the Company's Corporate Counsel.

Jacques St. Denis has been Executive Vice President, Operations since 1998.
From 1996 to 1998, he served as President and Director General of Tokheim-
Sofitam S.A. (the Company subsidiary that was formerly Sofitam). During 1996,
he served as Vice President, Tokheim International. From 1995 to 1996, Mr. St.
Denis was Director of Export and International Operations for the Company.
From 1994 to 1995, he was Tokheim's Director of Marketing, and from 1993 to
1994, he was Director of Worldwide Services. Previously, Mr. St. Denis served
as Managing Director of European Operations, and National Sales and Marketing
Director, USA, for Babson Brothers Company.

Scott A. Swogger has been President, Tokheim U.S., since 1997. From 1995 to
1997, he served as Vice President, Quality Systems. From 1994 to 1995, he was
Tokheim's Director of Quality Assurance. Previously, he served as the
Company's Senior Manager of Quality Assurance.

40
<PAGE>

Walter S. Ainsworth has been a Director since 1992. Before retiring in 1992,
he served as President and Chief Executive Officer of Phelps Dodge Magnet Wire
Company, an international producer of magnet wire, and as Senior Vice
President of Phelps Dodge Corp. He is also a director of Fort Wayne National
Corporation.

Robert M. Akin, III has been a Director since 1993. Before his retirement in
1995, he served as President and Chief Executive Officer of Hudson Wire
Company d/b/a of Hudson International Conductors, a manufacturer of speciality
wire products that became a subsidiary of Phelps Dodge Corp.

James K. Baker has been a Director since 1993. Since 1996, Mr. Baker has
been Vice Chairman of the Board of Arvin Industries, Inc., a global
manufacturer of automotive products. Previously, he was Chairman and Chief
Executive Officer of Arvin Industries, Inc. Mr. Baker is also a director of
First Chicago NBD Corp., Amcast Industrial Corp., the GEON Company and CINergy
Corp.

B. D. Cooper has been a Director since 1993. Mr. Cooper is President and
Chairman of the Board of P.E.S. Inc., which sells and distributes petroleum
equipment to the petroleum industry. He is also a director of Delhi
Bancshares, Chairman of the Board of Heritage Banks and a director of Stico
Insurance Co.

Richard W. Hansen has been a Director since 1995. Since 1977, Mr. Hansen has
been Chairman, President and Chief Executive Officer of Furnas Electric
Company, a leading manufacturer of industrial electrical and electronic motor
control products.

Dr. Winfred M. Phillips has served as a Director since 1986. Dr. Phillips is
Dean of the College of Engineering and Associate Vice President, Engineering
and Industrial Experiment Station of the University of Florida.

Ian M. Rolland has been a Director since 1981. Since 1992, Mr. Rolland has
been Chairman and Chief Executive Officer of Lincoln National Corporation,
which provides life insurance and annuities, property-casualty insurance and
related services through its subsidiary companies. Mr. Rolland also served as
President of Lincoln National Corporation from 1975 to 1992. He is also a
director of NIPSCO Industries, Inc. and Norwest Corporation.

41
<PAGE>

PRINCIPAL SHAREHOLDERS

The table below sets forth, as of February 4, 1998, certain information
regarding Common Stock beneficially owned (or deemed to be beneficially owned
pursuant to the rules of the Commission) by (i) each director and each of the
executive officers of the Company who owns Common Stock, (ii) all directors
and executive officers of the Company as a group and (iii) each person known
by the Company to own beneficially more than 5% of the Common Stock. Each
individual or entity named has sole investment and voting power with respect
to the Common Stock such person or entity beneficially owns, except where
otherwise noted.

<TABLE>
<CAPTION>
PERCENT BENEFICIALLY
OWNED(1)
SHARES --------------------
BENEFICIALLY BEFORE THE AFTER THE
OWNED(2)(3) OFFERING OFFERING
------------ ---------- ---------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
Walter S. Ainsworth (4)...................... 4,414 * *
Robert M. Akin, III.......................... 3,800 * *
James K. Baker............................... 2,600 * *
B. D. Cooper (5)............................. 2,800 * *
Gerald H. Frieling, Jr....................... 6,400 * *
Richard W. Hansen............................ 6,400 * *
John A. Negovetich (6)....................... 18,211 * *
Dr. Winfred M. Phillips...................... 2,600 * *
Douglas K. Pinner (7)........................ 80,344 * *
Norman L. Roelke (8)......................... 21,550 * *
Ian M. Rolland............................... 3,125 * *
Jacques St. Denis (9)........................ 21,033 * *
Scott A. Swogger (10)........................ 2,115 * *
Executive Officers and Directors as a Group
(13 persons)................................ 175,392 2.1 1.5
David L. Babson and Company, Inc............. 893,400 10.8 7.4
One Memorial Drive, Suite 1100
Cambridge, Massachusetts 02142
The TCW Group, Inc........................... 578,200 7.0 4.8
865 South Figueroa Street
Los Angeles, California 90017
Fort Wayne National Bank, as Trustee for the
ESOP (11)................................... 771,263 -- --
110 West Berry Street
Fort Wayne, Indiana 46802
</TABLE>
- --------
* Represents less than 1% of the outstanding Common Stock.

(1) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule 13d-
3(d), shares not outstanding that are subject to options, warrants, rights
or conversion privileges exercisable within 60 days are deemed outstanding
for the purpose of calculating the number and percentage owned by such
person, but deemed not outstanding for the purpose of calculating the
percentage owned by any other person listed. As of February 4, 1998, the
Company had 8,295,523 shares of Common Stock outstanding.

42
<PAGE>

(2) Includes shares of restricted stock that are subject to vesting but for
which the holder has voting rights in the following amounts: 1,000 shares
each for Ainsworth, Akin, Baker, Cooper, Freiling, Hanson, Phillips, and
Rolland.
(3) Assumes that the ESOP Preferred Shares have been converted to Common Stock
at 1:1 conversion rate.
(4) In addition, Catherine Ainsworth, Mr. Ainsworth's wife, owns 478 shares,
with respect to which Mr. Ainsworth disclaims any beneficial interest.
(5) In addition, Barbara Cooper, Mr. Cooper's wife, owns 1,000 shares, with
respect to which Mr. Cooper disclaims any beneficial interest. P.E.S.,
Inc. Pension Plan also owns 2,000 shares. Mr. Cooper is a participant in
and trustee of the Plan.
(6) Represents 10,500 shares of Common Stock, 104 shares of Common Stock held
in the Company's Retirement Savings Plan, 107 shares of Convertible
Preferred Stock held in the Company's Retirement Savings Plan and 7,500
exercisable stock options. Does not include 52,500 unexercisable stock
options.

(7) Represents 75,044 shares of Common Stock, 3,873 shares of Common Stock
held in the Company's Retirement Savings Plan and 1,427 shares of
Convertible Preferred Stock held in the Company's Retirement Savings Plan.
Does not include 105,000 unexercisable stock options.
(8) Represents 5,464 shares of Common Stock, 713 shares of Common Stock held
in the Company's Retirement Savings Plan, 2,123 shares of Convertible
Preferred Stock held in the Company's Retirement Savings Plan and 13,250
exercisable stock options. Does not include 23,750 unexercisable stock
options.

(9) Represents 11,897 shares of Common Stock, 408 shares of Common Stock held
in the Company's Retirement Savings Plan, 1,228 shares of Convertible
Preferred Stock held in the Company's Retirement Savings Plan and 7,500
exercisable stock options. Does not include 45,000 unexercisable stock
options.

(10) Represents 156 shares of Common Stock held in the Company's Retirement
Savings Plan, 759 shares of Convertible Preferred Stock held in the
Company's Retirement Savings Plan and 1,200 exercisable stock options.
Does not include 24,750 unexercisable stock options.
(11) This figure represents shares of Common Stock issuable upon conversion of
ESOP Preferred Stock held by the Trustee of the Retirement Savings Plan
for Employees of Tokheim Corporation and subsidiaries, as if converted on
the date hereof. Pursuant to this qualified plan, shares of Preferred
Stock are to be allocated from time to time to Tokheim's employees,
including its officers. It is not possible to predict the actual number
of shares of Preferred Stock which will be allocated to officers in the
future. Allocated shares are voted by the participants, including
officers, to whom they are allocated. Unallocated shares are voted by the
Trustee in proportion to the vote by participants with respect to
allocated shares.

43
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following summarizes the material provisions of the Restated Articles of
Incorporation, Bylaws and Shareholder Rights Plan. These summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by, reference to all of the provisions of such documents, copies of which have
been filed as exhibits to the Registration Statement of which this Prospectus
is a part.

GENERAL

As of the date of this Prospectus, the authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock, no par value, and
5,000,000 special shares of Preferred Stock, no par value. Of the 5,000,000
shares of Preferred Stock, 1,700,000 shares have been designated as "ESOP
Convertible Voting Preferred Stock" ("ESOP Preferred Stock"), and 30,000
shares have been designated as "Series A Junior Participating Preferred Stock"
("Series A Junior Preferred Stock"). 3,270,000 shares of Preferred Stock
remain authorized but undesignated and unissued. The following summary of the
respective rights of the Common Stock and the Preferred Stock is qualified in
its entirety by reference to the Company's Restated Articles of Incorporation.

COMMON STOCK

Following the Offering, 12,095,523 shares of Common Stock will be
outstanding (12,665,523 if the Underwriters' over-allotment option is
exercised in full). The holders of Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of shareholders.
Subject to preferences applicable to any outstanding Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
The Company has paid no cash dividends on any of its capital stock since 1991
and does not anticipate paying cash dividends in the foreseeable future.

In the event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock and, if issued, Series A Junior Preferred Stock, are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any other outstanding Preferred Stock. The
outstanding shares of Common Stock are, and the Common Stock to be outstanding
upon completion of the Offering will be, fully paid and nonassessable. Except
as set forth under "Shareholder Rights Plan" below, no preemptive rights,
conversion rights, redemption rights or sinking fund provisions are applicable
to the Common Stock.

PREFERRED STOCK

The Company's Board of Directors has the authority to issue 5,000,000 shares
of Preferred Stock in one or more series and to fix the relative preferences,
limitations and relative voting and other rights thereof, including dividend
rights, distribution rights, dividend rates, terms of redemption, redemption
prices, liquidation preferences, the number of shares constituting any series
or the designation of such series, and any other preferences or rights, and
any qualifications, limitations or restrictions of such preferences or rights,
to the full extent permitted by The Indiana Business Corporation Law, without
further vote or action by the shareholders.

On July 10, 1989, the Company sold 960,000 shares of ESOP Preferred Stock to
the Trust of the Company's Retirement Savings Plan (RSP) at the liquidation
value of $25 per share, or $24 million. As of November 30, 1997, there were
771,263 shares of ESOP Preferred Stock outstanding. The ESOP Preferred Stock
has a dividend rate of 7.75%. The holders of ESOP Preferred Stock are entitled
to vote on all matters submitted to a vote of the shareholders of the Company,
voting together with the holders of Common Stock as one class. The holder of
each share of ESOP Preferred Stock is entitled to a number of votes equal to
the number of shares of Common Stock into which such share of ESOP Preferred
Stock could be converted on the record date for determining the shareholders
entitled to vote, rounded to the nearest one-tenth of a vote.

The Trustee, who holds the ESOP Preferred Stock, may elect to convert each
preferred share to one common share in the event of redemption by Tokheim,
certain consolidations or mergers of Tokheim, or a redemption by the

44
<PAGE>

Trustee which is necessary to provide for distributions under the RSP. A
participant may elect to receive a distribution from the RSP in cash or common
stock. If redeemed by the Trustee, the Company is responsible for purchasing
the ESOP Preferred Stock at the $25 floor value. The Company may elect to pay
the redemption price in cash or an equivalent amount of common stock.

The Series A Junior Preferred Stock is authorized and may be issued as set
forth below under "Shareholder Rights Plan." Subject to the prior and superior
rights of the holders of any shares of any series of Preferred Stock ranking
prior and superior to the shares of Series A Junior Preferred Stock with
respect to dividends, the holders of Series A Junior Preferred Stock are
entitled to receive, when, if and as declared by the Board of Directors,
quarterly dividends payable in cash, commencing on the first quarterly
dividend payment date after the first issuance of a share or fraction of a
share of Series A Junior Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $0.01 or (b) subject to certain
adjustments, 1,000 times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in kind) of all non-
cash dividends or other distributions, other than a dividend payable in Common
Stock or a subdivision of the outstanding Common Stock, declared on the Common
Stock of the Company since the immediately preceding quarterly dividend
payment date, or, with respect to the first quarterly dividend payment date,
since the first issuance of any share or fraction of a share of Series A
Junior Preferred Stock.

Subject to adjustment relating to the number of shares of outstanding Common
Stock, each share of Series A Junior Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the shareholders
of the Company.

SHAREHOLDER RIGHTS PLAN

On January 22, 1997, the Board of Directors of the Company approved the
extension of the benefits afforded by the Company's then-existing rights plan
by adopting a new shareholder rights plan. Pursuant to the new Rights
Agreement, dated as of January 22, 1997, by and between the Company and Harris
Bank and Trust Company, as Rights Agent, one Right was issued for each
outstanding share of Common Stock upon the expiration of the Company's then-
existing rights (February 9, 1997). Each of the new Rights entitle the
registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Preferred Stock at a price of $44.00 per one-thousandth of
a share. The Rights will not become exercisable, however, unless and until,
among other things, any person acquires 15% or more of the outstanding Common
Stock or the Board of Directors of the Company determines that a person is an
Adverse Person.

A person who beneficially owns 10% or more of the outstanding Common Stock
will be declared an Adverse Person if the Board of Directors determines (a)
that such beneficial ownership is intended to cause the Company to repurchase
the Common Stock beneficially owned by such person or to pressure the Company
to take action or enter into transactions intended to provide such person with
short-term financial gain that are not in the best long-term interests of the
Company and its shareholders or (b) such beneficial ownership is causing or
reasonably likely to cause a material adverse impact on the Company to the
detriment of the Company's shareholders, employees, suppliers, customers or
community. If a person acquires 15% or more of the outstanding Common Stock or
is declared an Adverse Person (subject to certain conditions and exceptions
more fully described in the Rights Agreement), each Right will entitle the
holder (other than the person who acquired 15% or more of the outstanding
Common Stock or is declared an Adverse Person) to purchase Common Stock having
a market value equal to twice the exercise price of a Right. The new Rights
are redeemable under certain circumstances at $0.01 per Right and will expire,
unless earlier redeemed, on February 9, 2007.

45
<PAGE>

ANTI-TAKEOVER EFFECTS OF INDIANA LAW

Indiana Code Section 23-1-42 (the "Control Share Acquisitions Act") provides
that any person or group of persons that acquires the power to vote more than
one-fifth of certain corporations' shares shall not have the right to vote
such shares unless granted voting rights by both the holders of a majority of
the corporation's outstanding shares and by the holders of a majority of the
outstanding shares that are not "interested shares." Interested shares are
those shares held by the acquiring person, by officers of the corporation and
by employees who are also directors of the corporation. If approval of voting
power for the shares is obtained, additional shareholder approvals are
required when a shareholder acquires the power to vote more than one-third and
more than a majority of the voting power of the corporation's shares. In the
absence of such approval, the additional shares acquired by the shareholder
may not be voted. If the shareholders grant voting rights to the shares after
a shareholder has acquired more than a majority of the voting power, all
shareholders of the corporation are entitled to exercise statutory dissenters'
rights and to demand the value of their shares in cash from the corporation.
If voting rights are not accorded to the shares, the corporation may have the
right to redeem them. The provisions of the Control Share Acquisitions Act do
not apply to acquisitions of voting power pursuant to a merger or share
exchange agreement to which the corporation is a party.

Indiana Code Section 23-1-43 (the "Business Combination Act") prohibits a
person who acquires beneficial ownership of 10% or more of certain
corporations' shares (an "Interested Shareholder"), or any affiliate or
associate of an Interested Shareholder, from effecting a merger or other
business combination with the corporation for a period of five years from the
date on which the person became an Interested Shareholder, unless the
transaction in which the person became an Interested Shareholder was approved
in advance by the corporation's Board of Directors. Following the five-year
period, a merger or other business combination may be effected with an
Interested Shareholder only if (a) the business combination is approved by the
corporation's shareholders, excluding the Interested Shareholder and any of
its affiliates or associates, or (b) the consideration to be received by
shareholders in the business combination is at least equal to the highest
price paid by the Interested Shareholder in acquiring its interest in the
corporation, with certain adjustments, and certain other requirements are met.
The Business Combination Act broadly defines the term "business combination"
to include mergers, sales or leases of assets, transfers of shares of the
corporation, proposals for liquidation and the receipt by an Interested
Shareholder of any financial assistance or tax advantage from the corporation,
except proportionately as a shareholder of the corporation.

Indiana Code Section 23-1-35-1 provides that directors are required to
discharge their duties: (i) in good faith; (ii) with the care an ordinarily
prudent person in a like position would exercise under similar circumstances;
and (iii) in a manner the directors reasonably believe to be in the best
interests of the Company. This section also provides that a director is not
liable for any action taken as a director, or any failure to act, unless the
director has breached or failed to perform the duties of the director's office
and the action or failure to act constitutes willful misconduct or
recklessness. This statutory exoneration of directors may discourage
shareholders from bringing a lawsuit against directors for breach of their
fiduciary duty and may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though such an
action, if successful, might otherwise have benefitted the Company and its
shareholders.

The overall effect of the above provisions may be to render more difficult
or to discourage a merger, tender offer, proxy contest, the assumption of
control of the Company by a holder of a large block of the Company's stock or
other person, or the removal of incumbent management, even if such actions may
be beneficial to the Company's shareholders generally.

46
<PAGE>

UNDERWRITING

The Underwriters named below, acting through their representatives,
PaineWebber Incorporated, BT Alex. Brown Incorporated and Schroder & Co. Inc.
(collectively, the "Representatives"), have severally agreed with the Company,
subject to the terms and conditions of the Underwriting Agreement (a copy of
which is attached as an exhibit to the Registration Statement of which this
Prospectus is a part), to purchase from the Company the number of shares of
Common Stock set forth opposite their respective names below. The Underwriters
are committed to purchase and pay for all such shares if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ----------
<S> <C>
PaineWebber Incorporated.......................................
BT Alex. Brown Incorporated....................................
Schroder & Co. Inc.............................................
----------
Total...................................................... 3,800,000
==========
</TABLE>

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of not more than $ per share, of
which $ may be reallowed to other dealers. After the initial public
offering, the public offering price, concession and reallowance to dealers may
be reduced by the Representatives. No such reduction shall change the amount
of proceeds to be received by the Company as set forth on the cover page of
this Prospectus.

The Company has granted to the Underwriters an over-allotment option,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to an additional 570,000 shares of Common Stock at the same price
per share as the Company will receive for the 3,800,000 shares that the
Underwriters have agreed to purchase. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage of such additional shares that the
number of shares of Common Stock to be purchased by it shown in the above
tables represents as a percentage of the 3,800,000 shares offered hereby. If
purchased, such additional shares will be sold by the Underwriters on the same
terms as those on which the 3,800,000 shares are being offered hereby.

The Underwriting Agreement contains covenants of indemnity between the
Underwriters and the Company against certain civil liabilities, including
liabilities under the Securities Act.

The executive officers and directors of the Company have agreed with the
Representative for a period of 120 days from the date of this Prospectus (the
"Lock-Up Period") not to offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any option to purchase any shares of Common
Stock, or any securities convertible into, or exchangeable for, or any rights
to purchase or acquire, shares of Common Stock, now owned or hereafter
acquired directly by such holders or with respect to which they have the power
of disposition, without the prior written consent of PaineWebber Incorporated
which may, in its sole discretion and at any time or from time to time,
without notice, release all or any portion of the shares subject to the lock-
up agreements. In addition, the Company has agreed that, during the Lock-Up
Period, the Company will not, without the prior written consent of PaineWebber
Incorporated, issue, sell, contract to sell or otherwise dispose of any shares
of Common Stock, any options or warrants to purchase any shares of Common
Stock or any securities convertible into, exercisable for or exchangeable for
shares of Common Stock other than the issuance of Common Stock upon the
exercise of outstanding options and the Company's grant of options under
existing stock option plans.

PaineWebber Incorporated, BT Alex. Brown Incorporated and Schroder & Co.
Inc. have in the past performed, and may continue to perform, investment
banking, broker dealer, lending and financial advisory services for the
Company, and have received customary compensation therefor.

47
<PAGE>

In connection with the Offering, the Underwriters may purchase and sell the
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
established in connection with the Offering. Stabilizing transactions consist
of certain bids or purchases made for the purposes of preventing or retarding
a decline in the market price of the Common Stock. If the Underwriters over-
allot (i.e., if they sell more shares of Common Stock than are set forth on
the cover page of this Prospectus) and thereby create a short position in the
Common Stock in connection with this Offering, then the Underwriters may
reduce that short position by purchasing shares of Common Stock in the open
market. The Underwriters may also elect to reduce any short position by
exercising all or part of the over-allotment option described herein.

These activities may stabilize, maintain or otherwise affect the market
price of the Common Stock, which may or may not be higher than the price that
might otherwise prevail in the open market. The Underwriters make no
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the shares of
Common Stock. In addition, the Underwriters make no representation that the
Underwriters will engage in such transactions, and if such transactions are
commenced they may be discontinued without notice.

The offering price for the Common Stock has been determined by negotiations
among the Company and the Representatives, based largely upon the market price
for the Common Stock as reported on the New York Stock Exchange.

The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Common Stock will
be passed upon for the Company by Norman L. Roelke, Esq., Vice President,
Secretary, and General Counsel of the Company, and by Skadden, Arps, Slate,
Meagher & Flom (Illinois), Chicago, Illinois, which will rely on the opinion
of Mr. Roelke as to matters of Indiana law. Certain legal matters in
connection with the Common Stock offered hereby will be passed upon for the
Underwriters by Vinson & Elkins L.L.P., Houston, Texas.

EXPERTS

The consolidated balance sheets as of November 30, 1997 and 1996 and the
consolidated statements of earnings, shareholder's equity and cash flows of
Tokheim Corporation for each of the three years in the period ended November
30, 1997, included in this prospectus, have been included herein in reliance
on the report of Coopers & Lybrand LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.

The consolidated balance sheets as of November 30, 1997 and December 31,
1996 and the consolidated statements of operations, stockholder's equity, and
cash flows of Management Solutions, Inc. for the eleven months ended November
30, 1997 and the year ended December 31, 1996 included in this prospectus,
have been included herein in reliance on the report of Coopers & Lybrand LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

The combined balance sheets as of December 31, 1995 and 1994 and the
combined statements of income and cash flows of the Fuel Pump Division of
Sofitam S.A. for each of the three years in the period ended December 31,
1995, incorporated by reference in this prospectus, have been incorporated
herein in reliance on the report of Salustro Reydel, independent accountants,
given on the authority of that firm as experts in accounting and auditing.

48
<PAGE>

INDEX TO FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY

<TABLE>
<S> <C>
Consolidated Statement of Earnings for each of the three years in the
period ended
November 30, 1997..................................................... F-2
Consolidated Statement of Cash Flows for each of the three years in
the period ended November 30, 1997.................................... F-3
Consolidated Balance Sheet as of November 30, 1997, and 1996.......... F-4
Consolidated Statement of Shareholders' Equity for each of the three
years in the period ended November 30, 1997.......................... F-6
Notes to Consolidated Financial Statements............................ F-7
Independent Accountants' Report....................................... F-31

COMBINED FINANCIAL STATEMENTS OF MANAGEMENT SOLUTIONS, INC.

Independent Accountants' Report....................................... F-32
Balance Sheets as of November 30, 1997 and December 31, 1996.......... F-33
Statements of Operations for the eleven months ended November 30, 1997
and the year ended December 31, 1996................................. F-34
Statements of Cash Flows for the eleven months ended November 30, 1997
and the year ended December 31, 1996................................. F-35
Statements of Stockholders' Equity for the eleven months ended
November 30, 1997 and the year ended December 31, 1996............... F-36
Notes to the financial statements..................................... F-37
</TABLE>

F-1
<PAGE>

CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996, AND 1995
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net sales........................................ $385,469 $279,733 $221,573
Cost of sales, exclusive of items listed below... 283,932 210,223 166,974
Selling, general, and administrative expenses.... 68,167 51,667 41,251
Depreciation and amortization.................... 9,232 5,028 4,857
Merger and acquisition costs and other unusual
items........................................... 3,493 6,459 2,680
-------- -------- --------
Operating profit................................. 20,645 6,356 5,811
Interest expense (net of interest income of $837,
$602 and $269, respectively).................... 16,451 7,191 3,319
Foreign currency (gain) loss..................... 48 159 (143)
Minority interest in subsidiaries................ 394 393 --
Other income, net................................ (1,445) (158) (635)
-------- -------- --------
Earnings (loss) before income taxes and
extraordinary loss.............................. 5,197 (1,229) 3,270
Income taxes..................................... 1,217 780 39
-------- -------- --------
Earnings (loss) before extraordinary loss........ 3,980 (2,009) 3,231
Extraordinary loss on debt extinguishment........ (1,886) -- --
-------- -------- --------
Net earnings (loss).............................. 2,094 (2,009) 3,231
Preferred stock dividends ($1.94 per share)...... (1,512) (1,543) (1,580)
-------- -------- --------
Earnings (loss) applicable to common stock....... $ 582 $ (3,552) $ 1,651
======== ======== ========
Earnings (loss) per common share:
Primary
Before extraordinary loss...................... $ 0.31 $ (0.45) $ 0.21
Extraordinary loss on debt extinguishment...... (0.23) -- --
-------- -------- --------
Net earnings (loss)............................ $ 0.07 $ (0.45) $ 0.21
======== ======== ========
Weighted average number of shares outstanding.. 8,083 7,981 7,911
======== ======== ========
Fully diluted
Before extraordinary loss...................... $ 0.27 $ (0.45) $ 0.17
Extraordinary loss on debt extinguishment...... (0.21) -- --
-------- -------- --------
Net earnings (loss)............................ $ 0.06 $ (0.45) $ 0.17
======== ======== ========
Weighted average number of shares outstanding.. 9,067 7,981 9,500
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-2
<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996, AND 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss).............................. $ 2,094 $ (2,009) $ 3,231
Adjustments to reconcile net earnings (loss) to
net cash provided from operating activities:
Extraordinary loss on debt extinguishment....... 1,886 -- --
Depreciation and amortization................... 9,232 5,028 4,857
Gain on sale of property, plant, and equipment.. (408) (59) (436)
Deferred income taxes........................... (139) (251) (33)
Changes in assets and liabilities (net of
effects of the acquisition in 1996):
Receivables, net............................... 4,254 2,363 (6,140)
Inventories.................................... 5,975 (2,626) 89
Prepaid expenses............................... (2,001) 5,987 (877)
Accounts payable............................... 5,116 (1,425) 1,648
Accrued expenses............................... (3,395) 4,249 2,132
U.S. and foreign income taxes.................. 12 (912) (349)
Other.......................................... (1,424) (4,448) (775)
-------- -------- -------
Net cash provided from operating activities...... 21,202 5,897 3,347
-------- -------- -------
Cash Flows From Investing Activities:
Acquisition of Sofitam, net of cash acquired..... -- (52,105) --
Property, plant, and equipment additions......... (11,154) (3,061) (5,559)
Proceeds from sale of property, plant and
equipment....................................... 760 1,087 649
-------- -------- -------
Net cash used in investing activities............ (10,394) (54,079) (4,910)
-------- -------- -------
Cash Flows From Financing Activities:
Proceeds from senior subordinated notes.......... -- 100,000 --
Redemption of senior subordinated notes.......... (10,000) -- --
Proceeds from term debt.......................... -- 490 2,122
Payments on term debt and other.................. (3,747) (32,290) (819)
Net increase (decrease) notes payable, banks..... 1,770 (5,044) 559
Net increase in cash overdraft................... 1,874 7,237 199
Debt issuance costs.............................. -- (11,506) --
Proceeds from issuance of common stock........... 1,706 42 --
Treasury stock, net.............................. (496) (370) 273
Premiums paid on debt extinguishment............. (1,390) -- --
Preferred stock dividends........................ (1,512) (1,543) (1,580)
-------- -------- -------
Net cash provided from (used in) financing
activities...................................... (11,795) 57,016 754
-------- -------- -------
Effect of Translation Adjustments on Cash......... (2,389) (4,482) 41
-------- -------- -------
Increase (decrease) in cash...................... (3,376) 4,352 (768)
Cash and Cash Equivalents:
Beginning of year................................ 9,814 5,462 6,230
-------- -------- -------
End of year...................................... $ 6,438 $ 9,814 $ 5,462
======== ======== =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-3
<PAGE>

CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1997 AND 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 6,438 $ 9,814
Accounts receivable, less allowance for doubtful accounts
of $1,392 and $904, respectively.......................... 83,011 94,402
Inventories:
Raw materials and supplies............................... 29,427 30,689
Work in process.......................................... 27,514 33,080
Finished goods........................................... 7,406 11,145
-------- --------
64,347 74,914
Prepaid expenses........................................... 6,705 5,056
-------- --------
Total current assets..................................... 160,501 184,186
Property, plant and equipment, at cost:
Land and land improvements................................. 4,669 4,982
Buildings and building improvements........................ 26,924 29,867
Machinery and equipment.................................... 70,068 64,473
Construction in progress................................... 4,514 1,285
-------- --------
106,175 100,607
Less accumulated depreciation............................ 64,209 59,597
-------- --------
41,966 41,010
Assets held for sale......................................... 7,825 --
Other tangible assets........................................ 1,359 3,836
Goodwill, net................................................ 62,695 62,692
Other non-current assets and deferred charges, net........... 16,273 18,137
-------- --------
Total assets............................................. $290,619 $309,861
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-4
<PAGE>

CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1997 AND 1996
(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt..................... $ 2,391 $ 4,447
Notes payable to banks................................... 98 7,168
Cash overdrafts.......................................... 10,575 9,733
Accounts payable......................................... 54,597 53,593
Accrued expenses......................................... 51,190 54,889
-------- --------
Total current liabilities.............................. 118,851 129,830
Senior subordinated notes.................................. 90,000 100,000
Long-term debt, less current maturities.................... 28,487 22,402
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation................................................ 9,429 11,995
Post-retirement benefit liability.......................... 14,378 14,780
Minimum pension liability.................................. 2,173 3,248
Other long-term liabilities................................ 5,169 342
Deferred income taxes...................................... 342 524
Minority Interest.......................................... 1,319 925
-------- --------
270,148 284,046
-------- --------
Commitments and contingencies (Note 19)
Redeemable convertible preferred stock, at liquidation
value of $25 per share, 1,700
shares authorized, 960 shares issued...................... 24,000 24,000
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation................................................ (9,429) (11,692)
Treasury stock, at cost, 189 and 167 shares, respectively.. (4,718) (4,171)
-------- --------
9,853 8,137
-------- --------
Preferred stock, no par value; 3,300 shares authorized and
unissued.................................................. -- --
Common stock, no par value; 30,000 shares authorized, 8,232
and 7,954 shares issued, respectively..................... 21,158 19,452
Guaranteed Employers' Stock Ownership Plan (RSP)
obligation................................................ -- (303)
Minimum pension liability.................................. (2,173) (3,248)
Foreign currency translation adjustments................... (18,048) (7,271)
Retained earnings.......................................... 9,821 9,240
-------- --------
10,758 17,870
Treasury stock, at cost, 9 and 11 shares, respectively..... (140) (192)
-------- --------
10,618 17,678
-------- --------
Total liabilities and shareholders' equity............. $290,619 $309,861
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-5
<PAGE>

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK FOREIGN
-------------------- GUARANTEED MINIMUM CURRENCY TOTAL COMMON
OUTSTANDING TREASURY ESOP PENSION TRANSLATION RETAINED SHAREHOLDERS'
AMOUNT AMOUNT OBLIGATION OBLIGATION ADJUSTMENTS EARNINGS EQUITY
----------- -------- ---------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 30,
1994 $ 19,410 $(1,887) $(1,242) $ (1,906) $ (3,543) $12,024 $ 22,856
Other.................. (1) 33 -- -- -- -- 32
Redemption of preferred
stock................. -- 1,057 -- -- -- -- 1,057
Employee termination
benefits.............. -- 427 -- -- -- -- 427
RSP diversification.... -- 139 -- -- -- -- 139
Decrease in guaranteed
ESOP obligation....... -- -- 456 -- -- -- 456
Minimum pension
liability adjustment.. -- -- -- (1,962) -- -- (1,962)
Foreign currency
translation
adjustments........... -- -- -- -- 1 -- 1
Net earnings........... -- -- -- -- -- 3,231 3,231
Treasury stock
transactions.......... -- -- -- -- -- (860) (860)
Preferred stock
dividends............. -- -- -- -- -- (1,580) (1,580)
-------- ------- ------- -------- --------- ------- --------
BALANCE AT NOVEMBER 30,
1995 $$19,409 $ (231) $ (786) $ (3,868) $ (3,542) $12,815 $ 23,797
Stock options
exercised............. 43 -- -- -- -- -- 43
Employee termination
benefits.............. -- 11 -- -- -- -- 11
Other.................. -- 28 -- -- -- -- 28
Decrease in guaranteed
ESOP obligation....... -- -- 483 -- -- -- 483
Minimum pension
liability adjustment.. -- -- -- 620 -- -- 620
Foreign currency
translation
adjustments........... -- -- -- -- (3,729) -- (3,729)
Net loss............... -- -- -- -- -- (2,009) (2,009)
Treasury stock
transactions.......... -- -- -- -- -- (23) (23)
Preferred stock
dividends............. -- -- -- -- -- (1,543) (1,543)
-------- ------- ------- -------- --------- ------- --------
BALANCE AT NOVEMBER 30,
1996 $ 19,452 $ (192) $ (303) $ (3,248) $ (7,271) $ 9,240 $ 17,678
Stock options
exercised............. 1,706 -- -- -- -- -- 1,706
Other.................. -- 52 -- -- -- -- 52
Decrease in guaranteed
ESOP obligation....... -- -- 303 -- -- -- 303
Minimum pension
liability adjustment.. -- -- -- 1,075 -- -- 1,075
Foreign currency
translation
adjustments........... -- -- -- -- (10,777) -- (10,777)
Net earnings........... -- -- -- -- -- 2,094 2,094
Treasury stock
transactions.......... -- -- -- -- -- (1) (1)
Preferred stock
dividends............. -- -- -- -- -- (1,512) (1,512)
-------- ------- ------- -------- --------- ------- --------
BALANCE AT NOVEMBER 30,
1997 $ 21,158 $ (140) $ (2,173) $ (18,048) $ 9,821 $ 10,618
======== ======= ======= ======== ========= ======= ========
</TABLE>

The accompanying notes are an integral part of the financial statements

F-6
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation--The Consolidated Financial Statements include
the accounts of Tokheim Corporation and its wholly- and majority-owned
subsidiaries (the "Company"). The Consolidated Financial Statements include
100% of the assets and liabilities of these subsidiaries, with the ownership
interest of minority participants recorded as "Minority interest" in the
Consolidated Balance Sheet. All significant intercompany accounts and
transactions have been eliminated in consolidation. In September 1996, the
Company acquired the petroleum dispenser business ("Sofitam") of Sofitam,
S.A., which is included in the Consolidated Financial Statements since that
date. (See Note 2).

Nature of Operations--The Company engages principally in the design,
manufacture and servicing of electronic and mechanical petroleum dispensing
marketing systems, including service station equipment, point-of-sale control
systems, and card- and cash-activated transaction systems for customers around
the world. The Company markets its products through subsidiaries located
throughout the world and has major facilities in the United States, France,
Canada, Germany, Scotland, and South Africa.

Translation of Foreign Currency--The financial position and results of
operations of the Company's foreign subsidiaries are measured using local
currency as the functional currency. Revenues and expenses of such
subsidiaries have been translated into U.S. dollars at average exchange rates
prevailing during the period. Assets and liabilities have been translated at
the rates of exchange at the balance sheet date. Translation gains and losses
are deferred as a separate component of shareholders' equity, unless there is
a sale or complete liquidation of the underlying foreign investments.
Aggregate foreign currency transaction gains and losses are included in
determining net earnings.

Risks and Uncertainties--The Company is not dependent on any single
customer, group of customers, market, geographic area or supplier of
materials, labor or services. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the
Consolidated Financial Statements and accompanying notes. The more significant
areas requiring the use of management's estimates relate to allowances for
obsolete inventory and uncollectible receivables, warranty claims,
environmental and product liabilities, postretirement, pension, and other
employee benefits, valuation allowances for deferred tax assets, future
obligations associated with the Company's restructuring, future cash flows
associated with assets, and useful lives for depreciation and amortization.
Actual results could differ from these estimates, making it reasonably
possible that a change in certain of these estimates could occur in the near
term. Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and trade
receivables. The Company places its cash with high credit quality financial
institutions. At times, cash in United States banks may exceed FDIC insurance
limits. Concentration of credit risk with respect to trade receivables is
minimal due to the Company's large customer base and ongoing control
procedures, which monitor the credit worthiness of customers.

Fair Value of Financial Instruments--The fair value of cash and cash
equivalents, trade receivables, and accounts payable approximates the carrying
value because of the short-term maturities of these financial instruments.

The interest rate on the Company's bank debt and short-term notes payable
fluctuates with current market rates. Consequently, the carrying value of the
bank debt and short-term notes payable approximates the market prices for the
same or similar issues in future periods. The estimated fair value of the
Company's senior subordinated notes was $98,316 at November 30, 1997, based on
a quoted market price of 109.24%.

F-7
<PAGE>

The fair value of the Company's convertible preferred stock, which is held
in the Trust of the Company's Retirement Savings Plan ("RSP"), approximates
the carrying value, as such stock is not traded in the open market, and the
value at conversion is equal to a fixed redemption value in cash or equivalent
amounts of common stock.

In 1997, the Company entered into a foreign currency option contract
covering six bi-annual interest payments. During 1997, after selling one
contract, the Company sold the benefit side of the remaining five payments and
recognized a gain of $0.5, but retained the downside exposure. The floor is
set at 5.30 French francs to a U.S. dollar. As of November 30, 1997, the
French franc was 5.91 to a U.S. dollar.

Inventory Valuation--Inventories are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.

Accounting Change--During 1996, the Company changed its method of valuing
domestic inventories from the last-in, first-out (LIFO) method to the first-
in, first-out (FIFO) method.

Property and Depreciation--Depreciation of plant and equipment is determined
generally on a straight-line basis over the estimated useful lives of the
assets. Upon retirement or sale of assets, the cost of the disposed assets and
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is credited or charged to income. These gains and
losses are accumulated and shown as a component of other expense, net in the
statement of earnings. Buildings are generally depreciated over 40 years.
Machinery and equipment are depreciated over periods ranging from five to ten
years. Expenditures for normal repairs and maintenance are charged to expense
as incurred. Expenditures for improving or rebuilding existing assets which
extend the useful life of the assets are capitalized. Costs incurred to
address the year 2000 are expensed when incurred except for expenditures for
hardware, software and other system-related equipment. The Company is
currently holding for sale facilities in Falaise, France, Jasper, Tennessee
and Atlanta, Georgia, as well as a 109-acre tract of unimproved land located
in Fort Wayne, Indiana. Such assets are recorded at the lower of cost or net
realizable value.

Software, and Research and Development Costs--Amortization of capitalized
software development costs is provided over the estimated economic useful life
of the software product on a straight-line basis, generally three years.
Unamortized software costs included in other non-current assets were $1,089
and $479 at November 30, 1997 and 1996, respectively. The amounts amortized
and charged to expense in 1997, 1996 and 1995 were $260, $163 and $109,
respectively.

All other product development expenditures are charged to research and
development expense in the period incurred. These expenses amounted to
$18,284, $15,909 and $12,746 in 1997, 1996 and 1995, respectively.

Goodwill and Other Intangible Assets--Goodwill is amortized on a straight-
line basis over 40 years. The Company will continue to review facts and
circumstances to determine whether the remaining estimated useful life of
goodwill warrants revision or whether the carrying amount may not be
recoverable, using profitability projections to assess whether future
operating income on a non-discounted basis is likely to exceed the
amortization over the remaining life of the goodwill. The amounts amortized
and charged to expense in 1997 and 1996 were approximately $1,490 and $420,
respectively. Accumulated amortization of goodwill at November 30, 1997 and
1996 was $1,910 and $420, respectively.

Other non-current assets and deferred charges consist primarily of debt
issuance costs. These costs are amortized over the terms of the related debt
agreements on a straight-line basis with periods ranging from six to ten
years. Amortization of these deferred charges included in interest expense at
November 30, 1997, 1996 and 1995 was $1,623, $401, and $504, respectively.
During 1997, the Company charged $496 of deferred bond issuance costs to
extraordinary loss on debt extinguishment. This amount represents the write-
off of a proportionate share of the original unamortized deferred issuance
cost in connection with the issuance of the senior subordinated notes for the
acquisition of Sofitam. During 1996, the Company wrote-off approximately $233
of deferred debt issuance costs

F-8
<PAGE>

and capitalized approximately $11,506 of costs incurred in connection with the
refinancing of the Company's preexisting debt and issuance of senior
subordinated notes. Accumulated amortization of other non-current assets and
deferred charges at November 30, 1997 and 1996 was $2,520 and $401,
respectively.

Advertising and Promotion--All costs associated with advertising and product
promotion are expensed in the period incurred. These expenses amounted to
$2,687, $2,268 and $1,579 in 1997, 1996 and 1995, respectively.

Income Taxes--The Company accounts for income taxes under the liability
method in accordance with Statement of Financial Accounting Standards (SFAS)
No. 109 "Accounting for Income Taxes." The provision for income taxes includes
federal, foreign, state and local income taxes currently payable as well as
deferred taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled. If it is more
likely than not that some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized. No additional U.S. income taxes
or foreign withholding taxes have been provided on accumulated earnings of
foreign subsidiaries approximating $21,700 which are expected to be reinvested
indefinitely. Additional income and withholding taxes are provided, however,
on planned repatriations of foreign earnings. (See Note 13).

New Accounting Pronouncements--SFAS No. 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," was adopted
in 1997. This statement requires that long-lived assets and certain
identifiable intangible assets that are to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be fully recoverable. This
statement did not have an impact on the Company's consolidated financial
statements as it did not reflect a change in the Company's practices with
respect to reviewing assets for impairment and accounting for assets to be
disposed of.

The Company adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," in 1997. This statement encourages,
but does not require, companies to recognize compensation expense for grants
of stock, stock options, and other equity instruments based on a fair value
method of accounting. The Company has elected not to adopt the new expense
recognition provisions of SFAS No. 123 and will continue to apply the existing
accounting provisions of Accounting Principles Board Opinion (APBO) No. 25.
APBO No. 25 does not require recognition of compensation expense for the
stock-based compensation arrangements provided by the Company where the
exercise price is equal to the market price at the date of grant. The Company
has provided the required pro forma disclosure of the compensation expense
determined under the fair value provisions of SFAS No. 123 in Note 9, "Stock
Option Plans."

SFAS No. 128, "Earnings per Share," is effective for the first quarter of
1998. This statement establishes standards for computing and presenting
earnings per share ("EPS"). SFAS No. 128 simplifies the standards for
computing EPS previously codified in APBO No. 15, "Earnings per Share," and
makes them comparable to international EPS standards. This statement requires
the replacement of primary EPS with basic EPS and a dual presentation of basic
and diluted EPS on the face of the statement of earnings for all entities with
a complex capital structure. Restatement of prior-period EPS data presented is
required. The Company does not expect basic or diluted EPS as calculated under
SFAS No. 128 to differ significantly from primary or fully diluted EPS as
calculated pursuant to APBO No. 15. See Note 11 for additional information on
EPS, including a pro forma calculation of weighted average shares outstanding
and EPS calculated under SFAS No. 128 for the year ended November 30, 1997.

SFAS No. 129, "Disclosure of Information about Capital Structure," is
effective for the year ending November 30, 1998. SFAS No. 131 "Disclosures
about Segments of an Enterprise and Related Information," are effective for
the year ending November 30, 1999. In the opinion of management, these
statements will not have a material impact on the Company's financial
position, results of operations or cash flows. SFAS No. 130 "Reporting
Comprehensive Income," is effective for the year ending November 30, 1999. Due
to the significance of the foreign currency translation adjustments recorded
in 1997 and 1996, comprehensive income would have been significantly lower
than net income and resulted in a loss for both years.

F-9
<PAGE>

American Institute of Certified Public Accountants (AICPA) Statements of
Position (SOP) No. 96-1 "Environmental Remediation Liabilities," and No. 97-2
"Software Revenue Recognition," are effective for the year ending November 30,
1998. SOP No. 96-1 provides guidance for recognizing, measuring and disclosing
environmental remediation liabilities. SOP 97-2 supersedes SOP 91-1 and
provides more specific guidance on revenue recognition related to software
products. In the opinion of the Company, the adoption of these statements will
not have a material impact on the Company's financial position, results of
operations or cash flows.

Product Warranty Costs--Anticipated costs related to product warranty are
expensed in the period of sales.

Cash Flows--For purposes of the Statement of Cash Flows, the Company
considers all highly liquid investments purchased with an initial maturity of
90 days or less to be cash equivalents.

Supplemental disclosures of cash flow information:

<TABLE>
<CAPTION>
1997 1996 1995
------- -------- ------
<S> <C> <C> <C>
Cash paid during the year for interest............... $15,204 $ 4,918 $3,060
Cash paid during the year for income taxes........... 921 1,013 976
Noncash transactions primarily related to the
issuance of treasury stock in settlement of RSP
distributions....................................... 1 23 976
Noncash adjustments to certain assets and liabilities
in connection with the settlement of the corporate
reorganization...................................... -- -- 383
Liabilities assumed in the acquisition............... -- 113,776 --
Accrued merger and acquisition costs................. 9,799
</TABLE>

Reclassifications--Certain prior year amounts in these financial statements
have been reclassified to conform with the current year presentation.

2. ACQUISITION

In September 1996, the Company acquired Sofitam for $107.4 million less
certain adjustments. Sofitam is the leading designer, manufacturer and
servicer of petroleum dispensers in France and northern Africa, and has a
strong market position in southern Europe. The transaction was financed by the
sale of $100 million in aggregate principal amount of 11 1/2% senior
subordinated notes due 2006 (the "Notes") and by the Company's bank credit
facility (the "Bank Credit Facility").

During 1997, the Company adjusted goodwill and related acquisition accrued
liabilities originally recorded in connection with the acquisition of Sofitam.
These adjustments were recorded in connection with a more precise allocation
of the Sofitam purchase price performed during 1997.

The table below summarizes the acquisition liabilities as they relate to the
consolidation plan for Sofitam. The amounts do not include costs associated
with consolidation of previously-existing Tokheim subsidiaries, which will be
expensed as incurred, nor do they reflect costs expected to provide benefits
in future periods. The Company expects the consolidation plan to be completed
by 1999. (See Note 3 for additional information regarding the Company's
consolidation plan.)

<TABLE>
<CAPTION>
NOVEMBER 30, 1996 ADJUSTMENTS
ORIGINAL TO CHARGED TO
ACQUISITION ACQUISITION ACQUISITION NOVEMBER 30, 1997
ITEM ACCRUAL ACCRUAL ACCRUAL REMAINING BALANCE
- ---- ----------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Employee termination
benefits (A)........... $6,651 $(186) $2,341 $4,124
Asset write-off and
disposal cost (B)...... 2,108 183 59 2,232
Other plant closing cost
(C).................... 1,040 700 799 941
------ ----- ------ ------
$9,799 $ 697 $3,199 $7,297
====== ===== ====== ======
</TABLE>
- --------
(A) Approximately 300 employees
(B) Up to 10 locations
(C) Leases and other contract terminations

F-10
<PAGE>

In 1997 and 1996, the Company charged operations $1,736 and $1,043,
respectively, for restructuring expenses associated with the Company's plan
for merging the operations of Tokheim and Sofitam. These costs were included
in "Merger and acquisition costs and other unusual items" in the Consolidated
Statement of Earnings. The Company estimates future non-accruable
restructuring charges related to the consolidation plan to be approximately
$125 in 1998 and $1,515 in 1999. In addition, normal operating charges
associated with the plan will be expensed as incurred.

The following unaudited pro forma information summarizes consolidated
results of operations of Tokheim and Sofitam as if the acquisition had
occurred at the beginning of 1996 and 1995. These unaudited pro forma results
have been prepared for comparative purposes only and include certain
adjustments, such as additional amortization expense as a result of goodwill
and other intangible assets, and increased interest expense on acquisition
debt. They do not purport to be indicative of the results of operation which
actually would have resulted had the combination been in effect on December 1,
1994 or 1995, or the future results of operations of the consolidated
entities. The Company is in the process of closing several manufacturing,
sales, service and administrative operations in Europe, consolidating these
operations into its administrative center in Tremblay, France and into its
manufacturing facility in Grentheville, France. Anticipated efficiencies from
the merger of Tokheim and Sofitam are not fully determinable and therefore
have been excluded from the amounts included in the pro forma summary
presented below.

<TABLE>
<CAPTION>
UNAUDITED
YEARS ENDED
NOVEMBER 30,
------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues.................................................... $406,173 $399,023
Merger and acquisition costs and other unusual items........ 6,459 4,294
Net loss.................................................... (5,242) (5,208)
Net loss per common share................................... (0.85) (0.86)
</TABLE>

3. MERGER AND ACQUISITION COSTS AND OTHER UNUSUAL ITEMS

For the years ended November 30, 1997, 1996 and 1995, the Company identified
expenses brought about by the acquisition of Sofitam, costs associated with
the restructuring of the Company, pending and settled litigation, and warranty
policy adjustments above and beyond normal recurring amounts. These costs are
shown in aggregate as a single operating line item, "Merger and acquisition
costs and other unusual items," on the Consolidated Statement of Earnings.

Merger and acquisition costs/Restructuring--During 1997 and 1996 the Company
implemented several corporate realignment initiatives, including work force
reductions and reorganization of its domestic and international operations,
related to the consolidation of Sofitam. In addition, during 1995, the Company
reorganized its European operations to improve manufacturing and service
efficiencies and to reduce cost. Amounts charged to operations for the matters
described above for the years ended November 30, 1997, 1996 and 1995
approximated $1,736, $2,035 and $842, respectively.

Litigation/Other--During 1997, the Company settled a claim brought against
it directly associated with the purchase of Sofitam related to a personnel
matter that resulted in an adverse outcome against the Company. The Company
also favorably settled a claim that involved a former supplier, which resulted
in the reversal of an accrued liability which had been charged to "Merger and
acquisition costs and other unusual items" in 1996. In addition, during 1997
the Company recorded a charge for an impaired asset related to license
technology (see also Note 18). In 1996 the Company settled claims related to a
prior distributor, and a foreign distributor to extinguish an exclusive sales
representative agreement. The Company also accrued and charged to operations
for the potential adverse outcome in a Pension Benefit Guarantee Corporation
inquiry with respect to a terminated benefit plan payout dated back to 1991.
In 1995 the Company settled an environmental related matter in the amount of
$300. In addition, the Company incurred charges in 1996 and 1995 related to
customer satisfaction programs relating to dispensers sold in prior years.
Amounts charged to operations relating to litigation/other for 1997, 1996, and
1995, were $1,757, $4,424, and $1,838, respectively.

F-11
<PAGE>

The above costs, although not uncommon to the Company's industry, are
considered by the Company to be attributable to the purchase and consolidation
of Sofitam or otherwise significant enough in size and nature to warrant
separate disclosure.

4. ACCRUED EXPENSES

Accrued expenses consisted of the following at November 30, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Sofitam integration............................................ $ 7,297 $ 9,799
Compensated absences........................................... 7,087 6,833
Salaries, wages, and commissions............................... 6,076 9,240
Retirement benefits and profit sharing......................... 5,921 5,930
Interest....................................................... 3,755 3,294
Warranty....................................................... 3,742 5,193
Legal and professional......................................... 3,102 2,393
Employee payroll taxes......................................... 2,708 3,091
Deferred revenue............................................... 2,453 1,989
Taxes (sales, VAT, and other).................................. 2,434 2,924
Other.......................................................... 6,615 4,203
------- -------
$51,190 $54,889
======= =======
</TABLE>

5. NOTES PAYABLE TO BANKS

On September 3, 1996 the parent Company (the "Parent") and certain of its
French subsidiaries (the "French Borrowing Subsidiaries") entered into the
six-year $80,000 Bank Credit Facility. The facility consists of a working
capital/letter of credit facility in the amount of $67,768 (the "Credit
Agreement") and an Employee Stock Ownership Plan assignment facility in the
amount of $12,232 (the "ESOP Credit Agreement").

Notes payable to banks represent short-term borrowings under domestic and
foreign lines of credit. At November 30, 1997, the aggregate amount
outstanding under these lines was $24,188, of this amount, $24,090 has been
classified as long-term debt because the Company has the ability (under the
terms of the facility) and the intent to finance these obligations beyond one
year. Domestic and foreign lines of credit totaled approximately $85,371, of
which $61,182 was unused at November 30, 1997. The weighted average annual
interest rate for these lines of credit was 7.6% for 1997. The range of
domestic and foreign rates at November 30, 1997 was 6.9% to 9.0% and 4.8% to
7.5%, respectively.

At November 30, 1996, the aggregate amount outstanding under these lines of
credit was $23,300, of which $16,144 has been classified as long-term debt
(for reasons described above). Domestic and foreign credit lines totaled
approximately $75,311, of which $52,011 was unused at November 30, 1996. The
weighted average annual interest rate for these lines of credit was 8.8% for
1996. The range of domestic and foreign rates at November 30, 1996 was 8.2% to
10.0% and 4.4% to 6.7%, respectively.

At November 30, 1995, the aggregate amount outstanding under revolving
credit agreements was $19,064, of which $16,700 was classified as long-term
debt (for reasons described above). The weighted average annual interest rate
was 8.6% for fiscal 1995. The range of domestic and foreign rates at November
30, 1995 was 7.1% to 9.8%.

The Credit Agreement can be drawn down by the Parent and/or the French
Borrowing Subsidiaries if they are in compliance with a borrowing base
limitation. The borrowing base is calculated on specified percentages of
eligible

F-12
<PAGE>

receivables and inventories and is determined independently for the Parent and
the French Borrowing Subsidiaries. The unused portion of this commitment is
subject to a commitment fee ranging from 0.375% to 0.5%, depending on the
aggregate leverage ratio of the Parent and the French Borrowing Subsidiaries.
The Credit Agreement permits borrowings in U.S. dollars, French francs,
British pounds sterling, German deutsche marks and other currencies which are
freely available and convertible into U.S. dollars. The Credit Agreement
expires on September 3, 2002.

The ESOP Credit Agreement was used to assign existing indebtedness of the
Parent and the Tokheim Employee Stock Ownership Plan (the "ESOP"). The unused
portion of the ESOP Credit Agreement cannot be reclaimed as part of the Credit
Agreement, nor can any amounts be re-borrowed by the Parent or the French
Borrowing Subsidiaries. Principal amounts outstanding at November 30, 1997 and
1996 were $9,429 and $11,692, respectively, and are amortized over the
remaining life of the pre-existing agreement. See Note 7, captioned "Term Debt
and Guaranteed Employees' Stock Ownership Plan (RSP) Obligation".

Indebtedness of the Parent and domestic borrowing subsidiaries under the
Bank Credit Facility is collateralized by (i) a first perfected security
interest in and lien on certain of the real and personal assets of the Parent
(including claims against Subsidiaries to which the Parent has made an
intercompany loan) and each of the Parent's direct and indirect wholly-owned
United States Subsidiaries and, (ii) a pledge of 100% of the stock of the
Parent's direct and indirect wholly-owned United States Subsidiaries and,
(iii) a pledge of 65% of the stock of the French holding Company and (iv) a
guarantee by all of the Parent's direct and indirect wholly-owned United
States Subsidiaries. Indebtedness of the French Borrowing Subsidiaries under
the Bank Credit Facility is collateralized by (i) a first perfected security
interest in certain of the real and personal assets of the French Borrowing
Subsidiaries, the Parent and all of the Parent's direct and indirect wholly-
owned United States Subsidiaries and, (ii) a pledge of 100% of the stock of
the French Borrowing Subsidiaries, and (iii) a guarantee by the Parent, the
French holding Company and all of the Parent's direct and indirect wholly-
owned United States Subsidiaries. Any lien on the real property in France will
be limited to the fair market value of such property.

Indebtedness under the Bank Credit Facility will bear interest based (at the
applicable borrower's option) upon (i) the Base Rate in the case of U.S.
dollar denominated loans (defined as the higher of the applicable prime rate
and the federal funds rate plus 0.5%) plus an applicable margin based upon the
Company's leverage ratio (with a range of 0.5% to 1.75%) or (ii) the
applicable Eurocurrency rate for one, two, three, or six months, plus an
applicable margin based upon the Company's leverage ratio (with a range of
1.50% to 2.75%). The Bank Credit Facility contains customary provisions
relating to yield protection, availability and capital adequacy. In the event
of an occurrence and the continuation of a default, the Agent or the Bank, may
increase the interest rate payable to the otherwise applicable rate plus 2%.

The Bank Credit Facility requires the Company to meet certain consolidated
financial tests, including minimum leverage of consolidated net worth, minimum
level of consolidated EBITDA as defined, minimum consolidated interest
coverage, maximum consolidated leverage ratio and minimum consolidated fixed
charge coverage ratio. The Bank Credit Facility also contains certain
covenants common to such agreements, which among other things, prohibit the
payments of dividends, limits the incurrence of additional indebtedness and
guarantees, transactions with affiliates, significant asset sales, investments
and acquisitions, mergers and consolidations, prepayments and amendments to
other indebtedness, liens and encumbrances and other matters customarily
restricted in such agreements.

The Bank Credit Facility contains events of default, including payment
defaults, breach of representation and warranties, covenant defaults, cross
default to certain other indebtedness, certain events of bankruptcy and
insolvency, ERISA defaults, a change in control default, judgment defaults and
failure of any guaranty or security agreement supporting the Bank Credit
Facility to be in full force and effect.

Based on the Company's monthly borrowing base calculations, it had $33.1
million available under the Bank Credit Facility as of November 30, 1997. An
additional $9.0 million is available to the Company under the facility if it
meets the borrowing base requirements. Subsequent to year end the Company
borrowed an additional $12.0 million to fund the acquisition of Management
Solutions Inc.

F-13
<PAGE>

The Company's French subsidiaries participate, as needed, in a customary
practice of selling traits (selling accounts receivable without recourse) to
financial institutions. Under this arrangement, the subsidiaries present
traits to financial institutions and receive 95% of the face value in the form
of short-term loans. These loans bear interest at a variable rate, which was
3.8% at November 30, 1997. When the subsidiaries receive payment from the
customers, they remit 95% of the amount received back to the financial
institutions plus the accrued interest. The amount outstanding at November 30,
1997 was approximately $3.6 million. The Company did not sell traits prior to
1997.

6. SENIOR SUBORDINATED NOTES

In August 1996 the Company issued Notes with an aggregate principal amount
of $100,000, maturing on August 1, 2006, to finance the acquisition of
Sofitam. Interest on the Notes accrues at the rate of 11 1/2% per annum and is
payable semi-annually in cash on each February 1 and August 1 to the
registered holders at the close of business on January 15 and July 15
immediately preceding the applicable interest payment date.

During the fourth quarter of 1997, the Company used proceeds from its Bank
Credit Facility to purchase $10,000 face value of Notes. The Company purchased
these Notes on the open market at an aggregate price of $11,390 plus accrued
interest and recorded an extraordinary loss of $1,886. This amount includes
$1,390 of premiums paid to repurchase the Notes and $496 representing the
write-off of a proportionate share of the original unamortized deferred
issuance costs.

The Notes are general unsecured obligations of the Company, subordinate in
right of payment to all existing and future senior debt of the Company,
including the Company's obligations under the Bank Credit Facility, and to all
indebtedness and other obligations of the Company's subsidiaries. Evidence of
default under the Bank Credit Agreement could prevent payment of principal and
interest on the Notes.

The Notes are redeemable, at the Company's option, in whole at any time or
in part from time to time, on and after August 1, 2001, upon not less than 30
nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof), if redeemed during the
twelve-month period commencing on August 1 of the year set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of
redemption.

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001........................................................... 105.750%
2002........................................................... 103.833%
2003........................................................... 101.917%
2004 and thereafter............................................ 100.000%
</TABLE>

On or prior to August 1, 1999, the Company may, at its option, use the net
cash proceeds of one or more public equity offerings to redeem up to an
aggregate of 35% of the principal amount of the Notes originally issued at the
following redemption prices (expressed as percentages of the principal amount
thereof), if redeemed during the twelve-month period ending on August 1 of the
year set forth below, plus, in each case, accrued and unpaid interest thereon,
if any, to the date of redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1997........................................................... 111.500%
1998........................................................... 109.857%
1999........................................................... 108.214%
</TABLE>

To effect the foregoing redemption with the proceeds of any public equity
offering, the Company must make such redemption not more than 120 days after
the consummation of any such public equity offering.

The indenture under which the Notes are issued provides that, upon the
occurrence of a "Change of Control," each Note holder will have the right to
require that the Company purchase all or a portion of the holder's Notes at a
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest to the date of purchase.

F-14
<PAGE>

The indenture also contains restrictions common to such agreements,
including among others: limitation on incurrence of additional indebtedness;
limitation on restricted payments; limitation on asset sales; limitation on
dividend and other payment restrictions affecting subsidiaries; limitation on
preferred stock of subsidiaries; limitation on liens, merger, consolidation
and sale of assets; and limitations on transactions with affiliates.

7. TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN (RSP) OBLIGATION

Term debt at November 30, 1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
0.0% Belgian government note, maturing $16, due in quarterly
installments switching to $19, due in annual installments
through 1999 (a).............................................. $ 93 $ 129
3.5% German bonds, maturing $40, due in semiannual installments
through 1998 (a).............................................. 80 184
8.1% notes payable, maturing $8 to $18, due in semiannual
installments through
2001 (a)...................................................... 160 85
11.5% notes payable, maturing $41 to $73, due in quarterly
installments through
1998 (a)...................................................... 405 346
15.0% notes payable, maturing $15 to $19, due in quarterly
installments through 2002 (a)................................. 372 879
14.3% notes payable, maturing $4 to $7, due in monthly
installments through
2000 (a)...................................................... 149 223
20.25% note payable, maturing $4 to $6, due in monthly
installments through 1999 (a)................................. 94 153
6.0% to 20.25% capital lease obligations, maturing $7 to $84,
in annual installments through 2000 (a)....................... 2,564 3,300
9.15% capital lease obligation, maturing $271 to $475, in
annual installments through 2004 (a).......................... 2,559 3,230
Credit Agreement, variable rate, due 2002, rates ranging from
5.0% to 7.2% at November 30, 1997 (b)......................... 24,090 16,144
Other.......................................................... 312 296
5.0% to 9.6% notes payable, maturing $561 to $992, due in
annual installments through 1997 (a).......................... -- 1,553
11.0% notes payable, maturing $1 to $27, due in quarterly
installments through
2006 (a)...................................................... -- 327
------- -------
30,878 26,849
Less: Current maturities....................................... 2,391 4,447
------- -------
$28,487 $22,402
======= =======
</TABLE>

Guaranteed Employees' Stock Ownership Plan (RSP) obligation at November 30,
1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>
1997 1996
------ -------
<S> <C> <C>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate, maturing $593 to $760 quarterly through 2001,
rate of 6.27% at November 30, 1997 (b)....................... $9,429 $11,692
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate maturing $303 annually through 1997, rate of
8.075% at November 30, 1996 (b).............................. -- 303
------ -------
$9,429 $11,995
====== =======
</TABLE>
- --------
(a) Aggregate cost of plant and equipment pledged as collateral under revenue
bonds and lease obligations is $11,133.
(b) Per the Bank Credit Facility as described in Note 5, the term obligation
matures on September 3, 2002.

F-15
<PAGE>

Aggregate scheduled maturities of the above term debt, excluding Guaranteed
ESOP Obligation which is funded through preferred stock dividends, during the
ensuing five years approximate $2,391, $1,663, $742, $535, and $543
respectively.

8. OPERATING LEASES

The Company leases certain manufacturing and office equipment, vehicles, and
office and warehousing space under operating leases. These leases generally
expire in periods ranging from one to eight years.

During 1997, the Company entered into a thirty-six month operating lease
agreement for computer hardware and software to replace existing financial and
manufacturing applications for one of its domestic subsidiaries. The lease has
current monthly lease payments of $27 that are expected to increase to $61 per
month at completion of the project. In 1996 the Company executed various
operating leases for manufacturing equipment effective for a term of eight
years and monthly rentals ranging from $3 to $72.

Amounts charged to expense for operating leases in 1997, 1996 and 1995 were
$4,853, $2,835, and $1,986, respectively. Future minimum rental payments under
noncancelable operating leases during the ensuing five years aggregate $3,352,
$3,208, $2,906, $1,551, $1,408 and $22 thereafter.

9. STOCK OPTION PLANS

The Company has three separate Stock Option Plans, as outlined below:

1992 Stock Incentive Plan (SIP)

The Plan contains both incentive stock options (ISOs) and non-qualified
stock options (NSOs). The price of each share under this Plan for an ISO or
NSO shall not be less than the fair market value of Tokheim Corporation Common
Stock on the date the option is granted.

Options granted under the SIP become exercisable at the rate of
approximately 25% of the total options granted per year, beginning one year
after the grant date. All options expire within ten years from the date on
which they were granted.

In addition, the SIP provides for the granting of Stock Appreciation Rights
(SARs) and Restricted Stock Awards (RSAs). At November 30, 1997, there were no
SARs and 42,500 RSAs granted.

1982 Incentive Stock Option Plan (ISOP) and 1982 Unqualified Stock Option
Plan (USOP)

Effective January 21, 1992, no additional shares could be granted under
these plans. All options expire within ten years from the date on which they
were granted.

The price of each share under the ISOP was not less than fair market value
of Tokheim Corporation Common Stock on the date the option was granted, and
under the USOP was not less than 85% of the fair market value of the stock on
the date the option was granted.

Options granted under the respective plans during 1997, 1996, and 1995, are
as follows:

<TABLE>
<CAPTION>
1992 STOCK INCENTIVE PLAN
---------------------------
YEAR OF GRANT ISO NSO RSA
------------- ---------- ----------------
<S> <C> <C> <C>
1997........................................ 468,000 -- 42,500
1996........................................ 45,000 -- --
1995........................................ 35,000 -- --
</TABLE>

F-16
<PAGE>

The following table sets forth the status of all outstanding options at
November 30, 1997:

<TABLE>
<CAPTION>
EXERCISABLE IN TOTAL OPTIONS
OPTION PRICE OPTIONS THE NEXT ONE AUTHORIZED AND
PER SHARE EXERCISABLE TO FOUR YEARS OUTSTANDING
------------ ----------- -------------- --------------
<S> <C> <C> <C>
$20.0000....................... 16,575 -- 16,575
$18.1250....................... -- 20,000 20,000
$12.2500....................... 500 -- 500
$11.9375....................... 6,750 2,250 9,000
$ 9.3750....................... 6,500 -- 6,500
$ 9.0000....................... 500 1,500 2,000
$ 8.8800....................... 57,820 -- 57,820
$ 8.6880....................... -- 380,000 380,000
$ 8.5000....................... 7,500 7,500 15,000
$ 7.9380....................... -- 28,000 28,000
$ 7.8750....................... 15,000 -- 15,000
$ 7.1250....................... 8,250 32,250 40,500
$ 6.8750....................... 15,000 -- 15,000
$ 6.8125....................... 20,587 20,587
------- ------- -------
154,982 471,500 626,482
======= ======= =======
</TABLE>

335,388 and 310,140 options were exercisable as of November 30, 1996 and 1995
respectively.

The weighted average exercise price was $9.10 and the weighted average
remaining contractual life was 7.15 years for all outstanding options as of
November 30, 1997.

Transactions in stock options under these plans are summarized as follows:

<TABLE>
<CAPTION>
SHARES
UNDER
OPTION PRICE RANGE
-------- -------------
<S> <C> <C> <C>
Outstanding, November 30, 1994................... 542,528 $6.81- $20.00
Granted.......................................... 35,000 $8.50
Exercised........................................ --
Canceled or expired.............................. (95,187) $6.81- $20.00
--------
Outstanding, November 30, 1995................... 482,341 $6.81- $20.00
Granted.......................................... 45,000 $7.13- $ 9.00
Exercised........................................ (5,000) $8.75
Canceled or expired.............................. (70,087) $6.81- $20.00
--------
Outstanding, November 30, 1996................... 452,254 $6.81- $20.00
Granted.......................................... 468,000 $7.94- $ 8.69
Exercised........................................ (235,547) $6.81- $ 9.38
Canceled or expired.............................. (58,225) $6.81- $20.00
--------
Outstanding, November 30, 1997................... 626,482 $6.81- $20.00
========
<CAPTION>
SHARES
--------
<S> <C> <C> <C>
Reserved for the granting of new options:
November 30, 1995................................ 95,462
November 30, 1996................................ 98,774
November 30, 1997................................ 133,274
</TABLE>

F-17
<PAGE>

Effective December 1, 1996, the Company adopted the disclosure-only
provisions of SFAS No. 123. Accordingly, no compensation cost has been
recognized for the existing stock option plans under the provisions of this
statement. The Company continues to account for stock options at their
intrinsic value under the provisions of APBO No. 25, which is allowed under
SFAS No. 123. Under APBO No. 25, because the option terms are fixed and the
exercise price of employee stock options equals the market price on the date
of grant, no compensation expense is recorded. Had compensation cost for the
Company's stock option plan been determined based on the fair value at the
grant date, consistent with the provisions of SFAS No. 123, the Company's net
earnings would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE
DATA)
1997 1996
----------------- -----------------
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Earnings (loss) before extraordinary
loss and estimated fair value of the
year's option grants................... $ 3,980 $ 3,980 $(2,009) $(2,009)
Estimated fair value of the year's
option grants.......................... -- (308) -- (30)
------- ------- ------- -------
Earnings (loss) before extraordinary
loss................................... 3,980 3,672 (2,009) (2,039)
Extraordinary loss on debt
extinguishment......................... (1,886) (1,886) -- --
------- ------- ------- -------
Net earnings (loss)..................... $ 2,094 $ 1,786 $(2,009) $(2,039)
======= ======= ======= =======
Preferred stock dividends ($1.94 per
share)................................. $(1,512) $(1,512) $(1,543) $(1,543)
Earnings (loss) applicable to common
stock.................................. $ 582 $ 274 $(3,552) $(3,582)
Earnings (loss) per common share:
Primary
Before extraordinary loss........... $ 0.31 $ 0.26 $ (0.45) $ (0.45)
Extraordinary loss on debt
extinguishment..................... (0.23) (0.23) -- --
------- ------- ------- -------
Net earnings (loss)................. $ 0.07 $ 0.03 $ (0.45) $ (0.45)
======= ======= ======= =======
Weighted average number of shares
outstanding........................ 8,083 8,083 7,981 7,981
======= ======= ======= =======
Fully diluted
Before extraordinary loss........... $ 0.27 $ 0.24 $ (0.45) $ (0.45)
Extraordinary loss on debt
extinguishment..................... (0.21) (0.21) -- --
------- ------- ------- -------
Net earnings (loss)................. $ 0.06 $ 0.03 $ (0.45) $ (0.45)
======= ======= ======= =======
Weighed average number of shares
outstanding........................ 9,067 9,067 7,981 7,981
======= ======= ======= =======
</TABLE>

For purposes of pro forma disclosures, the estimated fair value of the options
(stock-based compensation) is amortized to expense on a straight-line basis
over the options' vesting period. The pro forma information above only
includes the effects of 1997 and 1996 grants. As such, the impacts are not
necessarily indicative of the effects on reported net income of future years.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996:

<TABLE>
<CAPTION>
ASSUMPTIONS 1997 1996
----------- ------- -------
<S> <C> <C>
Dividend yield.......................................... -- --
Risk free interest rate................................. 6.38% 5.29%
Expected life of options................................ 5 years 5 years
Expected volatility..................................... 38.76% 39.91%
Estimated fair value of options granted per share....... $8.61 $7.21
</TABLE>

F-18
<PAGE>

10. COMMON AND PREFERRED STOCK

Changes in common stock and common treasury stock are shown below:

<TABLE>
<CAPTION>
COMMON
COMMON STOCK TREASURY STOCK
----------------- ---------------
SHARES AMOUNT SHARES AMOUNT
--------- ------- ------- ------
<S> <C> <C> <C> <C>
Balance, November 30, 1994............... 7,949,000 $19,410 106,000 $1,887
Redemption of preferred stock............ -- -- (59,000) (1,057)
Employee termination benefits............ -- -- (24,000) (427)
RSP Diversification...................... -- -- (8,000) (139)
Other.................................... -- (1) (2,000) (33)
--------- ------- ------- ------
Balance, November 30, 1995............... 7,949,000 19,409 13,000 231
Stock options exercised.................. 5,000 43 -- --
Employee termination benefits............ -- -- (1,000) (11)
Other.................................... -- -- (1,000) (28)
--------- ------- ------- ------
Balance, November 30, 1996............... 7,954,000 19,452 11,000 192
Stock options exercised.................. 278,000 1,706 -- --
Shares purchased......................... -- -- 8,000 105
Other.................................... -- -- (10,000) (157)
--------- ------- ------- ------
Balance, November 30, 1997............... 8,232,000 $21,158 9,000 $ 140
========= ======= ======= ======
</TABLE>

Changes in redeemable convertible preferred stock and related treasury stock
are shown below:

<TABLE>
<CAPTION>
PREFERRED
PREFERRED STOCK TREASURY STOCK
--------------- ---------------
SHARES AMOUNT SHARES AMOUNT
------- ------- ------- ------
<S> <C> <C> <C> <C>
Balance, November 30, 1994.................. 960,000 $24,000 130,000 $3,262
Shares redeemed............................. -- -- 29,000 720
RSP Contributions........................... -- -- (8,000) (198)
------- ------- ------- ------
Balance, November 30, 1995.................. 960,000 24,000 151,000 3,784
Shares redeemed............................. -- -- 31,000 771
RSP Contributions........................... -- -- (15,000) (384)
------- ------- ------- ------
Balance, November 30, 1996.................. 960,000 24,000 167,000 4,171
Shares redeemed............................. -- -- 48,000 1,197
RSP Contributions........................... -- -- (26,000) (650)
------- ------- ------- ------
Balance, November 30, 1997.................. 960,000 $24,000 189,000 $4,718
======= ======= ======= ======
</TABLE>

On July 10, 1989, the Company sold 960,000 shares of redeemable convertible
preferred stock (the "Preferred Stock") to the Trust of the Company's RSP at
the liquidation value of $25 per share or $24,000. The Preferred Stock has a
dividend rate of 7.75%. The Trustees who hold the Preferred Stock may elect to
convert each preferred share to one common share in the event of redemption by
Tokheim, certain consolidations or mergers of Tokheim, or a redemption by the
Trustees which is necessary to provide for distributions under the RSP. A
participant may elect to receive a distribution from the RSP in cash or common
stock. If redeemed by the Trustees, the Company is responsible for purchasing
the Preferred Stock at the $25 floor value. The Company may elect to pay the
redemption price in cash or an equivalent amount of common stock. Due to the
redemption characteristics of the stock, the aggregate amount of future
redemptions for the next five years cannot be determined. See Note 16 for
further discussions on the Company's Preferred Stock.

11. EARNINGS PER SHARE

Primary earnings (loss) per share is based on the weighted average number of
shares outstanding during each year and the assumed exercise of dilutive
employees' stock options, less the number of treasury shares assumed to be
purchased from the proceeds using the average market price of the Company's
common stock.

F-19
<PAGE>

In addition to the primary earnings per share computation, the fully diluted
earnings per share computation assumes conversion of the Company's Preferred
Stock into common stock and further adjusts net earnings for the additional
ESOP compensation expense resulting from the absence of the Preferred Stock
dividends available to fund the ESOP.

The following table presents the share information necessary to calculate
earnings (loss) per share for fiscal years ended November 30, 1997, 1996, and
1995:

<TABLE>
<CAPTION>
PRIMARY
-----------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Shares outstanding:
Weighted average outstanding................................ 8,044 7,939 7,893
Share equivalents........................................... 39 42 18
----- ----- -----
Adjusted outstanding........................................ 8,083 7,981 7,911
===== ===== =====
<CAPTION>
FULLY DILUTED
-----------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Shares outstanding:
Weighted average outstanding................................ 8,044 7,939 7,893
Share equivalents........................................... 77 42 18
Weighted conversion of preferred stock...................... 946 -- 1,589
----- ----- -----
Adjusted outstanding........................................ 9,067 7,981 9,500
===== ===== =====
</TABLE>

The AICPA issued SOP 93-6, Employers' Accounting for Employee Stock
Ownership Plans, in November 1993. As allowed by that statement, the Company
has elected to continue its current accounting practices for the ESOP which
are based on SOP 76-3 and subject to consensuses of the Emerging Issues Task
Force of the Financial Accounting Standards Board. Dividends paid on Preferred
Stock are deducted for EPS computations and Preferred Stock that has not been
allocated to participants' accounts is assumed to be outstanding based on the
stated conversion ratio of one-for-one. Preferred Stock that has been
allocated to participants' accounts is included in the computation of EPS
based on the period-end closing price or the weighted average market value of
the Company's common stock relative to the $25 liquidation value of the
Preferred Stock. The number of unallocated shares of Preferred Stock at
November 30, 1997 and 1995 were 295,750 and 454,601, respectively. The number
of allocated shares of Preferred Stock at November 30, 1997 and 1995 were
488,947 and 365,843, respectively. The allocated shares of Preferred Stock
were converted using $18.813 at November 30, 1997 and $8.047 at November 30,
1995.

For 1996, fully diluted earnings per share is considered to be the same as
primary earnings per share, since the effect of common stock equivalents and
certain potentially dilutive securities would be antidilutive.

As stated in Note 1, the Company will be required to retroactively adopt the
provisions of SFAS No. 128 when it reports its operating results for the
quarter ended February 28, 1998. In addition, during 1998, the Company will
convert its preferred shares at a one-to-one ratio instead of the pro rated
approach described above. This change is due to the Company having the ability
and intent to make ESOP distributions in cash instead of in the Company's
common stock which has been the historical practice as described above. The
weighted average number of common shares outstanding for 1997 calculated under
the provisions of SFAS No. 128 are 8,042 for basic and 9,005 for diluted. EPS
for 1997 calculated pursuant to SFAS No. 128 is $0.07 for basic and $0.06 for
diluted.

F-20
<PAGE>

12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly financial information for 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1997
-------------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales............... $92,024 $95,857 $91,781 $105,807 $385,469
Cost of products sold
(A).................... 70,391 70,379 68,667 74,495 283,932
Earnings before
extraordinary item..... 126 1,210 152 2,493 3,980
Extraordinary loss on
debt extinguishment.... -- -- -- (1,886) (1,886)
Net earnings............ 126(B) 1,210(C) 152 (D) 607 (E) 2,094
Earnings (loss) per
share:
Primary:
Before extraordinary
item................. (0.03) 0.10 (0.03) 0.26 0.31
Extraordinary loss on
debt extinguishment.. -- -- -- (0.23) (0.23)
Net earnings (loss)... (0.03) 0.10 (0.03) 0.03 0.07
Fully dilutive:
Before extraordinary
item................. (0.03) 0.08 (0.03) 0.23 0.27
Extraordinary loss on
debt extinguishment.. -- -- -- (0.20) (0.21)
Net earnings (loss)... (0.03) 0.08 (0.03) 0.03 0.06
</TABLE>
- --------
(A) Includes product development expenses and excludes depreciation and
amortization.
(B) Includes $500 of interest income recorded on specified loss liability tax
claims.
(C) Increase attributable to (i) high sales levels and reduced manufacturing
costs due to the consolidation of manufacturing facilities in France and
(ii) a reduction of Company personnel in the U.S., which translated into a
reduction of the postretirement benefit liability.
(D) Includes a $530 gain on the sale of foreign currency option agreements.
(E) Includes an income adjustment in the amount of $955, increasing goodwill
for a materials supply contract between Sofitam and a previously
affiliated company. This amount was offset by a $894 charge recorded for
licensed technology that was determined to have minimal value.

<TABLE>
<CAPTION>
1996
---------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER(A) TOTAL
------- ------- ------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net sales................. $49,548 $57,620 $59,044 $113,521 $279,733
Cost of products sold (B). 37,805 43,546 45,222 83,650 210,223
Net earnings (loss)....... (613) 486 (37)(C) (1,845)(D) (2,009)
Earnings (loss) per share:
Primary:
Net earnings (loss)..... (0.13) 0.01 (0.05) (0.28) (0.45)
Fully dilutive:
Net earnings (loss)..... (0.13) 0.01 (0.05) (0.28) (0.45)
</TABLE>
- --------
(A) Includes the results of operations, for the three-month period ended
November 30, 1996, of Sofitam.
(B) Includes product development expenses and excludes depreciation and
amortization.
(C) Includes approximately $254 charged to operations for employee termination
benefits related to corporate restructuring resulting from the acquisition
of Sofitam and $669 related to a litigation settlement.
(D) Includes approximately $387 charged to operations for employee termination
benefits related to corporate restructuring resulting from the acquisition
of Sofitam, $455 for various other acquisition charges, $780 for
product/service exit costs and $866 for a legal settlement and a possible
adverse outcome related to Pension Benefit Guaranty Corporation inquiries.

F-21
<PAGE>

13. INCOME TAXES

Earnings (loss) before income taxes and extraordinary loss consists of the
following:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------- -------
<S> <C> <C> <C>
Domestic......................................... $4,209 $ (542) $ 8,946
Foreign.......................................... 988 (687) (5,676)
------ ------- -------
$5,197 $(1,229) $ 3,270
====== ======= =======
</TABLE>

Income tax provision (benefit) consists of the following:

<TABLE>
<CAPTION>
1997 1996 1995
------ ----- -----
<S> <C> <C> <C>
Current:
Federal............................................ $ 240 $(460) $(272)
State.............................................. 311 277 249
Foreign............................................ 652 906 132
Deferred:
Foreign............................................ 14 57 (70)
------ ----- -----
Total tax provision.............................. $1,217 $ 780 $ 39
====== ===== =====
</TABLE>

A reconciliation of the reported tax expense (benefit) and the amount
computed by applying the statutory U.S. federal income tax rate of 35% to
earnings (loss) before income taxes and extraordinary loss is as stated below.

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)....... $1,819 $ (430) $ 1,144
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax benefit. 202 180 162
Tax effect of dividends paid on stock held in
the RSP...................................... (529) (540) (553)
Adjustments to prior year accruals and
refunds...................................... (600) (111) (572)
Difference in foreign and U.S. tax rates...... (99) (78) (6)
Increase (decrease) in valuation allowance
before effect of stock options and
Extraordinary loss........................... (525) 316 (2,250)
Foreign losses with no current tax benefit: 1,016 1,201 1,985
Repatriation of foreign earnings.............. -- 125 41
Miscellaneous items, net...................... (67) 117 88
------ ------ -------
Provision at effective tax rate................. $1,217 $ 780 $ 39
====== ====== =======
</TABLE>

The components of the deferred tax assets and liabilities as of November 30,
1997 and 1996 are as stated below. The tax benefit of $660 related to the
extraordinary loss on the debt extinguishment has been fully offset by an
increase in the valuation allowance.

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable.................................... $ 346 $ 215
Employee compensation and benefit accruals............. 6,733 7,107
Workers' compensation and other claims................. 603 242
Other.................................................. 24 14
Warranty accrual....................................... 978 1,032
Environmental liability................................ 232 322
Net operating loss carryforwards....................... 8,634 7,137
Alternative minimum tax credit......................... 378 331
Valuation allowance.................................... (14,907) (14,885)
-------- --------
Total deferred tax asset............................. $ 3,021 $ 1,515
======== ========
</TABLE>

F-22
<PAGE>

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Gross deferred tax liabilities:
Property, plant and equipment......................... $ 1,322 $ 1,158
Pension assets........................................ 700 524
Inventory............................................. 476 (707)
Investment in property................................ 207 214
Foreign earnings not permanently invested............. 327 327
Foreign exchange...................................... 28 235
Export sales provision................................ 303 288
-------- --------
Total deferred tax liability........................ 3,363 2,039
-------- --------
Net deferred tax liability.............................. $ (342) $ (524)
======== ========
</TABLE>

For U.S. federal income tax purposes, the net operating loss ("NOL")
carryover amounts to $24,669 which will expire from 2006 to 2008. For purposes
of the Alternative Minimum Tax ("AMT"), the NOL carryover is $10,561 and the
credit carryforwards total $378. During 1997, $1,500 of the NOL was used.

At November 30, 1997, the Company recorded a net deferred tax asset of $14.9
million, which was offset in full by a valuation allowance due largely to
uncertainties associated with the Company's ability to fully use these tax
benefits. The Company is continuing to evaluate the likelihood that all or
part of the deferred tax asset will be realized through the generation of
future taxable earnings. If, in the future, the Company is able to generate
sufficient levels of taxable income, the valuation allowance will be adjusted
accordingly.

F-23
<PAGE>

14. GEOGRAPHICAL SEGMENTS

Domestic and foreign operations information for 1997, 1996, and 1995 is as
follows:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Net sales--unaffiliated customers:
North America........................... $ 139,928 $ 147,763 $137,470
Export.................................. 46,529 38,541 36,238
Europe.................................. 176,402 80,370 37,068
Africa.................................. 22,610 13,059 10,797
--------- --------- --------
$ 385,469 $ 279,733 $221,573
========= ========= ========
Inter-area sales eliminations:
North America........................... $ 8,432 $ 9,471 $ 10,778
========= ========= ========
Europe.................................. $ 3,660 $ 1,100 $ 47
========= ========= ========
Africa.................................. $ 286 $ 510 --
========= ========= ========
Operating income (loss):
North America........................... $ 5,557 $ 494 $ 8,812
Europe.................................. 10,259 2,649 (4,232)
Africa.................................. 1,444 633 165
Adjustments and eliminations............ 3,385 2,580 1,066
--------- --------- --------
$ 20,645 $ 6,356 $ 5,811
========= ========= ========
Identifiable assets:
North America........................... $ 207,209 $ 216,989 $121,044
Europe.................................. 169,110 186,372 22,914
Africa.................................. 14,448 14,955 7,025
Adjustments and eliminations............ (100,148) (108,455) (26,651)
--------- --------- --------
$ 290,619 $ 309,861 $124,332
========= ========= ========
</TABLE>

The Company's foreign operations are located in: Canada; Belgium; France;
Germany; Italy; Spain; Switzerland; the Netherlands; United Kingdom; Cameroon;
Ivory Coast; Morocco; Senegal; South Africa; and Tunisia. Transfers between
geographical areas are at cost plus an incremental amount intended to provide
a reasonable profit margin to the selling enterprises.

15. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Changes in the allowance for doubtful accounts are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year....................... $ 904 $1,150 $1,295
Sofitam acquisition adjustments.................. 350 -- --
Charged to operations............................ 192 667 367
Uncollectible accounts written off, less
recoveries...................................... (34) (900) (519)
Foreign currency translation adjustments......... (20) (13) 7
------ ------ ------
Balance, end of year........................... $1,392 $ 904 $1,150
====== ====== ======
</TABLE>

16. RETIREMENT PLAN COST

The Company has several retirement plans covering most employees, including
certain employees in foreign countries. Charges to operations for the cost of
the Company's retirement plans, including the RSP, were $2,625, $3,052 and
$3,054 in 1997, 1996 and 1995, respectively.

F-24
<PAGE>

Defined Benefit Plans (U.S.)--The Company maintains two noncontributory
defined benefit pension plans which cover certain union employees. The
Company's funding to the plans is equal to the minimum contribution required
by the Internal Revenue Code. The benefits are based upon a fixed benefit rate
and years of service. Future benefits under these plans were frozen as of
December 31, 1990, at which time the plans' participants became eligible to
participate in the RSP.

The following table sets forth the aggregate defined benefit plans' funded
status and amounts reflected in the accompanying consolidated balance sheets
as of November 30, 1997 and 1996:

<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
-------------- ----------------
1997 1996 1997 1996
------ ------ ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested................................. $1,470 $1,592 $ 9,624 $10,046
Non-vested............................. 80 89 662 703
------ ------ ------- -------
Accumulated benefit obligations........ $1,550 $1,681 $10,286 $10,749
====== ====== ======= =======
Projected benefit obligations............ $1,550 $1,681 $10,286 $10,749
Plan assets at fair value, principally
common stocks, bonds, and guaranteed
investment contracts, including $1,160
and $555 for 1997 and 1996,
respectively, of the Company's common
stock................................... 2,149 1,968 9,477 8,424
------ ------ ------- -------
Plan assets in excess of (less than)
projected benefit obligations........... 599 287 (809) (2,325)
Unrecognized net loss.................... 238 520 2,262 3,360
Unrecognized net assets at December 1,
1991 and 1990 being recognized over 15
years................................... (202) (231) (89) (112)
Adjustment required to recognize minimum
liability............................... -- -- (2,173) (3,248)
------ ------ ------- -------
Prepaid pension cost (pension liability)
recognized in the consolidated balance
sheet................................... $ 635 $ 576 $ (809) $(2,325)
====== ====== ======= =======

The net periodic pension expense amounts were based on the following
actuarial assumptions:

<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
-------------- ----------------
1997 1996 1997 1996
------ ------ ------- -------
<S> <C> <C> <C> <C>
Discount rate on plan liabilities........ 7.25% 7.00% 7.25% 7.00%
Rate of return on plan assets............ 8.00% 8.00% 8.00% 8.00%
</TABLE>

The Company has recorded an additional minimum pension liability for the
underfunded plan of $2,173 and $3,248 at November 30, 1997 and 1996,
respectively, representing the excess of unfunded accumulated benefit
obligations over previously recorded pension cost liabilities.

The net periodic pension cost of U.S. defined benefit plans for 1997, 1996,
and 1995 includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Interest cost on projected benefit obligations... $ 844 $ 842 $ 857
Return on plan assets............................ (1,739) (1,204) (1,138)
Net amortization and deferral.................... 1,056 619 558
------- ------- -------
Net periodic pension expense..................... $ 161 $ 257 $ 277
======= ======= =======
</TABLE>

F-25
<PAGE>

Defined Benefit Plans (Foreign)--Certain French Sofitam subsidiaries offer
unfunded defined benefit plans that cover all employees and provide lump-sum
benefit payments upon retirement unless employment is terminated prior to
retirement age. The following table sets forth the actuarial valuation
information required to be presented under U.S. GAAP for 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Actuarial present value of accumulated plan benefits
Vested................................................. -- --
Non-vested............................................. $ 2,178 $ 2,115
------- -------
Accumulated benefit obligations........................ 2,178 2,115
Effect of future salary increases...................... 1,086 1,187
======= =======
Projected benefit obligation........................... $ 3,264 $ 3,302
Plan assets at fair value -- --
------- -------
Funded status.......................................... (3,264) (3,302)
Amortization of unrecognized net transition obligation. 692 909
Unrecognized net (gain) loss........................... 324 136
------- -------
Prepaid pension cost (pension liability)............... $(2,248) $(2,257)
======= =======
The net periodic pension expense amounts were based on
the following actuarial assumptions:
*Discount rate........................................... 6.00% 6.58%
*Salary growth percentage................................ 3.50% 4.00%
The net periodic pension cost of the foreign defined
benefit plans includes the following components:
Service cost............................................. $ 222 $ 207
Interest cost on projected benefit obligation............ 201 219
Amortization............................................. 114 120
------- -------
Net periodic pension cost.............................. $ 537 $ 546
======= =======

Pension liability recognized in the balance sheet:
Accrued pension........................................ $(2,257)
Allowances paid during the year........................ 285
1997 net periodic pension cost......................... (537)
-------
Accrued pension........................................ $(2,509)
=======
</TABLE>
- --------
* In France

The information presented above was calculated based on actuarial valuations
of the plans as of August 31, 1997 and 1996, which approximates that as of
November 30, 1997 and 1996, respectively. The Company's other foreign
retirement plans represent an insignificant portion of the Company's total
retirement plans.

Defined Contribution Plan (U.S.)--The RSP covers substantially all U.S.
employees of Tokheim and includes a common and preferred stock ESOP, which
provide a retirement contribution of 2% (of salary) for factory and office
employees, and 1.5% for all other participants in the plan and a matching
contribution of at least two-thirds of the first 6% of employee contributions.
The matching contribution can increase to 150% of the first 6% of
contributions, depending on the performance of the Company. See Note 11 for a
discussion of the Company's accounting for the ESOP pursuant to SOP 76-3.

The number of shares of Preferred Stock in the RSP at November 30, 1997 and
1996 was 793,160 and 771,263 respectively, at a cost of $25 per share. The
number of common shares in the RSP at November 30, 1997 and 1996 was 137,645
and 25,305, respectively, at an average cost of $18.22 and $17.14 per share.
The dividend yield on the Preferred Stock is 7.75%, and the conversion rate is
one share of Preferred Stock to one share of common stock. Each year,
approximately 8% of the Preferred Stock held by the plan is allocated to
participants' accounts. The Company has guaranteed the RSP loans as described
in Note 7. A like amount entitled "Guaranteed Employees'

F-26
<PAGE>

Stock Ownership Plan (RSP) obligation" is recorded as a reduction of
shareholders' equity. As the Company makes contributions to the RSP, these
contributions, plus the dividends paid on the Company's preferred and common
stock held by the RSP, are used to repay the loans. As the principal amounts
of the loans are repaid, the "Guaranteed Employees' Stock Ownership Plan (RSP)
obligation" in the equity and liability sections of the balance sheet is
reduced accordingly. Company contributions in excess of dividends are
allocated to interest and compensation expense on a basis proportional to the
required debt service on RSP loans. Amounts allocated to interest expense were
$631, $715, and $832 for 1997, 1996 and 1995 respectively.

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Interest expense incurred by the Plan Trust(s) on
RSP debt........................................... $ 710 $1,075 $1,265
Company contributions to the RSP.................... 2,464 2,541 2,300
Dividends on preferred stock used for debt service
by the RSP......................................... 1,512 1,543 1,580
</TABLE>

17. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company provides defined benefit postretirement health and life
insurance benefits to most of its U.S. employees. Covered employees become
eligible for these benefits at retirement, after meeting minimum age and
service requirements. The Company continues to fund benefits on a pay-as-you-
go basis, with some retirees paying a portion of the costs.

The accumulated postretirement benefit obligation as of November 30, 1997
and 1996 consisted of unfunded obligations as follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Retirees and dependents.................................. $ 6,890 $ 8,220
Fully eligible active plan participants.................. 708 1,088
Other active plan participants........................... 4,588 7,742
------- -------
Total accumulated postretirement benefit obligation.... 12,186 17,050
Unrecognized net gain (loss)............................. 3,092 (1,531)
------- -------
Accrued postretirement benefit cost...................... 15,278 15,519
Less current portion..................................... (900) (739)
------- -------
$14,378 $14,780
======= =======
</TABLE>

Net postretirement benefit cost for 1997, 1996 and 1995 includes the
following components:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Service cost........................................ $ 323 $ 603 $ 422
Interest cost on accumulated postretirement benefit
obligation......................................... 860 1,108 1,034
Amortization (gain) loss............................ -- -- 25
------ ------ ------
Net postretirement benefit cost..................... $1,183 $1,711 $1,431
====== ====== ======
</TABLE>

The assumptions used to develop the net postretirement benefit expense and
the present value of benefit obligations are as follows:

<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Discount rate................................................. 7.25% 7.00%
Health care cost trend rate for the next year................. 6.50% 9.00%
</TABLE>

The health care cost trend rate used to value the accumulated postretirement
benefit obligation is assumed to decrease gradually to an ultimate rate of
4.5% in 2005. A 1% increase in this annual trend rate would increase the
accumulated postretirement benefit obligation as of November 30, 1997 by
approximately $1,500 and the combined service and interest components of the
annual net post-retirement health care cost by approximately $180.

F-27
<PAGE>

18. CONTINGENT LIABILITIES

The Company is defending various claims and legal actions which are common
to its operations. These legal actions primarily involve claims for damages
arising out of the Company's manufacturing operations, including environmental
actions, patent infringement, product liability matters and various contract
and employment matters.

Environmental Matters--The Company's operations and properties are subject
to a variety of complex and stringent federal, state, and local laws and
regulations, including those governing the use, storage, handling, generation,
treatment, emission, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater,
and the health and safety of employees. As such, the nature of the Company's
operations exposes it to the risk of claims with respect to such matters.
There can be no assurance that material costs or liabilities will not be
incurred in connection with such claims. Based upon its experience to date,
the Company believes that the future cost of compliance with existing
environmental laws and regulations, and liability for known environmental
claims pursuant to such laws and regulations, will not have a material adverse
effect on the Company's business, financial condition or results of
operations. However, future events, such as new information, changes in
existing laws and regulations or their interpretation, and more vigorous
enforcement policies of regulatory agencies, may give rise to additional
expenditures or liabilities that could be material.

The Company has been named as a potentially responsible party ("PRP") under
CERCLA or similar state Superfund laws at three sites: the Fort Wayne
Reduction Site in Fort Wayne, Indiana; the Moyer Landfill Site in
Collegeville, Pennsylvania; and the I. Jones Recycling Site in Fort Wayne,
Indiana. The Company believes that the clean ups at these three sites are
largely complete and that the Company has paid, or has currently accrued on
its balance sheet sufficient funds to pay, any liabilities it may have
associated with the clean up of these sites. The Company also owns or leases,
and has in the past owned or leased, numerous properties that for many years
have been used in industrial and manufacturing operations. Although the
Company has in the past utilized operating and disposal practices that were
standard for the industry at the time, hazardous substances may have been
disposed of or released on or under the properties owned or leased by the
Company, or on or under other locations where such wastes have been taken for
disposal. The Company currently owns a facility near Atlanta, Georgia that was
previously used to refurbish gasoline dispensers. As part of this operation,
chlorinated solvents were inadvertently released to the soil and groundwater
through the facility septic system. Migration of these releases has caused
solvent concentrations above background levels in the groundwater under an
adjacent residential property. The Company has completed the cleanup of this
release under the oversight of the Georgia Environmental Protection Division
of the Georgia Department of Natural Resources, and is currently monitoring
the property to ensure that additional cleanup work is not necessary.

F-28
<PAGE>

Total amounts included in accrued expenses related to environmental matters
were $990 and $878 at November 30, 1997 and 1996, respectively. During 1995,
the Company settled two actions with the Environmental Protection Agency
("EPA"). One matter the Company settled for $627 as part of a global
settlement with other PRPs, and the Company recorded the liability in full at
November 30, 1994. The government approved this settlement in late 1997, and
the Company paid one-half of the settlement amount in December 1997. The
remaining half is due in 12 months. The Company is pursuing recovery of these
amounts from its insurance carriers. In the other action, the Company settled
as a participating generator as part of a global settlement. The Company
provided a letter of credit in the amount of $148 to cover its projected
future costs. In 1996, this letter of credit was reduced to $43. This action
is still pending with respect to EPA oversight costs and potential natural
resource damages owed to the state of Indiana. Settlement negotiations are
ongoing with respect to the natural resource damages. The matter regarding EPA
oversight costs is on appeal to the U.S. Court of Appeals for the 7th Circuit.
Management believes that the letter of credit of $43 is adequate to cover any
future cost to the Company relating to this matter.

Product Liability and Other Matters--The Company is subject to various other
legal actions arising out of the conduct of its business, including actions
relating to product liability, and claims for damages alleging violations of
federal, state, or local statutes or ordinances dealing with civil rights,
equal pay, and sex discrimination. Total amounts included in accrued expenses
related to these actions were $1,330 and $382 at November 30, 1997 and 1996,
respectively. The Company is also seeking to recover in excess of $1.0 million
from its former outside legal firm for malpractice in handling a litigation
matter for the Company. In addition the Company appealed a jury verdict of
$350 with respect to an equal pay act and sexual discrimination claim to the
7th U.S. Court of Appeals. The Company is awaiting a decision in this matter.
In addition, during 1997, the Company settled various product liabilities,
patent infringement and other matters with aggregate settlement charges of
approximately $150.

The Company was a defendant in litigation filed by Gilbarco, Inc.
("Gilbarco"), which alleged infringement of patents on its vapor recovery
system and certain vapor recovery improvements, blender, printed receipt
severing and filter housing. Gilbarco also alleged violation of the North
Carolina Fair Practice Claims Act. Gilbarco sought injunctions and treble
unspecified damages. The Company, in addition to asserting other defenses,
counterclaimed with an antitrust claim. The lawsuit was filed on August 3,
1995 and took place in federal court in the Middle District of North Carolina.
The parties have signed a settlement agreement to license the disputed
technology (the "Licensing Agreement"), effective as of December 1, 1997. The
Licensing Agreement settles all outstanding issues related to the litigation,
and on February 13, 1998, the court entered a consent judgment regarding the
settlement. Under the License Agreement, the Company will pay a $3 million
fixed royalty fee, payable in 12 quarterly installments, plus earned royalties
for the use of the licensed technology. These royalties are estimated to total
approximately $1.1 million annually.

In the opinion of the Company, amounts accrued for awards or assessments in
connection with these matters at this time are adequate, and the ultimate
resolution of environmental, product liability, and other legal matters will
not have a material effect on the Company's consolidated financial position,
results of operations, or cash flows. The Company is not able to estimate
accurately the additional loss or range of loss that is reasonably possible,
in addition to the amounts accrued. The Company reassesses these matters as
new facts and cases are brought to management's attention.

19. RECENT EVENTS

In December 1997, the Company acquired MSI, a Colorado corporation. MSI
develops and distributes retail automation systems (including POS software),
primarily for the convenience store stations, petroleum dispensing and fast
food service industries. The Company paid the MSI shareholders an initial
amount of $12.0 million. The

F-29
<PAGE>

Company is also obligated to make contingent payments of up to $13.2 million
over the next 3 years based upon MSI's performance. The $13.2 million consists
of $8.0 million of additional purchase price, $2.6 million related to a non-
compete agreement, and $2.6 million of additional employee compensation. The
$12.0 million amount was funded through the Company's existing Bank Credit
Facility. The Company is in the process of valuing MSI's assets, which consist
principally of in-process research and development, software and other
intangibles. The Company estimates that it will incur a charge of
approximately $5.9 million in the first quarter of 1998 for the write off of
in-process research and development costs.

20. SHAREHOLDER RIGHTS PLAN

F-30
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

To the Shareholders and Directors, Tokheim Corporation:

We have audited the accompanying consolidated balance sheet of Tokheim
Corporation and Subsidiaries as of November 30, 1997 and 1996, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended November 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tokheim
Corporation and Subsidiaries as of November 30, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1997, in conformity with
generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Fort Wayne, Indiana
January 23, 1998

F-31
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

To the Boards of Directors of
Management Solutions, Inc. and
Tokheim Corporation:

We have audited the accompanying balance sheets of Management Solutions,
Inc. as of November 30, 1997 and December 31, 1996, and the related statements
of operations, stockholders' equity and cash flows for the eleven months ended
November 30, 1997 and the year ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Management Solutions, Inc.
as of November 30, 1997 and December 31, 1996, and the results of its
operations and its cash flows for the eleven months ended November 30, 1997
and the year ended December 31, 1996, in conformity with generally accepted
accounting principles.

Denver, Colorado
December 31, 1997

F-32
<PAGE>

MANAGEMENT SOLUTIONS, INC.

BALANCE SHEETS

AS OF NOVEMBER 30, 1997 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $1,020,285 $ 32,237
Trade accounts receivable, net of allowance of $110,403
and $64,603 at November 30, 1997 and December 31,
1996, respectively.................................... 1,061,527 1,098,540
Notes receivable from related party.................... 850,000 313,000
Inventory, net of reserve of $8,386 at November 30,
1997.................................................. 160,859 154,781
Interest receivable.................................... 90,591 68,892
Other.................................................. 6,776 37,281
---------- ----------
Total current assets................................. 3,190,038 1,704,731
Property and equipment, net of accumulated depreciation
of $247,875 and $194,576 at November 30, 1997 and
December 31, 1996, respectively......................... 255,027 107,320
Capitalized software, net of accumulated amortization of
$10,000 at November 30, 1997............................ 42,000 --
Other long-term assets................................... 6,950 6,000
---------- ----------
Total assets......................................... $3,494,015 $1,818,051
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable....................................... $ 170,349 $ 108,584
Bonuses payable........................................ 958,411 --
Deferred revenue....................................... 171,749 191,870
Customer deposits...................................... 26,428 36,421
Other.................................................. 45,876 8,445
---------- ----------
Total current liabilities............................ 1,372,813 345,320
========== ==========
Commitments (Note 4)
Stockholders' equity:
Common stock, no par value, 1,000,000 shares
authorized; 500,000 shares issued and outstanding..... 300,200 300,200
Retained earnings...................................... 1,821,002 1,172,531
---------- ----------
Total stockholders' equity........................... 2,121,202 1,472,731
---------- ----------
Total liabilities and stockholders' equity........... $3,494,015 $1,818,051
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-33
<PAGE>

MANAGEMENT SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31,
1996

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Licenses............................................... $3,580,394 $ 963,911
Hardware............................................... 2,063,433 2,346,438
Services............................................... 2,159,514 1,280,573
---------- ----------
Total revenues....................................... 7,803,341 4,590,922
Costs and expenses:
Direct hardware and software costs..................... 3,820,270 2,750,351
Selling, general and administrative and other.......... 3,161,254 1,132,420
---------- ----------
Operating income..................................... 821,817 708,151
Interest and other income, net........................... 63,567 30,164
---------- ----------
Net income........................................... $ 885,384 $ 738,315
========== ==========
Pro forma net income..................................... $ 555,136 $ 462,924
========== ==========
Pro forma net income per share........................... $ 1.11 $ .93
========== ==========
Weighted average common shares outstanding............... 500,000 500,000
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-34
<PAGE>

MANAGEMENT SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS

FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31,
1996

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 885,384 $ 738,315
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 63,299 50,676
Provision for bad debts and inventory............... 54,186 64,603
Change in operating assets and liabilities:
Trade accounts receivable......................... (8,787) (671,967)
Inventory......................................... (14,464) (135,334)
Interest receivable............................... (21,699) (29,009)
Other current assets.............................. 30,505 (19,165)
Other long-term assets............................ (950) --
Accounts payable.................................. 61,765 53,827
Bonuses payable................................... 958,411 --
Deferred revenue.................................. (20,121) 191,870
Customer deposits................................. (9,993) 18,408
Other current liabilities......................... 37,431 (29,734)
---------- ---------
Net cash provided by operating activities....... 2,014,967 232,490
---------- ---------
Cash flows from investing activities:
Purchase of property and equipment.................... (201,006) (12,150)
Capitalized software.................................. (52,000) --
Notes receivable from related party................... (537,000) 250,798
---------- ---------
Net cash (used in) provided by investing
activities..................................... (790,006) 238,648
---------- ---------
Cash flows from financing activities:
Distributions......................................... (236,913) (495,889)
---------- ---------
Net cash used in financing activities........... (236,913) (495,889)
---------- ---------
Net increase (decrease) in cash and cash
equivalents.................................... 988,048 (24,751)
Cash and cash equivalents, beginning of year............ 32,237 56,988
---------- ---------
Cash and cash equivalents, end of year.................. $1,020,285 $ 32,237
========== =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-35
<PAGE>

MANAGEMENT SOLUTIONS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31,
1996

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
------- -------- ---------- -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1996............. 500,000 $300,200 $ 930,105 $1,230,305
Net income......................... -- -- 738,315 738,315
Distributions ($.99 per share)..... -- -- (495,889) (495,889)
------- -------- ---------- ----------
Balance, December 31, 1996........... 500,000 300,200 1,172,531 1,472,731
Net income......................... -- -- 885,384 885,384
Distributions ($.47 per share)..... -- -- (236,913) (236,913)
------- -------- ---------- ----------
Balance, November 30, 1997........... 500,000 $300,200 $1,821,002 $2,121,002
======= ======== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-36
<PAGE>

MANAGEMENT SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS:

Management Solutions, Inc. (the "Company") was founded in 1985 and develops
point of sale software for companies involved in the convenience store
industry. The Company also offers hardware and software installation, software
support and consulting services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition:

The Company's revenue consists of sales of software products, hardware, and
fees for maintenance and services. Revenue from licenses and hardware is
recognized upon delivery and completion of significant vendor obligations.
Prepaid amounts for post-contract customer support are deferred at the time of
receipt and are recognized as revenue over the term of the contract on a
straight-line basis.

Cash and Cash Equivalents:

The Company considers all highly liquid instruments with an original
maturity of three months or less to be cash equivalents.

Inventory:

Inventory consists of computer hardware that is held for resale to
customers. Inventories are carried at cost on a first-in, first-out basis and
are periodically assessed for obsolescence.

Use of Estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk:

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash maintained at
financial institutions in amounts which at times may exceed federally insured
limits. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk in this area.

The Company sells its products to various end users in different geographic
locations located within the United States. Approximately 52% and 74% of the
November 30, 1997 and the December 31, 1996 accounts receivable balances,
respectively, are comprised of three customers.

Property and Equipment:

Property and equipment are stated at cost. Depreciation of property and
equipment are computed using the straight-line method over the estimated
useful lives of the assets as follows:

<TABLE>
<S> <C>
Furniture and fixtures........... 7 years
Equipment and automobiles........ 5 years
Computer equipment............... 3 years
</TABLE>

F-37
<PAGE>

MANAGEMENT SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Maintenance and repairs are charged to expense as incurred. Upon retirement
or sale, the costs of assets disposed of and the related accumulated
depreciation are eliminated and the related gain or loss is reflected in
income.

Income Taxes:

The Company has elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code, effective in 1985. Taxable income or loss for
federal tax reporting is reported by the stockholders. Accordingly, no
provision for federal income taxes has been provided for in the financial
statements.

Software Capitalization:

The cost of establishing the technological feasibility of new products or
product enhancements are expensed as incurred as research and development
costs ($405,000 in 1997 and 1996). The costs incurred subsequent to the
establishment of the technological feasibility of the product and prior to its
general release are capitalized. Capitalized costs are amortized on a product-
by-product basis using the greater of (a) the ratio that current revenues for
a product bear to the total current and anticipated future revenues or (b) the
straight-line method over the estimated useful life of three years.
Amortization expense related to capitalized software development costs is
included in direct hardware and software costs in the accompanying statement
of operations and was $10,000 in 1997. There were no software development
costs capitalized in 1996 and prior years.

Pro forma Net Income Per Share:

Pro forma net income per share is computed using the weighted average number
of common shares outstanding divided by pro forma net income. The Company did
not have any common stock equivalents outstanding in 1997 or 1996.

New Accounting Pronouncement:

Effective December 15, 1997, the Company will adopt Statement of Financial
Accounting Standards Statement No. 128, ("SFAS 128") Earnings per Share. SFAS
128 simplifies the standards for computing earnings per share found in
Accounting Principles Board Opinion No. 15, Earnings per Share, and makes them
comparable to international earnings per share standards. Had SFAS 128 been
effective during the eleven months ended November 30, 1997 and December 31,
1996, "Basic earnings per share" and "Dilutive earnings per share" under SFAS
128 would have been identical to pro forma net income per share as presented
on the statements of operations.

3. PROPERTY AND EQUIPMENT

Fixed assets consist of the following:

<TABLE>
<CAPTION>
NOVEMBER 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Furniture and fixtures.......................... $ 90,071 $ 19,687
Equipment and automobiles....................... 130,079 86,121
Computer equipment.............................. 257,411 189,588
Other........................................... 25,341 6,500
--------- ---------
502,902 301,896
Accumulated depreciation........................ (247,875) (194,576)
--------- ---------
Property and equipment, net..................... $ 255,027 $ 107,320
========= =========
</TABLE>

Depreciation expense was approximately $53,000 for the eleven months ended
November 30, 1997 and $51,000 for the year ended December 31, 1996.

F-38
<PAGE>

MANAGEMENT SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. TRANSACTIONS WITH RELATED PARTIES:

Operating Lease:

As of November 30, 1997 and December 31, 1996, the Company leased its office
and development facilities on a month-to-month basis with an officer and
employee, who is the majority stockholder of the Company. Rental expense was
approximately $110,400 for the eleven months ended November 30, 1997 and
$87,900 for the year ended December 31, 1996. On December 1, 1997, the Company
entered into a ten-year operating lease for its research and development
facilities with the majority stockholder of the Company. Per the lease
agreement, the Company is responsible for all tax, insurance, utility and
maintenance costs associated with the facility. The yearly rent is subject to
a CPI escalation starting December 2002. At the end of the initial ten-year
term, the Company has two renewal options of five years each.

Future minimum lease payments are as follows:

<TABLE>
<S> <C>
1998......................... $ 320,544
1999......................... 320,544
2000......................... 320,544
2001......................... 320,544
Thereafter................... 1,896,564
-----------
$3,178,740
===========
</TABLE>

Notes Receivable:

As of November 30, 1997 and December 31, 1996, the Company had a note
receivable of $850,000 and $263,000, respectively, bearing interest of 7.0%,
from a minority stockholder of the Company. The note is due on demand and was
subsequently repaid in December 1997. Interest earned during 1997 and 1996 was
$28,000 and $26,600, respectively.

As of December 31, 1996, the Company had a note receivable of $50,000 from
an officer and employee, who is the majority stockholder of the Company. The
full amount was repaid in November 1997.

5. SIGNIFICANT CUSTOMERS:

Customers which had greater than 10% of total revenues are as follows:

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Customer A..................................................... 18% 46%
Customer B..................................................... -- 11
Customer C..................................................... 58 --
Customer D..................................................... 11 --
Customer E..................................................... -- 19
</TABLE>

6. PRO FORMA NET INCOME:

The pro forma net income and pro forma net income per share reflects the tax
adjustment as if the Company had filed C corporation tax returns for all
periods presented. The effect is as follows:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Net income before pro forma adjustments................ $885,384 $738,315
Pro forma provision for income taxes................... 330,248 275,391
-------- --------
Pro forma net income................................... $555,136 $462,924
======== ========
</TABLE>

7. SUBSEQUENT EVENTS:

On December 29, 1997, Tokheim Corporation ("Tokheim") paid $12 million to
acquire all of the Company's common stock. In December 1997, prior to the
acquisition by Tokheim, the Company distributed $850,000 ($1.70 per share) to
the Company's shareholders.

F-39
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDER-
WRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF, OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RE-
LATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Special Note Regarding Forward-Looking Statements......................... 4
Summary................................................................... 5
Risk Factors.............................................................. 11
Recent Developments....................................................... 15
Use of Proceeds........................................................... 16
Price Range of Common Stock............................................... 17
Dividend Policy........................................................... 17
Capitalization............................................................ 18
Unaudited Pro Forma Financial Statements.................................. 19
Selected Consolidated Financial Data...................................... 23
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 24
The Company............................................................... 29
Management................................................................ 40
Principal Shareholders.................................................... 42
Description of Capital Stock.............................................. 44
Underwriting.............................................................. 47
Legal Matters............................................................. 48
Experts................................................................... 48
Index to Financial Statements............................................. F-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

3,800,000 SHARES

LOGO

COMMON STOCK

----------------

PROSPECTUS

----------------

PAINEWEBBER INCORPORATED

BT ALEX. BROWN

SCHRODER & CO. INC.

----------------

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with the
offerings described in this Registration Statement. All amounts are estimated
except the registration fee.

<TABLE>
<S> <C>
Registration fee................................................ $ 23,965
NYSE listing fees............................................... 15,050
National Association of Securities Dealers, Inc. (NASD) filing
fee............................................................ 8,623
*Printing and engraving costs................................... 200,000
*Accounting fees and expenses................................... 190,000
*Legal fees and expenses........................................ 210,000
*Miscellaneous.................................................. 2,362
--------
Total....................................................... $650,000
========
</TABLE>
- --------
*Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Chapter 37 of the Indiana Business Corporation Law ("IBCL") empowers an
Indiana corporation to indemnify against liability an individual who is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether formal or
informal (a "Proceeding"), because such person is or was a director. To be
eligible for indemnification, the director must have conducted himself in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful. Liability indemnified against includes the obligation to pay a
judgment, settlement, penalty, fine (including an excise tax with respect to
an employee benefit plan) or reasonable expenses incurred with respect to a
Proceeding. A corporation may not indemnify a director pursuant to these
requirements unless specifically authorized by the board of directors, legal
counsel or the shareholders.

Chapter 37 further provides that if a director is wholly successful, on the
merits or otherwise, in the defense of any Proceeding to which he was a party
because he is or was a director, the corporation must indemnify him against
reasonable expenses incurred in connection with the Proceeding. A corporation
may also pay for or reimburse a director's legal fees in advance of a final
disposition in a Proceeding in certain circumstances. Furthermore, a court may
order a company to indemnify a director if it determines the director is
fairly and reasonably entitled to indemnification in view of all of the
relevant circumstances. Chapter 37 also allows corporations to indemnify
officers, employees or agents to the same extent as directors, and provides
for mandatory or court-ordered indemnification for these persons as described
above. Finally, the IBCL allows corporations to purchase and maintain
insurance on behalf of directors, officers, employees or agents against
liability asserted against or incurred by him in that capacity or arising from
his status as such, whether or not the corporation would have the power to
indemnify such person against liability under Chapter 37. The indemnification
and advance of expenses in Chapter 37 do not exclude any other rights to
indemnification and advance of expenses provided for under a corporation's
articles of incorporation, bylaws, board resolution or by shareholder vote.

The Registrant's Restated Articles of Incorporation and Bylaws provide for
indemnification of the Registrant's officers and directors to the extent
allowed by Indiana law. The Registrant has directors' and officers' liability
insurance which protects each director and officer from certain claims and
suits, including shareholder derivative suits, even where the director may be
determined to not be entitled to indemnification under the IBCL and claims and
suits arising under the Securities Act. The policy may also afford coverage
under circumstances where the facts do

II-1
<PAGE>

not justify a finding that the director or officer acted in good faith and in
a manner that was in or not opposed to the best interests of the Registrant.

The foregoing represents a summary of the general effect of the IBCL, the
Registrant's Restated Articles of Incorporation and Bylaws and directors' and
officers' liability insurance coverage for purposes of general description
only.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following Exhibits are filed as part of this Registration Statement:

<TABLE>
<C> <S> <C>
1 Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of the Registrant, as
amended, as filed with the Indiana Secretary of State on
February 5, 1997 (incorporated by reference to the Regis-
trant's Annual Report on Form 10-K/A for the year ended
November 30, 1996).
3.2 Bylaws of the Registrant, as restated on July 12, 1995
(incorporated by reference to the Registrant's Annual Re-
port on Form 10-K/A, for the year ended November 30, 1995,
filed November 20, 1996).
4.1 Rights Agreement, dated as of January 22, 1997, between
the Registrant and Harris Trust and Savings Bank, as
Rights Agent (incorporated by reference to the Regis-
trant's Current Report on Form 8-K, dated February 6,
1997).
4.2 Indenture, dated as of August 23, 1996, between the Regis-
trant and Harris Trust and Savings Bank, as Trustee (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, dated September 23, 1996).
4.3 Credit Agreement, dated as of September 3, 1996, among the
Registrant, certain subsidiaries of the Registrant (the
"Borrowing Subsidiaries"), certain banks (the "Lenders")
and NBD Bank, N.A. ("Agent") (the "Credit Agreement") (in-
corporated by reference to the Registrant's Current Report
on Form 8-K, filed September 23, 1996).
4.4 Amendment No. 1 to Credit Agreement, dated as of May 15,
1997 (incorporated by reference to the Registrant's Annual
Report on Form 10-K, for the year ended November 30, 1997,
filed February 13, 1997).
4.5 Amendment No. 2 to Credit Agreement, dated as of June 30,
1997 (incorporated by reference to the Registrant's Annual
Report on Form 10-K, for the year ended November 30, 1997,
filed February 13, 1997).
4.6 Amendment No. 3 to Credit Agreement, dated as of September
25, 1997 (incorporated by reference to the Registrant's
Annual Report on Form 10-K, for the year ended November
30, 1997, filed February 13, 1997).
4.7 Amendment No. 4 to Credit Agreement, dated as of December
29, 1997 (incorporated by reference to the Registrant's
Annual Report on Form 10-K, for the year ended November
30, 1997, filed February 13, 1997).
5* Opinion of Skadden, Arps, Slate, Meagher & Flom (Illi-
nois).
11** Statement re: Computation of Per Share Earnings.
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Salustro Reydel.
24** Powers of attorney.
</TABLE>
- --------
*To be filed by amendment

**Filed previously

II-2
<PAGE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.

(2) For purposes of determining any liability under the Securities Act of
1933, as amended, each post-effective amendment that contains a form or
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF FORT WAYNE, STATE OF INDIANA, ON
THIS 24 DAY OF FEBRUARY, 1998.

Tokheim Corporation

/s/ Douglas K. Pinner
By: _________________________________
Douglas K. Pinner
Chairman of the Board, President,
Chief Executive Officer and
Director

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ Douglas K. Pinner Chairman of the Board, February 24, 1998
____________________________________ President and Chief
Douglas K. Pinner Executive Officer and
Director

/s/ John A. Negovetich Executive Vice President February 24, 1998
____________________________________ Finance and Administration
John A. Negovetich

* Vice Chairman of the Board
____________________________________ and Director
Gerald H. Frieling, Jr.

* Director
____________________________________
Walter S. Ainsworth

* Director
____________________________________
Robert M. Akin, III
/s/ Norman L. Roelke
*By_________________________
Norman L. Roelke
* Director
____________________________________
James K. Baker
Attorney-in-Fact
February 24, 1998

* Director
____________________________________
Bernard D. Cooper

* Director
____________________________________
Richard W. Hansen

* Director
____________________________________
Dr. Winfred M. Phillips

* Director
____________________________________
Ian M. Rolland
</TABLE>

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
1 Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of the Registrant, as
amended, as filed with the Indiana Secretary of State on Feb-
ruary 5, 1997 (incorporated by reference to the Registrant's
Annual Report on Form
10-K/A for the year ended November 30, 1996).
3.2 Bylaws of the Registrant, as restated on July 12, 1995 (incor-
porated by reference to the Registrant's Annual Report on Form
10-K/A, for the year ended November 30, 1995, filed November
20, 1996).
4.1 Rights Agreement, dated as of January 22, 1997, between the
Registrant and Harris Trust and Savings Bank, as Rights Agent
(incorporated by reference to the Registrant's Current Report
on Form
8-K, dated February 6, 1997).
4.2 Indenture, dated as of August 23, 1996, between the Registrant
and Harris Trust and Savings Bank, as Trustee (incorporated by
reference to the Registrant's Current Report on Form 8-K,
dated September 23, 1996).
4.3 Credit Agreement, dated as of September 3, 1996, among the
Registrant, certain subsidiaries of the Registrant (the "Bor-
rowing Subsidiaries"), certain banks (the "Lenders") and NBD
Bank, N.A. ("Agent") (the "Credit Agreement") (incorporated by
reference to the Registrant's Current Report on Form 8-K,
filed September 23, 1996).
4.4 Amendment No. 1 to Credit Agreement, dated as of May 15, 1997
(incorporated by reference to the Registrant's Annual Report
on Form 10-K, for the year ended November 30, 1997, filed Feb-
ruary 13, 1997).
4.5 Amendment No. 2 to Credit Agreement, dated as of June 30, 1997
(incorporated by reference to the Registrant's Annual Report
on Form 10-K, for the year ended November 30, 1997, filed Feb-
ruary 13, 1997).
4.6 Amendment No. 3 to Credit Agreement, dated as of September 25,
1997 (incorporated by reference to the Registrant's Annual Re-
port on Form 10-K, for the year ended November 30, 1997, filed
February 13, 1997).
4.7 Amendment No. 4 to Credit Agreement, dated as of December 29,
1997 (incorporated by reference to the Registrant's Annual Re-
port on Form 10-K, for the year ended November 30, 1997, filed
February 13, 1997).
5* Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois).
11** Statement re: Computation of Per Share Earnings.
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Salustro Reydel.
24** Powers of attorney.
</TABLE>
- --------
*To be filed by amendment

**Filed previously

<PAGE>

Exhibit 1

DRAFT DATED February 23, 1998

3,800,000 Shares
TOKHEIM CORPORATION

Common Stock

UNDERWRITING AGREEMENT
----------------------

____________, 1998

PAINEWEBBER INCORPORATED
BT ALEX. BROWN INCORPORATED
SCHRODER & CO., INC.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

Tokheim Corporation, an Indiana corporation (the "Company"), proposes to
sell an aggregate of 3,800,000 shares (the "Firm Shares") of the Company's
Common Stock, no par value (the "Common Stock"), to you and to the other
underwriters named in Schedule I (collectively, the "Underwriters"), for whom
you are acting as representatives (the "Representatives"). The Company has also
agreed to grant to you and the other Underwriters an option (the "Option") to
purchase up to an additional 570,000 shares of Common Stock (the "Option
Shares") on the terms and for the purposes set forth in Section 1(b). The Firm
Shares and the Option Shares are hereinafter collectively referred to as the
"Shares."

The initial public offering price per share for the Shares and the purchase
price per share for the Shares to be paid by the several Underwriters shall be
agreed upon by the Company and the Representatives, acting on behalf of the
several Underwriters, and such agreement shall be set forth in a separate
written instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication among the
Company and the Representatives and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Shares will be governed
by this Agreement, as supplemented by the Price Determination Agreement. From
and after the date of the execution and delivery of the Price Determination
Agreement, this Agreement shall be deemed to incorporate, and, unless the
context otherwise indicates, all references
<PAGE>

contained herein to "this Agreement" and to the phrase "herein" shall be deemed
to include the Price Determination Agreement.

The Company confirms as follows its agreements with the Representatives and
the several other Underwriters.

1. Agreement to Sell and Purchase.

(a) On the basis of the representations, warranties and agreements of
the Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to each Underwriter named below, and each
Underwriter, severally and not jointly, agrees to purchase from the Company at
the purchase price per share for the Firm Shares to be agreed upon by the
Representatives and the Company in accordance with Section 1(c) or 1(d) hereof
and set forth in the Price Determination Agreement, the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I, plus such
additional number of Firm Shares which such Underwriter may become obligated to
purchase pursuant to Section 8 hereof. Schedule I may be attached to the Price
Determination Agreement.

(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally and
not jointly, up to 570,000 Option Shares from the Company at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this Agreement (or, if
the Company has elected to rely on Rule 430A, on or before the 30th day after
the date of the Price Determination Agreement), upon written or telegraphic
notice (the "Option Shares Notice") by the Representatives to the Company no
later than 12:00 noon, New York City time, at least two and no more than five
business days before the date specified for closing in the Option Shares Notice
(the "Option Closing Date") setting forth the aggregate number of Option Shares
to be purchased and the time and date for such purchase. On the Option Closing
Date, the Company will issue and sell to the Underwriters the number of Option
Shares set forth in the Option Shares Notice, and each Underwriter will purchase
such percentage of the Option Shares as is equal to the percentage of Firm
Shares that such Underwriter is purchasing, as adjusted by the Representatives
in such manner as they deem advisable to avoid fractional shares.

(c) The initial public offering price per share for the Firm Shares
and the purchase price per share for the Firm Shares to be paid by the several
Underwriters shall be agreed upon and set forth in the Price Determination
Agreement, if the Company has elected to rely on Rule 430A. In the event such
price has not been agreed upon and the Price Determination Agreement has not
been executed by the close of business on the fourteenth business day following
the date on which the Registration Statement (as hereinafter defined) becomes
effective, this Agreement shall terminate forthwith, without liability of any
party to any other party except that Section 6 shall remain in effect.

(d) If the Company has elected not to rely on Rule 430A, the initial
public offering price per share for the Firm Shares and the purchase price per
share for the Firm Shares to be paid by the several Underwriters shall be agreed
upon and set forth in the Price Determination

-2-
<PAGE>

Agreement, which shall be dated the date hereof, and an amendment to the
Registration Statement containing such per share price information shall be
filed before the Registration Statement becomes effective.

2. Delivery and Payment. Delivery of the Firm Shares shall be made
to the Representatives for the accounts of the Underwriters at the office of
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York 10019,
against payment by you to the account of the Company of the purchase price by
wire transfer of Federal Funds or similar same day funds to an account
designated in writing by the Company to PaineWebber Incorporated at least one
business day prior to the Closing Date (as hereinafter defined). Such payment
shall be made at 10:00 a.m., New York City time, on the third business day (or
fourth business day, if the Price Determination Agreement is executed after 4:30
p.m.) after the date on which the first bona fide offering of the Shares to the
public is made by the Underwriters or at such time on such other date, not later
than ten business days after such date, as may be agreed upon by the Company and
the Representatives (such date is hereinafter referred to as the "Closing
Date"). It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Firm Shares and Option Shares, if any,
which it has agreed to purchase.

To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above at the time and date (which may be the
Closing Date) specified in the Option Shares Notice.

Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.

The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The Company will pay and
save each Underwriter and any subsequent holder of the Shares harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying Federal and state stamp and other transfer taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to such Underwriter of the Firm Shares and Option Shares.

3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:

(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. _____) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively

-3-
<PAGE>

referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a
preliminary prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of
the Rules and Regulations included at any time as part of the registration
statement. Copies of such registration statement and amendments and of each
related preliminary prospectus have been delivered to the Representatives. The
term "Registration Statement" means the registration statement as amended at the
time it becomes or became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included by Rule
430A or Rule 434 of the Rules and Regulations. If the Company files a
registration statement to register a portion of the Shares and relies on Rule
462(b) of the Rules and Regulations for such registration statement to become
effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration Statement" shall be deemed
to include the Rule 462 Registration Statement, as amended from time to time.
The term "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date. Any reference herein to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date or the date of such preliminary
prospectus or the Prospectus, as the case may be. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date, or the date of any preliminary prospectus or the Prospectus, as
the case may be, and deemed to be incorporated therein by reference.

(b) On the Effective Date, the date the Prospectus is first filed with
the Commission pursuant to Rule 424(b) (if required), the Closing Date and, if
later, the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), did or will comply in all
material respects with all applicable provisions of the Act, the Exchange Act,
the rules and regulations thereunder (the "Exchange Act Rules and Regulations")
and the Rules and Regulations. On the Effective Date and when any post-
effective amendment to the Registration Statement becomes effective, no part of
the Registration Statement or any such amendment did or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission and at the Closing
Date and, if later, the Option Closing Date, the Prospectus did not or will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or omissions made
in reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement or Prospectus or any amendment or
supplement thereto. For all purposes of this Agreement, the amounts of the
selling concession and reallowance set forth in the Prospectus constitute the
only information relating to any

-4-
<PAGE>

Underwriter furnished in writing to the Company by the Representatives
specifically for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the preliminary prospectus, the Prospectus or any other
materials, if any, permitted by the Act.

(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus, when they become effective or were
filed with the Commission, as the case may be, complied in all material respects
with the requirements of the Act or the Exchange Act, as applicable, the
Exchange Act Rules and Regulations and the Rules and Regulations; and any
documents so filed and incorporated by reference subsequent to the Effective
Date shall, when they are filed with the Commission, conform in all material
respects with the requirements of the Act and the Exchange Act, as applicable,
the Exchange Act Rules and Regulations and the Rules and Regulations.

(d) The only significant subsidiaries (as defined in Rule 1-02(w) of
Regulation S-X under the Act) of the Company as of the Closing Date are the
subsidiaries listed on Exhibit B attached hereto (the "Subsidiaries"). Each of
the Company and its Subsidiaries is, and at the Closing Date will be, a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each of the Company and its Subsidiaries
has, and at the Closing Date will have, full power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Registration Statement and
the Prospectus, except where such failure would not be expected to have a
material adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company and
the Subsidiaries taken as a whole (each such event a "Material Adverse Effect").
Each of the Company and its Subsidiaries is, and at the Closing Date will be,
duly licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so qualified would
not reasonably be expected to have a Material Adverse Effect. All of the
outstanding shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company free and clear of all liens, encumbrances and claims
whatsoever (except as described in the Registration Statement) or as imposed by
the credit agreement between the Company, NBD First Chicago Corporation and
certain other banks, dated as of September 6, 1996 (the "Credit Agreement"), the
Act or by the securities or "Blue Sky" laws of certain jurisdictions. Except
for the stock of the Subsidiaries and any other interest listed on Schedule __
or as disclosed in the Registration Statement, the Company does not own, and at
the Closing Date will not own, directly or indirectly, any shares of stock or
any other equity or long-term debt securities of any corporation or have any
equity interest in any firm, partnership, joint venture, association or other
entity. Complete and correct copies of the certificate of incorporation and of
the by-laws of each of the Company and its Subsidiaries and all amendments
thereto have been delivered (or, in the case of the Subsidiaries, made
available) to the Representatives, and, except as disclosed to the
Representatives, no changes therein will be made subsequent to the date hereof
and prior to the Closing Date or, if later, the Option Closing Date.

-5-
<PAGE>

(e) The outstanding shares of Common Stock have been, and the Shares
to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and are not and will
not be subject to any preemptive or similar right. The description of the
Common Stock and the Preferred Share Purchase Rights in the Registration
Statement and the Prospectus is, and at the Closing Date will be, complete and
accurate in all material respects. Except for the Preferred Share Purchase
Rights and as otherwise set forth in the Prospectus [and shares of Common Stock
subject to issuance] pursuant to employee stock options or other benefit plans,
the Company does not have outstanding, and at the Closing Date will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock, any shares of capital
stock of any Subsidiary or any such warrants, convertible securities or
obligations.

(f) The financial statements and schedules of the Company included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly, in all material respects, the consolidated financial condition
of the Company as of the respective dates thereof and the consolidated results
of operations and cash flows of the Company for the respective periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The audited combined financial statements of the
petroleum dispenser business ("Sofitam") of Sofitam S.A. incorporated by
reference in the Registration Statement or the Prospectus present fairly, in all
material respects, the combined financial position of Sofitam as of the dates
thereof and the combined results of operations and cash flows of Sofitam for the
periods covered thereby, all in accordance with French generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed therein. The audited financial
statements of Management Solutions, Inc. ("MSI") included in the Registration
Statement or Prospectus present fairly, in all material respects, the financial
position of MSI as of the dates thereof and the results of operations and cash
flows of MSI for the respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period covered thereby, except as otherwise disclosed
therein. The pro forma financial statements and other pro forma financial
information included in the Registration Statement or the Prospectus (i) have
been prepared in accordance, in all material respects, with the Commission's
rules and guidelines with respect to pro forma financial statements and (ii)
have been properly computed on the bases described therein. The assumptions used
in the preparation of the pro forma financial statements and other pro forma
financial information included in the Registration Statement or the Prospectus
are reasonable in the judgment of the Company, and the adjustments used therein
are appropriate, in all material respects, to give effect to the transactions or
circumstances referred to therein. No other financial statements or schedules
of the Company are required by the Act, the Exchange Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Coopers & Lybrand, L.L.P. ("C&L") and Salustro Reydel, are independent
accountants as required by the Act and the Rules and Regulations.

(g) The Company maintains a system of internal accountings control
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain

-6-
<PAGE>

accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by this Agreement, the Registration
Statement and the Prospectus, (i) there has not been and will not have been any
material change in the capitalization of the Company, or any material adverse
change in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole (a "Material Adverse Change"), (ii) neither the Company nor any of
its Subsidiaries has incurred or will incur any material liabilities or
obligations, direct or contingent, nor has it entered into or will it enter into
any material transactions other than pursuant to this Agreement and the
transactions referred to herein, in either case not in the ordinary course of
business and which are material to the Company and the Subsidiaries taken as a
whole, and (iii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock.

(i) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.

(j) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding could reasonably be expected to
result in a Material Adverse Effect or which seeks to enjoin or otherwise
prevent the consummation of the transactions contemplated hereby.

(k) Each of the Company and its Subsidiaries has, and at the Closing
Date will have, (i) all governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus, and (ii) complied in all respects with all laws,
regulations and orders applicable to it or its business; except, in the case of
(i) or (ii) where a failure could not be expected to result, singly or in the
aggregate, in a Material Adverse Effect and is not, and at the Closing Date will
not be, in violation or default, under any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, note agreement, lease,
contract or other agreement or instrument (collectively, a "contract or other
agreement") to which it is a party or by which its property is bound or
affected, except for such violations or defaults as could not be expected to
result, singly or in the aggregate, in a Material Adverse Effect. To the
knowledge of the Company and each of its Subsidiaries, no other party under any
contract or other agreement to which it is a party is in default in any respect
thereunder, except for such default as could not reasonably be expected to
result, singly or in the aggregate, in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is, nor at the Closing Date will any of them
be, in violation of any provision of its articles of incorporation or by-laws.

-7-
<PAGE>

(l) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws, the rules of the New York Stock Exchange or
the by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares.

(m) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and (assuming due authorization, execution and delivery by
PaineWebber Incorporated) constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with the terms hereof
except that such enforcement may be subject to (i) the effect of bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and remedies
of creditors and (ii) the effect of general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be brought.
The performance of this Agreement and the consummation of the transactions
contemplated hereby and the application of the net proceeds from the offering
and sale of the Shares in the manner set forth in the Prospectus under "Use of
Proceeds" will not violate, result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company or any of its
Subsidiaries pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a conflict with or
a default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, (i)
the articles of incorporation or by-laws of the Company or any of its
Subsidiaries, (ii) any contract or other agreement to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of its properties is bound or affected, or (iii) (assuming
compliance with all applicable state securities and "Blue Sky" laws) any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the business or properties of
the Company or any of its Subsidiaries, except in the case of clause (ii) and
(iii), breaches, defaults or violations which could not be reasonably expected
to result, either singly or in the aggregate, in a Material Adverse Effect.

(n) Each of the Company and its Subsidiaries has (i) good and valid
title to all properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions, and (ii)
valid and enforceable leases for the properties described in the Prospectus as
leased by it, except as described in the Prospectus, or as set forth in the
Credit Agreement, or where the failure to have such title or lease or the
existence of such lien, charge, encumbrance or restriction would not, singly or
in the aggregate, be reasonably likely to have a Material Adverse Effect.

(o) There is no document or contract required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required. All such
contracts to which the Company or any Subsidiary is a party

-8-
<PAGE>

have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof, except where such failure would not, singly
or in the aggregate, be reasonably likely to have a Material Adverse Effect and
except that such enforcement may be subject to (i) the effect of bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and remedies
of creditors and (ii) the effect of general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be brought.

(p) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.

(q) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.

(r) The Shares are duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange.

(s) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors that
could reasonably be expected to result in a Material Adverse Effect.

(t) Except as disclosed in the Prospectus, the Company and its
Subsidiaries own, or are licensed or otherwise have the right to use, or can
acquire on reasonable terms, the material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, services marks and trade names (collectively, "patent
and proprietary rights") presently employed by them or which are necessary in
connection with the conduct of the business now operated by them. Except as
disclosed in the Prospectus, neither the Company nor any of its Subsidiaries has
received any written notice or otherwise has actual knowledge of any
infringement of or conflict with asserted rights of others or any other claims
with respect to any patent or proprietary rights, or of any basis for rendering
any patent and proprietary rights invalid or inadequate to protect the interest
of the Company or any of its Subsidiaries which infringement, conflict,
invalidity or inadequacy would be reasonable expected to have a Material Adverse
Effect.

(u) Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.

(v) The Company and its Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human

-9-
<PAGE>

health and safety, the environment or imposing liability or standards of conduct
concerning any Hazardous Material (as hereinafter defined) ("Environmental
Laws"), (ii) have received all material permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such
material permit, license or approval, except as disclosed in the Prospectus or
where such noncompliance with Environmental Laws, failure to receive such
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals could not reasonably be
expected to result, either singly or in the aggregate, in a Material Adverse
Effect. The term "Hazardous Material" means (A) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or contaminant
or hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.

(w) The Company maintains insurance with respect to its properties and
business of the types and in amounts generally deemed adequate for its business
and consistent with insurance coverage maintained by similar companies and
businesses, all of which insurance is in full force and effect.

(x) The Company has filed all material federal, state and foreign
income and franchise tax returns required to be filed through the date hereof
and has paid all taxes shown as due thereon, other than taxes which are being
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles; and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company that would have a Material Adverse Effect. There
are no tax returns of the Company or any of its Subsidiaries that are currently
being audited by state, local or federal taxing authorities or agencies (and
with respect to which the Company or any Subsidiary has received notice), where
the findings of such audit, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect.

(y) Except as disclosed in the Prospectus, with respect to each
employee benefit plan, program and arrangement (including, without limitation,
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained or
contributed to by the Company, or with respect to which the Company could incur
any liability under ERISA (collectively, the "Benefit Plans"), no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances, in connection with which the Company could be subject to any
liability under the terms of such Benefit Plan, applicable law (including,
without limitation, ERISA and the Internal Revenue Code of 1986, as amended) or
any applicable agreement that could reasonably be expected to result in a
Material Adverse Effect.

4. Agreements ofthe Company. The Company agrees with the several
Underwriters as follows:

-10-
<PAGE>

(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have reasonably objected thereto in good
faith.

(b) The Company will use all reasonable efforts to cause the
Registration Statement to become effective, and will notify the Representatives
promptly, and will confirm such notification in writing, (1) when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (4) of the happening of
any event during the period mentioned in the second sentence of Section 4(e)
that in the judgment of the Company makes any statement of a material fact made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements of a material fact therein, in light of the circumstances
in which they are made, not misleading and (5) of receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Company, the Registration Statement, any preliminary
prospectus or the Prospectus. If at any time the Commission shall issue any
order suspending the effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. The Company will use all reasonable efforts to comply
with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and to notify the Representatives promptly of all such
filings.

(c) The Company will furnish to the Representatives, without charge,
two signed copies of the Registration Statement and of any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto (including any document filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus) and will furnish to the
Representatives, without charge, for transmittal to each of the other
Underwriters, a copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.

(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.

(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or
any amendment or supplement thereto by the several Underwriters and by all
dealers to whom the Shares may be sold, both in connection with the offering or
sale of the Shares and for any period of time thereafter during which the
Prospectus is required by law to be delivered in connection therewith. If
during such period of time any event shall occur which in the judgment of the
Company or counsel to the Underwriters should be set forth

-11-
<PAGE>

in the Prospectus in order to make any statement of a material fact therein, in
the light of the circumstances under which it was made, not misleading, or if it
is necessary to supplement or amend the Prospectus to comply with law, the
Company will forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and will deliver to each of the Underwriters,
without charge, such number of copies thereof as the Representatives may
reasonably request. The Company shall not file any document under the Exchange
Act before the termination of the offering of the Shares by the Underwriters
which is not approved by the Representatives after reasonable notice thereof,
which approval shall not be unreasonably withheld, conditioned or delayed, if
such document would be deemed to be incorporated by reference into the
Prospectus.

(f) Prior to any public offering of the Shares by the Underwriters,
the Company will cooperate with the Representatives and counsel to the
Underwriters in connection with the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of such jurisdictions
as the Representatives may request; provided, that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject or to subject itself
to taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.

(g) During the period of three years commencing on the Effective Date,
the Company will furnish to the Representatives and each other Underwriter who
may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.

(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the end of the calendar quarter
in which the Effective Date falls, an earnings statement (which need not be
audited but shall be in reasonable detail) for a period of at least 12 months
ended commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).

(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated pursuant to Section 7 hereof, the
Company will pay, or reimburse if paid by the Representatives, all costs and
expenses incident to the performance of the obligations of the Company under
this Agreement, including but not limited to costs and expenses of or relating
to (1) the preparation, printing and filing of the Registration Statement and
exhibits to it, each preliminary prospectus, the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus, (2) the preparation
and delivery of certificates representing the Shares, (3) the word processing,
printing and reproduction of this Agreement, the Agreement Among Underwriters,
any Dealer Agreements and any Underwriters' Questionnaire, (4) furnishing
(including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (5) the listing of the Shares on the New York Stock

-12-
<PAGE>

Exchange, (6) any filings required to be made by the Underwriters with the NASD,
and the fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (7) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (8) counsel to the Company, (9) the transfer agent for the Shares and
(10) C & L.

(j) If the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters is not satisfied or
because this Agreement shall be terminated by the Company pursuant to Section 7
hereof or if the Company shall be unable to perform its obligations hereunder
(other than because of a default by any Underwriter), the Company will reimburse
the several Underwriters for all out-of-pocket expenses (including the
reasonable and documented fees, disbursements and other charges of counsel to
the Underwriters) reasonably incurred by them in connection with the proposed
purchase and sale of the Shares.

(k) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares.

(l) The Company will apply the net proceeds from the offering and sale
of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."

(m) The Company will not, and will cause each of its executive
officers and directors to enter into agreements with the Representatives in the
form set forth in Exhibit C to the effect that each of them will not, for a
period of 120 days after the commencement of the public offering of the Shares,
without the prior written consent of PaineWebber Incorporated, sell, contract to
sell or otherwise dispose of any shares of Common Stock or rights to acquire
such shares (other than pursuant to employee stock option plans or in connection
with other employee incentive compensation arrangements).

5. Conditions of the Obligations of the Underwriters. In addition to
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:

(a) Notification that the Registration Statement has become effective
shall be received by the Representatives not later than 5:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representatives and all filings required by Rule
424 of the Rules and Regulations and Rule 430A shall have been made.

(b) At the closing, (i) no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) any request for
additional information on the part of the staff

-13-
<PAGE>

of the Commission shall have been complied with to the satisfaction of the staff
of the Commission and to the reasonable satisfaction of Counsel to the
Underwriters (iii) after the date hereof no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Representatives and the Representatives did
not object thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clause (i).

(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
Material Adverse Change, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus, and (ii) neither
the Company nor any of its Subsidiaries shall have sustained any material loss
or interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree, which
is not set forth in the Registration Statement and the Prospectus, if in the
judgment of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.

(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company or any of its Subsidiaries or
any of their respective officers or directors in their capacities as such,
before or by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would be
reasonably likely to have a Material Adverse Affect.

(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Shares, at the Option Closing Date,
as if made at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, and all covenants and agreements herein contained to be
performed on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date and,
with respect to the Option Shares, at or prior to the Option Closing Date, shall
have been duly performed, fulfilled or complied with in all material respects.

(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
and satisfactory in form and substance to counsel for the Underwriters, from (i)
Skadden, Arps, Slate, Meagher & Flom (Illinois) ("Skadden"), counsel to the
Company, to the effect set forth in Exhibit D, and (ii) Norman Roelke, General
Counsel to the Company, to the effect set forth in Exhibit E. In rendering such
opinion, Skadden shall have received, and may rely on, such certificates and
other documents as they may reasonably request to pass upon such matters
(including the opinion of Norman Roelke as to Indiana law).

-14-
<PAGE>

(g) The Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Vinson & Elkins L.L.P., counsel
to the Underwriters, with respect to the Registration Statement, the Prospectus
and this Agreement, which opinion shall be satisfactory in all respects to the
Representatives.

(h) On the date of the Prospectus, C&L shall have furnished to the
Representatives a letter, dated the date of its delivery, addressed to the
Representatives and in form and substance satisfactory to the Representatives,
confirming that they are independent accountants with respect to the Company as
required by the Act and the Rules and Regulations and with respect to the
financial and other statistical and numerical information contained in the
Registration Statement or incorporated by reference therein. At the Closing
Date and, as to the Option Shares, the Option Closing Date, C&L shall have
furnished to the Representatives a letter, dated the date of its delivery, which
shall confirm, on the basis of a review in accordance with the procedures set
forth in their letter dated the date of the Prospectus, that nothing has come to
their attention during the period from the date of their letter dated the date
of the Prospectus to a date (specified in the letter) not more than five days
prior to the Closing Date and the Option Closing Date which would require any
material change in their letter dated the date of the Prospectus, if it were
required to be dated and delivered at the Closing Date and the Option Closing
Date.

(i) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to the Representatives a certificate,
dated the date of its delivery, signed by each of the Chief Executive Officer or
President and the Chief Financial Officer of the Company, in form and substance
satisfactory to the Representatives, to the effect that:

(i) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects;

(ii) Each of the covenants required herein to be performed by the
Company on or prior to the delivery of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the date of such certificate
has been duly, timely and fully complied with; and

(iii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) there has not
been a Material Adverse Change other than as set forth in or contemplated
by the Registration Statement and the Prospectus, and (B) neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree, which is not set forth in the Registration Statement and the
Prospectus, except any such loss or interference which would not reasonably
be expected to have a Material Adverse Effect.

(j) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 4(m).

-15-
<PAGE>

(k) The Shares shall be qualified for sale in such states as the
Representatives may reasonably request, subject to Section 4(f).

(l) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the New York Stock Exchange, subject only to official
notice of issuance.

(m) The NASD shall have approved the underwriting terms and
arrangements, and such approval shall not have been withdrawn or limited.

(n) On the Closing Date and the Option Closing Date, the Company shall
have furnished to the Representatives such documents, in addition to those
specifically mentioned herein, as the Representatives may have reasonably
requested as to enable them to determine the accuracy and completeness of any
statement in the Registration Statement or the Prospectus or any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, the accuracy at the Closing Date and the Option Closing Date of the
representations and warranties of the Company herein, the performance by the
Company of its obligations hereunder, or the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Representatives.

6. Indemnification.

(a) The Company will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, liabilities, expenses and damages (including, but not limited to, any
and all investigative, legal and other expenses reasonably incurred in
connection with, and any and all amounts paid in settlement of, any action, suit
or proceeding between any of the indemnified parties and any indemnifying
parties or between any indemnified party and any third party, or otherwise, or
any claim asserted), as and when incurred, to which any Underwriter, or any such
person, may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities laws thereof or filed with the
Commission, (ii) the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements in
it not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, liability, expense or damage arising
out of or based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable under this clause (iii) to the extent it is
finally judicially determined by a court of competent jurisdiction that such
loss, claim, liability, expense or damage resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such underwriter through
its gross negligence or willful misconduct); provided that the Company

-16-
<PAGE>

will not be liable to the extent that such loss, claim, liability, expense or
damage (A) arises from the sale of the Shares in the public offering to any
person by an Underwriter and is based on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus or (B)
results solely from an untrue statement of a material fact contained in, or the
omission of a material fact from, such preliminary prospectus, which untrue
statement or omission was completely corrected in the Prospectus (as then
amended or supplemented) if the Company shall sustain the burden of proving that
the Underwriters sold Shares to the person alleging such loss, claim, liability,
expense or damage without sending or giving, at or prior to the written
confirmation of such sale, a copy of the Prospectus (as then amended or
supplemented) if the Company had previously furnished copies thereof to the
Underwriters within a reasonable amount of time prior to such sale or such
confirmation, and the Underwriters failed to deliver the corrected Prospectus,
if required by law to have so delivered it and if delivered would have been a
complete defense against the person asserting such loss, claim, liability,
expense or damage. This indemnity agreement will be in addition to any
liability that the Company might otherwise have.

(b) Each Underwriter will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, each director of the Company and
each officer of the Company who signs the Registration Statement to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
insofar as losses, claims, liabilities, expenses or damages arise out of or are
based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives on behalf
of such Underwriter expressly for use in the Registration Statement, the
Preliminary Prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have; provided, however,
that in no case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discounts and commissions received by such
Underwriter.

(c) Any party that proposes to assert the right to be indemnified
under this Section 6 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 6, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 6 unless, and only to the extent that,
such omission results in the forfeiture or material compromise of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel satisfactory to the
indemnified party (which consent shall not be unreasonably withheld), and after
notice from the indemnifying party to the indemnified party of its election to
assume the defense, the indemnifying party will not be liable to the

-17-
<PAGE>

indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a conflict
or potential conflict exists (based on advice of counsel to the indemnified
party) between the indemnified party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the indemnifying party has not
in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld). No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by this Section 6 (whether or not any indemnified party
is a party thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding. Notwithstanding any
other provision of this Section 6(c), if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriters, the
Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and any one or more of the Underwriters may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by

-18-
<PAGE>

the Company on the one hand and the Underwriters on the other. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (net of discounts and commissions but before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. If, but only if, the allocation provided
by the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and the Underwriters, on the
other, with respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Representatives on behalf of the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
6(d) were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, liability, expense or damage, or action in respect thereof,
referred to above in this Section 6(d) shall be deemed to include, for purpose
of this Section 6(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6(d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions received by it and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 6(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 6(d), any
person who controls a party to this Agreement within the meaning of the Act will
have the same rights to contribution as that party, and each director of the
Company and each officer of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject in each case
to the provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 6(d), will notify
any such party or parties from whom contribution may be sought, but the omission
so to notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 6(d).
Except for a settlement entered into pursuant to the last sentence of Section 6
(c) hereof, no party will be liable for contribution with respect to any action
or claim settled without its written consent (which consent will not be
unreasonably withheld).

(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Underwriters, (ii) acceptance
of the Shares and payment therefore or (iii) any termination of this Agreement.

-19-
<PAGE>

7. Termination. This Agreement may be terminated at any time on or
prior to the Closing Date (or, with respect to the Option Shares, on or prior to
the Option Closing Date), by notice to the Company from the Representatives,
without liability on the part of any Underwriter to the Company, if, prior to
delivery and payment for the Shares (or the Option Shares, as the case may be),
in the sole judgment of the Representatives, (i) there has been, since the
respective dates as of which information is given in the Registration Statement,
any Material Adverse Change, (ii) trading in any of the equity securities of the
Company shall have been suspended by the Commission, the NASD, or an exchange
that lists the Shares, (iii) trading in securities generally on the New York
Stock Exchange or the Nasdaq Stock Market shall have been suspended or limited,
or minimum or maximum prices shall have been generally established on such
exchange or over-the-counter market, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by such exchange or by order of the
Commission or the NASD or any court or other governmental authority, (iv) a
general banking moratorium shall have been declared by either Federal or New
York State authorities or (v) any material adverse change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation of
hostilities or declaration by the United States of a national emergency or war
or other calamity or crisis shall have occurred the effect of any of which is
such as to make it, in the sole judgment of the Representatives, impracticable
or inadvisable to market the Shares on the terms and in the manner contemplated
by the Prospectus.

8. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it or
they have agreed to purchase hereunder, and the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares which
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares which
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 8 by more than one-ninth of the number of
Firm Shares agreed to be purchased by such Underwriter without the prior written
consent of such Underwriter. If any Underwriter or Underwriters shall fail or
refuse to purchase any Firm Shares and the aggregate number of Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of the Firm Shares and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter or the Company for the purchase or sale of any Shares
under this Agreement. In any such case either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 8 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.

-20-
<PAGE>

9. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, Tokheim
Corporation, 10501 Corporate Drive, P.O. Box 360, Fort Wayne, Indiana 46845,
Attention: Chief Financial Officer, with a copy to Skadden, Arps, Slate,
Meagher & Flom (Illinois), 333 W. Wacker Drive, Ste. 2100 Chicago, Illinois,
60606, Attention William R. Kunkel, or (b) if to the Underwriters, to the
Representatives at the offices of PaineWebber Incorporated, 1285 Avenue of the
Americas, New York, New York 10019, Attention: Corporate Finance Department.
Any such notice shall be effective only upon receipt. Any notice under Section
7 or 8 may be made by telex or telephone, but if so made shall be subsequently
confirmed in writing.

This Agreement has been and is made solely for the benefit of the
several Underwriters and the Company and of the controlling persons, directors
and officers referred to in Section 6, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser, as such purchaser, of Shares from any of the
several Underwriters.

All representations, warranties and agreements of the Company
contained herein or in certificates or other instruments delivered pursuant
hereto, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any of its controlling
persons and shall survive delivery of and payment for the Shares hereunder.

Any action required or permitted to be taken by the Representatives
under this Agreement may be taken by them jointly or by PaineWebber
Incorporated.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.

This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.

In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

The Company and the Underwriters each hereby irrevocably waives any
right it may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.

This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Representatives and the Company.

Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.

-21-
<PAGE>

Very truly yours,

TOKHEIM CORPORATION

By:_____________________________
Name:
Title:

Confirmed as of the date first
above mentioned:

PAINEWEBBER INCORPORATED
BT ALEX. BROWN INCORPORATED
SCHRODER & CO., INC.
Acting on behalf of themselves
and as the Representatives of the
other several Underwriters
named in Schedule I hereof.

By: PAINEWEBBER INCORPORATED

By: ____________________________
Name:
Title:

-22-
<PAGE>

SCHEDULE I

UNDERWRITERS

Number of
Name of Firm Shares
Underwriters to be Purchased
------------ ---------------
<S> <C>

PaineWebber Incorporated
BT Alex. Brown Incorporated
Schroder & Co., Inc.

---------------
Total 3,800,000
===============
</TABLE>
<PAGE>

EXHIBIT A

TOKHEIM CORPORATION

________________

PRICE DETERMINATION AGREEMENT
- -----------------------------

[____________, 1998]

PAINEWEBBER INCORPORATED
BT ALEX. BROWN INCORPORATED
SCHRODER & CO., INC.
As Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019

Dear Sirs:

Reference is made to the Underwriting Agreement, dated [____________,
1998] (the "Underwriting Agreement"), among Tokheim Corporation, an Indiana
corporation (the "Company") and the several Underwriters named in Schedule I
thereto (the "Underwriters"), for whom PaineWebber Incorporated, BT Alex. Brown
Incorporated, and Schroder & Co., Inc., are acting as Representatives (the
"Representatives"). The Underwriting Agreement provides for the purchase by the
Underwriters from the Company, subject to the terms and conditions set forth
therein, of an aggregate of 3,800,000 shares (the "Firm Shares") of the
Company's common stock, no par value. This Agreement is the Price Determination
Agreement referred to in the Underwriting Agreement.

Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives as follows:

The initial public offering price per share for the Firm Shares shall
be $_______.

The purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be $_______, representing an amount equal to the
initial public offering price set forth above, less $______ per share.

-1-
<PAGE>

The Company represents and warrants to each of the Underwriters that
the representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate in all material respects as though expressly
made at and as of the date hereof.

As contemplated by the Underwriting Agreement, attached as Schedule I
is a completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.

This Agreement shall be governed by the law of the State of New York
without regard to the conflict of laws principles of such State.

If the foregoing is in accordance with your understanding of the
agreement among the Underwriters and the Company, please sign and return to the
Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Company in accordance with its terms
and the terms of the Underwriting Agreement.

-2-
<PAGE>

Very truly yours,

TOKHEIM CORPORATION

By:_________________________
Name:
Title:

Confirmed as of the date
first above mentioned:

PAINEWEBBER INCORPORATED
BT ALEX. BROWN INCORPORATED
SCHRODER & CO., INC.
Acting on behalf of themselves
and as the Representatives of the
other several Underwriters
named in Schedule I of the
Underwriting Agreement.

By: PAINEWEBBER INCORPORATED

By: ____________________________
Name:
Title:

-3-
<PAGE>

EXHIBIT B

LIST OF SUBSIDIARIES
<PAGE>

EXHIBIT C

[February ___, 1998]

Dear Sirs:

In consideration of the agreement of the several Underwriters, for
which PaineWebber Incorporated, Schroder & Co., Inc., and BT Alex. Brown
Incorporated (the "Representatives") intend to act as Representatives to
underwrite a proposed public offering (the "Offering") of 3,800,000 shares of
Common Stock, no par value (the "Common Stock") of Tokheim Corporation, an
Indiana corporation, as contemplated by a registration statement with respect to
such shares filed with the Securities and Exchange Commission on Form S-3
(Registration No. _________), the undersigned hereby agrees that the undersigned
will not, for a period of 120 days after the commencement of the public offering
of such shares, without the prior written consent of PaineWebber Incorporated,
offer to sell, sell, contract to sell, grant any option to sell, or otherwise
dispose of, or require the Company to file with the Securities and Exchange
Commission a registration statement under the Securities Act of 1933 to register
any shares of Common Stock or securities convertible into or exchangeable for
Common Stock or warrants or other rights to acquire shares of Common Stock of
which the undersigned is now, or may in the future become, the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934).

Very truly yours,

________________________

Print Name:________________________
<PAGE>

EXHIBIT D

Form of Opinion of
Counsel to the Company
- ----------------------

Each of the Subsidiaries listed below is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus: [list non-Indiana significant subs].

The Shares, when issued, delivered and paid for by the Underwriters in
accordance with the terms of the Agreement, will be, duly authorized, validly
issued, fully paid and nonassessable and will not be subject to any preemptive
or similar right under any instrument, document, contract or other agreement
referred to in the Registration Statement or any instrument, document, contract
or agreement filed as an exhibit to, or incorporated as an exhibit by reference
in, the Registration Statement. Except as described in the Registration
Statement or the Prospectus, to our knowledge, there is no commitment or
arrangement to issue, and there are no outstanding options, warrants or other
rights calling for the issuance of, any share of capital stock of the Company or
any Subsidiary to any person or any security or other instrument that by its
terms is convertible into, exercisable for or exchangeable for capital stock of
the Company.

No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Agreement by the Company or in connection with the taking by
the Company of any action contemplated thereby, except such as have been
obtained under the Act and the Rules and Regulations and such as may be required
under state securities or "Blue Sky" laws, the rules of the New York Stock
Exchange or by the by-laws and rules of the NASD in connection with the purchase
and distribution by the Underwriters of the Shares to be sold by the Company.

As of the date hereof, the authorized capital stock of the Company is
as set forth in the Registration Statement and the Prospectus under the caption
"Capitalization." The descriptions of the Common Stock and the Preferred Share
Purchase Rights contained in the Prospectus under the heading "Description of
Capital Stock" are accurate in all material respects.

At the Effective Time, the Registration Statement and the Prospectus
(including any documents incorporated by reference into the Prospectus, at the
time they were filed) complied in all material respects as to form with the
requirements of the Act and the Rules and Regulations (except that we express no
opinion or belief with respect to financial statements, schedules and other

-1-
<PAGE>

financial or statistical data or information included in or excluded from the
Registration Statement or the Prospectus or incorporated by reference therein).

To our knowledge, any instrument, document, lease, license, contract
or other agreement (collectively, "Documents") required to be described or
referred to in the Registration Statement or the Prospectus has been properly
described or referred to therein and any Document required to be filed as an
exhibit to the Registration Statement has been filed as an exhibit thereto or
has been incorporated by reference as an exhibit in the Registration Statement.

To our knowledge, except as disclosed in the Registration Statement or
the Prospectus, no person or entity has the right to require the registration
under the Act of shares of Common Stock or other securities of the Company by
reason of the filing or effectiveness of the Registration Statement.

To our knowledge, the Company is not in violation of, or in default
with respect to, any law, rule, regulation, order, judgment or decree, except as
may be described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a Material Adverse Effect.

All descriptions in the Prospectus of statutes, regulations or legal
or governmental proceedings (except for descriptions of the Indiana Business
Corporation Law contained therein, as to which we express no opinion) are
accurate and fairly present the information required to be shown.

The execution and delivery by the Company of, and the performance by
the Company of its agreements in, the Agreement do not and will not (i) breach
or result in a default under, cause the time for performance of any obligation
to be accelerated under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company or any of its
Subsidiaries pursuant to the terms of, (x) any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement, capital lease or other
evidence of indebtedness of which we have knowledge, (y) any voting trust
arrangement or any contract or other agreement to which the Company is a party
that restricts the ability of the Company to issue securities and of which we
have knowledge or (z) any Document filed as an exhibit to, or incorporated as an
exhibit by reference in, the Registration Statement, or (ii) breach or otherwise
violate any existing obligation of the Company under any court or administrative
order, judgment or decree of which we have knowledge.

Delivery of certificates for the Shares will transfer valid and
marketable title thereto to each Underwriter that has purchased such Shares in
good faith and without notice of any adverse claim with respect thereto.

The Company is not subject to registration and regulation as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended and the rules and regulations thereunder.

-2-
<PAGE>

The Shares have been duly authorized for listing by the New York Stock
Exchange upon official notice of issuance.

We have been advised orally by the Commission that the Registration
Statement has become effective under the Act and that no order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or is pending or threatened by the
Commission.

There are no actions, suits, proceedings or investigations pending or,
to our knowledge, overtly threatened in writing against the Company or any of
its Subsidiaries, or any of their respective officers or directors in their
capacities as such, before or by any court, governmental agency or arbitrator
which (i) seek to challenge the legality or enforceability of the Agreement,
(ii) could, if adversely determined, reasonably be expected to result in a
Material Adverse Effect, or (iii) seek to enjoin any of the business activities
of the Company or any of its Subsidiaries or the transactions described in the
Prospectus and of which we have knowledge.

We have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants of the Company, you and your counsel at which contents of the
Registration Statement and the Prospectus and related matters were discussed
and, without passing upon, or assuming any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus or in any amendment or supplement thereto or in any
document incorporated by reference into the Prospectus or the Registration
Statement, on the basis of the foregoing (relying as to materiality upon the
statements of officers and other representatives of the Company), no facts have
come to our attention that cause us to believe that, both as of the Effective
Date and as of the Closing Date, the Registration Statement or any amendment
thereto contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any amendment or supplement
thereto including any documents incorporated by reference into the Prospectus,
at the time such Prospectus was issued, at the time any such amended or
supplemented Prospectus was issued, and at the Closing Date, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading (except that we express no
opinion or belief with respect to financial statements, schedules and other
financial or statistical data or information included in or excluded from the
Registration Statement or the Prospectus or incorporated by reference therein).

This letter is furnished by us solely for your benefit in connection
with the closing of the transactions referred to in the Agreement and may not be
used, quoted, circulated to, referred to by or relied upon by, any other person
or for any other purpose without our express written permission, except that
this letter may be relied upon by your counsel in connection with the opinion
letter to be delivered to you pursuant to Section 5(g) of the Agreement.

-3-
<PAGE>

SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)

-4-
<PAGE>

EXHIBIT E

Form of Opinion of
Counsel to the Company
- ----------------------

Each of the Company and each of its domestic Significant Subsidiaries
(as defined in Regulation S-X) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has full corporate power and authority to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus.

All of the outstanding shares of Common Stock have been, and the
Shares, when paid for by the Underwriters in accordance with the terms of the
Agreement, will be, duly authorized, validly issued, fully paid and
nonassessable and are not and will not be subject to any preemptive or similar
right under (i) the statutes, judicial and administrative decisions, and the
rules and regulations of the governmental agencies of the State of Indiana and
(ii) the Company's articles of incorporation or by-laws. Except as described in
the Registration Statement or the Prospectus and except for subsequent issuances
of options pursuant to employee benefit plans of the Company and except for
rights issued pursuant to the Company's Rights Plan, to my knowledge, there is
no commitment or arrangement to issue, and there are no outstanding options,
warrants or other rights calling for the issuance of, any share of capital stock
of the Company or any Subsidiary to any person or any security or other
instrument that by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company.

As of the date hereof, the Company is the sole record owner and, to my
knowledge, the sole beneficial owner of all of the capital stock of each of its
Significant Subsidiaries [subject to qualifications for directors qualifying
shares or pledges under the Bank Credit Facility].

The form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements.

To my knowledge, no default by the Company of any of its Significant
Subsidiaries exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any Document filed or
required to be filed as an exhibit to the Registration Statement.

To my knowledge, except as disclosed in the Registration Statement or
the Prospectus, no person or entity has the right to require the registration
under the Act of shares of Common Stock or other securities of the Company by
reason of the filing or effectiveness of the Registration Statement.

-5-
<PAGE>

To my knowledge, the Company is not in violation of, or in default
with respect to, any law, rule, regulation, order, judgment or decree, except as
may be described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a Material Adverse Effect.

All descriptions in the Prospectus of the Indiana Business Corporation
Law are accurate and fairly present the information required to be shown.

The Company has full corporate power and authority to enter into the
Agreement, and the Agreement has been duly authorized, executed and delivered by
the Company.

The execution and delivery by the Company of, and the performance by
the Company of its agreements in, the Agreement do not and will not (i) violate
the articles of incorporation or by-laws of the Company or (ii) (assuming
compliance with all applicable state securities and "Blue Sky" laws) violate
applicable provisions of any statute or regulation of the United States or any
states whose statutes or regulations apply to the Company or its assets.

This letter is furnished by me solely for your benefit in connection
with the closing of the transactions referred to in the Agreement and may not be
used, quoted, referred to by, circulated to, or relied upon by, any other person
or for any other purpose without my express written permission, except that this
letter may be relied upon by your counsel in connection with the opinion letter
to be delivered to you pursuant to Section 5(g) of the Agreement.

NORMAN ROELKE
GENERAL COUNSEL
TOKHEIM CORPORATION

-6-

<PAGE>

Exhibit 23.2

[Letterhead of Coopers & Lybrand L.L.P.]

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the inclusion in this registration statement of Tokheim
Corporation on Form S-3 (File No. 333-46351) of our report dated January 23,
1998, on our audits of the consolidated financial statements of Tokheim
Corporation as of November 30, 1997 and November 30, 1996, and for the years
ended November 30, 1997, 1996 and 1995. We also consent to the references to our
Firm under the caption "Experts."

Fort Wayne, Indiana
February 24, 1998

<PAGE>

Exhibit 23.3

[Letterhead of Coopers & Lybrand L.L.P.]

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-3 of our
report dated December 31, 1997, on our audits of the financial statements of
Management Solutions, Inc. We also consent to the reference to our firm under
the caption "Experts".

Denver, Colorado Coopers & Lybrand LLP
February 24, 1998

<PAGE>

EXHIBIT 23.4

[Letterhead of Salustro Reydel]

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the registration statement on
Form S-3 of our report dated July 15, 1996 on our audit of the combined
financial statements of the Fuel Pump Division of Sofitam S.A. as of December
31, 1995 and 1994 for the three years then ended. We also consent to the
reference of our firm under the caption "Experts".

Salustro Reydel
Paris France
February 24, 1998